SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1997
-----------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-4085
POLAROID CORPORATION
______________________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 04-1734655
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(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
549 TECHNOLOGY SQUARE, CAMBRIDGE, MASSACHUSETTS 02139
______________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (6l7) 386-2000
_____________________________________________________________________
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Shares of Common Stock, $1 par value,
outstanding as of May 2, 1997: 44,904,787 shares
___________________________________________________________________
This document contains 16 pages.
Exhibit index appears on page 15
____________________________________________________________________
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Earnings (Unaudited)
Periods ended MARCH 30, 1997 and MARCH 31, 1996
(In millions, except per share data)
First Quarter
1997 1996
-------- --------
Net sales:
United States $189.3 $178.0
International 268.2 283.1
- -----------------------------------------------------------------------------
Total net sales 457.5 461.1
- -----------------------------------------------------------------------------
Cost of sales 259.8 280.9
Marketing, research, engineering
and administrative expenses 178.5 175.7
Restructuring and other - 110.0
- -----------------------------------------------------------------------------
Total costs 438.3 566.6
- -----------------------------------------------------------------------------
Profit/(loss) from operations 19.2 (105.5)
Other income 17.3 17.6
Interest expense 11.4 11.6
- -----------------------------------------------------------------------------
Earnings/(loss) before income taxes 25.1 (99.5)
Federal, state and foreign income
tax expense/(benefit) 9.3 (38.8)
- -----------------------------------------------------------------------------
Net earnings/(loss) $15.8 ($60.7)
=============================================================================
Primary earnings/(loss) per common share $0.35 ($1.33)
Fully diluted earnings per common share * *
- -----------------------------------------------------------------------------
Cash dividends per common share $0.15 $0.15
Weighted average common shares used for primary
earnings/(loss) per share calculation (in thousands) 45,345 ** 45,572
Common shares outstanding
at end of period (in thousands) 44,829 45,520
=============================================================================
* Fully diluted earnings per share are not stated because
they are greater than or equal to primary
earnings per common share.
** The weighted average shares used to calculate
primary earnings per common share include the
dilutive effect of stock options outstanding.
2
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Earnings
(In millions)
(Unaudited) (Unaudited)
March 30, December 31, March 31,
Assets 1997 1996 1996
- -----------------------------------------------------------------------------
Current assets
Cash and cash equivalents $29.5 $72.8 $104.6
Short-term investments 5.6 5.5 6.4
Receivables 502.3 535.2 437.7
Inventories:
Raw materials 98.1 104.7 129.6
Work-in-process 218.0 225.3 245.0
Finished goods 232.7 218.8 275.9
- -----------------------------------------------------------------------------
Total inventories 548.8 548.8 650.5
Prepaid expenses and other assets 238.3 224.1 222.6
- -----------------------------------------------------------------------------
Total current assets 1,324.5 1,386.4 1,421.8
- -----------------------------------------------------------------------------
Property, plant and equipment
Gross property, plant and equipment 2,177.5 2,163.6 2,151.3
Less accumulated depreciation 1,517.6 1,497.4 1,478.6
- -----------------------------------------------------------------------------
Net property, plant and equipment 659.9 666.2 672.7
- -----------------------------------------------------------------------------
Deferred tax assets 96.7 98.8 112.5
- -----------------------------------------------------------------------------
Other assets 51.2 50.2 8.8
- -----------------------------------------------------------------------------
Total assets $2,132.3 $2,201.6 $2,215.8
=============================================================================
Liabilities and stockholders' equity
- -----------------------------------------------------------------------------
Current liabilities
Short-term debt $156.2 $124.9 $158.3
Current portion of long-term debt 37.7 37.7 39.7
Payables and accruals 251.2 310.5 245.3
Compensation and benefits 207.4 238.4 275.9
Federal, state and
foreign income taxes 55.0 51.6 19.3
- -----------------------------------------------------------------------------
Total current liabilities 707.5 763.1 738.5
- -----------------------------------------------------------------------------
Long-term debt 497.0 489.9 526.8
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Accrued postretirement benefits 248.2 248.5 259.3
Accrued postemployment benefits 42.2 41.9 42.4
- -----------------------------------------------------------------------------
Common stockholders' equity
Common stock, $1 par value 75.4 75.4 75.4
Additional paid-in capital 411.8 409.4 404.7
Retained earnings 1,466.9 1,457.8 1,458.4
Cumulative translation adjustment (29.7) - -
Less: Treasury stock, at cost 1,247.8 1,244.8 1,209.4
Deferred compensation 39.2 39.6 80.3
- -----------------------------------------------------------------------------
Total common stockholders' equity 637.4 658.2 648.8
- -----------------------------------------------------------------------------
Total liabilities and
stockholders' equity $2,132.3 $2,201.6 $2,215.8
=============================================================================
3
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Cash Flows
Periods Ended March 30, 1997 and March 31, 1996 (Unaudited)
(In millions)
Cash flows from operating activities 1997 1996
- -----------------------------------------------------------------------
Net earnings/(loss) $15.8 ($60.7)
Depreciation of property, plant
and equipment 31.0 32.4
Decrease in receivables 5.1 106.5
Increase in inventories (1.7) (35.0)
Increase in prepaids and other assets (16.6) (24.7)
Decrease in payables and accruals (44.5) (24.8)
Increase/(decrease) in compensation
and benefits (31.3) 32.5
Increase/(decrease) in federal, state
and foreign income taxes payable 5.8 (26.5)
Gain on sale of fixed assets - (15.5)
Other non cash items (9.5) 53.3
- -----------------------------------------------------------------------
Net cash provided/(used) by operations (45.9) 37.5
- -----------------------------------------------------------------------
Cash flows from investing activities
- -----------------------------------------------------------------------
Decrease in short-term investments - 3.4
Increase in other assets (1.0) -
Additions to property, plant
and equipment (28.0) (22.3)
Proceeds from sale of fixed assets - 22.1
- -----------------------------------------------------------------------
Net cash provided/(used) by
investing activities (29.0) 3.2
- -----------------------------------------------------------------------
Cash flows from financing activities
- -----------------------------------------------------------------------
Net decrease in short-term debt
(maturities 90 days or less) 36.2 1.4
Short-term debt having maturities
more than 90 days
Proceeds 8.0 -
Payments (8.3) -
Proceeds from issuances of long-term debt 295.6 -
Repayments of long-term debt (290.4) -
Cash dividends paid (6.7) (6.8)
Stock options exercised 3.2 3.2
Purchase of treasury stock (4.4) (5.5)
- -----------------------------------------------------------------------
Net cash provided/(used) by financing 33.2 (7.7)
- -----------------------------------------------------------------------
Effect of exchange rate changes on cash (1.6) (1.7)
- -----------------------------------------------------------------------
Net increase/(decrease) in cash and cash (43.3) 31.3
Cash and equivalents at beginning of period 72.8 73.3
- -----------------------------------------------------------------------
Cash and cash equivalents at end of period $29.5 $104.6
=======================================================================
4
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Earnings
Periods ended MARCH 30, 1997 and MARCH 31, 1996
(In millions, except per share data)
First Quarter
1997 1996
--------- ---------
Common stock
Balance at the beginning of the period $75.4 $75.4
--------- ---------
Balance at the end of the period 75.4 75.4
- -------------------------------------------------------------------------
Additional paid-in capital
Balance at the beginning of the period 409.4 401.9
Stock options exercised - tax benefit 0.5 0.5
Issuance of shares in connection with stock 1.9 2.3
--------- ---------
Balance at the end of the period 411.8 404.7
- -------------------------------------------------------------------------
Retained earnings
Balance at the beginning of the period 1,457.8 1,525.8
Net earnings/(loss) 15.8 (60.7)
Dividends declared-common stock (6.7) (6.8)
ESOP dividend tax benefit received - 0.1
--------- ---------
Balance at the end of the period 1,466.9 1,458.4
- -------------------------------------------------------------------------
Cumulative Translation Adjustment
Balance at the beginning of the period - -
Currency Translation Adjustment (29.7) 0.0
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Balance at the end of the period (29.7) 0.0
- -------------------------------------------------------------------------
Less:
Treasury stock
Balance at the beginning of the period 1,244.8 1,205.4
Repurchase of common shares 4.4 5.5
Issuance of shares in connection
with stock incentive plan (1.4) (1.5)
--------- ---------
Balance at the end of the period 1,247.8 1,209.4
- -------------------------------------------------------------------------
Deferred compensation
Balance at the beginning of the period 39.6 80.0
Stock options - 1993 (0.3) (0.3)
Restricted stock (0.1) 0.6
--------- ---------
Balance at the end of the period 39.2 80.3
- -------------------------------------------------------------------------
Total common stockholders' equity $637.4 $648.8
=========================================================================
5
<PAGE>
Polaroid Corporation and Subsidiary Companies
Notes to Condensed Consolidated Financial Statements (Unaudited)
Basis of Presentation
- ---------------------
The condensed consolidated financial statements include the accounts of the
Company's domestic and foreign subsidiaries, all of which are either wholly
owned or majority owned. Intercompany accounts and transactions are
eliminated. This is an interim unaudited report, subject to year end audit
and adjustments. The information furnished, however, reflects all
adjustments (consisting of normal recurring accruals) which, in the opinion
of management, are necessary for a fair presentation of the results of the
interim period.
Foreign Currency Translation
- ----------------------------
Effective January 1, 1997, the Company has determined that the local currency
is the functional currency for most of its subsidiaries outside of the U.S.
The U.S. dollar will continue to be the functional currency for subsidiaries
in highly inflationary economies. This change did not have a material impact
on the Company's statement of financial position as of January 1, 1997.
Restructuring Charges and Other
- -------------------------------
In December 1995, the Company announced a plan to make fundamental changes in
its operating structure. This plan features three principal components --
program reductions in certain product, research and manufacturing areas;
strategic refocusing of the Company's digital imaging businesses for the
medical diagnostic and graphic arts markets; and a reduction in corporate
overhead expenses. The total pre-tax charge for restructuring and other
expenses related to this plan was $280.0 million. Of that amount, $110.0
million was recorded in the first quarter of 1996 and $170.0 million was
recorded in the fourth quarter of 1995. The December 1995 early retirement
and severance programs are expected to result in the elimination of a total
of approximately 1,570 positions worldwide (approximately 810 from
manufacturing and 760 from marketing, research, engineering and
administrative functions).
The 1996 first quarter pre-tax charge of $110.0 million represents the
balance of severance and pension enhancement costs and inventory write downs
related to the December 1995 program. In the first quarter of 1996, the pre-
tax costs related to the severance program were approximately $55.4 million.
Additionally, approximately $44.6 million represents enhanced retirement
benefits provided under the early retirement program that will be funded from
the Company's pension plans.
Total cash severance payments related to the December 1995 program will be
approximately $110.4 million. As of March 30, 1997, 1,289 of these
terminations and $80.2 million of related cash severance payments were made.
Approximately $14.0 million of related severance payments are expected to be
paid in the second quarter of 1997. The remaining balance of cash severance
payments of approximately $16.2 million is expected to be paid in the second
half of 1997.
6
<PAGE>
Legal Proceedings
- -----------------
Certain legal proceedings to which the Company is a party are discussed in
Part II, Item 1 of this filing on Form 10-Q.
Independent Auditors' Report
- ----------------------------
The March 30, 1997 and March 31, 1996 condensed consolidated financial
statements included in this filing on Form 10-Q have been reviewed by KPMG
Peat Marwick LLP, independent certified public accountants, in accordance
with established professional standards and procedures for such review. The
report by KPMG Peat Marwick LLP commenting upon their review of the condensed
consolidated financial statements appears on the following page.
New Accounting Standards
- ------------------------
In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standards No.128, "Earning Per Share" (FAS 128). FAS 128
supersedes Accounting Principle Board Opinion No.15 and specifies the
computation, presentation and disclosure requirements for earnings per share.
FAS 128 is effective for financial statements for both interim and annual
periods ending after December 15, 1997 and early application is not
permitted. Accordingly, the Company will apply FAS 128 for the quarter and
year ended December 31, 1997 and restate prior period information as required
under the statement. The Company does not expect the adoption of FAS 128 to
have a material impact on reported earnings per share.
7
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors
Polaroid Corporation
We have reviewed the condensed consolidated balance sheet of Polaroid
Corporation and subsidiaries as of March 30, 1997 and March 31, 1996, and the
related condensed consolidated statements of earnings, cash flows and changes
in common stockholders' equity for the three-month periods ended March 30,
1997 and March 31, 1996. These condensed consolidated financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Polaroid Corporation and
subsidiaries as of December 31, 1996, and the related consolidated statements
of earnings, cash flows and changes in common stockholders' equity for the
year then ended (not presented herein); and in our report dated January 28,
1997, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1996, is fairly
stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
April 15, 1997
8
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
------------------------------------------------
First Quarter Results
- ---------------------
Worldwide sales of Polaroid Corporation and its subsidiaries were $457.5
million in the first quarter of 1997 compared with sales of $461.1 million in
the first quarter of 1996. In the first quarter of 1997, worldwide shipments
of instant film increased slightly and worldwide shipments of instant cameras
decreased moderately compared with the same period last year. Worldwide
shipments of conventional film were substantially higher and worldwide
shipments of videotapes were slightly lower in the first quarter of 1997 than
in the first quarter of 1996.
In the first quarter of 1997, sales in the United States were $189.3 million,
an increase of 6% compared with $178.0 million in the first quarter of 1996.
U.S. shipments of instant film increased slightly in the first quarter of
1997 compared to the same period a year ago. Shipments of instant cameras
were up substantially in the first quarter of 1997 compared to the first
quarter of 1996.
International sales decreased 5% to $268.2 million in the first quarter of
1997 from $283.1 million in the same period a year ago, primarily due to the
negative impact of foreign currency translation. Excluding the impact of
exchange, strong performances in the Asia Pacific region, particularly Japan,
as well as in Mexico, more than offset a decline in Russia. Sales in
developing markets increased by double digit percentages in the first quarter
of 1997 compared to the same period a year ago. While the Company believes
that developing markets in total present particularly attractive
opportunities, such markets tend to be significantly less stable than more
established markets. There can be no assurance that developing markets will
continue to produce favorable results.
Gross margins as a percent of sales increased to 43% for the first quarter of
1997 from 39% for the first quarter of 1996. The increase in gross margin in
the first quarter of 1997 reflects the impact of savings from restructuring
and favorable pricing on instant film. Marketing, research, engineering and
administrative expenses in the first quarter of 1997 and 1996 were $178.5
million and $175.7 million, respectively.
In December 1995, the Company announced a plan to make fundamental changes in
its operating structure. This plan features three principal components --
program reductions in certain product, research and manufacturing areas;
strategic refocusing of the Company's digital imaging businesses for the
medical diagnostic and graphic arts markets; and a reduction in corporate
overhead expenses. The total pre-tax charge for restructuring and other
expenses related to this plan was $280.0 million. Of that amount, $110.0
million was recorded in the first quarter of 1996 and $170.0 million was
recorded in the fourth quarter of 1995. The December 1995 early retirement
and severance programs are expected to result in the elimination of a total
of approximately 1,570 positions worldwide (approximately 810 from
manufacturing and 760 from marketing, research, engineering and
administrative functions).
The 1996 first quarter pre-tax charge of $110.0 million represents the
balance of severance and pension enhancement costs and inventory write downs
related to the December 1995 program. In the first quarter of 1996, the pre-
tax costs related to the severance program were approximately $55.4 million.
Additionally, approximately $44.6 million represents enhanced retirement
benefits provided under the early retirement program that will be funded from
the Company's pension plans.
9
<PAGE>
First Quarter Results (continued)
- ---------------------------------
Total cash severance payments related to the December 1995 program will be
approximately $110.4 million. As of March 30, 1997, 1,289 of these
terminations and $80.2 million of related cash severance payments were made.
Approximately $14.0 million of related severance payments are expected to be
paid in the second quarter of 1997. The remaining balance of cash severance
payments of approximately $16.2 million is expected to be paid in the second
half of 1997.
Profit from operations was $19.2 million in the first quarter of 1997
compared to $4.5 million, excluding restructuring and other expenses of
$110.0 million, in the first quarter of 1996. The increase in operating
profit is primarily due to increased U.S. sales, reduced manufacturing costs
and continued improvement in reducing losses in the Company's digital imaging
businesses. Including the restructuring and other expenses, the loss from
operations was $105.5 million in the first quarter of 1996.
Other income was $17.3 million and $17.6 million in the first quarter of 1997
and 1996, respectively. In the first quarter of 1997, other income included
$15.8 million primarily attributable to the change in the Company's method of
applying Financial Accounting Standards Board Statement No. 52, "Foreign
Currency Translation" (FAS 52) for translating the financial results of most
of its foreign subsidiaries from dollar functional to local currency
functional. The change was adopted because of the Company's new operational
and financial structure in Europe and the increased globalization of the
Company's manufacturing since the initial adoption of FAS 52 in 1981. The
Company does not expect similar gains of this magnitude to recur. In the
first quarter of 1996, other income included a $15.5 million gain on the sale
of real estate. Interest expense was $11.4 million and $11.6 million in the
first quarter of 1997 and 1996, respectively.
For the first quarter of 1997, the effective tax rate was 37%, compared with
39% for the same period last year. The net after-tax foreign currency
exchange gain from balance sheet translation amounted to $9.9 million, or
$.22 per common share in the first quarter of 1997.
Net earnings for the first quarter of 1997 was $15.8 million, or $.35 primary
earnings per common share compared with a net loss of $60.7 million, or $1.33
primary loss per common share for the first quarter of 1996. Excluding the
net after-tax foreign currency exchange gain from balance sheet translation
in the first quarter of 1997, earnings per share were $.13 compared to $.07
loss per share before charges for restructuring and other expenses and a gain
on the sale of real estate in the first quarter of 1996.
Financial Liquidity and Capital Resources
- -----------------------------------------
As of March 30, 1997, the Company's cash and cash equivalents and short-term
investments amounted to $35.1 million, compared to $78.3 million at December
31, 1996. In addition, working capital decreased to $617.0 million at March
30, 1997 from $623.3 at December 31, 1996. The primary source for cash in the
first quarter of 1997 was net cash provided by financing activities. Capital
spending during the first quarter of 1997 of $28.0 million was less than
depreciation expense of $31.0 million. Total capital expenditures in 1997
are expected to be approximately $120.0 million.
10
<PAGE>
Financial Liquidity and Capital Resources (continued)
- -----------------------------------------------------
During the first quarter of 1997, the Company also expended cash to make
severance payments of approximately $12.8 million under the December 1995
severance program, to purchase $4.4 million of the Company's common stock and
to pay $6.7 million of dividends to common stockholders. Total cash
severance payments related to the December 1995 program will be approximately
$110.4 million of which approximately $14.0 million is expected to be paid in
the second quarter of 1997. The remaining balance of cash severance payments
of approximately $16.2 million is expected to be paid in the second half of
1997.
As of March 31, 1996, cash and cash equivalents and short-term investments
were $111.0 million and working capital was $683.3 million. During the
period from March 31, 1996 to March 30, 1997, net cash provided by operating
activities was more than offset by cash used by investing and financing
activities. Capital spending during the period from March 31, 1996 to March
30, 1997 was $127.5 million, which exceeded depreciation expense of $116.9
million. The Company expended cash during the twelve month period from March
31, 1996 to March 30, 1997 to make cash severance payments under the 1995
first quarter and the December 1995 severance programs, to purchase the
conversion rights of the Company's $140.0 million Subordinated Convertible
Debentures, to reduce borrowings, to purchase treasury stock, and to pay
dividends to common stockholders.
In the first quarter of 1997, the Company replaced its $150.0 million
committed line of credit with a $350.0 million committed line of credit. The
line of credit is available for general corporate purposes and expires in
2001. At the end of the first quarter of 1997 and 1996, there were no
borrowings under these facilities. Gross borrowings from uncommitted lines
of credit for international operations were $156.2 million and $158.3 million
at the end of the first quarter of 1997 and 1996, respectively. Cash balances
of $15.4 million at March 30, 1997 were required to support international
borrowings and no such balances were required at March 31, 1996. Additional
available, uncommitted lines of credit for international operations were
$74.4 million and $128.4 million at March 30, 1997 and March 31, 1996,
respectively. As of March 30, 1997 and March 31, 1996, additional available,
uncommitted lines of credit for U.S operations were $190.0 million and $160.0
million, respectively, and there were no borrowings from these lines of
credit.
In January 1997, the Company issued $300.0 million of debt securities
consisting of $150.0 million 7-1/4% Notes due January 15, 2007 and $150 million
6_% Notes due January 15, 2002. The net proceeds from the sale of the Notes
were used primarily for the payment of $150.0 million principal amount of 7-1/4%
Notes due January 15, 1997 and to exercise its right to repurchase the
remaining principal amount of $139.5 million Debentures. The Company also has
available $200.0 million of unsold debt securities remaining from its
existing shelf registration available for general corporate purposes. The
Company's available borrowing capacity is limited by certain debt covenants.
During the first quarter of 1997, the Company repurchased 100,000 shares of
its common stock for $4.4 million. In the first quarter of 1996, the Company
repurchased 135,000 shares of its common stock for $5.5 million. As of March
30, 1997, the unexpended balance under the Company's $100.0 million common
stock repurchase program, which was approved by the Board of Directors in
January 1995, was $37.2 million. The Company may repurchase its common stock
on the open market, in privately negotiated transactions or otherwise (which
may include transactions with Polaroid stock option holders and with Polaroid
retirement plans, including the employee stock ownership plan). The timing
and amounts of any future purchases under this program depend upon many
factors, including market conditions as well as the Company's business and
financial condition.
11
<PAGE>
Financial Liquidity and Capital Resources (continued)
- -----------------------------------------------------
The Company believes that its borrowing capacity and other existing corporate
resources are adequate for at least the next twelve months to meet working
capital needs, to fund planned capital expenditures, to pursue future growth
opportunities, and to fund other corporate requirements, including cash
severance payments for the December 1995 restructuring program.
Foreign Currency Exchange
- -------------------------
The Company generates a substantial portion of its revenues in international
markets, which subjects its operations to the exposure of currency exchange
fluctuations. The impact of currency fluctuations can be positive or negative
in any given period. The Company's ability to counteract currency exchange
movement is primarily dependent on pricing.
Effective January 1, 1997, the Company has determined that the local currency
is the functional currency for most of its subsidiaries outside of the U.S.
The U.S. dollar will continue to be the functional currency for subsidiaries
in highly inflationary economies.
To minimize the adverse impact of currency fluctuations on its net assets
denominated in a currency other than its functional currency (nonfunctional),
the Company may engage in nonfunctional currency-denominated borrowings. The
Company determines the aggregate amount of such borrowings based on its
forecast of the Company's nonfunctional net asset position and the relative
strength of the functional currency as compared to nonfunctional currencies.
These borrowings create nonfunctional currency-denominated liabilities that
hedge the Company's nonfunctional currency-denominated net assets. Upon
receipt of the borrowed nonfunctional currency-denominated funds, the Company
converts those funds to the functional currency at the spot exchange rate.
Exchange gains and losses on the nonfunctional currency-denominated
borrowings are recognized in earnings as incurred. At March 30, 1997, the
amount of the Company's outstanding short-term debt incurred for hedging
purposes was $115.5 million.
From time to time, the Company may use over-the-counter currency exchange
swaps to reduce the interest expense incurred through the borrowings
described above and to replace the hedge created by those borrowings. When a
currency exchange swap is used to replace a hedge, the currency received by
the Company in the spot market component of the currency exchange swap is
used to close out the borrowings and, simultaneously, the hedge is
reinstituted through a forward contract (not exceeding six months). The net
interest value of the currency exchange swap contract is amortized to
earnings over the life of the contract. Exchange gains or losses on the
currency obligation component of the forward contract are recognized in
earnings as incurred in each accounting period. The Company does not enter
into currency exchange swaps for trading purposes. There were no currency
exchange swap contracts outstanding at March 30, 1997.
12
<PAGE>
Foreign Currency Exchange (continued)
- -------------------------------------
When the Company may not have sufficient flexibility to increase prices in
the local currency to reflect any appreciation of the U.S. dollar, the
Company may, from time to time, also purchase U.S. dollar call options. The
term of these call options typically does not exceed one year. The Company's
purchase of call options allows it to protect a portion of its expected
foreign currency-denominated revenues from adverse foreign currency exchange
movement. The Company does not buy call options which can be exercised prior
to the expiration date, nor does it write options or purchase call options
for trading purposes. The Company defers premiums and any gains for its call
options activity until the option exercise date. No option contracts were
outstanding at March 30, 1997.
The Company maintains a Monetary Control Center (the MCC), which operates
under written policies and procedures defining day-to-day operating
guidelines, including exposure limits, to contract for the nonfunctional
currency-denominated borrowings, foreign exchange swaps and call options
described above. The MCC is subject to random independent audits and reports
to a supervisory committee comprised of members of the Company's management.
The MCC publishes monthly reports to the Company's management detailing the
foreign currency activities it has engaged in for the prior month.
Impact of Inflation
- -------------------
Inflation continues to be a factor in many countries in which the Company
does business. The Company's pricing strategy has offset to a considerable
degree inflation and normal cost increases. The overall inflationary impact
on earnings has been immaterial.
New Accounting Standards
- ------------------------
In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standards No.128, "Earning Per Share" (FAS 128). FAS 128
supersedes Accounting Principle Board Opinion No.15 and specifies the
computation, presentation and disclosure requirements for earnings per share.
FAS 128 is effective for financial statements for both interim and annual
periods ending after December 15, 1997 and early application is not
permitted. Accordingly, the Company will apply FAS 128 for the quarter and
year ended December 31, 1997 and restate prior period information as required
under the statement. The Company does not expect the adoption of FAS 128 to
have a material impact on reported earnings per share.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. - Legal Proceedings
---------------------------
The Company, together with other parties, is currently designated a
Potentially Responsible Party (PRP) by the United States Environmental
Protection Agency and certain state agencies with respect to the response
costs for environmental remediation at several sites. The Company believes
that its potential liability with respect to any site and with respect to all
sites in the aggregate will not have a materially adverse effect on the
financial condition or operating results of the Company.
Due to a wide range of estimates with regard to response costs at these sites
and various other uncertainties, the Company cannot firmly establish its
ultimate liability concerning these sites. In each case in which the Company
is able to determine its likely exposure, such amount has been included in
the Company's reserve for environmental liabilities. Where a range of
comparably likely exposures exists, the Company has included in its reserve
the minimum amount of the range. The Company's aggregate reserve for these
liabilities as of March 30, 1997 and March 31, 1996 was $4.0 million and $5.2
million, respectively. The Company currently estimates that the majority of
the $4.0 million amount reserved for environmental liabilities on March 30,
1997 will be payable over the next two to three years. The Company's analysis
of data which underlies its establishment of this reserve is undertaken on a
quarterly basis. The reserve for such liability does not provide for
associated litigation costs, which, if any, are expected to be
inconsequential in comparison with the amount of the reserve. The Company
will continue to accrue in its reserve such amounts as management believes
appropriate from time to time as circumstances warrant. This reserve does not
take into account potential recoveries from third parties.
The Company reviews its recurring internal expenditures on environmental
matters, as well as capital expenditures related to environmental compliance,
on a monthly basis, and reviews its third-party expenditures on environmental
matters on a quarterly basis. The Company believes that these expenditures
have not had and will not have a materially adverse effect on the financial
condition or operating results of the Company.
Federal law provides that PRPs may be held jointly and severally liable for
response costs. Based on current estimates of those costs and after
consideration of the potential estimated liabilities of other PRPs with
respect to those sites and their respective estimated levels of financial
responsibility, the Company does not believe its potential liability will be
materially enlarged by the fact that the liability is joint and several.
The Company is involved in various other legal proceedings and claims arising
in the ordinary course of business. Management believes that the disposition
of these matters will not have a materially adverse effect on the financial
condition or results of operations of the Company.
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits:
(4) Indenture dated as of January 9, 1997 between Polaroid
Corporation and State Street Bank and Trust Company, as
Trustee, including form of Note.
(10.1) $350,000,000 Credit Agreement dated as of March 19, 1997 among
Polaroid Corporation, Morgan Guaranty Trust Company of New
York, as Agent, and Banks listed therein.
(10.2) The Polaroid Board of Directors Stock Plan, effective January
1, 1997 dated as of March 27, 1997.
(10.3) The Polaroid Board of Directors Retirement Plan, effective
January 1,1997 as amended May 12, 1997.
(10.4) The 1993 Polaroid Stock Incentive Plan, effective March 19,
1997 as amended March 27, 1997.
(10.5) Executive Deferred Compensation Plan, effective January 1, 1997
dated as of May 12, 1997.
(10.6) Polaroid Non-Qualified Deferred Compensation Trust dated as of
March 31, 1997 between Polaroid Corporation and State Street
Bank and Trust Company.
(10.7) Employment Agreement dated as of April 29, 1997 between
Polaroid Corporation and Serafino Posa.
(10.8) Employment Agreement dated as of May 12, 1997 between Polaroid
Corporation and Thomas M. Lemberg.
(10.9) Employment Agreement amended and restated as of May 12, 1997
between Polaroid Corporation and Gary T. DiCamillo.
(10.10) Change in Control Severance Agreement dated as of April 25,
1997 between Polaroid Corporation and William J. O'Neill, Jr.
(10.11) Change in Control Severance Agreement dated as of April 25,
1997 between Polaroid Corporation and Carole J. Uhrich.
(10.12) Change in Control Severance Agreement dated as of April 25,
1997 between Polaroid Corporation and Robert M. Delahunt.
(11) Computation of earnings per share.
(15) Letter from KPMG Peat Marwick LLP re unaudited interim
financial information.
(27) Financial Data Schedule
Exhibits are not included in copies of this Form 10-Q except those copies
filed with the Securities and Exchange Commission. A copy of these exhibits
will be furnished to stockholders upon written request.
(b) Reports on Form 8-K:
During the first quarter of 1997, the Company did not file any
reports on Form 8-K.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POLAROID CORPORATION
-----------------------------------
(Registrant)
May 12, 1997 /s/ William J. O'Neill, Jr.
------------ -----------------------------------
William J. O'Neill, Jr.
Executive Vice President and
Chief Financial Officer
16
Exhibit 4
===========================================================================
POLAROID CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
as Trustee
INDENTURE
Dated as of January 9, 1997
Providing for the Issuance of
Debt Securities in Series
===========================================================================
<PAGE>
TABLE OF CONTENTS / 1
ARTICLE ONE
Definitions and Other Provisions of General Application
SECTION 101. Definitions 1
SECTION 102. Compliance Certificates and Opinions 9
SECTION 103. Form of Documents Delivered to Trustee 10sss
SECTION 104. Acts of Holders 10
SECTION 105. Notices, etc., to Trustee and Company 12
SECTION 106. Notice to Holders; Waiver 12
SECTION 107. Conflict with Trust Indenture Act 13
SECTION 108. Effect of Headings and Table of Contents 13
SECTION 109. Successors and Assigns 13
SECTION 110. Separability Clause 13
SECTION 111. Benefits of Indenture 13
SECTION 112. Governing Law 14
SECTION 113. Legal Holidays 14
SECTION 114. Moneys of Different Currencies
To Be Segregated 14
SECTION 115. Payment To Be in Proper Currency 14
SECTION 116. Language of Notices, etc 14
SECTION 117. Changes in Exhibits 15
ARTICLE TWO
Issuance of Securities
SECTION 201. Creation of Securities in Amount Unlimited 15
- --------------------------
1/ This table of contents shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
Contents, P. 2
SECTION 202. Documents Required for Issuance of Each Series of
Securities Other than Medium-Term Debt
Securities 15
ARTICLE THREE
Issuance of Medium-Term Debt Securities
SECTION 301. Documents Required for Issuance of Each Series of
Medium-Term Debt Securities 19
SECTION 302. Form of Medium-Term Debt Securities 23
ARTICLE FOUR
The Securities
SECTION 401. Form and Denomination 23
SECTION 402. Execution, Delivery, Dating
and Authentication 24
SECTION 403. Temporary Securities 25
SECTION 404. Registration, Registration of
Transfer and Exchange 27
SECTION 405. Mutilated, Destroyed, Lost and
Stolen Securities 30
SECTION 406. Payment of Interest; Interest
Rights Preserved 31
SECTION 407. Persons Deemed Owners 32
SECTION 408. Cancelation 32
SECTION 409. Computation of Interest 33
SECTION 410. Currency and Manner of Payment in Respect of
in Respect of Securities 33
SECTION 411. Securities in Global Form 37
SECTION 412. Registered Global Notes 38
ARTICLE FIVE
Satisfaction and Discharge
SECTION 501. Satisfaction and Discharge of Indenture in Respect of
Any Series of Securities 40
SECTION 502. Application of Trust Money 41
SECTION 503. Satisfaction, Discharge and Defeasance
of Securities of Any Series 41
SECTION 504. Reinstatement 43
SECTION 505. Definitions 43
<PAGE>
Contents, P. 3
ARTICLE SIX
Remedies
SECTION 601. Events of Default 44
SECTION 602. Acceleration of Maturity;
Rescission and Annulment 45
SECTION 603. Collection of Indebtedness and Suits
for Enforcement by Trustee 46
SECTION 604. Trustee May File Proofs of Claim 47
SECTION 605. Trustee May Enforce Claims Without
Possession of Securities 47
SECTION 606. Application of Money Collected 47
SECTION 607. Limitation on Suits 48
SECTION 608. Unconditional Right of Holders
To Receive Principal,Premium and Interest 48
SECTION 609. Restoration of Rights and Remedies 49
SECTION 610. Rights and Remedies Cumulative 49
SECTION 611. Delay or Omission Not Waiver 49
SECTION 612. Control by Holders 49
SECTION 613. Waiver of Past Defaults 49
SECTION 614. Undertaking for Costs 50
SECTION 615. Waiver of Stay or Extension Laws 50
ARTICLE SEVEN
The Trustee
SECTION 701. Certain Duties and Responsibilities 50
SECTION 702. Notice of Defaults 51
SECTION 703. Certain Rights of Trustee 51
SECTION 704. Not Responsible for Recitals or
Issuance of Securities 52
SECTION 705. May Hold Securities 52
SECTION 706. Money Held in Trust 52
SECTION 707. Compensation and Reimbursement 52
SECTION 708. Disqualification; Conflicting Interests 53
SECTION 709. Corporate Trustee Required; Eligibility 53
SECTION 710. Resignation and Removal;
Appointment of Successor 54
<PAGE>
Contents, P. 4
SECTION 711. Acceptance of Appointment by Successor 55
SECTION 712. Merger, Conversion, Consolidation or
Succession to Business 56
SECTION 713. Preferential Collection of Claims
Against Company 56
SECTION 714. Judgment Currency 56
SECTION 715. Appointment of Authenticating Agent 57
ARTICLE EIGHT
Holders' Lists and Reports by Trustee and Company
SECTION 801. Company To Furnish Trustee Names
and Addresses of Holders 58
SECTION 802. Preservation of Information;
Communications to Holders 59
SECTION 803. Reports by Trustee 59
SECTION 804. Reports by Company 59
ARTICLE NINE
Consolidation, Merger, Conveyance or Transfer
SECTION 901. Company May Consolidate, etc., Only on
Certain Terms 60
SECTION 902. Successor Corporation Substituted 60
ARTICLE TEN
Supplemental Indentures
SECTION 1001. Supplemental Indentures Without
Consent of Holders 61
SECTION 1002. Supplemental Indentures with
Consent of Holders 62
SECTION 1003. Execution of Supplemental Indentures 63
SECTION 1004. Effect of Supplemental Indentures 63
SECTION 1005. Conformity with Trust Indenture Act 63
SECTION 1006. Reference in Securities to
Supplemental Indentures 63
ARTICLE ELEVEN
Covenants
SECTION 1101. Payment of Principal, Premium and Interest 64
SECTION 1102. Maintenance of Office or Agency 64
<PAGE>
Contents, P. 5
SECTION 1103. Money for Securities Payments
To Be Held in Trust 65
SECTION 1104. Restrictions on Secured Debt 66
SECTION 1105. Restrictions on Sales and Leasebacks 67
SECTION 1106. Statement by Officers as to Default 68
SECTION 1107. Waiver of Certain Covenants 68
SECTION 1108. Additional Amounts 68
ARTICLE TWELVE
Redemption of Securities
SECTION 1201. Applicability of Article 69
SECTION 1202. Election To Redeem; Notice to Trustee 69
SECTION 1203. Selection by Trustee of Securities
To Be Redeemed 70
SECTION 1204. Notice of Redemption 70
SECTION 1205. Deposit of Redemption Price 71
SECTION 1206. Securities Payable on Redemption Date 71
SECTION 1207. Securities Redeemed in Part 72
ARTICLE THIRTEEN
Sinking Funds
SECTION 1301. Applicability of Article 72
SECTION 1302. Satisfaction of Sinking Fund
Payments with Securities 72
SECTION 1303. Redemption of Securities for Sinking Fund 72
ARTICLE FOURTEEN
Meetings of Holders of Securities
SECTION 1401. Purposes for Which Meetings May Be Called 73
SECTION 1402. Call, Notice and Place of Meetings 73
SECTION 1403. Persons Entitled To Vote at Meetings 73
SECTION 1404. Quorum; Action 73
SECTION 1405. Determination of Voting Rights; Conduct and
Adjournment of Meetings 74
SECTION 1406. Counting Votes and Recording
Action of Meetings 75
<PAGE>
Contents, P. 6
EXHIBIT A Forms of Debt Securities
EXHIBIT B.1 Form of Certificate to be given by Euro-clear and CEDEL S.A. in
connection with the Exchange of a portion of Temporary Global
Security
EXHIBIT B.2 Form of Certificate to be given by Person entitled to receive
Bearer Security
INDENTURE dated as of January 9, 1997, between POLAROID
CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware (herein
called the "Company"), having its principal office at 549 Technology
Square, Cambridge, MA 02139, and STATE STREET BANK AND TRUST COMPANY, a
trust company duly organized and existing under the laws of the
Commonwealth of Massachusetts, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture
provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders of the Securities or
of series thereof, as follows:
ARTICLE ONE
Definitions and Other Provisions of General Application
SECTION 101. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted in the United
States of America at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally within an Article of this Indenture, may
be defined in that Article.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
<PAGE>
-2-
"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 the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Attributable Debt" means, as to any particular lease under which any
Person is at the time liable and at any date as of which the amount thereof
is to be determined, the total net amount of rent required to be paid by
such Person under such lease during the remaining primary term thereof,
discounted from the respective due dates thereof to such date at the
weighted average Yield to Maturity of the Securities outstanding hereunder,
such average being weighted by the principal amount of the Securities or,
in the case of Original Issue Discount Securities, the amount that would
become due hereunder in the event such Securities were declared due and
payable on the date of the determination. The net amount of rent required
to be paid under any such lease for any such period shall be the aggregate
amount of the rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of maintenance and
repairs, insurance, taxes, assessments, water rates and similar charges.
In the case of any lease which is terminable by the lessee upon the
payment of a penalty, such net amount shall also include the amount of such
penalty, but no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 715 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Authorized Newspaper" means a newspaper of general circulation in the
place of publication, printed in the official language of the country of
publication and customarily published on each Business Day, whether or not
published on Saturdays, Sundays or holidays. Whenever successive weekly
publications in an Authorized Newspaper are authorized or required
hereunder, they may be made (unless otherwise expressly provided herein) on
the same or different days of the week and in the same or different
Authorized Newspapers.
"Bearer Security" means any Security which is not registered in the
Security Register as to both principal and interest (including without
limitation any Security in temporary or definitive global bearer form).
"Board of Directors" means either the board of directors of the Company,
any officer of the Company duly authorized to act in the name of or on
behalf of that board or any committee consisting of one or more persons,
who need not be directors, duly authorized to act in the name of or on
behalf of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors (as hereinabove defined) and to be in
full force and effect on the date of such certification.
"Business Day", when used with respect to any Place of Payment or place
of publication, means each day on which commercial banks and foreign
exchange markets settle payments in such Place of Payment or place of
publication, or as otherwise specified for a series of Securities pursuant
to Section 202 or Section 301, as the case may be. Unless otherwise
specified for a series of Securities pursuant to Section 202 or
Section 301, as the case may be, when used with respect to Securities
bearing interest at a rate or rates determined by reference to London
interbank offered rates for deposits in U.S. Dollars, "Business Day" shall
exclude any day on which commercial banks and foreign exchange markets do
not settle payments in London.
<PAGE>
-3-
"Capital Stock", as applied to the stock of any corporation, means the
capital stock of every class whether now or hereafter authorized,
regardless of whether such capital stock shall be limited to a fixed sum or
percentage with respect to the rights of the holders thereof to participate
in dividends and in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of such corporation.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the execution of this instrument such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Depositary" has the meaning specified in Section 403.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request", "Request of the Company", "Company Order" or "Order of
the Company" means a written request or order signed in the name of the
Company by its Chairman of the Board, its President or a Vice President,
and by its Treasurer, an Assistant Treasurer, its Controller, an Assistant
Controller, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Component Currency" has the meaning specified in Section 410(i).
"Consolidated Net Tangible Assets" means total assets (less applicable
reserves and other properly deductible items) after deducting therefrom
(a) all current liabilities and (b) all goodwill, trade names, trademarks,
patents, organization expenses and other like intangibles, all as set forth
on the most recent balance sheet of the Company and its consolidated
Subsidiaries and computed in accordance with generally accepted accounting
principles.
"Conversion Date" has the meaning specified in Section 410(e).
"Conversion Rate" has the meaning specified in Section 714.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at the date hereof is located at 2 International
Place, Fourth Floor, Boston, MA 02110, Attention: Corporate Trust
Department, except that with respect to the presentation of Securities (or
Coupons, if any, representing an installment of interest) for payment or
for registration of transfer and exchange, such term shall mean the office
or the agency of the Trustee in New York, New York at which at any
particular time its corporate agency business shall be conducted.
"corporation" includes corporations, associations, companies and business
trusts.
"Coupon" or "coupon" means any interest coupon appertaining to a Bearer
Security.
<PAGE>
-4-
"Debt" means indebtedness for money borrowed.
"Defaulted Interest" has the meaning specified in Section 406.
"Discharged" has the meaning specified in Section 505.
"Dollar" means the coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and private
debts.
"Dollar Equivalent of the Currency Unit" has the meaning specified in
Section 410(h).
"Dollar Equivalent of the Foreign Currency" has the meaning specified in
Section 410(g).
"ECU" means the European Currency Unit as defined and revised from time
to time by the Council of the European Communities.
"Euro-clear" means the operator of the Euro-clear System.
"European Communities" means the European Economic Community, the
European Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 601.
"Exchange Rate Agent" means the entity appointed by the Company pursuant
to Section 104(g). Unless otherwise specified as contemplated by
Section 202 or Section 301, as the case may be, the Luxembourg Stock
Exchange shall act as Exchange Rate Agent for purposes of Section 410 in
the case of each series of Securities listed on the Luxembourg Stock
Exchange.
"Exchange Rate Officers' Certificate" means a telecopy or tested telex or
a certificate setting forth (i) the applicable Official Currency Unit
Exchange Rate and (ii) the Dollar or Foreign Currency or currency unit
amounts of principal, premium, if any, and interest, if any, respectively
(on an aggregate basis and on the basis of a Security having a principal
amount of 1,000 units in the relevant currency or currency unit), payable
on the basis of such Official Currency Unit Exchange Rate, sent (in the
case of a telecopy or telex) or executed (in the case of a certificate) by
the Controller or any Assistant Controller or by the Treasurer or any
Assistant Treasurer of the Company and delivered to the Trustee; such
telecopy, tested telex or certificate need not comply with Section 102.
"Finance Subsidiary" means a Subsidiary of the Company engaged primarily
in financing or assisting in financing the acquisition or disposition of
products of the Company or of a Subsidiary of the Company by dealers,
distributors or customers.
"Foreign Currency" means a currency issued by the government of any
country other than the United States of America.
"Foreign Government Securities" has the meaning specified in Section 505.
"Funded Debt" means (a) all indebtedness for money borrowed having a
maturity of more than 12 months from the date as of which the determination
is made or having a maturity of 12 months or less but which is by its terms
renewable or extendible beyond 12 months from such date at the option of
the borrower and (b) rental obligations payable more than 12 months from
such date under leases which are capitalized in accordance with generally
accepted accounting principles (such rental obligations to be included as
Funded Debt at the amount so capitalized and to be included for the
purposes of the definition of Consolidated Net Tangible Assets both as an
asset and as Funded Debt at the amount so capitalized).
<PAGE>
-5-
"Holder" or "holder" means, with respect to a Registered Security, the
Person in whose name at the time a particular Registered Security is
registered in the Security Register and, with respect to a Bearer Security
and/or a Coupon, the bearer thereof.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof and shall include the terms of particular series of Securities
established as contemplated by Section 202 or Section 301, as the case may
be.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Market Exchange Rate" has the meaning specified in Section 410(i).
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption, repayment
at the option of the Holder, required repurchase or otherwise.
"Medium-Term Debt Securities" has the meaning specified in Section 301.
"Medium-Term Debt Securities Certificate" shall mean a certificate signed
by the Chairman of the Board, the President, any Vice President, the
Treasurer, the Controller, any Secretary or Assistant Treasurer, Assistant
Controller or Assistant Secretary of the Company, or any other employee of
the Company designated by a Board Resolution as having the authority to
deliver a Medium-Term Debt Securities Certificate hereunder.
"Mortgage" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or any Vice President, and by the Treasurer, the
Controller, the Secretary or any Assistant Treasurer, Assistant Controller
or Assistant Secretary, of the Company, and delivered to the Trustee. Each
such Officers' Certificate shall contain the statements provided in Section
102 if and to the extent required by the provisions of such Section.
"Official Currency Unit Exchange Rate" means, with respect to any payment
to be made hereunder, the exchange rate between the relevant currency unit
and the currency or currency unit of payment calculated by the Exchange
Rate Agent for the Securities of the relevant series (in the case of ECU,
reported by the Commission of the European Communities and on the date
hereof based on the rates in effect at 2:30 p.m., Brussels time, on the
exchange markets of the Component Currencies of ECU), on the Business Day
(in the city in which such Exchange Rate Agent has its principal office)
immediately preceding delivery of any Exchange Rate Officers' Certificate.
<PAGE>
-6-
"Opinion of Counsel" means a written opinion of counsel (subject to
customary qualifications and limitations), who may be counsel for or an
employee of the Company. Each Opinion of Counsel shall contain the
statements provided in Section 102 if and to the extent required by the
provisions of such Section.
"Original Issue Discount Security" means any Security which provides for
an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to
Section 602.
"Outstanding" or "outstanding", when used with respect to Securities,
means, as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered or
deemed delivered to the Trustee for cancelation;
(ii) Securities for whose payment or redemption money in the
necessary amount and in the required currency or currency unit has been
theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made; and
(iii) Securities which have been paid pursuant to Section 405 or in
exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid obligations
of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or
whether a quorum is present at a meeting of Holders of Outstanding
Securities or the number of votes entitled to be cast by each Holder of a
Security in respect of such Security at any such meeting, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon a
declaration of acceleration of the Maturity thereof pursuant to
Section 602, (ii) the principal amount of a Security denominated in a
Foreign Currency or currency unit shall be the Dollar equivalent obtained
by converting the specified Foreign Currency or currency unit into Dollars
at the Market Exchange Rate on the date of such determination (or, in the
case of a Security denominated in a currency unit for which there is no
Market Exchange Rate, the Dollar equivalent obtained by adding together the
results obtained by converting the Specified Amount of each Component
Currency into Dollars at the Market Exchange Rate for each such Component
Currency on the date of such determination) of the principal amount (or, in
the case of an Original Issue Discount Security, of the amount determined
as provided in (i) above) of such Security, and (iii) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee
knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor.
<PAGE>
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"Paying Agent" means the Trustee or any other Person authorized by the
Company to pay the principal of (and premium, if any) or interest, if any,
on any Securities on behalf of the Company.
"Person" or "person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, estate, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if
any) and interest, if any, on the Securities of that series are payable as
specified in accordance with Section 202 or Section 301, as the case may
be.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 405 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed
to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Principal Property" means any real estate or any manufacturing or
processing plant or warehouse owned or leased by the Company or any
Restricted Subsidiary of the Company which is located within the United
States of America and the gross book value (including related land and
improvements thereon and all machinery and equipment included therein
without deduction of any depreciation reserves) of which on the date as of
which the determination is being made exceeds 2% of Consolidated Net
Tangible Assets, other than (a) any property which in the opinion of the
Board of Directors is not of material importance to the total business
conducted by the Company as an entirety or (b) any portion of a particular
property which is found by the Board of Directors not to be of material
importance to the use or operation of such property.
"Realty Subsidiary" means a Subsidiary of the Company engaged primarily
in the development and sale or financing of real property.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price, in the currency or currency unit in which such
Security is payable, at which it is to be redeemed pursuant to this
Indenture.
"Registered Global Note" has the meaning specified in Section 412.
"Registered Security" means any Security registered in the Security
Register (including without limitation any Security in temporary or
definitive global registered form).
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Registered Securities of any series means the date
specified for that purpose as contemplated by Section 202 or Section 301,
as the case may be, which date shall be, unless otherwise specified
pursuant to Section 202 or Section 301, as the case may be, the fifteenth
day preceding such Interest Payment Date, whether or not such day shall be
a Business Day.
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"Required Currency" has the meaning specified in Section 115.
"Responsible Trust Officer", when used with respect to the Trustee, means
any officer in the Corporate Trust Office 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 Subsidiary" means a Subsidiary of the Company
(a) substantially all the property of which is located, or substantially
all the business of which is carried on, within the United States of
America and (b) which owns a Principal Property, but does not include a
Realty Subsidiary or a Finance Subsidiary.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities (including Medium-Term
Debt Securities) authenticated and delivered under this Indenture and, in
the case of any Bearer Security, shall include where appropriate any
Coupons appertaining thereto.
"Security Register" has the meaning specified in Section 404.
"Security Registrar" means the Person appointed as the initial Security
Registrar in Section 404 or any Person appointed by the Company as a
successor or replacement Security Registrar.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 406.
"Specified Amount" has the meaning specified in Section 410(i).
"Stated Maturity", when used with respect to any Security (or Coupon, if
any, representing an installment of interest) or any installment of
principal thereof or interest thereon, means the date specified in such
Security (or Coupon) as the fixed date on which the principal of such
Security or such installment of principal or interest is due and payable.
"Subsidiary" of any specified corporation means any corporation at least
a majority of whose outstanding Voting Stock shall at the time be owned,
directly or indirectly, by the specified corporation or by one or more of
its Subsidiaries, or both.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, "Trustee"
as used with respect to the Securities of any series shall mean the Trustee
with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990, and as in force at the date as
of which this instrument was executed, except as provided in Section 1005.
"United States" means the United States of America (including the
states and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
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"U.S. Depositary" means a clearing agency registered under the Securities
Exchange Act of 1934, as amended, or any successor thereto, which shall in
either case be designated by the Company pursuant to Section 202 or
Section 301, as the case may be, until a successor U.S. Depositary shall
have become such pursuant to the applicable provisions of this Indenture,
and thereafter "U.S. Depositary" shall mean or include each Person who is
then a U.S. Depositary hereunder, and if at any time there is more than one
such Person, "U.S. Depositary" as used with respect to the Securities of
any series shall mean the U.S. Depositary with respect to the Securities of
that series.
"U.S. Government Obligations" has the meaning specified in Section 505.
"Valuation Date" has the meaning specified in Section 410(e).
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word
or words added before or after the title "vice president".
"Voting Stock", as applied to the stock of any corporation, means stock
of any class or classes (however designated) having by the terms thereof
ordinary voting power to elect a majority of the members of the board of
directors (or other governing body) of such corporation other than stock
having such power only by reason of the happening of a contingency.
"Yield to Maturity" of any Security means the yield to maturity on such
Security, calculated at the time of issuance of such Security, or if
applicable, at the most recent redetermination of interest on such Security
in accordance with accepted financial practice.
SECTION 102. Compliance Certificates and Opinions. Upon any application
or request by the Company to the Trustee to take any action under any
provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of
this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Unless expressly otherwise specified with respect to any certificate or
opinion provided for in this Indenture, every certificate or opinion with
respect to compliance with a condition or covenant provided for in this
Indenture (other than annual certificates provided pursuant to
Section 1106) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) 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;
(3) a statement that, in the opinion of each such individual, he
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 complied with; and
<PAGE>
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(4) a statement as to whether or not, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate
or opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
SECTION 104. Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders of Securities of any series may
be embodied in and evidenced by (i) one or more instruments of
substantially similar tenor signed by such Holders in person or by proxies
duly appointed in writing, (ii) the record of such Holders voting in favor
thereof, either in person or by proxies duly appointed in writing, at any
meeting of Holders of Securities of such series duly called and held in
accordance with the provisions of Article Fourteen, or (iii) a combination
of any such record and one or more instruments of substantially similar
tenor signed by such Holders in person or by proxies duly appointed in
writing. Except as herein otherwise expressly provided, such action shall
become effective when such record and/or instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such record or instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments or so voting at
any such meeting. Proof of execution of any such instrument or of a writing
appointing any such proxy shall be sufficient for any purpose of this
Indenture and (subject to Section 701) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section. The record
of any meeting of Holders of Securities shall be proved in the manner
provided in Section 1406.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority.
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(c) The principal amount and serial numbers of Bearer Securities held by
any Person, and the date of holding the same, may be proved by the
production of such Bearer Securities or by a certificate executed by any
trust company, bank, banker or other depository, wherever situated, showing
that at the date therein mentioned such Person had on deposit with such
depository, or exhibited to it, the Bearer Securities therein described; or
such facts may be proved by the certificate or affidavit of the Person
holding such Bearer Securities, if such certificate or affidavit is deemed
by the Trustee to bc satisfactory. The Trustee and the Company may assume
that such ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the same
Bearer Security is produced, (2) such Bearer Security is produced to the
Trustee by some other Person, (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no
longer Outstanding.
(d) The fact and date of execution of any such instrument or writing
pursuant to clause (c) above, the authority of the Person executing the
same and the principal amount and serial numbers of Bearer Securities held
by the Person so executing such instrument or writing and the date of
holding the same may also be proved in any other manner which the Trustee
deems sufficient; and the Trustee may in any instance require further proof
with respect to any of the matters referred to in this clause.
(e) The principal amount and serial numbers of Registered Securities
held by any Person and the date of holding the same shall be proved by the
Security Register.
(f) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of a Holder shall bind every future Holder of the same
Security and/or Coupon and the Holder of every Security and/or Coupon
issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof in respect of anything done, omitted or suffered to be done
by the Trustee or the Company in reliance thereon, whether or not notation
of such action is made upon such Security and/or Coupon.
(g) Whenever any Act is to be taken hereunder by the Holders of
two or more series of Securities denominated in different currencies (or
currency units), then, for the purpose of determining the principal amount
of Securities held by such Holders, the aggregate principal amount of the
Securities denominated in a Foreign Currency (or any currency unit) shall
be deemed to be that amount determined by the Company or by an authorized
Exchange Rate Agent and evidenced to the Trustee by an Officers'
Certificate as of the date the taking of such Act by the Holders of the
requisite percentage in principal amount of the Securities is evidenced to
the Trustee to be equal to the Dollar equivalent obtained by converting the
specified Foreign Currency or currency unit into Dollars at the Market
Exchange Rate on such date (or, in the case of a Security denominated in a
currency unit for which there is no Market Exchange Rate, the Dollar
equivalent obtained by adding together the results obtained by converting
the Specified Amount of each Component Currency into Dollars at the Market
Exchange Rate for each such Component Currency on such date) of the
principal amount (or, in the case of an Original Issue Discount Security,
the principal amount thereof that would be due and payable as of the
declaration of acceleration of the Maturity thereof pursuant to
Section 602) of such Security. An Exchange Rate Agent may be authorized in
advance or from time to time by the Company. Any such determination by the
Company or by any such Exchange Rate Agent shall be conclusive and binding
on all Holders, the Company and the Trustee, and neither the Company nor
any such Exchange Rate Agent shall be liable therefor in the absence of bad
faith.
<PAGE>
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(h) If the Company shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or pursuant to a
Board Resolution, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as
of such record date; provided that no such authorization, agreement or
consent by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not
later than six months after the record date.
SECTION 105. Notices, etc., to Trustee and Company. Any request, demand,
authorization, direction, notice, consent, waiver or other Act of Holders
or other document provided or permitted by this Indenture to be made upon,
given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be made, given,
furnished or filed in writing to or with the Trustee at its Corporate
Trust Office and unless otherwise herein expressly provided, any such
document shall be deemed to be sufficiently made, given, furnished or
filed upon its receipt by a Responsible Trust Officer of the Trustee, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and delivered in person, mailed, first-class postage
prepaid, or sent by overnight courier or, until such time as the Company
shall have notified the Trustee in writing that it shall no longer
accept delivery of notice by telecopy or telex, given by telecopy or by
telex (with answerback received) to the Company addressed to it at the
address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to
the Trustee by the Company, or at its telecopy or telex number from time
to time furnished in writing to the Trustee expressly for purposes of
this Indenture, Attention: Secretary.
SECTION 106. Notice to Holders; Waiver. (a) Where this Indenture provides
for notice to Holders of any event:
(i) if any of the Securities affected by such event are Registered
Securities, such notice shall be sufficiently given (unless otherwise
herein expressly provided or unless otherwise specified in such
Securities) if in writing and delivered in person, mailed, first-class
postage prepaid or sent by overnight courier, to each Holder affected by
such event, at his address as it appears in the Security Register,
within the time prescribed for the giving of such notice, and
(ii) if any of the Securities affected by such event are Bearer
Securities, such notice shall be sufficiently given (unless otherwise
herein expressly provided or unless otherwise specified in such
Securities) if (A) published once in an Authorized Newspaper in New York
City and London and, if applicable, in Luxembourg or such other place of
publication as may be required pursuant to the rules and regulations of
any securities exchange on which such Securities are listed, and (B)
delivered in person, mailed, first-class postage prepaid or sent by
overnight courier to such Persons whose names were previously filed with
the Trustee, within the time prescribed for the giving of such notice.
<PAGE>
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In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice to Holders of
Registered Securities in the manner specified above, then such notification
as shall be made with the approval of the Trustee shall constitute a
sufficient notification for every purpose hereunder. In case by reason of
the suspension of publication of any Authorized Newspaper or Authorized
Newspapers or by reason of any other cause it shall be impracticable to
publish any notice to Holders of Bearer Securities as provided above, then
such notification to Holders of Bearer Securities as shall be given with
the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder.
(b) In any case where notice to a Holder of Registered Securities is
given in any manner specified in paragraph (a) above, such notice shall be
conclusively presumed to have been duly given, whether or not such Holder
receives such notice. In any case where notice to Holders of Registered
Securities is given in any manner specified in paragraph (a) above, neither
the failure to deliver, mail or send such notice, nor any defect in any
notice so mailed or sent, to any particular Holder of a Registered Security
shall affect the sufficiency of such notice with respect to other Holders
of Registered Securities or the sufficiency of any notice to Holders of
Bearer Securities given as provided herein. Neither the failure to give
notice by publication to Holders of Bearer Securities as provided in
paragraph (a) above, nor any defect in any notice so published, shall
affect the sufficiency of any notice to Holders of Registered Securities
given as provided herein.
(c) Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent
of such notice. Waivers of notice by Holders of Securities shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
SECTION 107. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with the duties imposed by any of
Sections 310 to 317, inclusive, of the Trust Indenture Act through
operation of Section 318(c) thereof, such imposed duties shall control.
SECTION 108. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 109. Successors and Assigns. All covenants and agreements in this
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 110. Separability Clause. In case any provision in this Indenture
or in the Securities 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 111. Benefits of Indenture. Nothing in this Indenture or in the
Securities or Coupons, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder and the Holders, any
benefit or any legal or equitable right, remedy or claim under this
Indenture.
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SECTION 112. Governing Law. THIS INDENTURE AND THE SECURITIES AND COUPONS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
SECTION 113. Legal Holidays. Except as otherwise specified as
contemplated by Section 202 or Section 301, as the case may be, in any case
where any Interest Payment Date, Redemption Date, scheduled date of
repayment at the option of the Holder, scheduled date of required
repurchase or Stated Maturity of any Security or Coupon shall not be a
Business Day at any Place of Payment, then (notwithstanding any other
provision of this Indenture or of such Security or Coupon) payment of
interest or principal (and premium, if any) need not be made at such Place
of Payment on such date, but may be made on the next succeeding Business
Day at such Place of Payment with the same force and effect as if made on
the Interest Payment Date, Redemption Date, scheduled date of repayment at
the option of the Holder or scheduled date of required repurchase, or at
the Stated Maturity, as the case may be, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date, scheduled date of repayment at the option of the Holder, scheduled
date of required repurchase or Stated Maturity, as the case may be, to the
next succeeding Business Day at such Place of Payment if such payment is
made or duly provided for on such Business Day.
SECTION 114. Moneys of Different Currencies To Be Segregated. The Trustee
shall segregate moneys, funds and accounts held by the Trustee hereunder in
one currency (or currency unit) from any moneys, funds or accounts in any
other currencies (or currency units), notwithstanding any provision herein
which would otherwise permit the Trustee to commingle such amounts.
SECTION 115. Payment To Be in Proper Currency. In the case of any
Security denominated in any particular currency or currency unit (the
"Required Currency"), subject to applicable law and except as otherwise
provided herein, therein or in or pursuant to the related Board Resolution,
Medium-Term Debt Securities Certificate or supplemental indenture, the
obligation of the Company to make any payment of principal, premium or
interest thereon shall not be discharged or satisfied by any tender by the
Company, or recovery by the Trustee, in any currency or currency unit other
than the Required Currency, except to the extent that such tender or
recovery shall result in the Trustee's timely holding the full amount of
the Required Currency then due and payable. If any such tender or recovery
is made in other than the Required Currency, the Trustee may take such
actions as it considers appropriate to exchange such other currency or
currency unit for the Required Currency. The costs and risks of any such
exchange, including without limitation the risks of delay and exchange rate
fluctuation, shall be borne by the Company, the Company shall be liable for
any shortfall or delinquency in the full amount of the Required Currency
then due and payable, and in no circumstances shall the Trustee be liable
therefor. The Company hereby waives any defense of payment based upon any
such tender or recovery which is not in the Required Currency, or which,
when exchanged for the Required Currency by the Trustee, is less than the
full amount of the Required Currency then due and payable
SECTION 116. Language of Notices, etc. Any request, demand,
authorization, direction, notice, consent or waiver required or permitted
under this Indenture shall be in the English language, except that any
published notice may be in an official language of the country of
publication.
SECTION 117. Changes in Exhibits. At any time and from time to
time, the Company may substitute a new form, or add new forms, of the
Exhibits hereto. Such substitution shall be effective upon receipt by the
Trustee of such new form of Exhibit and a Board Resolution or Officers'
Certificate adopting such new form of Exhibit, and thereafter all
references in this Indenture to such Exhibit shall be deemed to refer to
such new form of Exhibit.
<PAGE>
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ARTICLE TWO
Issuance of Securities
SECTION 201. Creation of Securities in Amount Unlimited. An unlimited
aggregate principal amount of Securities may be issued pursuant to this
Article Two and, in the case of Medium-Term Debt Securities, pursuant to
Article Three. The Securities (including Medium-Term Debt Securities) may
be authenticated and delivered, as authorized by the Board of Directors, in
an unlimited number of series.
SECTION 202. Documents Required for Issuance of Each Series of Securities
Other than Medium-Term Debt Securities. At any time and from time to time,
Securities of each series created pursuant to the provisions of this
Article Two may be executed by the Company and delivered to the Trustee and
shall be authenticated by the Trustee and delivered to, or upon the order
of, the Company upon receipt by the Trustee of the following:
(a) A Board Resolution or Board Resolutions authorizing the issuance
of the Securities of the series, and specifying, to the extent
applicable, the following terms:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
(except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of
the series pursuant to Section 403, 404, 405, 1006 or 1207 and except
for any Securities which, pursuant to Section 402, are deemed never to
have been authenticated and delivered hereunder);
(3) the date or dates on which the principal (and premium, if
any) of any of the Securities of the series are payable or the method
of determination thereof;
(4) the rate or rates, or the method of determination thereof, at
which any of the Securities of the series shall bear interest, if any,
the date or dates from which such interest shall accrue, the Interest
Payment Dates on which such interest shall be payable and the Regular
Record Date for the interest payable on any Registered Securities on
any Interest Payment Date;
(5) the place or places where the principal of (and premium, if
any) and interest, if any, on any of the Securities and Coupons, if
any, of the series shall be payable and the office or agency for the
Securities of the series maintained by the Company pursuant to
Section 1102;
(6) the period or periods within which, the price or prices at
which and the terms and conditions upon which any of the Securities of
the series may be redeemed, in whole or in part, at the option of the
Company;
<PAGE>
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(7) the terms of any sinking fund and the obligation, if any, of
the Company to redeem, repay or purchase Securities of the series
pursuant to any sinking fund or analogous provisions, upon the
occurrence of certain events or at the option of a Holder thereof and
the period or periods within which, the price or prices at which and
the terms and conditions upon which Securities of the series shall be
so redeemed, repaid or purchased, in whole or in part;
(8) the terms of the obligation of the Company, if any, to permit
the conversion of the Securities of the series into stock or other
securities of the Company or of any other corporation;
(9) the terms, if any, for the attachment to Securities of the
series of warrants, options or other rights to purchase or sell
stock or other securities of the Company;
(10) if other than denominations of $1,000 and any integral
multiple thereof, if Registered Securities, and $5,000, if Bearer
Securities, for Securities denominated in Dollars, the denominations
in which the Securities of the series shall be issuable;
(11) if other than the principal amount thereof, the portion of
the principal amount of any of the Securities of the series which
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 602;
(12) any non-application of Section 503, and whether and to what
extent any other means of satisfaction and discharge and/or defeasance
shall be applicable to the Securities and Coupons, if any, of a
series;
(13) any deletions or modifications of or additions to the Events
of Default set forth in Section 601 or covenants of the Company set
forth in Article Nine or Eleven pertaining to the Securities of the
series (including without limitation whether the provisions of
Section 1104 or Section 1105 shall not be applicable to the Securities
of the series);
(14) the forms of the Securities and Coupons, if any, of the
series;
(15) if other than Dollars, the currency or currencies, or
currency unit or units, in which the Securities of such series will be
denominated and/or in which payment of the principal of (and premium,
if any) and interest, if any, on any of the Securities of the series
shall be payable and the Exchange Rate Agent, if any, for such series;
(16) if the principal of (and premium, if any) or interest, if
any, on any of the Securities of the series are to be payable at the
election of the Company or a Holder thereof, or under some or all
other circumstances, in a currency or currencies, or currency unit or
units, other than that in which the Securities are denominated, the
period or periods within which, and the terms and conditions upon
which, such election may be made, or the other circumstances under
which any of the Securities are to be so payable, including without
limitation the application of Section 410(b) and any deletions to,
modifications of or additions to the provisions thereof, and any
provision requiring the Holder to bear currency exchange costs by
deduction from such payments;
(17) if the amount of payments of principal of (and premium, if
any) or interest, if any, on any of the Securities of the series may
be determined with reference to an index based on (i) a currency or
currencies or currency unit or units other than that in which such
Securities are stated to be payable or (ii) any other method, not
inconsistent with the provisions of this Indenture, then in each of
cases (i) and (ii) the manner in which such amounts shall be
determined;
<PAGE>
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(18) whether the Securities of the series are to be issued as
Registered Securities or Bearer Securities (with or without Coupons),
or any combination thereof, whether Bearer Securities may be exchanged
for Registered Securities of the series and the circumstances under
which and the place or places where any such exchanges, if permitted,
may be made; and whether any Securities of the series are to be
issuable initially in temporary global form and whether any Securities
of the series are to be issuable in definitive global form with or
without Coupons and, if so, whether beneficial owners of interests in
any such definitive global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which and the place or places
where any such exchanges may occur, if other than in the manner
provided in Section 404 or Section 412;
(19) if the Securities and Coupons, if any, of the series are to
be issued upon the exercise of warrants, the time, manner and place
for such Securities and Coupons, if any, to be authenticated and
delivered;
(20) whether and under what circumstances and with what
procedures and documentation the Company will pay additional amounts
on any of the Securities and Coupons, if any, of the series to any
Holder who is not a U.S. Person (including a definition of such term),
in respect of any tax, assessment or governmental charge withheld or
deducted and, if so, whether the Company will have the option to
redeem such Securities rather than pay additional amounts (and the
terms of any such option);
(21) the Person to whom any interest on any Registered Security
of the series shall be payable, if other than the Person in whose name
that Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest,
the manner in which, or the Person to whom, any interest on any Bearer
Security of the series shall be payable, if otherwise than upon
presentation and surrender of the Coupons appertaining thereto as they
severally mature and the extent to which, or the manner in which, any
interest payable on a temporary global Security on an Interest Payment
Date will be paid if other than in the manner provided in Section 403;
(22) whether the Securities of the series shall be issued in
whole or in part in the form of one or more global Securities and, in
such case, the U.S. Depositary or any Common Depositary for, and any
other provisions relating to, such global Security or global
Securities; and if the Securities of the series are issuable only as
Registered Securities, (A) the manner in which and the circumstances
under which Registered Global Notes representing Securities of the
series may be exchanged for Registered Securities in definitive form,
if other than, or in addition to, the manner and circumstances
specified in Section 412, and (B) any other provisions that may be
necessary or desirable to effect compliance with the rules,
regulations, practices and policies of the U.S. Depositary from time
to time in effect, which provisions may or may not be consistent with
Section 412; and
(23) any other terms of any of the Securities of the series
(which terms shall not be inconsistent with the provisions of this
Indenture).
<PAGE>
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If any of the terms of the series are established by action taken
pursuant to a Board Resolution or Board Resolutions, an Officers'
Certificate certifying as to such action also shall be delivered to the
Trustee.
(b) In case the Securities of the series to be authenticated and
delivered are to be created pursuant to one or more supplemental
indentures, such supplemental indenture or indentures, accompanied by a
Board Resolution or Board Resolutions authorizing such supplemental
indenture or indentures and designating the new series to be created and
prescribing pursuant to paragraph (a) above, consistent with the
applicable provisions of this Indenture, the terms and provisions
relating to the Securities of the series.
(c) Either (i) a certificate or other official document evidencing
the due authorization, approval or consent of any governmental body or
bodies, at the time having jurisdiction in the premises, together with
an Opinion of Counsel that the Trustee is entitled to rely thereon and
that the authorization, approval or consent of no other governmental
body is required, or (ii) an Opinion of Counsel that no authorization,
approval or consent of any governmental body is required.
(d) An Opinion of Counsel that all instruments furnished the Trustee
conform to the requirements of this Indenture and constitute sufficient
authority hereunder for the Trustee to authenticate and deliver the
Securities and to deliver the Coupons, if any, of the series; that all
conditions precedent provided for in this Indenture relating to the
authentication and delivery of the Securities and delivery of the
Coupons, if any, of the series have been complied with and the Company
is duly entitled to the authentication and delivery of the Securities
and Coupons, if any, of the series in accordance with the provisions of
this Indenture; that all laws and requirements with respect to the form
and execution by the Company of the supplemental indenture, if any, and
the execution and delivery by the Company of the Securities and Coupons,
if any, of the series have been complied with; that the Company has
corporate power to execute and deliver the supplemental indenture, if
any, and to issue the Securities and Coupons, if any, of the series and
has duly taken all necessary corporate action for those purposes; and
that the supplemental indenture, if any, as executed and delivered and
the Securities and Coupons, if any, of the series, when issued, will be
the legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms (subject to
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other laws affecting creditors' rights generally from time
to time in effect, the enforceability of the Company's obligations also
being subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law));
that the Securities and Coupons, if any, of the series, when issued,
will be entitled to the benefits of this Indenture, equally and ratably
with all other Securities and Coupons, if any, of such series
theretofore issued and then outstanding hereunder; and that the amount
of Securities then outstanding under this Indenture, including the
Securities of the series, will not exceed the amount at the time
permitted by law or this Indenture.
(e) An Officers' Certificate stating that the Company is not in
default under this Indenture and that the issuance of the Securities and
Coupons, if any, of the series will not result in any breach of any of
the terms, conditions or provisions of, or constitute a default under,
the Company's certificate of incorporation or by-laws or any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company is a party or by which it is bound, or any order of any court or
administrative agency entered in any proceeding to which the Company is
a party or by which it may be bound or to which it may be subject; and
that all conditions precedent provided in this Indenture relating to the
authentication and delivery of the Securities and Coupons, if any, of
the series have been complied with.
<PAGE>
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(f) Such other documents as the Trustee may reasonably require.
ARTICLE THREE
Issuance of Medium-Term Debt Securities
SECTION 301. Documents Required for Issuance of Each Series of Medium-
Term Debt Securities. At any time, and from time to time, Securities
(sometimes referred to herein as "Medium-Term Debt Securities") of each
series created pursuant to the provisions of this Article Three may be
executed by the Company and delivered to the Trustee and shall be
authenticated by the Trustee and delivered to, or upon the order of, the
Company upon receipt by the Trustee of the following:
(a) A Board Resolution or Board Resolutions authorizing the issuance
of Medium-Term Debt Securities up to a specified aggregate principal
amount or having a maximum aggregate offering price, in such series and
subject to such terms as shall be established by officers of the Company
authorized by such resolutions to establish such series and terms.
(b) A Medium-Term Debt Securities Certificate requesting the Trustee
to authenticate and deliver Medium-Term Debt Securities of a series as
contemplated by Section 402, and specifying, to the extent applicable,
the following terms with respect to the Medium-Term Debt Securities of
the particular series, or specifying, to the extent applicable, the
method of determining any such terms with respect to any such
Medium-Term Debt Securities, authorized pursuant to the Board Resolution
or Board Resolutions referred to in paragraph (a) above:
(1) the title of the Medium-Term Debt Securities of the series
(which shall distinguish the Medium-Term Debt Securities of the series
from all other Securities);
(2) the dates of the Medium-Term Debt Securities of the series;
(3) any limit upon the aggregate principal amount of the Medium-
Term Debt Securities of the series which may be authenticated and
delivered (except for Medium-Term Debt Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Medium-Term Debt Securities of the series pursuant to
Section 403, 404, 405, 1006 or 1207 and except for any Medium-Term
Debt Securities which, pursuant to Section 402, are deemed never to
have been authenticated and delivered hereunder);
(4) the date or dates on which the principal (and premium, if
any) of any of the Medium-Term Debt Securities of the series are
payable;
(5) the rate or rates at which any of the Medium-Term Debt
Securities of the series shall bear interest, if any, the date or
dates from which such interest shall accrue, the Interest Payment
Dates on which such interest shall be payable and the Regular Record
Date for the interest payable on any Medium-Term Debt Securities of
the series that are Registered Securities on any Interest Payment
Date;
<PAGE>
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(6) the place or places where the principal of (and premium, if
any) and interest, if any, on any of the Medium-Term Debt Securities
and Coupons, if any, of the series shall be payable and the office or
agency for the Medium-Term Debt Securities of the series maintained by
the Company pursuant to Section 1102;
(7) the period or periods within which, the price or prices at
which and the terms and conditions upon which any of the Medium-Term
Debt Securities of the series may be redeemed, in whole or in part, at
the option of the Company;
(8) the terms of any sinking fund and the obligation, if any, of
the Company to redeem, repay or purchase Medium-Term Debt Securities
of the series pursuant to any sinking fund or analogous provisions,
upon the occurrence of certain events or at the option of a Holder
thereof and the period or periods within which, the price or prices at
which and the terms and conditions upon which Medium-Term Debt
Securities of the series shall be so redeemed, repaid or purchased, in
whole or in part;
(9) the terms of the obligation of the Company, if any, to permit
the conversion of the Medium-Term Debt Securities of the series into
stock or other securities of the Company or of any other corporation;
(10) the terms, if any, for the attachment to Medium-Term Debt
Securities of the series of warrants, options or other rights to
purchase or sell stock or other securities of the Company;
(11) if other than denominations of $1,000 and any integral
multiple thereof, if Registered Securities, and $5,000 if Bearer
Securities, for Medium-Term Debt Securities denominated in Dollars,
the denominations in which the Medium-Term Debt Securities of the
series shall be issuable;
(12) if other than the principal amount thereof, the portion of
the principal amount of any of the Medium-Term Debt Securities of the
series which shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 602;
(13) any non-application of Section 503, and whether and to what
extent any other means of satisfaction and discharge and/or defeasance
shall be applicable to the Medium-Term Debt Securities and Coupons, if
any, of the series;
(14) any deletions or modifications of or additions to the Events
of Default set forth in Section 601 or covenants of the Company set
forth in Article Nine or Eleven pertaining to the Medium-Term Debt
Securities of the series (including without limitation whether the
provisions of Section 1104 or Section 1105 shall not be applicable to
the Medium-Term Debt Securities of the series);
(15) if other than Dollars, the currency or currencies, or
currency unit or units, in which any of the Medium-Term Debt
Securities of the series will be denominated and/or in which payment
of the principal of (and premium, if any) and interest, if any, on any
of the Medium-Term Debt Securities of the series shall be payable and
the Exchange Rate Agent, if any, for such series;
(16) if the principal of (and premium, if any) or interest, if
any, on any of the Medium-Term Debt Securities of the series are to be
payable at the election of the Company or Holder thereof, or under
some or all other circumstances, in a currency or currencies, or
currency unit or units, other than that in which the Medium-Term Debt
Securities are stated to be payable, the period or periods within
which, and the terms and conditions upon which, such election may be
made, or the other circumstances under which any of the Medium-Term
Debt Securities are to be so payable, including without limitation the
application of Section 410(b) and any deletions to, modification of or
additions to the provisions thereof, and any provision requiring the
Holder to bear currency exchange costs by deduction from such
payments;
<PAGE>
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(17) if the amount of payments of principal of (and premium, if
any) or interest, if any, on any of the Medium-Term Debt Securities of
the series may be determined with reference to an index based on (i) a
currency or currencies or currency unit or units other than that in
which such Medium-Term Debt Securities are stated to be payable or
(ii) any other method, not inconsistent with the provisions of this
Indenture, then in each of cases (i) and (ii) the manner in which such
amounts shall be determined;
(18) whether the Medium-Term Debt Securities of the series are to
be issued as Registered Securities or Bearer Securities (with or
without Coupons), or any combination thereof, whether Bearer
Securities may be exchanged for Registered Securities of the series
and the circumstances under which and the place or places where any
such exchanges, if permitted, may be made; and whether any of the
Medium-Term Debt Securities of the series are to be issuable initially
in temporary global form and whether any of the Medium-Term Debt
Securities of the series are to be issuable in definitive global form
with or without Coupons and, if so, whether beneficial owners of
interests in any such definitive global Medium-Term Debt Security may
exchange such interests for any of the Medium-Term Debt Securities of
such series and of like tenor of any authorized form and denomination
and the circumstances under which and the place or places where any
such exchange may occur, if other than in the manner provided in
Section 404 or Section 412;
(19) if any of the Medium-Term Debt Securities and Coupons, if
any, of the series are to be issued upon the exercise of warrants, the
time, manner and place for such Medium-Term Debt Securities and
Coupons, if any, of the series to be authenticated and delivered;
(20) whether and under what circumstances and with what
procedures and documentation the Company will pay additional amounts
on any of the Medium-Term Debt Securities of the series to any Holder
who is not a U.S. Person (including a definition of such term), in
respect of any tax, assessment or governmental charge withheld or
deducted and, if so, whether the Company will have the option to
redeem such Medium-Term Debt Securities rather than pay additional
amounts (and the terms of any such option);
(21) the Person to whom any interest on any Medium-Term Debt
Security of the series shall be payable, if other than the Person in
whose name that Medium-Term Debt Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular
Record Date for such interest, the manner in which, or the Person to
whom, any interest on any Bearer Security of the series shall be
payable, if otherwise than upon presentation and surrender of the
Coupons appertaining thereto as they severally mature and the extent
to which, or the manner in which, any interest payable on a temporary
global Medium-Term Debt Security on an Interest Payment Date will be
paid if other than in the manner provided in Section 403;
<PAGE>
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(22) if other than the forms set forth in Exhibit A hereto, the
forms of the Medium-Term Debt Securities and Coupons, if any, of the
series;
(23) whether the Medium-Term Debt Securities of the series shall
be issued in whole or in part in the form of one or more global
Securities and, in such case, the U.S. Depositary or any Common
Depositary for, and any other provisions relating to, such global
Security or global Securities; and if the Medium-Term Debt Securities
of the series are issuable only as Registered Securities, (A) the
manner in which and the circumstances under which Registered Global
Notes representing Medium-Term Debt Securities of the series may be
exchanged for Registered Securities in definitive form, if other than,
or in addition to, the manner and circumstances specified in
Section 412, and (B) any other provisions that may be necessary or
desirable to effect compliance with the rules, regulations, practices
and policies of the U.S. Depositary from time to time in effect, which
provisions may or may not be consistent with Section 412; and
(24) any other terms of any of the Medium-Term Debt Securities of
the series (which terms shall not be inconsistent with the provisions
of this Indenture).
Unless the Company shall be required to deliver an Officers'
Certificate pursuant to paragraph (d) below in connection with the
authentication of the Medium-Term Debt Securities of the series, the
delivery of such Medium-Term Debt Securities Certificate to the Trustee
shall be deemed to be a certification by the Company that all matters
certified in the most recent Officers' Certificate delivered to the
Trustee pursuant to paragraph (d) below continue to be true and correct,
as if such Officers' Certificate related to the Medium-Term Debt
Securities covered by such Medium-Term Debt Securities Certificate, on
and as of the date of such Medium-Term Debt Securities Certificate. The
delivery of such Medium-Term Debt Securities Certificate also shall be
deemed to be a certification that the Board Resolution or Board
Resolutions referred to in paragraph (a) above are in full force and
effect on and as of the date of such Medium-Term Debt Securities
Certificate and that the terms and form or forms of the Medium-Term Debt
Securities and Coupons, if any, of the series have been established by
an officer or officers of the Company authorized by such Board
Resolution or Board Resolutions in accordance with the provisions
thereof and hereof.
(c) If (i) the Company shall not have previously delivered to the
Trustee an Opinion of Counsel to the effect set forth in this paragraph
(c) with respect to the Medium-Term Debt Securities authorized pursuant
to the Board Resolution or Board Resolutions referred to in paragraph
(a) above or (ii) if the Medium-Term Debt Securities Certificate
referred to in paragraph (b) above specifies a means of satisfaction and
discharge other than the application of Section 503 with respect to the
series of Medium-Term Debt Securities to which such Medium-Term Debt
Securities Certificate relates, either (A) an Opinion of Counsel that
the Medium-Term Debt Securities have been duly authorized by resolutions
of the Board of Directors of the Company, subject to the establishment
of certain terms of the Medium-Term Debt Securities and Coupons, if any,
of the series by officers of the Company authorized by such resolutions
to establish such terms, that when the terms of the Medium-Term Debt
Securities and Coupons, if any, of the series have been established as
provided in such resolutions, in this Indenture and in the applicable
Medium-Term Debt Securities Certificate and the Medium-Term Debt
Securities and Coupons, if any, of the series have been executed,
authenticated and delivered in accordance with the provisions of this
Indenture, the Medium-Term Debt Securities and Coupons, if any, of the
series, assuming they do not violate any applicable law then binding on
the Company, will constitute legal, valid and binding obligations of the
Company entitled to the benefits of this Indenture, equally and ratably
with all other Securities and Coupons, if any, of such series
theretofore issued and then outstanding hereunder, and that the amount
of Securities then outstanding under this Indenture, including the
Medium-Term Debt Securities of the series, will not exceed the amount at
the time permitted by law or this Indenture, or (B) such other Opinion
of Counsel as is satisfactory to the Trustee in form and substance.
<PAGE>
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(d) If the Company shall not have delivered an Officers' Certificate
pursuant to the provisions of this paragraph (d) to the Trustee during
the immediately preceding 12-month period, an Officers' Certificate
stating that the Company is not in default under this Indenture, that
the issuance of the Medium-Term Debt Securities and Coupons, if any, of
the series will not result in any breach or violation of any of the
terms, conditions or provisions of, or constitute a default under, the
Company's certificate of incorporation or By-laws or any order of any
court or other governmental body entered in any proceeding to which the
Company is a party or by which it may be bound or to which it may be
subject, that all laws, rules and regulations and any requirements of
any court or other governmental body with respect to the execution and
delivery by the Company of the Medium-Term Debt Securities and Coupons,
if any, of the series have been complied with and that, upon the
delivery of an Officer's Certificate pursuant to Section 301(e) with
respect to any issue of Medium-Term Debt Securities of a series, all
conditions precedent provided in this Indenture relating to the
authentication and delivery of such issue of the Medium-Term Debt
Securities and Coupons, if any, of the series will have been complied
with.
(e) With respect to each issue of Medium-Term Debt Securities and
Coupons, if any, of a series, an Officer's Certificate stating that the
issuance of such issue of Medium-Term Debt Securities and Coupons, if
any, of such series will not result in the breach of any of the terms,
conditions or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company is a party or by which it is bound.
(f) Such other documents as the Trustee shall reasonably request.
SECTION 302. Form of Medium-Term Debt Securities. The Medium-Term Debt
Securities and Coupons, if any, of each series shall be in such forms as
shall be specified as contemplated by Section 301. In the absence of any
such provisions with respect to the Medium-Term Debt Securities of any
series, the Medium-Term Debt Securities and Coupons, if any, of such series
shall be substantially in the applicable form set forth in Exhibit A
hereto, except with such additions, changes and deletions thereto as may be
required to reflect the different provisions thereof as shall be specified
as provided in Section 301.
ARTICLE FOUR
The Securities
SECTION 401. Form and Denomination. All Securities of any one series and
the Coupons appertaining to any Bearer Securities of such series shall be
substantially identical except, in the case of Registered Securities, as to
denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to in Section 202 or Section 301, as the case may
be, and (subject to Section 402) set forth in the Officers' Certificate or
Medium-Term Debt Securities Certificate referred to in Section 202 or
Section 301, as the case may be, or in any indenture supplemental hereto.
<PAGE>
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The Securities of each series shall be issuable in such denominations as
shall be specified as contemplated by Section 202 or Section 301, as the
case may be. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series denominated in
Dollars shall be issuable in denominations of $l,000 and any integral
multiple thereof, if registered, and in denominations of $5,000 if bearer.
Securities of each series shall be numbered, lettered or otherwise
distinguished in such manner or in accordance with such plan as the
officers of the Company executing the same may determine with the approval
of the Trustee. Each Security shall bear the appropriate legends, if any,
as required by U.S. Federal tax law and regulations.
SECTION 402. Execution, Delivery, Dating and Authentication. The
Securities shall be executed on behalf of the Company by the manual or
facsimile signature of its Chairman, its President, any of its Vice
Presidents, its Treasurer, any Assistant Treasurer, its Secretary or any
Assistant Secretary. Any Coupons shall be executed on behalf of the Company
by the manual or facsimile signature of any such officer of the Company. In
case any of the above referenced officers of the Company who shall have
signed any of the Securities or Coupons shall cease to be such officer
before the Securities so signed shall have been authenticated and delivered
by the Trustee or disposed of by the Company, such Securities nevertheless
may be authenticated and delivered or disposed of as though the person who
signed such Securities and/or Coupons had not ceased to be such officer;
and any Securities or Coupons may be signed on behalf of the Company by
such persons as, at the actual date of the execution of such Security or
Coupon, shall be such officers of the Company, although at the date of the
execution of this Indenture any such person was not such officer.
At any time and from time to time, the Company may deliver Securities of
any series, together with any Coupons appertaining thereto, executed by the
Company to the Trustee for authentication, together (except in the case of
any Medium-Term Debt Securities) with a Company Order for the
authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order (or, in the case of Medium-Term Debt
Securities of any series, upon receipt of a Medium-Term Debt Securities
Certificate and in accordance with the terms thereof) shall authenticate
and make available for delivery such Securities; provided, however, that,
unless otherwise specified in the Board Resolution (or, in the case of any
Bearer Securities that are Medium-Term Debt Securities in the Medium-Term
Debt Securities Certificate) with respect to an Bearer Securities, in
connection with its original issuance, no Bearer Security (including any
temporary Bearer Security issued pursuant to Section 403 which is not in
global form) shall be mailed or otherwise delivered to any location in the
United States; and provided further that, unless otherwise specified in the
Board Resolution (or, in the case of any Bearer Securities that are Medium-
Term Debt Securities, in the Medium-Term Debt Securities Certificate) with
respect to such Bearer Securities, such Bearer Security may be delivered in
connection with its original issuance only if the Person entitled to
receive such Bearer Security (including any temporary Bearer Security
issued pursuant to Section 403 which is not in global form) shall have
furnished to the Company or any agent, underwriter or selling group member
a certificate substantially in the form set forth in Exhibit B.2 to this
Indenture, dated no earlier than 15 days prior to the earlier of the date
on which such Bearer Security is delivered and the date on which any
temporary Security first becomes exchangeable for such Bearer Security in
accordance with the terms of such temporary Security and this Indenture. If
any Security shall be represented by a definitive global Bearer Security,
then, for purposes of this Section and Section 403, the notation of a
beneficial owner's interest therein upon original issuance of such Security
or upon exchange of a portion of a temporary global Security shall be
deemed to be delivery in connection with its original issuance of such
beneficial owner's interest in such definitive global Bearer Security.
Except as permitted by Section 405, the Trustee shall not authenticate and
make available for delivery any Bearer Security unless all appurtenant
Coupons for interest then matured have been detached and canceled.
<PAGE>
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The Trustee shall not be required to authenticate Securities of any
series if the issue of such Securities pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under the Securities
and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee, or if the Trustee determines that such action
may not lawfully be taken.
Unless otherwise specified pursuant to Section 301(b)(2), each Registered
Security shall be dated the date of its authentication, and each Bearer
Security and any Bearer Security in global form shall be dated as of the
date of original issuance of the first Security of such series to be
issued.
No Security or Coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for below executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
duly authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancelation as provided in Section 408 together with a written statement
(which need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel) stating that such Security has never been issued and
sold by the Company, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated herein issued under
the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By
Authorized Signatory
SECTION 403. Temporary Securities. Pending the preparation of definitive
Securities of any series, the Company may execute, and upon Company Order
(or, in the case of Medium-Term Debt Securities, receipt of the Medium-Term
Debt Securities Certificate with respect to such Medium-Term Debt
Securities) the Trustee shall authenticate and make available for delivery,
temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which
they are issued, in registered form or, if authorized, in bearer form with
one or more Coupons or without Coupons, and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced conclusively by their
execution of such Securities. Such temporary Securities may be in global
form.
<PAGE>
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Except in the case of temporary Securities in global form (which shall be
exchanged in accordance with the provisions of the following paragraphs),
if temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of
such series at the office or agency of the Company maintained pursuant to
Section 1102 in a Place of Payment for such series for the purpose of
exchanges of Securities of such series, without charge to the Holder. Upon
surrender for cancelation of any one or more temporary Securities of any
series (accompanied by any unmatured Coupons) the Company shall execute and
the Trustee shall authenticate and make available for delivery in exchange
therefor a like aggregate principal amount of definitive Securities of the
same series and of like tenor and of authorized denominations; provided,
however, that a definitive Bearer Security shall be delivered in exchange
for a temporary Bearer Security only in compliance with the conditions set
forth in Section 402.
If temporary Bearer Securities of any series are issued in global form,
such temporary global Bearer Securities shall, unless otherwise specified
as contemplated by Section 202 or Section 301, as the case may be, be
delivered to the London office of a depository or common depository (the
"Common Depositary"), for the benefit of Euro-clear and CEDEL S.A., for
credit to the respective accounts of the beneficial owners of interests in
such Securities (or to such other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary
global Security (which shall (subject to any applicable laws and
regulations) be at least 40 days after the issue date of such temporary
global Security (the "Exchange Date"), the Company shall deliver to the
Trustee definitive Securities, in aggregate principal amount equal to the
principal amount of such temporary global Security, executed by the
Company. On or after the Exchange Date such temporary global Security shall
be surrendered by the Common Depositary to the Trustee, as the Company's
agent for such purpose, to be exchanged, in whole or from time to time in
part, for definitive Securities without charge and the Trustee shall
authenticate and make available for delivery, in exchange for each portion
of such temporary global Security, an equal aggregate principal amount of
definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange for any
such temporary global Security shall be in bearer form, registered form,
definitive global form or any combination thereof, as specified as
contemplated by Section 202 or Section 301, as the case may be, and, if any
combination thereof is so specified, as requested by the beneficial owner
thereof; provided, however, that, unless otherwise specified as
contemplated by Section 202 or Section 301, as the case may be, upon such
presentation by the Common Depositary, such temporary global Security shall
be accompanied by a certificate dated the Exchange Date or a subsequent
date and signed by Euro-clear as to the portion of such temporary global
Security held for its account then to be exchanged and a certificate dated
the Exchange Date or a subsequent date and signed by CEDEL S.A. as to the
portion of such temporary global Security held for its account then to be
exchanged, each in the form set forth in Exhibit B.1 to this Indenture;
provided further that definitive Bearer Securities (including a definitive
global Bearer Security) shall be delivered in exchange for a portion of a
temporary global Security only in compliance with the requirements of
Section 402.
<PAGE>
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Unless otherwise specified as contemplated by Section 202 or Section 301,
as the case may be, the interest of a beneficial owner of Securities of a
series in a temporary global Bearer Security shall be exchanged for
definitive Bearer Securities of the same series and of like tenor following
the Exchange Date when the beneficial owner instructs Euro-clear or CEDEL
S.A., as the case may be, to request such exchange on his behalf and
delivers to Euro-clear or CEDEL S.A., as the case may be, a certificate
substantially in the form set forth in Exhibit B.2 to this Indenture, dated
no earlier than 15 days prior to the Exchange Date, copies of which
certificate shall be available from the offices of Euro-clear, CEDEL S.A.,
the Trustee, any Authenticating Agent appointed for such series of
Securities and any Paying Agent appointed for such series of Securities.
Unless otherwise specified as contemplated by Section 202 or Section 301,
as the case may be, any such exchange shall be made free of charge to the
beneficial owners of such temporary global Security, except that a Person
receiving definitive Securities must bear the cost of insurance, postage,
transportation and the like in the event that such Person does not take
delivery of such definitive Securities in person at the offices of Euro-
clear or CEDEL S.A. The definitive Bearer Securities to be delivered in
exchange for any portion of a temporary global Security shall be delivered
only outside the United States.
Until exchanged in full as provided above, the temporary Securities of
any series shall in all respects be entitled to the same benefits under
this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 202 or Section 301, as the case may
be, interest payable on a temporary global Bearer Security on an Interest
Payment Date for Securities of such series occurring prior to the
applicable Exchange Date shall be payable to Euro-clear and CEDEL S.A. on
such Interest Payment Date upon delivery by Euro-clear and CEDEL S.A. to
the Trustee of a certificate or certificates substantially in the form set
forth in Exhibit B.1 to this Indenture, for credit without further interest
on or after such Interest Payment Date to the respective accounts of the
Persons who are the beneficial owners of such temporary global Security (or
to such other accounts as they may direct) on such Interest Payment Date
and who have each delivered to Euro-clear or CEDEL S.A., as the case may
be, a certificate substantially in the form set forth in Exhibit B.2 to
this Indenture. Any interest so received by Euro-clear and CEDEL S.A. and
not paid as herein provided shall be returned to the Trustee immediately
prior to the expiration of two years after such Interest Payment Date in
order to be repaid to the Company in accordance with Section 1103.
SECTION 404. Registration, Registration of Transfer and Exchange. The
Company shall cause to be kept at an office or agency to be maintained by
the Company in accordance with Section 1102 a register (being the combined
register of the Security Registrar and all additional transfer agents
designated pursuant to Section 1102 for the purpose of registration of
transfer of Securities and sometimes collectively referred to as the
"Security Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Registered
Securities and the registration of transfers of Registered Securities.
State Street Bank and Trust Company is hereby appointed the initial
Security Registrar. At all reasonable times each register maintained by the
Security Registrar and any additional transfer agents shall be open for
inspection by the Trustee.
<PAGE>
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Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained pursuant to
Section 1102 for such purpose in a Place of Payment for such series, the
Company shall execute, and the Trustee shall authenticate and make
available for delivery, in the name of the designated transferee or
transferees, one or more new Registered Securities of the same series of
any authorized denominations and of a like aggregate principal amount and
tenor.
At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount and
tenor, upon surrender of the Registered Securities to be exchanged at any
such office or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, the Securities which the Holder making the
exchange is entitled to receive. Unless otherwise specified as contemplated
by Section 202 or Section 301, as the case may be, Bearer Securities may
not be issued in exchange for Registered Securities.
At the option of the Holder, to the extent permitted by law, and unless
otherwise specified as contemplated by Section 202 or Section 301, as the
case may be, Bearer Securities of any series may be exchanged for
Registered Securities of the same series of any authorized denominations
and of a like aggregate principal amount and tenor, upon surrender of the
Bearer Securities to be exchanged at any such office or agency, with all
unmatured Coupons and all matured Coupons in default appertaining thereto.
If the Holder of a Bearer Security is unable to produce any such unmatured
Coupon or Coupons or matured Coupon or Coupons in default, such exchange
may be effected if the Bearer Securities are accompanied by payment in
funds acceptable to the Company in an amount equal to the face amount of
such missing Coupon or Coupons, or the surrender of such missing Coupon or
Coupons may be waived by the Company and the Trustee if there is furnished
to them such security or indemnity as they may require to save each of them
and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to any Paying Agent any such missing Coupon in
respect of which such a payment shall have been made, such Holder shall be
entitled to receive the amount of such payment; provided, however, that,
except as otherwise provided in Section 1102, interest represented by
Coupons shall be payable only upon presentation and surrender of those
Coupons at an office or agency located outside the United States.
Notwithstanding the foregoing, in case a Bearer Security of any series is
surrendered at any such office or agency in exchange for a Registered
Security of the same series and like tenor after the close of business at
such office or agency on (i) any Regular Record Date and before the opening
of business at such office or agency on the relevant Interest Payment Date,
or (ii) any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of Defaulted
Interest, such Bearer Security shall be surrendered without the Coupon
relating to such Interest Payment Date or proposed date for payment, as the
case may be (or, if such Coupon is surrendered with such Bearer Security,
such Coupon shall be returned to the Person so surrendering the Bearer
Security), and interest or Defaulted Interest, as the case may be, will not
be payable on such Interest Payment Date or proposed date for payment, as
the case may be, in respect of the Registered Security issued in exchange
for such Bearer Security, but will be payable only to the Holder of such
Coupon when due in accordance with the provisions of this Indenture.
<PAGE>
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Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, the Securities which the Holder making the exchange is entitled
to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 202 or Section 301, as the case may be, any
definitive global Bearer Security shall be exchangeable only as provided in
this paragraph. If the beneficial owners of interests in a definitive
global Bearer Security are entitled to exchange such interests for
Securities of such series and of like tenor and principal amount of another
authorized form and denomination, as specified as contemplated by Section
202 or Section 301, as the case may be, then without unnecessary delay but
in any event not later than the earliest date on which such interests may
be so exchanged, the Company shall deliver to the Trustee definitive
Securities in an aggregate principal amount equal to the principal amount
of such definitive global Bearer Security, executed by the Company. On or
after the earliest date on which such interests may be so exchanged, such
definitive global Bearer Security shall be surrendered by the Common
Depositary or such other depositary as shall be specified in the Company
Order or Medium-Term Debt Securities Certificate, as the case may be, with
respect thereto to the Trustee, as the Company's agent for such purpose, to
be exchanged, in whole or from time to time in part, for definitive
Securities without charge and the Trustee shall authenticate and make
available for delivery, in exchange for each portion of such definitive
global Bearer Security, an equal aggregate principal amount of definitive
Securities of the same series of authorized denominations and of like tenor
as the portion of such definitive global Bearer Security to be exchanged
which, unless the Securities of the series are not issuable both as Bearer
Securities and as Registered Securities, as specified as contemplated by
Section 202 or Section 301, as the case may be, shall be in the form of
Bearer Securities or Registered Securities, or any combination thereof, as
shall be specified by the beneficial owner thereof; provided, however, that
no such exchanges may occur during a period beginning at the opening of
business 15 Business Days before any selection of Securities of that series
to be redeemed and ending on the relevant Redemption Date; provided further
that no Bearer Security delivered in exchange for a portion of a definitive
global Security shall be mailed or otherwise delivered to any location in
the United States. If a Registered Security is issued in exchange for any
portion of a definitive global Bearer Security after the close of business
at the office or agency where such exchange occurs on (i) any Regular
Record Date and before the opening of business at such office or agency on
the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect of such
Registered Security, but will be payable on such Interest Payment Date or
proposed date for payment, as the case may be, only to the Person to whom
interest in respect of such portion of such definitive global Bearer
Security is payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
<PAGE>
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Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the
Trustee or any transfer agent) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar or any transfer agent duly executed, by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 403, 1006 or 1207 not
involving any transfer.
The Company shall not be required (i) to issue, register the transfer of
or exchange Securities of any series during a period beginning at the
opening of business 15 Business Days before any selection of Securities of
that series to be redeemed and ending at the close of business on (A) if
Securities of the series are issuable only as Registered Securities, the
day of the mailing of the relevant notice of redemption and (B) if
Securities of the series are issuable as Bearer Securities, the day of the
first publication of the relevant notice of redemption or, if Securities of
the series are also issuable as Registered Securities and there is no
publication, the day of mailing of the relevant notice of redemption, or
(ii) to register the transfer of or exchange any Registered Security so
selected for redemption, in whole or in part, except the unredeemed portion
of any Security being redeemed in part, or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may
be exchanged for a Registered Security of that series and of like tenor;
provided that such Registered Security shall be simultaneously surrendered
for redemption.
SECTION 405. Mutilated, Destroyed, Lost and Stolen Securities. If any
mutilated Security or Security with a mutilated Coupon appertaining to it
is surrendered to the Trustee, the Company shall execute and the Trustee
shall authenticate and make available for delivery in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding with Coupons
corresponding to the Coupons, if any, appertaining to the surrendered
Security, provided that if such new Security is a Bearer Security, such
Security shall be delivered only outside the United States.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security or
Coupon and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security or
Coupon has been acquired by a bona fide purchaser, the Company shall
execute and the Trustee shall authenticate and make available for delivery,
in lieu of any such destroyed, lost or stolen Security or in exchange for
the Security to which a destroyed, lost or stolen Coupon appertains (upon
surrender to the Trustee of such Security with all appurtenant Coupons not
destroyed, lost or stolen), a new Security of the same series and of like
tenor and principal amount and bearing a number not contemporaneously
outstanding, with Coupons corresponding to the Coupons, if any,
appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen Coupon appertains.
In case any such mutilated, destroyed, lost or stolen Security or Coupon
has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security or Coupon, pay such
Security or Coupon; provided, however, that principal of (and premium, if
any) and any interest on Bearer Securities shall, except as otherwise
provided in Section 1102, be payable only at an office or agency located
outside the United States and, unless otherwise specified as contemplated
by Section 202 or Section 301, as the case may be, any interest on Bearer
Securities shall be payable only upon presentation and surrender of the
Coupons appertaining thereto.
<PAGE>
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Upon the issuance of any new Security or Coupon under this Section, the
Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security or Coupon of any series issued pursuant to this
Section in lieu of any mutilated, destroyed, lost or stolen Security or
Coupon shall constitute an original additional contractual obligation of
the Company, whether or not the mutilated, destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be entitled
to all the benefits of this Indenture equally and proportionately with any
and all other Securities or Coupons of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated. destroyed, lost or stolen Securities
or Coupons.
SECTION 406. Payment of Interest; Interest Rights Preserved. Unless
otherwise provided as contemplated by Section 202 or Section 301, as the
case may be, with respect to any series of Securities, interest on any
Registered Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest. At the option of the Company, interest on the Registered
Securities of any series that bears interest may be paid by mailing a check
to the address of any Holder as such address shall appear in the Security
Register.
Any interest on any Registered Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest Payment
Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in Clause (1) or (2)
below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Registered Securities of such series
(or their respective Predecessor Securities) are registered at the close
of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security of such series and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to
be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of Securities of
such series at his address as it appears in the Security Register, not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
<PAGE>
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(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this Clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 404, each
Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such
other Security.
SECTION 407. Persons Deemed Owners. Prior to due presentment of a
Registered Security for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose
name such Registered Security is registered as the owner of such Registered
Security for the purpose of receiving payment of principal of (and premium,
if any) and (subject to Sections 404, 406 and 411 and unless otherwise
specified as contemplated by Section 202 or Section 301, as the case may
be) interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Title to any Bearer Security and any Coupons shall pass by delivery. The
Company, the Trustee and any agent of the Company or the Trustee may treat
the Holder of any Bearer Security and the Holder of any Coupon as the
absolute owner of such Security or Coupon for the purpose of receiving
payment thereof or on account thereof (unless otherwise specified as
contemplated by Section 202 or Section 301, as the case may be) and for all
other purposes whatsoever, whether or not such Security or Coupon be
overdue, and neither the Company, the Trustee nor any agent of the Company
or the Trustee shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any temporary or
permanent global Security, nothing herein shall prevent the Company, the
Trustee, or any agent of the Company or the Trustee, from giving effect to
any written certification, proxy or other authorization furnished by a
Common Depositary or a U.S. Depositary, as the case may be, or impair, as
between a Common Depositary or a U.S. Depositary and holders of beneficial
interests in any temporary or permanent global Security, as the case may
be, the operation of customary practices governing the exercise of the
rights of the Common Depositary or the U.S. Depositary as Holder of such
temporary or permanent global Security.
<PAGE>
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SECTION 408. Cancelation. All Securities and Coupons surrendered for
payment, redemption, registration of transfer or exchange or for credit
against any sinking fund payment shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee. All Securities and Coupons
so delivered shall be promptly canceled by the Trustee. All Bearer
Securities and unmatured Coupons held by the Trustee pending such
cancelation shall be deemed to be delivered for cancelation for all
purposes of this Indenture and the Securities. The Company may at any time
deliver to the Trustee for cancelation any Securities previously
authenticated and delivered hereunder which the Company may have acquired
in any manner whatsoever, and may deliver to the Trustee (or to any other
Person for delivery to the Trustee) for cancelation any Securities
previously authenticated hereunder which the Company has not issued and
sold, and all Securities so delivered to the Trustee shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or
in exchange for any Securities canceled as provided in this Section, except
as expressly permitted by this Indenture. All canceled Securities and
Coupons held by the Trustee shall be disposed of in a manner selected by
the Trustee unless otherwise directed by a Company Order; provided,
however, that the Trustee may, but shall not be required to, destroy such
canceled Securities and Coupons.
SECTION 409. Computation of Interest. Except as otherwise specified as
contemplated by Section 202 or Section 301, as the case may be, for
Securities of any series, interest on the Securities of each series shall
bc computed on the basis of a 360-day year of twelve 30-day months.
SECTION 410. Currency and Manner of Payment in Respect of Securities.
The provisions of this Section shall apply to the Securities of any series
unless otherwise provided as contemplated by Section 202 or Section 301, as
the case may be.
(a) The following payment provisions shall apply to any Registered
Security of any series denominated in a Foreign Currency or any currency
unit, including without limitation ECU, except as provided in paragraph
(b) below:
(1) Except as provided in subparagraph (a)(2) or in
paragraph (e) below, payment of principal of and premium, if any,
on such Registered Security will be made at the Place of Payment by
delivery of a check in the currency or currency unit in which the
Security is denominated on the payment date against surrender of
such Registered Security, and any interest on any Registered
Security will be paid at the Place of Payment by mailing a check in
the currency or currency unit in which such interest is payable
(which shall be the same as that in which the Security is
denominated unless otherwise provided) to the Person entitled
thereto at the address of such Person appearing on the Security
Register.
(2) Payment of the principal of, premium, if any, and
interest, if any, on such Security may also, subject to applicable
laws and regulations, be made at such other place or places as may
be designated by the Company by any appropriate method.
(b) With respect to any Registered Security of any series denominated
in any currency unit, including without limitation ECU, if the following
provisions (or any substitute therefor, or addition thereto, not
inconsistent with this Indenture) are established pursuant to Section
202 or Section 301, as the case may be, and if the Company has not,
before the delivery of the election referred to in clause (1) below,
deposited funds or securities in compliance with Section 501 or clause
(a)(i) or (if specified pursuant to Section 202 or Section 301, as the
case may be) clause (a)(ii) of Section 503, the following payment
provisions shall apply to any payment to be made prior to the giving of
any notice to Holders of any election to redeem pursuant to Section
1204, except as otherwise provided in paragraphs (e) and (f) below:
<PAGE>
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(1) A Holder of Securities of a series shall have the option to
elect to receive payments of principal of, premium, if any, and
interest, if any, on such Securities in a currency or currency unit
(including Dollars), other than that in which the Security is
denominated, such election, as designated in the certificates for such
Securities (or as provided by Section 202 or Section 301, as the case
may be, or a supplemental indenture hereto with respect to
uncertificated securities), shall be made by delivering to the Paying
Agent a written election, to be in form and substance satisfactory to
the Paying Agent, not later than the close of business in New York,
New York, on the day 15 days prior to the applicable payment date.
Such election will remain in effect for such Holder until changed by
the Holder by written notice to the Paying Agent (but any such written
notice must be received by the Paying Agent not later than the close
of business on the day 15 days prior to the next payment date to be
effective for the payment to be made on such payment date and no such
change may be made with respect to payments to be made on any Security
of such series with respect to which notice of redemption has been
given by the Company pursuant to Article Twelve). Any Holder of any
such Security who shall not have delivered any such election to the
Paying Agent in accordance with this paragraph (b) will be paid the
amount due on the applicable payment date in the relevant currency
unit as provided in paragraph (a) of this Section. Payment of
principal of and premium, if any, shall be made on the payment date
therefor against surrender of such Security. Payment of principal,
premium, if any, and interest, if any, shall be made at the Place of
Payment by mailing at such location a check, in the applicable
currency or currency unit, to the Holder entitled thereto at the
address of such Holder appearing on the Security Register.
(2) Payment of the principal of, premium, if any, and interest,
if any, on such Security may also, subject to applicable laws and
regulations, be made at such other place or places as may be
designated by the Company by any appropriate method.
(c) Payment of the principal of and premium, if any, and interest, if
any, on any Bearer Security will be made, except as provided in
Section 403 with respect to temporary global Securities, unless
otherwise specified pursuant to Section 202 or Section 301, as the case
may be, and/or Section 1001(8), at such place or places outside the
United States as may be designated by the Company pursuant to any
applicable laws or regulations by any appropriate method in the currency
or currencies or currency unit or units in which the Security is payable
(except as provided in paragraph (e) below) on the payment date therefor
against surrender of the Bearer Security, in the case of payment of
principal and premium, if any, or the relevant Coupon, in the case of
payment of interest, if any, to a Paying Agent designated for such
series pursuant to Section 1102.
(d) Not later than 10 Business Days (with respect to any Place of
Payment) prior to each payment date, the Paying Agent shall deliver to
the Company a copy of its record of the respective aggregate amounts of
principal of, premium, if any, and interest, if any, on the Securities
to be made on such payment date, in the currency or currency unit in
which each of the Securities is payable, specifying the amounts so
payable in respect of Registered Securities and Bearer Securities and in
respect of the Registered Securities as to which the Holders of
Securities denominated in any currency unit shall have elected to be
paid in another currency or currency unit as provided in paragraph (b)
above. If the election referred to in paragraph (b) above has been
provided for pursuant to Section 202 or Section 301, as the case may be,
and if at least one Holder has made such election, then, not later than
the fifth Business Day (with respect to any Place of Payment) prior to
the applicable payment date the Company will deliver to the Trustee an
Exchange Rate Officers' Certificate in respect of the Dollar or Foreign
Currency or currency unit payments to be made on such payment date. The
Dollar or Foreign Currency or currency unit amount receivable by Holders
of Registered Securities denominated in a currency unit who have elected
payment in another currency or currency unit as provided in paragraph
(b) above shall be determined by the Company on the basis of the
applicable Official Currency Unit Exchange Rate set forth in the
applicable Exchange Rate Officers' Certificate.
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(e) If a Foreign Currency in which any Security is denominated or
payable ceases to be recognized both by the government of the country
which issued such currency and for the settlement of transactions by
public institutions of or within the international banking community, or
if ECU ceases to be used within the European Monetary System, or if any
other currency unit in which a Security is denominated or payable ceases
to be used for the purposes for which it was established, in each case
as determined in good faith by the Company, then with respect to each
date for the payment of principal of, premium, if any, and interest, if
any, on the applicable Security denominated or payable in such Foreign
Currency, ECU or such other currency unit occurring after the last date
on which such Foreign Currency, ECU or such other currency unit was so
used (the "Conversion Date"), the Dollar shall become the currency of
payment for use on each such payment date (but ECU or the Foreign
Currency or the currency unit previously the currency of payment shall,
at the Company's election, resume being the currency of payment on the
first such payment date preceded by 15 Business Days during which the
circumstances which gave rise to the Dollar becoming such currency no
longer prevail, in each case as determined in good faith by the
Company). The Dollar amount to be paid by the Company to the Trustee and
by the Trustee or any Paying Agent to the Holder of such Security with
respect to such payment date shall be the Dollar Equivalent of the
Foreign Currency or, in the case of a currency unit, the Dollar
Equivalent of the Currency Unit, as determined by the Exchange Rate
Agent (which shall be delivered in writing to the Trustee not later than
the fifth Business Day prior to the applicable payment date) as of the
Conversion Date or, if later, the date most recently preceding the
payment date in question on which such determination is possible of
performance, but not more than 15 days before such payment date (such
Conversion Date or date preceding a payment date as aforesaid being
called the "Valuation Date") in the manner provided in paragraph (g) or
(h) below.
(f) If the Holder of a Registered Security denominated in a currency
unit elects payment in a specified Foreign Currency or currency unit as
provided for by paragraph (b) and such Foreign Currency ceases to be
used both by the government of the country which issued such currency
and for the settlement of transactions by public institutions of or
within the international banking community, or if ECU ceases to be used
within the European Monetary System, or if another currency unit ceases
to be used for the purposes for which it is established, in each case as
determined in good faith by the Company, such Holder shall (subject to
paragraph (e) above) receive payment in the currency unit in which the
Security is denominated. Each payment covered by an election pursuant to
paragraph (b) above shall be governed by the provisions of this
paragraph (f) (but, subject to any contravening valid election pursuant
to paragraph (b) above, the specified Foreign Currency or ECU or other
currency unit shall, at the Company's election, resume being the
currency or currency unit, as applicable, of payment with respect to
Holders who have so elected, but only with respect to payments on
payment dates preceded by 15 Business Days during which the
circumstances which gave rise to such currency unit becoming the
currency unit of payment, no longer prevail, in each case as determined
in good faith by the Company).
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(g) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Exchange Rate Agent as of each Valuation Date and
shall be obtained by converting the specified Foreign Currency into
Dollars at the Market Exchange Rate on the Valuation Date.
(h) The "Dollar Equivalent of the Currency Unit" shall be determined
by the Exchange Rate Agent as of each Valuation Date and shall be the
sum obtained by adding together the results obtained by converting the
Specified Amount of each Component Currency into Dollars at the Market
Exchange Rate on the Valuation Date for such Component Currency.
(i) For purposes of this Section 410 the following terms shall have
the following meanings:
A "Component Currency" shall mean any currency which, on the
Conversion Date, was a component currency of the relevant currency
unit, including without limitation ECU.
A "Specified Amount" of a Component Currency shall mean the
number of units (including decimals) which such Component Currency
represented in the relevant currency unit, on the Conversion Date or,
if ECU and such currency unit is being used for settlement of
transactions by public institutions of or within the European
Communities or was so used after the Conversion Date, the Valuation
Date or the last date the currency unit was so used, whichever is
later. If after such date the official unit of any Component Currency
is altered by way of combination or subdivision, the Specified Amount
of such Component Currency shall be divided or multiplied in the same
proportion. If after such date two or more Component Currencies are
consolidated into a single currency, the respective Specified Amounts
of such Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the respective Specified Amounts
of such consolidated Component Currencies expressed in such single
currency, and such amount shall thereafter be a Specified Amount and
such single currency shall thereafter be a Component Currency. If
after such date any Component Currency shall be divided into two or
more currencies, the Specified Amount of such Component Currency shall
be replaced by specified amounts of such two or more currencies, the
sum of which, at the Market Exchange Rate of such two or more
currencies on the date of such replacement, shall be equal to the
Specified Amount of such former Component Currency and such amounts
shall thereafter be Specified Amounts and such currencies shall
thereafter be Component Currencies.
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"Market Exchange Rate" shall mean, as of any date, for any
currency or currency unit the noon Dollar buying rate for that
currency or currency unit, as the case may be, for cable transfers
quoted in New York City on such date as certified for customs purposes
by the Federal Reserve Bank of New York or such other rate as may be
established pursuant to Section 202 or Section 301, as the case may
be. If such rates are not available for any reason with respect to one
or more currencies or currency units for which an Exchange Rate is
required, the Exchange Rate Agent shall use, in its sole discretion
and without liability on its part, such quotation of the Federal
Reserve Bank of New York as of the most recent available date, or
quotations from one or more major banks in New York City or in the
country of issue of the currency or currency unit in question, or such
other quotations as the Exchange Rate Agent shall deem appropriate.
Unless otherwise specified by the Exchange Rate Agent, if there is
more than one market for dealing in any currency or currency unit by
reason of foreign exchange regulations or otherwise, the market to be
used in respect of such currency or currency unit shall be that upon
which a nonresident issuer of securities designated in such currency
or currency unit would, as determined in its sole discretion and
without liability on the part of the Exchange Rate Agent, purchase
such currency or currency unit in order to make payments in respect of
such securities.
All decisions and determinations of the Exchange Rate Agent
regarding the Dollar Equivalent of the Foreign Currency, the Dollar
Equivalent of the Currency Unit and the Market Exchange Rate shall be
in its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and irrevocably binding upon the Company
and all Holders of the Securities and Coupons denominated or payable
in the relevant currency or currency units. In the event that a
Foreign Currency ceases to be used both by the government of the
country which issued such currency and for the settlement of
transactions by public institutions of or within the international
banking community, the Company, after learning thereof, will
immediately give notice thereof to the Trustee (and the Trustee will
promptly thereafter give notice in the manner provided in Section 106
to the Holders) specifying the Conversion Date. In the event the ECU
ceases to be used within the European Monetary System, or any other
currency unit in which Securities or Coupons are denominated or
payable, ceases to be used for the purposes for which it was
established, the Company, after learning thereof, will immediately
give notice thereof to the Trustee (and the Trustee will promptly
thereafter give notice in the manner provided in Section 106 to the
Holders) specifying the Conversion Date. Any actions taken pursuant to
the parentheticals at the end of the first sentence of Section 410(e)
and at the end of Section 410(f) shall be promptly set forth in like
notices from the Company to the Trustee and then from the Trustee to
the Holders (which notices may be mailed with payment to the Holders).
Subject to the provisions of Sections 701 and 703, the Trustee
shall be fully justified and protected in relying and acting upon
information received by it from the Company and the Exchange Rate
Agent, and shall not otherwise have any duty or obligation to
determine such information independently.
SECTION 411. Securities in Global Form. If Securities of a series are
issuable in global form, as specified as contemplated by Section 202 or
Section 301, as the case may be, then, notwithstanding clause (a)(8) of
Section 202 or clause (b)(9) of Section 301, as the case may be, and the
provisions of Section 401, a global Security shall represent such of the
Outstanding Securities of such series as shall be specified therein and may
provide that it shall represent the aggregate amount of Outstanding
Securities from time to time endorsed thereon and that the aggregate amount
of Outstanding Securities represented thereby may from time to time be
reduced or increased to reflect exchanges. Any endorsement of a Security in
global form to reflect the amount, or any increase or decrease in the
amount, of Outstanding Securities represented thereby shall be made by the
Trustee in such manner and upon instructions given by such Person or
Persons as shall be specified therein or in the Company Order (or, in the
case of Medium-Term Debt Securities, the Medium-Term Debt Securities
Certificate) to be delivered to the Trustee pursuant to Section 402 or
Section 403. Subject to the provisions of Section 402 and, if applicable,
Section 403, the Trustee shall deliver and redeliver any Security in
definitive global bearer form in the manner and upon written instructions
given by the Person or Persons specified therein or in the applicable
Company Order (or, in the case of Medium-Term Debt Securities, the Medium-
Term Debt Securities Certificate). If a Company Order (or, in the case of
Medium-Term Debt Securities, Medium-Term Debt Securities Certificate)
pursuant to Section 402 or 403 has been, or simultaneously is, delivered,
any instructions by the Company with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not
comply with Section 102 and need not be accompanied by an Opinion of
Counsel.
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The provisions of the last sentence of the fifth paragraph of Section 402
shall apply to any Security represented by a Security in global form if
such Security was never issued and sold by the Company and the Company
delivers to the Trustee the Security in global form together with written
instructions (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel) with regard to the reduction in the
principal amount of Securities represented thereby, together with the
written statement contemplated by the last sentence of the fifth paragraph
of Section 402.
Notwithstanding the provisions of Section 406, unless otherwise specified
as contemplated by Section 202 or Section 301, as the case may be, payment
of principal of and any premium and any interest on any Security in
definitive global form shall be made to the Person or Persons specified
therein.
SECTION 412. Registered Global Notes. (a) If the Company shall establish
pursuant to Section 202 or Section 301, as the case may be, that the
Registered Securities of a series are to be issued in whole or in part in
the form of one or more global Securities (Registered Securities in the
form of global Securities being herein called "Registered Global Notes"),
then the Company shall execute and the Trustee shall, in accordance with
Section 202 or Section 301, as the case may be, and the Company Order or
the Medium-Term Debt Securities Certificate, as the case may be, with
respect to such series, authenticate and deliver one or more temporary or
permanent Registered Global Notes that (i) shall represent the aggregate
principal amount of the Outstanding Securities of such series to be
represented by one or more Registered Global Notes, (ii) shall be
registered in the name of the U.S. Depositary for such Registered Global
Note or Notes or the nominee of such depositary, and (iii) may bear a
legend, in addition to any other legend required or requested by the U.S.
Depositary or included on such Note pursuant to applicable laws or
regulations, substantially to the following effect:
UNLESS AND UNTIL IT IS EXCHANGED FOR SECURITIES IN DEFINITIVE
REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE U.S. DEPOSITARY TO A NOMINEE OF THE U.S. DEPOSITARY OR BY A
NOMINEE OF THE U.S. DEPOSITARY TO THE U.S. DEPOSITARY OR ANOTHER NOMINEE
OF THE U.S. DEPOSITARY OR BY THE U.S. DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR U.S. DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR U.S.
DEPOSITARY.
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Notwithstanding any other provision of this Section 412 or Section 404,
unless and until it is exchanged in whole or in part for Registered
Securities in definitive form, a Registered Global Note representing all or
a portion of the Registered Securities of a series may not be transferred
except as a whole by the U.S. Depositary for such series to a nominee of
such depositary or by a nominee of such depositary to such depositary or
another nominee of such depositary or by such depositary or any such
nominee to a successor U.S. Depositary for such series or a nominee of such
successor depositary.
(b) If at any time the U.S. Depositary for the Securities of a series
notifies the Company that it is unwilling or unable to continue as U.S.
Depositary for the Securities of such series or if at any time the
U.S. Depositary for Securities of a series shall no longer be a clearing
agency registered and in good standing under the Securities Exchange Act of
1934, as amended, or other applicable statute or regulation, the Company
shall appoint a successor U.S. Depositary with respect to the Securities of
such series. If a successor U.S. Depositary for the Securities of such
series is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, the Company will
execute, and the Trustee, upon receipt of a Company Order or a Medium-Term
Debt Securities Certificate, as the case may be, for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver Registered Securities of such series in definitive form in an
aggregate principal amount equal to the principal amount of the Registered
Global Note or Notes representing such series in exchange for such
Registered Global Note or Notes.
(c) The Company may at any time and in its sole discretion determine
that all or a portion of the Registered Securities of any series issued in
the form of one or more Registered Global Notes shall no longer be
represented by such Registered Global Note or Notes. In such event, the
Company will execute, and the Trustee, upon receipt of a Company Order or a
Medium-Term Debt Securities Certificate, as the case may be, for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver, Registered Securities of such series in
definitive form and in an aggregate principal amount equal to the principal
amount of the Registered Global Note or Notes representing such series, or
portion thereof to be exchanged, in exchange for such Registered Global
Note or Notes.
(d) If the Registered Securities of any series shall have been issued
in the form of one or more Registered Global Notes and if an Event of
Default with respect to the Securities of such series shall have occurred
and be continuing, the Company will promptly execute, and the Trustee, upon
receipt of a Company Order or a Medium-Term Debt Securities Certificate, as
the case may be, for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver, Registered
Securities of such series, in definitive form and in an aggregate principal
amount equal to the principal amount of the Registered Global Note or Notes
representing such series in exchange for such Registered Global Note or
Notes.
(e) If specified by the Company pursuant to Section 202 or Section
301, as the case may be, with respect to Registered Securities of a series,
the U.S. Depositary for such series of Registered Securities may surrender
a Registered Global Note for such series of Securities in exchange in whole
or in part for Registered Securities of such series in definitive form on
such terms as are acceptable to the Company and such depositary.
Thereupon, the Company shall execute and the Trustee shall authenticate and
deliver, without charge:
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(i) to each Person specified by the U.S. Depositary a new Registered
Security or Securities of the same series in definitive form registered
in such names and in such authorized denominations as the
U.S. Depositary for such Registered Global Note, pursuant to
instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee, and in exchange for such Person's beneficial
interest in the Registered Global Note; and
(ii) to the U.S. Depositary a new Registered Global Note in a
denomination equal to the difference, if any, between the principal
amount of the surrendered Registered Global Note and the aggregate
principal amount of Registered Securities in definitive form delivered
to Holders thereof.
(f) Upon the exchange of a Registered Global Note for Registered
Securities in definitive form, such Registered Global Note shall be
cancelled by the Trustee. Securities issued in exchange for a Registered
Global Note pursuant to this Section 412 shall be registered in such names
and in such authorized denominations as the U.S. Depositary for such
Registered Global Note, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver such Securities to the Persons in whose names such
Securities are so registered.
ARTICLE FIVE
Satisfaction and Discharge
SECTION 501. Satisfaction and Discharge of Indenture in Respect of Any
Series of Securities. This Indenture shall upon Company Request cease to be
of further effect with respect to a series of Securities (except as to any
surviving rights of (as applicable) registration of transfer or exchange of
Securities and Coupons, if any, of such series herein expressly provided
for), and the Trustee, at the request and expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to such series, when
(1) either
(A) all Securities and Coupons, if any, of such series
theretofore authenticated and delivered (other than (i) Securities and
Coupons of such series which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 405 and
(ii) Securities and Coupons of such series for whose payment money has
theretofore been deposited in trust or segregated and held in trust by
the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1103) have been delivered to the
Trustee for cancelation; or
(B) all such Securities and Coupons of such series not
theretofore delivered to the Trustee for cancelation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company,
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and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount in the currency or
currency unit in which such Securities and Coupons of such series are
payable sufficient to pay and discharge the entire indebtedness on
such Securities and Coupons of such series not theretofore delivered
to the Trustee for cancelation, for principal (and premium, if any)
and interest, if any, to the date of such deposit (in the case of
Securities and Coupons of such series which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may
be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company with respect to such series of Securities; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of the
Securities of the series under this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to a series, the obligations of the Company to the Trustee under
Section 707, the obligations of the Trustee to any Authenticating Agent
under Section 715 and, if money shall have been deposited with the Trustee
pursuant to subclause (B) of clause (1) of this Section, the obligations of
the Trustee under Section 502 and the last paragraph of Section 1103 shall
survive.
SECTION 502. Application of Trust Money. Subject to the provisions of the
last paragraph of Section 1103, all money deposited with the Trustee
pursuant to Sections 501 and 503 (and all money received as payment in
connection with U.S. Government Obligations and Foreign Government
Securities deposited pursuant to Section 503) shall be held in trust and
applied by it, in accordance with the provisions of the Securities and
Coupons, if any, and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest, if any, for whose payment
such money has been deposited with the Trustee.
SECTION 503. Satisfaction, Discharge and Defeasance of Securities of Any
Series. (a) Unless pursuant to Section 202 or Section 301, as the case may
be, provision is made that this Section shall not be applicable to
Securities and Coupons, if any, of any series, at the Company's option,
either:
(i) the Company will be deemed to have been Discharged (as defined
below) from its obligations with respect to Securities and Coupons, if
any, of such series, or
(ii) the Company will cease to be under any obligation with respect to
such series to comply with any term, provision or condition set forth in
(x) Sections 901, 902, 1104 and 1105 or (y) the instrument or
instruments setting forth the terms, provisions or conditions of such
series pursuant to Section 202 or Section 301, as the case may be
(provided, in the case of this subclause (y), that such instrument or
instruments specify which terms, provisions or conditions, if any, are
subject to this clause (a)(ii) and that no such instrument may specify
that the Company may cease to comply with any obligations as to which it
may not be Discharged pursuant to the definition of "Discharged").
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(b) A Discharge pursuant to clause (a)(i) above shall be effective with
respect to the Securities and Coupons, if any, of such series on the first
day after the applicable conditions set forth below in (i) and either (ii)
or (iii) have been satisfied, and the Company's release from its
obligations to comply with certain obligations with respect to such series
pursuant to clause (a)(ii) above shall be effective with respect to the
Securities and Coupons, if any, of such series on the first day after the
applicable conditions set forth below in (i) and either (ii) or (iii) have
been satisfied:
(i) the Company has:
(A) paid or caused to be paid all other sums payable with respect
to the Outstanding Securities and Coupons, if any, of such series (in
addition to any required under clause (b)(ii) or (b)(iii)); and
(B) delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of the entire
indebtedness on all Outstanding Securities and Coupons, if any, of any
such series have been complied with;
(ii) (A) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee as a trust fund specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Securities and Coupons, if any, of such series (1) money in an amount
(in such currency, currencies or currency unit or units in which any
Outstanding Securities and Coupons, if any, of such series are payable)
or (2) in the case of Securities and Coupons, if any, denominated in
Dollars, U.S. Government Obligations (as defined below) or, in the case
of Securities and Coupons, if any, denominated in a Foreign Currency,
Foreign Government Securities (as defined below), which through the
payment of interest and principal in respect thereof in accordance with
their terms will provide, not later than one day before the due date of
any payment of principal (including any premium) and interest, if any,
under the Securities and Coupons, if any, of such series, money in an
amount or (3) a combination of (1) and (2), which in any case of
clauses (1), (2) and (3) is sufficient (in the opinion with respect to
(2) and (3) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee) to pay and discharge each installment of principal of
(including premium, if any, on), and interest, if any, on, the
Outstanding Securities and Coupons, if any, of such series on the dates
such installments of interest or principal are due, in the currency,
currencies or currency unit or units, in which such Securities and
Coupons, if any, are payable;
(B)(1) no Event of Default or event (including such deposit) which
with notice or lapse of time would become an Event of Default shall have
occurred and be continuing on the date of such deposit, and (2) no Event
of Default as defined in clause (5) or (6) of Section 601, or event
which with notice or lapse of time or both would become an Event of
Default under either such clause, shall have occurred within 91 days
after the date of such deposit;
(C) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that Holders of the Securities and Coupons, if
any, of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of the Company's exercise of its option
under this Section 503 and will be subject to Federal income tax in the
same amount, in the same manner and at the same times as would have been
the case if such option had not been exercised; and
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(D) if the Securities of such series are then listed on the New York
Stock Exchange, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that such Securities will not be
delisted as the result of the Company's exercise of its option under
this Section 503;
(iii) the Company has properly fulfilled such other means of
satisfaction and discharge as is specified, as contemplated by
Section 202 or Section 301, as the case may be, to be applicable to the
Securities and Coupons, if any, of such series.
(c) Any deposits with the Trustee referred to in clause (b)(ii)(A) above
will be made under the terms of an escrow trust agreement in form and
substance satisfactory to the Trustee. If any Outstanding Securities and
Coupons, if any, of such series are to be redeemed prior to their Stated
Maturity, whether pursuant to any mandatory redemption provisions or in
accordance with any mandatory sinking fund requirement, the applicable
escrow trust agreement will provide therefor and the Company will make
arrangements for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company.
SECTION 504. Reinstatement. If the Trustee is unable to apply any money,
U.S. Government Obligations or Foreign Government Securities in accordance
with Section 501 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities and Coupons, if any, of
such series shall bc revived and reinstated as though no deposit had
occurred pursuant to Section 501 until such time as the Trustee is
permitted to apply all such money, U.S. Government Obligations or Foreign
Government Securities in accordance with Section 501; provided, however,
that if the Company has made any payment of interest on or principal of
(and premium, if any) on any Securities and Coupons, if any, of such series
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such series of Securities and
Coupons, if any, to receive such payment from the money, U.S. Government
Obligations or Foreign Government Securities held by the Trustee.
SECTION 505. Definitions. The following terms, as used in this Article,
shall have the following meanings:
"Discharged" means that the Company will be deemed to have paid and
discharged the entire indebtedness represented by, and obligations
under, the Securities and Coupons, if any, of the series as to which
this Section is specified as applicable as aforesaid and to have
satisfied all the obligations under this Indenture relating to the
Securities and Coupons, if any, of such series (and the Trustee, at the
request and expense of the Company, will execute proper instruments
acknowledging the same), except (A) the rights of Holders thereof to
receive, from the trust fund described in Section 503(b)(ii)(A), payment
of the principal of (and premium, if any) and the interest, if any, on
such Securities and Coupons, if any, when such payments are due, (B) the
Company's obligations with respect to such Securities and Coupons, if
any, under Sections 404 and 405 (insofar as applicable to Securities of
such series), 502, 1102 and 1103 (last paragraph only) and the Company's
obligations to the Trustee under Section 707, (C) the rights of Holders
of Securities of any series with respect to the currency or currency
units in which they are to receive payments of principal, premium, if
any, and interest, if any, and (D) the rights, powers, trusts, duties
and immunities of the Trustee hereunder, will survive such discharge.
The Company will reimburse the trust fund for any loss suffered by it as
a result of any tax, fee or other charge imposed on or assessed against
deposited U.S. Government Obligations or Foreign Government Securities,
as the case may be, or any principal or interest paid on such
obligations, and, subject to the provisions of Section 707, will
indemnify the Trustee against any claims made against the Trustee in
connection with any such loss.
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"Foreign Government Securities" means, with respect to Securities and
Coupons, if any, of any series that are denominated in a Foreign
Currency, securities that are (i) direct obligations of the government
that issued or caused to be issued such currency for the payment of
which obligations its full faith and credit is pledged or (ii)
obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of such government the timely payment of which
is unconditionally guaranteed as a full faith and credit obligation by
such government, which, in either case under clause (i) or (ii), are not
callable or redeemable at the option of the issuer thereof.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality
of the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation of the
United States of America, which, in either case under clause (i) or
(ii), are not callable or redeemable at the option of the issuer
thereof, and will also include a depository receipt issued by a bank or
trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest on or principal of any such
U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt, provided that (except as required by
law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation
or the specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
ARTICLE SIX
Remedies
SECTION 601. Events of Default. "Event of Default" with respect to any
series of Securities means each one of the events specified below in this
Section 601, unless it is either inapplicable to a particular series or is
specifically deleted or modified in or pursuant to the supplemental
indenture, Board Resolution or Medium-Term Debt Securities Certificate
establishing such series of Securities:
(1) default in the payment of any installment of interest upon any of
the Securities of such series, as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or
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(2) default in the payment of the principal of or premium, if any, on
any of the Securities of such series, as and when the same shall become
due and payable (subject to clause (3) below) either at maturity, upon
redemption, by declaration or otherwise; or
(3) default in the making of any payment for a sinking, purchase or
analogous fund provided for in respect of such series of Securities, as
and when the same shall become due and payable; or
(4) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in
respect of the Securities of such series, or in this Indenture contained
with respect to such series, for a period of 90 days after the date on
which written notice of such failure requiring the Company to remedy the
same and stating that such notice is a `Notice of Default' hereunder,
shall have been given, by registered or certified mail, to the Company
by the Trustee, or to the Company and the Trustee by the holders of at
least 25% in aggregate principal amount of the Securities of such series
at the time Outstanding; or
(5) entry of a decree or order for relief in respect of the Company by
a court having jurisdiction in the premises in an involuntary case under
any applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the
Company or for any substantial part of its property, or ordering the
winding-up or liquidation of its affairs and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
(6) commencement by the Company of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or consent by the Company to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of the Company or
for any substantial part of its property, or any general assignment by
the Company for the benefit of creditors, or failure by the Company
generally to pay its debts as they become due, or the taking by the
Company of any corporate action in furtherance of any of the foregoing;
or
(7) any other Event of Default provided with respect to Securities of
that series.
SECTION 602. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in each and every such case,
either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of that series or, in the
case of an Event of Default specified in Clause (5) or (6) of Section 601,
of all series (voting as a class) with respect to which such Event of
Default has occurred and is continuing, may declare the principal amount
(or, if the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all of the Securities of that series, together
with accrued interest thereon, if any, to be due and payable immediately,
by a notice in writing to the Company (and to the Trustee if given by
Holders), and upon any such declaration such principal amount (or specified
amount), together with accrued interest thereon, if any, shall become
immediately due and payable.
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At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences
if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) in Dollars all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the nonpayment of the principal of Securities of that series
which has become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 613.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 603. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Company covenants that if
(1) default shall be made in the payment of any installment of
interest on any Security or Coupon as and when the same shall become due
and payable, and such default shall have continued for the period of
grace provided for with respect to such Security or Coupon, as the case
may be,
(2) default shall be made in the payment of the principal of or
premium, if any, on any Security as and when the same shall have become
due and payable (subject to clause (3) below), whether at maturity of
the Security or upon redemption or by declaration or otherwise, and such
default shall have continued for any period of grace provided for with
respect to such Security, or
(3) default shall be made in the making of any payment for any
sinking, purchase or analogous fund provided for in respect of any
Security as and when the same shall become due and payable, and such
default shall have continued for any period of grace provided for with
respect to such Security,
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities and Coupons, if any, the whole amount then
due and payable on such Securities and Coupons, if any, for principal (and
premium, if any) and interest, if any, and, to the extent that payment of
such interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue installments of
interest, if any, at the rate or rates prescribed therefor in such
Securities and Coupons, if any, and, in addition thereto, 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.
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If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the
same against the Company or any other obligor upon such Securities and
Coupons, if any, and collect the moneys adjudged or decreed to be payable
in the manner provided by law out of the property of the Company or any
other obligor upon such Securities and Coupons, if any, wherever situated.
If an Event of Default with respect to Securities and Coupons, if any, of
any series occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders of
Securities and/or Coupons of such series by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
SECTION 604. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative
to the Company or any other obligor upon the Securities or the property of
the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall then be due
and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the
Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest, if any, owing and unpaid in respect of
the Securities and to file such 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
of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official 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 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 707.
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
Securities and/or Coupons or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 605. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities and
Coupons, if any, may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or Coupons, if any, or the production
thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit
of the Holders of the Securities and Coupons, if any, in respect of which
such judgment has been recovered.
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SECTION 606. Application of Money Collected. Any money collected by the
Trustee pursuant to this Article shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution
of such money on account of principal (or premium, if any) or interest,
upon presentation of the Securities and Coupons, if any, and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: to the payment of all amounts due the Trustee under
Section 707;
SECOND: to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities and
Coupons, if any, in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Securities and/or
Coupons for principal (and premium, if any) and interest, if any,
respectively; and
THIRD: the balance, if any, to the Person or Persons entitled thereto.
SECTION 607. Limitation on Suits. No Holder of Securities of any series
shall have any right to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless
(1) an Event of Default with respect to Securities of such series
shall have occurred and be continuing and such Holder has previously
given written notice to the Trustee of such continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series or, in the case of an Event of
Default specified in Clause (5) or (6) of Section 601, of all series
(voting as a class) with respect to which such Event of Default has
occurred and is continuing, shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series or, in the
case of an Event of Default specified in Clause (5) or (6) of
Section 601, of all series (voting as a class) with respect to which
such Event of Default has occurred and is continuing;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture (including without limitation the provisions of
Section 612) to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over
any other of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit
of all such Holders.
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SECTION 608. Unconditional Right of Holders To Receive Principal, Premium
and Interest. Notwithstanding any other provision in this Indenture, the
Holder of any Security or any Coupon shall have the right, which is
absolute and unconditional, to receive payment of the principal of (and
premium, if any) and (subject to Section 406) interest, if any, on such
Security or Coupon on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights
shall not be impaired without the consent of such Holder.
SECTION 609. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such
Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.
SECTION 610. Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities and/or Coupons, if any, in the last paragraph of
Section 405, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 611. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder of any Securities and/or Coupons to exercise any
right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Subject to the provisions of Section 607, every right
and remedy given by this Article or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 612. Control by Holders. The Holders of not less than a majority
in principal amount of the Outstanding Securities of any series shall have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, with respect to the Securities of such series;
provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture.
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) subject to the provisions of Section 701, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Trust Officer or Officers of the Trustee,
determine that the action so directed would involve the Trustee in
personal liability or would be unduly prejudicial to Holders not joining
in such direction.
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SECTION 613. Waiver of Past Defaults. The Holders of not less than a
majority in principal amount of the Outstanding Securities of any series
may on behalf of the Holders of all the Securities of such series waive any
past default hereunder with respect to such series and its consequences,
except a default
(1) in the payment of the principal of (or premium, if any) or
interest, if any, on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Ten cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist with respect to
such series, and any Event of Default with respect to such series 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 614. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of a Security and/or Coupon by his acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, 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, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys'
fees and expenses, against any party litigant in such suit in the manner
and to the extent provided in Section 315(e) of the Trust Indenture Act,
having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not
apply to any suit instituted by the Company, to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding
in the aggregate more than 10% in principal amount of the Outstanding
Securities of any series, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or
interest, if any, on any Security or the payment of interest on any Coupon
on or after the Stated Maturity or Maturities expressed in such Security
(or, in the case of redemption, on or after the Redemption Date).
SECTION 615. Waiver of Stay or Extension Laws. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any
time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
<PAGE>
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ARTICLE SEVEN
The Trustee
SECTION 701. Certain Duties and Responsibilities. The duties and
responsibilities of the Trustee shall be as provided by the Trust Indenture
Act. Notwithstanding the foregoing, no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. Whether or
not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 702. Notice of Defaults. Within 90 days after the occurrence of
any default hereunder with respect to the Securities of any series, the
Trustee shall transmit to the Holders of Securities of such series notice
as provided in Section 106 of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of
(or premium, if any, on) or interest on any Security of such series or in
the payment of any sinking fund installment with respect to Securities of
such series, the Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee or a trust
committee of directors or Responsible Trust Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of
the Holders of Securities of such series; provided further that in the case
of any default of the character specified in Section 601(4) with respect to
Securities of such series, no such notice to Holders shall be given until
at least 30 days after the occurrence of such default. For the purpose of
this Section, the term "default" means any event which is, or after notice
or lapse of time or both would become, an Event of Default with respect to
Securities of such series.
SECTION 703. Certain Rights of Trustee. Subject to the provisions of
Section 701 and subject to Sections 315(a) through (d) of the Trust
Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, coupon, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) 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 in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
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(e) 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 pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) 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, coupon, other evidence of indebtedness or other
paper or document;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
counsel, and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or counsel appointed with due care
(and, in the case of any agent, with the prior written consent of the
Company; provided, however, that the Company's prior written consent
shall not be required in connection with the appointment of an agent as
a result of or in connection with a default or an Event of Default) by
it hereunder; and
(h) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
SECTION 704. Not Responsible for Recitals or Issuance of Securities. The
recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Securities. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 705. May Hold Securities. The Trustee, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities or
warrants to purchase Securities and, subject to Sections 708 and 713, may
otherwise deal with the Company with the same rights it would have if it
were not Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 706. Money Held in Trust. Except as provided in Section 114,
money held by the Trustee or any Paying Agent in trust hereunder need not
be segregated from other funds except to the extent required by law. The
Trustee or any Paying Agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 707. Compensation and Reimbursement. The Company agrees
(1) to pay to the Trustee from time to time in Dollars such
compensation as shall be agreed to in writing between the Company and
the Trustee for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee in Dollars upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
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(3) to indemnify the Trustee in Dollars for, and to hold it harmless
against, any and all loss, liability, damage, claim or expense,
including taxes (other than taxes based upon, or measured or determined
by, the income of the Trustee) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon
all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of, premium, if any, or
interest, if any, on particular Securities.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 601(5) and Section 601(6), the
expenses (including the reasonable charges and expenses of its counsel) and
the compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency
or other similar law. The provisions of this Section shall survive the
termination of this Indenture.
SECTION 708. Disqualification; Conflicting Interests. If the Trustee has
or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions
of, the Trust Indenture Act and this Indenture. To the extent permitted by
such Act, the Trustee shall not be deemed to have a conflicting interest by
virtue of (i) being a trustee under this Indenture with respect to
Securities of more than one series, or (ii) being a trustee under the
indenture dated as of December 15, 1991, between the Company and State
Street Bank and Trust Company (as successor to The First National Bank of
Boston).
SECTION 709. Corporate Trustee Required; Eligibility. There shall at all
times be a Trustee for each series of Securities hereunder which shall be
either (1) a corporation or other Person organized and doing business under
the laws of the United States of America, any State thereof or the District
of Columbia, which is authorized under such laws to exercise corporate
trust powers and is subject to supervision or examination by Federal or
State authority or (2) a corporation or other Person organized and doing
business under the laws of a foreign government that is permitted to act as
Trustee pursuant to a rule, regulation or order of the Commission, which is
authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by authority of such foreign
government or a political subdivision thereof substantially equivalent to
supervision or examination applicable to United States institutional
trustees; in either case having a combined capital and surplus of at least
$50,000,000. If such corporation or Person publishes reports of condition
at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section,
the combined capital and surplus of such corporation or Person shall be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. Neither the Company nor any Person
directly or indirectly controlling, controlled by, or under common control
with the Company shall serve as trustee for the Securities of any series
issued hereunder. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
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SECTION 710. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 711.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 711
shall not have been delivered to the resigning Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 708 after written
request therefor by the Company or by any Holder who has been a bona
fide Holder of a Security of a series as to which the Trustee has a
conflicting interest for at least six months, or
(2) the Trustee for a series shall cease to be eligible under
Section 709 and shall fail to resign after written request therefor by
the Company or by any Holder of Securities of such series, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove
the Trustee with respect to the series, or, in its discretion, with respect
to all Securities, or (ii) subject to Section 614, any Holder who has been
a bona fide Holder of a Security for at least six months (and, in the case
of Clause (1) above, who is a holder of a Security of a series as to which
the Trustee has a conflicting interest) may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to the series, or in the case of
clause (3), with respect to all Securities and the appointment of a
successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any
cause, with respect to the Securities of one or more series, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to
the Securities of one or more of or all such series and that at any time
there shall be only one Trustee with respect to the Securities of any
particular series) and such successor Trustee or Trustees shall comply with
the applicable requirements of Section 711. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment in accordance with the applicable
requirements of Section 711, become the successor Trustee with respect to
the Securities of such series and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee with respect to
the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 711,
any Holder who has been a bona fide Holder of a Security of such series for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment
of a successor Trustee with respect to the Securities of such series.
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(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series by giving notice of such event to all Holders of Securities of such
series as provided by Section 106. Each notice shall include the name of
the successor Trustee with respect to the Securities of such series and the
address of its Corporate Trust Office.
SECTION 711. Acceptance of Appointment by Successor. (a) In case of the
appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers
and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which the retiring Trustee
is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein
or in such supplemental indenture shall constitute such Trustees cotrustees
of the same trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery
of such supplemental indenture, the resignation or removal of the retiring
Trustee shall become effective to the extent provided therein and each such
successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly
assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates.
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(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 712. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust
business of the Trustee, including the trust created by this Indenture,
shall be the successor of the Trustee hereunder, provided that such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 713. Preferential Collection of Claims Against Company. If and
when the Trustee shall be or become a creditor of the Company (or of any
other obligor upon the Securities or the Coupons, if any), the Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
SECTION 714. Judgment Currency. If, for the purpose of obtaining a
judgment in any court with respect to any obligation of the Company
hereunder or under any Security or Coupon, it shall become necessary to
convert into any other currency or currency unit any amount in the currency
or currency unit due hereunder or under such Security or Coupon, then such
conversion shall be made at the Conversion Rate (as defined below) as in
effect on the date the Company shall make payment to any Person in
satisfaction of such judgment. If pursuant to any such judgment, conversion
shall be made on a date other than the date payment is made and there shall
occur a change between such Conversion Rate and the Conversion Rate as in
effect on the date of payment or distribution, the Company agrees to pay
such additional amounts (if any) as may be necessary to ensure that the
amount paid is the amount in such other currency or currency unit which,
when converted at the Conversion Rate as in effect on the date of payment
or distribution, is the amount then due hereunder or under such Security or
Coupon. Any amount due from the Company under this Section 714 shall be due
as a separate debt and is not to be affected by or merged into any judgment
being obtained for any other sums due hereunder or in respect of any
Security or Coupon so that in any event the Company's obligations hereunder
or under such Security or Coupon will be effectively maintained as
obligations in such currency or currency unit. In no event, however, shall
the Company be required to pay more in the currency or currency unit stated
to be due hereunder or under such Security or Coupon.
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For purposes of this Section 714, "Conversion Rate" shall mean, as of any
date, for any currency or currency unit into which an amount due hereunder
or under any Security or Coupon is to be converted, the noon buying rate in
the other currency or currency unit for that currency or currency unit for
cable transfers quoted in New York City on such date as certified for
customs purposes by the Federal Reserve Bank of New York. If such rates are
not available for any reason with respect to one or more currencies or
currency units for which a Conversion Rate is required, the Exchange Rate
Agent shall use, in its sole discretion and without liability on its part,
such quotation of the Federal Reserve Bank of New York as of the most
recent available date, or quotations from one or more major banks in New
York City or in the country of issue of the currency in question, or such
other quotations as the Exchange Rate Agent shall deem appropriate. Unless
otherwise specified by the Exchange Rate Agent, if there is more than one
market for dealing in a currency or currency unit by reason of foreign
exchange regulations or otherwise, the market to be used in respect of such
currency or currency unit shall be that upon which a nonresident issuer of
securities denominated in such currency or currency unit would, as
determined in its sole discretion and without liability on the part of the
Exchange Rate Agent, purchase such currency or currency unit in order to
make payments in respect of such securities. If there does not exist a
quoted exchange rate in any currency or currency unit (the "First
Currency") for another currency unit (the "Second Currency"), then the
Conversion Rate for the Second Currency shall be equal to equivalent amount
in the First Currency obtained by converting the Specified Amount of each
Component Currency of the Second Currency into the First Currency at the
Conversion Rate (determined as provided above) for each such Component
Currency on such date (or, if the First Currency is a currency unit for
which there is no quoted exchange rate in any Component Currency, by
converting the Specified Amount of each Component Currency of the Second
Currency into the Specified Amount of each Component Currency of the First
Currency at the Conversion Rate (determined as provided above) for each
such Component Currency on such date).
SECTION 715. Appointment of Authenticating Agent. The Company may appoint
an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon original issue or upon
exchange, registration of transfer or partial redemption thereof or
pursuant to Section 405, and Securities so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference
is made in this Indenture to the authentication and delivery of Securities
by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Trustee and
shall at all times be a corporation having a combined capital and surplus
of not less than the equivalent of $50,000,000 and subject to supervision
or examination by Federal, state or District of Columbia authority or the
equivalent foreign authority, in the case of an Authenticating Agent who is
not organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia. If such
Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of such Authenticating Agent,
shall continue to be an Authenticating Agent; provided such corporation
shall be otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee or such
Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Company may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Trustee. Upon receiving
such a notice of resignation or upon such a termination, or in case at any
time such Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, the Company may appoint a successor
Authenticating Agent which shall be acceptable to the Trustee and shall
mail, or cause to be mailed, written notice of such appointment by first-
class mail, postage prepaid, to all Holders of Registered Securities, if
any, of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated herein issued
under the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY, as Trustee
By
As Authenticating Agent
By
Authorized [Officer] [Signatory]
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If all the Securities of a series may not be originally issued at one
time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment or other
place where the Company wishes to have Securities of such series
authenticated upon original issuance, the Company shall appoint in
accordance with this Section an Authenticating Agent (which may be an
Affiliate of the Company if eligible to be appointed as an Authenticating
Agent hereunder) having an office in such Place of Payment or other place
designated by the Company with respect to such series of Securities.
ARTICLE EIGHT
Holders' Lists and Reports by Trustee and Company
SECTION 801. Company To Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semiannually, not later than January 15 and July 15 in each year,
a list in such form as the Trustee may reasonably require and which
shall comply with the requirements of the Trust Indenture Act, of the
names and addresses of the Holders of each series of Registered
Securities as of the preceding January 1 or July 1, as the case may be,
and such information concerning the Holders of Bearer Securities which
is known to the Company or any Paying Agent other than the Company;
provided, however, that the Company and such Paying Agents shall
have no obligation to investigate any matter relating to any Holder
of a Bearer Security or a Coupon; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content, such list to be dated as of a date not more
than 15 days prior to the time such list is furnished, and such
information concerning the Holders of Bearer Securities which is known
to the Company or any such Paying Agent; provided, however, that the
Company and such Paying Agents shall have no obligation to investigate
any matter relating to any Holder of a Bearer Security or a Coupon;
notwithstanding the foregoing subsections (a) and (b), at such times as the
Trustee is the Security Registrar and Paying Agent with respect to a
particular series of Securities, no such list shall be required to be
furnished in respect of such series.
SECTION 802. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of each series contained in
the most recent list furnished to the Trustee as provided in Section 801
and the names and addresses of Holders of each series received by the
Trustee in any capacity as Security Registrar or Paying Agent. The Trustee
may destroy any list furnished to it as provided in Section 801 upon
receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Holder of Securities or Coupons, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any agent of either of them shall be held accountable by
reason of the disclosure of any such information as to the names and
addresses of the Holders in accordance with Section 312 of the Trust
Indenture Act, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.
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SECTION 803. Reports by Trustee. (a) Within 60 days after May 15 of each
year commencing with the May 15 occurring after the initial issuance of
Securities hereunder, the Trustee shall transmit to the Holders of
Securities, in the manner and to the extent provided in Section 313(c) of
the Trust Indenture Act, a brief report, dated as of such May 15, if
required by Section 313(a) of the Trust Indenture Act. The Trustee also
shall comply with Section 313(b) of the Trust Indenture Act and shall
transmit to Holders, in the manner and to the extent provided in said
Section 313(c), such other reports, if any, as may be required pursuant to
the Trust Indenture Act.
(b) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when any Securities are listed on any stock
exchange.
SECTION 804. Reports by Company. The Company shall file with the
Trustee and the Commission, and transmit to Holders, such information,
documents and reports, and such summaries thereof and copies of portions
thereof, as may be required pursuant to Section 314 of the Trust Indenture
Act at the times and in the manner provided pursuant to such Act; provided
that any such information, documents or reports required to be filed with
the Commission pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 shall be filed with the Trustee within 15 days after the same
shall be so required to be filed with the Commission.
ARTICLE NINE
Consolidation, Merger, Conveyance or Transfer
SECTION 901. Company May Consolidate, etc., Only on Certain Terms. The
Company shall not consolidate with or merge into any other corporation or
convey or transfer its properties and assets substantially as an entirety
to any Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer
the properties and assets of the Company substantially as an entirety
shall be a corporation organized and existing under the laws of the
United States of America or any state or the District of Columbia, and
shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, the
due and punctual payment of the principal of, and premium, if any, and
interest, if any, on all the Securities and the performance or
observance of every covenant of this Indenture on the part of the
Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have occurred and be continuing;
and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance or transfer and such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
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SECTION 902. Successor Corporation Substituted. Upon any consolidation or
merger, or any conveyance or transfer of the properties and assets of the
Company substantially as an entirety in accordance with Section 901, the
successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein; and in the
event of any such conveyance or transfer, the Company (which term shall for
this purpose mean the Person named as the "Company" in the first paragraph
of this instrument or any successor corporation which shall have
theretofore become such in the manner prescribed in Section 901) shall be
discharged from all liability under this Indenture and in respect of the
Securities and may be dissolved and liquidated.
ARTICLE TEN
Supplemental Indentures
SECTION 1001. Supplemental Indentures Without Consent of Holders. Without
the consent of any Holders, the Company, when authorized by or pursuant to
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory
to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities;
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of
such series) or to surrender any right or power herein conferred upon
the Company;
(3) to add any additional Events of Default with respect to all or any
series of the Securities (and, if such Event of Default is applicable to
less than all series of Securities, specifying the series to which such
Event of Default is applicable);
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to facilitate the issuance of
Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons; to change or eliminate
any restrictions on the payment of principal of or any premium or
interest on Bearer Securities, to permit Bearer Securities to be issued
in exchange for Bearer Securities of other authorized denominations;
provided that any such addition or change shall not adversely affect the
interests of the Holders of Securities of any series or any related
Coupons in any material respect;
(5) to change or eliminate any of the provisions of this Indenture;
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is adversely affected by
such change in or elimination of such provision;
(6) to establish the form or terms of Securities of any series as
permitted by Sections 202 and 301;
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 711(b);
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(8) if allowed under applicable laws and regulations, to permit
payment in the United States of principal, premium or interest on Bearer
Securities or Coupons, if any;
(9) to provide for the issuance of uncertificated Securities of one or
more series in addition to or in place of certificated Securities;
(10) to cure any ambiguity or to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein; or
(11) to make any other provisions with respect to matters or questions
arising under this Indenture; provided such other provisions as may be
made shall not adversely affect the interests of the Holders of
outstanding Securities of any series in any material respect.
SECTION 1002. Supplemental Indentures with Consent of Holders. With the
consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities of all series affected by such supplemental
indenture (acting as one class), by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by or pursuant to a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such
series under this indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each outstanding
Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
602, or change any Place of Payment where, or the currency, currencies
or currency unit or units in which, any Security or any premium or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date), or affect adversely the terms, if any, of conversion of any
Security into stock or other securities of the Company or of any other
corporation,
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture,
(3) change any obligation of the Company, with respect to Outstanding
Securities of a series, to maintain an office or agency in the places
and for the purposes specified in Section 1102 for such series, or
(4) modify any of the provisions of this Section, Section 613 or
Section 1107, except to increase any such percentage or to provide with
respect to the Securities of any particular series the right to
condition the effectiveness of any supplemental indenture as to that
series on the consent of the Holders of a specified percentage of the
aggregate principal amount of Outstanding Securities of such series
(which provision may be made pursuant to Section 202 or Section 301, as
the case may be, without the consent of any Holder) or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided, however, that this clause shall not be deemed to
require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and
Section 1107, or the deletion of this proviso, in accordance with the
requirements of Section 711(b) and 1001(7).
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For purposes of this Section 1002, if the Securities of any series are
issuable upon the exercise of warrants, each holder of an unexercised and
unexpired warrant with respect to such series shall be deemed to be a
Holder of Outstanding Securities of such series in the amount issuable upon
the exercise of such warrant. For such purposes, the ownership of any such
warrant shall be determined by the Company in a manner consistent with
customary commercial practices. The Trustee for such series shall be
entitled to rely on an Officers' Certificate as to the principal amount of
Securities of such series in respect of which consents shall have been
executed by holders of such warrants.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely
for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Securities of any other
series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 1003. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive (in
addition to the opinion which the Trustee is entitled to receive pursuant
to Section 202), and (subject to Section 701) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties,
immunities or liabilities under this Indenture or otherwise.
SECTION 1004. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall
form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 1005. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
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SECTION 1006. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities of any series so modified as to conform,
in the opinion of the Trustee and the Company, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Securities of such
series.
ARTICLE ELEVEN
Covenants
SECTION 1101. Payment of Principal, Premium and Interest. The Company
covenants and agrees for the benefit of each series of Securities and
Coupons, if any, that it will duly and punctually pay the principal of (and
premium, if any, on) and interest, if any, on the Securities and Coupons,
if any, of that series in accordance with the terms of the Securities and
Coupons, if any, of such series and this Indenture.
SECTION 1102. Maintenance of Office or Agency. If Securities of a series
are issuable only as Registered Securities, the Company will maintain in
each Place of Payment for such series an office or agency where Securities
of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Company in respect
of the Securities of that series and this Indenture may be served. If
Securities of a series are issuable as both Registered or Bearer Securities
or only as Bearer Securities, the Company will maintain (A) in the Borough
of Manhattan, The City of New York, an office or agency where any
Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered
for registration of transfer, where Securities of that series may be
surrendered for exchange, where notices and demands to or upon the Company
in respect of the Securities of that series and this Indenture may be
served and where Bearer Securities of that series and related Coupons may
be presented or surrendered for payment in the circumstances described in
the proviso contained in the last sentence of this first paragraph of
Section 1102 (and not otherwise), (B) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series which is located
outside the United States, an office or agency where Securities of that
series and related Coupons may be presented and surrendered for payment
(including payment of any additional amounts payable on Securities of that
series pursuant to Section 1108); provided, however, that if the Securities
of that series are listed on any stock exchange located outside the United
States and such stock exchange shall so require, the Company will maintain
a Paying Agent for the Securities of that series in any required city
located outside the United States, so long as the Securities of that series
are listed on such exchange, and (C) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series located outside
the United States, an office or agency where any Registered Securities of
that series may be surrendered for registration of transfer, where
Securities of that series may be surrendered for exchange and where notices
and demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served. The Company will give prompt
written notice to the Trustee and the Holders of the location, and any
change in the location, of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency in
respect of any series of Securities or shall fail to furnish the Trustee
with the address thereof, such presentations and surrenders of Securities
of that series may be made and notices and demands may be made or served at
the office or agency of the Company in the Borough of Manhattan, The City
of New York, except that Bearer Securities of that series and the related
Coupons may be presented and surrendered for payment (including payment of
any additional amounts payable on Bearer Securities of that series pursuant
to Section 1108) at the London office of the Trustee (or an agent with a
London office appointed by the Trustee and acceptable to the Company), and
the Company hereby appoints the same as its agent to receive such
respective presentations, surrenders, notices and demands. No payment of
principal, premium or interest on Bearer Securities shall be made at any
office or agency of the Company in the United States or by check mailed to
any address in the United States or by transfer to an account maintained
with a bank located in the United States; provided, however, that, if the
Securities of a series are denominated and payable in Dollars, payment of
principal of and any premium and interest on any Bearer Security (including
any additional amounts payable on Securities of such series pursuant to
Section 1108) shall be made at the office of the Company's Paying Agent in
the Borough of Manhattan, The City of New York, if (but only if) payment in
Dollars of the full amount of such principal, premium, interest or
additional amounts, as the case may be, at all offices or agencies outside
the United States maintained for the purpose by the Company in accordance
with this Indenture is illegal or effectively precluded by exchange
controls or other similar restrictions.
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The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series 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 accordance with the requirements set forth
above for Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee and the Holders of any such
designation or rescission and of any change in the location of any such
other office or agency.
SECTION 1103. Money for Securities Payments To Be Held in Trust. If the
Company shall at any time act as its own Paying Agent with respect to any
series of Securities, it will, on or before each due date of the principal
of (and premium, if any, on) or interest, if any, on any of the Securities
of that series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum in the relevant currency (or a sufficient number of
currency units, as the case may be) sufficient to pay the principal (and
premium, if any, on) or interest so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series
of Securities, it will, at or prior to the opening of business on each due
date of the principal of (and premium, if any, on) or interest, if any, on
any Securities of that series, deposit with a Paying Agent a sum sufficient
to pay the principal (and premium, if any) or interest so becoming due,
such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
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The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument
in which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any, on) or interest, if any, on Securities of that series
in trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal (and premium, if any, on) or interest, if any, on
the Securities of that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
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 (and premium, if
any, on) or interest, if any, on any Security of any series 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, or (if
then held by the Company) shall be discharged from such trust; and the
Holder of such Security and Coupons, if any, shall thereafter, as an
unsecured general creditor, 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 and at
the direction of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business
Day and of general circulation in the Borough of Manhattan, The City of New
York, notice that such money remains unclaimed and that, after a date
specified herein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will
be repaid to the Company. All moneys payable to the Company by the Trustee
or any Paying Agent as provided in the preceding sentence shall be paid to
the Company on May 31 of each year.
SECTION 1104. Restrictions on Secured Debt. The Company will not
itself, and will not permit any Restricted Subsidiary to, incur, issue,
assume, or guarantee any Debt, whether or not evidenced by negotiable
instruments or securities, secured after the date hereof by Mortgage on any
Principal Property of the Company or any Restricted Subsidiary or any
shares of Capital Stock of or Debt of any Restricted Subsidiary, without
effectively providing that all the Securities Outstanding (together with,
if the Company shall so determine, any other Debt of the Company or such
Restricted Subsidiary then existing or thereafter created which is not
subordinate to any of the Securities) shall be secured equally and ratably
with (or, at the option of the Company, prior to) such secured Debt, so
long as such secured Debt shall be so secured, unless, after giving effect
thereto, the aggregate amount of all such secured Debt plus all
Attributable Debt of the Company and its Restricted Subsidiaries with
respect to sale and leaseback transactions to which Section 1105 is
applicable would not exceed 10% of Consolidated Net Tangible Assets;
provided, however, that this Section shall not apply to, and there shall be
excluded from secured Debt in any computation under this Section, Debt
secured by:
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(a) Mortgages on property of, or on any shares of Capital Stock of or
Debt of, any corporation existing at the time such corporation becomes a
Restricted Subsidiary;
(b) Mortgages in favor of the Company or any Restricted Subsidiary;
(c) Mortgages in favor of any governmental body to secure progress,
advance or other payments pursuant to any contract or provisions of any
statute;
(d) Mortgages on property, shares of Capital Stock or Debt existing at
the time of acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of the
purchase price thereof or construction thereon or to secure any Debt
incurred prior to, at the time of, or within 180 days after the later of
the acquisition of such property, shares of Capital Stock or Debt or the
completion of construction for the purpose of financing all or any part
of the purchase price thereof or construction thereon;
(e) Mortgages securing obligations issued by a state, territory or
possession of the United States, any political subdivision of any of the
foregoing, or the District of Columbia, or any instrumentality of any of
the foregoing to finance the acquisition or construction of property and
on which the interest is not, in the opinion of tax counsel of
recognized standing or in accordance with a ruling issued by the
Internal Revenue Service, includible in gross income of the holder by
reason of Section 103 of the Internal Revenue Code (or any successor to
such provision) as in effect at the time of the issuance of such
obligations; or
(f) Any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Mortgage
referred to in the foregoing clauses (a) to (e), inclusive; provided,
however, that such extension, renewal or replacement Mortgage shall be
limited to all or part of the same property, shares of Capital Stock or
Debt that secured the Mortgage so extended, renewed or replaced (plus
improvements on such property).
SECTION 1105. Restrictions on Sales and Leasebacks. The Company will
not itself, and will not permit any Restricted Subsidiary to, enter into
any transaction after the date hereof with any bank, insurance company or
other lender or investor, or to which any such bank, company, lender or
investor is a party, providing for the leasing by the Company or a
Restricted Subsidiary of any Principal Property which has been or is to be
sold or transferred by the Company or such Restricted Subsidiary to such
bank, company, lender or investor, or to any person to whom funds have been
or are to be advanced by such bank, company, lender or investor on the
security of such Principal Property (herein referred to as a "sale and
leaseback transaction") unless, after giving effect thereto, the aggregate
amount of all Attributable Debt with respect to all such transactions plus
all secured Debt to which Section 1104 is applicable would not exceed 10%
of Consolidated Net Tangible Assets. This covenant shall not apply, and
there shall be excluded from Attributable Debt in any computation under
this Section, Attributable Debt with respect to any sale and leaseback
transaction if:
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(a) the lease in such sale and leaseback transaction is for a period,
including renewal rights, of not in excess of three years; or
(b) the Company or a Restricted Subsidiary, within 180 days after the
sale or transfer shall have been made by the Company or by a Restricted
Subsidiary, applies an amount equal to the greater of the net proceeds
of the sale of the Principal Property so leased at the time of entering
into such arrangement (as determined in a reasonable manner approved by
the Board of Directors) (i) to the retirement of Securities or other
Funded Debt of the Company ranking on a parity with or senior to all the
Securities, or the retirement of the Funded Debt of a Restricted
Subsidiary; provided, however, that the amount to be applied to the
retirement of such Funded Debt of the Company or a Restricted Subsidiary
shall be reduced by (x) the principal amount of any Securities, or other
notes or debentures constituting such Funded Debt, delivered within such
180-day period to the trustee or other applicable trustee for retirement
and cancelation and (y) the principal amount of such Funded Debt, other
than items referred to in the preceding clause (x), voluntarily retired
by the Company or a Restricted Subsidiary within 180 days after such
sale; and provided, further, that, notwithstanding the foregoing, no
retirement referred to in this clause (i) may be effected by payment at
maturity or pursuant to any mandatory sinking fund payment or any
mandatory prepayment provision, or (ii) to the purchase of other
property which will constitute a Principal Property having a fair market
value, in the opinion of the Board of Directors, at least equal to the
fair market value of the Principal Property leased in such sale and
leaseback transaction; or
(c) such sale and leaseback transaction is entered into prior to, at
the time of, or within 180 days after the later of the acquisition of
the Principal Property or the completion of construction thereon; or
(d) the lease in such sale and leaseback transaction secures or
relates to obligations issued by a state, territory or possession of the
United States, or any political subdivision of any of the foregoing, the
District of Columbia, or any instrumentality of any of the foregoing to
finance the acquisition or construction of property and on which the
interest is not, in the opinion of tax counsel of recognized standing or
in accordance with a ruling issued by the Internal Revenue Service,
includible in gross income of the holder by reason of Section 103 of the
Internal Revenue Code (or any successor to such provision) as in effect
at the time of the issuance of such obligations; or
(e) such sale and leaseback transaction is entered into between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries.
SECTION 1106. Statement by Officers as to Default. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year,
a written certificate signed by the principal executive officer, the
principal financial officer or the principal accounting officer of the
Company, stating that:
(1) a review of the activities of the Company during such year and of
performance under this Indenture has been made under such officer's
supervision; and
(2) to such officer's knowledge, based on such review, the Company has
fulfilled all its obligations, and has complied with all conditions and
covenants, under this Indenture throughout such year, or, if there has
been a default in the fulfillment of any such obligation, condition or
covenant, specifying each such default known to him and the nature and
status thereof. For purposes of this Section 1106, compliance shall be
determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
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SECTION 1107. Waiver of Certain Covenants. The Company may omit in any
particular instance to comply with any term, provision or condition set
forth in Section 1104 or Section 1105 if before the time for such
compliance the Holders of not less than a majority in principal amount of
the Outstanding Securities of all series affected thereby shall, by Act of
such Holders (acting as one class), either waive such compliance in such
instance or generally waive compliance with such term, provision or
condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
SECTION 1108. Additional Amounts. If the Securities of a series provide
for the payment of additional amounts, the Company will pay to the Holder
of any Security of such series or any related Coupon additional amounts as
provided therein. Whenever in this Indenture there is mentioned, in any
context, the payment of the principal of or any premium or interest on, or
in respect of, any Security of any series or payment of any related Coupon
or the net proceeds received on the sale or exchange of any Security of any
series, such mention shall be deemed to include mention of the payment of
additional amounts provided for in this Section to the extent that, in such
context, additional amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section and express mention of
the payment of additional amounts (if applicable) in any provisions hereof
shall not be construed as excluding additional amounts in those provisions
hereof where such express mention is not made.
If the Securities of a series provide for the payment of additional
amounts, at least 10 days prior to the first Interest Payment Date with
respect to that series of Securities (or if the Securities of that series
will not bear interest prior to Maturity, the first day on which a payment
of principal and any premium is made), and at least 10 days prior to each
date of payment of principal and any premium or interest if there has been
any change with respect to the matters set forth in the below-mentioned
Officers' Certificate, the Company will furnish the Trustee and the
Company's Paying Agent or Paying Agents, if other than the Trustee, with an
Officers' Certificate instructing the Trustee and such Paying Agent or
Paying Agents whether such payment of principal of and any premium or
interest on the Securities of that series shall be made to Holders of
Securities of that series or any related Coupons who are United States
Aliens (as defined in such Securities) without withholding for or on
account of any tax, assessment or other governmental charge described in
the Securities of that series. If any such withholding shall be required,
then such Officers' Certificate shall specify by country the amount, if
any, required to be withheld on such Payments to such Holders of Securities
or Coupons and the Company will pay to the Trustee or such Paying Agent the
additional amounts required by this Section. The Company covenants to
indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by any of them in reliance on any Officers'
Certificate furnished pursuant to this Section.
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ARTICLE TWELVE
Redemption of Securities
SECTION 1201. Applicability of Article. Securities of any series which
are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as
contemplated by Section 202 or Section 301, as the case may be, for
Securities of any series) in accordance with this Article.
SECTION 1202. Election To Redeem; Notice to Trustee. If the Company shall
desire to exercise the right to redeem all, or, as the case may be, any
part of the Securities of any series, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities of such series to
be redeemed. In the case of any redemption of Securities prior to the
expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish
the Trustee with an Officers' Certificate evidencing compliance with such
restriction.
SECTION 1203. Selection by Trustee of Securities To Be Redeemed. If less
than all the Securities of any series are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding Securities of such
series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple of $1,000 in excess
thereof, except as otherwise specified as contemplated by Section 202 or
Section 301, as the case may be) of the principal amount of Securities of
such series of a denomination larger than the minimum authorized
denomination for Securities of that series.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has
been or is to be redeemed.
SECTION 1204. Notice of Redemption. Notice of redemption shall be given
not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, as provided in Section 106.
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Each such notice of redemption shall specify the Redemption Date, the
Redemption Price, the Place or Places of Payment, that the Securities of
such series are being redeemed at the option of the Company pursuant to
provisions contained in the terms of the Securities of such series or in a
supplemental indenture establishing such series, if such be the case,
together with a brief statement of the facts permitting such redemption,
that on the Redemption Date the Redemption Price will become due and
payable upon each Security redeemed, that payment will be made upon
presentation and surrender of the applicable Securities, that all Coupons,
if any, maturing subsequent to the date fixed for redemption shall be void,
that any interest accrued to the Redemption Date will be paid as specified
in said notice, that the redemption is pursuant to the sinking fund, if
such is the case, and that on and after said Redemption Date any interest
thereon or on the portions thereof to be redeemed will cease to accrue. If
less than all the Securities of any series are to be redeemed, the notice
of redemption shall specify the registration and, if any, CUSIP numbers of
the Securities of such series to be redeemed, and, if only Bearer
Securities of any series are to be redeemed, and if such Bearer Securities
may be exchanged for Registered Securities, the last date on which
exchanges of Bearer Securities for Registered Securities not subject to
redemption may be made. In case any Security of any series is to be
redeemed in part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that on and
after the Redemption Date, upon surrender of such Security and any Coupons
appertaining thereto, a new Security or Securities of such series in
principal amount equal to the unredeemed portion thereof and with
appropriate Coupons will be issued, or, in the case of Registered
Securities providing appropriate space for such notation, at the option of
the Holders, the Trustee, in lieu of delivering a new Security or
Securities as aforesaid, may make a notation on such Security of the
payment of the redeemed portion thereof.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1205. Deposit of Redemption Price. On or before the opening of
business on any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own paying
Agent, segregate and hold in trust as provided in Section 1103) an amount
of money in the relevant currency (or a sufficient number of currency
units, as the case may be) sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that date.
SECTION 1206. Securities Payable on Redemption Date. Notice of redemption
having been given as aforesaid, the Securities so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest and the Coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the
extent provided below, shall be void. Upon surrender of any such Security
for redemption in accordance with said notice, together with all Coupons,
if any, appertaining thereto maturing after the Redemption Date, such
Security shall be paid by the Company at the Redemption Price, together
with accrued interest to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on
or prior to the Redemption Date shall be payable only at an office or
agency located outside the United States (except otherwise provided in
Section 1102) and, unless otherwise specified as contemplated by
Section 202 or Section 301, as the case may be, only upon presentation and
surrender of Coupons for such interest; provided further that, unless
otherwise specified as contemplated by Section 202 or Section 301, as the
case may be, installments of interest on Registered Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 406.
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If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date,
such Security may be paid after deducting from the Redemption Price an
amount equal to the face amount of all such missing Coupons, or the
surrender of such missing Coupon or Coupons may be waived by the Company
and the Trustee if there be furnished to them such security or indemnity as
they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to the Trustee or
any Paying Agent any such missing Coupon in respect of which a deduction
shall have been made from the Redemption Price, such Holder shall be
entitled to receive the amount so deducted; provided, however, that
interest represented by Coupons shall be payable only at an office or
agency located outside the United States (except as otherwise provided in
Section 1102) and, unless otherwise specified as contemplated by
Section 202 or Section 301, as the case may be, only upon presentation and
surrender of those Coupons.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
SECTION 1207. Securities Redeemed in Part. Any Security which is to be
redeemed only in part shall be surrendered at a Place of Payment therefor
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities (with
appropriate Coupons) of the same series and Stated Maturity, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal
of the Security so surrendered or, in the case of Registered Securities
providing appropriate space for such notation, at the option of the Holder,
the Trustee, in lieu of delivering a new Security or Securities as
aforesaid, may make a notation on such Security of the payment of the
redeemed portion thereof.
ARTICLE THIRTEEN
Sinking Funds
SECTION 1301. Applicability of Article. The provisions of this Article
shall be applicable to any sinking fund for the retirement of Securities of
a series, except as otherwise specified as contemplated by Section 202 or
Section 301, as the case may be, for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Securities
of any series, the cash amount of any sinking fund payment may be subject
to reduction as provided in Section 1302. Each sinking fund payment shall
be applied to the redemption of Securities of any series as provided for by
the terms of Securities of such series.
SECTION 1302. Satisfaction of Sinking Fund Payments with Securities. The
Company (1) may deliver Outstanding Securities (including all unmatured
Coupons appertaining thereto) of a series (other than any previously called
for redemption) and (2) may apply as a credit Securities of a series which
have been redeemed either at the election of the Company pursuant to the
terms of such Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with
respect to the Securities of such series required to be made pursuant to
the terms of such Securities as provided for by the terms of such series;
provided that such Securities have not been previously so credited. Such
Securities shall be received and the outstanding principal amount thereof
credited for such purpose by the Trustee at the Redemption Price specified
in such Securities for redemption through operation of the sinking fund and
the amount of such sinking fund payment shall be reduced accordingly.
<PAGE>
-73-
SECTION 1303. Redemption of Securities for Sinking Fund. Not less than 60
days prior to each sinking fund payment date for any series of Securities,
the Company will deliver to the Trustee an Officers' Certificate specifying
the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is
to be satisfied by payment of cash and the portion thereof, if any, which
is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1302 and will also deliver to the Trustee any
Securities (including all unmatured Coupons appertaining thereto) to be so
delivered. Not less than 30 days before each such sinking fund payment date
the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1203 and cause notice
of the redemption thereof to be given in the name of and at the expense of
the Company in the manner provided in Section 1204. Such notice having been
duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1206 and 1207.
ARTICLE FOURTEEN
Meetings of Holders of Securities
SECTION 1401. Purposes for Which Meetings May Be Called. A meeting of
Holders of Securities of any series may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided
by this Indenture to be made, given or taken by Holders of Securities of
such series.
SECTION 1402. Call, Notice and Place of Meetings. (a) The Trustee may at
any time call a meeting of Holders of Securities of any series for any
purpose specified in Section 1401, to be held at such time and at such
place in the Borough of Manhattan, The City of New York, or in London, as
the Trustee shall determine. Notice of every meeting of Holders of
Securities of any series, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such
meeting, shall be given, in the manner provided in Section 106, not less
than 20 nor more than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, by or pursuant to a Board
Resolution, or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to
call a meeting of the Holders of Securities of such series for any purpose
specified in Section 1401, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee
shall not have made the first publication of the notice of such meeting
within 20 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the
Company or the Holders of Securities of such series in the amount above
specified, as the case may be, may determine the time and the place in the
Borough of Manhattan, The City of New York, or in London, for such meeting
and may call such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section.
<PAGE>
-74-
SECTION 1403. Persons Entitled To Vote at Meetings. To be entitled to
vote at any meeting of Holders of Securities of any series, a Person shall
be (1) a Holder of one or more Outstanding Securities of such series or
(2) a Person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Securities of such series by such Holder
or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the
Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of
the Company and its counsel.
SECTION 1404. Quorum; Action. The Persons entitled to vote a majority in
principal amount of the Outstanding Securities of a series shall constitute
a quorum for a meeting of Holders of Securities of such series. In the
absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of
Securities of such series, be dissolved. In any other case the meeting may
be adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting
may be further adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall
be given as provided in Section 1402(a), except that such notice need be
given only once not less than five days prior to the date on which the
meeting is scheduled to be reconvened.
Except as limited by the proviso to Section 1002, and subject to the
provisions described in the next succeeding paragraph, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a
quorum is present as aforesaid may be adopted by the affirmative vote of
the Holders of a majority in principal amount of the Outstanding Securities
of that series; provided, however, that any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action which this Indenture expressly provides may be made, given or taken
by the Holders of a specified percentage, which is equal to or less than a
majority, in principal amount of the Outstanding Securities of a series may
be adopted at a meeting or an adjourned meeting duly reconvened and at
which a quorum is present as aforesaid by the affirmative vote of the
Holders of such specified percentage in principal amount of the Outstanding
Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Securities of any series duly held in accordance with
this Section shall be binding on all the Holders of Securities of such
series and the related Coupons, whether or not present or represented at
the meeting.
With respect to any consent, waiver or other action which this Indenture
expressly provides may be given by the Holders of a specified percentage of
Outstanding Securities of all series affected thereby (acting as one
class), only the principal amount of Outstanding Securities of any series
represented at a meeting or adjourned meeting duly reconvened at which a
quorum is present, held in accordance with this Section, and voting in
favor of such action, shall be counted for purposes of calculating the
aggregate principal amount of Outstanding Securities of all series affected
thereby favoring such action.
<PAGE>
-75-
SECTION 1405. Determination of Voting Rights; Conduct and Adjournment of
Meetings. (a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Securities of a series in regard to proof of the
holding of Securities of such series and of the appointment of proxies and
in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the
meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved
in the manner specified in Section 104 and the appointment of any proxy
shall be proved in the manner specified in Section 104 or by having the
signature of the person executing the proxy witnessed or guaranteed by any
trust company, bank or banker authorized by Section 104 to certify to the
holder of Bearer Securities. Such regulations may provide that written
instruments appointing proxies, regular on their face, may be presumed
valid and genuine without the proof specified in Section 104 or other
proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 1402(b), in
which case the Company or the Holders of Securities of the series calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting
shall be elected by vote of the Persons entitled to vote a majority in
principal amount of the outstanding Securities of such series represented
at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 (or the equivalent thereof)
principal amount of the Outstanding Securities of such series held or
represented by him; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding.
The chairman of the meeting shall have no right to vote, except as a Holder
of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1402 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting; and
the meeting may be held as so adjourned without further notice.
SECTION 1406. Counting Votes and Recording Action of Meetings. The vote
upon any resolution submitted to any meeting of Holders of Securities of
any series shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities of such series or of their
representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in duplicate of all votes cast at the meeting. A record, at
least in duplicate, of the proceedings of each meeting of Holders of
Securities of any series shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of
the notice of the meeting and showing that said notice was given as
provided in Section 1402 and, if applicable, Section 1404. Each copy shall
be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one such copy shall be delivered to the
Company, and another to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting. Any
record so signed and verified shall be conclusive evidence of the matters
therein stated.
<PAGE>
-76-
__________________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
<PAGE>
-77-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
POLAROID CORPORATION,
by /s/ William J. O'Neill, Jr.
----------------------------
Name: William J. O'Neill, Jr.
Title: Executive Vice President and
Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY, as Trustee,
by /s/ Eric J. Donaghey
--------------------------------
Name: Eric J. Donaghey
Title: Assistant Vice President
Attest: /s/ Louise L. Cavanaugh
----------------------
(seal) Louise L. Cavanaugh
Assistant Corporate Secretary
Attest: /s/ Henry W. Seemore
----------------------
(seal) Assistant Vice President
<PAGE>
Exhibit A.1
If the registered owner of this Note (as indicated below) is The
Depository Trust Company (the "U.S. Depositary") or a nominee of the U.S.
Depositary, this Note is a global Note and the following legend is
applicable: Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of CEDE &
CO., or such other name as requested by an authorized representative of The
Depository Trust Company, and any payment is made to CEDE & CO. or such other
entity, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has
an interest herein.
POLAROID CORPORATION
MEDIUM-TERM NOTE, SERIES A
(Due 9 months or more from date of issue)
(Fixed Rate)
[Form of Face]
The following summary of terms is subject to the
information set forth on the reverse hereof:
REGISTERED NO. ORIGINAL ISSUE DATE:
OPTIONAL REDEMPTION: [ ] YES [ ] NO STATED MATURITY:
INITIAL REDEMPTION DATE: REDEMPTION PRICE, if applicable:
Initially __% of Principal
Amount and declining by __% of
the Principal Amount on each
anniversary of the Initial
Redemption Date until the
Redemption Price is 100% of the
Principal Amount.
PRINCIPAL AMOUNT: $
SPECIFIED CURRENCY:
AUTHORIZED DENOMINATIONS (If other than
$1,000 and any integral multiple thereof):
OPTION TO ELECT PAYMENTS IN U.S. DOLLARS:
[ ] YES [ ] NO CUSIP NO.__
FORM: [ ] BOOK ENTRY
[ ] CERTIFICATED
OPTION TO ELECT REPAYMENT:
[ ]YES [ ]NO
INTEREST RATE: OPTIONAL REPAYMENT DATES:
INTEREST PAYMENT DATE[S]: OPTIONAL REPAYMENT PRICES:
REGULAR RECORD DATE[S]: OPTIONAL INTEREST RESET:
[ ]YES [ ]NO
U.S. DEPOSITARY: OPTIONAL EXTENSIONS OF MATURITY
[ ]YES [ ]NO
EXCHANGE RATE AGENT: EXTENSION PERIOD:
AMORTIZING NOTE: [ ]YES [ ]NO NUMBER OF EXTENSION PERIODS:
FINAL MATURITY DATE:
OTHER PROVISIONS: ANNEX ATTACHED [ ]YES [ ]NO
(and incorporated by
reference herein)
<PAGE>
POLAROID CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which
term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received, hereby promises to pay to
or registered assigns the principal sum set forth above, at the office or
agency of the Company in the Borough of Manhattan, The City and State of New
York, on the Stated Maturity specified above, and to pay interest thereon
from and including the Original Issue Date shown above or from and including
the most recent Interest Payment Date (as hereinafter defined) to which
interest has been paid or duly provided for, as the case may be.
Interest will be paid on the Interest Payment Date or Dates shown
above ("Interest Payment Dates"), commencing with the first such Interest
Payment Date next succeeding the Original Issue Date shown above (except as
provided below), at the rate per annum specified above, until the principal
hereof is paid or made available for payment and on the Stated Maturity, and
interest shall accrue on any overdue principal and on any overdue installment
of interest (to the extent that the payment of such interest shall be legally
enforceable) at the rate per annum set forth above. The interest so payable
and punctually paid or duly provided for on any Interest Payment Date will be
paid to the Person in whose name this Note (or one or more predecessor Notes)
is registered at the close of business on the Regular Record Date set forth
above next preceding such Interest Payment Date. The first payment of
interest on any Note originally issued between a Regular Record Date and the
related Interest Payment Date will be made on the Interest Payment Date
following the next succeeding Regular Record Date to the Person in whose name
this Note is registered on such next succeeding Regular Record Date. Except
as otherwise provided in the Indenture, any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder
(as defined in such Indenture) on such Regular Record Date and may either be
paid to the Person in whose name this Note (or one or more predecessor Notes)
is registered at the close of business on a Special Record Date for the
payment of such defaulted interest to be fixed (after receipt of notice from
the Company of a proposed payment of defaulted interest) by the Trustee (as
hereinafter defined), notice whereof shall be given to Holders of Notes not
less than 10 days preceding such special record date or may be paid in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Payment of interest may, at the option of the Company, be made by check
mailed to the registered address of the person entitled thereto.
Notwithstanding the foregoing, interest payable at maturity shall be payable
to the person to whom the principal is payable. Interest on the Notes will
be computed and paid on the basis of a 360-day year of twelve 30-day months.
If any Interest Payment Date or the Stated Maturity for this Note is a day
that is not a Business Day, all payments to be made on such day will be made
on the next succeeding Business Day with the same force and effect as if made
on the due date, and no additional interest shall be payable as a result of
such delayed payment.
Payments of interest to be paid in U.S. dollars (other than
interest, and if this is an Amortizing Note, principal (if this is not a
global Note) payable at the Stated Maturity) will be made by mailing a check
to the Holder at the address of the Holder appearing in the Security Register
as of the applicable Regular Record Date. Notwithstanding the foregoing, at
the option of the Company, all payments of interest and, if this is an
Amortizing Note, principal on this Note may be made by wire transfer of
immediately available funds to an account maintained by such Holder with a
bank located in the United States as designated by the Holder not less than
15 calendar days prior to the Interest Payment Date. If a Holder holds U.S.
$10,000,000 or more in aggregate principal amount of Notes of like tenor and
terms (including the same Interest Payment Dates) (or is the Holder of the
equivalent thereof in a Specified Currency other than U.S. dollars), such
Holder shall be entitled to receive payments of interest (other than at the
Stated Maturity or upon earlier redemption or repayment) in U.S. dollars by
wire transfer of immediately available funds, but only if appropriate payment
instructions have been received in writing by the Trustee not less than 15
calendar days prior to the applicable Interest Payment Date.
The Company will pay any administrative costs imposed by banks in
connection with making payments by wire transfer, but not any tax, assessment
or governmental charge imposed upon the Holder of this Note. In the event
that payment is so made in accordance with the instructions of the Holder,
such wire transfer shall be deemed to constitute full and complete payment of
such interest and principal on this Note. If this is not a global Note,
payment of the principal, premium, if any, and interest payable at Maturity
in respect of this Note will be paid in immediately available funds upon
surrender of this Note accompanied by wire instructions at the principal
office of the Trustee, provided that this Note is presented in time for the
Trustee to make such payments in such funds in accordance with its normal
procedures.
If this Note is a Book-Entry Note as specified above, while this
Note is represented by one or more Book-Entry Notes registered in the name of
the U.S. Depositary or its nominee, the Company will cause payments of
principal of, premium, if any, and interest on such Book-Entry Notes to be
made to the U.S. Depositary or its nominee, as the case may be, by wire
transfer to the extent, in the funds and in the manner required by agreements
with, or regulations or procedures prescribed from time to time by, the U.S.
Depositary or its nominee, and otherwise in accordance with such agreements,
regulations and procedures.
If the Holder of this Note (as indicated above) is the U.S.
Depositary or a nominee of the U.S. Depositary, this Note is a global Note
and the following legend is applicable except as specified on the reverse
hereof: UNLESS AND UNTIL IT IS EXCHANGED FOR SECURITIES IN DEFINITIVE
REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE U.S. DEPOSITARY TO A NOMINEE OF THE U.S. DEPOSITARY OR BY A NOMINEE OF
THE U.S. DEPOSITARY TO THE U.S. DEPOSITARY OR ANOTHER NOMINEE OF THE U.S.
DEPOSITARY OR BY THE U.S. DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR U.S.
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR U.S. DEPOSITARY.
Reference is made to the further provisions of this Note set forth
on the reverse hereof. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: POLAROID CORPORATION
By:______________________________
Name:
Title:
By:________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities
of the Series designated herein
issued under the within-mentioned
indenture.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:_______________________________
Authorized Signatory
<PAGE>
[Form of Reverse]
POLAROID CORPORATION
MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
SECTION 1. General. This Note is one of a duly authorized issue
of notes of the Company (herein called the "Notes"), constituting part of the
series of Securities (as defined in the Indenture hereinafter referred to)
designated on the face hereof (Securities of such series being herein called
the "Securities of this series"), all issued or to be issued under an
indenture dated as of November __, 1996 (the "Indenture"), duly executed and
delivered by the Company to State Street Bank and Trust Company, as trustee
(the "Trustee"), to which Indenture reference is hereby made for a
description of the respective rights and duties thereunder of the Trustee,
the Company and the Holders of the Securities. The Securities of this series
may be issued in various aggregate principal amounts, may mature at different
times, may bear interest at different rates, may be subject to different
redemption provisions, may be subject to different sinking, purchase or
analogous funds and may otherwise vary as in the Indenture provided.
SECTION 2. Events of Default. In case an Event of Default (as
defined in the Indenture) with respect to the Securities of this series shall
have occurred and be continuing, the principal hereof together with accrued
interest thereon, if any, may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
SECTION 3. Supplemental Indentures. The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding of all series to be affected (acting as
one class) to execute supplemental indentures adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture
or modifying in any manner the rights of the Holders of the Securities or
such series; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each outstanding Security affected
thereby, among other things, (i) change the fixed maturity of the principal
of, or any installment of principal of or interest on, any Security;
(ii) reduce the principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof; (iii) impair the right to
institute suit for the enforcement of any such payment on or after the fixed
maturity thereof (or, in the case of redemption, on or after the redemption
date); (iv) reduce the percentage in principal amount of the outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences) provided for in the Indenture;
(v) change any obligation of the Company, with respect to outstanding
Securities of a series, to maintain an office or agency in the places and for
the purposes specified in the Indenture for such series; or (vi) modify any
of the foregoing provisions or the provisions for the waiver of certain
covenants and defaults, except to increase any applicable percentage of the
aggregate principal amount of outstanding Securities the consent of the
Holders of which is required or to provide with respect to any particular
series the right to condition the effectiveness of any supplemental indenture
as to that series on the consent of the Holders of a specified percentage of
the aggregate principal amount of outstanding Securities of such series or to
provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the Holder of each outstanding Security
affected thereby. It is also provided in the Indenture that the Holders of a
majority in aggregate principal amount of the Securities of a series at the
time outstanding may on behalf of the Holders of all the Securities of such
series waive any past default under the Indenture with respect to such series
and its consequences, except a default in the payment of the principal of,
premium, if any, or interest, if any, on any Security of such series or in
respect of a covenant or provision which cannot be modified without the
consent of the Holder of each outstanding Security of the series affected.
Any such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this Note
and any Notes which may be issued in exchange or substitution herefor,
irrespective of whether or not any notation thereof is made upon this Note or
such other Notes.
SECTION 4. Obligation of the Company Absolute. No reference
herein to the Indenture and no provision of this Note or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Note at the place, at the respective times, at the rate and in the coin or
currency herein prescribed.
SECTION 5. Discharge of Obligations. The Indenture permits the
Company to discharge its obligations with respect to the Notes on the 91st
day following the satisfaction of the conditions set forth in the Indenture,
which include the deposit with the Trustee of money or U.S. Government
Obligations or a combination thereof sufficient to pay and discharge each
installment of principal of (including premium, if any, on) and interest, if
any, on the outstanding Notes.
SECTION 6. Consolidation or Merger of the Company. If the Company
shall, in accordance with Section 901 of the Indenture, consolidate with or
merge into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person, the successor shall
succeed to, and be substituted for, the Person named as the "Company" on the
face of this Note, all on the terms set forth in the Indenture.
SECTION 7. Authorized Denominations. The Notes are issuable in
registered form without coupons in denominations of $1,000 or any integral
multiple thereof. In the manner and subject to the limitations provided in
the Indenture, but without the payment of any service charge, Notes may be
exchanged for an equal aggregate principal amount of Notes of other
authorized denominations at the office or agency of the Company maintained
for such purpose in the Borough of Manhattan, The City and State of New York.
SECTION 8. Redemption. If so specified on the face hereof, this
Note may be redeemed at the option of the Company as a whole or from time to
time in part, on or after the date designated as the Initial Redemption Date
on the face hereof, at the redemption price specified on the face hereof,
together with unpaid interest accrued on the principal amount hereof to be
redeemed to the date of redemption, but interest installments that are due on
or prior to the date of redemption will be payable to the Holder of this Note
of record at the close of business on the relevant Regular Record Date
referred to on the face hereof, all as provided in the Indenture. The
Company may exercise such option by causing the Trustee to mail a notice of
such redemption not less than 30 nor more than 60 days prior to the date
fixed for redemption, subject to all the conditions and provisions of the
Indenture. In the event of redemption of this Note in part only, a new Note
or Notes for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
<PAGE>
SECTION 9. Registration of Transfer. Upon due presentment for
registration of transfer of this Note at an office or agency of the Company
for such registration, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued to the transferee in exchange
herefor, subject to the limitations provided in the Indenture, without charge
except for any tax or other governmental charge imposed in connection
therewith.
If this Note is a global Note (as specified on the face hereof),
this Note is exchangeable for certificated Notes only upon the terms and
conditions provided in the Indenture. Except as provided above, owners of
beneficial interests in this permanent global Note will not be entitled to
receive physical delivery of Notes in certificated registered form and will
not be considered the Holders thereof for any purpose under the Indenture.
SECTION 10. Owners. Prior to due presentment for registration of
transfer of this Note, the Company, the Trustee and any agent of the Company
or the Trustee may deem and treat the registered Holder hereof as the owner
of this Note (whether or not this Note shall be overdue) for the purpose of
receiving payment of the principal of, premium, if any, and interest on this
Note, as herein provided, and for all other purposes, and neither the Company
nor the Trustee nor any agent of the Company or the Trustee shall be affected
by any notice to the contrary. All payments made to or upon the order of
such registered Holder shall, to the extent of the sum or sums paid,
effectually satisfy and discharge liability for moneys payable on this Note.
SECTION 11. Waiver and Release of Liability. No recourse for the
payment of the principal of, premium, if any, or interest on this Note, or
for any claim based hereon or otherwise in respect hereof, and no recourse
under or upon any obligation, covenant or agreement of the Company in the
Indenture or any indenture supplemental thereto or in any Note or because of
the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or any successor corporation, whether by virtue of any
constitution, statute or role of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof
and as part of the consideration for the issue hereof, expressly waived and
released.
SECTION 12. Payments. Interest on this Note will be payable on
the Interest Payment Date or Interest Payment Dates as specified on the face
hereof and, in either case, at Stated Maturity or earlier redemption or
repayment.
Interest payments on each Interest Payment Date or date of Maturity
for this Note will include accrued interest from and including the Original
Issue Date or from and including the last date in respect of which interest
has been paid or duly provided for, as the case may be, to but excluding such
Interest Payment Date or date of Maturity, as the case may be.
Unless otherwise specified on the face hereof, if this Note is an
Amortizing Note, payments with respect to this Note will be applied first to
interest due and payable hereon and then to the reduction of the unpaid
principal amount hereof. If this Note is an Amortizing Note, a table setting
forth repayment information in respect of this Note will be provided to the
original purchaser hereof and will be available, upon request, to subsequent
Holders.
The principal of and any premium and interest on this Note are
payable by the Company in the Specified Currency for this Note. If the
Specified Currency for this Note is other than U.S. dollars, the Company will
(unless otherwise specified on the face hereof) arrange to convert all
payments in respect of this Note into U.S. dollars in the manner described in
the following paragraph. If this Note has a Specified Currency other than
U.S. dollars, the Holder of this Note may (unless otherwise specified on the
face hereof) elect to receive all payments in respect of this Note in the
Specified Currency by delivery of a written notice to the Trustee for such
Note not later than fifteen calendar days prior to the applicable payment
date, except under the circumstances described below. Such election will
remain in effect until revoked by written notice to such Trustee received not
later than fifteen calendar days prior to the applicable payment date.
The amount of any U.S. dollar payment in respect of this Note will
be determined by the Exchange Rate Agent based on the highest firm bid
quotation expressed in U.S. dollars received by the Exchange Rate Agent at
approximately 11:00 a.m., New York City time, on the second Business Day
preceding the applicable payment date (or, if no such rate is quoted on such
date, the last date on which such rate was quoted), from three (or, if three
are not available, then two) recognized foreign exchange dealers in The City
of New York (one of which may be an Agent (as such term is used in the
Distribution Agreement dated as of November , 1996 relating to the Notes)
and another of which may be the Exchange Rate Agent) selected by the Exchange
Rate Agent, for the purchase by the quoting dealer, for settlement on such
payment date, of the aggregate amount of such Specified Currency payable on
such payment date in respect of all Notes denominated in such Specified
Currency. All currency exchange costs will be borne by the registered
Holders of such Notes by deductions from such payments.
Except as set forth below, if payment in respect of this Note is
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments in respect of this Note shall be made in U.S.
dollars; provided that the Company, at its option, may resume making payment
in such currency once such currency is again available or so used. The
amounts so payable on any date in such currency shall be converted into U.S.
dollars on the basis of the most recently available market exchange rate for
such currency or as otherwise indicated on the face hereof. Any payment in
respect of this Note made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
If payment in respect of this Note is required to be made in ECU
and ECU are no longer used in the European Monetary System, then all payments
in respect of this Note shall be made in U.S. dollars; provided that the
Company, at its option, may resume making payments in ECU once ECU are again
so used. The amount of each payment in U.S. dollars shall be computed on the
basis of the equivalent of ECU in U.S. dollars, determined as described
below, as of the second Business Day prior to the date on which such payment
is due.
<PAGE>
The equivalent of ECU in U.S. dollars as of any date shall be
determined by the Trustee for this Note on the following basis. The
component currencies of ECU for this purpose (the "Components") shall be the
currency amounts that were components of ECU as of the last date on which ECU
were used in the European Monetary System. The equivalent of ECU in U.S.
dollars shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by such Trustee or such Exchange Rate Agent, as the case may be,
on the basis of the most recently available Market Exchange Rates for such
Components or as otherwise indicated on the face hereof.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or
more component currencies are consolidated into a single currency, the
amounts of those currencies as Components shall be replaced by an amount in
such single currency equal to the sum of the amounts of the consolidated
component currencies expressed in such single currency. If any component
currency is divided into two or more currencies, the amount of that currency
as a Component shall be replaced by amounts of such two or more currencies,
each of which shall be equal to the amount of the former component currency
divided by the number of currencies into which that currency was divided.
All determinations referred to above made by the Trustee or the
Exchange Rate Agent, as the case may be, shall be at its sole discretion and
shall, in the absence of manifest error, be conclusive for all purposes and
binding on Holders of this Note.
All percentages resulting from any calculations under this Note
will be rounded, if necessary, to the nearest one hundred thousandth of a
percentage point (with five one-millionths of a percentage point being
rounded upward) and all currency or currency unit or dollar amounts used in
or resulting from any such calculation in respect of this Note will be
rounded to the nearest one-hundredth of a unit (with five one-thousandths
being rounded upward) or nearest cent (with one-half cent being rounded
upward), as the case may be.
SECTION 13. Repayment. If so specified on the face hereof, this
Note will be repayable prior to Stated Maturity at the option of the Holder
on the Optional Repayment Dates shown on the face hereof at the Optional
Repayment Prices shown on the face hereof together with interest accrued and
unpaid thereon to the date of repayment. In order for this Note (if it is
repayable at the option of the Holder) to be repaid prior to Stated Maturity,
the Paying Agent must receive at least 30 but not more than 45 calendar days
prior to an Optional Repayment Date (i) this Note with the form below
entitled "Option to Elect Repayment" duly completed or (ii) a telegram,
telex, facsimile transmission, hand delivery or letter (first class, postage
prepaid) from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
in the United States of America setting forth the name of the Holder of this
Note, the principal amount of this Note, the principal amount of the Note to
be repaid, the certificate number or a description of the tenor and terms of
this Note, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note with the form below entitled "Option
to Elect Repayment" duly completed will be received by the Paying Agent not
later than five Business Days after the date of such telegram, telex,
facsimile transmission, hand delivery or letter (first class, postage
prepaid). If the procedure described in clause (ii) of the preceding
sentence is followed, this Note with such form duly completed must be
received by the Trustee by such fifth Business Day. Exercise of the
repayment option by the Holder of this Note shall be irrevocable, except that
a Holder who has tendered this Note for repayment may revoke any such tender
for repayment by written notice to the Trustee received prior to the close of
business on the tenth calendar day prior to the repayment date. The
repayment option may be exercised by the Holder of this Note for less than
the entire principal amount of this Note provided that the principal amount
of this Note remaining outstanding after such repayment is an authorized
denomination. Upon such partial repayment, this Note shall be cancelled and
a new Note or Notes for the remaining principal amount hereof shall be issued
in the name of the Holder of this Note.
SECTION 14. Optional Interest Reset. If so specified on the face
hereof, the interest rate on this Note may be reset by the Company on the
date or dates specified on the face hereof (each an "Optional Interest Reset
Date"). The Company may exercise such option by notifying the Trustee of
such exercise at least 45 but not more than 60 calendar days prior to an
Optional Interest Reset Date. If the Company so notifies the Trustee of such
exercise, the Trustee will send, not later than 40 calendar days prior to
each Optional Interest Reset Date, by telegram, telex, facsimile
transmission, hand delivery or letter (first class, postage prepaid) to the
Holder of this Note a notice (the "Reset Notice") indicating (i) that the
Company has elected to reset the interest rate, (ii) such new interest rate
and (iii) the provisions, if any, for redemption during the period from such
Optional Interest Reset Date to the next Optional Interest Reset Date or, if
there is no such next Optional Interest Reset Date, to the Stated Maturity of
this Note (each such period a "Subsequent Interest Period"), including the
date or dates on which or the period or periods during which and the price or
prices at which such redemption may occur during such Subsequent Interest
Period.
Notwithstanding the foregoing, not later than 20 calendar days
prior to an Optional Interest Reset Date, the Company may, at its option,
revoke the interest rate provided for in the Reset Notice and establish a
higher interest rate for the Subsequent Interest Period commencing on such
Optional Interest Reset Date by causing the Trustee to send by telegram,
telex, facsimile transmission, hand delivery or letter (first class, postage
prepaid) notice of such higher interest rate to the Holder of this Note.
Such notice shall be irrevocable. All Notes with respect to which the
interest rate is reset on an Optional Interest Reset Date will bear such
higher interest rate, whether or not tendered for repayment as provided in
the next paragraph.
If the Company elects prior to an Optional Interest Reset Date to
reset the interest rate of this Note, the Holder of this Note will have the
option to elect repayment of this Note by the Company on such Optional
Interest Reset Date at a price equal to the principal amount hereof plus
interest accrued and unpaid thereon to such Optional Interest Reset Date. In
order to obtain repayment on an Optional Interest Reset Date, the Holder must
follow the procedures set forth under Section 13 for optional repayment
except that the period for delivery or notification to the Trustee shall be
at least 25 but not more than 35 calendar days prior to such Optional
Interest Reset Date. If the Holder has tendered this Note for repayment
following receipt of a Reset Notice, the Holder may revoke such tender for
repayment by written notice to the Trustee received prior to 5:00 P.M., New
York City time, on the tenth calendar day prior to such Optional Interest
Reset Date.
SECTION 15. Optional Extension of Maturity. If so specified on
the face hereof, the Stated Maturity of this Note may be extended at the
option of the Company for the period or periods of from one to five whole
years specified on the face hereof (each an "Extension Period") up to but not
beyond the date (the "Final Maturity Date") set forth on the face hereof.
The Company may exercise such option with respect to this Note by notifying
the Trustee of such exercise at least 45 but not more than 60 calendar days
prior to the Stated Maturity of this Note in effect prior to the exercise of
such option (the "Original Stated Maturity Date"). If the Company so
notifies the Trustee of such exercise, the Trustee will send, not later than
40 calendar days prior to the Original Stated Maturity Date, by telegram,
telex, facsimile transmission, hand delivery or letter (first class, postage
prepaid) to the Holder of this Note, a notice (the "Extension Notice")
indicating (i) that the Company has elected to extend the Stated Maturity of
this Note, (ii) the new Stated Maturity, (iii) the interest rate applicable
to the Extension Period and (iv) the provisions, if any, for redemption
during such Extension Period, including the date or dates on which or the
period or periods during which and the price or prices at which such
redemption may occur during such Extension Period. Upon the Trustee's
sending of the Extension Notice, the Stated Maturity of this Note shall be
extended automatically and, except as modified by the Extension Notice and as
described in the next two paragraphs, this Note will have the same terms as
prior to the sending of such Extension Notice.
<PAGE>
Notwithstanding the foregoing, not later than 20 calendar days
prior to the Original Stated Maturity Date of this Note, the Company may, at
its option, revoke the interest rate provided for in the Extension Notice and
establish a higher interest rate for the Extension Period by causing the
Trustee to send by telegram, telex, facsimile transmission, hand delivery or
letter (first class, postage prepaid) notice of such higher interest rate to
the Holder of this Note. Such notice shall be irrevocable. All Notes with
respect to which the Stated Maturity is extended will bear such higher
interest rate for the Extension Period, whether or not tendered for repayment
as provided in the next paragraph.
If the Company elects to extend the Stated Maturity of this Note,
the Holder will have the option to elect repayment of this Note by the
Company on the Original Stated Maturity Date at a price equal to the
principal amount hereof, plus interest accrued and unpaid thereon to such
date. In order to obtain repayment on the Original Stated Maturity Date, the
Holder must follow the procedures set forth under Section 13 for optional
repayment, except that the period for delivery or notification to the Trustee
shall be at least 25 but not more than 35 calendar days prior to the Original
Stated Maturity Date. A Holder who has tendered this Note for repayment
following receipt of an Extension Notice may revoke such tender for repayment
by written notice to the Trustee received prior to 5:00 P.M., New York City
time, on the tenth calendar day prior to the Original Stated Maturity Date.
SECTION 16. Sinking Fund. This Note will not be subject to any
sinking fund.
SECTION 17. Original Issue Discount Notes. Notwithstanding
anything herein to the contrary, if this Note is an Original Issue Discount
Note, the amount payable in the event the principal amount hereof is declared
to be due and payable immediately by reason of an Event of Default or in the
event of redemption or repayment prior to the Stated Maturity hereof in lieu
of the principal amount due at the Stated Maturity hereof shall be the
Amortized Face Amount of this Note as of the date of declaration, redemption
or repayment, as the case may be. The "Amortized Face Amount" of this Note
shall be the amount equal to (a) the principal amount of this Note multiplied
by the Issue Price (as set forth on the face hereof) plus (b) that portion of
the difference between the dollar amount determined pursuant to the preceding
clause (a) and the principal amount hereof that has accreted at the Yield to
Maturity (as set forth on the face hereof) (computed in accordance with
generally accepted United States bond yield computation principles) to such
date of declaration, redemption or payment, but in no event shall the
Amortized Face Amount of this Note exceed its principal amount.
SECTION 18. Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 19. Defined Terms. All terms used in this Note which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture; and all references in the Indenture to "Security" or "Securities"
shall be deemed to include the Notes. "Business Day" means any Monday,
Tuesday, Wednesday, Thursday or Friday that in The City of New York is not a
day on which banking institutions are authorized or required by law,
regulation or executive order to close; provided that with respect to a
Specified Currency, such day is also not a day on which banking institutions
are authorized or required by law, regulation or executive order to close in
the principal financial center of the country of such Specified Currency (or
in the case of ECUs, is not a day designated as an ECU Non-Settlement Day by
the ECU Banking Association in Paris or otherwise generally regarded in the
ECU interbank market as a day on which payments on ECUs shall not be made).
<PAGE>
OPTION TO ELECT REPAYMENT
[To be completed only if this Note is repayable at the option
of the Holder and the Holder elects to exercise such rights]
The undersigned owner of this Note hereby irrevocably elects to
have the Company repay the principal amount of this Note or portion hereof
below designated at (i) the applicable Optional Repayment Price indicated on
the face hereof, together with interest accrued and unpaid thereon to the
date of repayment, if this Note is to be repaid pursuant to Section 13 of
this Note, or (ii) 100% of the principal amount of this Note to be repaid
plus interest accrued and unpaid thereon to the Optional Interest Reset Date,
if this Note is to be repaid pursuant to Section 14 hereof, or to the
Original Stated Maturity Date, if this Note is to be repaid pursuant to
Section 15 hereof. Specify the denomination or denominations (which shall be
$1,000 or an integral multiple thereof in excess thereof or, if the Note is
denominated in a currency other than U.S. dollars, an Authorized
Denomination) of the Note or Notes to be issued to the Holder for the portion
of the within Note not being repaid (in the absence of any specification, one
such Note will be issued for the portion not being repaid):
_______________________________ ___________________________
Dated:_________________________ Signature
Sign exactly as name appears
on the front of this Note.
Principal amount to be repaid if Indicate address where check
amount to be repaid is less than is to be sent, if repaid:
the entire principal amount of
this Note (principal amount ____________________________
remaining must be an authorized ____________________________
denomination)
$______________________________
(which shall be an integral
multiple of $1,000 or, if the
Note is denominated in a currency
other than U.S. dollars, of an
amount equal to the integral
multiples referred to on the face SOCIAL SECURITY OR OTHER TAXPAYER
hereof under "Authorized ID NUMBER
Denominations" (or, if no such _____________________________
reference is made,
an amount equal to the minimum
Authorized Denomination)).
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as through they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT Custodian
-----------------------------------------------
(Cust) (Minor)
Under Uniform Gifts to Minors Act
-----------------------------------------------
(State)
Additional abbreviations may also be used though not in the
above list.
__________________
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
|______________________________________|
__________________________________________________________________
PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
__________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably
constituting and appointing _______________ attorney to transfer
said Note on the books of the Company, with full power of
substitution in the premises.
Dated:________________ _________________________
Signature
Sign exactly as name appears
on the front of this Note
(SIGNATURE MUST BE GUARANTEED
by a commercial bank, a trust
company or by a member of the
New York Stock Exchange which
is a member of an approved
signature guarantee medallion
program pursuant to Securities
and Exchange Commission Rule
17Ad-15.)
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN
INSTRUMENT IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
Exhibit A.2
If the registered owner of this Note (as indicated below) is The
Depository Trust Company (the "U.S. Depositary") or a nominee of the U.S.
Depositary, this Note is a global Note and the following legend is
applicable: Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of CEDE &
CO., or such other name as requested by an authorized representative of The
Depository Trust Company, and any payment is made to CEDE & CO. or such other
entity, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has
an interest herein.
POLAROID CORPORATION
MEDIUM-TERM NOTE, SERIES A
(Due 9 months or more from date of issue)
(Floating Rate)
[Form of Face]
The following summary of terms is subject to the
information set forth on the reverse hereof:
REGISTERED NO. ORIGINAL ISSUE DATE:
OPTIONAL REDEMPTION: [ ]YES [ ]NO STATED MATURITY:
INITIAL REDEMPTION DATE: REDEMPTION PRICE, if applicable:
Initially __% of Principal Amount
and declining by __% of the
Principal Amount on each
anniversary of the Initial
Redemption Date until the
Redemption Price is 100% of
the Principal Amount.
PRINCIPAL AMOUNT:
SPECIFIED CURRENCY:
AUTHORIZED DENOMINATIONS (If
other than $1,000 and any
integral multiple thereof):
OPTION TO ELECT PAYMENTS IN
U.S. DOLLARS: [ ]YES [ ]NO CUSIP NO.
FORM: [ ] BOOK ENTRY
[ ] CERTIFICATED OPTION TO ELECT
REPAYMENT: [ ]YES [ ]NO
INTEREST RATE BASIS: OPTIONAL REPAYMENT DATES:
INDEX MATURITY: OPTIONAL REPAYMENT PRICES:
REGULAR RECORD DATES: OPTIONAL INTEREST RESET:
[ ]YES [ ]NO
INITIAL INTEREST RATE: OPTIONAL INTEREST RESET DATES:
MAXIMUM INTEREST RATE: OPTIONAL EXTENSIONS OF
MATURITY [ ]YES [ ]NO
MINIMUM INTEREST RATE:
SPREAD: EXTENSION PERIOD:
SPREAD MULTIPLIER: NUMBER OF EXTENSION PERIODS:
RESET PERIOD: FINAL MATURITY DATE:
INTEREST RESET DATES: INDEXED NOTE
(See attached Annex): [ ]YES [ ]NO
OTHER PROVISIONS:
ANNEX ATTACHED [ ]YES [ ]NO
(and incorporated herein
by reference)
INTEREST DETERMINATION DATES:
INTEREST PAYMENT DATES:
CALCULATION AGENT:
EXCHANGE RATE AGENT:
AMORTIZING NOTE: [ ]YES [ ]NO
U.S. DEPOSITARY:
<PAGE>
POLAROID CORPORATION, a corporation duly organized and existing under
the laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to
or registered assigns the principal sum set forth above, at the office or
agency of the Company in Borough of Manhattan, The City and State of
New York, on the Stated Maturity specified above, and to pay interest thereon
from and including the Original Issue Date shown above or from and including
the most recent Interest Payment Date (as hereinafter defined) to which
interest has been paid or duly provided for, as the case may be.
Interest will be paid on the Interest Payment Date or Dates shown
above ("Interest Payment Dates"), at the rate per annum determined in
accordance with the provisions on the reverse hereof, commencing with the
first such Interest Payment Date next succeeding the Original Issue Date
shown above (except as provided below) until the principal hereof is paid or
made available for payment and on the Stated Maturity, and interest shall
accrue on any overdue principal and on any overdue installment of interest
(to the extent that the payment of such interest shall be legally
enforceable) at the rate per annum in effect from time to time with respect
to this Note. The interest so payable and punctually paid or duly provided
for on any Interest Payment Date will be paid to the Person in whose name
this Note (or one or more predecessor Notes) is registered at the close of
business on the Regular Record Date set forth above next preceding such
Interest Payment Date. The first payment of interest on any Note originally
issued between a Regular Record Date and the related Interest Payment Date
will be made on the Interest Payment Date following the next succeeding
Regular Record Date to the Person in whose name this Note is registered on
such next succeeding Regular Record Date. Except as otherwise provided in
the Indenture, any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder (as defined in such
Indenture) on such Regular Record Date and may either be paid to the Person
in whose name this Note (or one or more predecessor Notes) is registered at
the close of business on a Special Record Date for the payment of such
defaulted interest to be fixed (after receipt of notice from the Company of a
proposed payment of defaulted interest) by the Trustee (as hereinafter
defined), notice whereof shall be given to Holders of Notes not less than 10
calendar days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said
Indenture. Payment of interest may, at the option of the Company, be made by
check mailed to the registered address of the person entitled thereto.
Notwithstanding the foregoing, interest payable at maturity shall be payable
to the person to whom the principal is payable.
Payments of interest to be paid in U.S. dollars (other than
interest, and if this is an Amortizing Note, principal (if this is not a
global Note) payable at the Stated Maturity) will be made by mailing a check
to the Holder at the address of the Holder appearing in the Security Register
as of the applicable Regular Record Date. Notwithstanding the foregoing, at
the option of the Company, all payments of interest and, if this is an
Amortizing Note, principal on this Note may be made by wire transfer of
immediately available funds to an account maintained by such Holder with a
bank located in the United States as designated by the Holder not less than
15 calendar days prior to the Interest Payment Date. If a Holder holds U.S.
$10,000,000 or more in aggregate principal amount of Notes of like tenor and
terms (including the same Interest Payment Dates) (or is the Holder of the
equivalent thereof in a Specified Currency other than U.S. dollars), such
Holder shall be entitled to receive payments of interest (other than at the
Stated Maturity or upon earlier redemption or repayment) in U.S. dollars by
wire transfer of immediately available funds, but only if appropriate payment
instructions have been received in writing by the Trustee not less than 15
calendar days prior to the applicable Interest Payment Date.
The Company will pay any administrative costs imposed by banks in
connection with making payments by wire transfer, but not any tax, assessment
or governmental charge imposed upon the Holder of this Note. In the event
that payment is so made in accordance with the instructions of the Holder,
such wire transfer shall be deemed to constitute full and complete payment of
such interest and principal on this Note. If this is not a global Note,
payment of the principal, premium, if any, and interest payable at Maturity
in respect of this Note will be paid in immediately available funds upon
surrender of this Note accompanied by wire instructions at the principal
office of the Trustee, provided that this Note is presented in time for the
Trustee to make such payments in such funds in accordance with its normal
procedures.
If this Note is a Book-Entry Note as specified above, while this
Note is represented by one or more Book-Entry Notes registered in the name of
the U.S. Depositary or its nominee, the Company will cause payments of
principal of, premium, if any, and interest on such Book-Entry Notes to be
made to the U.S. Depositary or its nominee, as the case may be, by wire
transfer to the extent, in the funds and in the manner required by agreements
with, or regulations or procedures prescribed from time to time by, the U.S.
Depositary or its nominee, and otherwise in accordance with such agreements,
regulations and procedures.
If the Holder of this Note (as indicated above) is the U.S.
Depositary or a nominee of the U.S. Depositary, this Note is a global Note
and the following legend is applicable except as specified on the reverse
hereof: UNLESS AND UNTIL IT IS EXCHANGED FOR SECURITIES IN DEFINITIVE
REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE U.S. DEPOSITARY TO A NOMINEE OF THE U.S. DEPOSITARY OR BY A NOMINEE OF
THE U.S. DEPOSITARY TO THE U.S. DEPOSITARY OR ANOTHER NOMINEE OF THE U.S.
DEPOSITARY OR BY THE U.S. DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR U.S.
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR U.S. DEPOSITARY.
Reference is made to the further provisions of this Note set forth
on the reverse hereof. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated: POLAROID CORPORATION
By:__________________________
Name:
Title:
By:___________________________
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities
of the Series designated herein
issued under the within-mentioned
indenture.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:____________________________
Authorized Signatory
<PAGE>
[Form of Reverse]
POLAROID CORPORATION
MEDIUM-TERM NOTE, SERIES A
(Floating Rate)
SECTION 1. General. This Note is one of a duly authorized issue
of notes of the Company (herein called the "Notes"), constituting part of the
series of Securities (as defined in the Indenture hereinafter referred to)
designated on the face hereof (Securities of such series being herein called
the "Securities of this series"), all issued or to be issued under an
indenture dated as of November , 1996 (the "Indenture"), duly executed and
delivered by the Company to State Street Bank and Trust Company, as trustee
(the "Trustee"), to which Indenture reference is hereby made for a
description of the respective rights and duties thereunder of the Trustee,
the Company and the Holders of the Securities. The Securities of this series
may be issued in various aggregate principal amounts, may mature at different
times, may bear interest at different rates, may be subject to different
redemption provisions, may be subject to different sinking, purchase or
analogous funds and may otherwise vary as in the Indenture provided.
SECTION 2. Interest Rate Calculations; Payments. The interest
rate on this Note will be equal to either (i) the interest rate calculated by
reference to the specified Interest Rate Basis plus or minus the Spread, if
any, or (ii) the interest rate calculated by reference to the specified
Interest Rate Basis multiplied by the Spread Multiplier, if any. The
"Spread" is the number of basis points (one basis point equals one-hundredth
of a percentage point) specified on the face hereof as being applicable to
this Note, and the "Spread Multiplier" is the percentage specified on the
face hereof as being applicable to this Note. Set forth on the face hereof
are the Interest Rate Basis and the Spread or Spread Multiplier, if any, and
the maximum or minimum interest rate limitation, if any, applicable to this
Note. Set forth on the face hereof are particulars as to the Calculation
Agent (unless specified otherwise, State Street Bank and Trust Company (in
such capacity, the "Calculation Agent")), Index Maturity, Original Issue
Date, interest rate in effect for the period from the Original Issue Date to
the first Interest Reset Date set forth on the face hereof (the "Initial
Interest Rate"), Interest Determination Dates, Interest Payment Dates,
Regular Record Dates and Interest Reset Dates with respect to this Note.
Except as provided below, interest on this Note will be payable (i)
if this Note resets daily, weekly or monthly, on the third Wednesday of each
month or on the third Wednesday of March, June, September and December of
each year, as specified on the face hereof; (ii) if this Note resets
quarterly, on the third Wednesday of March, June, September and December of
each year; (iii) if this Note resets semi-annually, on the third Wednesday of
each of two months of each year specified on the face hereof; and (iv) if
this Note resets annually, on the third Wednesday of one month of each year
specified on the face hereof (each such day being an "Interest Payment
Date"), and in each case at Maturity. If any Interest Payment Date, other
than Maturity, for this Note would otherwise be a day that is not a Business
Day, such Interest Payment Date shall be postponed to the next day that is a
Business Day, except that if this Note is a LIBOR Note, if such Business Day
is in the next succeeding calendar month, such Interest Payment Date shall be
the immediately preceding Business Day. If the Maturity for this Note falls
on a day that is not a Business Day, payment of principal, premium, if any,
and interest with respect to this Note will be made on the next succeeding
Business Day with the same force and effect as if made on the due date, and
no additional interest shall be payable as a result of such delayed payment.
The rate of interest on this Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (such period being the "Reset
Period" for such Note, and the first day of each Reset Period being an
"Interest Reset Date"), as specified on the face hereof. The Interest Reset
Dates will be, if this Note resets daily, each Business Day; if this Note
resets weekly (unless the Interest Rate Basis on the face hereof is the
Treasury Rate), the Wednesday of each week; if this Note resets weekly and
the Interest Rate Basis on the face hereof is the Treasury Rate, the Tuesday
of each week, except as provided in the next succeeding paragraph; if this
Note resets monthly (unless the Interest Rate Basis on the face hereof is the
11th District Cost of Funds Rate), the third Wednesday of each month; if this
Note resets monthly and the Interest Rate Basis on the face hereof is the
11th District Cost of Funds Rate, the first calendar day of the month; if
this Note resets quarterly, the third Wednesday of each March, June,
September and December; if this Note resets semi-annually, the third
Wednesday of the two months of each year specified on the face hereof; and if
this Note resets annually, the third Wednesday of one month of each year
specified on the face hereof. If the Interest Reset Date would otherwise be
a day that is not a Business Day, the Interest Reset Date shall be postponed
to the next day that is a Business Day, except that if the Interest Rate
Basis on the face hereof is LIBOR, if such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day. The interest rate in effect on each day will be (a)
if such day is an Interest Reset Date, the interest rate with respect to the
Interest Determination Date pertaining to such Interest Reset Date, or (b) if
such day is not an Interest Reset Date, the interest rate with respect to the
Interest Determination Date pertaining to the next preceding Interest Reset
Date, subject in either case to any maximum or minimum interest rate
limitation referred to on the face hereof and to any adjustment by a Spread
or a Spread Multiplier referred to on the face hereof; provided, however,
that the interest rate in effect for the period from and including the
Original Issue Date to but excluding the first Interest Reset Date shall be
the Initial Interest Rate specified on the face hereof.
The interest rate for each Reset Period will be the rate determined
by the Calculation Agent on the Calculation Date (as defined below)
pertaining to the Interest Determination Date pertaining to the Interest
Reset Date for such Reset Period. Unless otherwise specified on the face
hereof, the "Interest Determination Date" pertaining to an Interest Reset
Date for (a) a Commercial Paper Rate Note (the "Commercial Paper Interest
Determination Date"), (b) a Federal Funds Rate Note (the "Federal Funds
Interest Determination Date"), (c) a CD Rate Note (the "CD Interest
Determination Date'), (d) a Prime Rate Note (the "Prime Interest
Determination Date"), (e) a CMT Rate Note (the "CMT Interest Determination
Date"), or (f) a Kenny Rate Note (the "Kenny Rate Interest Determination
Date") will be the second Business Day prior to such Interest Reset Date.
Unless otherwise specified on the face hereof, the Interest Determination
Date pertaining to an Interest Reset Date for an 11th District Cost of Funds
Rate Note (the "11th District Interest Determination Date") will be the last
Business Day of the month immediately preceding such Interest Reset Date on
which the Federal Home Loan Bank of San Francisco (the "FHLB of San
Francisco") publishes the Index (as defined below). Unless otherwise
specified on the face hereof, the Interest Determination Date pertaining to
an Interest Reset Date for a LIBOR Note (the "LIBOR Interest Determination
Date") will be the second London Business Day immediately preceding such
Interest Reset Date. Unless otherwise specified on the face hereof, the
Interest Determination Date pertaining to an Interest Reset Date for a
Treasury Rate Note (the "Treasury Interest Determination Date") will be the
day of the week in which such Interest Reset Date falls on which Treasury
bills would normally be auctioned. Treasury bills are usually sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is usually held on the following Tuesday, except that such
auction may be held on the preceding Friday. If, as a result of a legal
holiday, an auction is so held on the preceding Friday, such Friday will be
the Treasury Interest Determination Date pertaining to the Reset Period
commencing in the next succeeding week. If an auction date shall fall on any
Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date
shall instead be the first Business Day immediately following such auction
date. Unless otherwise specified on the face hereof, the "Calculation Date"
pertaining to any Interest Determination Date shall be the earlier of (i) the
tenth calendar day after the Interest Determination Date or, if such day is
not a Business Day, the next succeeding Business Day, or (ii) the Business
Day preceding the applicable Interest Payment Date or Maturity, as the case
may be.
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As used herein, "Business Day" means, unless otherwise specified on
the face hereof, any Monday, Tuesday, Wednesday, Thursday or Friday that in
The City of New York is not a day on which banking institutions are
authorized or required by law, regulation or executive order to close and, if
the Interest Rate Basis of this Note is LIBOR, is also a London Business Day;
provided that with respect to a Specified Currency, such day is also not a
day on which banking institutions are authorized or required by law,
regulation or executive order to close in the principal financial center of
the country of such Specified Currency (or in the case of ECUs, is not a day
designated as an ECU Non-Settlement Day by the ECU Banking Association in
Paris or otherwise generally regarded in the ECU interbank market as a day on
which payments on ECUs shall not be made). As used herein, "London Business
Day" means any day (a) if the Designated LIBOR Currency is other than the
ECU, on which dealings in deposits in such Designated LIBOR Currency are
transacted in the London interbank market or (b) if the Designated LIBOR
Currency is the ECU, that is not designated as an ECU Non-Settlement Day by
the ECU Banking Association in Paris or otherwise generally regarded in the
ECU interbank market as a day on which payments on ECUs shall not be made.
"Index Maturity" means the period to maturity of the instrument or
obligation on which the interest rate formula is based, as specified on the
face hereof.
Unless otherwise specified on the face hereof, if this Note is an
Amortizing Note, payments with respect to this Note will be applied first to
interest due and payable hereon and then to the reduction of the unpaid
principal amount hereof. If this Note is an Amortizing Note, a table setting
forth repayment information in respect of this Note will be provided to the
original purchaser hereof and will be available, upon request, to subsequent
Holders.
Unless otherwise indicated on the face hereof, interest on this
Note will accrue from and including the date of issue or from and including
the immediately preceding Interest Payment Date in respect of which interest
has been paid or duly provided for, as the case may be, to but excluding the
Interest Payment Date or the Maturity, as the case may be. Accrued interest
is calculated by multiplying the face amount of this Note by an accrued
interest factor. This accrued interest factor is computed by adding the
interest factors calculated for each day from and including the date of
issue, or from and including the last date to which interest has been paid or
duly provided for, to but excluding the date for which accrued interest is
being calculated. The interest factor for each such day (unless otherwise
specified) is computed by dividing the interest rate applicable to such day
by 360, in the case of Commercial Paper Rate Notes, CD Rate Notes, 11th
District Cost of Funds Rate Notes, Federal Funds Rate Notes, LIBOR Notes and
Prime Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes or CMT Rate Notes, or by 365 days in the case of Kenny
Rate Notes.
The Calculation Agent shall calculate the interest rate on this
Note, as provided below. The Calculation Agent will, upon the request of the
Holder of this Note, provide the interest rate then in effect and, if then
determined, the interest rate which will become effective as a result of a
determination made with respect to the most recent Interest Determination
Date with respect to this Note. The Trustee shall act as the initial
Calculation Agent for the Notes. For purposes of calculating the rate of
interest payable on this Note, the Company will enter into an agreement with
the Calculation Agent. The Calculation Agent's determination of any interest
rate shall be final and binding in the absence of manifest error.
Notwithstanding the determination of the interest rate as provided
below, the interest rate on this Note for any interest period shall not be
greater than the maximum interest rate, if any, or less than the minimum
interest rate, if any, specified on the face hereof. The interest rate on
this Note will in no event be higher than the maximum rate permitted by New
York or other applicable law, as the same may be modified by United States
law of general application.
Determination of Commercial Paper Rate. If the Interest Rate Basis specified
on the face hereof is Commercial Paper Rate, the interest rate determined
with respect the Commercial Paper Rate Interest Determination Date shall be
the Commercial Paper Rate plus or minus the Spread, if any, or multiplied by
the Spread Multiplier, if any, as specified on the face hereof, as determined
on such Commercial Paper Rate Interest Determination Date.
"Commercial Paper Rate" means, with respect to any Commercial Paper
Interest Determination Date, the Money Market Yield (calculated as described
below) of the rate on such date for commercial paper having the Index
Maturity designated on the face hereof as published by the Board of Governors
of the Federal Reserve System in "Statistical Release H.15(519), Selected
Interest Rates" or any successor publication of the Board of Governors
("H.15(519)") under the heading "Commercial Paper." In the event that such
rate is not published prior to 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Commercial Paper Interest Determination
Date, then the Commercial Paper Rate with respect to such Commercial Paper
Interest Determination Date shall be the Money Market Yield of the rate on
such Commercial Paper Interest Determination Date for commercial paper having
the Index Maturity designated on the face hereof as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30
P.M. Quotations for U.S. Government Securities" or any successor publication
("Composite Quotations") under the heading "Commercial Paper." If by 3:00
P.M., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the Commercial
Paper Rate for such Commercial Paper Interest Determination Date shall be
calculated by the Calculation Agent and shall be the Money Market Yield of
the arithmetic mean of the offered rates as of 11:00 A.M., New York City
time, on such Commercial Paper Interest Determination Date, of three leading
dealers of commercial paper in The City of New York selected by the
Calculation Agent for commercial paper having the Index Maturity designated
on the face hereof placed for an industrial issuer whose bond rating is "AA,"
or the equivalent, from a nationally recognized securities rating agency;
provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate with respect to such Commercial Paper Interest
Determination Date will be the Commercial Paper Rate in effect immediately
prior to such Commercial Paper Interest Determination Date.
<PAGE>
"Money Market Yield" shall be a yield (expressed as a percentage
rounded, if necessary, to the nearest one hundred-thousandth of a percent)
calculated in accordance with the following formula:
D x 360
Money Market Yield = ---------------- x 100
360 - (D x M)
where "D" refers to the per annum rate for commercial paper, quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the period for which accrued interest is being calculated.
Determination of CD Rate. If the Interest Rate Basis specified on the face
hereof is CD Rate, the interest rate determined with respect to the CD
Interest Determination Date shall be the CD Rate plus or minus the Spread, if
any, or multiplied by the Spread Multiplier, if any, as specified on the face
hereof, as determined on such CD Interest Determination Date.
"CD Rate" means, with respect to any CD Interest Determination
Date, the rate on such date for negotiable certificates of deposit having the
Index Maturity designated on the face hereof as published in H.15(519) under
the heading "CDs (Secondary Market)." In the event that such rate is not
published prior to 9:00 A.M., New York City time, on the Calculation Date
pertaining to such CD Interest Determination Date, then the CD Rate with
respect to such CD Interest Determination Date shall be the rate on such CD
Interest Determination Date for negotiable certificates of deposit having the
Index Maturity designated on the face hereof as published in Composite
Quotations under the heading "Certificates of Deposit." If by 3:00 P.M., New
York City time, on such Calculation Date such rate is not published in either
H.15(519) or Composite Quotations, then the CD Rate on such CD Interest
Determination Date shall be calculated by the Calculation Agent and shall be
the arithmetic mean of the secondary market offered rates as of 10:00 A.M.,
New York City time, on such CD Interest Determination Date of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in The City
of New York selected by the Calculation Agent for negotiable certificates of
deposit of major United States money market banks (in the market for
negotiable certificates of deposit) with a remaining maturity closest to the
Index Maturity specified on the face hereof in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the CD Rate
with respect to such CD Interest Determination Date will be the CD Rate in
effect immediately prior to such CD Interest Determination Date.
Determination of CMT Rate. If the Interest Rate Basis specified on the face
hereof is CMT Rate, the interest rate determined with respect to the CMT
Interest Determination Date shall be the CMT Rate plus or minus the Spread,
if any, or multiplied by the Spread Multiplier, if any, as specified on the
face hereof, as determined on such CMT Interest Determination Date.
"CMT Rate" means, with respect to any CMT Interest Determination
Date, the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption ". . . Treasury Constant Maturities . . . Federal
Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under the
column for the Designated CMT Maturity Index (as defined below) for (i) if
the Designated CMT Telerate Page is 7055, the rate on such CMT Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
week, or the month, as applicable, ended immediately preceding the week in
which the applicable CMT Interest Determination Date occurs. If such rate is
no longer displayed on the relevant page, or if not displayed by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such CMT Interest
Determination Date, then the CMT Rate for such CMT Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published in the relevant H.15(519). If such rate is no
longer published, or if not published by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such CMT Interest Determination Date, then
the CMT Rate for such CMT Interest Determination Date will be such treasury
constant maturity rate for the Designated CMT Maturity Index (or other United
States Treasury rate for the Designated CMT Maturity Index) for the CMT
Interest Determination Date with respect to such Interest Reset Date as may
then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in the relevant H.15(519). If
such information is not provided by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CMT Interest Determination Date, then the
CMT Rate for the CMT Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately
3:30 P.M., New York City time, on the CMT Interest Determination Date
reported, according to their written records, by three leading primary United
States government securities dealers (each, a "Reference Dealer") in The City
of New York selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)), for the most
recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less
than such Designated CMT Maturity Index minus one year. If the Calculation
Agent cannot obtain three such Treasury Note quotations, the CMT Rate for
such CMT Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 P.M., New York
City time, on the CMT Interest Determination Date of three Reference Dealers
in The City of New York (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity
of the number of years that is the next highest to the Designated CMT
Maturity Index and a remaining term to maturity closest to the Designated CMT
Maturity Index and in an amount of at least $100,000,000. If three or four
(and not five) of such Reference Dealers are quoting as described above, then
the CMT Rate will be based on the arithmetic mean of the offer prices
obtained and neither the highest nor the lowest of such quotes will be
eliminated; provided, however, that if fewer than three Reference Dealers
selected by the Calculation Agent are quoting as described herein, the CMT
Rate will be the CMT Rate in effect on such CMT Interest Determination Date.
If two Treasury Notes with an original maturity as described in the third
preceding sentence have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the quotes for the Treasury Note with the
shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page specified on the face hereof (or any other page
as may replace such page on that service for the purpose of displaying
Treasury Constant Maturities as published in H.15(519)), for the purpose of
displaying Treasury Constant Maturities as published in H.15(519). If no
such page is specified on the face hereof, the Designated CMT Telerate Page
shall be 7052, for the most recent week.
<PAGE>
"Designated CMT Maturity Index" means the original period to
maturity of the Treasury Notes (either one, two, three, five, seven, ten,
twenty or thirty years) specified on the face hereof with respect to which
the CMT Rate will be calculated. If no such maturity is specified on the
face hereof, the Designated CMT Maturity Index shall be two years.
Determination of Federal Funds Rate. If the Interest Rate Basis specified on
the face hereof is Federal Funds Rate, the interest rate determined with
respect to the Federal Funds Interest Determination Date shall be the Federal
Funds Rate plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any, specified on the face hereof, as determined on such
Federal Funds Interest Determination Date.
"Federal Funds Rate" means, with respect to any Federal Funds
Interest Determination Date, the rate on such date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)." In the
event that such rate is not published prior to 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Federal Funds Interest
Determination Date, then the Federal Funds Rate with respect to such Federal
Funds Interest Determination Date shall be the rate on such Federal Funds
Interest Determination Date as published in Composite Quotations under the
heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York City time,
on such Calculation Date such rate is not published in either H.15(519) or
Composite Quotations, then the Federal Funds Rate with respect to such
Federal Funds Interest Determination Date shall be calculated by the
Calculation Agent and shall be the arithmetic mean (each as rounded, if
necessary, to the nearest one hundred-thousandth of a percent) of the rates
as of 9:00 A.M., New York City time, on such Federal Funds Interest
Determination Date for the last transaction in overnight Federal Funds
arranged by three leading brokers of Federal Funds transactions in The City
of New York selected by the Calculation Agent; provided, however, that if the
brokers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate with respect to such
Federal Funds Interest Determination Date will be the Federal Funds Rate in
effect immediately prior to such Federal Funds Interest Determination Date.
Determination of 11th District Cost of Funds Rate. If the Interest Rate
Basis specified on the face hereof is 11th District Cost of Funds Rate, the
interest rate determined with respect to the 11th District Interest
Determination Date shall be the 11th District Cost of Funds Rate plus or
minus the Spread, if any, or multiplied by the Spread Multiplier, if any,
specified on the face hereof, as determined on such 11th District Interest
Determination Date.
"11th District Cost of Funds Rate" means, with respect to any 11th
District Interest Determination Date, the rate equal to the monthly weighted
average cost of funds for the calendar month immediately preceding such 11th
District Interest Determination Date as set forth under the caption "11th
District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such
11th District Interest Determination Date. If such rate does not appear on
Telerate Page 7058 on any related 11th District Interest Determination Date,
the 11th District Cost of Funds Rate for such 11th District Interest
Determination Date shall be the monthly weighted average cost of funds paid
by member institutions of the Eleventh Federal Home Loan Bank District that
was most recently announced (the "Index") by the FHLB of San Francisco as
such cost of funds for the calendar month immediately preceding the date of
such announcement. If the FHLB of San Francisco fails to announce such rate
for the calendar month immediately preceding such 11th District Interest
Determination Date, then the 11th District Cost of Funds Rate for such 11th
District Interest Determination Date will be the 11th District Cost of Funds
Rate then in effect on such 11th District Interest Determination Date.
Determination of Kenny Rate. If the Interest Rate Basis specified on the
face hereof is Kenny Rate, the interest rate determined with respect to the
Kenny Rate Interest Determination Date shall be the Kenny Rate plus or minus
the Spread, if any, or multiplied by the Spread Multiplier, if any, specified
on the face hereof, as determined on such Kenny Rate Interest Determination
Date.
"Kenny Rate" means, with respect to any Kenny Rate Interest
Determination Date, the high grade weekly index (the "Weekly Index") on such
date made available by Kenny Information Systems ("Kenny") to the Calculation
Agent. The Weekly Index is, and shall be, based upon 30 day yield
evaluations at par of bonds, the interest on which is exempt from Federal
income taxation under the Internal Revenue Code of 1986, as amended, of not
less than five high grade component issuers selected by Kenny which shall
include, without limitation, issuers of general obligation bonds. The
specific issuers included among the component issuers may be changed from
time to time by Kenny in its discretion. The bonds on which the Weekly Index
is based shall not include any bonds on which the interest is subject to a
minimum tax or similar tax under the Internal Revenue Code of 1986, as
amended, unless all tax-exempt bonds are subject to such tax. In the event
Kenny ceases to make available such Weekly Index, a successor indexing agent
will be selected by the Calculation Agent, such index to reflect the
prevailing rate for bonds rated in the highest short-term rating category by
Moody's Investors Service, Inc. and Standard & Poor's Corporation in respect
of issuers most closely resembling the high grade component issuers selected
by Kenny for its Weekly Index, the interest on which is (A) variable on a
weekly basis, (B) exempt from Federal income taxation under the Internal
Revenue Code of 1986, as amended, and (C) not subject to a minimum tax or
similar tax under the Internal Revenue Code of 1986, as amended, unless all
tax-exempt bonds are subject to such tax. If such successor indexing agent
is not available, the rate for any Kenny Rate Interest Determination Date
shall be 67% of the rate determined if the Treasury Rate option had been
originally selected.
Determination of LIBOR. If the Interest Rate Basis specified on the face
hereof is LIBOR, the interest rate determined with respect to the LIBOR
Interest Determination Date shall be LIBOR plus or minus the Spread, if any,
or multiplied by the Spread Multiplier, if any, specified on the face hereof,
as determined on such LIBOR Interest Determination Date.
LIBOR will be determined by the Calculation Agent in accordance
with the following provisions:
(i) With respect to any LIBOR Interest Determination Date,
LIBOR will be either: (a) if "LIBOR Reuters" is specified on the
face hereof, the arithmetic mean of the offered rates (unless the
specified Designated LIBOR Page (as defined below) by its terms
provides only for a single rate, in which case such single rate
shall be used) for deposits in the Designated LIBOR Currency (as
defined below) having the Index Maturity designated on the face
hereof, commencing on the second London Business Day immediately
following the LIBOR Interest Determination Date, which appear on
the Designated LIBOR Page specified on the face hereof as of 11:00
A.M., London time, on that LIBOR Interest Determination Date, if at
least two such offered rates appear (unless, as aforesaid, only a
single rate is required) on such Designated LIBOR Page, or (b) if
"LIBOR Telerate" is specified on the face hereof, the rate for
deposits in the Designated LIBOR Currency (as defined below) having
the Index Maturity designated on the face hereof, commencing on the
second London Business Day immediately following such LIBOR
Interest Determination Date, which appears on the Designated LIBOR
Page specified on the face hereof as of 11:00 A.M. London time on
that LIBOR Interest Determination Date. Notwithstanding the
foregoing, if fewer than two offered rates appear on the Designated
LIBOR Page with respect to LIBOR Reuters (unless the specified
Designated LIBOR Page with respect to LIBOR Reuters by its terms
provides only for a single rate, in which case such single rate
shall be used), or if no rate appears on the Designated LIBOR Page
with respect to LIBOR Telerate, whichever may be applicable, LIBOR
in respect of the related LIBOR Interest Determination Date will be
determined as if the parties had specified the rate described in
clause (ii) below.
<PAGE>
(ii) With respect to any LIBOR Interest Determination Date on
which fewer than two offered rates appear on the Designated LIBOR
Page with respect to LIBOR Reuters (unless the Designated LIBOR
Page by its terms provides only for a single rate, in which case
such single rate shall be used), or if no rate appears on the
Designated LIBOR Page with respect to LIBOR Telerate, as the case
may be, the Calculation Agent will request the principal London
office of each of four major banks in the London interbank market
selected by the Calculation Agent to provide the Calculation Agent
with its offered rate quotation for deposits in the Designated
LIBOR Currency (as defined below) for the period of the Index
Maturity specified on the face hereof, commencing on the second
London Business Day immediately following such LIBOR Interest
Determination Date, to prime banks in the London interbank market
as of 11:00 A.M., London time, on such LIBOR Interest Determination
Date and in a principal amount that is representative for a single
transaction in such Designated LIBOR Currency in such market at
such time. If at least two such quotations are provided, LIBOR
determined on such LIBOR Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations
are provided, LIBOR determined on such LIBOR Interest Determination
Date will be the arithmetic mean of the rates quoted as of 11:00
A.M. in the applicable Principal Financial Center (as defined
below), on such LIBOR Interest Determination Date by three major
banks in such Principal Financial Center selected by the
Calculation Agent for loans in the Designated LIBOR Currency to
leading banks commencing on the second London Business Day
immediately following such LIBOR Interest Determination Date,
having the Index Maturity designated on the face hereof in a
principal amount that is representative for a single transaction in
such Designated LIBOR Currency in such market at such time;
provided, however, that if the banks so selected by the Calculation
Agent are not quoting as mentioned in this sentence, LIBOR
determined on such LIBOR Interest Determination Date will be LIBOR
in effect on such LIBOR Interest Determination Date.
"Designated LIBOR Currency" means the currency (including a
composite currency), if any, designated on the face hereof as the Designated
LIBOR Currency. If no such currency is designated on the face hereof, the
Designated LIBOR Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) the display on the Reuters
Monitor Money Rates Service for the purpose of displaying the London
interbank rates of major banks for the applicable Designated LIBOR Currency
(if "LIBOR Reuters" is designated on the face hereof), or (b) the display on
the Dow Jones Telerate Service for the purpose of displaying the London
interbank rates of major banks for the applicable designated LIBOR Currency
(if "LIBOR Telerate" is designated on the face hereof). If neither LIBOR
Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR for the
applicable Designated LIBOR Currency will be determined as if LIBOR Telerate
(and, if the U.S. dollar is the Designated LIBOR Currency, page 3750) had
been chosen.
"Principal Financial Center" means, unless otherwise specified on
the face hereof, the capital city of the country that issues as its legal
tender the Designated LIBOR Currency of this Note, except that with respect
to U.S. dollars and ECUs, the Principal Financial Center shall be The City of
New York and Brussels, respectively.
Determination of Prime Rate. If the Interest Rate Basis specified on the
face hereof is the Prime Rate, the interest rate determined with respect to
the Prime Interest Determination Date shall be the Prime Rate plus or minus
the Spread, if any, or multiplied by the Spread Multiplier, if any, specified
on the face hereof, as determined on such Prime Interest Determination Date.
"Prime Rate" means, with respect to any Prime Interest
Determination Date, the rate set forth on such date in H.15(519) under the
heading "Bank Prime Loan." In the event that such rate is not published
prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to
such Prime Interest Determination Date, then the Prime Rate with respect to
such Prime Interest Determination Date shall be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the Reuters
Screen USPRIME1 Page as such bank's prime rate or base lending rate as in
effect for that Prime Interest Determination Date. If fewer than four such
rates appear on the Reuters Screen USPRIME1 Page for the Prime Interest
Determination Date, the Prime Rate with respect to such Prime Interest
Determination Date shall be the arithmetic mean of the prime rates quoted on
the basis of the actual number of days in the year divided by 360 as of the
close of business on such Prime Interest Determination Date by at least two
of the three major money center banks in The City of New York selected by the
Calculation Agent. If fewer than two quotations are provided, the Prime Rate
with respect to such Prime Interest Determination Date shall be determined on
the basis of the rates furnished in The City of New York by the appropriate
number of substitute banks or trust companies organized and doing business
under the laws of the United States, or any state thereof, having total
equity capital of at least U.S. $500 million and being subject to supervision
or examination by Federal or state authority, selected by the Calculation
Agent to provide such rate or rates; provided, however, that if the
appropriate number of substitute banks or trust companies selected as
aforesaid are not quoting as mentioned in this sentence, the Prime Rate with
respect to such Prime Interest Determination Date will be the Prime Rate in
effect immediately prior to such Prime Interest Determination Date. "Reuters
Screen USPRIME1 Page" means the display designated as page "USPRIME1" on the
Reuters Monitor Money Rate Service (or such other page as may replace the
USPRIME1 page on the service for the purpose of displaying the prime rate or
base lending rate of major banks).
Determination of Treasury Rate. If the Interest Rate Basis specified on the
face hereof is Treasury Rate, the interest rate determined with respect to
the Treasury Interest Determination Date shall be the Treasury Rate plus or
minus the Spread, if any, or multiplied by the Spread Multiplier, if any,
specified on the face hereof, as determined on such Treasury Interest
Determination Date.
<PAGE>
"Treasury Rate" means, with respect to any Treasury Interest
Determination Date, the rate for the most recent auction of direct
obligations of the United States ("Treasury bills") having the Index Maturity
specified on the face hereof as published in H.15(519) under the heading,
"Treasury bills -- auction average (investment)" or, if not so published by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Treasury Interest Determination Date, the average auction rate (expressed as
a bond equivalent, on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that such rate is not available by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Treasury Interest Determination Date, or if no such auction is held in a
particular week, then the Treasury Rate with respect to such Treasury
Interest Determination Date shall be calculated by the Calculation Agent and
shall be a yield to maturity (expressed as a bond equivalent, on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis) of
the arithmetic mean of the secondary market bid rates, as of approximately
3:30 P.M., New York City time, on such Treasury Interest Determination Date,
of three leading primary U.S. government securities dealers selected by the
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity designated on the face hereof; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Treasury Rate with respect
to such Treasury Interest Determination Date will be the Treasury Rate in
effect immediately prior to such Treasury Interest Determination Date.
The Calculation Agent shall calculate the interest rate on this
Note in accordance with the foregoing as soon as practicable after the
Interest Determination Date.
The principal of and any premium and interest on this Note are
payable by the Company in the Specified Currency for this Note. If the
Specified Currency for this Note is other than U.S. dollars, the Company will
(unless otherwise specified on the face hereof) arrange to convert all
payments in respect of this Note into U.S. dollars in the manner described in
the following paragraph. If this Note has a Specified Currency other than
U.S. dollars, the holder of this Note may (unless otherwise specified on the
face hereof) elect to receive all payments in respect of this Note in the
Specified Currency by delivery of a written notice to the Trustee for such
Note not later than fifteen calendar days prior to the applicable payment
date, except under the circumstances described below. Such election will
remain in effect until revoked by written notice to such Trustee received not
later than fifteen calendar days prior to the applicable payment date.
The amount of any U.S. dollar payment in respect of this Note will
be determined by the Exchange Rate Agent based on the highest firm bid
quotation expressed in U.S. dollars received by the Exchange Rate Agent at
approximately 11:00 a.m., New York City time, on the second Business Day
preceding the applicable payment date (or, if no such rate is quoted on such
date, the last date on which such rate was quoted), from three (or, if three
are not available, then two) recognized foreign exchange dealers in The City
of New York (one of which may be an Agent (as such term is used in the
Distribution Agreement dated November , 1996 relating to the Notes) and
another of which may be the Exchange Rate Agent) selected by the Exchange
Rate Agent, for the purchase by the quoting dealer, for settlement on such
payment date, of the aggregate amount of such Specified Currency payable on
such payment date in respect of all Notes denominated in such Specified
Currency. All currency exchange costs will be borne by the registered
Holders of such Notes by deductions from such payments.
Except as set forth below, if payment in respect of this Note is
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments in respect of this Note shall be made in U.S.
dollars; provided that the Company, at its option, may resume making payments
in such currency once such currency is again available or so used. The
amounts so payable on any date in such currency shall be converted into U.S.
dollars on the basis of the most recently available market exchange rate for
such currency or as otherwise indicated on the face hereof. Any payment in
respect of this Note made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
If payment in respect of this Note is required to be made in ECU
and ECU are no longer used in the European Monetary System, then all payments
in respect of this Note shall be made in U.S. dollars; provided that the
Company, at its option, may resume making payments in ECU once ECU are again
so used. The amount of each payment in U.S. dollars shall be computed on the
basis of the equivalent of ECU in U.S. dollars, determined as described
below, as of the second Business Day prior to the date on which such payment
is due.
The equivalent of ECU in U.S. dollars as of any date shall be
determined by the Trustee for this Note on the following basis. The
component currencies of ECU for this purpose (the "Components") shall be the
currency amounts that were components of ECU as of the last date on which ECU
were used in the European Monetary System. The equivalent of ECU in U.S.
dollars shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by such Trustee or such Exchange Rate Agent, as the case may be,
on the basis of the most recently available Market Exchange Rates for such
Components or as otherwise indicated on the face hereof.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or
more component currencies are consolidated into a single currency, the
amounts of those currencies as Components shall be replaced by an amount in
such single currency equal to the sum of the amounts of the consolidated
component currencies expressed in such single currency. If any component
currency is divided into two or more currencies, the amount of that currency
as a Component shall be replaced by amounts of such two or more currencies,
each of which shall be equal to the amount of the former component currency
divided by the number of currencies into which that currency was divided.
All determinations referred to above made by the Trustee or the
Exchange Rate Agent shall be at its sole discretion and shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
of this Note.
All percentages resulting from any calculations under this Note
will be rounded, if necessary, to the nearest one hundred thousandth of a
percentage point (with five one-millionths of a percentage point being
rounded upward) and all currency or currency unit or dollar amounts used in
or resulting from any such calculation in respect of the Notes will be
rounded to the nearest one-hundredth of a unit (with five one-thousandths
being rounded upward) or nearest cent (with one-half cent being rounded
upward), as the case may be.
<PAGE>
SECTION 3. Supplemental Indentures. The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding of all series to be affected (acting as
one class) to execute supplemental indentures adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture
or modifying in any manner the rights of the Holders of the Securities or
such series; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each outstanding Security affected
thereby , among other things, (i) change the fixed maturity of the principal
of, or any installment of principal of or interest on, any Security;
(ii) reduce the principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof; (iii) impair the right to
institute suit for the enforcement of any such payment on or after the fixed
maturity thereof (or, in the case of redemption, on or after the redemption
date); (iv) reduce the percentage in principal amount of the outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences) provided for in the Indenture;
(v) change any obligation of the Company, with respect to outstanding
Securities of a series, to maintain an office or agency in the places and for
the purposes specified in the Indenture for such series; or (vi) modify any
of the foregoing provisions or the provisions for the waiver of certain
covenants and defaults, except to increase any applicable percentage of the
aggregate principal amount of outstanding Securities the consent of the
Holders of which is required or to provide with respect to any particular
series the right to condition the effectiveness of any supplemental indenture
as to that series on the consent of the Holders of a specified percentage of
the aggregate principal amount of outstanding Securities of such series or to
provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the Holder of each outstanding Security
affected thereby. It is also provided in the Indenture that the Holders of a
majority in aggregate principal amount of the Securities of a series at the
time outstanding may on behalf of the Holders of all the Securities of such
series waive any past default under the Indenture with respect to such series
and its consequences, except a default in the payment of the principal of,
premium, if any, or interest, if any, on any Security of such series or in
respect of a covenant or provision which cannot be modified without the
consent of the Holder of each outstanding Security of the series affected.
Any such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this Note
and any Notes which may be issued in exchange or substitution herefor,
irrespective of whether or not any notation thereof is made upon this Note or
such other Notes.
SECTION 4. Obligation of the Company Absolute. No reference
herein to the Indenture and no provision of this Note or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Note at the place, at the respective times, at the rate and in the coin or
currency herein prescribed.
SECTION 5. Discharge of Obligations. The Indenture permits the
Company to discharge its obligations with respect to the Notes on the 91st
day following the satisfaction of the conditions set forth in the Indenture,
which include the deposit with the Trustee of money or U.S. Government
Obligations or a combination thereof sufficient to pay and discharge each
installment of principal of (including premium, if any, on) and interest, if
any, on the outstanding Notes.
SECTION 6. Consolidation or Merger of the Company. If the Company
shall, in accordance with Section 901 of the Indenture, consolidate with or
merge into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person, the successor shall
succeed to, and be substituted for, the Person named as the "Company" on the
face of this Note, all on the terms set forth in the Indenture.
SECTION 7. Authorized Denominations. The Notes are issuable in
registered form without coupons in denominations of $1,000 or any integral
multiple thereof. In the manner and subject to the limitations provided in
the Indenture, but without the payment of any service charge, Notes may be
exchanged for an equal aggregate principal amount of Notes of other
authorized denominations at the office or agency of the Company maintained
for such purpose in the Borough of Manhattan, The City and State of New York.
SECTION 8. Registration of Transfer. Upon due presentment for
registration of transfer of this Note at the office or agency of the Company
for such registration, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued to the transferee in exchange
herefor, subject to the limitations provided in the Indenture, without charge
except for any tax or other governmental charge imposed in connection
therewith.
If this Note is a global Note (as specified on the face hereof),
this Note is exchangeable for certificated Notes only upon the terms and
conditions provided in the Indenture. Except as provided above, owners of
beneficial interests in this permanent global Note will not be entitled to
receive physical delivery of Notes in certificated registered form and will
not be considered the Holders thereof for any purpose under the Indenture.
SECTION 9. Owners. Prior to due presentment for registration of
transfer of this Note, the Company, the Trustee and any agent of the Company
or the Trustee may deem and treat the registered Holder hereof as the owner
of this Note (whether or not this Note shall be overdue) for the purpose of
receiving payment of the principal of, premium, if any, and interest on this
Note, as herein provided, and for all other purposes, and neither the Company
nor the Trustee nor any agent of the Company or the Trustee shall be affected
by any notice to the contrary. All payments made to or upon the order of
such registered Holder shall, to the extent of the sum or sums paid,
effectually satisfy and discharge liability for moneys payable on this Note.
SECTION 10. Waiver and Release of Liability. No recourse for the
payment of the principal of, premium, if any, or interest on this Note, or
for any claim based hereon or otherwise in respect hereof, and no recourse
under or upon any obligation, covenant or agreement of the Company in the
Indenture or any indenture supplemental thereto or in any Note or because of
the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or any successor corporation, whether by virtue of any
constitution, statute or role of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof
and as part of the consideration for the issue hereof, expressly waived and
released.
SECTION 11. Redemption. If so specified on the face hereof, this
Note may be redeemed at the option of the Company as a whole or from time to
time in part, on or after the date designated as the Initial Redemption Date
on the face hereof, at the redemption price specified on the face hereof,
together with unpaid interest accrued on the principal amount hereof to be
redeemed to the date of redemption, but interest installments that are due on
or prior to the date of redemption will be payable to the Holder of this Note
of record at the close of business on the relevant Regular Record Date
referred to on the face hereof, all as provided in the Indenture. The
Company may exercise such option by causing the Trustee to mail a notice of
such redemption at least 30 but not more than 60 calendar days prior to the
date of redemption, subject to all the provisions and conditions of the
Indenture. In the event of redemption of this Note in part only, a new Note
or Notes for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
<PAGE>
SECTION 12. Repayment. If so specified on the face hereof, this
Note will be repayable prior to Stated Maturity at the option of the Holder
on the Optional Repayment Dates shown on the face hereof at the Optional
Repayment Prices shown on the face hereof together with interest accrued and
unpaid thereon to the date of repayment. In order for this Note (if it is
repayable at the option of the Holder) to be repaid prior to Stated Maturity,
the Paying Agent must receive at least 30 but not more than 45 calendar days
prior to an Optional Repayment Date (i) this Note with the form below
entitled "Option to Elect Repayment" duly completed or (ii) a telegram,
telex, facsimile transmission, hand delivery or letter (first class, postage
prepaid) from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
in the United States of America setting forth the name of the Holder of this
Note, the principal amount of this Note, the principal amount of the Note to
be repaid, the certificate number or a description of the tenor and terms of
this Note, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note with the form below entitled "Option
to Elect Repayment" duly completed will be received by the Paying Agent not
later than five Business Days after the date of such telegram, telex,
facsimile transmission, hand delivery or letter (first class, postage
prepaid). If the procedure described in clause (ii) of the preceding
sentence is followed, this Note with such form duly completed must be
received by the Trustee by such fifth Business Day. Exercise of the
repayment option by the Holder of this Note shall be irrevocable, except that
a Holder who has tendered this Note for repayment may revoke any such tender
for repayment by written notice to the Trustee received prior to the close of
business on the tenth calendar day prior to the repayment date. The
repayment option may be exercised by the Holder of this Note for less than
the entire principal amount of this Note provided that the principal amount
of this Note remaining outstanding after such repayment is an authorized
denomination. Upon such partial repayment, this Note shall be cancelled and
a new Note or Notes for the remaining principal amount hereof shall be issued
in the name of the Holder of this Note.
SECTION 13. Optional Interest Reset. If so specified on the face
hereof, the Spread or the Spread multiplier on this Note may be reset by the
Company on the date or dates specified on the face hereof (each an "Optional
Interest Reset Date"). The Company may exercise such option by notifying the
Trustee of such exercise at least 45 but not more than 60 calendar days prior
to an Optional Interest Reset Date. If the Company so notifies the Trustee
of such exercise, the Trustee will send, not later than 40 calendar days
prior to each Optional Interest Reset Date, by telegram, telex, facsimile
transmission, hand delivery or letter (first class, postage prepaid) to the
Holder of this Note a notice (the "Reset Notice") indicating (i) that the
Company has elected to reset the Spread or the Spread Multiplier, (ii) such
new Spread or Spread Multiplier and (iii) the provisions, if any, for
redemption during the period from such Optional Interest Reset Date to the
next Optional Interest Reset Date or, if there is no such next Optional
Interest Reset Date, to the Stated Maturity of this Note (each such period a
"Subsequent Interest Period"), including the date or dates on which or the
period or periods during which and the price or prices at which such
redemption may occur during such Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 calendar days
prior to an Optional Interest Reset Date, the Company may, at its option,
revoke the Spread and/or the Spread Multiplier provided for in the Reset
Notice and establish a Spread and/or Spread Multiplier resulting in a higher
interest rate for the Subsequent Interest Period commencing on such Optional
Interest Reset Date by causing the Trustee to send by telegram, telex,
facsimile transmission, hand delivery or letter (first class, postage
prepaid) notice of such Spread and/or Spread Multiplier resulting in a higher
interest rate to the Holder of this Note. Such notice shall be irrevocable.
All Notes with respect to which the Spread and/or the Spread Multiplier is
reset on an Optional Interest Reset Date will bear such Spread and/or Spread
Multiplier resulting in a higher interest rate, whether or not tendered for
repayment as provided in the next paragraph.
If the Company elects prior to an Optional Interest Reset Date to
reset the Spread and/or Spread Multiplier of this Note, the Holder of this
Note will have the option to elect repayment of this Note by the Company on
such Optional Interest Reset Date at a price equal to the principal amount
hereof plus interest accrued and unpaid thereon to such Optional Interest
Reset Date. In order to obtain repayment on an Optional Interest Reset Date,
the Holder must follow the procedures set forth under Section 12 for optional
repayment except that the period for delivery or notification to the Trustee
shall be at least 25 but not more than 35 calendar days prior to such
Optional Interest Reset Date. If the Holder has tendered this Note for
repayment following receipt of a Reset Notice, the Holder may revoke such
tender for repayment by written notice to the Trustee received prior to 5:00
P.M., New York City time, on the tenth calendar day prior to such Optional
Interest Reset Date.
SECTION 14. Optional Extension of Maturity. If so specified on
the face hereof, the Stated Maturity of this Note may be extended at the
option of the Company for the period or periods of from one to five whole
years specified on the face hereof (each an "Extension Period") up to but not
beyond the date (the "Final Maturity Date") set forth on the face hereof.
The Company may exercise such option with respect to this Note by notifying
the Trustee of such exercise at least 45 but not more than 60 calendar days
prior to the Stated Maturity of this Note in effect prior to the exercise of
such option (the "Original Stated Maturity Date"). If the Company so
notifies the Trustee of such exercise, the Trustee will send, not later than
40 calendar days prior to the Original Stated Maturity Date, by telegram,
telex, facsimile transmission, hand delivery or letter (first class, postage
prepaid) to the Holder of this Note, a notice (the "Extension Notice")
indicating (i) that the Company has elected to extend the Stated Maturity of
this Note, (ii) the new Stated Maturity, (iii) the Spread and/or Spread
Multiplier applicable to the Extension Period and (iv) the provisions, if
any, for redemption during such Extension Period, including the date or dates
on which or the period or periods during which and the price or prices at
which such redemption may occur during such Extension Period. Upon the
Trustee's sending of the Extension Notice, the Stated Maturity of this Note
shall be extended automatically and, except as modified by the Extension
Notice and as described in the next two paragraphs, this Note will have the
same terms as prior to the sending of such Extension Notice.
Notwithstanding the foregoing, not later than 20 calendar days
prior to the Original Stated Maturity Date of this Note, the Company may, at
its option, revoke the Spread and/or Spread Multiplier provided for in the
Extension Notice and establish a Spread and/or Spread Multiplier resulting in
a higher interest rate for the Extension Period by causing the Trustee to
send by telegram, telex, facsimile transmission, hand delivery or letter
(first class, postage prepaid) notice of such Spread and/or Spread Multiplier
resulting in a higher interest rate to the Holder of this Note. Such notice
shall be irrevocable. All Notes with respect to which the Stated Maturity is
extended will bear such Spread and/or Spread Multiplier resulting in a higher
interest rate for the Extension Period, whether or not tendered for repayment
as provided in the next paragraph.
If the Company elects to extend the Stated Maturity of this Note,
the Holder will have the option to elect repayment of this Note by the
Company on the Original Stated Maturity Date at a price equal to the
principal amount hereof, plus interest accrued and unpaid thereon to such
date. In order to obtain repayment on the Original Stated Maturity Date, the
Holder must follow the procedures set forth under Section 12 for optional
repayment, except that the period for delivery or notification to the Trustee
shall be at least 25 but not more than 35 calendar days prior to the Original
Stated Maturity Date. A Holder who has tendered this Note for repayment
following receipt of an Extension Notice may revoke such tender for repayment
by written notice to the Trustee received prior to 5:00 P.M., New York City
time, on the tenth calendar day prior to the Original Stated Maturity Date.
<PAGE>
SECTION 15. Sinking Fund. This Note will not be subject to any
sinking fund.
SECTION 16. Original Issue Discount Notes. Notwithstanding
anything herein to the contrary, if this Note is an Original Issue Discount
Note, the amount payable in the event the principal amount hereof is declared
to be due and payable immediately by reason of an Event of Default or in the
event of redemption or repayment prior to the Stated Maturity hereof in lieu
of the principal amount due at the Stated Maturity hereof shall be the
Amortized Face Amount of this Note as of the date of declaration, redemption
or repayment, as the case may be. The "Amortized Face Amount" of this Note
shall be the amount equal to (a) the principal amount of this Note multiplied
by the Issue Price (as set forth on the face hereof) plus (b) that portion of
the difference between the dollar amount determined pursuant to the preceding
clause (a) and the principal amount hereof that has accreted at the Yield to
Maturity (as set forth on the face hereof) (computed in accordance with
generally accepted United States bond yield computation principles) to such
date of declaration, redemption or payment, but in no event shall the
Amortized Face Amount of this Note exceed its principal amount.
SECTION 17. Events of Default. In case an Event of Default (as
defined in the Indenture) with respect to the Securities of this series shall
have occurred and be continuing, the principal hereof together with accrued
interest thereon, if any, may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
SECTION 18. Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 19. Defined Terms. All terms used in this Note which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture; and all references in the Indenture to "Security" or "Securities"
shall be deemed to include the Notes.
<PAGE>
OPTION TO ELECT REPAYMENT
[To be completed only if this Note is repayable at the option
of the Holder and the Holder elects to exercise such rights]
The undersigned owner of this Note hereby irrevocably elects to
have the Company repay the principal amount of this Note or portion hereof
below designated at (i) the applicable Optional Repayment Price indicated on
the face hereof, together with interest accrued and unpaid thereon to the
date of repayment, if this Note is to be repaid pursuant to Section 12 of
this Note, or (ii) 100% of the principal amount of this Note to be repaid
plus interest accrued and unpaid thereon to the Optional Interest Reset Date,
if this Note is to be repaid pursuant to Section 13 hereof, or to the
Original Stated Maturity Date, if this Note is to be repaid pursuant to
Section 14 hereof. Specify the denomination or denominations (which shall be
$1,000 or an integral multiple thereof in excess thereof or, if the Note is
denominated in a currency other than U.S. dollars, an Authorized
Denomination) of the Note or Notes to be issued to the Holder for the portion
of the within Note not being repaid (in the absence of any specification, one
such Note will be issued for the portion not being repaid):
______________________________
Dated:________________________ ___________________________
Signature
Sign exactly as name appears on
the front of this Note.
Principal amount to be repaid Indicate address where check is
if amount to be repaid is less to be sent, if repaid:
than the entire principal amount
of this Note (principal amount
remaining must be an authorized
denomination)
$______________________________
(which shall be an integral
multiple of $1,000 or, if the
Note is denominated in a SOCIAL SECURITY OR OTHER
currency other than U.S. dollars, TAXPAYER ID NUMBER
of an amount equal to the integral ___________________________
multiples referred to on the face
hereof under "Authorized
Denominations" (or, if no such
reference is made, an amount
equal to the minimum Authorized
Denomination)).
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as through they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT Custodian
----------------------------------------
(Cust) (Minor)
Under Uniform Gifts to Minors Act
----------------------------------------
(State)
Additional abbreviations may also be used though not in
the above list.
_______________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________
|_____________________________________|
___________________________________________________________________________
PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
___________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting
and appointing __________________ attorney to transfer said Note on the books
of the Company, with full power of substitution in the premises.
Dated:_____________________ _____________________________
Signature
Sign exactly as name appears on the
front of this Note (SIGNATURE MUST
BE GUARANTEED by a commercial bank,
a trust company or by a member of
the New York Stock Exchange which is
a member of an approved signature
guarantee medallion program pursuant
to Securities and Exchange Commission
Rule 17Ad-15.)
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
<PAGE>
Exhibit A.3
(Form of Fixed Rate
Security with and without
Optional Redemption Provision)
(Form of Face of [Note] 1/ )
[Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the issuer
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.] 2/
No.:
POLAROID CORPORATION
% [Note] Due
No.: CUSIP No.:
$
POLAROID CORPORATION, a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to
or registered assigns, the principal sum of
Dollars, at the office or agency of the Company designated for such purpose,
on , in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payments of public
and private debts, and to pay interest, semi-annually on
and of each year, on said principal sum at said
office or agency, in like coin or currency, at the rate of %
per annum, from the or the , as the case may
be, next preceding the date of this [Note] to which interest has been paid,
unless the date hereof is a date to which interest has been paid, in which
case from the date of this [Note], or unless no interest has been paid on the
[Notes] due (as defined on the reverse hereof), in which case from
until payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after
or as the case may be, and before the following
or , this [Note] shall bear interest from such
or , provided, however, that if the Company
shall default in the payment of interest due on such or
, then this [Note] shall bear interest from the next preceding
or to which interest has been paid, or, if no
interest has been paid on the [Notes] due ,from
. The interest so payable on any or
will subject to certain exceptions
__________________________________
1/ Bracketed references to "Note" or "Notes" should be
changed to reflect the designation of the series of
Securities being issued.
2/ The bracketed language is to be included if the Securities
are included within DTC's book-entry system.
<PAGE>
provided in the Indenture referred to on the reverse hereof, be paid to the
person in whose name this [Note] is registered at the close of business on
such or , as the
case may be, next preceding such or
, unless the Company shall default in the payment of interest due on such
interest payment date, in which case such defaulted interest, at the option
of the Company, may be paid to the person in whose name this [Note] is
registered at the close of business on a special record date for the payment
of such defaulted interest established by notice to the registered holders of
[Notes] not less than 10 days preceding such special record date or may be
paid in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the [Notes] due may be listed. Payment of
interest may, at the option of the Company, be made by check mailed to the
registered address of the person entitled thereto.
Reference is made to the further provisions of this [Note] set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This [Note] shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: POLAROID CORPORATION
by__________________________________
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities of the
Series designated herein issued under the
within-mentioned Indenture. by__________________________________
STATE STREET BANK AND TRUST COMPANY,
as Trustee
by
_____________________________________
Authorized Signatory
-2-
<PAGE>
(Form of Reverse of [Note])
This [Note] is one of a duly authorized issue of unsecured
debentures, notes or other evidences of indebtedness of the
Company (hereinafter called the "Securities), of the series
hereinafter specified, all issued or to be issued under an
indenture dated as of November [ ], 1996 (hereinafter called the
"Indenture"), duly executed and delivered by the Company to
State Street Bank and Trust Company, a trust company
duly organized and existing under the laws of the
Commonwealth of Massachusetts, as trustee (hereinafter called the "Trustee"),
to
which Indenture and all indentures supplemental thereto reference is hereby
made
for a description of the respective rights and duties thereunder of the
Trustee,
the Company and the holders of the Securities. The Securities may be issued in
one or more series, which different series may be issued in various aggregate
principal amounts, may mature at different times, may bear interest at
different
rates, may be subject to different redemption provisions, may be subject to
different sinking, purchase or analogous funds, may be subject to different
covenants and Events of Default and may otherwise vary as in the Indenture
provided. This [Note] is one of a series designated as the % [Notes] due
of the Company (hereinafter called the "[Notes] due ") issued under the
Indenture, limited in aggregate principal amount to $ .
In case an Event of Default with respect to the [Notes] due ,
as defined in the Indenture, shall have occurred and be
continuing, the principal hereof together with interest accrued
thereon, if any, may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company
and the Trustee, with the consent of the holders of not less
than a majority in aggregate principal amount of the Securities
at the time outstanding of all series to be affected (acting as
one class) to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or
modifying in any manner the rights of the holders of the Securities
of such series to be affected; provided, however, that no such
supplemental indenture shall, among other things, (i) change the
fixed maturity of the principal of, or any installment of principal
of or interest on, any Security; (ii) reduce the principal
amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof; (iii) impair
the right to institute suit for the enforcement of any
such payment on or after the fixed maturity thereof (or, in
the case of redemption, on or after the redemption date);
(iv) reduce the percentage in principal amount of the
outstanding Securities of any series, the consent of
whose holders is required for any such supplemental indenture,
or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences) provided for in the
Indenture; (v) change any obligation of the Company, with respect
to outstanding Securities of a series, to maintain an office or
agency in the places and for the purposes specified in the Indenture for
such series; or (vi) modify any of the foregoing provisions or
the provisions for the waiver of certain covenants and defaults,
except to increase any applicable percentage of the aggregate
principal amount of outstanding Securities the consent
of the holders of which is required or to provide with
respect to any particular series the right to condition
the effectiveness of any supplemental indenture as to that
series on the consent of the holders of a specified percentage of the
aggregate principal amount of outstanding Securities of such
series or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent
of the holder of each outstanding Security affected thereby.
It is also provided in the Indenture that the holders of
a majority in aggregate principal amount of the Securities
of a series at the time outstanding may on behalf of the holders
of all the Securities of such series waive any past default
under the Indenture with respect to such series and its
consequences, except a default in the payment of the principal
of, premium, if any, or interest, if any, on any Security of
such series or in respect of a covenant or provision which
cannot be modified without the consent of the Holder of
each outstanding Security of the series affected. Any
such consent or waiver by the holder of this [Note]
shall be conclusive and binding upon such holder and upon
all future holders and owners of the [Note] and any
[Notes] due which may be issued in exchange or substitution
herefor, irrespective of whether or not any notation thereof is made
upon this [Note] or such other [Notes] due .
-3-
<PAGE>
No reference herein to the Indenture and no provision of this [Note] or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any,
and interest on this [Note] at the place, at the respective
times, at the rate and in the coin or currency herein prescribed.
The Indenture permits the Company to Discharge its obligations with
respect
to the [Notes] due on the first day following the satisfaction of the
conditions set forth in the Indenture, which include the irrevocable
deposit with the Trustee of money or U.S. Government Obligations
or a combination thereof sufficient to pay and discharge each
installment of principal of (including premium, if any, on)
and interest, if any, on the outstanding [Notes] due .
If the Company shall, in accordance with Section 901 of the Indenture,
consolidate with or merge into any other corporation or convey or transfer its
properties and assets substantially as an entirety to any Person, the successor
shall succeed to, and be substituted for, the Person named as the
"Company" on the face of this [Note], all on the terms set
forth in the Indenture.
The [Notes] due are issuable in registered form without coupons in
denominations of $1,000 or any integral multiple thereof. In the manner and
subject to the limitations provided in the Indenture, but without the payment
of
any service charge, [Notes] due may be exchanged for an equal aggregate
principal amount of [Notes] due of other authorized denominations at the
office or agency of the Company maintained for such purpose in the Borough of
Manhattan, the City and State of New York.
[The [Notes] due may be redeemed as a whole, or from time to time in
part, at the option of the Company at any time upon mailing a notice of such
redemption not less than 30 nor more than 60 days prior to the date fixed for
redemption to the holders of the [Notes] due at their last registered
addresses, all as provided in the Indenture, at the following
optional redemption prices (expressed in percentages of the principal
amount), together in each case with accrued interest to the date
fixed for redemption.
If redeemed during the twelve-month period beginning
Year Percentage
] 3/
____________________________
3/ Bracketed language to be included in Securities
redeemable at the option of the Company.
-4-
<PAGE>
Upon due presentment for registration of transfer of this [Note] at the
office or agency of the Company for such registration in the Borough of
Manhattan, the City and State of New York, a new [Note] or [Notes] of
authorized
denominations for an equal aggregate principal amount will be issued to the
transferee in exchange herefor, subject to the limitations provided in the
Indenture, without charge except for any tax or other governmental charge
imposed in connection therewith.
Prior to due presentment for registration of transfer of this [Note], the
Company, the Trustee and any agent of the Company or the Trustee may deem and
treat the registered holder hereof as the absolute owner of this [Note]
(whether
or not this [Note] shall be overdue) for the purpose of receiving payment of
the
principal of, premium, if any, and interest on this Note, as herein provided,
and for all other purposes, and neither the Company nor the Trustee
nor any agent of the Company or the Trustee shall be affected by
any notice to the contrary. All payments made to or upon the order
of such registered holder shall, to the extent
of the sum or sums paid, effectively satisfy and discharge
liability for moneys payable on this [Note].
No recourse for the payment of the principal of, premium,
if any, or interest on this [Note], or for any claim based
hereon or otherwise in respect hereof, and no recourse under
or upon any obligation, covenant or agreement of the Company in
the Indenture or any indenture supplemental thereto or in
any [Note], or because of the creation of any indebtedness
represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or of any successor
corporation, either directly or through the
Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of
the
consideration for the issue hereof, expressly waived and released.
Unless otherwise defined in this [Note], all terms used
in this [Note] which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THIS [NOTE] SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
-5-
<PAGE>
EXHIBIT B
[FORMS OF CERTIFICATIONS]
EXHIBIT B.1
[FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR CEDEL]
CERTIFICATION
POLAROID CORPORATION
[Title of Securities]
(the "Securities")
This is to certify that, based solely on certifications we have received
in writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion
of the principal amount set forth below (our "Member Organizations")
substantially to the effect set forth in the Fiscal Agency or other
Agreement, as of the date hereof.___________________ principal amount of the
above captioned Securities (i) is owned by persons that are not citizens or
residents of the United States, domestic partnerships, domestic corporations
or any estate or trust the income of which is subject to United States
Federal income taxation regardless of its source ("United States persons"),
(ii) is owned by United States persons that (a) are foreign branches of
United States financial institutions (as defined in U.S. Treasury Regulations
Section 1.165-12(c)(1)(v) ("financial institutions")) purchasing for their
own account or for resale, or (b) acquired the Securities through foreign
branches of United States financial institutions and who hold the Securities
through such United States financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial institution has
agreed, on its own behalf or through its agent, that we may advise the Issuer
or the Issuer's agent that it will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) is owned by United States
or foreign financial institutions for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States
or foreign financial institutions described in clause (iii) above (whether or
not also described in clause (i) or (ii)) have certified that they have not
acquired the Securities for purposes of resale directly or indirectly to a
United States person or to a person within the United States or its
possessions.
If the Securities are of the category contemplated in
Section 230.903(c)(3) of Regulation S under the Securities Act of 1933, as
amended (the "Act") then this is also to certify with respect to the
principal amount of Securities set forth above that, except as set forth
below, we have received in writing by tested telex or by electronic
transmission, from our Member Organizations entitled to portion of such
principal amount, certifications with respect to such portion, substantially
to the effect set forth in the Fiscal Agency or other Agreement.
<PAGE>
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or collection of any
interest) any portion of the Temporary Global security excepted in such
certifications and (ii) that as of the date hereof we have not received any
notification from any of our Member Organizations to the effect that the
statements made by such Member Organizations with respect to any portion of
the part submitted herewith for exchange (or, if relevant, exercise of any
rights or collection of any interest) are no longer true and cannot be relied
upon as the date hereof.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the
United States. In connection therewith, if administrative or legal
proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to
produce this certification to any interested party in such proceedings.
Dated:________________, 19__ **
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
Brussels Office,
as operator of the Euroclear System]
or
[CEDEL S.A.]
By__________________________________________
* Note: Unless Morgan Guaranty Brussels and Cedel are otherwise informed by
the Lead Manager or Issuing Agent, the Standard Long-Form Certification set
out in the Operating Procedures will be deemed to meet the requirements of
this sentence.
** Not earlier than the Certification Event to which the certification
relates.
To the extent that this certification is used as a reference document,
drafters should note that the asterisks in the text, and the footnotes, may
be omitted.
-2-
<PAGE>
EXHIBIT B.2
[FORM OF PARTICIPANT CERTIFICATION INCORPORATED
BY REFERENCE IN A CERTIFICATION INSTRUCTION]
CERTIFICATE
POLAROID CORPORATION
[Title of Securities]
(the "Securities")
This is to certify that as of the date hereof, and except as set forth
below, the above captioned Securities held by you for our account (i) are
owned by persons that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the
income of which is subject to the United States Federal income taxation
regardless of its source ("United States persons"), (ii) are owned by
United States person(s) that (a) are foreign branches of a United States
financial institution (as defined in U.S. Treasury Regulations
Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their
own account or for resale, or (b) acquired the Securities through foreign
branches of United States financial institutions and who hold the Securities
through such United States financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial institution hereby
agrees, on its own behalf or through its agent, that you may advise the
issuer or the issuer's agent that it will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) are owned by United States
or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the
Securities is a United States or foreign financial institution described in
clause (iii) above (whether or not also described in clause (i) or (ii)) this
is to further certify that such financial institution has not acquired the
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
If the Securities are of the category contemplated in
Section 230.903(c)(3) of Regulation S under the Securities Act of 1933, as
amended (the "Act"), then this is also to certify that, except as set forth
below, (i) in the case of debt securities, the Securities are beneficially
owned by (a) non-U.S. person(s) or (b) U.S. person(s) who purchased the
Securities in transactions which did not require registration under the Act
or (ii) in the case of equity securities, the Securities are owned by
(x) non-U.S. person(s) (and such person(s) are not acquiring the Securities
for the account or benefit of U.S. person(s)) or (y) U.S. person(s) who
purchased the Securities in a transaction which did not require registration
under the Act. If this certification is being delivered in connection with
the exercise of warrants pursuant to Section 230.902(m) of Regulation S under
the Act, then this is further to certify that, except as set forth below, the
Securities are being exercised by and on behalf of non-U.S. person(s). As
used in this paragraph the term "U.S. person" has the meaning given to it by
Regulation S under the Act.
<PAGE>
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
Securities held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date,
and in the absence of any such notification it may be assumed that this
certification applies as of such date.
This certification excepts and does not relate to $_____________ of such
interest in the above Securities in respect of which we are not able to
certify and as to which we understand exchange and delivery of definitive
Securities (or, if relevant, exercise of any rights or collection of any
interest) cannot be made until we do so certify.
We understand that this certification is required in connection with
certain tax laws and, if applicable, certain securities laws of the
United States. In connection therewith, if administrative or legal
proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to
produce this certification to any interested party in such proceedings.
Date: ________________, 19__*
By __________________________________________________
As, or as agent for, the beneficial owner(s)
of the Securities to which this certificate relates
* Not earlier than 15 days prior to the Certification Event to which the
certification relates.
-2-
Exhibit 10.1
[EXECUTION COPY]
$350,000,000
CREDIT AGREEMENT
dated as of
March 19, 1997
among
Polaroid Corporation
Morgan Guaranty Trust Company of New York,
as Agent
and
The Banks Party Hereto
<PAGE>
TABLE OF CONTENTS /1/
Page
ARTICLE 1
Definitions
Section 1.01. Definitions 1
Section 1.02. Accounting Terms and Determinations 14
Section 1.03. Types of Borrowings 14
Section 1.04. Types of Loans 15
ARTICLE 2
The Credits
Section 2.01. Commitments to Lend 15
Section 2.02. Notice of Committed Borrowings 15
Section 2.03. Money Market Borrowings 17
Section 2.04. Interest Rate Elections 21
Section 2.05. Interest Rates 23
Section 2.06. Fees 26
Section 2.07. Optional Termination or Reduction of
Commitments 27
Section 2.08. Mandatory Termination of Commitments;
Maturity of Loans 27
Section 2.09. Optional Prepayments 27
Section 2.10. General Provisions as to Payments 28
Section 2.11. Funding Losses 28
Section 2.12. Computation of Interest and Fees 29
Section 2.13. Notes 29
Section 2.14. Withholding Tax Exemption 30
Section 2.15. Judgment Currency 30
Section 2.16. Foreign Withholding Taxes 31
Section 2.17. Eligible Subsidiaries 31
Section 2.18. Regulation D Compensation 31
Section 2.19. Termination of Existing Credit Agreement 32
____________________
/1/ The Table of Contents is not a part of this Agreement
-i-
<PAGE>
ARTICLE 3
Conditions
Section 3.01. Effectiveness 32
Section 3.02. Borrowings 33
Section 3.03. First Borrowing by Each
Eligible Subsidiary 34
ARTICLE 4
Representations and Warranties of the Company
Section 4.01. Corporate Existence and Power 35
Section 4.02. Corporate and Governmental Authorization;
No Contravention 35
Section 4.03. Binding Effect 35
Section 4.04. Financial Information; No Material
Adverse Change 35
Section 4.05. Litigation 36
Section 4.06. Compliance with ERISA 36
Section 4.07. Taxes 37
Section 4.08. Subsidiaries 37
Section 4.09. No Regulatory Restrictions on Borrowing 37
Section 4.10. Compliance with Laws 37
Section 4.11. No Defaults 37
Section 4.12. Possession of Franchises, Licenses, etc 38
Section 4.13. Full Disclosure 38
Section 4.14. Environmental Matters 38
ARTICLE 5
Covenants
Section 5.01. Information 38
Section 5.02. Payment of Obligations 42
Section 5.03. Maintenance of Property; Insurance 42
Section 5.04. Conduct of Business and Maintenance
of Existence 42
Section 5.05. Compliance with Laws 43
Section 5.06. Inspection of Property, Books and Records 43
Section 5.07. Interest Coverage Ratio 43
Section 5.08. Leverage Ratio 43
Section 5.09. Minimum Consolidated Adjusted Net Worth 43
Section 5.10. Subsidiary Debt 44
Section 5.11. Negative Pledge 44
Section 5.12. Consolidations, Mergers and
Sales of Assets 46
Section 5.13. Fiscal Year 46
Section 5.14. Use of Proceeds 46
-ii-
<PAGE>
ARTICLE 6
Defaults
Section 6.01. Events of Default 46
Section 6.02. Notice of Default 50
ARTICLE 7
The Agent
Section 7.01. Appointment and Authorization 50
Section 7.02. Agent and Affiliates 50
Section 7.03. Action by Agent 50
Section 7.04. Consultation with Experts 50
Section 7.05. Liability of Agent 50
Section 7.06. Indemnification 51
Section 7.07. Credit Decision 51
Section 7.08. Successor Agent; Resignations 51
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest
Rate Inadequate or Unfair 52
Section 8.02. Illegality 53
Section 8.03. Increased Cost and Reduced Return 53
Section 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans 55
Section 8.05. Substitution of Bank 55
ARTICLE 9
Representations and Warranties of Eligible Subsidiaries
Section 9.01. Corporate Existence and Power 56
Section 9.02. Corporate and Governmental
Authorization; No Contravention 56
Section 9.03. Binding Effect 57
Section 9.04. Taxes 57
-iii-
<PAGE>
ARTICLE 10
Guaranty
Section 10.01. The Guaranty 57
Section 10.02. Guaranty Unconditional 57
Section 10.03. Discharge Only upon Payment in Full;
Reinstatement In Certain Circumstances 58
Section 10.04. Waiver by the Company 59
Section 10.05. Subrogation 59
Section 10.06. Stay of Acceleration 59
ARTICLE 11
Miscellaneous
Section 11.01. Notices 59
Section 11.02. No Waivers 60
Section 11.03. Expenses; Documentary Taxes;
Indemnification 60
Section 11.04. Sharing of Set-offs 60
Section 11.05. Amendments and Waivers 61
Section 11.06. Successors and Assigns 61
Section 11.07. No Reliance on Margin Stock 63
Section 11.08. WAIVER OF TRIAL BY JURY 63
Section 11.09. Submission to Jurisdiction 63
Section 11.10. New York Law 63
Section 11.11. Confidentiality 63
Section 11.12. Counterparts 63
Commitment Schedule
Pricing Schedule
Exhibit A - Note
Exhibit B - Form of Money Market Quote Request
Exhibit C - Form of Invitation for Money Market Quotes
Exhibit D - Form of Money Market Quote
Exhibit E - Opinion of Simpson Thacher & Bartlett, Special Counsel for the
Company
Exhibit F - Opinion of Thomas M. Lemberg, General Counsel of the Company
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Exhibit G - Opinion of Davis Polk & Wardwell,
Special Counsel for the Agent
Exhibit H - Form of Election to Participate
Exhibit I - Form of Election to Terminate
Exhibit J - Opinion of Counsel for the Borrower
(Borrowings by Eligible Subsidiaries)
Exhibit K - Assignment and Assumption Agreement
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CREDIT AGREEMENT
AGREEMENT dated as of March 19, 1997 among POLAROID CORPORATION, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent, THE FIRST NATIONAL BANK OF
BOSTON, as Co-Agent and the BANKS party hereto.
WITNESSETH:
WHEREAS, Polaroid Corporation is presently a party to the Existing
Credit Agreement (as defined below) and desires to cancel the commitments of
the banks thereunder and to replace the Existing Credit Agreement with this
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1. Definitions. The following terms, as used herein, have
the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Additional Bank" means any bank or other financial institution that
first becomes a Bank for purposes hereof in connection with the replacement
of a Bank pursuant to Section 8.05.
"Additional Equity" means any capital stock (or options, rights or
warrants therefor) issued, or any treasury stock sold, by the Company after
December 31, 1996.
"Adjusted CD Rate" has the meaning set forth in Section 2.05(b).
"Administrative Questionnaire" means, with respect to each Bank, the
administrative questionnaire in the form submitted to such Bank by the Agent
and submitted to the Agent (with a copy to the Company) duly completed by
such Bank.
"Affiliate" means any Person (other than a Subsidiary) directly or
indirectly controlling, controlled by or under common control with the
Company. As used in this definition of "Affiliate", the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.
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"Agent" means Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks hereunder, and its successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.05(b).
"Assignee" has the meaning set forth in Section 11.06(c).
"Bank" means (i) each bank listed on the Commitment Schedule, (ii) each
Assignee which becomes a Bank pursuant to Section 11.06(c), (iii) each
Additional Bank and (iv) their respective successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means at any time a Committed Loan outstanding
hereunder which bears interest at such time at the Base Rate pursuant to a
Notice of Committed Borrowing or Notice of Interest Rate Election or pursuant
to the provisions of Article 8.
"Borrower" means the Company or any Eligible Subsidiary, as the context
may require, and their respective successors, and "Borrowers" means all of
the foregoing.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.05(b).
"CD Loan" means at any time a Committed Loan outstanding hereunder which
bears interest at such time at a rate based on the Adjusted CD Rate pursuant
to a Notice of Committed Borrowing or Notice of Interest Rate Election.
"CD Margin" has the meaning set forth in Section 2.05(b).
"CD Reference Banks" means The First National Bank of Chicago, First
National Bank of Boston and Morgan Guaranty Trust Company of New York.
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"Change in Control" means
(a) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 35% or more of the combined voting power
of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors, but excluding, for
this purpose, any such acquisition by (i) the Company or any of its
subsidiaries, (ii) any other Person of voting power pursuant to a
revocable proxy, or (iii) any corporation with respect to which,
following such acquisition, more than 65% of the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by individuals and
entities who were the beneficial owners of voting securities of the
Company immediately prior to such acquisition, in substantially the
same proportion as their ownership, immediately prior to such
acquisition, of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors; or
(b) individuals who, as of March 19, 1997, constituted the
Board of Directors of the Company (as of March 19, 1997, the
"Incumbent Board") cease for any reason to constitute at least a
majority of such Board; provided that any individual becoming a
director subsequent to March 19, 1997, whose election, or
nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act); or
(c) approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect
to which all or substantially all the individuals and entities who
were the respective beneficial owners of the voting securities of
the Company immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than
65% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors
of the corporation resulting from such reorganization, merger or
consolidation; or
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(d) the sale or other disposition of all or substantially all
the assets of the Company in one transaction or series of related
transactions.
"Co-Agent" means The First National Bank of Boston in its capacity as Co-
Agent hereunder.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Commitment" means (i) with respect to each Bank listed on the
Commitment Schedule, the amount set forth opposite such Bank's name on the
Commitment Schedule, (ii) with respect to any Additional Bank, the amount of
the Commitment assumed by it pursuant to Section 8.05 and (iii) with respect
to any Assignee, the amount of the transferor Bank's Commitment assigned to
it pursuant to Section 11.06(c), in each case as such amount may be changed
from time to time pursuant to Section 2.07, 8.05 or 11.06(c).
"Commitment Schedule" means the Commitment Schedule attached hereto.
"Committed Loan" means (i) a Base Rate Loan, (ii) a CD Loan or (iii) a
Euro-Dollar Loan.
"Company" means Polaroid Corporation, a Delaware corporation, and its
successors.
"Company's 1995 Form 10-K" means the Company's annual report on Form
10-K for Fiscal Year 1995, as filed with the Securities and Exchange
Commission pursuant to the Exchange Act.
"Company's Third Quarter 1996 Form 10-Q" means the Company's quarterly
report on Form 10-Q for the Fiscal Quarter ended September 29, 1996, as filed
with the Securities and Exchange Commission pursuant to the Exchange Act.
"Consolidated Adjusted Net Worth" means, at any date, the sum of (i)
Consolidated Stockholders' Equity as of such date, minus (ii) all write-ups
(other than write-ups resulting from foreign currency translations) after
December 31, 1996 in the book value of any asset owned by the Company or a
Consolidated Subsidiary, minus (iii) the carrying value of all Investments in
Unconsolidated Joint Ventures carried as assets on the Company's consolidated
balance sheet as of such date, to the extent that the carrying value of such
Investments as of such date exceeds $25,000,000.
"Consolidated Debt" means, at any date, the Debt of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of such
date; provided that "Consolidated Debt" shall exclude Debt incurred by the
Company or any of its Foreign Subsidiaries for bona fide hedging purposes,
which in the aggregate does not exceed 90% of the aggregate amount of the
cash deposits and Temporary Cash Investments of the Company and its
Subsidiaries.
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"Consolidated EBIT" means, for any period, the sum of (i) Consolidated
Net Income for such period (excluding any extraordinary item of gain or
loss), plus (ii) to the extent deducted in determining Consolidated Net
Income for such period, interest expense and federal, state and foreign
income taxes.
"Consolidated Interest Expense" means, for any period, the consolidated
interest expense of the Company and its Consolidated Subsidiaries for such
period.
"Consolidated Net Income" means, for any period, the consolidated net
income of the Company and its Consolidated Subsidiaries for such period.
"Consolidated Stockholders' Equity" means, at any date, the consolidated
stockholders' equity of the Company and its Consolidated Subsidiaries as of
such date.
"Consolidated Subsidiary" means, at any date, any Subsidiary or other
entity the accounts of which would be consolidated with those of the Company
in its consolidated financial statements if such statements were prepared as
of such date.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all non-contingent obligations of such Person to reimburse or repay any bank
or other Person in respect of amounts paid under a letter of credit, banker's
acceptance or similar instrument (excluding any such obligations which do not
arise from a repayment of Debt and are repaid within three Euro-Dollar
Business Days after the date incurred), (vi) all Debt of others secured by a
Lien on any asset of such Person, whether or not such Debt is assumed by such
Person (but excluding any such Debt in excess of the book value of such
asset, unless such Debt is assumed by such Person) and (vii) all Guarantees
by such Person of Debt of another Person (each such Guarantee to constitute
Debt in an amount equal to the amount of such other Person's Debt Guaranteed
thereby).
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
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"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such
other office as such Bank may hereafter designate as its Domestic Lending
Office by notice to the Company and the Agent; provided that any Bank may so
designate separate Domestic Lending Offices for its Base Rate Loans, on the
one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer
to either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.05(b).
"Domestic Subsidiary" means any Subsidiary which is not a Foreign
Subsidiary.
"Effective Date" has the meaning set forth in Section 3.01.
"Election to Participate" means an Election to Participate substantially
in the form of Exhibit H hereto.
"Election to Terminate" means an Election to Terminate substantially in
the form of Exhibit I hereto.
"Eligible Subsidiary" means any Wholly-Owned Consolidated Subsidiary as
to which an Election to Participate shall have been delivered to the Agent
and as to which an Election to Terminate shall not have been delivered to the
Agent.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees or permits relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, hazardous
substances, materials or wastes into the environment or otherwise relating to
the treatment, storage or disposal of hazardous substances, materials or
wastes or to the remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended or any successor statute.
"ERISA Group" means the Company, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414(b), (c) or (m)
of the Code.
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"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Company and the Agent.
"Euro-Dollar Loan" means at any time a Committed Loan outstanding
hereunder which bears interest at such time at a rate based on the London
Interbank Offered Rate pursuant to a Notice of Committed Borrowing or Notice
of Interest Rate Election.
"Euro-Dollar Margin" has the meaning set forth in Section 2.05(c).
"Euro-Dollar Reference Banks" means the principal London offices of ABN
AMRO Bank N.V., The First National Bank of Chicago and Morgan Guaranty Trust
Company of New York.
"Euro-Dollar Reserve Percentage" means, with respect to any Bank, for
any day that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement for such
Bank in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of such Bank to United States residents).
"Event of Default" has the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Credit Agreement" means the $150,000,000 Credit Agreement
dated as of August 24, 1994, as heretofore amended, among the Company, Morgan
Guaranty Trust Company of New York, as Agent, and the banks party thereto.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business
Day next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds
Rate for such day shall be the average rate quoted to the Agent (for its own
account) on such day on such transactions as reasonably determined by the
Agent.
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"Fiscal Quarter" means a fiscal quarter of the Company.
"Fiscal Year" means a fiscal year of the Company.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"Foreign Subsidiary" means any Subsidiary which is organized under the
laws of a jurisdiction other than the United States of America or any state
thereof and no more than 20% of the sales, earnings or assets (determined on
a consolidated basis) of which are located or derived from operations in the
United States of America.
"Funding Date" means, with respect to any Borrowing to be made pursuant
to Section 2.01 or 2.03, the date on which the Loans comprising such
Borrowing are to be made by the Banks participating therein, as specified by
the relevant Borrower in the related Notice of Borrowing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the obligee
of such Debt of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a corresponding
meaning.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date specified in the applicable
Notice of Committed Borrowing or Notice of Interest Rate Election and ending
one, two, three or six months thereafter (or, if all Banks agree, nine or
twelve months thereafter), as specified in such Notice; provided that:
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(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(2) with respect to each CD Borrowing, the period commencing on the date
specified in the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election and ending 30, 60, 90 or 180 days thereafter (or, if
all Banks agree, 270 or 360 days thereafter), as specified in such Notice;
provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day;
and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(3) with respect to each Money Market LIBOR Borrowing, the period
commencing on the date specified in the applicable Notice of Money Market
Borrowing and ending such whole number of months thereafter as is specified
in such Notice in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business Day;
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(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
(4) with respect to each Money Market Absolute Rate Borrowing, the
period commencing on the date specified in the applicable Notice of Money
Market Borrowing and ending such number of days thereafter (but not less than
15 days) as is specified in such Notice in accordance with Section 2.03;
provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day;
and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise;
provided that the term "Investment" shall not include any securities of or
claims with respect to any account debtor received in any compromise or
settlement of any account receivable.
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Company or any Subsidiary
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset.
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"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money Market
Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market
Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(c).
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $10,000,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d)(ii)(D).
"Money Market Absolute Rate Loan" means a loan made or to be made by a
Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it
may hereafter designate as its Money Market Lending Office by notice to the
Company and the Agent; provided that any Bank may from time to time by notice
to the Company and the Agent designate separate Money Market Lending offices
for its Money Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all references herein
to the Money Market Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan made or to be made by a Bank
pursuant to a LIBOR Auction (including such a loan bearing interest at the
Base Rate pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section
2.03(d)(ii)(C).
"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group
during such five year period.
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"Notes" means promissory notes of any Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of such Borrower to repay
the Loans made to it, and "Note" means any one of such promissory notes
issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"Notice of Interest Rate Election" has the meaning set forth in Section
2.04.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 11.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group for employees
of any member of the ERISA Group or (ii) has at any time within the preceding
five years been maintained, or contributed to, by any Person which was at
such time a member of the ERISA Group for employees of any Person which was
at such time a member of the ERISA Group.
"Pricing Schedule" means the Pricing Schedule attached hereto.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any
one of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least 51% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 51% of the aggregate unpaid
principal amount of the Loans.
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"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-
Hill Companies, Inc., and its successors.
"Subsidiary" means any corporation or other entity (except an
Unconsolidated Joint Venture) of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time
directly or indirectly owned by the Company.
"Substitute Bank" has the meaning set forth in Section 8.05.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated A1 or higher by S&P and P1 or higher by Moody's, (iii) demand or time
deposits with, including certificates of deposit and bankers' acceptances
issued by, any Qualifying Bank (as defined below), (iv) repurchase agreements
with respect to securities described in clause (i) above entered into with
any Qualifying Bank (or, to the extent that the party making such Investment
has a perfected security interest in the securities subject to such
repurchase agreements, with securities broker-dealers of nationally
recognized standing), (v) debt securities rated in one of the two highest
categories by a nationally recognized credit rating agency and (vi) in the
case of Investments made by any Foreign Subsidiary, obligations, deposits and
repurchase agreements comparable to those specified in clauses (i), (iii) and
(iv) above (except that such obligations may be issued or guaranteed by the
country in which such Foreign Subsidiary is located and such deposits and
repurchase agreements may be made with comparable banks and trust companies
located in such countries), provided in each case that such Investment
matures (or permits the holder thereof at its option to require repayment or
repurchase thereof) within two years from the date of acquisition thereof by
the Company or a Subsidiary. As used in this definition, "Qualifying Bank"
means (i) any office located in the United States of any Bank or (ii) any
office located in the United States of any other bank or trust company (A)
whose long-term debt securities are rated in one of the three highest
categories by a nationally recognized credit rating agency or (B) which is
organized under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000.
"Termination Date" means December 31, 2001 or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"Type" has the meaning set forth in Section 1.04.
"Unconsolidated Joint Venture" means at any time any Person in which the
Company or one or more of its Consolidated Subsidiaries has an equity
investment which, if material, would be accounted for under the equity
accounting method on the financial statements of the Company and its
Consolidated Subsidiaries, if such statements were prepared as of such time.
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"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefit liabilities
under such Plan based on the assumptions used for purposes of determining
required contributions to the Plan, as determined in the Plan's most recent
actuarial valuation, exceeds (ii) the fair market value of all Plan assets
allocable to such benefits, as determined as of the then most recent
valuation date for such Plan.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated Subsidiary
all of the shares of capital stock or other ownership interests of which
(except qualifying shares) are at the time directly or indirectly owned by
the Company.
Section 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with generally accepted accounting principles as in effect in the United
States from time to time, applied on a basis consistent (except for changes
concurred in by the Company's independent public accountants) with the most
recent audited consolidated financial statements of the Company and its
Consolidated Subsidiaries delivered to the Banks; provided that, if the
Company notifies the Agent that the Company wishes to amend any provision
hereof to eliminate the effect of any change in generally accepted accounting
principles on the operation of such provision (or if the Agent notifies the
Company that the Required Banks wish to amend any provision hereof for such
purpose), then such provision shall be applied on the basis of generally
accepted accounting principles in effect immediately before the relevant
change in generally accepted accounting principles became effective, until
either such notice is withdrawn or such provision is amended in a manner
satisfactory to the Company and the Required Banks.
Section 1.3. Types of Borrowings. (a) When used with respect to a
Funding Date, the term "Borrowing" refers to the borrowing by a specific
Borrower on such Funding Date of Loans of a specific Type and (except in the
case of Base Rate Loans) for a specific Interest Period pursuant to Section
2.01 or 2.03. When used with respect to Loans outstanding at any time, the
term "Borrowing" refers to the portion of the aggregate principal amount of
the Loans outstanding to a specific Borrower which bears interest of a
specific Type and (except in the case of Base Rate Loans) for a specific
Interest Period at such time pursuant to a Notice of Borrowing or Notice of
Interest Rate Election. Each Bank's share (if any) of each Borrowing is
referred to herein as a separate "Loan".
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(b) Borrowings are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans, while
a "Money Market LIBOR Borrowing" is a Borrowing comprised of Money Market
LIBOR Loans) or by reference to how the Banks' participation therein is or
was determined (i.e., a "Committed Borrowing" is a Borrowing comprised of
Committed Loans made by the Banks in proportion to their respective
Commitments, while a "Money Market Borrowing" is a Borrowing under Section
2.03 in which the Bank participants are determined on the basis of their
respective bids).
Section 1.4. Types of Loans. Loans hereunder are distinguished by
Type. The "Type" of a Loan refers to whether such Loan is a Base Rate Loan,
a CD Loan, a Euro-Dollar Loan, a Money Market Absolute Rate Loan or a Money
Market LIBOR Loan.
ARTICLE 2
The Credits
Section 2.1. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the
Company or any Eligible Subsidiary pursuant to this Section from time to time
prior to the Termination Date; provided that the aggregate principal amount
of Committed Loans by such Bank at any one time outstanding to all Borrowers
shall not exceed the amount of its Commitment. Each Borrowing under this
Section shall be in an aggregate principal amount of $10,000,000 or any
larger multiple of $1,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.02(b)) and shall be
made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, a Borrower may borrow under this
Section, repay or (to the extent permitted by Section 2.09) prepay loans made
under this Section and reborrow at any time prior to the Termination Date
under this Section.
Section 2.2. Notice of Committed Borrowings. (a) The Borrower shall
give the Agent notice (a "Notice of Committed Borrowing") not later than
10:00 A.M. (New York City time) on (x) the Funding Date for each Base Rate
Borrowing, (y) the second Domestic Business Day before the Funding Date for
each CD Borrowing and (z) the third Euro-Dollar Business Day before the
Funding Date for each Euro-Dollar Borrowing, specifying:
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(i) the Funding Date for such Borrowing, which
shall be a Domestic Business Day in the case of a
Domestic Borrowing or a Euro-Dollar Business Day in the
case of a Euro-Dollar Borrowing,
(ii) whether the Loans comprising such Borrowing are
to be Base Rate Loans, CD Loans or Euro-Dollar Loans,
(iii) the aggregate amount of such Borrowing, which
shall be $10,000,000 or a larger multiple of $1,000,000
(except that any such Borrowing may be in the aggregate
amount available in accordance with Section 3.02(b)), and
(iv) in the case of a Fixed Rate Borrowing, the
duration of the initial Interest Period applicable
thereto, subject to the provisions of the definition of
Interest Period.
(b) Upon receipt of a Notice of Committed Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's ratable
share of the Loans to be made on the Funding Date for such Borrowing and such
Notice of Committed Borrowing shall not thereafter be revocable by the
Borrower.
(c) Not later than 12:00 noon (New York City time) on the Funding Date
for each Committed Borrowing, each Bank shall make available its ratable
share of the Loans comprising such Borrowing, in Federal or other funds
immediately available in New York City, to the Agent at its address specified
in or pursuant to Section 11.01. Unless the Agent determines that any
applicable condition specified in Article 3 has not been satisfied, the Agent
will make the funds so received from the Banks available to the Borrower at
the Agent's aforesaid address.
(d) Unless the Agent shall have received notice from a Bank prior to the
Funding Date for any Committed Borrowing that such Bank will not make
available to the Agent such Bank's share of the Loans comprising such
Borrowing, the Agent may assume that such Bank has made such share available
to the Agent on such Funding Date in accordance with subsection (c) of this
Section and the Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent
that such Bank shall not have so made such share available to the Agent, the
Agent shall be entitled to recover from either such Bank or the Borrower
(each of which agrees to pay such amount forthwith on demand) such
corresponding amount together with interest thereon, for each day from the
date such amount is made available to the Borrower until the date such amount
is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum
equal to the higher of the Federal Funds Rate and the interest rate
applicable to such Borrowing pursuant to Section 2.05 or (ii) in the case of
such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute such Bank's
Loan included in such Borrowing for purposes of this Agreement. Any amounts
paid by the Borrower to the Agent pursuant to this subsection (d) shall not
relieve the defaulting Bank from any liability that such Bank may otherwise
have to the Borrower with respect to its failure to fund.
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Section 2.3. Money Market Borrowings. (a) The Money Market Option.
In addition to Committed Borrowings pursuant to Section 2.01, any Borrower
may, as set forth in this Section, request the Banks from time to time prior
to the Termination Date to make offers to make Money Market Loans to the
Borrower. The Banks may, but shall have no obligation to, make such offers
and the Borrower may, but shall have no obligation to, accept any such offers
in the manner set forth in this Section.
(b) Money Market Quote Request. When a Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to
the Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later
than 10:00 A.M. (New York City time) on (x) the fifth Euro-Dollar Business
Day prior to the Funding Date for the Borrowing proposed therein, in the case
of a LIBOR Auction, or (y) the Domestic Business Day next preceding the
Funding Date for the Borrowing proposed therein, in the case of an Absolute
Rate Auction (or, in either case, such other time or date as the Company and
the Agent shall have mutually agreed and shall have notified to the Banks not
later than the date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be effective),
specifying:
(i) the proposed Funding Date for such Borrowing,
which shall be a Euro-Dollar Business Day in the case of
a LIBOR Auction or a Domestic Business Day in the case of
an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $10,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of
Interest Period, and
(iv) whether the Money Market Quotes requested are
to set forth a Money Market Margin or a Money Market
Absolute Rate.
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The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market
Quote Request shall be given within five Euro-Dollar Business Days (or such
other number of days as the Company and the Agent may agree) of any other
Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the
Money Market Loans to which such Money Market Quote Request relates in
accordance with this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may
submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this subsection (d)
and must be submitted to the Agent by telex or facsimile transmission at its
offices specified in or pursuant to Section 11.01 not later than (x) 2:00
P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the
proposed Funding Date, in the case of a LIBOR Auction, or (y) 9:00 A.M. (New
York City time) on the proposed Funding Date, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the Company and the
Agent shall have mutually agreed and shall have notified to the Banks not
later than the date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be effective);
provided that Money Market Quotes submitted by the Agent (or any affiliate of
the Agent) in the capacity of a Bank may be submitted, and may only be
submitted, if the Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x) one hour prior to
the deadline for the other Banks, in the case of a LIBOR Auction, or (y) 15
minutes prior to the deadline for the other Banks, in the case of an Absolute
Rate Auction. Subject to Articles 3 and 6, any Money Market Quote so made
shall be irrevocable except with the written consent of the Agent given on
the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed Funding Date,
(B) the principal amount of the Money Market Loan
for which each such offer is being made, which principal
amount (w) may be greater than or less than the
Commitment of the quoting Bank, (x) must be $5,000,000 or
a larger multiple of $1,000,000, (y) may not exceed the
principal amount of Money Market Loans for which offers
were requested and (z) may be subject to an aggregate
limitation as to the principal amount of Money Market
Loans for which offers being made by such quoting Bank
may be accepted,
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(C) in the case of a LIBOR Auction, the margin above
or below the applicable London Interbank Offered Rate
(the "Money Market Margin") offered for each such Money
Market Loan, expressed as a percentage (rounded to the
nearest 1/10,000th of 1%) to be added to or subtracted
from such base rate,
(D) in the case of an Absolute Rate Auction, the
rate of interest per annum (rounded to the nearest
1/10,000th of 1%) (the "Money Market Absolute Rate")
offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit
D hereto or does not specify all of the information
required by subsection (d)(ii) of this Section;
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation for Money
Market Quotes; or
(D) arrives after the time set forth in subsection
(d)(i) of this Section.
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(e) Notice to Borrower. The Agent shall promptly notify the Borrower of
the terms (x) of any Money Market Quote submitted by a Bank that is in
accordance with subsection (d) of this Section and (y) of any Money Market
Quote that amends, modifies or is otherwise inconsistent with a previous
Money Market Quote submitted by such Bank with respect to the same Money
Market Quote Request. Any such subsequent Money Market Quote shall be
disregarded by the Agent unless such subsequent Money Market Quote is
submitted solely to correct a manifest error in such former Money Market
Quote. The Agent's notice to the Borrower shall specify (A) the aggregate
principal amount of Money Market Loans for which offers have been received
for each Interest Period specified in the related Money Market Quote Request,
(B) the respective principal amounts and Money Market Margins or Money Market
Absolute Rates, as the case may be, so offered and (C) if applicable,
limitations on the aggregate principal amount of Money Market Loans for which
offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:00 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed Funding Date, in the case of a LIBOR Auction, or (y) the proposed
Funding Date, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Company and the Agent shall have mutually
agreed and shall have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective), the Borrower shall notify
the Agent of its acceptance or non-acceptance of the offers so notified to it
pursuant to subsection (e) of this Section. In the case of acceptance, such
notice (a "Notice of Money Market Borrowing") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept any Money Market Quote in whole or in part, provided
that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set
forth in the related Money Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be $10,000,000 or a larger multiple of
$1,000,000,
(iii) acceptance of offers may only be made on the
basis of ascending Money Market Margins or Money Market
Absolute Rates, as the case may be, and
(iv) the Borrower may not accept any offer that is
described in subsection (d)(iii) of this Section or that
otherwise fails to comply with the requirements of this
Agreement.
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(g) Allocation by Agent; Notice to Banks. (i) If offers are made by
two or more Banks with the same Money Market Margins or Money Market Absolute
Rates, as the case may be, for a greater aggregate principal amount than the
amount in respect of which such offers are accepted for the related Interest
Period, the principal amount of Money Market Loans in respect of which such
offers are accepted shall be allocated by the Agent among such Banks as
nearly as possible (in such multiples, not greater than $1,000,000, as the
Agent may deem appropriate) in proportion to the aggregate principal amounts
of such offers. Determinations by the Agent of the amounts of Money Market
Loans shall be conclusive in the absence of manifest error.
(ii) Upon receipt of a Notice of Money Market Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share
(if any) of the Loans to be made on the Funding Date for such Borrowing and
such Notice of Money Market Borrowing shall not thereafter be revocable by
the Borrower.
(h) Funding of Money Market Loans. (i) Not later than 11:00 A.M. (New
York City time) on the Funding Date for each Money Market Borrowing, each
Bank participating in such Borrowing shall make available its ratable share
of the Loans comprising such Borrowing, in Federal or other funds immediately
available in New York City, to the Agent at its address specified in or
pursuant to Section 11.01. Unless the Agent determines that any applicable
condition specified in Article 3 has not been satisfied, the Agent will make
the funds so received from such Banks available to the Borrower at the
Agent's aforesaid address.
(ii) Unless the Agent shall have received notice from a Bank prior to
the Funding Date for any Money Market Borrowing that such Bank will not make
available to the Agent such Bank's share of the Loans comprising such
Borrowing, the Agent may assume that such Bank has made such share available
to the Agent on such Funding Date in accordance with subsection (h)(i) of
this Section and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Bank shall not have so made such share available to the
Agent, the Agent shall be entitled to recover from either such Bank or the
Borrower (each of which agrees to pay such amount forthwith on demand) such
corresponding amount together with interest thereon, for each day from the
date such amount is made available to the Borrower until the date such amount
is repaid to the Agent, at (A) in the case of the Borrower, a rate per annum
equal to the higher of the Federal Funds Rate and the interest rate
applicable to such Borrowing pursuant to Section 2.05 or (B) in the case of
such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute such Bank's
Loan included in such Borrowing for purposes of this Agreement. Any amounts
paid by the Borrower to the Agent pursuant to this subsection (h)(ii) shall
not relieve the defaulting Bank from any liability that such Bank may
otherwise have to the Borrower with respect to its failure to fund.
Section 2.4. Interest Rate Elections. (a) The initial Type of Loans
comprising each Committed Borrowing, and the duration of the initial Interest
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Period applicable thereto if they are initially CD Loans or Euro-Dollar
Loans, shall be as specified in the applicable Notice of Committed Borrowing.
Thereafter, the relevant Borrower may from time to time elect to change or
continue (x) the Type of, or (y) in the case of CD Loans or Euro-Dollar
Loans, the duration of the Interest Period applicable to, the Loans included
in any Committed Borrowing (excluding overdue Loans and subject in each case
to the provisions of the definition of Interest Period and Article 8), as
follows:
(i) if such Loans are Base Rate Loans, such Borrower
may elect to designate such Loans as CD Loans or
Euro-Dollar Loans, or may elect to designate such Loans
as any combination of Base Rate Loans, CD Loans and
Euro-Dollar Loans;
(ii) if such Loans are CD Loans, such Borrower may
elect to designate such Loans as Base Rate Loans or
Euro-Dollar Loans, may elect to continue such Loans as CD
Loans for an additional Interest Period, or may elect to
designate such Loans as any combination of Base Rate
Loans, CD Loans and Euro-Dollar Loans; and
(iii) if such Loans are Euro-Dollar Loans, such
Borrower may elect to designate such Loans as Base Rate
Loans or CD Loans, may elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, or
may elect to designate such Loans as any combination of
Base Rate Loans, CD Loans and Euro-Dollar Loans.
Notwithstanding the foregoing, no Borrower may elect an Interest Period for
CD Loans or Euro-Dollar Loans unless the aggregate outstanding principal
amount of such Loans (including any such Loans made pursuant to Section 2.01
on the date that such Interest Period is to begin) to which such Interest
Period will apply is at least $10,000,000.
(b) Any election permitted by subsection (a) of this Section may become
effective on any Euro-Dollar Business Day specified by the Borrower (the
"Election Date"). Each such election shall be made by the Borrower by
delivering a notice (a "Notice of Interest Rate Election") to the Agent not
later than 11:00 A.M. (New York City time) on (x) the Election Date, if all
the resulting Loans will be Base Rate Loans, (y) the second Domestic Business
Day before the Election Date, if the resulting Loans will include CD Loans
but not Euro-Dollar Loans, and (z) the third Euro-Dollar Business Day before
the Election Date, if the resulting Loans will include Euro-Dollar Loans.
Each Notice of Interest Rate Election shall specify with respect to the
outstanding Loans to which such notice applies:
(i) the Election Date;
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(ii) if the Type of Loan is to be changed, the new
Type of Loan and, if such new Type is a CD Loan or
Euro-Dollar Loan, the duration of the first Interest
Period applicable thereto;
(iii) if such Loans are CD Loans or Euro-Dollar
Loans and the Type of such Loans is to be continued for
an additional or different Interest Period, the duration
of such additional or different Interest Period; and
(iv) if such Loans are to be designated as a
combination of Base Rate Loans, CD Loans and Euro-Dollar
Loans, the information specified in clauses (i) through
(iii) above as to each resulting Borrowing and the
aggregate amount of each such Borrowing.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period and the last
sentence of subsection (a) of this Section.
(c) Upon receipt of a Notice of Interest Rate Election, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's ratable
share of such Borrowing, and such notice shall not thereafter be revocable by
the Borrower.
(d) If the Borrower (i) fails to deliver a timely Notice of Interest
Rate Election to the Agent electing to continue or change the Type of, or the
duration of the next Interest Period applicable to, the Loans included in any
Committed Borrowing comprised of CD Loans or Euro-Dollar Loans and (ii) has
not theretofore delivered a notice of prepayment relating to such Loans, then
the Borrower shall be deemed to have given the Agent a Notice of Interest
Rate Election electing to change the Type of such Loans to Base Rate Loans on
the last day of the then current Interest Period applicable thereto.
Section 2.5. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the
date such Loan is made (or is changed to a Base Rate Loan) until it becomes
due (or is changed to a different Type of Committed Loan), at a rate per
annum equal to the Base Rate for such day. Such interest shall be payable
(i) quarterly on each March 31, June 30, September 30 and December 31 and
(ii) upon any termination of the Commitments in their entirety.
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(b) Each CD Loan shall bear interest on the outstanding principal amount
thereof, for each day during each Interest Period applicable thereto, at a
rate per annum equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period; provided that if any CD
Loan shall, as a result of clause (2)(b) of the definition of Interest
Period, have an Interest Period of less than 30 days, such CD Loan shall bear
interest for each day during such Interest Period at the Base Rate for such
day. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than 90 days, at intervals of
90 days after the first day thereof; provided that, if the relevant Borrower
elects to change the Type of, or the duration of an Interest Period
applicable to, any CD Borrowing on any day other than the last day of an
Interest Period applicable thereto, such Borrower shall pay, on the effective
date of such change, the interest accrued on such CD Borrowing to such
effective date (and shall reimburse each Bank for any loss or expense
resulting from such change as provided in Section 2.11).
"CD Margin" means a rate per annum determined in accordance with the
Pricing Schedule.
The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ------------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve
Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if necessary, to the
next higher 1/100 of 1%.
The "CD Base Rate" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum
bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable)
on the first day of such Interest Period by two or more New York certificate
of deposit dealers of recognized standing for the purchase at face value from
each CD Reference Bank of its certificates of deposit in an amount comparable
to the principal amount of the CD Loan of such CD Reference Bank to which
such Interest Period applies and having a maturity comparable to such
Interest Period.
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"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars
in respect of new non-personal time deposits in dollars in New York City
having a maturity comparable to the related Interest Period and in an amount
of $100,000 or more. The Adjusted CD Rate shall be adjusted automatically on
and as of the effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual assessment rate in effect
on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or
a comparable successor assessment risk classification) within the meaning of
12 C.F.R. 327.4(a) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted automatically on and
as of the effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for
such day plus the London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof; provided that, if the
relevant Borrower elects to change the Type of, or the duration of an
Interest Period applicable to, any Euro-Dollar Borrowing on any day other
than the last day of an Interest Period applicable thereto, such Borrower
shall pay, on the effective date of such change, the interest accrued on such
Euro-Dollar Borrowing to such effective date (and shall reimburse each Bank
for any loss or expense resulting from such change as provided in Section
2.11).
"Euro-Dollar Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of
1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business
Days before the first day of such Interest Period in an amount approximately
equal to the principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and for a period of
time comparable to such Interest Period.
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(d) Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance
with subsection (c) of this Section as if the related Money Market LIBOR
Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the Money
Market Margin quoted by the Bank making such Loan in accordance with Section
2.03. Each Money Market Absolute Rate Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the Money Market Absolute Rate quoted
by the Bank making such Loan in accordance with Section 2.03. Such interest
shall be payable for each Interest Period on the last day thereof and, if
such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
(e) Any overdue principal of and interest on any Loan shall bear
interest, payable on demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment, at a rate per
annum equal to the sum of 2% plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to the Loans
hereunder. The Agent shall give prompt notice to the Borrower and the
relevant Banks by telex, facsimile or cable of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence
of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated hereby. If any Reference Bank does
not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available
on a timely basis, the provisions of Section 8.01 shall apply.
Section 2.6. Fees. (a) Commitment Fees. The Company shall pay to
the Agent, for the account of the Banks ratably in accordance with their
Commitments, a commitment fee at the Commitment Fee Rate, determined for each
day in accordance with the Pricing Schedule, on the amount by which the
aggregate amount of the Commitments at the close of business on such day
exceeds the aggregate principal amount of the Loans outstanding at the close
of business on such day. Such commitment fees shall accrue from and
including the Effective Date to but excluding the Termination Date, and shall
be payable quarterly on each March 31, June 30, September 30 and December 31
and upon any termination of the Commitments in their entirety.
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(b) Facility Fees. The Company shall pay to the Agent, for the account
of the Banks ratably in accordance with their Commitments, a facility fee at
the Facility Fee Rate, determined for each day in accordance with the Pricing
Schedule. Such facility fees shall accrue (i) for each day from and
including the Effective Date to but excluding the Termination Date (or any
earlier date on which the Commitments terminate in their entirety) on the
aggregate amount of the Commitments (whether used or unused) at the close of
business on such day and (ii) for each day from and including the Termination
Date (or any earlier date on which the Commitments terminate in their
entirety) to but excluding the date the Loans shall be repaid in their
entirety, on the aggregate principal amount of the Loans outstanding on the
close of business on such day. Facility fees accrued under this subsection
(b) shall be payable quarterly on each March 31, June 30, September 30 and
December 31 and upon any termination of the Commitments in their entirety.
(c) Agent's Fee. The Company shall pay to the Agent for its own account
fees in the amounts and at the times previously agreed upon between the
Company and the Agent.
Section 2.7. Optional Termination or Reduction of Commitments. The
Company may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at
such time or (ii) proportionately reduce from time to time, by an aggregate
amount of at least $10,000,000, the aggregate amount of the Commitments in
excess of the aggregate outstanding principal amount of the Loans.
Section 2.8. Mandatory Termination of Commitments; Maturity of Loans.
The Commitments shall terminate on the Termination Date, and any Committed
Loans then outstanding (together with accrued interest thereon) shall be due
and payable on such date. Each Money Market Loan shall mature, and the
principal amount thereof (together with accrued interest thereon) shall be
due and payable, on the last day of the Interest Period applicable thereto.
Section 2.9. Optional Prepayments. (a) The relevant Borrower may,
upon notice to the Agent given not later than 11:00 A.M. (New York City time)
on (i) the date of prepayment of its Base Rate Loans (or any Money Market
Borrowing bearing interest at the Base Rate pursuant to Section 8.01(a)),
(ii) the second Domestic Business Day prior to the date of prepayment of any
CD Borrowing and (iii) the third Euro-Dollar Business Day prior to the date
of prepayment of any Euro-Dollar Borrowing, prepay any such Borrowing in
whole at any time, or from time to time in part in amounts aggregating
$10,000,000 or a larger multiple of $1,000,000, by paying the principal
amount to be prepaid together with accrued interest thereon to the date of
prepayment. Each such notice of prepayment shall specify which outstanding
Borrowing is to be prepaid in connection therewith. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Borrowing.
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(b) No Borrower may prepay all or any portion of the principal amount of
any Money Market Loan (except a Money Market LIBOR Loan bearing interest at
the Base Rate pursuant to Section 8.01(a)) prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section, the
Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
Section 2.10. General Provisions as to Payments. (a) The relevant
Borrower shall make each payment of principal of, and interest on, the Loans
and of fees hereunder, not later than 12:00 noon (New York City time) on the
date when due, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 11.01. The Agent
will promptly distribute to each relevant Bank its ratable share of each such
payment received by the Agent for the account of the relevant Banks.
Whenever any payment of principal of, or interest on, the Domestic Loans or
of fees shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest on, the
Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day. If the date for
any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from a Borrower prior to
the date on which any payment is due from such Borrower to the Banks
hereunder that such Borrower will not make such payment in full, the Agent
may assume that such Borrower has made such payment in full to the Agent on
such date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent that such Borrower shall not have so
made such payment, each Bank shall repay to the Agent forthwith on demand
such amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date such
Bank repays such amount to the Agent, at the Federal Funds Rate.
Section 2.11. Funding Losses. If (i) a Borrower makes any payment of
principal with respect to any Fixed Rate Loan (pursuant to Article 2, 6 or 8
or otherwise) on any day other than the last day of an Interest Period
applicable thereto, (ii) the Type of any CD Loan or Euro-Dollar Loan or the
Interest Period applicable to any such Loan is changed pursuant to Section
2.04 or Article 8 on any day other than the last day of an Interest Period
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applicable to such Loan, (iii) a Borrower fails to borrow any Fixed Rate Loan
after notice of such borrowing has been given to any Bank in accordance with
Section 2.02(b) or 2.03(g), (iv) a Borrower prepays any Loan after a Notice
of Interest Rate Election electing to continue such Loan as, or to change it
to, a CD Loan or Euro-Dollar Loan has been given to any Bank in accordance
with Section 2.04 but before the Interest Period specified therein begins, or
(v) the Company requires a Bank to assign its rights with respect to any CD
Loan or Euro-Dollar Loan to a Substitute Bank pursuant to Section 8.05 on any
day other than the last day of an Interest Period applicable to such Loan,
the Company shall reimburse each Bank within 15 days after demand for any
resulting loss or expense incurred by it (or by any existing or prospective
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties,
but excluding loss of margin for the period after any such payment, change,
failure to borrow or assignment, provided that such Bank shall have delivered
to the Company a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
Section 2.12. Computation of Interest and Fees. Interest and fees
shall be computed on the basis of a year of 360 days (except that interest on
any Loan which bears interest during any period at the Prime Rate shall be
computed on the basis of a year of 365 or 366 days, as the case may be) and
paid for the actual number of days elapsed (including the first day but
excluding the last day).
Section 2.13. Notes. (a) The Loans of each Bank to each Borrower
shall be evidenced by a single Note of such Borrower payable to the order of
such Bank for the account of its Applicable Lending Office in an amount equal
to the aggregate unpaid principal amount of such Bank's Loans to such
Borrower.
(b) Each Bank may, by notice to a Borrower and the Agent, direct that
its Loans of a particular Type be evidenced by a separate Note of such
Borrower in an amount equal to the aggregate unpaid principal amount of such
Loans. Each such Note shall be substantially in the form of Exhibit A hereto
with appropriate modifications to reflect the fact that it evidences solely
Loans of the relevant Type. Each reference in this Agreement to the "Note"
of such Bank shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(b) or
3.03(a), the Agent shall send such Note to such Bank. Each Bank shall record
the date and amount (and, in the case of a Money Market Loan, the maturity)
of each Loan made by it to each Borrower and the date and amount of each
payment of principal made with respect thereto, and prior to any transfer of
any of its Notes shall endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to
each Loan made by it to such Borrower then outstanding; provided that the
failure of any Bank to make any such recordation or endorsement shall not
affect the obligations of any Borrower hereunder or under the Notes. Each
Bank is hereby irrevocably authorized by each Borrower so to endorse its
Notes and to attach to and make a part of its Notes a continuation of any
such schedule as and when required.
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Section 2.14. Withholding Tax Exemption. Each Bank that is not
incorporated under the laws of the United States of America or a state
thereof agrees that it will deliver to each of the Company and the Agent, at
least one Domestic Business Day before interest or fees first become payable
hereunder for the account of such Bank, two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, in either case certifying
that such Bank is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes. Each Bank which so delivers a Form 1001 or 4224 further undertakes to
deliver to each of the Company and the Agent two additional copies of such
form (or a successor form) on or before the date that such form expires or
becomes obsolete or after the occurrence of any event requiring a change in
the most recent form so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by the Company
or the Agent, in each case certifying that such Bank is entitled to receive
payments under this Agreement and the Notes without deduction or withholding
of any United States federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Bank from duly completing
and delivering any such form with respect to it and such Bank advises the
Company and the Agent that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax.
Section 2.15. Judgment Currency. If for the purpose of obtaining
judgment in any court it is necessary to convert a sum due from any Borrower
hereunder or under any of the Notes in United States dollars ("dollars") into
another currency, the parties hereto agree, to the fullest extent that they
may effectively do so, that the rate of exchange used shall be that at which
in accordance with normal banking procedures the Agent could purchase dollars
with such other currency at the Agent's New York office on the Domestic
Business Day preceding that on which final judgment is given. The
obligations of each Borrower in respect of any sum due to any Bank or the
Agent hereunder or under any Note shall, notwithstanding any judgment in a
currency other than dollars, be discharged only to the extent that, on the
Domestic Business Day following receipt by such Bank or the Agent (as the
case may be) of any sum adjudged to be so due in such other currency, such
Bank or the Agent (as the case may be) may in accordance with normal banking
procedures purchase dollars with such other currency; if the amount of
dollars so purchased is less than the sum originally due to such Bank or the
Agent, as the case may be, in dollars, each Borrower agrees, to the fullest
extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Bank or the Agent, as
the case may be, against such loss, and if the amount of dollars so purchased
exceeds (a) the sum originally due to any Bank or the Agent, as the case may
be, and (b) any amounts shared with other Banks as a result of allocations of
such excess as a disproportionate payment to such Bank under Section 11.04,
such Bank or the Agent, as the case may be, agrees to remit such excess to
the appropriate Borrower.
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Section 2.16. Foreign Withholding Taxes. All payments by an
Eligible Subsidiary of principal of and interest on its Notes and of all
other amounts payable under this Agreement are intended to be payable without
deduction for or on account of any present or future taxes, duties or other
charges levied or imposed by the government of any jurisdiction outside the
United States of America or by any political subdivision or taxing authority
thereof or therein through withholding or deduction with respect to any such
payments. If any such taxes, duties or other charges are so levied or
imposed, such Eligible Subsidiary will pay additional interest or will make
additional payments in such amounts that every net payment of principal of
and interest on its Notes and of all other amounts payable by it under this
Agreement, after withholding or deduction for or on account of any such
present or future taxes, duties or other charges, will not be less than the
amount provided for herein. Such Eligible Subsidiary shall furnish promptly
to the Agent official receipts evidencing payment of the taxes so withheld or
deducted.
Section 2.17. Eligible Subsidiaries. The Company may from time to
time cause any Wholly-Owned Consolidated Subsidiary to become eligible to
borrow under Sections 2.01 and 2.03 by delivering to the Agent an Election to
Participate with respect to such Subsidiary. The eligibility of any such
Subsidiary to borrow under said Sections shall terminate when the Agent
receives an Election to Terminate with respect to such Subsidiary. Each
Election to Participate delivered to the Agent shall be duly executed on
behalf of the relevant Subsidiary and the Company, and each Election to
Terminate delivered to the Agent shall be duly executed on behalf of the
Company, in such number of copies as the Agent may request. The delivery of
an Election to Terminate shall not affect any obligation of the relevant
Subsidiary theretofore incurred. The Agent shall promptly give notice to the
Banks of its receipt of any Election to Participate or Election to Terminate.
Section 2.18. Regulation D Compensation. Each Bank may require each
Borrower to pay, contemporaneously with each payment of interest on its Euro-
Dollar Loans, additional interest on the related Euro-Dollar Loan of such
Bank at a rate per annum determined by such Bank up to but not exceeding the
excess of (i) (A) the applicable London Interbank Offered Rate divided by (B)
one minus the Euro-Dollar Reserve Percentage applicable to such Bank over
(ii) the applicable London Interbank Offered Rate. Any Bank wishing to
require payment of such additional interest (x) shall so notify the Company
and the Agent, in which case such additional interest on the Euro-Dollar
Loans of such Bank shall be payable to such Bank at the place indicated in
such notice with respect to each Interest Period commencing at least three
Euro-Dollar Business Days after such Bank gives such notice and (y) shall
notify the relevant Borrower at least five Euro-Dollar Business Days before
each date on which interest is payable on the Euro-Dollar Loans of the amount
then due to such Bank under this Section.
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Section 2.19. Termination of Existing Credit Agreement. On the
Effective Date the Company shall (i) terminate the commitments of the banks
under the Existing Credit Agreement pursuant to Section 2.07 thereof and (ii)
pay in full the principal of and accrued interest on each loan (if any) then
outstanding thereunder and all facility fees and commitment fees accrued
thereunder to but excluding the Effective Date. The Banks which are parties
to the Existing Credit Agreement waive the provisions thereof to the extent
(and only to the extent) that such provisions would otherwise require the
Company to give prior notice of such termination of commitments and
prepayment (if any) thereunder.
ARTICLE 3
Conditions
Section 3.1. Effectiveness. This Agreement shall become effective on
the date (the "Effective Date"), which shall not be later than April 15,
1997, on which all of the following conditions shall have been satisfied (or
waived in accordance with Section 11.05):
(a) receipt by the Agent of counterparts hereof
signed by each of the parties hereto (or, in the case of
any party as to which an executed counterpart shall not
have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex, facsimile or
other written confirmation from such party of execution
of a counterpart hereof by such party);
(b) receipt by the Agent for the account of each
Bank of a duly executed Note of the Company, dated on or
before the Effective Date, complying with the provisions
of Section 2.13;
(c) receipt by the Agent of opinions of Simpson
Thacher & Bartlett, special counsel for the Company, and
Thomas M. Lemberg, Senior Vice President and General
Counsel of the Company, substantially in the form of
Exhibit E hereto and Exhibit F hereto, respectively and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request;
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(d) receipt by the Agent of an opinion of Davis Polk
& Wardwell, special counsel for the Agent, substantially
in the form of Exhibit G hereto and covering such
additional matters relating to the transactions
contemplated hereby as the Required Banks may reasonably
request;
(e) receipt by the Agent of a certificate signed by
the Vice President and Treasurer and the Senior Vice
President and General Counsel of the Company to the
effect set forth in clauses (c) and (d) of Section 3.02;
(f) receipt by the Agent of a notice from the
Company pursuant to Section 2.07 of the Existing Credit
Agreement terminating the commitments of the banks
thereunder on the Effective Date;
(g) receipt by the Agent of evidence satisfactory to it that
all accrued but unpaid fees payable and all principal of and
accrued but unpaid interest on any Loans made under the Existing
Credit Agreement shall have been paid in full; and
(h) receipt by the Agent of all documents it may
reasonably request relating to the existence of the
Company, the corporate authority for and the validity of
this Agreement and the Notes, and any other matters
relevant hereto, all in form and substance reasonably
satisfactory to the Agent.
The opinions and certificates referred to in clauses (c), (d) and (e) of this
Section shall be dated the Effective Date. The Company instructs each of the
counsel referred to in clause (c) of this Section to prepare the opinions
referred to in clause (c) and deliver them to the Agent for the benefit of
the Agent and the Banks. The Agent shall promptly notify the other parties
hereto of the Effective Date, and such notice shall be conclusive and binding
on all parties hereto.
Section 3.2. Borrowings. The obligation of any Bank to make a Loan on
the Funding Date for any Borrowing is subject to the satisfaction of the
following conditions:
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(a) receipt by the Agent of a Notice of Borrowing as
required by Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after the Borrowing
hereunder on such Funding Date, the aggregate outstanding
principal amount of the Loans shall not exceed the
aggregate amount of the Commitments;
(c) the fact that, immediately after the Borrowing
hereunder on such Funding Date, no Default shall have
occurred and be continuing; and
(d) the fact that the representations and
warranties of the Company contained in this Agreement
shall be true on and as of such Funding Date.
Each such Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the Funding Date as to the facts specified in
clauses (b), (c) and (d) of this Section, except as otherwise disclosed in
writing by the Company to the Banks.
Section 3.3. First Borrowing by Each Eligible Subsidiary. The
obligation of each Bank to make a Loan on the Funding Date for the first
Borrowing by each Eligible Subsidiary is subject to the satisfaction of the
following further conditions:
(a) receipt by the Agent for the account of each
Bank of a duly executed Note of such Eligible Subsidiary,
dated on or before such Funding Date, complying with the
provisions of Section 2.13;
(b) receipt by the Agent of one or more opinions of
counsel for such Eligible Subsidiary acceptable to the
Agent, which taken together cover the matters set forth
in Exhibit J hereto and cover such additional matters
relating to the transactions contemplated hereby as the
Required Banks may reasonably request; and
(c) receipt by the Agent of all documents which it
may reasonably request relating to the existence of such
Eligible Subsidiary, the corporate authority for and the
validity of the Election to Participate of such Eligible
Subsidiary, this Agreement and the Notes of such Eligible
Subsidiary, and any other matters relevant thereto, all
in form and substance reasonably satisfactory to the
Agent.
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The opinions referred to in clause (b) of this Section shall be dated no
earlier than the date of such Eligible Subsidiary's Election to Participate
and no later than the Funding Date for its first Borrowing hereunder.
ARTICLE 4
Representations and Warranties of the Company
The Company represents and warrants that:
Section 4.1. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
Section 4.2. Corporate and Governmental Authorization; No
Contravention. The execution and delivery by the Company of this Agreement
and its Notes and the performance of its obligations hereunder and thereunder
(i) are within the Company's corporate powers and have been duly authorized
by all necessary corporate action, (ii) require no action by or in respect
of, or filing with, any governmental body, agency or official, and (iii) do
not contravene, or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation or by-laws of the
Company or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Company or result in the creation or imposition
of any Lien on any asset of the Company or any of its Subsidiaries.
Section 4.3. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Company and the Company's Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and
binding obligations of the Company, in each case enforceable in accordance
with its terms except as may be limited by (i) bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) equitable
principles of general applicability.
Section 4.4. Financial Information; No Material Adverse Change. (a)
The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1995 and the related consolidated statements
of earnings, cash flows and changes in common stockholders' equity for the
Fiscal Year then ended, reported on by KPMG Peat Marwick LLP and set forth in
the Company's 1995 Form 10-K, a copy of which has been delivered to each of
the Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Company and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such Fiscal Year.
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(b) The unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of September 29, 1996 and the related unaudited
consolidated statements of earnings, cash flows and changes in common
stockholders' equity for the nine months then ended, set forth in the
Company's Third Quarter 1996 Form 10-Q, a copy of which has been delivered to
each of the Banks, fairly present, in conformity with generally accepted
accounting principles applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section, the consolidated
financial position of the Company and its Consolidated Subsidiaries as of
such date and their consolidated results of operations and cash flows for
such nine-month period (subject to normal year-end adjustments).
(c) Since September 29, 1996 there has been no material adverse change
in the business, financial position or results of operations of the Company
and its Consolidated Subsidiaries, considered as a whole.
Section 4.5. Litigation. (a) Except as disclosed in the Company's
1995 Form 10-K and the Company's Third Quarter 1996 Form 10-Q, there is no
(i) injunction, stay, decree or order issued by any court or arbitrator or
any governmental body, agency or official or (ii) action, suit or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision, in either case (A) which could
materially adversely affect the business, financial position or results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole, or (B) which could materially adversely affect the ability of the
Company to perform any of its obligations under this Agreement or its Notes.
(b) There is no (i) injunction, stay, decree or order issued by any
court or arbitrator or any governmental body, agency or official or (ii)
action, suit or proceeding pending against, or to the knowledge of the
Company threatened against or affecting, the Company or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable possibility of an adverse
decision, in either case which in any manner draws into question the validity
of this Agreement or the Notes.
Section 4.6. Compliance with ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver
of the minimum funding standard under Section 412 of the Code in respect of
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any Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan, or made any amendment to any Plan, which has resulted or
could result in the imposition of a Lien under Section 412(n) of the Code or
the posting of a bond or other security under Section 401(a)(29) of the Code
(including, in the case of both Section 412(n) and 401(a)(29) of the Code,
the similar subsections of Section 302 and 307 of ERISA) or (iii) incurred
any liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA that has not been paid or satisfied
prior to the date hereof.
Section 4.7. Taxes. United States Federal income tax returns of the
Company and its Subsidiaries (other than Foreign Subsidiaries) have been
examined and closed through the Fiscal Year ended December 31, 1988. The
Company and its Subsidiaries have filed all United States Federal income tax
returns and all other material tax returns which are required to be filed by
them and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Company or any Subsidiary, except to the extent
that such assessment is being contested by the Company or any Subsidiary in
good faith by appropriate proceedings. The charges, accruals and reserves on
the books of the Company and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Company, adequate.
Section 4.8. Subsidiaries. Each of the Company's corporate
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
Section 4.9. No Regulatory Restrictions on Borrowing. No Borrower is
(i) an "investment company" within the meaning of the Investment Company Act
of 1940, as amended, (ii) a "holding company" or a subsidiary of a "holding
company" within the meaning of the Public Utility Holding Company Act of
1935, as amended, or (iii) otherwise subject to any regulatory scheme which
restricts its ability to incur debt.
Section 4.10. Compliance with Laws. The Company and each of its
Subsidiaries is in compliance in all material respects with all applicable
laws, rules and regulations, other than laws, rules or regulations (i) the
validity or applicability of which the Company or such Subsidiary is
contesting in good faith or (ii) the failure to comply with which cannot
reasonably be expected to have consequences which would materially adversely
affect the business, financial position or results of operations of the
Company and its Consolidated Subsidiaries, considered as a whole.
Section 4.11. No Defaults. Neither the Company nor any of its
Subsidiaries is in violation of, or in default under, any term or provision
of any charter, by-law, mortgage, indenture, agreement, instrument, statute,
rule, regulation, judgment, decree, order, writ or injunction applicable to
it, such that such violations and defaults in the aggregate could reasonably
be expected to materially adversely affect the business, financial position
or results of operations of the Company and its Consolidated Subsidiaries,
considered as a whole, or the ability of the Company to perform in any
material respect its obligations under this Agreement or its Notes.
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Section 4.12. Possession of Franchises, Licenses, etc. The Company
and its Subsidiaries own or possess all franchises, patents, trademarks,
service marks, trade names, copyrights, licenses and other rights that are
necessary in any material respect for the ownership and operation of their
respective properties and businesses, and neither the Company nor any of its
Subsidiaries is in violation of any provision thereof in any respect that
could reasonably be expected to have a materially adverse effect on the
business, financial position or results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole.
Section 4.13. Full Disclosure. All information (other than
projections) heretofore furnished by the Company or any Subsidiary to the
Agent or any Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby, when taken as a whole, was, and all such
information hereafter furnished by the Company or any Subsidiary to the Agent
or any Bank will be, true and accurate in all material respects or based on
reasonable estimates on the date as of which such information is stated or
certified. The Company has disclosed to the Banks in writing any and all
facts known to any officer of the Company which materially and adversely
affect or may materially and adversely affect (to the extent the Company can
now reasonably foresee) the business, financial position or results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole.
Section 4.14. Environmental Matters. Except with respect to any matter
disclosed under the heading "Environmental Compliance" in the Company's 1995
Form 10-K, the Company reasonably believes the costs of compliance with
Environmental Laws, and associated liabilities, are unlikely to have a
material adverse effect on the business, financial condition or results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole, provided that the inclusion of such exception does not indicate that
any such matter will have such a material adverse effect.
ARTICLE 5
Covenants
The Company agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
Section 5.1. Information. The Company will deliver to each of the
Banks:
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(a) as soon as available and in any event within 90 days after
the end of each Fiscal Year, a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of the end of such
Fiscal Year and the related consolidated statements of earnings,
cash flows and changes in common stockholders' equity for such
Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all in reasonable detail and
reported on (in a manner acceptable to the Securities and Exchange
Commission for use in filings under the Exchange Act) by KPMG Peat
Marwick LLP or other independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within 45
days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, a consolidated balance
sheet of the Company and its Consolidated Subsidiaries as
of the end of such Fiscal Quarter and the related
consolidated statements of earnings, cash flows and
changes in common stockholders' equity for such Fiscal
Quarter and for the portion of such Fiscal Year ended at
the end of such Fiscal Quarter, setting forth in each
case in comparative form the figures for the
corresponding Fiscal Quarter in, and the corresponding
portion of, the previous Fiscal Year, all certified
(subject to normal year-end adjustments) as to fairness
of presentation and consistency by the chief financial
officer or the chief accounting officer of the Company;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b)
of this Section, a certificate of the chief financial
officer or the chief accounting officer of the Company
(i) setting forth in reasonable detail such calculations
as are required to establish whether the Company was in
compliance with the requirements of Sections 5.07 through
5.11, inclusive, on the date of such financial
statements, (ii) stating whether, to the knowledge of
such officer, any Default exists on the date of such
certificate and, if any Default then exists, setting
forth the details thereof and the action that the Company
is taking or proposes to take with respect thereto, (iii)
stating whether, to the knowledge of such officer, since
the date of the most recent previous delivery of
financial statements pursuant to clause (a) or (b) of
this Section, there has been any material adverse change
in the business, financial position or results of
operations of the Company and its Consolidated
Subsidiaries, considered as a whole, and, if so, the
nature of such material adverse change, and (iv) stating
whether, since the date of the most recent financial
statements previously delivered pursuant to clause (a) or
(b) of this Section, there has been a material change in
the generally accepted accounting principles applied in
preparing the financial statements being delivered and,
if so, describing such change and the effect thereof;
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(d) simultaneously with the delivery of each set of
financial statements referred to in clause (a) of this
Section, a statement of the firm of independent public
accountants which reported on such statements (i) stating
that its audit examination has included a review of the
terms of this Agreement as they relate to financial or
accounting matters, (ii) stating whether anything has
come to its attention to cause it to believe that any
Default existed on the date of such statements and (iii)
confirming the calculations set forth in the officer's
certificate delivered simultaneously therewith pursuant
to clause (c) of this Section;
(e) within five days after any executive officer of
the Company obtains knowledge of any Default, if such
Default is then continuing, a certificate of the chief
financial officer or the chief accounting officer of the
Company setting forth the details thereof and the action
which the Company is taking or proposes to take with
respect thereto;
(f) promptly upon any change in the rating by S&P or
Moody's of the Company's senior unsecured long-term debt
securities (without third-party credit enhancement), a
certificate of the chief financial officer, chief
accounting officer or treasurer of the Company reporting
such change and stating the date on which such change was
publicly announced by the relevant rating agency;
(g) promptly upon the mailing thereof to the
shareholders of the Company generally, copies of all
financial statements, reports and proxy statements so
mailed;
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(h) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto
and any registration statements on Form S-8 or its
equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Company shall have filed
with the Securities and Exchange Commission;
(i) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA)
with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has
given or is required to give notice of any such
reportable event, a copy of the notice of such reportable
event that was given or that should have been given to
the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice
that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice;
(iii) receives notice from the PBGC under title IV of
ERISA of an intent to terminate, impose liability (other
than for premiums under Section 4007 of ERISA) in respect
of, or appoint a trustee to administer any Plan, a copy
of such notice; (iv) applies for a waiver of the minimum
funding standard under Section 412 of the Code, a copy of
such application; (v) gives notice of intent to terminate
any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi)
gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; (vii) fails
to make any payment or contribution to any Plan or
Multiemployer Plan or makes any amendment to any Plan
which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief
accounting officer of the Company setting forth details
as to such occurrence and action, if any, which the
Company or applicable member of the ERISA Group is
required or proposes to take or (viii) receives a
completed actuarial valuation report relating to any Plan
or Plans a copy of such report (but only if and to the
extent that delivery of copies thereof is requested by
the Agent); and
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(j) from time to time such additional information
regarding the business, financial position or results of
operations of the Company or any of its Subsidiaries as
the Agent, at the request of any Bank, may reasonably
request.
Section 5.2. Payment of Obligations. The Company will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, and
will cause each Subsidiary to maintain, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of any of the
same.
Section 5.3. Maintenance of Property; Insurance. (a) The Company will
keep, and will cause each Subsidiary to keep, all property necessary in its
business in good working order and condition, ordinary wear and tear
excepted.
(b) The Company will maintain, and will cause each Subsidiary to
maintain, (i) physical damage insurance on all real and personal property
covering the repair and replacement cost of all such property and
consequential loss coverage for business interruption and extra expense, (ii)
public liability insurance (including products/completed operations liability
coverage) in an amount not less than $80,000,000, and (iii) such other
insurance coverage in such amounts and with respect to such risks as the
Required Banks may reasonably request; provided that the Company shall not be
required to maintain insurance specified in this subsection (A) if an
independent insurance broker, agent or other representative reasonably
satisfactory to the Required Banks shall certify to the Banks that such
requirement with respect to such insurance cannot be complied with in a
recognized insurance market of the United States or of any other country by
reason of (x) the unavailability to companies of established repute engaged
in the same or a similar business of insurance with respect to one or more
risks so required to be insured against or (y) the amount of insurance so
required to be maintained, or (B) with respect to any assets sold by the
Company, for events occurring after the sale of such assets. All such
insurance shall be provided by insurers having an A.M. Best policyholders
rating of not less than B+ or such other insurers as the Required Banks may
approve in writing. The Company will deliver to the Banks upon request of
any Bank through the Agent from time to time full information as to the
insurance carried.
Section 5.4. Conduct of Business and Maintenance of Existence. The
Company will continue, and will cause each Subsidiary to continue, to engage
in business of the same general type as now conducted by the Company and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and
effect, their respective corporate existence (except as permitted under
Section 5.12 and except for the liquidation of any Subsidiary) and their
respective material rights, privileges and franchises necessary in the normal
conduct of business.
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Section 5.5. Compliance with Laws. The Company will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules
and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings or where
noncompliance would not have a material adverse effect on the business,
financial condition or results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole.
Section 5.6. Inspection of Property, Books and Records. The Company
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions relating to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of any Bank at such
Bank's expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and
to discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
Section 5.7. Interest Coverage Ratio. At the end of each Fiscal
Quarter, the ratio of (i) Consolidated EBIT to (ii) Consolidated Interest
Expense, in each case for the four consecutive Fiscal Quarters then ended,
will not be less than 2.50 to 1.
Section 5.8. Leverage Ratio. The ratio of (i) Consolidated Debt to
(ii) Consolidated Adjusted Net Worth will not exceed 1.25 to 1 at any time.
Section 5.9. Minimum Consolidated Adjusted Net Worth. (a) At no time
will Consolidated Adjusted Net Worth be less than Minimum Consolidated
Adjusted Net Worth. "Minimum Consolidated Adjusted Net Worth" means
$560,000,000 as such amount is adjusted from time to time pursuant to
subsection (b) of this Section.
(b) Minimum Consolidated Adjusted Net Worth shall be adjusted from time
to time as follows:
(i) at the end of each Fiscal Quarter ending after
December 31, 1996, permanently increased (but not
decreased) by the amount (if any) necessary so that
cumulative increases pursuant to this clause (i) equal
50% of Consolidated Net Income for the period beginning
on January 1, 1997 and ending at the end of such Fiscal
Quarter; and
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(ii) permanently increased, on the date of any issuance or
sale of Additional Equity after December 31, 1996, by an amount
equal to 50% of any increase in Consolidated Adjusted Net Worth
attributable to such issuance or sale of Additional Equity.
Section 5.10. Subsidiary Debt. (a) The Company will not permit any of
its Subsidiaries to incur or at any time be liable with respect to any Debt
except:
(i) Debt outstanding under this Agreement and the
Notes;
(ii) Debt owing to the Company or to a Subsidiary;
(iii) Debt incurred by any Foreign Subsidiary for
bona fide hedging purposes in an aggregate principal
amount at any one time outstanding for all Foreign
Subsidiaries not exceeding $250,000,000;
(iv) Guarantees by Foreign Subsidiaries of Debt
specified in clause (iii) above;
(v) Debt incurred by any Foreign Subsidiary, the proceeds of
which are used to pay amounts owing to the Company, in an aggregate
principal amount at any one time outstanding for all Foreign
Subsidiaries not exceeding $35,000,000; and
(vi) additional Debt, not otherwise permitted under
this Section, in an aggregate principal or face amount
outstanding at any time not exceeding $10,000,000.
(b) The Company will not permit any of its Subsidiaries to issue or
permit to be outstanding any preferred stock of such Subsidiary other than
preferred stock owned by the Company or by a Wholly-Owned Consolidated
Subsidiary.
Section 5.11. Negative Pledge. Neither the Company nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it (other than treasury stock of the Company), except:
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(a) Liens on any asset of a Foreign Subsidiary
securing (i) Debt described in Section 5.10(a)(iii) or
(ii) Guarantees described in Section 5.10(a)(iv);
(b) any Lien existing on any asset of any
corporation at the time such corporation becomes a
Subsidiary and not created in contemplation of such
event;
(c) any Lien on any asset securing Debt incurred or
assumed solely for the purpose of financing all or any
part of the cost of acquiring or improving such asset
(including any Lien on any asset deemed to exist by
reason of the second sentence of the definition of Lien);
provided that such Lien attaches (or is so deemed to
attach) to such asset concurrently with or within 90 days
after the acquisition or completion of the improvement
thereof;
(d) any Lien on any asset of any corporation
existing at the time such corporation is merged or
consolidated with or into the Company or a Subsidiary and
not created in contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Company or a Subsidiary and
not created in contemplation of such acquisition;
(f) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by
any Lien permitted by any of the foregoing clauses of
this Section, provided that such Debt is not increased
and is not secured by any additional assets;
(g) Liens for taxes not delinquent or being
contested in good faith and by appropriate proceedings;
(h) deposits or pledges to secure obligations under
workers' compensation, social security or similar laws,
or under unemployment insurance;
(i) mechanics', workers', materialmen's or other
like Liens arising in the ordinary course of business
with respect to obligations which are not due or which
are being contested in good faith;
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(j) Liens arising in the ordinary course of its
business which (i) do not secure Debt, (ii) do not secure
any monetary obligation in an amount exceeding
$50,000,000 and (iii) do not in the aggregate materially
detract from the value of its assets or materially impair
the use thereof in the operation of its business; and
(k) Liens not otherwise permitted by the foregoing
clauses of this Section securing Debt in an aggregate
principal amount at any time outstanding not to exceed
the higher of (i) $30,000,000 and (ii) 5% of Consolidated
Adjusted Net Worth.
Section 5.12. Consolidations, Mergers and Sales of Assets. (a) The
Company will not (i) consolidate with or merge with or into any other Person
(other than in a transaction in which the Company is the surviving
corporation provided that immediately after giving effect to such
consolidation or merger, no Default shall have occurred and be continuing) or
(ii) sell, assign, lease, transfer or otherwise dispose of, directly or
indirectly, all or substantially all of its assets to any other Person. The
Company will not permit any of its Subsidiaries to consolidate with or merge
with or into any Person unless the Company or a Subsidiary is the
corporation surviving such consolidation or merger.
(b) The Company will not, and will not permit any of its Subsidiaries
to, sell, assign, lease, transfer or otherwise dispose of any assets if the
consideration received for such assets is less than the fair market value
thereof.
Section 5.13. Fiscal Year. The Company will not change its Fiscal
Year from the calendar year.
Section 5.14. Use of Proceeds. The proceeds of the Loans will be used
by the Borrowers for working capital and other general corporate purposes,
including acquisitions. None of such proceeds will be used in violation of
any applicable law or regulation.
ARTICLE 6
Defaults
Section 6.1. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
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(a) any principal of any Loan shall not be paid when
due or any interest on any Loan, any fee or any other
amount payable hereunder shall not be paid within three
Domestic Business Days after the due date thereof;
(b) the Company shall fail to observe or perform
any covenant contained in Section 5.01(e) or Sections
5.07 to 5.14, inclusive;
(c) the Company shall fail to perform any covenant
contained in Section 5.01(a) or (b) and such failure
shall continue for five days;
(d) any Borrower or any Subsidiary shall fail to
observe or perform any covenant or agreement on its part
contained in this Agreement (other than those covered by
clause (a), (b) or (c) above) for 30 days after written
notice thereof has been given to the Company by the Agent
at the request of any Bank;
(e) any representation, warranty, certification or
statement made by any Borrower or any Subsidiary in this
Agreement or in any certificate, financial statement or
other document delivered pursuant hereto shall prove to
have been incorrect in any material respect when made (or
deemed made);
(f) the Company or any Subsidiary shall fail to make
any payment in respect of any Debt (other than the Notes)
when due and such failure shall continue for more than
any expressly applicable period of grace with respect
thereto, and the aggregate principal amount of such Debt
and any Debt referred to in clause (g) below is at least
$10,000,000;
(g) the Company or any Subsidiary shall fail to
observe or perform any term, covenant or agreement
contained in any agreement or instrument (other than this
Agreement or the Notes) by which it is bound evidencing
or securing or relating to any Debt or any other
condition or event shall occur, if the effect thereof is
to accelerate the maturity thereof or to permit the
holder or holders of such Debt or a trustee or other
representative acting on their behalf to cause or declare
acceleration of the maturity thereof, and the aggregate
principal amount of such Debt and any Debt referred to in
clause (f) above is at least $10,000,000;
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(h) the Company or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or (except in the
case of a Foreign Subsidiary being liquidated for reasons
other than insolvency) seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property,
or shall consent to any such relief or to the appointment
of or taking possession by any such official in an
involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to
authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be
commenced against the Company or any Subsidiary seeking
liquidation, reorganization or other relief with respect
to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any
substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief
shall be entered against the Company or any Subsidiary
under the federal bankruptcy laws as now or hereafter in
effect;
(j) any member of the ERISA Group shall fail to pay
when due an amount or amounts aggregating in excess of
$10,000,000 which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to terminate
a Material Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or
any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan;
or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that
any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multi-employer Plans
which could cause one or more members of the ERISA Group
to incur a payment obligation payable in the current year
in excess of $10,000,000;
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(k) a final and unappealable judgment or order for
the payment of money in excess of $10,000,000 (excluding
any portion thereof covered by insurance and as to which
the insurance company has admitted liability) shall be
rendered against the Company or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed
for a period of 30 days; provided that, if such judgment
or order permits amounts to be paid over a greater period
of time, such judgment or order may continue unsatisfied
as to such amounts for such greater period; or
(l) a Change in Control shall have occurred;
then, and in every such event, the Agent shall (i) if requested by Banks
having more than 50% in aggregate amount of the Commitments, by notice to the
Company terminate the Commitments and they shall thereupon terminate, and
(ii) if requested by Banks holding Notes evidencing more than 50% in
aggregate outstanding principal amount of the Loans, by notice to the Company
declare the Notes (together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Borrower; provided that if any Event of Default
specified in clause (h) or (i) above occurs with respect to the Company,
then, without any notice to any Borrower or any other act by the Agent or the
Banks, the Commitments shall thereupon terminate and the Notes (together with
accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Borrower; and provided further that if any Event of
Default specified in clause (h) or (i) above occurs with respect to any
Eligible Subsidiary, then, without any notice to such Eligible Subsidiary or
any other act by the Agent or the Banks, the eligibility of such Eligible
Subsidiary to borrow hereunder shall thereupon terminate and the Notes of
such Eligible Subsidiary (together with accrued interest thereon) shall
become immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by each Eligible
Subsidiary.
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Section 6.2. Notice of Default. The Agent shall, promptly upon being
requested to do so by any Bank, give notice to the Company under Section
6.01(d) and thereupon notify all the Banks thereof.
ARTICLE 7
The Agent
Section 7.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the Notes as are
delegated to it by the terms hereof or thereof, together with all such powers
as are reasonably incidental thereto.
Section 7.2. Agent and Affiliates. Morgan Guaranty Trust Company of
New York shall have the same rights and powers under this Agreement as any
other Bank and may exercise or refrain from exercising the same as though it
were not the Agent, and Morgan Guaranty Trust Company of New York and its
affiliates may accept deposits from, lend money to, and generally engage in
any kind of business with the Company or any Subsidiary or Affiliate as if it
were not the Agent hereunder.
Section 7.3. Action by Agent. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality
of the foregoing, the Agent shall not be required to take any action with
respect to any Default, except as expressly provided in Article 6.
Section 7.4. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Company), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
Section 7.5. Liability of Agent. Neither the Agent nor the Co-Agent
(nor any of their respective directors, officers, agents or employees) shall
be liable for any action taken or not taken by it in connection herewith (i)
with the consent or at the request or direction of the Required Banks or (ii)
in the absence of its own gross negligence or willful misconduct. Neither
the Agent nor the Co-Agent (nor any of their respective directors, officers,
agents or employees) shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the
Company or any Subsidiary; (iii) the satisfaction of any condition specified
in Article 3, except, in the case of the Agent, receipt of items required to
be delivered to the Agent; or (iv) the validity, effectiveness or genuineness
of this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex, facsimile or similar writing) reasonably
believed by it to be genuine or to be signed by the proper party or parties.
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Section 7.6. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent and the Co-Agent (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (collectively,
"Liabilities") that the Agent or the Co-Agent may suffer or incur in
connection with this Agreement or any action taken or omitted by it
hereunder, except any Liability resulting from its gross negligence or
willful misconduct.
Section 7.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent, the Co-Agent or any other
Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Agent, the Co-Agent or any other Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any action
under this Agreement.
Section 7.8. Successor Agent; Resignations. (a) The Agent may resign
at any time (effective upon acceptance of its appointment by a successor
Agent) by giving written notice thereof to the Banks and the Company. Upon
any such resignation, the Required Banks shall have the right to appoint a
successor Agent, with the consent of the Company (if no Default shall have
occurred and be continuing), which consent shall not be unreasonably
withheld. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a Bank, if a
Bank is able and willing to serve as Agent, or, if no Bank is able and
willing to serve as Agent, a commercial bank organized or licensed under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance
of its appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder.
(b) The Co-Agent may resign at any time by giving notice of its
resignation to the Banks and the Company.
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(c) After any retiring Agent or Co-Agent resigns hereunder, the
provisions of this Article shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent or Co-Agent, as the case
may be..
ARTICLE 8
Change in Circumstances
Section 8.1. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period:
(a) the Agent is advised by the Reference Banks that
deposits in U.S. dollars (in the applicable amounts) are
not being offered to the Reference Banks in the relevant
market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks
having 50% or more of the aggregate principal amount of
the Commitments advise the Agent that the Adjusted CD
Rate or the London Interbank Offered Rate, as the case
may be, as determined by the Agent will not adequately
and fairly reflect the cost to such Banks of funding
their CD Loans or Euro-Dollar Loans as the case may be,
for such Interest Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the right of any Borrower to
elect to have Loans bear interest at a rate based on the Adjusted CD Rate or
the London Interbank Offered Rate, as the case may be, shall be suspended and
(ii) each outstanding Loan of the relevant Type shall begin bearing interest
at the rate applicable to Base Rate Loans on the last day of the then current
Interest Period applicable thereto, notwithstanding any prior election by any
Borrower to the contrary. Thereafter, unless the Borrower notifies the Agent
at least two Domestic Business Days before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the Base Rate for such
day.
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Section 8.2. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans to any
Borrower and such Bank shall so notify the Agent, the Agent shall forthwith
give notice thereof to the other Banks and the Company, whereupon until such
Bank notifies such Borrower and the Agent that the circumstances giving rise
to such suspension no longer exist, the obligation of such Bank to make
Euro-Dollar Loans to such Borrower shall be suspended. Before giving any
notice to the Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need
for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such notice is given, all
Euro-Dollar Loans of such Bank to such Borrower then outstanding shall begin
bearing interest at the rate applicable to Base Rate Loans, notwithstanding
any prior election by such Borrower to the contrary, either (a) on the last
day of the then current Interest Period applicable to such Euro-Dollar Loans
if such Bank may lawfully continue to maintain and fund such Loans at the
rate applicable to Euro-Dollar Loans to such day or (b) immediately if such
Bank may not lawfully continue to maintain and fund such Loans at the rate
applicable to Euro-Dollar Loans to such day (in which case such Borrower
shall reimburse such Bank for any resulting loss or expense as provided in
Section 2.11).
Section 8.3. Increased Cost and Reduced Return. (a) If on or after
(x) the date hereof, in the case of any Committed Loan or any obligation to
make Committed Loans, or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, the adoption of any applicable law, rule
or regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or compliance by any Bank (or its Applicable Lending Office) with any request
or directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
(i) shall subject any Bank (or its Applicable
Lending Office) to any tax, duty or other charge with
respect to its Fixed Rate Loans, its Notes or its
obligation to make Fixed Rate Loans, or shall change the
basis of taxation of payments to any Bank (or its
Applicable Lending Office) of the principal of or
interest on its Fixed Rate Loans or any other amounts due
under this Agreement in respect of its Fixed Rate Loans
or its obligation to make Fixed Rate Loans (except for
changes in the rate of tax on the overall net income of
such Bank or its Applicable Lending Office imposed by the
jurisdiction in which such Bank's principal executive
office or Applicable Lending Office is located); or
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(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement
(including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve
System, but excluding (A) with respect to any CD Loan any
such requirement included in an applicable Domestic
Reserve Percentage and (B) with respect to any
Euro-Dollar Loan any such requirement included in an
applicable Euro-Dollar Reserve Percentage) against assets
of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office)
or shall impose on any Bank (or its Applicable Lending
Office) or on the United States market for certificates
of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Notes or
its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank
(or its Applicable Lending Office) of making or maintaining any Fixed Rate
Loan to any Borrower, or to reduce the amount of any sum received or
receivable by such Bank (or its Applicable Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount deemed by
such Bank to be material, then, within 15 days after demand by such Bank
(with a copy to the Agent), such Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction. If an Eligible Subsidiary is incorporated in, or
conducts business in, a jurisdiction outside the United States of America, a
Bank that makes or maintains any Fixed Rate Loan to such Eligible Subsidiary
shall be entitled to compensation under this subsection (a) for the effect of
applicable laws, rules and regulations existing in such jurisdiction, whether
adopted before, on or after the date hereof.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on capital of
such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change or compliance with any such request or
directive (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time to
time, within 15 days after demand by such Bank (with a copy to the Agent),
the Company shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its Parent) for such reduction.
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(c) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment
of such Bank, be otherwise disadvantageous to such Bank. A certificate of
any Bank in reasonable detail claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution methods.
No Borrower shall be obligated to compensate any Bank pursuant to this
Section for increased costs or reduced return accruing prior to the date
which is six months before such Bank requests compensation; provided that if
any law, rule or regulation, or interpretation or administration thereof, or
any request or directive giving rise to increased costs or reduced returns
has retroactive effect, such Bank shall be entitled to claim compensation
hereunder for the period commencing on such date of retroactive effect
through the date of adoption or change or promulgation thereof without regard
to the foregoing limitation.
Section 8.4. Base Rate Loans Substituted for Affected Fixed Rate Loans.
If (i) the obligation of any Bank to make Euro-Dollar Loans to any Borrower
has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation from any Borrower under Section 8.03(a) and such Borrower shall,
by at least five Euro-Dollar Business Days' prior notice to such Bank through
the Agent, have elected that the provisions of this Section shall apply to
such Bank, then, unless and until such Bank notifies the Company that the
circumstances giving rise to such suspension or demand for compensation no
longer apply, all Loans of such Bank to such Borrower which would otherwise
bear interest at the rate applicable to CD Loans or Euro-Dollar Loans, as the
case may be, shall instead bear interest at the rate applicable to Base Rate
Loans (on which interest and principal shall be payable contemporaneously
with the related Fixed Rate Loans of the other Banks), notwithstanding any
prior election by such Borrower to the contrary.
Section 8.5. Substitution of Bank. (a) If (i) the obligation of any
Bank to make or maintain Euro-Dollar Loans has been suspended pursuant to
Section 8.02 or (ii) any Bank (or any Participant in its Loans) has demanded
compensation under Section 2.16(b) or 8.03, the Company shall have the right
to seek a bank or banks (each a "Substitute Bank"), which may be one or more
of the Banks or one or more other banks reasonably satisfactory to the Agent,
to purchase the Notes and assume the Commitment of such Bank (the "Affected
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Bank") and, if the Company locates one or more Substitute Banks, the
Affected Bank shall, upon payment to it of the purchase price agreed between
it and the Substitute Bank or Banks (or, failing such agreement, a purchase
price in the amount of the outstanding principal amount of its Loans and
accrued interest thereon to the date of payment) plus any amount (other than
principal and interest) then due to it or accrued for its account hereunder,
assign all its rights and obligations under this Agreement and the Notes
(including its Commitment) to the Substitute Bank or Banks, and the
Substitute Bank or Banks shall assume such rights and obligations, whereupon
(i) the commitment of each Substitute Bank that is already a Bank shall be
increased by the portion of the Affected Bank's Commitment so assigned to and
assumed by it and (ii) each Substitute Bank that is not already a Bank shall
become a Bank party to this Agreement and shall acquire all the rights and
obligations of a Bank with a Commitment equal to the portion of the Affected
Bank's Commitment so assigned to and assumed by it.
(b) Notwithstanding the provisions of subsection (a) above, if an
Affected Bank shall have outstanding Money Market Loans at the time it is
required to assign its rights and obligations under this Agreement and its
Note or Notes to one or more Substitute Banks, such Affected Bank shall not
be obligated to so assign its rights with respect to such Money Market Loans
prior to the maturity date thereof and shall not be obligated to deliver its
Note or Notes to the Substitute Bank or Banks until it shall have received a
new Note or Notes from the relevant Borrowers to evidence such Money Market
Loans.
ARTICLE 9
Representations and Warranties of Eligible Subsidiaries
Each Eligible Subsidiary shall, by signing and delivering its Election
to Participate, represent and warrant as of the date thereof that:
Section 9.1. Corporate Existence and Power. It is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is, and upon each borrowing by it hereunder
will be, a Wholly-Owned Consolidated Subsidiary of the Company.
Section 9.2. Corporate and Governmental Authorization; No
Contravention. The execution and delivery by it of its Election to
Participate and its Notes, and the performance by it of this Agreement and
its Notes, are within its corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (other than such actions or
filings, if any, as have been duly taken or made) and do not contravene, or
constitute a default under, any provision of applicable law or regulation or
of its certificate of incorporation or by-laws or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or
such Eligible Subsidiary or result in the creation or imposition of any Lien
on any asset of the Company or any of its Subsidiaries.
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Section 9.3. Binding Effect. This Agreement constitutes a valid and
binding agreement of such Eligible Subsidiary and its Notes, when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of such Eligible Subsidiary, in each case enforceable in
accordance with its terms except as may be limited by (i) bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii)
equitable principles of general applicability.
Section 9.4. Taxes. Except as disclosed in its Election to
Participate, there is no income, stamp or other tax of any country, or any
taxing authority thereof or therein, imposed by or in the nature of
withholding or otherwise, which is imposed on any payment to be made by such
Eligible Subsidiary pursuant hereto or on its Notes, or is imposed on or by
virtue of the execution, delivery or enforcement of its Election to
Participate or of its Notes.
ARTICLE 10
Guaranty
Section 10.1. The Guaranty. The Company hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Note
issued by any Eligible Subsidiary pursuant to this Agreement, and the full
and punctual payment of all other amounts payable by any Eligible Subsidiary
under this Agreement. Upon failure by any Eligible Subsidiary to pay
punctually any such amount, the Company shall forthwith on demand pay the
amount not so paid at the place and in the manner specified in this
Agreement.
Section 10.2. Guaranty Unconditional. The obligations of the Company
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of any
Eligible Subsidiary under this Agreement or any Note, by
operation of law or otherwise;
(ii) any modification or amendment of or supplement
to this Agreement or any Note;
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(iii) any release, non-perfection or invalidity of
any direct or indirect security for any obligation of any
Eligible Subsidiary under this Agreement or any Note;
(iv) any change in the corporate existence,
structure or ownership of any Eligible Subsidiary, or any
insolvency, bankruptcy, reorganization or other similar
proceeding affecting any Eligible Subsidiary or its
assets or any resulting release or discharge of any
obligation of any Eligible Subsidiary contained in this
Agreement or any Note;
(v) the existence of any claim, set-off or other
rights which the Company may have at any time against any
Eligible Subsidiary, the Agent, any Bank or any other
Person, whether in connection herewith or any unrelated
transaction, provided that nothing herein shall prevent
the assertion of any such claim by separate suit or
compulsory counterclaim;
(vi) any invalidity or unenforceability relating to
or against any Eligible Subsidiary for any reason of this
Agreement or any Note, or any provision of applicable law
or regulation purporting to prohibit the payment by any
Eligible Subsidiary of the principal of or interest on
any Note or any other amount payable by it under this
Agreement; or
(vii) any other act or omission to act or delay of
any kind by any Eligible Subsidiary, the Agent, any Bank
or any other Person or any other circumstance whatsoever
which might, but for the provisions of this clause (vii),
constitute a legal or equitable discharge of the
Company's obligations hereunder.
Section 10.3. Discharge Only upon Payment in Full; Reinstatement In
Certain Circumstances. The Company's obligations under this Article 10
shall remain in full force and effect until the Commitments shall have
terminated and the principal of and interest on the Notes of each Eligible
Subsidiary and all other amounts payable by each Eligible Subsidiary under
this Agreement shall have been paid in full. If at any time any payment of
the principal of or interest on any Note of any Eligible Subsidiary or any
other amount payable by any Eligible Subsidiary under this Agreement is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of any Eligible Subsidiary or otherwise, the
Company's obligations under this Article 10 with respect to such payment
shall be reinstated at such time as though such payment had been due but not
made at such time.
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Section 10.4. Waiver by the Company. The Company irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided
for herein, as well as any requirement that at any time any action be taken
by any Person against any Eligible Subsidiary or any other Person.
Section 10.5. Subrogation. Upon making full payment with respect to
any obligation of any Eligible Subsidiary under this Article 10, the Company
shall be subrogated to the rights of the payee against such Eligible
Subsidiary with respect to such obligation; provided that the Company shall
not enforce any payment by way of subrogation against such Eligible
Subsidiary so long as (i) any Bank has any Commitment hereunder (unless such
Subsidiary is no longer an Eligible Subsidiary for purposes hereof) or (ii)
any amount payable by such Eligible Subsidiary hereunder remains unpaid.
Section 10.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Eligible Subsidiary under this Agreement
or its Notes is stayed upon insolvency, bankruptcy or reorganization of such
Eligible Subsidiary, all such amounts otherwise subject to acceleration under
the terms of this Agreement shall nonetheless be payable by the Company
hereunder forthwith on demand by the Agent made at the request of the
Required Banks.
ARTICLE 11
Miscellaneous
Section 11.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party:
(x) in the case of any Borrower or the Agent, at its address or telex or
telecopy number set forth on the signature pages hereof (or, in the case of
an Eligible Subsidiary, in its Election to Participate), (y) in the case of
any Bank, at its address or telex or telecopy number set forth in its
Administrative Questionnaire or (z) in the case of any party, at such other
address or telex or telecopy number as such party may hereafter specify for
the purpose by notice to the Agent and the Company. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and
the appropriate answerback is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address or received at the telecopy number specified in this
Section; provided that notices to the Agent under Article 2 or Article 8
shall not be effective until received.
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Section 11.2. No Waivers. No failure or delay by the Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
Section 11.3. Expenses; Documentary Taxes; Indemnification. (a) The
Company shall pay (i) all reasonable out-of-pocket expenses of the Agent,
including reasonable fees and disbursements of special counsel for the Agent,
in connection with the preparation of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred
by the Agent or any Bank, including fees and disbursements of counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency
and other enforcement proceedings resulting therefrom. The Company shall
indemnify the Agent and each Bank against any transfer taxes, documentary
taxes, assessments or charges made by any governmental authority by reason of
the execution and delivery of this Agreement and the Notes.
(b) The Company agrees to indemnify the Agent, the Co-Agent and each
Bank, and hold each of them harmless, from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including,
without limitation, reasonable fees and disbursements of counsel, which may
be incurred by such Bank (or by the Agent or the Co-Agent) in connection with
any investigative, administrative or judicial proceeding (whether or not it
shall be designated a party thereto) relating to or arising out of this
Agreement or any actual or proposed use of proceeds of Loans hereunder;
provided that none of the Agent, the Co-Agent and the Banks shall have the
right to be indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
Section 11.4. Sharing of Set-offs. Each Bank agrees that if (i) it
shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest due with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of
principal and interest due with respect to any Note held by such other Bank
and (ii) such inequality shall have continued for more than 15 days, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other
adjustments shall be made from time to time, as may be required so that all
such payments of principal and interest with respect to the Notes held by the
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Banks shall be shared by the Banks pro rata; provided that nothing in this
Section shall impair the right of any Bank to exercise any right of set-off
or counterclaim it may have and to apply the amount subject to such exercise
to the payment of indebtedness of a Borrower other than its indebtedness
hereunder. Each Borrower agrees, to the fullest extent it may effectively do
so under applicable law, that any holder of a participation in a Note,
whether or not acquired pursuant to the foregoing arrangements, may exercise
rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the maker of such Note in the amount of such participation.
Section 11.5. Amendments and Waivers. Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed or otherwise approved in writing by the
Company and the Required Banks (and, if the rights or duties of the Agent are
affected thereby, by the Agent), provided that no such amendment or waiver
shall, unless signed or otherwise approved in writing by all the Banks, (i)
increase or decrease any Commitment of any Bank or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of interest on
any Loan or any fee hereunder, (iii) postpone the date fixed for any payment
of principal of or interest on any Loan or any fees hereunder, (iv) release
any guaranty of the Company under Article 10 or amend any provision of
Article 10 or (v) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any action under this
Section or any other provision of this Agreement.
Section 11.6. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that no Borrower
may assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all the Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its
Commitments or its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrowers and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrowers and the Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement. Any agreement
pursuant to which any Bank may grant such a participating interest shall
provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrowers hereunder including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such participation agreement may
provide that such Bank will not, without the consent of the Participant,
agree to any modification, amendment or waiver of this Agreement (x)
described in clause (ii) or (iii) of Section 11.05 or (y) that would change
the requirement that all the Banks must sign or approve any amendment or
waiver described in clause (ii) or (iii) of Section 11.05. Subject to
subsection (e) below, the Borrowers agree that each Participant shall, to the
extent provided in its participation agreement, be entitled to the benefits
of Article 8 with respect to its participating interest. An assignment or
other transfer which is not permitted by subsection (c) or (d) below shall be
given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection (b).
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(c) Any Bank may at any time, upon prior notice to the Borrowers and the
Agent, assign to one or more banks or other institutions (each an "Assignee")
a proportionate part (equivalent to an initial Commitment of not less than
$10,000,000) of its rights and obligations under this Agreement and the
Notes, and such Assignee shall assume such rights and obligations pursuant to
an Assignment and Assumption Agreement substantially in the form of Exhibit K
hereto executed by such Assignee and such transferor Bank with (and subject
to) the subscribed consent of the Company, which consent shall not be
unreasonably withheld and the Agent; provided that (i) if an Assignee is an
affiliate of such transferor Bank or was a Bank immediately before such
assignment, no such consent shall be required and (ii) such assignment may,
but need not, include rights of the transferor Bank in respect of outstanding
Money Market Loans. Upon execution and delivery of such an instrument,
payment by such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Assignee,
delivery to the Agent and the Company of an executed copy of such instrument
and payment by such Assignee to the Agent of a processing fee of $2,500, such
Assignee shall be a Bank party to this Agreement and shall have all the
rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor Bank, the Agent
and the Borrowers shall make appropriate arrangements so that, if required,
new Notes are issued to the Assignee. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to the Company and the Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in
accordance with Section 2.14.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 2.16 or 8.03
than such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's prior written
consent or pursuant to Section 8.05 or by reason of the provisions of Section
8.02 or 8.03 requiring such Bank to designate a different Applicable Lending
Office under certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.
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Section 11.7. No Reliance on Margin Stock. Each of the Banks
represents to the Agent and each of the other Banks that it in good faith is
not relying upon any "margin stock" (as defined in Regulation U) as
collateral in the extension or maintenance of the credit provided for in this
Agreement.
Section 11.8. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 11.9. Submission to Jurisdiction. Each Borrower hereby
submits to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York and of any New York State court sitting
in New York City for purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. Each
Borrower irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Section 11.10. New York Law. This Agreement and each Note shall be
construed in accordance with and governed by the laws of the State of New
York.
Section 11.11. Confidentiality. Any information disclosed by the
Company to the Agent or any of the Banks, which was designated proprietary or
confidential at the time of receipt thereof by the Agent or such Bank, shall
be used solely for purposes of this Agreement and not in any other manner
detrimental to the Company and, if such information is not otherwise in the
public domain, shall not be disclosed by the Agent or such Bank to any other
Person except (i) to its independent accountants and legal counsel (it being
understood that the Persons to whom such disclosure is made will be informed
of the confidential nature of such information and instructed to keep such
information confidential), (ii) pursuant to statutory and regulatory
requirements, (iii) pursuant to any mandatory court order, subpoena or other
legal process, (iv) to the Agent or any other Bank, (v) pursuant to any
agreement heretofore or hereafter made between such Bank and the Company
which permits such disclosure, (vi) in connection with the exercise of any
remedy under this Agreement or (vii) subject to an agreement containing
provisions substantially the same as those of this Section, to any
participant in or assignee of, or prospective participant in or assignee of,
any Loan or Commitment (it being understood that prior to any such
disclosures contemplated by clauses (ii) and (iii) above, the Agent or such
Bank shall, if practicable, give the Company prior written notice of such
disclosure).
Section 11.12. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
-63-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
POLAROID CORPORATION
By: /s/ Ralph M. Norwood
--------------------------------------
Name: Ralph M. Norwood
Title: Vice President & Treasurer
549 Technology Square
Cambridge, Massachusetts 02139
Attention: Treasurer
Telex number: 921 482
Telecopy number: 617-386-6615
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/s/ Deborah A. Brodheim
--------------------------------------
Name: Deborah A. Brodheim
Title: Vice President
ABN AMRO BANK N.V., BOSTON BRANCH
By:/s/ James E. Davis
--------------------------------------
Name: James E. Davis
Title: Group Vice President
By: /s/ Carol A. Levine
---------------------------------------
Name: Carol A. Levine
Title: Senior Vice President
-64-
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Grace A. Barnett
--------------------------------------
Name: Grace A. Barnett
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Patrick D. Bonebrake
--------------------------------------
Name: Patrick D. Bonebrake
Title: Assistant Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Vladimir Labun
--------------------------------------
Name: Vladimir Labun
Title: First Vice President - Manager
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/ Stephan A. Wiedemann
--------------------------------------
Name: Stephan A. Wiedemann
Title: Vice President
By: /s/ Thomas A. Foley
--------------------------------------
Name: Thomas A. Foley
Title: Assistant Vice President
-65-
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ S. Thomas Knoff
--------------------------------------
Name: S. Thomas Knoff
Title: Authorized Agent
ROYAL BANK OF CANADA
By: /s/ Peter D. Steffen
--------------------------------------
Name: Peter D. Steffen
Title: Senior Manager
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By: /s/ John C. Kissinger
--------------------------------------
Name: John C. Kissinger
Title: Joint General Manager
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Terence A. Snellings
--------------------------------------
Name: Terence A. Snellings
Title: Senior Vice President
FLEET NATIONAL BANK
By: /s/ Roger C. Boucher
--------------------------------------
Name: Roger C. Boucher
Title: Vice President
-66-
<PAGE>
MELLON BANK, N.A.
By: /s/ Joseph F. Bond, Jr.
--------------------------------------
Name: Joseph F. Bond, Jr.
Title: Vice President
NATIONSBANK, N.A.
By: /s/ Patricia G. McCormack
--------------------------------------
Name: Patricia G. McCormack
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ M. J. Williams
--------------------------------------
Name: M. J. Williams
Title: V.P.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent
By: /s/ Deborah A. Brodheim
--------------------------------------
Name: Deborah A. Brodheim
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Loan Department
Telex number: 177615 MGT UT
Telecopy number: 212-648-5014
-67-
<PAGE>
THE FIRST NATIONAL BANK OF
BOSTON, as Co-Agent
By: /s/ Grace A. Barnett
--------------------------------------
Name: Grace A. Barnett
Title: Vice President
100 Federal Street
Mail Stop: 01-10-01
Boston, MA 02110
Attention: Grace A. Barnett
Telex number: 4996527
Telecopy number: 617-434-0601
-68-
<PAGE>
COMMITMENT SCHEDULE
-------------------
Name of Bank Commitment
- ------------------- ----------
Morgan Guaranty Trust Company of New York $ 45,000,000
ABN AMRO Bank N.V., Boston Branch 35,000,000
The First National Bank of Boston 35,000,000
Bank of Tokyo-Mitsubishi Trust Company 25,000,000
Credit Lyonnais New York Branch 25,000,000
Deutsche Bank AG, New York and/or CaymanIslands Branches 25,000,000
The First National Bank of Chicago 25,000,000
Royal Bank of Canada 25,000,000
The Sumitomo Bank, Limited, New York Branch 25,000,000
Wachovia Bank of Georgia, N.A. 25,000,000
Fleet National Bank 15,000,000
Mellon Bank, N.A. 15,000,000
NationsBank, N.A. 15,000,000
PNC Bank, National Association 15,000,000
------------
TOTAL COMMITMENTS $350,000,000
-69-
<PAGE>
PRICING SCHEDULE
The "Euro-Dollar Margin", "CD Margin", "Commitment Fee Rate" and
"Facility Fee Rate" for any day are the respective rates per annum set forth
below in the applicable row in the column corresponding to the Pricing Level
that applies on such day:
Level I Level II Level III Level IV Level V
============================================================================
Euro-Dollar Margin .190% .225% .275% .375% .400%
Facility Fee Rate .085% .100% .100% .125% .200%
Commitment Fee Rate .000% .000% .025% .025% .050%
CD Margin .315% .350% .400% .500% .525%
For purposes of this Pricing Schedule, the following terms have the
following meanings:
"Level I Pricing" applies on any day if, on such day, the Company's long-
term debt is rated (i) A- or higher by S&P and Baa1 or higher by Moody's or
(ii) BBB+ by S&P and A3 or higher by Moody's.
"Level II Pricing" applies on any day if, on such day, the Company's
long-term debt is rated BBB+ by S&P and Baa1 by Moody's.
"Level III Pricing" applies on any day if, on such day, the Company's
long-term debt is rated BBB by S&P or Baa2 by Moody's.
"Level IV Pricing" applies on any day if, on such day, (i) the Company's
long-term debt is rated BBB- or higher by S&P and Baa3 or higher by Moody's
and (ii) neither Level I Pricing nor Level II Pricing applies.
"Level V Pricing" applies on any day if, on such day, no other Pricing
Level applies.
"Moody's" means Moody's Investors Service, Inc.
<PAGE>
"Pricing Level" means any one of the five pricing levels represented by
Level I Pricing, Level II Pricing, Level III Pricing, Level IV Pricing and
Level V Pricing.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-
Hill Companies, Inc.
The ratings to be utilized for purposes of this Pricing Schedule are those
assigned to the senior unsecured long-term debt securities of the Company
without third-party credit enhancement, and any rating assigned to any other
debt security of the Company shall be disregarded. The rating in effect on
any day is the rating in effect at the close of business on such day.
-2-
<PAGE>
EXHIBIT A
NOTE
New York, New York
, 19
For value received, [NAME OF BORROWER], a ________ corporation (the
"Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of all Loans made by the Bank to the Borrower pursuant to
the Credit Agreement referred to below, such principal amount to be payable
on the Termination Date. The Borrower promises to pay interest on the unpaid
principal amount of such Loans on the dates and at the rate or rates provided
for in the Credit Agreement. All such payments of principal and interest
shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, and all repayments of the principal thereof
shall be recorded by the Bank and, prior to any transfer hereof, appropriate
notations to evidence the foregoing information with respect to each such
Loan then outstanding shall be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of March 19, 1997 among Polaroid Corporation, the banks party thereto,
Morgan Guaranty Trust Company of New York, as Agent and The First National
Bank of Boston, as Co-Agent (as the same may be amended from time to time,
the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
[NAME OF BORROWER]
By____________________
Title:
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
_____________________________________________________________________
Date Amount Type Amount of Notation
of of Principal Made By
Loan Loan Repaid
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
<PAGE>
EXHIBIT B
FORM OF MONEY MARKET QUOTE REQUEST
----------------------------------
[Date]
To: Morgan Guaranty Trust Company of New York (the "Agent")
From: [Name of Borrower]
Re: Credit Agreement dated as of March 19, 1997
(as amended from time to time, the "Credit
Agreement") among Polaroid Corporation,
the Banks party thereto, the Agent and The
First National Bank of Boston, as Co-Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Funding Date of Borrowing: __________________
Principal Amount /1/ Interest Period /2/
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
_________________________________________
/1/ Amount must be $10,000,000 or a larger multiple of $1,000,000
/2/ Not less than one month (LIBOR Auction) or not less than 15 days
(Absolute Rate Auction), subject to the provisions of the definition of
Interest Period.
<PAGE>
Terms used herein have the meanings assigned to them in the Credit
Agreement.
[NAME OF BORROWER]
By________________________
Title:
-2-
<PAGE>
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
------------------------------------------
To: [Name of Bank]
Re: Invitation for Money Market Quotes
to [Name of Borrower] (the "Borrower")
Pursuant to Section 2.03 of the Credit Agreement dated as of March 19,
1997 among Polaroid Corporation, the Banks party thereto, the undersigned, as
Agent and The First National Bank of Boston, as Co-Agent, we are pleased on
behalf of the Borrower to invite you to submit Money Market Quotes to the
Borrower for the following proposed Money Market Borrowing(s):
Funding Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:00
A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By______________________
Authorized Officer
<PAGE>
EXHIBIT D
FORM OF MONEY MARKET QUOTE
--------------------------
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
60 Wall Street
New York, New York 10260
Attention:
Re: Money Market Quote to
[Name of Borrower] (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Funding Date of Borrowing: ____________________1
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
<PAGE>
Principal Interest Money Market
Amount /2/ Period /3/ [Margin /4/] [Absolute Rate/5/]
$
$
[Provided, that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted shall not exceed
$____________.] /2
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit
Agreement dated as of March 19, 1997 among Polaroid Corporation, the Banks
party thereto, yourselves, as Agent and The First National Bank of Boston, as
Co-Agent, irrevocably obligates us to make the Money Market Loan(s) for which
any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
____________________________________________
/2/ Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must
be made for $5,000,000 or a larger multiple of $1,000,000.
/3/ Not less than one month or not less than 15 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
/4/ Margin over or under the London Interbank Offered Rate determined for
the applicable Interest Period. Specify percentage (rounded to the nearest
1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
/5/ Specify rate of interest per annum (rounded to the nearest 1/10,000th
of 1%).
-2-
<PAGE>
EXHIBIT E
OPINION OF SIMPSON THACHER & BARTLETT
SPECIAL COUNSEL FOR THE COMPANY
------------------------------------
March __, 1997
Morgan Guaranty Trust Company
of New York, as Agent
The Banks Listed on Schedule 1 hereto
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
We have acted as special counsel for Polaroid Corporation, a Delaware
corporation (the "Company"), in connection with the preparation, execution
and delivery of the Credit Agreement dated as of March 19, 1997 (the "Credit
Agreement") among the Company, Morgan Guaranty Trust Company of New York, as
Agent, The First National Bank of Boston, as Co-Agent and the Banks party
thereto. Capitalized terms defined in the Credit Agreement are used herein
as therein defined. This opinion is being delivered to you pursuant to
Section 3.01(c) of the Credit Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such records,
agreements, instruments and other documents and have made such other
investigations as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
For purposes hereof, we have assumed, with your permission, the
genuineness of all signatures, the legal capacity of natural persons and the
authenticity and regularity of all documents examined by us. As to questions
of fact relevant to this opinion, we have relied upon, and assume the
accuracy of, the representations and warranties of the Company in the Credit
Agreement and have relied upon certificates and oral or written statements
and other information of public officials, officers and representatives of
the Company and others and assume compliance on the part of all parties to
the Credit Agreement with their covenants and agreements contained therein.
<PAGE>
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. The Credit Agreement constitutes a valid and binding agreement of
the Company, and the Notes, when executed and delivered in accordance with
the Credit Agreement, will constitute valid and binding obligations of the
Company, in each case enforceable against the Company in accordance with the
terms thereof.
2. The execution, delivery and performance by the Company of the
Credit Agreement requires no action by or in respect of, or filing with, any
governmental body, agency or official pursuant to any present law, statute,
rule or regulation of the United States of America or the State of New York
or pursuant to the Delaware General Corporation Law (other than filings which
have already been made) and does not contravene, or constitute a default
under, any applicable provision of any present law or regulation of the
United States of America, the State of New York or the Delaware General
Corporation Law.
Our opinion in paragraph 1 above is subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing. Our opinion
in paragraph 1 above, insofar as it relates to rights to indemnification, is
subject to considerations of public policy.
With your permission, we express no opinion as to (a) any provision of
the Credit Agreement which is intended (i) to establish any standard as the
measure of the performance by any party thereto of such party's obligations
of good faith, diligence, fair dealing, reasonableness or care or (ii) to
permit modification thereof only by means of an agreement in writing signed
by the parties thereto; (b) any provision of the Credit Agreement (i)
requiring payment of attorneys' fees, except to the extent a court determines
such fees to be reasonable or (ii) waiving objections based on forum non-
conveniens; (c) the effect of the compliance or noncompliance with any
federal or state laws or regulations applicable to the Banks or their
affiliates because of their legal or regulatory status or the nature of their
businesses; (d) Section 11.04 of the Credit Agreement and any other provision
of the Credit Agreement insofar as it purports to grant a right of setoff in
respect of the Company's or its subsidiaries' assets (i) to any person other
than a creditor of the Company or subsidiary, as the case may be, or (ii) to
any Bank in an amount greater than the amount owing by the Company or
subsidiary, as the case may be, to such Bank; (e) Section 2.05(e) of the
Credit Agreement insofar as it relates to post-judgment or default interest
rates; (f) any provisions of the guaranty contained in Section 10.02 of the
Credit Agreement that provides that the Company's liability thereunder shall
not be affected by action or failure to act on the part of the Banks; (g) the
enforceability of the provisions of any agreement or document to the extent
that such provisions constitute a waiver of illegality as a defense to
performance of contract obligations or any other defense to performance which
cannot, as a matter of law, be effectively waived; and (h) the enforceability
of Section 2.15 of the Credit Agreement concerning judgment in a different
currency.
<PAGE>
In addition, we express no opinion as the enforceability of any
provision of the Credit Agreement whereby the Company purports to submit to
the subject matter jurisdiction of the United States District Court for the
Southern District of New York. We note the limitations of 28 U.S.C. 1332
on federal court jurisdiction where diversity of citizenship is lacking, and
we also note that such submissions cannot supersede that court's discretion
in determining whether to transfer an action from one federal court to
another under 28 U.S.C. 1404(a).
We are members of the Bar of the State of New York and we express no
opinion as to the laws of any jurisdiction other than the federal laws of the
United States of America, the laws of the State of New York and the General
Corporation Law of the State of Delaware.
This opinion is rendered to you in connection with the above-described
transactions. This opinion may not be relied upon by you for any other
purpose, or relied upon by any other person, firm or corporation without
prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
<PAGE>
EXHIBIT F
OPINION OF THOMAS M. LEMBERG,
GENERAL COUNSEL OF THE COMPANY
------------------------------
[Dated the Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
As Senior Vice President and General Counsel of Polaroid Corporation, a
Delaware Corporation (the "Company"), I am familiar with the Credit Agreement
dated as of March 19, 1997 (the "Credit Agreement") among the Company, Morgan
Guaranty Trust Company of New York, as Agent, The First National Bank of
Boston, as Co-Agent and the Banks party thereto. Capitalized terms defined
in the Credit Agreement are used herein as therein defined.
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as I have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, I am of opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and has all
corporate powers and, to the best of my knowledge, all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted, the absence of which would have a material adverse
effect on the business, financial position or results of operations of the
Company and its Consolidated Subsidiaries, considered as a whole.
<PAGE>
2. The execution, delivery and performance by the Company of the Credit
Agreement and the Notes (i) are within the Company's corporate powers and
have been duly authorized by all necessary corporate action, (ii) require no
action by or in respect of, or filing with, any governmental body, agency or
official under the laws of the Commonwealth of Massachusetts and (iii) do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the Restated Certificate of Incorporation or By-laws of the
Company or, to the best of my knowledge, of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or, to
the best of my knowledge, result in the creation or imposition of any Lien on
any asset of the Company or any of its Subsidiaries.
3. To the best of my knowledge, neither the Company nor any of its
Subsidiaries is in violation of, or in default under, any term or provision
of any charter, by-law, mortgage, indenture, agreement, instrument, statute,
rule, regulation, judgment, decree, order, writ or injunction applicable to
it, such that such violations and defaults in the aggregate could reasonably
be expected to materially adversely affect the business, financial position
or results of operations of the Company and its Consolidated Subsidiaries,
considered as a whole, or the ability of the Company to perform in any
material respect its obligations under the Credit Agreement or the Notes.
4. Except as disclosed in the Company's 1995 Form 10-K and the
Company's Third Quarter 1996 Form 10-Q, to the best of my knowledge there is
no (i) injunction, stay, decree or order issued by any court or arbitrator or
any governmental body, agency or official or (ii) action, suit or proceeding
pending or threatened against or affecting, the Company or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable likelihood of an adverse decision,
in either case (y) which could materially adversely affect the business,
financial position or results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole, or (z) which could
materially adversely affect the ability of the Company to perform any of its
obligations under the Credit Agreement or the Notes.
5. To the best of my knowledge there is no (i) injunction, stay, decree
or order issued by any court or arbitrator or any governmental body, agency
or official or (ii) action, suit or proceeding pending or threatened against
or affecting, the Company or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable likelihood of an adverse decision, in either case which in any
manner draws into question the validity of the Credit Agreement or the Notes.
I am a member of the bar of the District of Columbia and do not express
any opinion as to any laws other than the General Corporation Law of the
State of Delaware and the Federal laws of the United States of America. In
rendering the opinion set forth in paragraph 2 above, I have relied, without
independent investigation, as to all matters governed by the Commonwealth of
Massachusetts upon the opinion, dated the date hereof, of Sheldon W.
Rothstein, Assistant Secretary of the Company, a copy of which has been
delivered to you.
<PAGE>
This opinion is delivered to you pursuant to the instruction of the
Company and is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied
upon by any other person without our prior written consent.
Very truly yours,
<PAGE>
EXHIBIT G
OPINION OF DAVIS POLK & WARDWELL,
SPECIAL COUNSEL FOR THE AGENT
--------------------------------
[Dated the Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Credit Agreement dated as
of March 19, 1997 (the "Credit Agreement") among Polaroid Corporation, a
Delaware corporation (the "Company"), Morgan Guaranty Trust Company of New
York, as Agent (the "Agent"), The First National Bank of Boston, as Co-Agent
and the banks party thereto (the "Banks"). We have acted as special counsel
for the Agent for the purpose of rendering this opinion pursuant to Section
3.01(d) of the Credit Agreement. Terms defined in the Credit Agreement are
used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution and delivery and performance by the Company of the
Credit Agreement and the Notes are within the Company's corporate powers and
have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of
the Company and the Notes constitute valid and binding obligations of the
Company.
<PAGE>
We are members of the bar of the State of New York only. We express no
opinion as to any laws other than the laws of the State of New York, the
General Corporation Law of the State of Delaware and the Federal laws of the
United States of America. In giving the foregoing opinion, we express no
opinion as to the effect (if any) of any law of any jurisdiction (except the
State of New York) in which any Bank is located which limits the rate of
interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
<PAGE>
EXHIBIT H
FORM OF ELECTION TO PARTICIPATE
-------------------------------
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Credit Agreement
dated as of March 19, 1997 (as amended from
time to time, the "Credit Agreement") among
Polaroid Corporation, such Banks, such Agent
and The First National Bank of Boston, as
Co-Agent
Dear Sirs:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation, elects to be an Eligible Subsidiary for purposes
of the Credit Agreement, effective from the date hereof until an Election to
Terminate shall have been delivered on behalf of the undersigned in
accordance with the Credit Agreement. The undersigned confirms that the
representations and warranties set forth in Articles 4 and 9 of the Credit
Agreement are true and correct as to the undersigned as of the date hereof,
and the undersigned agrees to perform all the obligations of an Eligible
Subsidiary under, and to be bound in all respects by the terms of, the Credit
Agreement, including without limitation Section 11.09 thereof, as if the
undersigned were a signatory party thereto.
<PAGE>
The address to which all notices to the undersigned under the Credit
Agreement should be directed is: . This instrument shall be
construed in accordance with and governed by the laws of the State of New
York.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By____________________________
Title:
The undersigned confirms that [name of Eligible Subsidiary] is an
Eligible Subsidiary for purposes of the Credit Agreement described above.
POLAROID CORPORATION
By____________________________
Title:
Receipt of the above Election to Participate is acknowledged on and as
of the date set forth above.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent
By____________________________
<PAGE>
EXHIBIT I
FORM OF ELECTION TO TERMINATE
----------------------------
, 19
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
for the Banks named in the Credit Agreement
dated as of March 19, 1997 (as amended from
time to time, the "Credit Agreement") among
Polaroid Corporation, such Banks, such Agent
and The First National Bank of Boston, as
Co-Agent
Dear Sirs:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement have for the
purposes hereof the meaning provided therein.
The undersigned, Polaroid Corporation, a Delaware corporation, elects to
terminate the status of [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation (the "Designated Subsidiary"), as an Eligible
Subsidiary for purposes of the Credit Agreement, effective as of the date
hereof. The undersigned represents and warrants that all principal and
interest on all Notes of the Designated Subsidiary and all other amounts
payable by such Designated Subsidiary pursuant to the Credit Agreement have
been paid in full on or prior to the date hereof. Notwithstanding the
foregoing, this Election to Terminate shall not affect any obligation of the
Designated Subsidiary under the Credit Agreement or under any of its Notes
heretofore incurred.
<PAGE>
This instrument shall be construed in accordance with and governed by
the laws of the State of New York.
Very truly yours,
POLAROID CORPORATION
By_______________________
Title:
Receipt of the above Election to Terminate is hereby acknowledged on and
as of the date set forth above.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent
By______________________
Title:
<PAGE>
EXHIBIT J
OPINION OF COUNSEL FOR THE BORROWER
(BORROWINGS BY ELIGIBLE SUBSIDIARIES)
------------------------------------
[Dated as provided in
Section 3.03 of the
Credit Agreement]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am counsel to [name of Eligible Subsidiary, jurisdiction of
incorporation] (the "Borrower") and give this opinion pursuant to Section
3.03(b) of the Credit Agreement dated as of March 19, 1997 (as heretofore
amended, the "Credit Agreement") among Polaroid Corporation (the "Company"),
the banks party thereto, Morgan Guaranty Trust Company of New York, as Agent
and The First National Bank of Boston, as Co-Agent. Terms defined in the
Credit Agreement are used herein as therein defined.
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as I have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of [jurisdiction of incorporation], and
is a Wholly-Owned Consolidated Subsidiary of the Company.
<PAGE>
2. The execution and delivery by the Borrower of its Election to
Participate and its Notes and the performance by the Borrower of the Credit
Agreement and its Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official (except
actions or filings that have been duly taken or made) and do not contravene,
or constitute a default under, any provision of applicable law or regulation
or of the certificate of incorporation or by-laws of the Borrower or, to the
best of my knowledge, of any agreement, judgment, injunction, order, decree
or other instrument binding upon the Company or the Borrower or, to the best
of my knowledge, result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries.
3. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and its Notes constitute valid and binding obligations of the
Borrower.
4. Except as disclosed in the Borrower's Election to Participate, there
is no income, stamp or other tax of [jurisdiction of incorporation and, if
different, principal place of business], or any taxing authority thereof or
therein, imposed by or in the nature of withholding or otherwise, which is
imposed on any payment to be made by the Borrower pursuant to the Credit
Agreement or its Notes, or is imposed on or by virtue of the execution,
delivery or enforcement of its Election to Participate or of its Notes.
Very truly yours,
<PAGE>
EXHIBIT K
ASSIGNMENT AND ASSUMPTION AGREEMENT
----------------------------------
AGREEMENT dated as of _________, 19__ between [ASSIGNOR] (the
"Assignor") and [ASSIGNEE] (the "Assignee").
W I T N E S S E T H:
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Credit Agreement dated as of March 19, 1997 (as the same may
be amended from time to time, the "Credit Agreement") among Polaroid
Corporation (the "Company"), the Assignor and the other Banks party thereto,
as Banks, Morgan Guaranty Trust Company of New York, as Agent (the "Agent")
and The First National Bank of Boston, as Co-Agent;
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Company and its Eligible Subsidiaries in an
aggregate principal amount at any time outstanding not to exceed $__________;
WHEREAS, [Committed] Loans made to the Company and its Eligible
Subsidiaries by the Assignor under the Credit Agreement are outstanding at
the date hereof in an aggregate principal amount of $__________; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of
its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount") together with a corresponding portion of each of its outstanding
[Committed] Loans, and the Assignee proposes to accept assignment of such
rights and assume the corresponding obligations from the Assignor on such
terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Credit
Agreement.
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement and
its Notes to the extent of the Assigned Amount and a corresponding portion of
each of its outstanding [Committed] Loans, and the Assignee hereby accepts
such assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount.
Upon (i) the execution and delivery by the Assignor and the Assignee, and the
acknowledgment and acceptance by the Company and the Agent, of this Agreement
and (ii) the payment by the Assignee of the amounts specified in Section 3 of
this Agreement required to be paid on the date hereof and the processing fee
specified in Section 11.06(c) of the Credit Agreement, (A) the Assignee
shall, as of the date hereof, succeed to the rights and be obligated to
perform the obligations of a Bank under the Credit Agreement to the extent of
the Assigned Amount and acquire the rights of the Assignor with respect to a
corresponding portion of each of its outstanding [Committed] Loans and (B)
the Commitment of the Assignor shall, as of the date hereof, be reduced by a
like amount and the Assignor shall be released from its obligations under the
Credit Agreement to the extent such obligations have been so assumed by the
Assignee. The assignment provided for herein shall be without recourse to
the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds an amount equal to $_________, being the sum
of (i) the aggregate principal amount of the outstanding [Committed] Loans so
assigned, (ii) interest accrued thereon up to but excluding the date hereof
and (iii) commitment and/or facility fees accrued in respect thereof up to
but excluding the date hereof. It is understood that commitment and/or
facility fees accrued to the date hereof are for the account of the Assignor
and such fees accruing from and including the date hereof are for the account
of the Assignee. Each of the Assignor and the Assignee hereby agrees that if
it receives any amount under the Credit Agreement which is for the account of
the other party hereto, it shall receive the same for the account of such
other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
SECTION 4. Consent of the Company and the Agent. This Agreement
is conditioned upon the consent of the Company (which consent shall, as
provided by the Credit Agreement, not be unreasonably withheld) and the Agent
pursuant to the Credit Agreement. The acknowledgment of receipt of this
Agreement by the Company and the Agent is evidence of this consent.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition, or
statements of the Company, or the validity and enforceability of the
obligations of any Borrower in respect of the Credit Agreement or any Note.
The Assignee acknowledges that it has, independently and without reliance on
the Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Company.
<PAGE>
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
Acknowledged and accepted
as of the date first
above written.
POLAROID CORPORATION
By__________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:
_______________________________
Exhibit 10.2
THE POLAROID BOARD OF DIRECTORS STOCK PLAN
------------------------------------------
POLAROID CORPORATION
--------------------
Cambridge, Massachusetts
Effective January 1, 1997
<PAGE>
THE POLAROID BOARD OF DIRECTORS STOCK PLAN
------------------------------------------
The purpose of the Plan is to advance the interests of the
Company and its shareholders by affording non-employee members of
its Board of Directors an opportunity to increase their
proprietary interest in the Company by the grant of Awards under
the terms set forth herein. The Company believes that this Plan
can give an incentive to its non-employee members of the Board to
increase revenues and profits.
ARTICLE I
DEFINITIONS
-----------
1.01 Award. Award shall mean an incentive award granted under
the Plan, whether in the form of Options, Stock Appreciation
Rights, Restricted Stock or any other form of consideration
(which may provide for settlement in shares of Stock, cash
and/or a combination thereof) determined by the Committee to
be consistent with the purposes of the Plan, including but
not limited to restricted units, phantom stock, performance
awards, performance units, performance shares, stock
appreciation shares, limited stock appreciation rights,
stock acquisition rights, valuation protection rights,
reload options or any other type of award or combination or
derivative of various types of awards.
1.02 Board or Board of Directors. Board or Board of Directors
shall mean the Board of Directors of the Company.
1.03 Code. Code shall mean the Internal Revenue Code of 1986, as
amended, unless otherwise specifically provided herein.
1.04 Committee. Committee shall mean a Committee of the Board
consisting of members of the Board of Directors who are Non-
Employee Directors as defined in Rule 16b-3 (b) (3)
promulgated under the Exchange Act.
<PAGE>
1.05 Company. Company shall mean Polaroid Corporation, a
Delaware corporation, and any successor thereof.
1.06 Exchange Act. Exchange Act shall mean the Securities
Exchange Act of 1934, as amended.
1.07 Fair Market Value. Fair Market Value of the Stock shall
mean the last sale price at which Stock is traded on any
given date or, if no Stock is traded on such date, the most
recent prior date on which Stock was traded, as reflected in
the New York Stock Exchange Composite Transactions Index.
1.08 Option. Option shall mean an option granted by the Company
to purchase Stock pursuant to the provisions of this Plan
and the Agreement executed pursuant hereto.
1.09 Option Price. Option Price shall mean the price per
share of Stock purchasable under an Option. The Option
Price shall be determined by the Committee at the time of
grant but shall not be less than the Fair Market Value on
the Date of Grant.
1.10 Participant. Participant shall mean a non-employee member
of the Board, or a former non-employee member of the Board
who has received an Award granted by the Committee
hereunder.
1.11 Plan. Plan shall mean the Board of Directors Stock Plan.
1.12 Restricted Stock Awards. A Restricted Stock Award shall
mean a grant made by the Committee entitling the Participant
to acquire, at no cost or for a purchase price determined by
the Committee at the time of grant, shares of Stock subject
to such restrictions and conditions as the Committee may
determine at the time of grant ("Restricted Stock").
-2-
<PAGE>
1.13 Securities Act. Securities Act shall mean the Securities
Act of 1933, as amended from time to time.
1.14 Stock. Stock shall mean common stock, par value $1 per
share, issued by the Company.
1.15 Stock Appreciation Right. A Stock Appreciation Right shall
mean a grant entitling the Participant to receive an amount
in cash or shares of Stock or a combination thereof having a
value equal to (or if the Committee shall so determine at
the time of a grant, less than) the excess of the Fair
Market Value of a share of Stock on the date of exercise
over the Fair Market Value of a share of Stock on the date
of grant (or over the Option Price, if the Stock
Appreciation Right was granted in tandem with an Option)
multiplied by the number of shares with respect to which the
Stock Appreciation Right shall have been exercised, with the
Committee having sole discretion to determine the form of
payment. A Stock Appreciation Right is further defined in
Article V hereof.
1.16 Stock Incentive Agreement or Agreement. Stock Incentive
Agreement or Agreement shall mean the agreement as described
in Section 3.04 of the Plan between the Company and the
Participant under which such Participant receives an Award
pursuant to this Plan.
1.17 Unrestricted Stock Awards. An Unrestricted Stock
Award shall mean a grant made by the Committee entitling the
Participant to acquire, at no cost or for a purchase price
determined by the Committee at the time of grant, share of Stock
free from any restrictions imposed under the Plan ("Unrestricted
Stock").
-3-
<PAGE>
ARTICLE II
PARTICIPATION
-------------
2.01 Participation. An Award under this Plan may be made by the
Committee to non-employee members of the Board of Directors.
ARTICLE III
SHARES OF STOCK SUBJECT TO THE PLAN
-----------------------------------
3.01 Limitations .
a) Subject to adjustments pursuant to the provisions
of Section 3.03 hereof, the number of shares of Stock
or Stock equivalents which may be granted hereunder to
Participants under all forms of Awards shall not exceed
300,000 shares plus the number of shares available
for grant under the Polaroid Board of Directors Stock
Option Plan approved by the Company's shareholders in
1990 (the "1990 Plan). No grants will be made under
the 1990 Plan after this Plan is approved by the
Shareholders.
b) For purposes of this Section 3.01, the shares of
Stock that shall be counted toward such limitation
shall include all Stock:
1) Issued or issuable pursuant to Options that have
been or may be exercised;
2) Subject to Stock Appreciation Rights that have
been or may be exercised (other than Stock
Appreciation Rights granted in tandem with
outstanding Options or any limited stock
appreciation rights deemed to be granted pursuant
to Article XI); and,
3) Issued as, or subject to issuance as Restricted
Stock or Unrestricted Stock.
c) Shares of Stock subject to grants under this Plan
shall be authorized and unissued shares of Stock or
treasury stock.
-4-
<PAGE>
3.02 Availability of Shares Once Issued Under the Plan. Once
Awards have lapsed, terminated or have been forfeited, the
Committee shall have the sole discretion to issue a new
grant to any Participant, covering the number of shares to
which such lapsed, terminated or forfeited grant related.
3.03 Adjustments To Awards Once Issued. In the event that the
outstanding shares of Stock are changed into or exchanged
for a different number or kind of shares or other securities
of the Company or of another corporation by reason of
merger, consolidation, other reorganization,
recapitalization, reclassification, combination of shares,
stock split-up, or stock dividend, the Committee shall make
such corresponding adjustments, if any, as deemed
appropriate in its sole discretion. The Committee may
adjust the number and kind of shares which may be granted
under the Plan, and the number, the Option Price, and the
kind of shares or property subject to each outstanding
grant. The adjustment by the Committee shall be final,
binding and conclusive. Notwithstanding the foregoing, no
fractional shares of Stock shall be issued under the Plan as
a result of such adjustment, but the Committee in its
discretion may make a cash payment in lieu of fractional
shares.
3.04 Grants and Agreement. Each grant of an Award under this
Plan shall be evidenced by a written Stock Incentive
Agreement dated as of the date of the grant and executed by
the Company and the Participant. This Agreement shall set
forth the terms and conditions of such Award, as may be
determined by the Committee consistent with this Plan.
ARTICLE IV
OPTIONS
-------
4.01 Option Exercise. Subject to Federal and State statutes then
applicable, the terms and procedures by which an Option may
be exercised shall be set forth in the Participant's
Agreement or in procedures established by the Committee.
The Committee may permit payment of the Option Price to be
made through the tender of cash or securities, the
withholding of Stock or cash to be received through Awards,
brokers' cashless exercise arrangement, or any other
arrangement satisfactory to the Committee.
-5-
<PAGE>
4.02 Options. The Committee may grant Options to any Participant
in such amount and at such Option Price determined at the
discretion of the Committee. Options granted under the Plan
are not intended to be "Incentive Stock Options" within the
meaning of Section 422 of the Code..
4.03 Vesting of Options. The Stock Incentive Agreement shall
specify the date or dates on which the Participant may begin
to exercise all or a portion of his Option. Subsequent to
such date or dates, the option shall be deemed "vested."
Notwithstanding the terms of any Stock Incentive Agreement,
the Committee at any time may accelerate such date or dates
and otherwise waive or amend any conditions of the grant of
an Option subject to the other terms of the Plan.
A Participant's subsequent transfer or disposition of any
Stock secured through the grant shall be subject to any
Federal and State laws then applicable, specifically
securities laws.
ARTICLE V
STOCK APPRECIATION RIGHTS
-------------------------
5.01 Grant and Exercise of Stock Appreciation Rights. Stock
Appreciation Rights may be granted to Participants by the
Committee in tandem with, or independently of, any Option
granted pursuant to Article IV of this Plan, either at or
after the time of the grant of such Option.
-6-
<PAGE>
A Stock Appreciation Right, or applicable portion thereof
granted in tandem with an Option, shall terminate and no
longer be exercisable upon the termination or exercise of
the related Option. However, if a Stock Appreciation Right
is granted with respect to less than the full number of
shares covered by a related Option, such Stock Appreciation
Right shall terminate only if and to the extent that the
number of shares covered by the exercise or termination of
the related Option exceeds the number of shares not covered
by such Stock Appreciation Right.
5.02 Terms and Conditions of Stock Appreciation Rights. Stock
Appreciation Rights shall be subject to such terms and
conditions as shall be determined from time to time by the
Committee and embodied in the Agreements and in procedures
established by the Committee. The Committee at any time may
accelerate the exercisability of any Stock Appreciation
Right and otherwise waive or amend any conditions of the
grant of a Stock Appreciation Right.
ARTICLE VI
RESTRICTED STOCK AWARDS
-----------------------
6.01 Grant of Restricted Stock Award. The Committee may grant a
Restricted Stock Award to any Participant at no cost or for
a purchase price determined by the Committee at the time of
grant. The Restricted Stock shall be subject to such
restrictions and conditions as determined by the Committee
and embodied in the Agreement.
6.02 Agreement. If the purchase of Restricted Stock is required
by the Agreement, a Participant who is granted a Restricted
Stock Award shall not have any rights with respect to such
grant unless the Participant shall have accepted the grant
within 60 days (or such shorter time as the Committee may
specify) following the date of the grant by making payment
to the Company by certified or bank check or other
instrument acceptable to the Committee in an amount equal to
the specified purchase price, if any, of the shares covered
by the grant and by executing and delivering to the Company
an Agreement in such form as the Committee shall determine.
-7-
<PAGE>
6.03 Rights as a Shareholder. After the Restricted Stock has
been recorded in the stock ledger of the Company and:
a) Upon complying with Section 6.02 above, if payment of
purchase price is required by the Agreement; or,
b) Immediately, if no purchase price is required by
the Agreement, a Participant shall have all the rights
of a shareholder with respect to such Restricted Stock
including voting and dividend rights, subject to non-
transferability restrictions and Company repurchase or
forfeiture rights described in this Section and Section
6.04, and subject to such other conditions (including
but not limited to condition on voting and dividend
rights) as are contained in the Agreement. Unless the
Committee shall otherwise determine, certificates
evidencing shares of Restricted Stock shall remain in
the possession of the Company until such shares are
vested as provided in Section 6.05 below and the
Agreement.
6.04 Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered or
disposed of except as specifically provided herein.
Restrictions on shares of Restricted Stock shall be set
forth in a Stock Incentive Agreement and may include such
vesting restrictions as the Committee shall determine,
including but not limited to restrictions related to timing,
profitability of the Company, and growth of the share price.
In the event of a Participant's ceases to serve on the Board
for any reason (including death) prior to the date shares of
Restricted Stock awarded to such Participant become vested,
the Company shall have the right, at the discretion of the
Committee, to repurchase such shares at their purchase
price, or to require forfeiture of such shares to the
Company if acquired at no cost, from such Participant or
Participant's legal representative.
-8-
<PAGE>
6.05 Vesting of Restricted Stock. The Committee at the time of
grant shall specify the date or dates (which may depend upon
or be related to the attainment of performance goals and
other conditions) on which the restrictions imposed upon the
Restricted Stock and the Company's right of repurchase or
forfeiture shall lapse. Subsequent to such date or dates,
the shares on which all restrictions have lapsed shall no
longer be Restricted Stock and shall be deemed "vested."
The Committee at any time may accelerate such date or dates
and otherwise waive or amend any conditions of the grant. A
Participant may transfer or dispose of any Restricted Stock
that has vested, subject to any Federal and State laws then
applicable, specifically securities laws.
ARTICLE VII
UNRESTRICTED STOCK AWARDS
-------------------------
7.01 Grant or Sale of Unrestricted Stock. The Committee may
grant (or sell at a purchase price determined by the
Committee) an Unrestricted Stock Award to any Participant
pursuant to which such Participant may receive shares of
Unrestricted Stock free of any restrictions under the Plan.
Unrestricted Stock Awards may be granted or sold as
described in the preceding sentence in respect of past
services or other valid consideration, or in lieu of any
cash compensation due to such Participant.
7.02 Elections to Receive Unrestricted Stock in Lieu of
Compensation. Upon the request of a Participant and with
the consent of the Committee, each such Participant may,
pursuant to an advance written election delivered to the
Company no later than the date specified by the Committee,
receive a portion of the cash compensation otherwise due to
such Participant in the form of shares of Unrestricted Stock
either currently or on a deferred basis.
-9-
<PAGE>
7.03 Restrictions on Transfers. The right to receive shares of
Unrestricted Stock on a deferred basis may not be sold,
assigned, transferred, pledged or otherwise encumbered,
other than by will or the laws of descent and distribution.
ARTICLE VIII
STOCK CERTIFICATES
------------------
8.01 Stock Certificates. The Company shall not be required to
issue or deliver any certificate for shares of Stock under
this Plan or of any portion thereof prior to fulfillment of
all of the following conditions:
a) The admission of such shares to listing on all
stock exchanges on which the Stock is then listed, if
any;
b) The completion of any registration or other
qualification of such shares under any Federal or State
law, under the rulings or regulations of the Securities
and Exchange Commission, or under any other
governmental regulatory agency which the Committee
shall in its sole discretion determine to be necessary
or advisable;
c) The obtaining of any approval or other clearance from
any Federal or State governmental agency which the
Committee shall in its sole discretion determine to be
necessary or advisable; and,
d) The lapse of such reasonable period of time
following the exercise of the grant as the Committee
from time to time may establish for reasons of
administrative convenience.
If these conditions are not satisfied, the Participant may
lose his rights to such Stock as determined by the
Committee.
-10-
<PAGE>
ARTICLE IX
DIVIDENDS
---------
9.01 Dividends. At the time of each grant of an Award the
Committee may, in its sole discretion, determine whether the
grant shall provide a dividend or a dividend equivalent and
the terms and conditions under which any such dividend or
dividend equivalent is to be provided, including but not
limited to permitting or requiring immediate payment,
deferral or investment of dividends or dividend equivalents.
ARTICLE X
PLAN ADMINISTRATION
-------------------
10.01 Plan Administration. The Plan and all Agreements shall
be administered, and all grants under this Plan shall be
awarded, by the Committee. The Committee shall have full
authority and absolute sole discretion:
a) To determine, consistent with the provisions of
this Plan, which of the non-employee members of the
Board shall be granted Awards the form and terms of
such Awards including forms of Awards not specifically
described in Articles IV, V, VI and VII above; the form
and terms of such Awards; the timing of such grants;
the number of shares subject to each Award and the
Option Price of Stock covered by each Option (if
applicable); and the period over which the Awards shall
become and remain exercisable (if applicable);
b) To determine the terms and provisions of each
respective Stock Incentive Agreement, which need not be
identical;
c) To make all other determinations and take all other
actions deemed necessary or advisable for the proper
administration of the Plan;
d) To adopt, alter, and repeal such rules, guidelines, and
practices for administration of the Plan and for its
own acts and proceedings as it shall deem advisable;
e) To construe and interpret the terms and provisions of
the Plan and any Award (including related Agreements);
f) To decide all disputes arising in connection with the
Plan; and,
g) To otherwise supervise the administration of the Plan.
-11-
<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
11.01 Applicable Law. To the extent that state law shall not
have been preempted by any laws of the United States, the
Plan shall be construed, regulated, interpreted and
administered according to the laws of the State of Delaware.
11.02 Expenses. The expenses of administering the Plan shall
be borne by the Company.
11.03 Gender and Number. Unless the context clearly requires
otherwise, the masculine pronoun whenever used shall include
the feminine and neuter pronoun, the singular shall include
the plural, and vice versa.
11.04 Headings Not Part of the Plan. Headings of Articles
and Sections are inserted for convenience and reference;
they constitute no part of this Plan.
11.05 Indemnification. No member of the Board of Directors
or the Committee shall be liable for any action or
determination taken or made in good faith with respect to
this Plan nor shall any member of the Board of Directors or
the Committee be liable for any Agreement issued pursuant to
this Plan or any grants under this Plan. Each member of the
Board of Directors and the Committee shall be indemnified by
the Company against any losses incurred in such
administration of the Plan, unless his action constitutes
serious and willful misconduct.
-12-
<PAGE>
11.06 Limitation of Rights. Neither the adoption and
maintenance of the Plan or Agreement nor anything contained
herein, with respect to any Participant, shall be deemed to
create any contract or other right or interest under the
Plan, or in any funds hereunder, other than as specifically
provided in the Plan and the Agreement.
11.07 No Distribution Until Compliance with Legal
Requirements. The Committee may require each Participant
acquiring shares pursuant to a grant to represent to and
agree with the Company in writing that such Participant is
acquiring the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to a grant until
all applicable securities laws and other legal and stock
exchange requirements have been satisfied. The Committee
may require the placing of such stop-orders and restrictive
legends on certificates for Stock and grants as it deems
appropriate.
11.08 Non-Assignability. Except as provided in Section
11.09, a Participant's interest under this Plan shall not be
subject at any time, or in any manner, to alienation, sale,
transfer, assignment, pledge, attachment, garnishment or
encumbrance of any kind and any attempt to deliver, sell,
transfer, assign, pledge, attach, garnish or otherwise
encumber such interest shall be void and any interest so
encumbered will terminate.
11.09 Nontransferability. An Award (other than any
Unrestricted Stock Award or any Award of Restricted Stock
after the restrictions relating thereto shall have lapsed)
shall not be transferable by the Participant other than by
will or the laws of descent and distribution. During the
lifetime of the Participant, such Award shall be exercisable
or perfected only by the Participant in accordance with the
terms of this Plan and the Agreement. Notwithstanding the
foregoing and anything to the contrary elsewhere herein, the
Committee may permit a Participant to transfer, without
consideration for the transfer, Awards to members of the
Participant's immediate family, to trusts for the benefit of
such family members, to partnerships in which such family
members are the only partners, or to charitable
organizations, provided that the transferee agrees in
writing with the Company to be bound by all of the terms and
conditions of this Plan and the applicable Agreement.
-13-
<PAGE>
11.10 Other Compensation Plans. The adoption of the Plan
shall not affect any other existing or future incentive or
compensation plans for directors, officers or employees of
the Company or its subsidiaries. Moreover, the adoption of
this Plan shall not preclude the Company or its subsidiaries
from:
a) Establishing any other forms of incentive or other
compensation for directors, officers or employees of
the Company or its subsidiaries; or,
b) Assuming any forms of incentives or other
compensation of any person or entity in connection with
the acquisition of the business or assets, in whole or
in part, of any person or entity.
11.11 Plan Binding on Successors. This Plan shall be binding
upon the successors and assigns of the Company.
11.12 Tax Withholding. Each Participant shall, no later than
the date as of which the value of a grant or of any Stock or
other amount received thereunder first becomes includable in
the gross income of the Participant for Federal income tax
purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of any
Federal, State, or local taxes of any kind required by law
to be withheld with respect to such income. The Committee
may permit payment of such taxes to be made through the
tender of cash or securities, the withholding of Stock or
cash to be received through Awards or any other arrangement
satisfactory to the Committee. The Company and its
subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind
otherwise due to the Participant.
11.13 Non-Contravention of Securities Laws. Notwithstanding
anything to the contrary expressed in this Plan, any
provisions hereof that vary from or conflict with any
applicable Federal or State securities laws (including any
regulations promulgated thereunder) shall be deemed to be
modified to conform to and comply with such laws.
-14-
<PAGE>
11.14 Unenforceability of a Particular Provision. The
unenforceability of any particular provision of this
document shall not affect the other provisions and the
document shall be construed in all respects as if such
unenforceable provision were omitted.
ARTICLE XII
CHANGE OF CONTROL
------------------
12.01 Acceleration. Unless the Committee shall otherwise
expressly provide in the Agreement relating to an Award:
a) Upon the occurrence of a Trigger Date (as hereinafter
defined):
1) In the case of Options and Stock
Appreciation Rights, each such Option and Stock
Appreciation Right shall automatically become
fully exercisable;
2) Restrictions and conditions applicable
to Restricted Stock shall automatically be deemed
waived, and the recipients of such grants shall
become entitled to receipt of the Stock subject to
such grants; and,
3) In the case of any other Award, the
occurrence of such Trigger Date shall have such
effect on such Award as may be provided in the
Agreement related thereto or in the Committee's
procedures; and,
b) The Committee may at any time accelerate the
exercisability of any Awards (if applicable) and may
waive restrictions and conditions on Awards (if
applicable) to the extent it shall in its sole
discretion determine.
12.02 Special Rights. Anything in this Plan and the 1990
Plan to the contrary notwithstanding, but subject to Section
12.04, during the 90-day period from and after a Trigger
Date (the "Change of Control Exercise Period") a Participant
(other than a Participant who initiated the event that
resulted in the occurrence of such Trigger Date in a
capacity other than as an officer or director of the
Company) shall have the following rights, unless the
Committee shall otherwise expressly provide in the Agreement
relating to an Award:
-15-
<PAGE>
a) With respect to any Option or 1990 Plan Option (or
portion thereof) granted to such Participant and
unaccompanied by a Stock Appreciation Right, such
Participant shall have the right (by giving written
notice to the Company) to elect (within the Change of
Control Exercise Period) to surrender all or a portion
of such Option or 1990 Plan Option (as the case may be)
to the Company and to receive in cash, for each share
of Stock in respect of which such Option or 1990 Plan
Option (as the case may be) is surrendered, an amount
equal to the amount by which the Event Price exceeds
the Option Price (as such term is defined in the 1990
Plan in the case of a 1990 Plan Option) for such share;
b) With respect to any Stock Appreciation Right
granted to such Participant, such Participant shall
have the right (by giving written notice to the
Company) to elect (within the Change of Control
Exercise Period) to surrender such Stock Appreciation
Right to the Company and to receive in cash an amount
equal to the amount such Participant would have
received if such Stock Appreciation Right had been
exercised and the Fair Market Value of a share of Stock
on the date of exercise had been the Event Price;
c) With respect to any Restricted Stock granted to
such Participant in respect of which such Participant
has paid the required purchase price (if any), such
Participant shall have the right (by giving written
notice to the Company) to elect (within the Change of
Control Exercise Period) to surrender all or a portion
of such Restricted Stock to the Company and receive in
lieu thereof a cash payment equal to the Event Price
for each share of Restricted Stock so surrendered; and,
d) With respect to any other type of Award granted to
such Participant, such Participant shall have the right
to take such action or make such election as may be
permitted upon a Trigger Date in the Agreement relating
to such Award or in the Committee's procedures.
-16-
<PAGE>
12.03 Special Merger Provisions. Anything in this Plan and
the 1990 Plan to the contrary notwithstanding (other than
Section 12.02 of this Plan shall control in the event of any
conflict with this Section 12.03), upon consummation of a
consolidation or merger or sale of all or substantially all
of the assets of the Company in which outstanding shares of
Stock are exchanged for securities, cash or other property
of an unrelated corporation or business entity or in the
event of liquidation of the Company (in each case, a
"Transaction"), all outstanding Options (including under the
1990 Plan) shall become fully vested and exercisable and the
Board or the board of directors of any corporation assuming
the obligation of the Company, may, in its discretion, take
any one or more of the following actions, as to outstanding
Options:
a) provide that such Options shall be assumed or equivalent
options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof),
b) upon written notice to the Optionees, provide that all
unexercised Options will terminate immediately prior to the
consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice,
and/or
c) in the event of a business combination under the terms of
which holders of the Stock of the Company will receive upon
consummation thereof a cash payment for each share surrendered in
the business combination, make or provide for a cash payment to
the Optionees equal to the difference between:
i) the value (as determined by the Committee) of the
consideration payable per share of Stock pursuant to the business
combination (the "Merger Price") times the number of shares of
Stock subject to such outstanding Options (to the extent then
exercisable at prices not in excess of the Merger Price) and
ii) the aggregate exercise price of all such outstanding Options
in exchange for the termination of such Options
In the event Options will terminate upon the
consummation of the Transaction, each Optionee shall be
permitted, within a specified period determined by the
Committee, to exercise all outstanding Options held by
such Optionee that are then exercisable; and, subject
to the consummation of the Transaction, all Options
that would become fully vested and exercisable solely
as a result of the Transaction.
-17-
<PAGE>
12.04 Limitation on Special Rights. If a Participant is
subject to the restrictions of Section 16(b) of the Exchange
Act and has been granted (or is deemed to have been granted)
an Award under this Plan during the six months prior to a
Trigger Date, then the Change of Control Exercise Period
referred to in Section 12.02 shall, in respect of such
Award, begin on the Trigger Date and end 90 days after the
date six months after the later of the Approval Date or the
date such Award was granted. If a Trigger Date occurs prior
to six months after the Approval Date, then the Change of
Control Exercise Period referred to in Section 12.02 shall,
in respect of 1990 Plan Options, begin on the Trigger Date
and end 90 days after the date six months after the Approval
Date. The Committee may at any time prior to the occurrence
of a Trigger Date provide that any or all of the exercises,
surrenders, elections and other actions that may be taken by
Participants pursuant to Section 12.02 shall occur
automatically with respect to Participants (or particular
categories of Participants) subject to Section 16(b) of the
Exchange Act.
12.05 Termination of Participant; Modification of the Plan.
The rights of a Participant under Section 12.02 with respect
to Awards or 1990 Plan Options may be exercised during the
Change of Control Exercise Period referred to therein (or,
if applicable, in Section 12.04) notwithstanding the
termination of the Participant's employment by the Company,
unless provided otherwise in the Agreement relating to such
Award. Anything in this Plan to the contrary
notwithstanding, no termination, amendment or modification
of this Plan after the occurrence of a Trigger Date shall in
any manner adversely affect any Participant's rights under
this Article XII in respect of such Trigger Date without the
written consent of the affected Participant.
-18-
<PAGE>
12.06 Event Price. In connection with a Trigger Date and an
exercise, surrender, election or other action contemplated
by Section 12.02 with respect to an Award or a 1990 Plan
Option, Event Price shall mean a price per share of Stock
equal to the higher of:
a) The highest Fair Market Value of the Stock during
the period beginning 90 days prior to such Trigger Date
and ending on and including the last trading day prior
to such exercise, surrender, election or other action;
or,
b) Whichever of the following is applicable (or the
highest if more than one is applicable):
1) The highest per share price paid or to
be paid in any tender or exchange offer which is
in effect at any time during such period referred
to in clause (A);
2) The fixed or formula price for the
acquisition of shares of Stock in a merger or
similar agreement approved by the Company's
stockholders or the Board, if such price is
determinable on the date of such exercise,
surrender, election or other action; and/or,
3) The highest price per share paid or to
be paid to any stockholder of the Company in a
transaction or group of transactions (including
any tender or exchange offer) giving rise to the
occurrence of such Trigger Date;
provided, however, that a Participant may at the time
of an election pursuant to Section 12.02 request that
certain of the foregoing parameters be disregarded
(which may include shortening applicable time periods)
in determining the Event Price applicable to one or
more of the Awards held by such Participant, so long as
disregarding such parameters does not increase the
Event Price and the Committee may grant such a waiver.
Any securities or property which are part or all of the
consideration paid or to be paid for shares of Stock in
connection with any event contemplated by clauses (b)
(1), (2), and (3) above shall be valued in determining
the Event Price at the higher of (x) the valuation
placed on such securities or property by the person or
entity which paid or is to pay such price or (y) the
valuation placed on such securities or property by the
Committee.
-19-
<PAGE>
12.07 Trigger Date. Trigger Date shall have the meaning
assigned to such term in the Polaroid Extended Severance
Plan adopted by the Company effective July 28, 1987 and
amended from time to time, and as it may be further amended
from time to time.
12.08 1990 Plan Options. 1990 Plan Options shall mean
"Options", as such term is defined in the 1990 Plan.
ARTICLE XIII
PERMANENCY OF THE PLAN AND PLAN TERMINATION
-------------------------------------------
13.01 Effective Date. This Plan became effective as of
January 1, 1997, upon a resolution by the Board of Directors
for its adoption, subject to the approval of the
shareholders within 1997.
13.02 Termination, Amendment, and Modification of the Plan.
The Board of Directors may at any time terminate or suspend,
and may at any time and from time to time and in any respect
amend or modify, the Plan; provided, however, that no such
action of the Board of Directors without approval of the
shareholders of the Company may increase the total number of
shares of Stock subject to the Plan except as contemplated
in Section 3.03 hereof.
IN WITNESS WHEREOF, this Plan is hereby adopted effective
January 1, 1997 and executed this 27th day of March, 1997.
Attest: POLAROID CORPORATION
/s/ Louise L. Cavanaugh By: /s/ Gary T. DiCamillo
- ----------------------- --------------------------
Chief Executive Officer
-20-
Exhibit 10.3
THE POLAROID BOARD OF DIRECTORS
-------------------------------
RETIREMENT PLAN
---------------
POLAROID CORPORATION
--------------------
Cambridge, Massachusetts
Effective January 1, 1997
<PAGE>
THE POLAROID BOARD OF DIRECTORS RETIREMENT PLAN
-----------------------------------------------
The purpose of this Plan is to provide the non-employee members
of the Company's Board of Directors a retirement plan
commensurate with their services to the Company.
ARTICLE I
DEFINITIONS
-----------
1.01 Annual Retainer. Annual Retainer shall mean one-hundred
percent (100%) of the annual fee paid to a Participant as a
non-employee member of the Board of Directors on the date he
resigns as a member of the Board of Directors exclusive of
amounts paid for attendance at Board or Committee meetings
and for acting as a Committee chairman.
1.02 Board of Directors. Board of Directors shall mean the Board
of Directors of the Company.
1.03 Committee. Committee shall mean the committee designated by
the Chief Executive Officer of the Company and shall consist
of not less than a chairman and at least two (2) other
members.
1.04 Company. Company shall mean Polaroid Corporation, a
Delaware corporation, and any successor thereof.
1.05 Participant. A Participant shall mean each non-employee
member of the Board of Directors in service on or after
January 1, 1990.
1.06 Plan. Plan shall mean the Polaroid Board of Directors
Retirement Plan as amended from time to time.
1.07 Spouse. Spouse shall mean with respect to a deceased
Participant, the widow or widower of such deceased
Participant who was legally married to such Participant on
the date of his death and who, if such death was due to
illness rather than accident or other reason, was legally
married to such Participant for not less than six (6) months
immediately preceding such death.
-2-
<PAGE>
1.08 Retirement. Retirement shall mean a Participant's
retirement or termination from service as a member of the
Board of Directors for any reason.
1.09 Service Year. Service Year shall mean each twelve (12)
month period completed on the anniversary date of when a
Participant first joined the Board of Directors.
ARTICLE II
BENEFITS UNDER THE PLAN
-----------------------
2.01 Participant's Benefit. Each Participant who is vested, as
set forth in Section 2.04, shall begin receiving an annual
lump sum payment in cash equal to his Annual Retainer in the
year immediately following the year of his Retirement. Such
annual payment shall continue for the maximum period as set
forth in Section 2.02 or for as long as the Participant and
his Spouse lives, whichever is shorter.
2.02 Maximum Period of Annual Payments. The maximum period of
annual payments under this Plan shall be equal to the lesser
of:
(a) the number of Service Years the Participant is a
non-employee member of the Board of Directors prior to
the day in which he turns age seventy-three (73); or
(b) the first twenty-five (25) Service Years the Participant
serves as a non-employee member of the Board of Directors.
2.03 Exceptions of Benefit Accrual. Notwithstanding the
foregoing,
(a) the age limitation set forth in Section 2.02(a) above
shall not apply to Participants who as of January 1,
1990 have reached such age.
(b) benefit accrual for any Participant who is less than
age sixty eight (68) effective January 1, 1997 shall
cease.
-3-
<PAGE>
2.04 Vesting. Each Participant who has completed five (5)
Service Years on the Board of Directors through his date of
Retirement shall have a non-forfeitable right to the
benefits provided under this Plan. A Participant who has
not completed such service requirement on the day of his
Retirement shall not be entitled to any of the benefits
provided under this Plan.
2.05 Spouse's Survivor Benefit. If a Participant dies and has
not received all of the maximum period of annual payments as
provided under Section 2.02 of this Plan, his Spouse, if
any, shall continue to receive such payments until the
earlier of:
(a) the maximum period of annual payments set forth in
Section 2.02 hereof; or
(b) the death of such Spouse.
ARTICLE III
FINANCING
---------
3.01 Financing. The benefits under this Plan shall be paid out
of the general assets of the Company.
3.02 Unsecured Interest. No Participant or Spouse hereunder
shall have any interest whatsoever in any specific asset of
the Company. To the extent that any person acquires a right
to receive payments under this Plan, such right shall be no
greater than the right of any unsecured general creditor of
the Company.
-4-
<PAGE>
ARTICLE IV
PLAN ADMINISTRATION
-------------------
4.01 Plan Administration. This Plan shall be administered by the
Committee. The Committee shall have the full authority and
absolute discretion:
(a) To construe and interpret the Plan; and
(b) To make all determinations and take all other
actions necessary or advisable for the proper
administration of the Plan.
All such actions and determinations shall be conclusively
binding upon all persons for all purposes.
ARTICLE V
MISCELLANEOUS PROVISIONS
------------------------
5.01 Applicable Law. This instrument shall be construed in
accordance with and governed by the laws of the State of
Delaware.
5.02 Taxes. Polaroid shall have the right to deduct from any
distributions made under this Plan, any federal, state or
local taxes or any other amounts required by law to be
withheld with respect to such distribution.
5.03 Expenses. The cost of benefit payments from this Plan and
the expenses of administering the Plan shall be borne by the
Company.
5.04 Gender and Number. Unless the context clearly requires
otherwise, the masculine pronoun whenever used shall include
the feminine and neuter pronoun, the singular shall include
the plural, and vice versa.
5.05 Indemnification. No member of the Committee shall be
liable for any action or determination taken or made in good
faith with respect to this Plan, or any distributions under
it. Each member of the Committee shall be indemnified by
the Company against any losses incurred in such
administration of the Plan, unless his action constitutes
serious and willful misconduct.
-5-
<PAGE>
5.06 Headings Not Part of Plan. Headings of Articles and
Sections are inserted for convenience and reference; they
constitute no part of this Plan.
5.07 Non-Assignability. The interest of any Participant or
Spouse under this Plan shall not be subject at any time or
in any manner to alienation, sale, transfer, assignment,
pledge, attachment, garnishment or encumbrance of any kind
and any attempt to deliver, sell, transfer, assign, pledge,
attach, garnish or otherwise encumber such interest shall be
void and any interest so encumbered will terminate.
5.08 Non-transferability. In no event shall the Company make any
payment under this Plan to any assignee or creditor of a
Participant or of a Spouse, except as otherwise required by
law. Prior to the time of a payment hereunder, a
Participant or a Spouse shall have no rights by way of
anticipation or otherwise to assign or otherwise dispose of
any interest under this Plan, nor shall rights be assigned
or transferred by operation of law.
5.09 Other Compensation Plans. The adoption of the Plan shall
not affect fee or compensation schedules which presently
exist, or which may at a later date be approved by the
shareholders of the Company for members of the Board of
Directors.
5.10 Plan Binding on Successors. This Plan shall be binding upon
the successors and assigns of the Company.
5.11 Unenforceability of a Particular Provision. The
unenforceability of any particular provision of this
document shall not affect the other provisions, and the
document shall be construed in all respects as if such
unenforceable provision were omitted.
-6-
<PAGE>
ARTICLE VI
PERMANENCY OF THE PLAN AND PLAN TERMINATION
-------------------------------------------
6.01 Effective Date. This Plan, originally effective January 1,
1990, amended from time to time, the most current amendment
effective January 1, 1997.
6.02 Right to Amend, Modify or Terminate. The Company reserves
the right to amend, modify or terminate the Plan or payments
thereunder at any time by action of the Committee and does
not intend to submit any amendments or modifications to the
Plan to stockholders of the Company for their approval.
However, without the consent of any Participant or his
Spouse, if applicable, no such amendment or termination
shall reduce or diminish such person's right to receive any
benefit accrued hereunder prior to the date of such
amendment or termination. Notwithstanding the foregoing,
the Chief Executive Officer of the Company may adopt any
amendments to the Plan that do not materially and adversely
affect the benefits to a Participant accrued under the Plan
and may adopt any amendments to the Plan that do not
materially affect the cost to the Company (excluding any
amendment that relates exclusively to himself).
IN WITNESS WHEREOF, Polaroid has caused this instrument to
be executed this 12 day of May, 1997, effective January 1,
1997.
Attest: POLAROID CORPORATION
/s/ Louise L. Cavanaugh By: Gary T. DiCamillo
- ---------------------- -----------------------------
Chief Executive Officer
-7-
Exhibit 10.4
THE 1993 POLAROID STOCK INCENTIVE PLAN
The purpose of the Plan is to advance the interests of the
Company and its shareholders by affording officers, executives
and other key employees of the Company and its Subsidiaries an
opportunity to increase their proprietary interest in the Company
by the grant of Awards under the terms set forth herein. The
Company seeks to motivate present employees as well as attract
highly competent individuals whose judgment, initiative,
leadership, and continued effort contribute to the success of the
Company and its Subsidiaries. The Company believes that this
Plan can give an incentive to managers to increase revenues and
profits.
ARTICLE I
DEFINITIONS
-----------
1.01 Award. Award shall mean an incentive award granted under
the Plan, whether in the form of Options, Stock Appreciation
Rights, Restricted Stock, Performance Awards, or any other
form of consideration (which may provide for settlement in
shares of Stock, cash and/or a combination thereof)
determined by the Committee to be consistent with the
purposes of the Plan, including but not limited to
restricted units, phantom stock, stock appreciation shares,
limited stock appreciation rights, stock acquisition rights,
valuation protection rights, reload options or any other
type of award or combination or derivative of various types
of awards.
1.02 Board or Board of Directors. Board or Board of Directors
shall mean the Board of Directors of the Company.
1.03 Code. Code shall mean the Internal Revenue Code of 1986, as
amended, unless otherwise specifically provided herein.
<PAGE>
1.04 Committee. Committee shall mean a Committee of the Board of
whom each member:
(A) is not a current employee of the Company; and,
(B) is not otherwise disqualified from being:
(i) a "non-employee director" with respect to the Company for
purposes of Rule 16b-3(b)(3) under the Exchange Act (or any
successor rule); or
(ii) an "outside director" with respect to the Company for
purposes of Section 162(m) of the Code (or any successor statute)
and the rules and regulations of the Treasury Department
promulgated thereunder; provided, however, that the failure of
any member of the Committee appointed by the Board in good faith
to meet the requirements of clause (B) above shall not invalidate
the Plan or any Award granted hereunder.
1.05 Company. Company shall mean Polaroid Corporation, a
Delaware corporation, and any successor thereof.
1.06 Exchange Act. Exchange Act shall mean the Securities
Exchange Act of 1934, as amended.
1.07 Fair Market Value. Fair Market Value of the Stock shall
mean the last sale price at which Stock is traded on any
given date or, if no Stock is traded on such date, the most
recent prior date on which Stock was traded, as reflected in
the New York Stock Exchange Composite Transactions Index.
1.08 Incentive Stock Option. Incentive Stock Option shall have
the meaning given to it by Section 422 of the Code and as
further defined in Article V hereof.
-2-
<PAGE>
1.09 Nonstatutory Stock Option. Nonstatutory Stock Option shall
mean any Option granted by the Company pursuant to this Plan
which is not an Incentive Stock Option.
1.10 Option. Option shall mean an option granted by the Company
to purchase Stock pursuant to the provisions of this Plan
and the Agreement executed pursuant thereto.
1.11 Option Price. Option Price shall mean the price per share
of Stock purchasable under an Option. The Option Price
shall be determined by the Committee at the time of grant
but, in the case of an Incentive Stock Option, shall not be
less than the Fair Market Value on the date of grant.
1.12 Participant. Participant shall mean an employee or former
employee of the Company or one of its Subsidiaries who has
received an Award granted by the Committee hereunder.
1.13 Performance Award. Performance Award means an award
made pursuant to Article VIII that is subject to attainment of
one or more Performance Goals.
1.14 Performance Goal. Performance Goal means a standard
established by the Committee to determine in whole or in part
whether a Performance Award shall be earned.
1.15 Plan. Plan shall mean the 1993 Polaroid Stock Incentive
Plan, as amended.
1.16 Restricted Stock Awards. A Restricted Stock Award shall
mean a grant made by the Committee entitling the Participant
to acquire, at no cost or for a purchase price determined by
the Committee at the time of grant, shares of Stock subject
to such restrictions and conditions as the Committee may
determine at the time of grant ("Restricted Stock").
-3-
<PAGE>
1.17 Securities Act. Securities Act shall mean the Securities
Act of 1933, as amended from time to time.
1.18 Stock. Stock shall mean common stock, par value $1 per
share, issued by the Company.
1.19 Stock Appreciation Right or SAR. A Stock Appreciation Right
shall mean a grant entitling the Participant to receive an
amount in cash or shares of Stock or a combination thereof
having a value equal to (or if the Committee shall so
determine at the time of a grant, less than) the excess of
the Fair Market Value of a share of Stock on the date of
exercise over the Fair Market Value of a share of Stock on
the date of grant (or over the Option Price, if the Stock
Appreciation Right was granted in tandem with an Option)
multiplied by the number of shares with respect to which the
Stock Appreciation Right shall have been exercised, with the
Committee having sole discretion to determine the form of
payment. A Stock Appreciation Right is further defined in
Article VI hereof.
1.20 Stock Incentive Agreement or Agreement. Stock Incentive
Agreement or Agreement shall mean the agreement as described
in Section 3.04 of the Plan between the Company and the
Participant under which such Participant receives an Award
pursuant to this Plan.
1.21 Subsidiary. Subsidiary shall mean any corporation of which
more than fifty percent of the outstanding shares of voting
stock are beneficially owned directly or indirectly by the
Company.
-4-
<PAGE>
ARTICLE II
PARTICIPATION
-------------
2.01 Participation. A grant under this Plan may be made by the
Committee to any officer, executive or other key employee of
the Company or a Subsidiary.
ARTICLE III
SHARES OF STOCK SUBJECT TO THE PLAN
-----------------------------------
3.01 Limitations.
(A) Subject to adjustments pursuant to the provisions of
Section 3.03 hereof, the number of shares of Stock or
Stock equivalents which may be granted hereunder to
Participants under all forms of Awards shall not
exceed 3,500,000 shares plus the remaining shares
available for grant under this Plan, as of the date of
approval of this Plan by the Company's stockholders
(the "Approval Date"), plus the number of shares that
become available under the 1990 Plan after the
Approval Date due to the lapse, termination or
forfeiture of grants under the 1990 Plan, including
shares issued in lieu of or upon reinvestment of
dividends arising from grants. No grants will be made
under the 1990 Plan after the Approval Date.
(B) For purposes of this Section 3.01, the shares of Stock
that shall be counted toward such limitation shall
include all Stock:
(1) Issued or issuable pursuant to Options that have
been or may be exercised;
(2) Subject to Stock Appreciation Rights that have
been or may be exercised (other than Stock
Appreciation Rights granted in tandem with
outstanding Options or any limited stock
appreciation rights deemed to be granted pursuant
to Article XII); and,
(3) Issued as, or subject to issuance as Restricted
Stock.
(C) Shares of Stock subject to grants under this Plan shall
be authorized and unissued shares of Stock or treasury
stock.
-5-
<PAGE>
3.02 Availability of Shares Once Issued Under the Plan. Once
grants of Awards have lapsed, terminated or have been
forfeited, the Committee shall have the sole discretion to
issue a new grant to any Participant, covering the number of
shares to which such lapsed, terminated or forfeited grant
related, provided that the Participant has received no
monetary benefits of ownership therefrom, such as dividends.
3.03 Adjustments To Grants Once Issued. In the event that the
outstanding shares of Stock are changed into or exchanged
for a different number or kind of shares or other securities
of the Company or of another corporation by reason of
merger, consolidation, other reorganization,
recapitalization, reclassification, combination of shares;
stock split-up, or stock dividend, the Committee shall make
such corresponding adjustments, if any, as deemed
appropriate in its sole discretion. The Committee may
adjust the number and kind of shares which may be granted
under the Plan, the maximum number and kind of shares which
may be granted to any one eligible Participant, and the
number, the Option Price, and the kind of shares or property
subject to each outstanding grant.
3.04 Grants and Agreement. Each grant of an Award under this
Plan shall be evidenced by a written Stock Incentive
Agreement dated as of the date of the grant and executed by
the Company and the Participant. This Agreement shall set
forth the terms and conditions of such Award, as may be
determined by the Committee consistent with this Plan, and
if such Agreement relates to the grant of an Option, shall
indicate whether the Option that it evidences, if
applicable, is intended to be an Incentive Stock Option or a
Nonstatutory Stock Option.
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3.05 Limitation on Grants. Except to the extent that any
acceleration of vesting pursuant to Section 13.01(A) hereof
may be deemed to constitute the grant of a new Award:
(A) no Person may be granted Options covering more than 250,000
shares of Stock in any one calendar year; and,
(B) no Person may be granted Stock Appreciation Rights covering
more than 250,000 shares of Stock in any one calendar year (in
each case as adjusted as provided in Section 3.03 hereof).
ARTICLE IV
OPTIONS
-------
4.01 Option Exercise. Subject to Federal and State statutes then
applicable, the terms and procedures by which an Option may
be exercised shall be set forth in the Participant's
Agreement or in procedures established by the Committee.
The Committee may permit payment of the Option Price to be
made through the tender of cash or securities, the
withholding of Stock or cash to be received through Awards,
or any other arrangement satisfactory to the Committee.
4.02 Nonstatutory Stock Options. The Committee may grant
Nonstatutory Stock Options under this Plan. Such
Nonstatutory Stock Options must comply with all requirements
of this Plan except for those contained in Article V,
Article VI, Article VII, and Article VIII hereof.
4.03 Vesting of Options. The Stock Incentive Agreement shall
specify the date or dates on which the Participant may begin
to exercise all or a portion of his Option. Subsequent to
such date or dates, the option shall be deemed "vested."
Notwithstanding the terms of any Stock Incentive Agreement,
the Committee at any time may accelerate such date or dates
and otherwise waive or amend any conditions of the grant.
A Participant's subsequent transfer or disposition of
any Stock secured through the grant shall be subject to any
Federal and State laws then applicable, specifically
securities laws.
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ARTICLE V
INCENTIVE STOCK OPTIONS
-----------------------
5.01 General. All Incentive Stock Options shall comply with all
of the restrictions and limitations set forth in Section 422
of the Code and this Article. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall
constitute a Nonstatutory Stock Option.
ARTICLE VI
STOCK APPRECIATION RIGHTS
-------------------------
6.01 Grant and Exercise of Stock Appreciation Rights. Stock
Appreciation Rights may be granted to Participants by the
Committee in tandem with, or independently of, any Option
granted pursuant to Article IV or Article V of this Plan.
In the case of a Stock Appreciation Right granted in tandem
with a Nonstatutory Stock Option, such Stock Appreciation
Right may be granted either at or after the time of the
grant of such Nonstatutory Stock Option. In the case of a
Stock Appreciation Right granted in tandem with an Incentive
Stock Option, such Stock Appreciation Right may be granted
only at the time of the grant of such Incentive Stock
Option.
A Stock Appreciation Right, or applicable portion
thereof granted in tandem with an Option, shall terminate
and no longer be exercisable upon the termination or
exercise of the related Option. However, if a Stock
Appreciation Right is granted with respect to less than the
full number of shares covered by a related Option, such
Stock Appreciation Right shall terminate only if and to the
extent that the number of shares covered by the exercise or
termination of the related Option exceeds the number of
shares not covered by such Stock Appreciation Right.
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6.02 Terms and Conditions of Stock Appreciation Rights. Stock
Appreciation Rights shall be subject to such terms and
conditions as shall be determined from time to time by the
Committee and embodied in the Agreements and in procedures
established by the Committee. The Committee at any time may
accelerate the exercisability of any Stock Appreciation
Right and otherwise waive or amend any conditions of the
grant of a Stock Appreciation Right.
ARTICLE VII
RESTRICTED STOCK AWARDS
-----------------------
7.01 Agreement. The Committee may grant a Participant a
Restricted Stock Award entitling the Participant to acquire,
at no cost or for a purchase price determined by the
Committee at the time of grant, shares of Stock subject to
such restrictions and conditions as the Committee may
determine at the time of grant. At the sole discretion of
the Committee, stock subject to a Restricted Stock Award may
be issued effective the date of the grant, or effective only
after all restrictions on the Award have lapsed.
If the purchase of Restricted Stock is required by the
Agreement, a Participant who is granted a Restricted Stock
Award shall not have any rights with respect to such grant
unless the Participant shall have accepted the grant within
60 days (or such shorter time as the Committee may specify)
following the date of the grant by making payment to the
Company by certified or bank check or other instrument
acceptable to the Committee in an amount equal to the
specified purchase price, if any, of the shares covered by
the grant and by executing and delivering to the Company an
Agreement in such form as the Committee shall determine.
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7.02 Rights as a Shareholder. After the Restricted Stock has
been recorded in the stock ledger of the Company and:
(A) Upon complying with Section 7.01 above, if the purchase
of Restricted Stock is required by the Agreement; or,
(B) Immediately, if no purchase of Restricted Stock is
required by the Agreement,
a Participant shall have all the rights of a shareholder
with respect to such Restricted Stock including voting and
dividend rights, subject to non-transferability restrictions
and Company repurchase or forfeiture rights described in
this Section and Section 7.03, and subject to such other
conditions (including but not limited to condition on voting
and dividend rights) as are contained in the Agreement.
Unless the Committee shall otherwise determine, certificates
evidencing shares of Restricted Stock shall remain in the
possession of the Company until such shares are vested as
provided in Section 7.04 below and the Agreement.
7.03 Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered or
disposed of except as specifically provided herein.
Restrictions on shares of Restricted Stock shall be set
forth in a Stock Incentive Agreement and may include such
vesting restrictions as the Committee shall determine,
including but not limited to restrictions related to timing,
profitability of the Company, and growth of the share price.
In the event of a Participant's termination of employment
with the Company and its Subsidiaries for any reason
(including death) prior to the date shares of Restricted
Stock awarded to such Participant become vested, the Company
shall have the right, at the discretion of the Committee, to
repurchase such shares at their purchase price, or to
require forfeiture of such shares to the Company if acquired
at no cost, from such Participant or Participant's legal
representative.
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<PAGE>
7.04 Vesting of Restricted Stock. The Committee at the time of
grant shall specify the date or dates (which may depend upon
or be related to the attainment of performance goals and
other conditions) on which the restrictions imposed upon the
Restricted Stock and the Company's right of repurchase or
forfeiture shall lapse. Subsequent to such date or dates,
the shares on which all restrictions have lapsed shall no
longer be Restricted Stock and shall be deemed "vested."
The Committee at any time may accelerate such date or dates
and otherwise waive or amend any conditions of the grant. A
Participant may transfer or dispose of any Restricted Stock
that has vested, subject to any Federal and State laws then
applicable, specifically securities laws.
7.05 Limitation on Grants. Except to the extent that any
acceleration of vesting pursuant to Section 13.01(A) hereof
may be deemed to constitute the grant of a new Award no
Person may be granted Restricted Stock covering more than
100,000 shares of Stock in any one calendar year.
ARTICLE VIII
PERFORMANCE AWARDS
------------------
8.01 Terms of Performance Awards. Subject to the limitations of
the Plan, the Committee shall designate those eligible
persons to be granted Performance Awards, shall determine
the form and amount of each such award, the time when each
such award shall be granted, and the Performance Goals
applicable thereto, and may prescribe other restrictions,
terms and conditions applicable to such Award in addition to
those provided in the Plan. A Performance Award may be
payable in the form of cash, property or securities of the
Company, including, without limitation, Options, Stock
Appreciation Rights and/or shares of Restricted Stock
(however a grant of Restricted Stock pursuant to Article VII
hereof shall not constitute a Performance Award hereunder,
even if subject in whole or in part to the achievement of
performance goal, unless the Committee shall otherwise
determine at the time of grant). A Performance Award shall
be paid, vested or otherwise deliverable solely on account
of the attainment of one or more pre-established, objective
Performance Goals established by the Committee prior to the
earlier occurrence of:
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(A) 90 days after the commencement of the period of service to
which the Performance Goal relates and
(B) the passage of 25% of the period of service (as scheduled in
good faith at the time goal is established), and in any event
while the outcome is substantially uncertain.
A Performance Goal is objective if a third party having
knowledge of the relevant facts can determine whether the
goal has been met.
8.02 Performance Goal Criteria. A Performance Goal may be based
on one or more business criteria that apply to the
individual, one or more business units of the Company, or
the Company as a whole, and may include one or more of the
following: revenue, net income, cash flow (as defined for
such purpose by the Committee), stock price, market share,
earnings per share, return on equity, return on assets or
decrease in cost, economic value added, operating profit,
earnings before interest and taxes and gross margin percent.
Unless otherwise stated, such Performance Goals need not be
based upon an increase or positive result under a particular
business criterion and could include, for example,
maintaining the status quo or limiting economic losses
(measured, in each case, by reference to specific business
criteria). In interpreting Plan provisions applicable to
Performance Goals and Performance Awards, it is the intent
of the Plan to conform with the standards of Section 162(m)
of the Code and Treasury Regulation Section 1.162-
27(e)(2)(i), and the Committee in establishing such goals
and interpreting the Plan shall be guided by such
provisions.
8.03 Committee Certification. Prior to the payment of any
compensation based on the achievement of Performance Goals,
the Committee must certify in writing that applicable
Performance Goals and any of the material terms thereof
were, in fact, satisfied. Subject to the foregoing
provisions, the terms, conditions and limitations applicable
to any Performance Awards made pursuant to this Plan shall
be determined by the Committee.
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<PAGE>
8.04 Certain Limitations. Notwithstanding anything to the
contrary contained in this Plan, any Performance Awards made
hereunder shall be limited so that no person may be granted
Performance Awards consisting of cash or in any other form
permitted under this Plan (other than Awards consisting of
Options or Stock Appreciation Rights, or Restricted Stock
subject to Article VII, to the extent such awards are
counted towards the limitation set forth in Section 3.05
hereof) in any one year having a value determined on the
date of grant in excess of $2,000,000.
ARTICLE IX
STOCK CERTIFICATES
------------------
9.01 Stock Certificates. The Company shall not be required to
issue or deliver any certificate for shares of Stock under
this Plan or of any portion thereof prior to fulfillment of
all of the following conditions:
(A) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed, if any;
(B) The completion of any registration or other qualification of
such shares under any Federal or State law, under the rulings or
regulations of the Securities and Exchange Commission, or under
any other governmental regulatory agency which the Committee
shall in its sole discretion determine to be necessary or
advisable;
(C) The obtaining of any approval or other clearance from any
Federal or State governmental agency which the Committee shall in
its sole discretion determine to be necessary or advisable; and,
(D) The lapse of such reasonable period of time following the
exercise of the grant as the Committee from time to time may
establish for reasons of administrative convenience.
If these conditions are not satisfied, the employee may lose
his rights to such Stock as determined by the Committee.
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ARTICLE X
DIVIDENDS
---------
10.01 Dividends. At the time of each grant of an Award the
Committee may, in its sole discretion, determine whether the
grant shall provide a dividend or a dividend equivalent and
the terms and conditions under which any such dividend or
dividend equivalent is to be provided, including but not
limited to permitting or requiring immediate payment,
deferral or investment of dividends or dividend equivalents.
ARTICLE XI
PLAN ADMINISTRATION
-------------------
11.01 Plan Administration. The Plan and all Agreements shall
be administered, and all grants under this Plan shall be
awarded, by the Committee. The Committee shall have full
authority and absolute sole discretion:
(A) To determine, consistent with the provisions of this
Plan, which of the employees shall be granted Awards;
the form and terms of such Awards; the timing of such
grants; the number of shares subject to each Award and
the Option Price of Stock covered by each Option (if
applicable); and the period over which the Awards shall
become and remain exercisable (if applicable);
(B) To construe and interpret the Plan and the Agreements;
(C) To determine the terms and provisions of each
respective Stock Incentive Agreement, which need not be
identical;
(D) To make all other determinations and take all other
actions deemed necessary or advisable for the proper
administration of the Plan;
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<PAGE>
(E) To adopt, alter, and repeal such rules, guidelines, and
practices for administration of the Plan and for its
own acts and proceedings as it shall deem advisable;
(F) To interpret the terms and provisions of the Plan and
any grant (including related Agreements);
(G) To make all determinations it deems advisable for the
administration of the Plan;
(H) To decide all disputes arising in connection with the
Plan; and,
(I) To otherwise supervise the administration of the Plan.
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
12.01 Applicable Law. To the extent that state law shall not
have been preempted by any laws of the United States, the
Plan shall be construed, regulated, interpreted and
administered according to the laws of the State of Delaware.
12.02 Expenses. The cost of benefit payments from this Plan
and the expenses of administering the Plan shall be borne by
the Company.
12.03 Gender and Number. Unless the context clearly requires
otherwise, the masculine pronoun whenever used shall include
the feminine and neuter pronoun, the singular shall include
the plural, and vice versa.
12.04 Headings Not Part of the Plan. Headings of Articles
and Sections are inserted for convenience and reference;
they constitute no part of this Plan.
12.05 Indemnification. No member of the Board of Directors
or the Committee shall be liable for any action or
determination taken or made in good faith with respect to
this Plan nor shall any member of the Board of Directors or
the Committee be liable for any Agreement issued pursuant to
this Plan or any grants under this Plan. Each member of the
Board of Directors and the Committee shall be indemnified by
the Company against any losses incurred in such
administration of the Plan, unless his action constitutes
serious and willful misconduct.
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<PAGE>
12.06 Limitation of Rights. Neither the adoption and
maintenance of the Plan or Agreement nor anything contained
herein, with respect to any Participant, shall be deemed to:
(A) Limit the right of the Company or any Subsidiary to
discharge or discipline any such person, or otherwise
terminate or modify the terms of his employment; or,
(B) Create any contract or other right or interest under
the Plan, or in any funds hereunder, other than as
specifically provided in the Plan and the Agreement.
12.07 No Distribution Until Compliance with Legal
Requirements. The Committee may require each Participant
acquiring shares pursuant to a grant to represent to and
agree with the Company in writing that such Participant is
acquiring the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to a grant until
all applicable securities laws and other legal and stock
exchange requirements have been satisfied. The Committee
may require the placing of such stop-orders and restrictive
legends on certificates for Stock and grants as it deems
appropriate.
12.08 Timing of Grants. All Awards granted under this Plan
shall be granted on or prior to May 31, 2001.
12.09 Non-Assignability. A Participant's interest under this
Plan shall not be subject at any time, or in any manner, to
alienation, sale, transfer, assignment, pledge, attachment,
garnishment or encumbrance of any kind and any attempt to
deliver, sell, transfer, assign, pledge, attach, garnish or
otherwise encumber such interest shall be void and any
interest so encumbered will terminate.
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12.10 Non-transferability. An Award shall not be
transferable by the Participant other than by will or the
laws of descent and distribution. During the lifetime of
the Participant, such Award shall be exercisable or
perfected only by the Participant in accordance with the
terms of this Plan and the Agreement.
12.11 Other Compensation Plans. The adoption of the Plan
shall not affect any other existing or future incentive or
compensation plans for directors, officers or employees of
the Company or its Subsidiaries. Moreover, the adoption of
this Plan shall not preclude the Company or its Subsidiaries
from:
(A) Establishing any other forms of incentive or other
compensation for directors, officers or employees of the Company
or its Subsidiaries; or,
(B) Assuming any forms of incentives or other compensation of
any person or entity in connection with the acquisition of the
business or assets, in whole or in part, of any person or entity.
12.12 Plan Binding on Successors. This Plan shall be binding
upon the successors and assigns of the Company.
12.13 Tax Withholding. Each Participant shall, no later than
the date as of which the value of a grant or of any Stock or
other amount received thereunder first becomes includable in
the gross income of the Participant for Federal income tax
purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of any
Federal, State, or local taxes of any kind required by law
to be withheld with respect to such income. The Committee
may permit payment of such taxes to be made through the
tender of cash or securities, the withholding of Stock or
cash to be received through Awards or any other arrangement
satisfactory to the Committee. The Company and its
Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind
otherwise due to the Participant.
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12.14 Non-Contravention of Securities Laws. Notwithstanding
anything to the contrary expressed in this Plan, any
provisions hereof that vary from or conflict with any
applicable Federal or State securities laws (including any
regulations promulgated thereunder) shall be deemed to be
modified to conform to and comply with such laws.
12.15 Unenforceability of a Particular Provision. The
unenforceability of any particular provision of this
document shall not affect the other provisions and the
document shall be construed in all respects as if such
unenforceable provision were omitted.
ARTICLE XIII
CHANGE OF CONTROL
-----------------
13.01 Acceleration. Unless the Committee shall otherwise
expressly provide in the Agreement relating to an Award:
(A) Upon the occurrence of a Trigger Date (as hereinafter
defined):
(1) In the case of Options and Stock Appreciation
Rights, each such Option and Stock Appreciation
Right shall automatically become fully
exercisable;
(2) Restrictions and conditions applicable to
Restricted Stock shall automatically be deemed
waived, and the recipients of such grants shall
become entitled to receipt of the Stock subject to
such grants; and,
(3) In the case of any other Award, the occurrence of
such Trigger Date shall have such effect on such
Award as may be provided in the Agreement related
thereto or in the Committee's procedures; and,
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(B) The Committee may at any time accelerate the exercisability
of any Awards (if applicable) and may waive restrictions and
conditions on Awards (if applicable) to the extent it shall in
its sole discretion determine.
13.02 Special Rights. Anything in this Plan and the 1990
Plan to the contrary notwithstanding, but subject to Section
13.04, during the 90-day period from and after a Trigger
Date (the "Change of Control Exercise Period") a Participant
(other than a Participant who initiated the event that
resulted in the occurrence of such Trigger Date in a
capacity other than as an officer or director of the
Company) shall have the following rights, unless the
Committee shall otherwise expressly provide in the Agreement
relating to an Award:
(A) With respect to any Option or 1990 Plan Option (or portion
thereof) granted to such Participant and unaccompanied by a Stock
Appreciation Right, such Participant shall have the right (by
giving written notice to the Company) to elect (within the Change
of Control Exercise Period) to surrender all or a portion of such
Option or 1990 Plan Option (as the case may be) to the Company
and to receive in cash, for each share of Stock in respect of
which such Option or 1990 Plan Option (as the case may be) is
surrendered, an amount equal to the amount by which the Event
Price exceeds the Option Price (as such term is defined in the
1990 Plan in the case of a 1990 Plan Option) for such share;
(B) With respect to any Stock Appreciation Right granted to
such Participant, such Participant shall have the right
(by giving written notice to the Company) to elect
(within the Change of Control Exercise Period) to
surrender such Stock Appreciation Right to the Company
and to receive in cash an amount equal to the amount
such Participant would have received if such Stock
Appreciation Right had been exercised and the Fair
Market Value of a share of Stock on the date of
exercise had been the Event Price;
(C) With respect to any Restricted Stock granted to such
Participant in respect of which such Participant has
paid the required purchase price (if any), such
Participant shall have the right (by giving written
notice to the Company) to elect (within the Change of
Control Exercise Period) to surrender all or a portion
of such Restricted Stock to the Company and receive in
lieu thereof a cash payment equal to the Event Price
for each share of Restricted Stock so surrendered; and,
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<PAGE>
(D) With respect to any other type of Award granted to such
Participant, such Participant shall have the right to
take such action or make such election as may be
permitted upon a Trigger Date in the Agreement relating
to such Award or in the Committee's procedures.
13.03 Special Merger Provisions. Anything in this Plan and
the 1990 Plan to the contrary notwithstanding (other than
Section 13.02 of this Plan which shall control in the event
of any conflict with this Section 13.03), upon consummation
of a consolidation or merger or sale of all or substantially
all of the assets of the Company in which outstanding shares
of Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or
in the event of liquidation of the Company (in each case, a
"Transaction"), all outstanding Options (including under the
1990 Plan), SARs, Restricted Stock, Performance Awards and
any other Award shall become fully vested and exercisable
and the Board or the board of directors of any corporation
assuming the obligation of the Company, may, in its
discretion, take any one or more of the following actions,
as to outstanding Awards:
a) provide that such Awards shall be assumed or equivalent
options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof),
b) upon written notice to the holder of an Option or SAR,
provide that all unexercised Options or SARs will terminate
immediately prior to the consummation of the Transaction unless
exercised by the holder within a specified period following the
date of such notice, and/or
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c) in the event of a business combination under the terms of
which holders of the Stock of the Company will receive upon
consummation thereof a cash payment for each share surrendered in
the business combination, make or provide for a cash payment to
the holder of an Option or SAR equal to the difference between:
(i) the value (as determined by the Committee) of the
consideration payable per share of Stock pursuant to the business
combination (the "Merger Price") times the number of shares of
Stock subject to such outstanding Options or SARs (to the extent
then exercisable at prices not in excess of the Merger Price) and
(ii) the aggregate exercise price of all such outstanding Options
or SARs in exchange for the termination of such Options or SARs.
In the event Options and SARs will terminate upon the
consummation of the Transaction, each holder of such
Award shall be permitted, within a specified period
determined by the Committee, to exercise all
outstanding Options or SARs held by each holder of such
Award that are then exercisable; and, subject to the
consummation of the Transaction, all Options or SARs
that would become fully vested and exercisable solely
as a result of the Transaction.
(d) in the event of a business combination under the terms
of which holders of the Stock of the Company will
receive upon consummation thereof a cash payment for
each share surrendered in the business combination,
make or provide for a cash payment to the holder of
Restricted Stock or other stock-based Award equal to
the Merger Price.
13.04 Limitation on Special Rights. If a Participant is
subject to the restrictions of Section 16(b) of the Exchange
Act and has been granted (or is deemed to have been granted)
an Award under this Plan during the six months prior to a
Trigger Date, then the Change of Control Exercise Period
referred to in Section 13.02 shall, in respect of such
Award, begin on the Trigger Date
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and end 90 days after the date six months after the later of
the Approval Date or the date such Award was granted. If a
Trigger Date occurs prior to six months after the Approval
Date, then the Change of Control Exercise Period referred to
in Section 13.02 shall, in respect of 1990 Plan Options,
begin on the Trigger Date and end 90 days after the date six
months after the Approval Date. The Committee may at any
time prior to the occurrence of a Trigger Date provide that
any or all of the exercises, surrenders, elections and other
actions that may be taken by Participants pursuant to
Section 13.02 shall occur automatically with respect to
Participants (or particular categories of Participants)
subject to Section 16(b) of the Exchange Act.
13.05 Termination of Participant; Modification of the Plan.
The rights of a Participant under Section 13.02 with respect
to Awards or 1990 Plan Options, may be exercised during the
Change of Control Exercise Period referred to therein (or,
if applicable, in Section 13.03) notwithstanding the
termination of the Participant's employment by the Company,
unless provided otherwise in the Agreement relating to such
Award. Anything in this Plan to the contrary
notwithstanding, no termination amendment or modification of
this Plan after the occurrence of a Trigger Date shall in
any manner adversely affect any Participant's rights under
this Article XIII in respect of such Trigger Date without
the written consent of the affected Participant.
13.06 Event Price. In connection with a Trigger Date and an
exercise, surrender, election or other action contemplated
by Section 13.02 with respect to an Award or a 1990 Plan
Option, Event Price shall mean a price per share of Stock
equal to the higher of:
(A) The highest Fair Market Value of the Stock during the period
beginning 90 days prior to such Trigger Date and ending on and
including the last trading day prior to such exercise, surrender,
election or other action; or,
(B) Whichever of the following is applicable (or the highest if
more than one is applicable):
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(1) The highest per share price paid or to be paid in any tender
or exchange offer which is in effect at any time during such
period referred to in clause (A);
(2) The fixed or formula price for the acquisition of shares of
Stock in a merger or similar agreement approved by the Company's
stockholders or the Board, if such price is determinable on the
date of such exercise, surrender, election or other action;
and/or,
(3) The highest price per share paid or to be paid to any
stockholder of the Company in a transaction or group of
transactions (including any tender or exchange offer)
giving rise to the occurrence of such Trigger Date;
provided, however, that a Participant may at the time of an
election pursuant to Section 13.02 request that certain of
the foregoing parameters be disregarded (which may include
shortening applicable time periods) in determining the Event
Price applicable to one or more of the Awards held by such
Participant, so long as disregarding such parameters does
not increase the Event Price.
Any securities or property which are part or all of the
consideration paid or to be paid for shares of Stock in
connection with any event contemplated by clauses (B) (1),
(2), and (3) above shall be valued in determining the Event
Price at the higher of (x) the valuation placed on such
securities or property by the person or entity which paid or
is to pay such price or (y) the valuation placed on such
securities or property by the Committee.
13.07 Trigger Date. Trigger date shall have the meaning
assigned to such term in the Polaroid Extended Severance
Plan as originally adopted by the Company effective
June 28, 1987 and amended from time to time and as it may be
further amended from time to time.
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13.08 1990 Plan Options. 1990 Plan Options shall mean
"Options", as such item is defined in the 1990 Plan.
ARTICLE XIV
PERMANENCY OF THE PLAN AND PLAN TERMINATION
-------------------------------------------
14.01 Effective Date. This Plan originally effective as of
May 11, 1993, was amended effective as of March 19, 1997,
upon a resolution by the Board of Directors for its
adoption, subject to the approval of the shareholders within
1997.
14.02 Termination, Amendment, and Modification of the Plan.
The Board of Directors may at any time terminate or suspend,
and may at any time and from time to time and in any respect
amend or modify, the Plan; provided, however, that no such
action of the Board of Directors without approval of the
shareholders of the Company may increase the total number of
shares of Stock subject to the Plan except as contemplated
in Section 3.03 hereof.
IN WITNESS WHEREOF, this Plan is hereby adopted effective
March 19, 1997 and executed this 27 day of March, 1997.
ATTEST: POLAROID CORPORATION
/s/ Louise L. Cavanaugh /s/ Gary T. DiCamillo
- ----------------------- -------------------------
Chief Executive Officer
-24-
Exhibit 10.5
POLAROID CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective January 1, 1997
<PAGE>
POLAROID CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
This Polaroid Corporation Executive Deferred Compensation Plan (the
"Plan") is adopted by Polaroid Corporation (the "Company") for certain
of its executive employees. The purpose of the Plan is to offer those
employees an opportunity to elect to defer the receipt of compensation
in order to provide termination of employment and related benefits
taxable pursuant to Section 451 of the Internal Revenue Code of 1986,
as amended (the "Code"). The Plan is intended to be a "top-hat" plan
(i.e., an unfunded deferred compensation plan maintained for a select
group of management or highly-compensated employees) under Sections
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974 ("ERISA").
ARTICLE I
DEFINITIONS
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1.1 Annual Cash Bonus means the executive annual bonus plan (currently
the Polaroid Incentive Plan for Executives).
1.2 Account means:
(a) the balance credited due to Company Contributions (which may have
vesting and other performance factors as set forth in Section 3.1),
(b) the Participant Compensation Deferrals pursuant to Section 3.2.
(c) amounts equal to any deemed earnings or losses (to the extent
realized, based upon deemed fair market value of the Account's deemed
assets, as determined by the Company, in its discretion) attributable
or allocable thereto; and
(d) expenses and/or taxes charged to that Account in accordance with
Sections 4.7 and 4.8.
1.3 Base Pay shall mean the annual rate of base salary as may be
increased from time to time by the Company.
1.4 Beneficiary(ies) means any person or persons so designated in
accordance with the provisions of Article 7.
1.5 Code means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.
1.6 Company means Polaroid Corporation and its successors and assigns
unless otherwise herein provided, or any other corporation or business
organization which, with the consent of Polaroid Corporation or its
successors or assigns, assumes the Company's obligations hereunder, or
any other corporation or business organization which agrees, with the
consent of Polaroid Corporation, to become a party to the Plan.
1.7 1.7 COMPENSATION DEFERRALS shall mean the amounts which a
Participant elects to defer from either his Base Pay or Annual Cash
Bonus as set forth more fully in Section 3.2.
1.8 Designation Date means the date as of which a designation of
deemed investment directions by an individual shall be applied pursuant
to the procedures adopted by the Plan Administrator in a uniform and
non-discriminatory manner (see Addendum A).
1.9 Effective Date means the effective date of the Plan, which shall
be January 1, 1997.
1.10 Eligible Employee means, for any Plan Year (or applicable portion
thereof), a person employed by the Company who is determined by the
Company to be a member of a select group of management or highly-
compensated employees and who is designated by the Company to be
eligible to participate in this Plan. By each November 1 (or before
the Effective Date for the Plan's first Plan Year), the Company shall
notify those individuals, if any, who will be eligible to participate
for the next Plan Year. If the Company determines that an individual
first becomes an Eligible Employee during a Plan Year, the Company
shall notify such individual of its determination and of the date
during the Plan Year on which the individual shall first become an
Eligible Employee.
1.11 ENTRY DATE with respect to an individual means the first day of
the pay period following the date on which the individual first becomes
an Eligible Employee.
1.12 Participant means any person so designated in accordance with the
provisions of Article 2, including, where appropriate according to the
context of the Plan, any former employee who is or may become (or whose
Beneficiary(ies) may become) eligible to receive a benefit under the
Plan.
1.13 Participant Enrollment And Election Form means the form or forms
on which a Participant elects to defer Compensation hereunder and on
which the Participant makes certain other designations as required
thereon.
1.14 Plan means this Polaroid Corporation Executive Deferred
Compensation Plan, as amended from time to time.
1.15 Plan Year means the calendar year ending on December 31st during
which the Plan is in effect.
1.16 Trust means the Trust established by the Company which shall
maintain one or more separate sub-accounts to represent Participants'
interests in the Plan. Any such Trust shall be intended to be treated
as a "grantor trust" under the Code and the establishment of the Trust
or the utilization of any existing Trust for Plan benefits, as
applicable, shall not be intended to cause any Participant to realize
current income on amounts contributed thereto, and the Trust shall be
so interpreted.
1.17 Valuation Date means the last day of each Plan Year and any other
date that the Company, in its sole discretion, designates as a
Valuation Date.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
-----------------------------
2.1 Requirements. Every Eligible Employee on the Effective Date shall
be eligible to become a Participant on the Effective Date. Every other
Eligible Employee shall be eligible to become a Participant if he makes
an election to become a Participant within the first twenty-five (25)
days of employment. No individual shall become a Participant, however,
if he is not an Eligible Employee on the date his participation is to
begin.
2.2 Participation In The Participant Compensation Deferrals.
Participation in the Participation Compensation Deferrals is entirely
voluntary. To become a Participant, an Eligible Employee must comply
with all application procedures set forth in this Plan and the
Administrative Procedures.
2.3 Re-Employment. If a Participant whose employment with the Company
is terminated is subsequently re-employed, he must file a new election
to continue to participate in the Plan.
2.4 Change Of Employment Category. During any period in which a
Participant remains in the employ of the Company, but ceases to be an
Eligible Employee, he shall not be eligible to make future Compensation
Deferrals hereunder. However, once a Participant has an Account, he
shall be entitled to continue participation in the Plan regardless of
his employment status.
ARTICLE III
CONTRIBUTIONS AND CREDITS
-------------------------
3.1 Company Contribution Credits. The Company in its discretion shall
have the right to provide elective Company Contribution Credits for any
Eligible Participant. Such Company Contribution Credits may have
vesting or performance factors at the sole and complete discretion of
the Company. The Company shall credit or debit, as applicable,
Participant's Account with:
(a) amounts equal to the Company's Contribution Credits credited to
that Account;
(b) any deemed earnings and losses (to the extent realized, based upon
deemed fair market value of the Account's deemed assets as determined
by the Company, in its discretion) allocated to that Account; and
(c) taxes charged to that Account in accordance with Section 4.8.
3.2 Compensation Deferrals. In accordance with rules established by
the Company, a Participant may elect to defer Base Pay or Annual Cash
Bonus which is due to be earned and which would otherwise be paid to
the Participant, in a lump sum or in any fixed periodic dollar amount
designated by the Participant ("Compensation Deferrals").
(a) A Participant's election to defer any portion of his Base Pay for
a Plan Year must be made during the period beginning on November 1 and
ending on December 1 of the prior calendar year, or during such other
period as might be established by the Company. Compensation Deferrals
from Base Pay shall be taken through regular payroll deductions.
(b) A Participant's election to defer any portion of his Annual Cash
Bonus for Plan Year must be made on or before October 1 of the prior
calendar year, or during such other period as might be established by
the Company. Compensation Deferrals from a Participant's Annual Cash
Bonus shall be taken in a single lump sum from the bonus payment. A
Participant's election for deferral of any portion of his Annual Cash
Bonus shall continue from one year to the next unless modified on or
before the October 1 date prior to the year of distribution.
(c) Notwithstanding the foregoing, for the Plan's first Plan Year,
regular pay and bonus pay deferral elections must be made on or before
December 20, 1996.
A Participant shall at all times be one hundred percent
(100%) vested in amounts credited to his Participant
Compensation Deferrals and the earnings on such amounts.
3.3 Reduction In Compensation Deferrals.
(a) Once made, a Compensation Deferral shall continue in force
indefinitely, until the Participant affirmatively changes this election
in a manner consistent with Plan procedures.
(b) The Participant may reduce his Compensation Deferral election if
such election is made consistent with the Administrative Procedures.
If a Participant reduces his Compensation Deferrals in a Plan Year, he
may not begin deferral until the next Plan Year.
3.4 Contributions To The Trust. An amount shall be contributed by the
Company to the Trust equal to the amount(s) required to be credited to
the Participant's Account under this Article. The Company shall make a
good faith effort to contribute these amounts to the Trust as soon as
practicable following the date on which the contribution credit
amount(s) are determined.
ARTICLE IV
ALLOCATION OF FUNDS
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4.1 Allocation Of Funds. Subject to Section 4.6, each Participant
shall have the right to direct the Company as to how amounts in his
Account shall be deemed to be invested. Subject to such limitations as
may from time to time be required by law, imposed by the Company or
Trustee or contained elsewhere in the Plan, and subject to such
operating rules and procedures as may be imposed from time to time by
the Company, prior to the date on which a direction will become
effective, the Participant shall have the right to direct the Company
as to how amounts in his Account shall be deemed to be invested. The
Company shall direct the Trustee to invest the account maintained in
the Trust on behalf of the Participant pursuant to the deemed
investment directions the Company properly has received from the
Participant.
4.2 Allocation Of Deemed Earnings Or Losses On Accounts. The value of
the Participant's Account shall be equal to the value of the Account
maintained under the Trust on behalf of the Participant. As of each
Valuation Date, the Participant's Account will be credited or debited
with the increase or decrease in the realizable net asset value or
credited interest, as applicable, of the designated deemed investments.
Such allocation shall be equal to the net increase or decrease in
realizable net asset value or credited interest, as applicable (as
determined by the Trustee), of each deemed investment option within the
Account since the preceding Valuation Date shall be allocated among all
Participants' Accounts deemed to be invested in that investment option
in accordance with the ratio which the portion of the Account of each
Participant which is deemed to be invested within that investment
option, determined as provided herein, bears to the aggregate of all
amounts deemed to be invested within that investment option. The
Plan's deemed investment options may include, among other options, a
fund deemed to be invested in one or more classes of the Company's
publicly traded equity securities, as determined by the Company in its
discretion.
4.3 Accounting For Distributions. As of the date of any distribution
hereunder, the distribution made hereunder to the Participant or his
Beneficiary(ies) shall be charged to such Participant's Account. Such
amounts shall be charged on a pro-rata basis against the investments of
the Trust in which the Participant's Account is deemed to be invested.
4.4 Separate Accounts. A separate account under the Plan shall be
established and maintained by the Company to reflect the Account for
each Participant with sub-accounts to show separately the deemed
earnings and losses credited or debited to such Account, and the
applicable deemed investments of the Account.
4.5 Interim Valuations. If it is determined by the Company that the
value of a Participant's Account as of any date on which distributions
are to be made differs materially from the value of the Participant's
Account on the prior Valuation Date upon which the distribution is to
be based, the Company, in its discretion, shall have the right to
designate any date in the interim as a Valuation Date for the purpose
of revaluing the Participant's Account so that the Account will, prior
to the distribution, reflect its share of such material difference in
value.
4.6 Deemed Investment Directions Of Participants. Subject to such
limitations as may from time to time be required by law, imposed by the
Company or the Trustee or contained elsewhere in the Plan, and subject
to such operating rules and procedures as may be imposed from time to
time by the Company, prior to and effective for each Designation Date,
each Participant may communicate to the Company a direction (in
accordance with (a), below) as to how his Plan Accounts should be
deemed to be invested among such categories of deemed investments as
may be made available by the Company hereunder (see Administrative
Procedures in Addendum attached).
4.7 Expenses. Expenses, including Trustee fees, associated with the
administration or operation of the Plan shall be allocated to and
charged against Participants' Accounts in a manner deemed appropriate
by the Company unless the Company, in its discretion, pays such
expenses.
4.8 Taxes. Any taxes (or net operating loss reductions) allocable to
an Account (or portion thereof) maintained under the Plan which arise
prior to the complete distribution of the Account, as determined by the
Company in its discretion, shall be charged against that Account in any
manner determined by the Company in its discretion, or shall be
absorbed by the Company in its discretion. If taxes (or net operating
loss reductions) are charged against a Participant's Account, at the
discretion of the Company, such charge either (i) will reduce the
contribution to the Trust under Section 3.4 next due to be made by the
Company in respect of the Account maintained for the Participant or
(ii) will be paid from the Trust to the Company out of assets of the
Trust corresponding to the Participant's Account.
ARTICLE V
ENTITLEMENT TO BENEFITS
-----------------------
5.1 Fixed Payment Dates; Termination Of Employment. On the
Participant Enrollment and Election Form, a Participant may select a
fixed payment date for the payment or commencement of payment of his
vested Account (or elect to treat his vested Account as three (3) or
more sub-accounts and select fixed payment dates for the payment or
commencement of payment of each sub-account), which will be valued and
payable according to the provisions of Article 6. Such payment dates
may be extended to later dates so long as elections to so extend the
dates are made by the Participant prior to the calendar year in which
the distribution is to be made or commence and at least nine (9) months
prior to the date on which the distribution is to be made or commence.
Such payment dates may not be accelerated.
Alternatively, on his Participant Enrollment and Election Form, a
Participant may select payment or commencement of payment of his
vested Account (or a sub-account thereof) at his termination of
employment with the Company, or at the earlier of a fixed payment
date or dates or his termination of employment with the Company.
In this case the extension and non-acceleration rules discussed
above shall apply to such fixed payment date or dates and/or
termination of employment date, as applicable.
Any fixed payment date elected by a Participant as provided above
must be a date no earlier than January 1 of the second calendar
year after the calendar year in which the election is made.
If a Participant does not make an election as provided above for
any particular amounts hereunder, and the Participant terminates
employment with the Company for any reason, the Participant's
vested Account as of the date of such termination shall be valued
and payable at or commencing at such termination according to the
Plan and Administrative Procedures (see Attached Addendum).
5.2 Hardship Distributions. In the event of financial hardship of the
Participant, as hereinafter defined, the Participant may apply to the
Company for the distribution of all or any part of his vested Account.
The Company shall consider the circumstances of each such case, and the
best interests of the Participant and his family, and shall have the
right, in its sole discretion, if applicable, to allow such
distribution, or, if applicable, to direct a distribution of part of
the amount requested, or to refuse to allow any distribution. Upon a
finding of financial hardship, the Company shall make the appropriate
distribution to the Participant from amounts held by the Company in
respect of the Participant's vested Account. In no event shall the
aggregate amount of the distribution exceed either the full value of
the Participant's vested Account or the amount determined by the
Company to be necessary to alleviate the Participant's financial
hardship (which financial hardship may be considered to include any
taxes due because of the distribution occurring because of this
Section), and which is not reasonably available from other resources of
the Participant. For purposes of this Section, the value of the
Participant's vested Account shall be determined as of the date of the
distribution. "Financial hardship" means (a) a severe financial
hardship to the Participant resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent (as defined in
Code Section 152(a)) of the Participant, (b) loss of the Participant's
property due to casualty, or (c) other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant, each as determined to exist by the Company.
A distribution may be made under this Section only with the consent of
the Company.
5.3 Vesting. Amounts credited to a Participant's Account as Company
Contribution Credits shall vest according to a schedule determined by
the Company, in its discretion, and which is expected to be
communicated to the Participant on or about the date the credit is
made.
If a Participant terminates employment because of death, total and
permanent disability (as determined by the Company in its
discretion) or retirement from the Company on or after age sixty-
five (65), the Participant shall become one hundred percent (100%)
vested in his Company Contribution Credit Credits. If a
Participant terminates employment for any other reason, he shall
become vested in his Company Contribution Credits, if at all,
under the vesting schedule determined by the Company.
ARTICLE VI
DISTRIBUTION OF BENEFITS
------------------------
6.1 Amount. A Participant (or his Beneficiary(ies)) shall become
entitled to receive, on or about the date or dates selected by the
Participant on his Participant Enrollment and Election Form or, if
none, on or about the date of the Participant's termination of
employment with the Company (or earlier as provided in Article 5), a
distribution in an aggregate amount equal to the Participant's vested
Account. Any payment due hereunder from the Trust which is not paid by
the Trust for any reason will be paid by the Company from its general
assets.
6.2 Method Of Payment.
(a) Cash Or In-Kind Payments. Payments under the Plan shall be made
in cash or in-kind, as elected by the Participant, as permitted by the
Company in its sole and absolute discretion and subject to applicable
restrictions on transfer as may be applicable legally or contractually.
(b) Timing and Manner of Payment. In the case of distributions to a
Participant or his Beneficiary by virtue of an entitlement pursuant to
Section 5.1, an aggregate amount equal to the Participant's vested
Account will be paid by the Trust or the Company, as provided in
Section 6.1, in a lump sum or in five (5) or ten (10) substantially
equal annual installments (adjusted for gains and losses), as selected
by the Participant as provided in Article 5. If a Participant fails to
designate properly the manner of payment of the Participant's benefit
under the Plan, such payment will be in a lump sum.
If the whole or any part of a payment hereunder is to be in
installments, the total to be so paid shall continue to be
deemed to be invested pursuant to Sections 4.1 and 4.6 under
such procedures as the Company may establish, in which case
any deemed income, gain, loss or expense or tax allocable
thereto (as determined by the Trustee, in its discretion)
shall be reflected in the installment payments, in such
equitable manner as the Trustee shall determine.
6.3 Death Benefits. If a Participant dies before terminating his
employment with the Company and before the commencement of payments to
the Participant hereunder, the entire value of the Participant's
Account shall be paid as soon as practical after the Participant's
death, unless the Participant has specifically made an election to the
contrary pursuant to 5.1, to the person or persons designated in
accordance with Section 7.1.
Upon the death of a Participant after payments hereunder have begun but
before he has received all payments to which he is entitled under the
Plan, the remaining benefit payments shall be paid to the person or
persons designated in accordance with Section 7.1, in the manner in
which such benefits were payable to the Participant.
ARTICLE VII
BENEFICIARIES; PARTICIPANT DATA
-------------------------------
7.1 Designation Of Beneficiaries. Each Participant from time to time
may designate any person or persons (who may be named contingently or
successively) to receive such benefits as may be payable under the Plan
upon or after the Participant's death, and such designation may be
changed from time to time by the Participant by filing a new
designation. Each designation will revoke all prior designations by
the same Participant, shall be in a form prescribed by the Company, and
will be effective only when filed in writing with the Company during
the Participant's lifetime.
In the absence of a valid Beneficiary(ies) designation, or if, at
the time any benefit payment is due to a Beneficiary(ies), there
is no living Beneficiary(ies) validly named by the Participant,
the Company shall pay any such benefit payment to the
Participant's spouse, if then living, but otherwise to the
Participant's then living descendants, if any, per sterpes, but,
if none, to the Participant's estate. In determining the
existence or identity of anyone entitled to a benefit payment, the
Company may rely conclusively upon information supplied by the
Participant's personal representative, executor or administrator.
If a question arises as to the existence or identity of anyone
entitled to receive a benefit payment as aforesaid, or if a
dispute arises with respect to any such payment, then,
notwithstanding the foregoing, the Company, in its sole
discretion, may distribute such payment to the Participant's
estate without liability for any taxes or other consequences which
might flow therefrom, or may take such other action as the Company
deems to be appropriate.
7.2 Information To Be Furnished By Participants And Beneficiaries;
Inability To Locate Participants Or Beneficiaries. Any communication,
statement or notice addressed to a Participant or to a Beneficiary(ies)
at his last post office address as shown on the Company's records shall
be binding on the Participant or Beneficiary(ies) for all purposes of
the Plan. The Company shall not be obliged to search for any
Participant or Beneficiary(ies) beyond the sending of a registered
letter to such last known address. If the Company notifies any
Participant or Beneficiary(ies) that he is entitled to an amount under
the Plan and the Participant or Beneficiary(ies) fails to claim such
amount or make his location known to the Company within three (3) years
thereafter, then, except as otherwise required by law, if the location
of one or more of the next of kin of the Participant is known to the
Company, the Company may direct distribution of such amount to any one
or more or all of such next of kin, and in such proportions as the
Company determines. If the location of none of the foregoing persons
can be determined, the Company shall have the right to direct that the
amount payable shall be deemed to be a forfeiture, except that the
dollar amount of the forfeiture, unadjusted for deemed gains or losses
in the interim, shall be paid by the Company if a claim for the benefit
subsequently is made by the Participant or the Beneficiary(ies) to whom
it was payable. If a benefit payable to a Participant or
Beneficiary(ies) that cannot be located is subject to escheat pursuant
to applicable state law, the Company shall not be liable to any person
for any payment made in accordance with such law.
ARTICLE VIII
ADMINISTRATION
--------------
8.1 Administrative Authority. Except as otherwise specifically
provided herein, the Company shall have the sole responsibility for and
the sole control of the operation and administration of the Plan, and
shall have the power and authority to take all action and to make all
decisions and interpretations which may be necessary or appropriate in
order to administer and operate the Plan, including, without limiting
the generality of the foregoing, the power, duty and responsibility to:
(a) Resolve and determine all disputes or questions arising under the
Plan, and to remedy any ambiguities, inconsistencies or omissions in
the Plan.
(b) Adopt such rules of procedure and regulations as in its opinion
may be necessary for the proper and efficient administration of the
Plan and as are consistent with the Plan.
(c) Implement the Plan in accordance with its terms and the rules and
regulations adopted as above.
(d) Make determinations with respect to the eligibility of any
Eligible Employee as a Participant and make determinations concerning
the crediting of Plan Accounts.
(e) Appoint any persons or firms, or otherwise act to secure
specialized advice or assistance, as it deems necessary or desirable in
connection with the administration and operation of the Plan, and the
Company shall be entitled to rely conclusively upon, and shall be fully
protected in any action or omission taken by it in good faith reliance
upon the advice or opinion of such firms or persons. The Company shall
have the power and authority to delegate from time to time by written
instrument all or any part of its duties, powers or responsibilities
under the Plan, both ministerial and discretionary, as it deems
appropriate, to any person or committee, and in the same manner to
revoke any such delegation of duties, powers or responsibilities. Any
action of such person or committee in the exercise of such delegated
duties, powers or responsibilities shall have the same force and effect
for all purposes hereunder as if such action had been taken by the
Company. Further, the Company may authorize one or more persons to
execute any certificate or document on behalf of he Company, in which
event any person notified by the Company of such authorization shall be
entitled to accept and conclusively rely upon any such certificate or
document executed by such person as representing action by the Company
until such notified person shall have been notified of the revocation
of such authority.
8.2 Uniformity Of Discretionary Acts. Whenever in the administration
or operation of the Plan discretionary actions by the Company are
required or permitted, such actions shall be consistently and uniformly
applied to all persons similarly situated, and no such action shall be
taken which shall discriminate in favor of any particular person or
group of persons.
8.3 Litigation. Except as may be otherwise required by law, in any
action or judicial proceeding affecting the Plan, no Participant or
Beneficiary(ies) shall be entitled to any notice or service of process,
and any final judgment entered in such action shall be binding on all
persons interested in, or claiming under, the Plan.
8.4 Claims Procedure. Any person claiming a benefit under the Plan (a
"Claimant") shall present the claim, in writing, to the Company, and
the Company shall respond in writing. If the claim is denied, the
written notice of denial shall state, in a manner calculated to be
understood by the Claimant:
(a) The specific reason or reasons for the denial, with specific
references to the Plan provisions on which the denial is based;
(b) A description of any additional material or information necessary
for the Claimant to perfect his claim and an explanation of why such
material or information is necessary; and
(c) An explanation of the Plan's claims review procedure.
The written notice denying or granting the Claimant's claim
shall be provided to the Claimant within ninety (90) days
after the Company's receipt of the claim, unless special
circumstances require an extension of time for processing the
claim. If such an extension is required, written notice of
the extension shall be furnished by the Company to the
Claimant within the initial ninety (90) day period and in no
event shall such an extension exceed a period of ninety (90)
days from the end of the initial ninety (90) day period. Any
extension notice shall indicate the special circumstances
requiring the extension and the date on which the Company
expects to render a decision on the claim. Any claim not
granted or denied within the period noted above shall be
deemed to have been denied.
Any Claimant whose claim is denied, or deemed to have been denied
under the preceding sentence (or such Claimant's authorized
representative), may, within sixty (60) days after the Claimant's
receipt of notice of the denial, or after the date of the deemed
denial, request a review of the denial by notice given in writing
to the Company. Upon such a request for review, the claim shall
be reviewed by the Company (or its designated representative)
which may, but shall not be required to, grant the Claimant a
hearing. In connection with the review, the Claimant may have
representation, may examine pertinent documents, and may submit
issues and comments in writing.
The decision on review normally shall be made within sixty (60)
days of the Company's receipt of the request for review. If an
extension of time is required due to special circumstances, the
Claimant shall be notified, in writing, by the Company, and the
time limit for the decision on review shall be extended to one
hundred twenty (120) days. The decision on review shall be in
writing and shall state, in a manner calculated to be understood
by the Claimant, the specific reasons for the decision and shall
include references to the relevant Plan provisions on which the
decision is based. The written decision on review shall be given
to the Claimant within the sixty (60) day (or, if applicable, the
one hundred twenty (120) day) time limit discussed above. If the
decision on review is not communicated to the Claimant within the
sixty (60) day (or, if applicable, the one hundred twenty (120)
day) period discussed above, the claim shall be deemed to have
been denied upon review. All decisions on review shall be final
and binding with respect to all concerned parties.
ARTICLE IX
AMENDMENT AND TERMINATION
-------------------------
9.1 Right To Amend. The Company, by action of its Board of Directors,
shall have the right to amend the Plan, at any time and with respect to
any provisions hereof, and all parties hereto or claiming any interest
hereunder shall be bound by such amendment; provided, however, that no
such amendment shall deprive a Participant or a Beneficiary(ies) of a
right accrued hereunder prior to the date of the amendment.
9.2 Amendments To Ensure Proper Characterization Of Plan.
Notwithstanding the provisions of Section 9.1, the Plan may be amended
by the Company, by action of its Board of Directors, at any time,
retroactively if required, if found necessary, in the opinion of the
Company, in order to ensure that the Plan is characterized as a "top-
hat" plan of deferred compensation maintained for a select group of
management or highly-compensated employees as described under ERISA
Sections 201(2), 301(a)(3), and 401(a)(1), and to conform the Plan to
the provisions and requirements of any applicable law (including ERISA
and the Code). No such amendment shall be considered prejudicial to
any interest of a Participant or a Beneficiary(ies) hereunder.
9.3 Company's Right To Terminate Or Suspend Plan. The Company
reserves the right to terminate the Plan and/or its obligation to make
further credits to Plan Accounts, by action of its Board of Directors.
The Company also reserves the right to suspend the operation of the
Plan for a fixed or indeterminate period of time, by action of its
Board of Directors.
9.4 Automatic Termination Of Plan. The Plan automatically shall
terminate upon the dissolution of the Company, or upon its merger into
or consolidation with any other corporation or business organization if
there is a failure by the surviving corporation or business
organization to adopt specifically and agree to continue the Plan.
9.5 Suspension Of Deferrals. In the event of a suspension of the
Plan, the Company shall continue all aspects of the Plan, other than
Compensation Deferrals and Company Contribution Credits, during the
period of the suspension, in which event payments hereunder will
continue to be made during the period of the suspension in accordance
with the Plan and Administrative Procedures attached.
9.6 Allocation And Distribution. This Section shall become operative
on a complete termination of the Plan. The provisions of this Section
also shall become operative in the event of a partial termination of
the Plan, as determined by the Company, but only with respect to that
portion of the Plan attributable to the Participants to whom the
partial termination is applicable. Upon the effective date of any such
event, notwithstanding any other provisions of the Plan, no persons who
were not therefore Participants shall be eligible to become
Participants, the value of the interest of all Participants and
Beneficiaries shall be determined and, after deduction of estimated
expenses in liquidating and, if applicable, paying Plan benefits, paid
to them as soon as is practicable after such termination.
9.7 Successor To The Company. Any corporation or other business
organization which is a successor to the Company by reason of a
consolidation, merger or purchase of substantially all of the assets of
the Company shall have the right to become a party to the Plan by
adopting the same by resolution of the entity's board of directors or
other appropriate governing body. If, within ninety (90) days from the
effective date of such consolidation, merger or sale of assets, such
new entity does not become a party hereto, as above provided, the Plan
automatically shall be terminated, and the provisions of Section 9.4
shall become operative.
ARTICLE X
MISCELLANEOUS
-------------
10.1 Limitations On Liability Of Company. Neither the establishment of
the Plan nor any modification thereof, nor the creation of any account
under the Plan, nor the payment of any benefits under the Plan shall be
construed as giving to any Participant or other person any legal or
equitable right against the Company, or any officer or Company thereof
except as provided by law or by any Plan provision. The Company does
not in any way guarantee any Participant's Account from loss or
depreciation, whether caused by poor investment performance of a deemed
investment or the inability to realize upon an investment due to an
insolvency affecting an investment vehicle or any other reason. In no
event shall the Company, or any successor, employee, officer, director
or stockholder of the company, be liable to any person on account of
any claim arising by reason of the provisions of the Plan or of any
instrument or instruments implementing its provisions, or for the
failure of any Participant, Beneficiary(ies) or other person to be
entitled to any particular tax consequences with respect to the Plan,
or any credit or distribution hereunder.
10.2 Construction. If any provision of the Plan is held to be illegal
or void, such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the Plan
shall be construed and enforced as if said illegal or invalid provision
had never been inserted herein. For all purposes of the Plan, where
the context admits, the singular shall include the plural, and the
plural shall include the singular. Headings of Articles and Sections
herein are inserted only for convenience of reference and are not to be
considered in the construction of the Plan. The laws of the
Commonwealth of Massachusetts shall govern, control and determine all
questions of law arising with respect to the Plan and the
interpretation and validity of its respective provisions, except where
those laws are pre-empted by the laws of the United States.
Participation under the Plan will not give any Participant the right to
be retained in the service of the Company nor any right or claim to any
benefit under the Plan unless such right or claim has specifically
accrued hereunder.
The Plan is intended to be and at all times shall be interpreted
and administered so as to qualify as an unfunded deferred compensation
plan, and no provision of the Plan shall be interpreted so as to give
any individual any right in any assets of the Company which right is
greater than the right of a general unsecured creditor of the Company.
10.3 Spendthrift Provision. No amount payable to a Participant or a
Beneficiary(ies) under the Plan will, except as otherwise specifically
provided by law, be subject in any manner to anticipation, alienation,
attachment, garnishment, sale, transfer, assignment (either at law or
in equity), levy, execution, pledge, encumbrance, charge or any other
legal or equitable process, and any attempt to do so will be void; nor
will any benefit be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of the person entitled
thereto. Further, (i) the withholding of taxes from Plan benefit
payments, (ii) the recovery under the Plan of overpayments of benefits
previously made to a Participant or Beneficiary(ies), (iii) if
applicable, the transfer of benefit rights from the Plan to another
plan or (iv) the direct deposit of benefit payments to an account in a
banking institution (if not actually part of an arrangement
constituting an assignment or alienation) shall not be construed as an
assignment or alienation.
In the event that any Participant's or Beneficiary(ies)' benefits
hereunder are garnished or attached by order of any court, the Company
or Trustee may bring an action or a declaratory judgment in a court of
competent jurisdiction to determine the proper recipient of the
benefits to be paid under the Plan. During the pendency of said
action, any benefits that become payable shall be held as credits to
the Participant's or Beneficiary(ies)'s Account or, if the Company or
Trustee prefers, paid into the court as they become payable, to be
distributed by the court to the recipient as the court deems proper at
the close of said action.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed and
its seal to be affixed hereto, effective as of the 1st day of January,
1997.
ATTEST/WITNESS: POLAROID CORPORATION
/s/ Louise L. Cavanaugh By: /s/ Gary T. DiCamillo
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Date: 5/12/97
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Exhibit 10.6
POLAROID NON-QUALIFIED
DEFERRED COMPENSATION TRUST
THIS AGREEMENT is made as of the 31 day of March, 1997, by
and between POLAROID CORPORATION, a corporation having its
principal office at (the "Company") and STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company having its
principal office at 225 Franklin Street, Boston, Massachusetts
02110 (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has incurred and expects to continue
to incur certain unfunded deferred compensation liabilities to
or with respect to members of its Board of Directors and
certain employees pursuant to supplemental executive retirement
plans (SERPS) including elective deferred compensation plans
identified on Exhibit A attached hereto, together with such
additional deferred compensation plans as may be designated in
writing by the Company to the Trustee from time to time
(hereinafter the "Plans");
WHEREAS, the Company desires to provide additional
assurance to some or all such employees (the "Participants") and
their beneficiaries or estates under the Plans (collectively,
the "Beneficiaries") that their unfunded deferred compensation
rights under the Plans will in the future be met or
substantially met by application of the procedures set forth
herein;
WHEREAS, the Company wishes to establish a trust
(hereinafter called "Trust'') and to contribute to the Trust
assets that shall be held therein, subject to the claims of
Company's creditors in the event of Company's Insolvency, as
herein defined, until paid to Participants and their
beneficiaries in such manner and at such times as specified in
the Plans;
WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect
the status of the Plans as an unfunded plan maintained for the
purpose of providing deferred compensation for non-employee
members of the Board of Directors or a select group of
management or highly compensated employees for purposes of Title
I of the Employee Retirement Income Security Act of 1974;
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WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Plans;
WHEREAS, the Company wishes to establish separate accounts
(hereinafter the "Accounts") with respect to Participants in
order to provide a source of payments as such are required under
the terms of such Plans;
WHEREAS, contributions credited to each separate Account,
as determined by the Company from time to time in its sole
discretion, and the earnings thereon shall be used by the
Trustee solely in satisfaction of the liabilities of the Company
with respect to the Participant for whom such Account has been
established and expenses as provided herein and such utilization
shall be in accordance with the procedures set forth herein;
WHEREAS, upon satisfaction of all liabilities of the
Company with respect to a Participant in respect of whom an
Account has been established, the balance, if any, remaining in
the Account of such Participant shall be allocated to the
Accounts of other Participants for whom Accounts have been
established in accordance with the procedures set forth herein;
WHEREAS, upon satisfaction of all liabilities of the
Company with respect to all Participants in respect of whom
separate Accounts have been established, the balance, if any,
remaining in such Accounts shall revert to the Company, except
that all amounts in all such Accounts shall at all times be
subject under this Agreement to the claims of the Company's
creditors as hereinafter provided;
WHEREAS, the Trustee has agreed to act as Trustee of the
trust fund created hereunder and to hold and administer such
assets as may be delivered to it as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and mutual
and independent promises herein, the parties hereto do hereby
establish the Trust and covenant and agree that the Trust shall
be comprised, held and disposed of as follows:
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ARTICLE I
ESTABLISHMENT OF TRUST
1.01 Establishment of Trust.
(a) The Company hereby establishes with the Trustee a grantor
trust consisting solely of such sums of money and such property
acceptable to the Trustee as shall from time to time be paid or
delivered to the Trustee and the earnings and profits thereon.
(b) Company hereby deposits with Trustee in the trust
approximately 5,580,000 which shall become the principal of the
Trust to be held, administered and disposed of by Trustee as
provided in this Trust Agreement.
(c) The Trust established hereunder shall be known as the
Polaroid Deferred Compensation Trust.
(d) All such money and property, all investments made therewith
and proceeds thereof, less the payments or other distributions
which, at the time of reference, shall have been made by the
Trustee, as authorized herein, are referred to herein as the
"Fund" and shall be held by the Trustee, in trust, in accordance
with the provisions of this Agreement.
(e) The Trust hereby established shall be irrevocable.
(f) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter I, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be construed accordingly.
(g) The principal of the Trust, and any earnings thereon shall
be held separate and apart from other funds of Company and shall
be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth.
(h) Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any
assets of the Trust. Any rights created under the Plans and this
Trust Agreement shall be mere unsecured contractual rights of
Plan participants and their beneficiaries against Company.
(i) Any assets held by the Trust will be subject to the claims
of Company's general creditors under federal and state law in the
event of Insolvency, as defined in Section 3.4 herein.
(j) Company, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other property
in trust with Trustee to augment the principal to be held,
administered and disposed of by Trustee as provided in the Trust
Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional
deposits.
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1.02 Change of Control. To the extent that the some of the
Plans to which this Trust applies are not fully funded, the
Company shall 10 days prior to a Change of Control, as
defined herein, make an irrevocable contribution to the
Trust in an amount that is sufficient to pay each Plan
participant or beneficiary the benefits to which Plan
participants or their beneficiaries would be entitled
pursuant to the terms of the Plans as of the date on which
the Change of Control occurred.
1.03 Trustee Responsibilities.
(a) The Trustee shall hold, manage, invest and otherwise
administer the Fund pursuant to the terms of this Agreement.
(b) The Trustee shall be responsible only for contributions
actually received by it hereunder. The amount of each
contribution made by the Company to the Fund shall be determined
in the sole discretion of the Company, and the Trustee shall have
no duty or responsibility with respect thereto.
(c) Except as otherwise specifically agreed to by the Trustee,
the Trustee shall not be responsible for the administration of
any Plan (including without limitation the determination of Plan
participation rights of employees of the Company and the
determination of benefits of the Participants of any Plan);
provided, however, that upon a Change in Control the Trustee
shall maintain Participant Accounts as provided in Sections 1.05
and 2.05, and shall make payments to Participants as provided in
Section 3.01.
(d) The Trustee shall not have any authority or obligation to
determine the adequacy of or to enforce the collection from the
Company of any contribution to the Fund. Except to the extent
that the Trustee has otherwise specifically agreed in writing,
the Trustee shall not be responsible, directly or indirectly, for
the investment or reinvestment of the assets of the Fund, which
investment and reinvestment shall be the sole responsibility of
the Company unless otherwise delegated by the Company as provided
in this Agreement, however, that upon a Change in Control the
Trustee shall become responsible for the investment and
reinvestment of the assets of the Fund as elsewhere provided
herein.
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<PAGE>
1.04 Participant Accounts. Depending upon the Plan to which
this Trust applies, the Company shall maintain a separate
Account for each Participant. Appendix A shall set forth
by Plan, the terms and conditions of this Trust which shall
apply.
1.05 Participant Accounts Following Change in Control.
(a) Notwithstanding the foregoing, upon a "Change in Control",
the Trustee shall become responsible for the maintenance of a
separate Account for each Participant under each Plan and for the
periodic adjustments of such Accounts in accordance with the
procedures described herein.
(b) The Trustee may select and retain a third party
administrator to maintain such Accounts. The full expense
incurred by the Trustee in maintaining such separate Accounts
shall be paid by the Company, and until so paid shall constitute
a charge upon the Fund.
(c) "Change in Control" shall have the same meaning as "Trigger
Date" in the Polaroid Extended Severance Plan (set forth as
Appendix B which may be amended from time to time). In such
event the Trustee will be notified within 24 hours, such
notification shall be conclusive and may be relied upon by the
Trustee. Should the Company fail to provide the Trustee notice
and the Trustee through independent means reasonably determine
that a Change in Control has occurred, the Company or its
successor shall indemnify the Trustee in making this decision.
(d) As soon as practicable following a Change in Control, the
Trustee shall distribute to each Participant the full cash value
of his account.
ARTICLE II
MAINTENANCE OF TRUST
2.01 Funding of Trust and Plans.
(a) The Company represents and agrees that the Trust established
under this Agreement does not fund and is not intended to fund
the Plans or any other employee benefit plan or program of the
Company but shall be utilized by the Company in a manner set
forth in Appendix A below, subject to the other terms and
conditions of this Plan.
(b) Such Trust is and is intended to be a depository arrangement
with the Trustee for the setting aside of cash and other assets
of the Company as and when it so determines in its sole
discretion for the meeting of part or all of its future
retirement obligations to the Participants and their
Beneficiaries under the Plans. Contributions by the Company to
the Trust shall be in amounts determined solely by the Company.
The Company shall make its contributions to the Trust in
accordance with appropriate corporate action and the Trustee
shall have no responsibility with respect thereto, except to add
such contributions to the Fund. The purpose of this Trust is to
provide a fund from which retirement benefits may be payable
under the Plans and as to which Participants and their
Beneficiaries may, by exercising the procedures set forth herein,
have access to some or all of their benefits as such become due
without having the payment of such benefits subject to the
administrative control of the Company unless the Company becomes
insolvent as defined below.
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2.02 Company as Owner. Nothing provided in this Agreement
shall relieve the Company of its liabilities to pay the
retirement benefits provided under the Plans except to the
extent such liabilities are met by application of Fund
assets. It is the intent of the Company to have each
Account established hereunder treated as a separate trust
designed to satisfy in whole or in part the Company's legal
liability under the Plan in respect of the Participant for
whom such Account has been established. The Company,
therefore, agrees that all income, deductions and credits
for each such Account belong to it as owner for income tax
purposes and will be included on the Company's income tax
returns.
2.03 Non-ERISA Plans. The Company further represents that
the Plans are either unfunded deferred compensation
arrangements for members of its Board of Directors and a
select group of highly-compensated and management
employees, excess benefit plans or plans not covering
employees, and as such are exempt from the application of
the Employee Retirement Income Security Act of 1978
("ERISA") except for the limited disclosure requirements
applicable to such plans (other than excess benefit and non-
employee plans) for which the Company bears full
responsibility as to compliance. The Company further
represents that the Plans are not qualified under Section
401 of the Internal Revenue Code ("Code") and therefore are
not subject to any of the Code requirements applicable to
tax-qualified plans.
2.04 Participants as Unsecured Creditors. Participants and
their Beneficiaries shall have the rights under this
Agreement of unsecured general creditors of the Company and
shall not have any preferred claim on, or any beneficial
ownership interest in, the Fund prior to the time amounts
in the Fund are paid to such Participants or Beneficiaries
as benefits under this Agreement.
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2.05 Recordkeeping After Change in Control. The Trustee shall
maintain all records dealing with the Fund and its
investment and such other Participant records as are
contemplated by this Agreement, including the maintenance
of the separate Accounts of each Participant under this
Agreement after a Change in Control. All such records
shall be made available promptly on the request of the
Company. After a Change in Control, the Trustee shall also
prepare and distribute Participants' annual statements.
2.06 Information to be Provided to Trustee.
(a) The Company shall maintain and furnish the Trustee with such
reports, documents and information as shall be required by the
Trustee to perform its duties and discharge its responsibilities
under this Agreement, including without limitation a certified
copy of each of the Plans and any and all amendments thereto.
(b) The Company shall also furnish the Trustee written reports
setting forth the name, address, date of birth, and social
security or tax identification number of each Participant and
Beneficiary, a listing of the adjusted value of each separate
Account as of each valuation date on an annual basis listing each
Participants accrued benefit in each Plan set forth in Appendix
A. This information shall also be provided immediately prior to
a Change in Control.
(c) The Trustee shall be entitled to rely on the most recent
reports, documents and information furnished to it by the
Company.
(d) The Company shall be required to promptly notify the Trustee
as to the termination of employment of any Participant by death,
retirement or otherwise.
(e) Notwithstanding the foregoing, at any time after a Change in
Control, the Trustee may rely upon information provided to the
Trustee by the Participant (or the Beneficiary of a deceased
Participant).
(f) The Trustee shall be provided with such valuations and
reports as are necessary to enable the Trustee to fulfill its
obligations under this Agreement from each Investment Manager and
insurance companies holding contracts held by this Trust, and the
Trustee shall be fully protected in relying upon such valuations
and reports.
2.07 Authorized Persons for the Company.
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(a) After the execution of this Agreement, the Company shall
promptly file with the Trustee a certified list of the names and
specimen signatures of the officers of the Company and any
delegee authorized to act for it.
(b) All certifications, notices and directions by any such
authorized person or persons to the Trustee shall be in writing
signed by such person or persons. The Trustee may rely on any
such certification, notice or direction signed by such authorized
person or persons.
(c) The Company shall promptly notify the Trustee of the
addition or deletion of any person's name to or from such list,
respectively.
(d) The Trustee shall have no responsibility for acting or not
acting in reliance upon any notification believed by the Trustee
to have been so signed by a duly authorized person of the
Company. If at any time there is no person authorized to act
under this Agreement in behalf of the Company, the Board of
Directors of the Company (or if the Board has ceased to exist,
the individuals who last served as Directors) shall have the
authority to act hereunder.
ARTICLE III
DISTRIBUTIONS UNDER THE TRUST
3.01 Payments to Participants.
(a) Unless payments are being made after a Change of Control,
the entitlement of a Participant or his or her beneficiaries to
benefits under the Plans shall be determined by authorized person
at Company and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plans.
(b) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each
Participant (and his or her beneficiaries), that provides a
formula or other instructions acceptable to Trustee for
determining the amounts so payable, the form in which such amount
is to be paid (as provided for or available under the Plans), and
the time of commencement for payment of such amounts.
(c) Except as otherwise provided herein, Trustee shall make
payments to the Participants and their beneficiaries in
accordance with such Payment Schedule. Such schedules shall
include the amount of such benefits, the manner of payment and
the name, address and social security number of the recipient.
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(d) Upon Change of Control the Trustee shall initiate payments
upon request of the Participant (or by the Beneficiary with
respect to a deceased Participant) that such Participant (or
Beneficiary) has become entitled to receive benefit payments
under the Plan. This request, however, must be consistent with
the information provided to the Trustee prior to Change of
Control. The Trustee shall take such reasonable steps as it, in
its sole discretion, determines are necessary to verify any claim
by a Participant (or Beneficiary) that such Participant (or
Beneficiary) has become entitled to receive benefit payments
under a Plan and to verify any information provided by such
Participant (or Beneficiary) as to the amount of such benefits
and the manner of their payment. If there is a discrepancy, the
Trustee has authority to rely on the information provided by the
Company prior to Change of Control.
(e) All benefits payable from the Fund to a Participant (or a
Beneficiary) under a Plan shall be paid solely from the separate
Account established with respect to such Participant under such
Plan, and only if and to the extent the amounts credited to the
Participant's Account are sufficient therefor, and such
Participant's Account established hereunder with respect to such
Plan shall be charged with the amount of such payments.
(f) The Trustee shall make provisions in accordance with this
Agreement for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plans and
shall pay amounts withheld to the appropriate taxing authorities
or determine that such amounts have been reported, withheld and
paid by Company.
(g) Notwithstanding anything to the contrary in this Agreement,
the Company may make payment of benefits as provided in a Plan
identified in Appendix A directly to Participants or their
beneficiaries as they become due under the terms of the Plans.
Company shall notify Trustee thirty (30) days prior to its
decision to make payment of benefits directly, unless such other
time is mutually agreed upon.
(h) If the principal of the Trust, and any earnings thereon, are
not sufficient to make payments of benefits in accordance with
the terms of the Plans, Company shall make the balance of each
such payment as it falls due. Trustee shall notify Company where
principal and earnings are not sufficient.
(i) The Trustee shall have no responsibility for and shall incur
no liability with respect to any payment made pursuant to a
direction received in accordance with this Section or, in the
event of a dispute the Trustee shall submit the matter to the
Arbitrator pursuant to Section 8.08 of this Agreement.
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3.02 Company Insolvency.
(a) At all times during the continuance of this Trust, as
provided in Section 1.01 hereof, the principal and income of the
Trust shall be subject to claims of general creditors of Company
under federal and state law as set forth below. The Company
shall be considered to be Insolvent if it is unable to pay its
debts as they fall due; or, bankruptcy or insolvency proceedings
are initiated by its creditors or the Company or any third party
under the Bankruptcy Act of the United States or the bankruptcy
laws of any State alleging that the Company is insolvent or
bankrupt.
(b) By its approval and execution of this Agreement, the Company
represents and agrees that its Board of Directors and Chief
Executive Officer, as from time to time acting, shall have the
duty to inform the Trustee in writing of the Company's Insolvency
and the Trustee shall be entitled to rely thereon to the
exclusion of all directions or claims to pay benefits thereafter
made.
(c) Notwithstanding any provision in this Agreement to the
contrary, if at any time while the Trust is still in existence
the Company becomes insolvent (as defined in subsection (a)
above), the Trustee shall upon written notice thereof suspend the
payment of all benefits from the Fund.
(d) The Trustee shall thereafter hold the Fund in suspense until
it receives a court order directing the disposition of the Fund;
provided, however, the Trustee may deduct or continue to deduct
its fees and expenses and other expenses of the Trust, including
taxes, pending the receipt of such court order.
(e) If a person, considered by the Trustee to be reliable and
responsible, claiming to be a creditor of Company, alleges in
writing to Trustee that Company has become Insolvent, Trustee
shall determine whether Company is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits to
Plan participants or their beneficiaries.
(f) Unless Trustee has actual knowledge of Company's Insolvency,
or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have
no duty to inquire whether Company is Insolvent. Trustee may in
all events rely on such evidence concerning Company's solvency as
may be furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning Company's
solvency.
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(g) Notwithstanding anything in this Agreement to the contrary,
nothing in this Agreement shall in any way diminish any rights of
Participants or their beneficiaries to pursue their rights as
general creditors of Company with respect to benefits due under
the Plans otherwise.
3.03 Trustee Actions After Insolvency. If after an event of
Insolvency, the Company later becomes solvent without the
entry of a court order concerning the disposition of the
Fund, the Company shall by written notice so inform the
Trustee and the Trustee shall thereupon resume all its
duties and responsibilities under this Agreement without
regard for this Section until and unless the Company again
becomes Insolvent as such term is defined herein. Provided
that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to this
Section 3.02 above and subsequently resumes such payments,
the first payment following such discontinuance shall
include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the
Plans for the period of such discontinuance, less the
aggregate amount of any payments made to Participants or
their beneficiaries by Company in lieu of the payments
provided for thereunder during any such period of
discontinuance.
3.04 Satisfaction of Liabilities. Upon the satisfaction of all
Company liabilities under a Plan to a Participant (and such
Participant's Beneficiary) for whom an Account has been
established thereunder, the balance, if any, remaining in
such Participant's Account shall thereupon be reallocated
ratably to the Accounts of all Participants being continued
under such Plan (including Accounts which may have
previously been reduced to a zero balance) in the ratio
that liabilities in respect of each such Participant (and
Beneficiary) under such Plan bear to the total liabilities
to all such Participants (and Beneficiaries) for whom
Accounts have been established thereunder with respect to
such Plan. Upon the satisfaction of all Company
liabilities under a Plan the balance, if any, remaining in
the Accounts under such Plan shall thereupon be reallocated
ratably to the Accounts of Participants (and Beneficiaries)
under the other Plans covered by this Agreement (including
Accounts which may have previously been reduced to a zero
balance) in the ratio that liabilities to each such
Participant (and Beneficiary) under such Plans bear to the
total liabilities to all such Participants (and
Beneficiaries) for whom Accounts have been established
thereunder. Upon the satisfaction of all Company
liabilities under all Plans, the Trustee shall thereupon
hold or distribute the Fund in accordance with the written
instructions of the Company.
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3.05 Irrevocable Status of Trust
(a) At no time prior to the Company's Insolvency, as defined in
Section 3.02, or the satisfaction of all liabilities of the
Company under the Plans in respect of all Participants and
Beneficiaries having Accounts thereunder shall any part of the
Fund revert to the Company.
(b) Except as provided in Section 3.02 hereof, after the Trust
has become irrevocable, Company shall have no right or power to
direct Trustee to return to Company or to divert to others any of
the Trustee assets before all payment[s] of benefits have been
made to Plan participants and their beneficiaries pursuant to the
terms of the Plans.
3.06 Tax Withholding. The Trustee shall withhold from any
payment to a Participant (or a Beneficiary) the amount
required by law to be so withheld under federal, state and
local wage withholding requirements or otherwise, and shall
pay over to the appropriate government authority the amount
withheld. The Trustee may rely on instructions from the
Company as to any required withholding and shall be fully
protected in relying on such instructions. For purposes of
the preceding sentence, a failure by the Company to provide
any instructions as to required withholding may be deemed
by the Trustee to be an instruction by the Company that no
withholding is required.
ARTICLE IV
TUSTEE RESPONSIBILITIES
4.01 Standard of Care.
(a) The Trustee and each Investment Manager appointed to invest
assets in this Trust shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and
with like aims. Notwithstanding the forgoing; the Trustee shall
incur no liability to anyone for any action taken pursuant to a
direction, request, or approval given in writing by the Company
and contemplated by and complying with the terms of this
Agreement or any of the Plans, or for any failure to take any
action in the absence of such a direction, request or approval.
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(b) The duties of the Trustee shall only be those specifically
undertaken pursuant to this Agreement or by means of a separate
written agreement.
(c) The Trustee may consult with legal counsel (who may be
counsel for the Trustee or for the Company) with respect to any
of its duties or obligations thereunder, and shall be fully
protected in acting or refraining from acting in accordance with
the advice of such counsel.
4.02 Trustee Powers.
(a) The Trustee shall have, without exclusion, all powers
conferred on Trustees by applicable law, unless expressly
provided otherwise herein, provided, however, than if an
insurance policy is held as an asset of the Trust, Trustee shall
have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or
to loan to any person the proceeds of any borrowing against such
policy.
(b) Notwithstanding any powers granted to Trustee pursuant to
this Trust Agreement or to applicable law, Trustee shall not have
any power that could give this Trust the objective of carrying on
a business and dividing the gains therefrom, within the meaning
of section 301.7701-2 of the Procedure and Administrative
Regulations promulgated pursuant to the Internal Revenue Code.
4.03 Investment of Trust Assets Prior to Change of Control.
Unless an Investment Manger has been appointed pursuant to
Section, or the Company and the Trustee have mutually
agreed in a separate writing that the Trustee shall have
and exercise investment discretion, in either case with
respect to all or an portion of the assets of the Trust the
Company shall have complete discretion with respect to the
investment of such assets at all times prior to a Change in
Control, and shall direct the Trustee accordingly.
4.04 Investment of Trust Assets After a Change of Control.
After a Change in Control, the Trustee shall have and
exercise investment discretion with respect to all assets
of the Trust, including the power to appoint an Investment
Manager (who may be an affiliate of the Trustee). Subject
to the foregoing, the Trustee shall have the power:
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(a) to purchase, receive or subscribe for any securities or
other property,
(b) to retain in trust such securities or other property,
without being limited to the classes of property in which
trustees are authorized to invest by any law or any rule of court
of any state and without regard to the proportion any such
property may bear to the entire amount of the Fund;
(c) to retain any securities issued by the Company and received
by the Trustee;
(d) to sell for cash or on credit, to grant options, convert,
redeem, exchange for other securities or other property, to enter
into standby agreements for future investment, either with or
without a standby fee, or otherwise to dispose of any securities
or other property held by it;
(e) to vote in person or by proxy, or to refrain from voting, in
respect of any securities held by the Fund, and to give general
or special proxies or powers of attorney with or without power of
substitution, and to exercise any conversion privileges,
subscription rights or other options; to oppose or consent to
reorganizations, recapitalizations, consolidations, mergers and
similar transactions with respect to such securities; and
generally to exercise any of he powers of an owner with respect
to any securities or other property held by the Fund;
(f) with respect to any investment, to consent or object to or
otherwise request any action or nonaction on the part of any
corporation, association or trust or of the directors, officers,
stockholders or trustees of any such corporation, association or
trust:
(g) to settle, compromise or submit to arbitration any claims
debts or damages due or owing to or from the Fund;
(h) to deposit any property in any voting trust, or with any
protective, reorganization or similar committee, or with
depositories designated thereby; to delegate power thereto; and
to pay or agree to pay part of its expenses and compensation and
any assessments levied with respect to any property so deposited;
(i) to deposit securities with custodians, subcustodians, or
securities clearing corporations or depositories or similar
organizations, whether located within the Commonwealth of
Massachusetts or elsewhere in the United States or abroad;
(j) to commence or defend suits or legal proceedings and to
represent the Fund in all suits or legal proceedings in any court
or before any other body or tribunal (provided, however, that the
Trustee shall have no obligation to take any legal action for the
benefit of the Fund unless it shall be first indemnified for all
expenses in connection therewith, including without limitation
counsel fees);
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(k) to hold uninvested any monies received by it, without
liability for interest thereon, until such monies shall be
invested, reinvested or disbursed;
(l) to register or cause to be registered any securities or
other property-held by it thereunder in its name or in the name
of any nominee with or without indication of the capacity in
which the securities shall be held, and to hold any securities
in;
(m) to employ suitable agents and legal counsel, who may be
counsel for the Company or the Trustee, and, as a part of its
reimbursable expenses under this Agreement, to pay such agent's
and counsel's reasonable compensation and expenses;
(n) to appoint one or more individuals or corporations as a
custodian of any property and, as a part of its reimbursable
expenses under this Agreement, to pay the reasonable compensation
and expenses of any such custodian;
(o) for the purpose of the Fund, to borrow money in such amounts
and upon such terms and conditions as shall be deemed advisable
or proper to carry out the purposes of the Fund, from others, to
issue its promissory note or notes therefor, and to secure the
repayment thereof by pledging any property held by it;
(p) to form any corporation, association, partnership, or joint
venture under the laws of any jurisdiction, or to participate in
the forming of any such corporation, association, partnership, or
joint venture, or to acquire an interest in or otherwise make use
of any corporation, association, partnership, or joint venture
for he purpose of facilitating the Fund's investing in and
holding title to any property;
(q) for the purpose of facilitating the Fund's investing in and
holding title to real or personal property or part interests
therein, whatever situate, to appoint one or more individuals or
corporations as a subtrustee or subtrustees, and to pay the
reasonable compensation and expenses of each such subtrustee. Any
such subtrustee, upon being appointed, shall act with such one or
more of all of the powers, authorities, discretion, duties and
functions of the Trustee under this Section as shall be
designated in the instrument establishing such subtrust
including, without limitation, the power to receive and hold
property, real or personal, or part interest therein, oil,
mineral or gas properties, royalty interests or rights, including
equipment pertaining thereto, leaseholds, mortgages and other
interests in realty, situated in any state of the United States
of America in which the subtrustee is authorized to act as a
trustee;
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(r) to lease any property, to sell or acquire any property (at
public or private sale and for cash or on credit), to grant or
acquire options for the purchase of any property and generally to
make, execute, acknowledge and deliver any and all deeds, leases,
assignments and instruments whenever such action may be required
to perform its obligations thereunder; to write or purchase call
or put options; to trade in financial options and futures,
including index options and options on futures and to take
appropriate actions in connection therewith; to purchase and sell
foreign exchange and contracts for foreign exchange, including
transactions with the Trustee, its affiliates, agents or
subcustodians; to invest at State Street Bank and Trust Company
(i) in any type of interest bearing investment (including but
not limited to savings accounts, money market accounts,
certificates of deposit and repurchase agreements) and
(ii) in non-interest bearing accounts (including but not
limited to checking accounts) and
(iii) in common or collective investment funds managed by the
Trustee.
Generally to do all actions, exclusive of acts involving
investment management discretion, which the Trustee may
deem necessary or desirable for the protection of the Fund.
4.05 Definition of Securities. Wherever used in this Agreement,
the term "securities" shall include bonds, mortgages,
notes, obligations, warrants and stocks of any class,
certificates of participating or shares of any mutual
investment company, trust or fund, and such other evidences
of indebtedness and certificates of interest as are usually
referred to by the term "securities," and the term
"property" shall include real, personal and mixed property,
tangible or intangible, of any kind and wherever located.
4.06 Substitution of Assets. Prior to a Change in Control,
Company shall have the right at anytime, and from time to
time in its sole discretion, to substitute assets of equal
fair market value for any asset held by the Trust. This
right is exercisable by Company in a nonfiduciary capacity
without the approval or consent of any person in a
fiduciary capacity. After a Change in Control the Trustee
shall have sole and exclusive authority to determine the
assets held in the Trust.
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4.07 Proxies. In order to permit the Company or an Investment
Manger, as the case may be, to make timely and informed
decisions regarding the management of those assets in the
Fund subject to its respective control, the Trustee shall
forward to the Company or each such Investment Manager, as
the case may be, for appropriate action any and all
proxies, proxy statements, notices, requests, advice or
other communications received by the Trustee (or its
nominee) as the record owner of such assets.
4.08 Investment Managers.
(a) The Company, prior to a Change in Control, or the Trustee
after a change in Control, may from time to time appoint one or
more Investment Managers to manage any portion of the Fund and,
with respect to such portion, to direct the Trustee with respect
to effecting investment transactions on behalf of the Fund and
exercising such other powers as may be granted to Investment
Managers thereunder.
(b) Prior to a Change in Control, the Company shall give prompt
written notice to the Trustee of the appointment of an Investment
Manager, upon which the Trustee shall rely until it receives from
the Company written notice of the termination of such
appointment.
(c) When an Investment Manager is appointed, the Company or the
Trustee, as the case may be, shall determine the assets of the
Fund to be allocated to the Investment Manager from time to time.
(d) Prior to Change of Control, the Trustee shall not be liable
for the acts or omissions of such Investment Manager, shall be
under no duty to question any direction of an Investment Manager
with respect to the portion of the Fund managed by such
Investment Manager, to review any securities or property held in
such portion, to make any suggestions with respect to the
investment and reinvestment of such portion.
(e) After a Change in Control the Trustee's sole responsibility
being to comply with the standard of care set forth in Section
4.01 in appointment and retaining any Investment Manager.
Trustee shall evaluate the performance of any Investment Manager,
and shall be fully protected in acting in accordance with the
directions of an Investment Manager or for failing to act in the
absence of such directions, after a Change in Control.
4.09 Life Insurance.
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(a) The Trust may hold life insurance, retirement income on
annuity policies or contracts on or for the life a any
Participant.
(b) Prior to Change in Control, the Company reserves the right
to transfer assets to one of these vehicles.or, to direct the
Trustee to purchase any such policies or contracts on or for the
life of any such Participant out of the amounts credited to his
Account.
(c) Any such policy or contract shall be an asset of the Fund
subject to the claims of the Company creditors in the event of
insolvency, as specified in this Agreement.
(d) The proceeds of any life insurance policy shall upon the
death of the insured Participant be credited to his Account under
the applicable Plan and shall be an additional source of
benefits, if any, payable to his Beneficiary.
(e) Prior to a Change in Control, the Trustee shall be under no
duty to question any direction of the Company or to review the
form of any such policies or contracts or of the selection of the
issuer thereof, or to make suggestions to the Company with
respect to the form of such policies or contracts or to the
issuer thereof.
(f) Prior to a Change in Control, the Company may direct the
Trustee to exercise or may exercise directly the powers of the
contract holder under any such policies or contracts, and the
Trustee shall exercise such powers only upon the direction of the
Company.
(g) Notwithstanding the fact that it may have knowledge of the
terms of this Fund, the obligations of such insurance carrier
shall be measured and determined solely by the terms and
conditions of the policies or contracts issued by it, and there
shall be no obligations to any person, partnership, corporation,
trust or association other than as stated in such policies or
contracts.
(h) No insurance carrier shall for any purpose be deemed a party
to this Agreement or be responsible for the validity or
sufficiency hereof.
ARTICLE V
TRUSTEE ACCOUNTS
5.01 Disposition of Income. During the term of this Trust,
all income received by the Trust, net expenses and taxes,
shall be accumulated and reinvested.
5.02 Trust Taxes. The Company shall pay any and all federal,
state or local taxes on the Fund, or any part thereof, and
on the income therefrom.
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5.03 Trust Expenses. The Company shall pay to the Trustee
its reasonable expenses for the management and
administration of the Fund, including without limitation
advances for or prompt reimbursement of reasonable expenses
of counsel, custodians and other agents employed by the
Trustee, and reasonable compensation for its services as
Trustee thereunder, the amount of which shall be agreed
upon from time to time by the Company and the Trustee in
writing. Such expenses compensation shall be a charge on
the Fund and shall constitute a lien on the Fund in favor
of the Trustee unless and until paid by the Company.
5.05 Payment from Fund. All payments to, or reimbursements of,
the Trustee pursuant to this Article V may be made without
approval or direction of the Company
5.06 Trustee Records and Accounts. The Trustee shall keep
accurate and detailed accounts of all investments,
receipts, disbursements and other transactions thereunder,
and all accounts, books and records relating thereto shall
be open to inspections and audit at all reasonable time by
any persons designated by the Company. The Trustee shall be
entitled to reasonable compensation and reimbursement of
its reasonable expenses incurred in connection with such
audits or inspections. Within ninety (90) days following
the close of each fiscal year of the Fund (which shall be
the calendar year), and within ninety (90) days after the
removal or resignation of the Trustee as provided in
ARTICLE VII hereof, the Trustee shall render to the Company
a written account setting forth in reasonable summary the
investments, receipts, disbursements and other transactions
effected by the Trustee or reported to it by such
Investment Managers as may be appointed thereunder during
the preceding fiscal year or during the period from the
close of the last such fiscal year to the date of such
removal or resignation. Upon the expiration of 90 days from
the date of filing such annual or other account, the
Trustee shall be forever released and discharged from all
liability and accountability to anyone with respect to the
propriety of all acts and transactions shown in such
account, except with respect to any such acts or
transactions as to which the Company shall within such 90
day period file with the Trustee written objections.
The Trustee shall from time to time make such other reports
and furnish such other information concerning the Fund as
the Company may reasonably request or as may be required by
the Plans.
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5.07 Settlement of Accounts. Notwithstanding the foregoing
Section 6.1, the Trustee shall have the right to apply at
any time to a court of competent jurisdiction for the
judicial settlement of the Trustee's account, and in any
case it shall be necessary to join as parties thereto only
the Trustee and the Company; and any judgment or decree
which may be entered therein shall be conclusive upon all
persons having or claiming to have any interest in the Fund
or under a Plan.
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ARTICLE VII
AMENDMENT AND TERMINATION OF THE TRUST
7.01 Resignation and Removal of Trustee. The Trustee may
resign at any time by delivering written notice thereof to
the Company; provided, however, that no such resignation
shall take effect until the earlier of
(a) sixty (60) days from the date of delivery of such
notice to the Company, unless such notice period is
waived in whole or in part by the Company or
(b) the appointment of a successor trustee pursuant to
this Agreement. The Trustee may be removed at any
time by the Company, pursuant to a resolution of the
Board of Directors of the Company (or a duly
authorized committee thereof), by delivering to the
Trustee a certified copy of such resolution. Such
removal shall take effect upon the earlier of (i)
thirty (30) days from the date of delivery of such
resolution, unless such notice period is waived in
whole or in part by the Trustee or (ii) the
appointment of a successor trustee pursuant to Section
7.02.
Notwithstanding the foregoing, after a Change in Control,
any such removal of the Trustee shall be effective only
with the written consent of Participants (or Beneficiaries
of deceased Participants) having at least a majority of all
amounts then held in the Fund credited to their Accounts.
If, within thirty (30) days of the delivery of written
notice of resignation or removal, a successor trustee shall
not have been appointed, the provisions of Section 7.02
apply.
7.02 Successor Trustee. Upon the resignation or removal of the
Trustee, a successor trustee shall be appointed by the
Company; provided, however, that after a Change in Control
such appointment shall be effective only with the written
consent of Participants (or Beneficiaries of deceased
Participants) having at least a majority of all amounts
then held in the Fund credited to their Accounts. If the
Company (and, after a Change in Control, such Participants
and Beneficiaries) are unable to so agree upon a successor
trustee within thirty days after such notice, the Trustee
shall be entitled, at the expense of the Company, to
petition a United States District Court or any of the
courts of the Commonwealth of Massachusetts having
jurisdiction to appoint its successor. The Trustee shall
continue to serve, and to receive its compensation and
reimbursement of its expenses, (which shall continue to be
a charge upon the Fund and a lien on the Fund in favor of
the Trustee unless and until paid by the Company) until its
successor accepts the trust and receives delivery of the
Fund. Such successor trustee shall be a commercial bank or
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trust company which is established under the laws of the
United States or a State within the United States and which
is not an affiliate of the Company. Such appointment shall
take effect upon the delivery to the Trustee of a written
appointment of such successor trustee, duly executed by the
Company, and a written acceptance by such successor
trustee, duly executed by an authorized officer. Any
successor trustee shall have all the rights, powers and
duties granted the Trustee thereunder. Upon the resignation
or removal of the Trustee and the appointment of a
successor trustee, and after the acceptance and approval of
its account, the Trustee shall transfer and deliver the
Fund to such successor. Under no circumstances shall the
Trustee transfer or deliver the Fund to any successor which
is not a bank or trust company as hereinabove defined.
7.03 Amendment of Trust. This Agreement may be amended, in
whole or in part, at any time and from time to time, by the
Company, pursuant to a resolution of the Board of Directors
(or a duly authorized committee thereof), by delivery to
the Trustee of a certified copy of such resolution and a
written instrument duly executed and acknowledged in the
same form as this Agreement; provided no such amendment
shall conflict with the terms of the Plans or shall make
the Trust revocable after it has become irrevocable in
accordance with Section 1.1 hereof, provided further,
however, that the duties and responsibilities of the
Trustee shall not be increased without the Trustee's
written consent; and provide further that, after a Change
in Control any such amendment affecting any Account or the
procedures for distribution thereof shall not become
effective until sixty (60) days after a copy of such
amendment has been delivered by registered mail by the
Company or the Trustee to each person entitled to receive a
statement of a Participant's Account. In the event the
Company or the Trustee receives written objections to such
amendment from such person within such sixty (60) day
period, such amendment shall be ineffective and void in
respect of the Participant (or Beneficiary) so objecting.
7.04 Termination of Trust. The Trust established pursuant to
this Agreement shall terminate upon the earlier of:
(a) the exhaustion of the Fund,
(b) the satisfaction of all Company liabilities under the Plans
with respect to all Participants (and Beneficiaries) with respect
to whom Accounts have been established thereunder or
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(c) provided however, that the Trust shall terminate in any
event upon the expiration of twenty-one (21) years after the
death of the last survivor of the group of persons consisting of
all employees of the Company who are living on the date of the
execution of this Agreement.
7.05 Liquidation of Trust. Upon the termination of the Trust in accordance with
Section 9.1, the Trustee shall, after the acceptance and approval of its
account, distribute the remaining Fund assets, if any, to the Company.
Upon completing such distribution, the Trustee shall be relieved
and discharged of all liabilities and obligations thereunder.
The powers of he Trustee shall continue as long as any part
of the Fund remains in its possession.
ARTICLE VII
MISCELLEANOUS PROVISIONS
8.01 Indemnification. The Company hereby agrees to
indemnify and hold harmless the Trustee from and against
any loss, costs, damages or expenses, including without
limitation reasonable attorneys' fees ("Losses"), which the
Trustee may incur or pay out by reason of its performance
of duties under the Agreement any alleged or actual act, or
failure to act, on the part of the Company, any Employer,
Plan Administrator, Fund Manager, or any other person, to
the extent allowed by ERISA or the Code, except to the
extent that such loss, costs, damages or expenses result
from the negligence, bad faith or willful misconduct of the
Trustee, its employees, or any agent it has appointed or
the Trustee's breach of any of its duties thereunder.
The Trustee hereby agrees to indemnify and hold harmless
the Sponsor, the Plan Administrator, and the Fund Manager
from and against any Losses that may be incurred by,
imposed upon, or asserted against any of them by reason of
the Trustee's in the performance of its duties required by
this Agreement or by reason of the negligence or bad faith
or willful misconduct of the Trustee.
8.02 Governing Law. This Agreement shall be construed and
interpreted under, and the Trust hereby created shall be
governed by, the laws of the Commonwealth of Massachusetts.
8.03 Gender. Neither the gender nor the number (singular or
plural) of any word shall be construed to exclude another
gender or number when a different gender or number would be
appropriate.
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8.04 Non-Alienation. No right or interest of any Participant or
Beneficiary under the Plans or in the Fund shall be
transferable or assignable or subject to alienation,
anticipation or encumbrance, and no right or interest of
any Participant or Beneficiary in the Plans or in the Fund
shall be subject to any garnishment, attachment or
execution. Notwithstanding the foregoing, the Fund shall at
all times remain subject to the claims of creditors of the
Company in the event the Company becomes insolvent as
provided in Section 3.02.
8.05 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of any successor to
the Company as the result of merger, consolidation,
reorganization, or otherwise. In the event of any such
merger, consolidation, reorganization, or other similar
transaction, the successor to the Company shall promptly
notify the Trustee in writing of its successorship and
furnish the Trustee with the information specified in
Section 3.02 of this Agreement.
8.06 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an
original, but all of which shall together constitute only
one Agreement.
8.07 Addresses of Parties. Communications to the Trustee
shall be sent to:
State Street Bank and Trust Company
Marketing Department/RIS
Two International Place
Boston, MA 02110
Attn: Bruce Wilson, Vice President
or to such other address as the Trustee may specify in
writing.
Communications to the Company shall be sent to:
Douglas Mitchell
Director Risk Management
Polaroid Corporation
575 Technology Square
Cambridge MA 02139
or to such other address as the Company may specify in
writing.
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8.08 Arbitration. Any dispute between any Participant (or
Beneficiary of a deceased Participant) and the Company or
the Trustee as to the interpretation or application of the
provisions of this Trust and amounts payable thereunder
shall be determined exclusively by binding arbitration in
the Commonwealth of Massachusetts in accordance with the
rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award
in any court of competent jurisdiction. All fees and
expenses of such arbitration shall be paid by the Trustee
and considered an expense of the Trust.
8.09 Severability. In the event that any provision of this
Trust or the application thereof to any person or
circumstances shall be determined by a court of proper
jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Trust, or the application of such
provision to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be
affected thereby, and each provision of this Trust shall be
valid and enforced to the fullest extent permitted by law.
8.10 Trust Beneficiaries. Each Participant (and Beneficiary of a
deceased Participant) is an intended beneficiary under this
Trust, and shall be entitled to enforce all terms and
provisions hereof with the same force and effect as if such
person had been a party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed and their respective corporate
seals to be hereto affixed this day___ of January, 1997
STATE STREET BANK AND
TRUST COMPANY POLAROID CORPORATION
By /s/ Bruce B. Wilson BY: /s/ Ralph M. Norwood
---------------------- -------------------------
NAME: Bruce B. Wilson NAME: Ralph M. Norwood
TITLE: Vice President TITLE Vice President & Treasurer
DATE March 28, 1997 DATE 27 Mar. 97
--------------------- ---------------------
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APPENDIX A
PLANS TO WHICH THE
POLAROID NON-QUALIFED DEFERRED COMPENSATION TRUST
APPLIES AND TERMS BY WHICH ASSETS ARE HELD
A. POLAROID ELECTIVE DEFERRAL COMPENSATION PLAN.
(1) The Company shall maintain in an equitable manner a separate
Account for each Participant.
(2) It shall keep a separate record of the share of such
Participant under such Plan in the Fund.
(3) The Company may select and retain a third party
administrator to maintain such Accounts.
(4) An Account maintained with respect to a Participant shall
represent the portion of the Fund allocated to provide benefits
to such Participant.
(5) The Company shall certify to the Trustee at the time of each
contribution to the Fund the amount of such contribution being
made in respect of each Participant under each Plan.
(6) The Fund shall be revalued by the Trustee at current market
values, as determined by the Trustee, as of the last business day
of each calendar year and as of such additional dates as the
Trustee shall determine to be appropriate.
(7) The Trustee shall certify to the Company the results of each
such valuation, whereupon each Participant's Account shall be
equitably adjusted by the Company to reflect its share of income,
expense, appreciation and depreciation since the preceding
valuation date.
(8) The Company shall provide the Trustee with a compilation of
all such adjusted Account balances as of each such valuation
date.
(9) Each Participant (or Beneficiary of a deceased Participant)
shall receive a statement of the value of his separate Account at
least annually. Such statement shall be provided by the Company
prior to a Change in Control and by the Trustee after a Change in
Control.
B. POLAROID BOARD OF DIRECTORS' ELECTIVE DEFERRAL COMPENSATION
PLAN.
(1) The Company shall maintain in an equitable manner a separate
Account for each Participant.
(2) It shall keep a separate record of the share of such
Participant under such Plan in the Fund.
(3) The Company may select and retain a third party
administrator to maintain such Accounts.
(4) An Account maintained with respect to a Participant shall
represent the portion of the Fund allocated to provide benefits
to such Participant.
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(5) The Company shall certify to the Trustee at the time of each
contribution to the Fund the amount of such contribution being
made in respect of each Participant under each Plan.
(6) The Fund shall be revalued by the Trustee at current market
values, as determined by the Trustee, as of the last business day
of each calendar year and as of such additional dates as the
Trustee shall determine to be appropriate.
(7) The Trustee shall certify to the Company the results of each
such valuation, whereupon each Participant's Account shall be
equitably adjusted by the Company to reflect its share of income,
expense, appreciation and depreciation since the preceding
valuation date.
(8) The Company shall provide the Trustee with a compilation of
all such adjusted Account balances as of each such valuation
date.
(9) Each Participant (or Beneficiary of a deceased Participant)
shall receive a statement of the value of his separate Account at
least annually. Such statement shall be provided by the Company
prior to a Change in Control and by the Trustee after a Change in
Control.
C. POLAROID OFFICER'S COMPENSATION EXCHANGE PLAN
(1) The Company shall maintain in an equitable manner a separate
Account for each Participant.
(2) It shall keep a separate record of the share of such
Participant under such Plan in the Fund.
(3) The Company may select and retain a third party
administrator to maintain such Accounts.
(4) An Account maintained with respect to a Participant shall
represent the portion of the Fund allocated to provide benefits
to such Participant.
(5) The Company shall certify to the Trustee at the time of each
contribution to the Fund the amount of such contribution being
made in respect of each Participant under each Plan.
(6) The Fund shall be revalued by the Trustee at current market
values, as determined by the Trustee, as of the last business day
of each calendar year and as of such additional dates as the
Trustee shall determine to be appropriate.
(7) The Trustee shall certify to the Company the results of each
such valuation, whereupon each Participant's Account shall be
equitably adjusted by the Company to reflect its share of income,
expense, appreciation and depreciation since the preceding
valuation date.
(8) The Company shall provide the Trustee with a compilation of
all such adjusted Account balances as of each such valuation
date.
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(9) Each Participant (or Beneficiary of a deceased Participant)
shall receive a statement of the value of his separate Account at
least annually. Such statement shall be provided by the Company
prior to a Change in Control and by the Trustee after a Change in
Control.
D. POLAROID SUPPLEMENTAL DEFERRED COMPENSATION PLAN
(1) The Company shall maintain a list of all Participants
entitled to benefits under this Plan.
(2) The Company shall fund this benefit in a manner it deems
necessary and appropriate until Change of Control.
(3) Immediately prior to Change of Control all benefit and
entitlements shall be fully funded.
E. POLAROID EXCESS BENEFIT PLAN
(1) The Company shall maintain a list of all Participants
entitled to benefits under this Plan.
(2) The Company shall fund this benefit in a manner it deems
necessary and appropriate until Change of Control.
(3) Immediately prior to Change of Control all benefit and
entitlements shall be fully funded.
F. POLAROID EXCESS BENEFIT PLAN
(1) The Company shall maintain a list of all Participants
entitled to benefits under this Plan.
(2) The Company shall fund this benefit in a manner it deems
necessary and appropriate until Change of Control.
(3) Immediately prior to Change of Control all benefit and
entitlements shall be fully funded.
-28-
Exhibit 10.7
April 29, 1997
Mr. Serafino Posa
601 Keystone Avenue
River Forest, Illinois 60305
Dear Sandy:
We are delighted you have joined Polaroid Corporation as a
senior executive. This will serve to confirm our
agreements and the arrangements under which you have joined
us.
Your title is Executive Vice President, Consumer Imaging
Group reporting to the Chairman and Chief Executive
Officer. Your salary is three hundred twenty thousand
dollars ($320,000) per year ($26,667/month).
BONUS
- -----
Immediately upon joining us, you received a sign-on bonus
of one hundred ten thousand dollars ($110,000).
You are enrolled in the Executive Bonus Plan. This plan
pays a percentage of salary as a bonus opportunity target
if the Company achieves its financial plan. Your bonus
opportunity target is fifty five percent (55%) of your
earnings based on one hundred percent (100%) attainment of
the financial plan. Your bonus opportunity for the year
1997, payable in February 1998, will be no less than one
hundred seventy six thousand dollars ($176,000).
STOCK OPTIONS - HIRING GRANT
- ----------------------------
You were granted fifty thousand (50,000) non-dividend
paying stock options upon hire, which are vested in
accordance with the rules
<PAGE>
governing the Polaroid Stock Incentive Plan. The Stock
Option Agreement sets forth the terms of this grant.
LONG TERM INCENTIVE PLAN
- ------------------------
You are participating in our Long Term Incentive Plan
(LTIP) which enables key employees to increase their
ownership in the Company. Specifically, you have the
opportunity to receive annual stock options and performance
share grants at the Executive Vice President level. Based
on a stock price of $44, in 1997 you could expect an
allocation of about seventeen thousand five hundred
(17,500) stock options and an opportunity to earn three
thousand five hundred (3,500) performance shares (Polaroid
stock). The performance shares are earned based on sales
growth and Return On Net Assets improvements. These grants
should provide an annual opportunity to earn one hundred
twenty five percent (125%) of your proposed base salary.
RETIREMENT PLANS
- ----------------
You are eligible to make 401(k) and voluntary after tax
contributions through our Polaroid Profit Sharing
Retirement Plan and participate in the Polaroid Pension
Plan (five-year vesting) which is a Company-paid defined
benefit plan.
Additionally, you are eligible to participate in the
Elective Deferred Compensation Plan. This plan allows
executives and officers to defer part of their annual
compensation until retirement or a specific date. You will
be given the opportunity to decide on the length of your
deferral option but it must be at least two (2) years.
RELOCATION
- ----------
Expenses in connection with your relocation from Illinois
to Massachusetts will be reimbursed in accordance with the
Home Equity Relocation Plan.
VACATION AND BENEFITS
- ---------------------
You are entitled to four (4) weeks vacation each year
starting in 1997. Of course, you are eligible to
participate in all other health, medical, dental, life and
disability benefit programs and receive employment
perquisites on a basis consistent with other Polaroid
executives.
TERMINATION DATE OF EMPLOYMENT
- ------------------------------
If a Change in Control has not occurred and your employment
is terminated by Polaroid for any reason other than Cause
(as defined below), or at your initiative within twenty-
four (24) months of your hiring date due to a reassignment
Page 2 of 18
<PAGE>
by Polaroid to a position of significantly lesser
responsibility, relocation outside of the Boston
metropolitan area without your consent, or the resignation
of Gary DiCamillo, you will receive a lump sum severance
payment of twenty-four (24) months' pay and all stock
options granted to such date will be fully vested. This
severance payment will be based upon your monthly base pay
rate on the Termination Date. Additionally, the Company
will provide medical, dental and life insurance coverage
for two (2) years at current employee group rates.
Notwithstanding the foregoing, if your employment is
terminated for Cause (as defined below), you will not be
entitled to receive such severance and all options shall be
immediately forfeited.
TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL
- -------------------------------------------------------
1. Defined Terms.
a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
is the Beneficial Owner of twenty percent (20%) or more of
the Stock then outstanding, but does not include any
Subsidiary of the Company, any employee benefit plan of the
Company or any of its Subsidiaries or any Person holding
Stock for or pursuant to the terms of any such employee
benefit plan.
b) "Affiliate and Associate" when used with reference to
any Person, shall have the meaning given to such terms in
Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.
c) "Annual Bonus" shall mean a bonus amount payable under
the Company's executive annual bonus plan (currently the
Polaroid Incentive Plan for Executives). Unless otherwise
specifically provided, this annual bonus shall be
calculated assuming the Company target has been achieved
and that there are no factors that reduce the ultimate
distribution.
d) "Base Salary" shall mean the annual rate of base
salary (disregarding any reduction in such rate that
constitutes Constructive Termination) in effect on the date
of the Change in Control or the Termination Date which ever
is higher.
e) "Beneficial Owner" shall be a Person deemed to
"beneficially own" any securities:
Page 3 of 18
<PAGE>
i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly; or
ii) which such Person or any of such Person's Affiliates
or Associates has:
(a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(written or oral), or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise;
provided however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted
for purchase or exchange thereunder; or,
(b) the right to vote pursuant to any agreement,
arrangement or understanding (written or oral); provided
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding (written or oral)
to vote such security (1) arises solely from a revocable
proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the
Exchange Act, and (2) is not also then reportable on
Schedule 13D (or any comparable or successor report) under
the Exchange Act; or
(c) which are beneficially owned, directly or indirectly,
by any Person with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (written or oral), for the
purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described above) or disposing of any
securities of Polaroid.
Page 4 of 18
<PAGE>
f) "Board" shall mean the Board of Directors of the
Company.
g) "Bonus" means the amount payable to you under any
plan, or agreement offered by Polaroid.
h) "Cause" means either of the following:
i) Your willful malfeasance having a material adverse
effect on Polaroid; or
ii) Your conviction of a felony;
provided, that any action or refusal by
you shall not constitute "Cause" if, in
good faith, you believed such action or
refusal to be in, or not opposed to, the
best interests of Polaroid, or if you
shall be entitled, under applicable law
or under an applicable Polaroid
Certificate of Incorporation or the
Polaroid By-Laws, as they may be amended
or restated from time to time, to be
indemnified with respect to such action
or refusal.
i) "Change in Control" shall occur on:
i) the date on which a change in control of the Company
occurs of a nature that would be required to be reported
(assuming that the Company's Stock was registered under the
Exchange Act) in response to an item (currently item 6(e))
of Schedule 14A of Regulation 14A promulgated under the
Exchange Act or an item (currently Item l(a)) of Form 8-K
under the Exchange Act;
ii) the date on which there is an Acquiring Person and a
change in the composition of the Board of the Company
within two years after the Share Acquisition Date such that
the individuals who constitute the Board prior to the Share
Acquisition Date shall cease for any reason to constitute
at least a majority of the Board;
iii) any day on or after the Share Acquisition Date when
directly or indirectly, any of the transactions specified
in the following clauses occurs:
(a) the Company shall consolidate with, or merge with and
into, any other Person;
Page 5 of 18
<PAGE>
(b) any Person shall merge with and into the Company;
(c) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries
shall sell, lease, exchange or otherwise transfer or
dispose of), in one or more transactions, the major part of
the assets of Polaroid and its Subsidiaries (taken as a
whole) to any other Person or Persons; or,
iv) the date when a Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or any of its Subsidiaries or any Person holding
Stock for or pursuant to the terms of any such employee
benefit plan) alone or together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of
thirty percent (30%) or more of the Stock then outstanding;
v) the date on which the stockholders of The Company
approve a merger or consolidation of The Company with any
other corporation other than:
(a) a merger or consolidation which would result in voting
securities of The Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving or parent entity) fifty percent (50%) or more
of the combined voting power of the voting securities of
The Company or such surviving or parent entity outstanding
immediately after such merger or consolidation; or
(b) a merger or consolidation effected to implement a
recapitalization of The Company (or similar transaction) in
which no Person acquires fifty percent (50%) or more of the
combined voting power of The Company's then outstanding
securities; or,
vi) the date stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a
similar effect).
Page 6 of 18
<PAGE>
j) "Code" means the Internal Revenue Code of 1986, as
amended.
k) "Confidential Information" means non-public
information relating to the business plans, marketing
plans, customers or employees of the Company other than
information the disclosure of which cannot reasonably be
expected to adversely affect the business of the Company.
l) "Constructive Termination" shall occur when you
voluntarily terminate your employment with the Company or
retire after the occurrence of one or more of the following
events on or after the Change in Control:
i) a reduction in the Participant's Compensation Base Pay
from the amount of the Participant's Base Pay Compensation
on the day immediately preceding the Change in Control;
ii) the elimination of or reduction of any benefit under
any bonus, incentive or other employee benefit plan in
effect on the day immediately preceding the Change in
Control, without an economically equivalent replacement, if
the Participant was a participant or member of such plan on
the day immediately preceding the Change in Control;
iii) the discontinuation of or any reduction in a
Participant's participation or membership in any bonus,
incentive or other benefit plan in which the Participant
was a participant or member on the day immediately
preceding the Change in Control, without an economically
equivalent replacement;
iv) the reassignment of the Participant without his
consent from his regular shift or regular duties as they
existed on the day immediately preceding the Change in
Control;
v) the reassignment of the Participant without his
consent to a location more than thirty (30) miles from his
regular workplace on the day immediately preceding the
Change in Control;
Page 7 of 18
<PAGE>
vi) the reduction in the Participant's job title or level
in effect on the day immediately preceding the Change in
Control;
vii) the provision of significantly less favorable working
conditions than those provided on the day immediately
preceding the Change in Control; or
viii) a significant diminution in duties or
responsibilities or the reassignment of the Participant to
duties which represent a position of lesser responsibility
than his duties as they existed on the day immediately
preceding the Change in Control.
m) "Disability" shall mean the Executive's disability
within the meaning of the Polaroid Long Term Disability
Plan.
n) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as in effect on the date in question.
o) "Person" shall mean any individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity.
p) "Polaroid" or "Company" means Polaroid and its
Subsidiaries and affiliates and, after a Change in Control,
any successor or successors thereto.
q) "Share Acquisition Date" shall mean the first date any
Person shall become an Acquiring Person.
r) "Stock" shall mean the outstanding shares of Common
Stock of the Company and any other shares of capital stock
of the Company into which the Common Stock shall be
reclassified or changed.
s) "Subsidiary" of the Company shall mean any corporation
of which the Company owns, directly or indirectly, more
than 50% of the Voting Stock.
t) "Terminated" shall mean:
i) termination by Polaroid without Cause at any time
within the two (2) years following a Change in Control;
Page 8 of 18
<PAGE>
ii) your termination due to a Constructive Termination at
any time within the two (2) years following a Change in
Control; or
iii) termination within three (3) months prior to a Change
in Control at the request of any individual or entity
acquiring ownership and control of Polaroid. If your
employment with Polaroid is terminated prior to a Change in
Control at the request of Acquiring Person, this Agreement
shall become effective upon the subsequent occurrence of a
Change in Control involving such Acquiring Person. In such
situation your Termination Date shall be deemed to have
occurred immediately following the Change in Control, and
therefore you shall be entitled to the benefits provided in
this Agreement.
u) "Termination Date" shall mean the later of the date
there is a Change in Control or the date you are
terminated.
v) "Voting Stock" shall mean capital stock of any class
or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect
the directors of a corporation.
2. Effective Date; Term. This Section of the Agreement
shall be effective immediately prior to a Change in Control
(the "Effective Date") and shall remain in effect for two
(2) years following such Change in Control, and such
additional time as may be necessary to give effect to the
terms of the Agreement.
3. Change in Control Benefits. If your employment with
Polaroid is terminated, you shall be entitled to the
following benefits:
a) Severance Benefits. Within ten (10) business days
after the Termination Date, Polaroid shall pay you a lump
sum amount, in cash, equal to:
i) Two (2) times the sum of:
(a) Your Base Salary; and
(b) Your Annual Bonus; and
ii) Your Annual Bonus multiplied by a fraction, the
numerator of which shall equal the number of days you were
employed by Polaroid in the calendar year in which the
Termination Date occurs and the denominator of which shall
equal three hundred sixty-five (365).
Page 9 of 18
<PAGE>
b) Continued Welfare Benefits. Until the second
anniversary of the Termination Date, you shall be
entitled to participate in the Company's medical, dental,
and life insurance plans, at the highest level provided to
you during the period beginning immediately prior to the
Change in Control and ending on the Termination Date and at
no greater cost than the cost you were paying immediately
prior to Change in Control; provided, however, that if you
become employed by a new employer, your coverage under the
applicable Polaroid plans shall continue, but your coverage
thereunder shall be secondary to (i.e., reduced by) any
benefits provided under like plans of such new employer.
c) Payment of Accrued But Unpaid Amounts. Within ten
(10) business days after the Termination Date, Polaroid
shall pay you:
i) earned but unpaid compensation, including, without
limitation, any unpaid portion of your Bonus accrued with
respect to the full calendar year ended prior to the
Termination Date; and
ii) all compensation previously deferred by you on a non-
qualified basis but not yet paid.
d) Retiree-Medical Benefits. If you are or would become
fifty-five (55) or older and your age and service equal
sixty-five (65) and you have at least five (5) years of
service with the Company within two (2) years of Change in
Control, you are eligible for retiree medical benefits (as
such are determined immediately prior to Change in
Control). You are eligible to commence receiving such
retiree medical benefits based on the terms and conditions
of the applicable plans in effect immediately prior to the
Change in Control.
e) Supplemental Retirement and Profit Sharing Benefits.
i) On the Termination Date, you shall become vested in
the benefits provided under Polaroid's non-qualified
defined benefit pension plans or any successor plans (the
"Supplemental Plans").
Page 10 of 18
<PAGE>
ii) Within ten (10) business days after the Termination
Date, Polaroid shall pay you a lump sum cash amount equal
to the present value of your accrued benefit under the
Supplemental Plans. For purposes of computing the lump sum
present value of your accrued benefit under the
Supplemental Plans,
(a) Polaroid shall credit you with two (2) years of plan
participation and service and two (2) years of age for all
purposes (including additional accruals and eligibility for
early retirement) over your actual years and fractional
years of plan participation and service and age credited to
you on the Termination Date; and
(b) Polaroid shall apply the present value (and any other
actuarial adjustment required by this Agreement) using the
actuarial assumptions set forth in Section 1.01 of the
Pension Plan. In determining the your benefits under this
paragraph (e)(ii), the terms of the Supplemental Plans as
in effect immediately prior to the Change in Control,
except as expressly modified in this paragraph (e), shall
govern.
f) Effect on Existing Plans. All Change in Control
provisions applicable to you and contained in any plan,
program, agreement or arrangement maintained as of the date
this Agreement is signed (including, but not limited to,
any stock option, restricted stock or pension plan) shall
remain in effect through the date of a Change in Control,
and for such period thereafter as is necessary to carry out
such provisions and provide the benefits payable
thereunder, and may not be altered in a manner which
adversely affects you without your prior written approval.
This means that all awards of options, performance shares
or such other awards as may be granted shall upon Change in
Control be fully vested consistent with the terms of these
Agreements. Notwithstanding the foregoing, no benefits
shall be paid to you, however, under the Polaroid Extended
Severance Plan or any other severance plan maintained
generally for the employees of Polaroid if you are eligible
to receive severance benefits under this Agreement.
Page 11 of 18
<PAGE>
g) Outplacement Counseling. Outplacement services will
be provided consistent with Polaroid's outplacement
practices in effect prior to the Change in Control.
4. Gross-up.
a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the
Company, or one or more trusts established by the Company
for the benefit of its employees, to or for the benefit of
you ("the Executive") (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement, or otherwise) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Code or any
interest or penalties incurred by the Executive with
respect to such excise tax (such excise tax, together with
any such interest and penalties, hereinafter collectively
referred to as the "Excise Tax"), the Executive shall be
entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and the Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
b) Subject to the provisions of Section 4(c), all
determinations required to be made under this Section 4,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting
firm as may be designated by the Executive (the "Accounting
Firm") which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (15)
business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for an individual,
entity or group effecting the change in ownership or
effective control (within the meaning of Section 280G of
the Code), the Executive shall appoint another nationally
recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees
and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 4, shall be paid by the Company to
Page 12 of 18
<PAGE>
the Executive within five (5) business days after the
receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall so indicate to the Executive in
writing. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of
the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section
4(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit.
c) The Executive shall notify the Company in writing of
any written claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim
and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid
(but the Executive's failure to comply with this notice
obligation shall not eliminate his rights under this
Section except to the extent Polaroid's defense against the
imposition of the Excise Tax is actually prejudiced by any
such failure). The Executive shall not pay such claim
prior to the expiration of the thirty (30) day period
following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If
the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such
claim, the Executive shall:
i) give the Company any information reasonably requested
by the Company relating to such claim;
ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by the Company;
Page 13 of 18
<PAGE>
iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear
and pay directly all costs and expenses
(including additional interest and penalties)
incurred in connection with such contest and
shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with
respect thereto) imposed as a result of such
representation and payment of costs and expenses.
Without limitation on the foregoing provisions of
this Section 4(c), the Company shall control all
proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings,
hearings and conferences with the taxing
authority in respect of such claim and may, at
its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to
a determination before any administrative
tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Company
shall reasonably determine; provided, however,
that if the Company directs the Executive to pay
such claim and sue for a refund, the Company
shall advance the amount of such payment to the
Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect
thereto) imposed with respect to such advance or
with respect to any imputed income with respect
to such advance; and provided, further, that if
the Executive is required to extend the statute
of limitations to enable the Company to contest
such claim, the Executive may limit this
extension solely to such contested amount. The
Company's control of the contest shall be limited
to issues with respect to which a Gross-Up
Payment would be payable hereunder and the
Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing
authority.
Page 14 of 18
<PAGE>
d) If, after the Executive receives an amount
advanced by the Company pursuant to Section 4(c),
the Executive receives any refund with respect to
such claim, the Executive shall (subject to the
Company's complying with the requirements of
Section 4(c)) promptly pay to the Company the
amount of such refund (together with any interest
paid or credited thereon after taxes applicable
thereto). If, after the Executive receives an
amount advanced by the Company pursuant to
Section 4(c), a determination is made that the
Executive shall not be entitled to any refund
with respect to such claim and the Company does
not notify the Executive in writing of its intent
to contest such denial of refund prior to the
expiration of thirty (30) days after such
determination, then such advance shall be
forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up
Payment required to be paid.
4. Mitigation. You shall not be required to mitigate
damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise,
and compensation earned from such employment or otherwise
shall not reduce the amounts otherwise payable under this
Agreement. No amounts payable under this Agreement shall
be subject to reduction or offset in respect of any claims
which Polaroid (or any other person or entity) may have
against you unless specifically referenced herein.
5. Disputes. Any dispute or controversy arising under or
in connection with this Agreement shall be settled
exclusively by arbitration in Boston, Massachusetts or, at
your option, in the county where you then resides, in
accordance with the Rules of the American Arbitration
Association then in effect. Judgment may be entered on an
arbitrator's award relating to this Agreement in any court
having jurisdiction.
6. Costs of Proceedings. Polaroid shall pay all of your
costs and expenses, including attorneys' fees and
disbursements, at least monthly, in connection with any
legal proceeding (including arbitration), whether or not
instituted by Polaroid or you as the Executive, relating to
the interpretation or enforcement of any provision of this
Agreement, except that if Executive instituted the
proceeding and the judge, arbitrator or other individual
presiding over the proceeding affirmatively finds that
Executive instituted the proceeding in bad faith, Executive
shall pay all costs and expenses, including attorneys' fees
and disbursements, of Executive. Polaroid shall pay pre-
judgment interest on any money judgment obtained by
Executive as a result of such a proceeding, calculated at
the prime rate of The Chase Manhattan Bank (or its
successors), as in effect from time to time, from the date
that payment should have been made to Executive under this
Agreement.
Page 15 of 18
<PAGE>
7. INDEMNIFICATION; DIRECTOR'S AND OFFICER'S LIABILITY
INSURANCE. You shall, after the Termination Date, retain
all rights to indemnification under applicable law or under
Polaroid Certificate of Incorporation or the Polaroid By-
Laws, as they may be amended or restated from time to time.
In addition, Polaroid shall maintain Director's and
Officer's liability insurance on behalf of Executive, at
the better of the level in effect immediately prior to the
Change in Control or the Executive's Termination Date, for
the two (2) year period following the Termination Date, and
throughout the period of any applicable statute of
limitations.
TERMINATION FOR CAUSE
- ---------------------
Nothing in this Agreement shall be construed to prevent
Polaroid from terminating you employment for Cause. If you
are terminated for Cause, Polaroid shall have no obligation
to make any payments under this Agreement, except for
payments that may otherwise be payable under then existing
employee benefit plans, programs and arrangements of
Polaroid.
CONFIDENTIALITY
- ---------------
Without the prior written consent of the Company, except to
the extent required by an order of a court having competent
jurisdiction or under subpoena from an appropriate
government agency, you shall comply with the
Confidentiality Agreement you executed when hired, and
shall not disclose any trade secrets, customer lists,
drawings, designs, information regarding product
development, marketing plans, sales plans, manufacturing
plans, management organization information (including data
and other information relating to members of the Board and
management), operating policies or manuals, business plans,
financial records or other financial, commercial, business
or technical information relating to the Company or any of
its Subsidiaries or information designated as confidential
or proprietary that the Company or any of its Subsidiaries
may receive belonging to suppliers, customers or others who
do business with the Company or any of its subsidiaries
(collectively, "Confidential Information") to any third
person unless such Confidential Information has been
previously disclosed to the public by the Company or is in
the public domain (other than by reason of your breach of
this Agreement).
ASSIGNMENT
- ----------
Except as otherwise provided herein, this Agreement shall
be binding upon, inure to the benefit of and be enforceable
by Polaroid and you as the Executive and their respective
heirs, legal representatives, successors and assigns. If
Polaroid shall be merged into or consolidated with another
Page 16 of 18
<PAGE>
entity, the provisions of this Agreement shall be binding
upon and inure to the benefit of the entity surviving such
merger or resulting from such consolidation. Polaroid will
require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of Polaroid, by
agreement in form and substance satisfactory to Executive,
to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Polaroid would
be required to perform it if no such succession had taken
place. The provisions of this Agreement shall continue to
apply to each subsequent employer of Executive hereunder in
the event of any subsequent merger, consolidation or
transfer of assets of such subsequent employer.
PAYMENTS IN EVENT OF DEATH
- --------------------------
Should the you become eligible to receive payments and
benefits under this Section and die prior to receipt of all
such payments and benefits, the residual payments shall be
made to the beneficiaries identified on the you beneficiary
form for the Executive Deferred Compensation Plan. Any
residual family medical and dental benefits which the you
were receiving on the you date of death shall continue to
the family members the you had covered in such medical and
dental plans on such date.
WITHHOLDING
- -----------
Polaroid may, to the extent required by law, withhold
applicable federal, state and local income and other taxes
from any payments due to Executive hereunder.
APPLICABLE LAW
- --------------
This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts made and to be
performed therein.
ENTIRE AGREEMENT
- ----------------
This Agreement, with the plans and grant agreements
referenced herein, contains the entire understanding and
agreement between the Parties concerning the subject matter
hereof and supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written
or oral, between the Parties with respect thereto.
If these terms are acceptable to you, please sign and date
the duplicate copy of this letter, and return it to me.
Sandy, we are all extremely impressed with you personally
and professionally. You are a valuable addition to Polaroid
Page 17 of 18
<PAGE>
Corporation, and look forward to having you continue your
strong career path as Executive Vice President, Consumer
Imaging Group.
Sincerely,
/s/ Gary T. DiCamillo
Gary T. DiCamillo
Chairman and
Chief Executive Officer
I accept the terms and conditions as outlined in this
letter.
/s/ Serafino Posa 5/2/97
- ----------------------- --------------
Serafino Posa Date
Page 18 of 18
Exhibit 10.8
May 12, 1997
Mr. Thomas M. Lemberg
287 Marlborough Street, Apartment A
Boston, Massachusetts 02116
Dear Tom:
We are delighted to have you here at Polaroid. This
letter confirms the terms and conditions of your
employment at Polaroid Corporation as Senior Vice
President effective September 1, 1996 ("Employment
Date").
Your title is Senior Vice President, General Counsel and
Secretary, reporting to the Chairman and Chief Executive
Officer. Your starting salary is $275,000 per year
($22,917 per month) with a review after six (6) months
from your Employment Date.
BONUS
- -----
As of your Employment Date you were enrolled in the
Executive Bonus Plan. This plan pays a percentage of
salary as a bonus opportunity target if Polaroid achieves
its financial plan. Your bonus opportunity target will
be fifty-five percent (55%) of your earnings based on one
hundred percent (100%) attainment of the financial plan.
Your bonus for the years 1996 and 1997, payable in
February of the following year, will be no less than
$75,000 irrespective of Polaroid's financial performance.
STOCK OPTIONS - HIRING GRANT
- ----------------------------
You were granted 50,000 non-dividend paying stock options
upon hire, which will be vested in accordance with the
rules governing the Polaroid Stock Incentive Plan. You
have received an Agreement which sets forth the terms of
this grant.
LONG-TERM INCENTIVE PLAN
- ------------------------
As of your Employment Date, you became a participant in
our long-term Incentive Plan ("LTIP") which enables key
employees to receive stock rights to increase their
ownership in Polaroid. Specifically, you will have the
opportunity to receive annual stock options and
performance share grants at the Senior Vice President
level.
<PAGE>
PENSION RETIREMENT
- ------------------
You are eligible to participate in the Polaroid Pension
Plan (five (5) year vesting) which is a Polaroid-paid
defined benefit plan. In addition to the benefits
normally provided under this Plan, and after any
additional credit becomes applicable under the Change in
Control provision set forth below, you will receive an
additional monthly retirement benefit which shall be
equal to the excess of:
(a) the monthly pension benefit you would
receive under the terms of the Polaroid Pension
Plan (including the benefits under the Polaroid
Retirement Parity Plan and the Polaroid
Executive Equalization Retirement Plan)
("Retirement Benefit") in effect on your
Employment Date, assuming that you are credited
with one (1) additional year of credited
benefit accrual for every four (4) years of
credited benefit accrual earned under the Plan,
over
(b) the actual monthly Retirement Benefit
which is payable without regard to this
provision.
In addition your pension benefit will vest over your
first four (4) years of actual service. These benefits
shall be provided in the Supplemental Benefit Plan which
is a non-qualified retirement plan for executives.
In determining the amount of your total monthly
retirement benefit, such amount shall be calculated
assuming the same frequency of payment, the same form of
annuity and the same commencement date of payment as the
benefits to be paid. Moreover, you shall be vested in
the Retirement Benefit and the enhancement set forth in
this Section upon completion of four (4) years of
credited vested service. The Benefit which you receive
pursuant to this Section shall be paid at the same time,
and in the same form, as the Retirement Benefit.
401(k) RETIREMENT PLANS
- -----------------------
As of your Employment Date you became eligible to make
401(k) and voluntary after tax contributions through our
Polaroid Profit Sharing Retirement Plan. Additionally,
in January, Polaroid Corporation implemented a new Non-
Qualified Deferred Compensation Plan. This plan allows
executives and officers to defer part of their annual
compensation at competitive, guaranteed interest rates
until retirement or a specific date. You have been given
the opportunity to enroll in this Plan.
Page 2 of 18
<PAGE>
VACATION AND BENEFITS
- ---------------------
You will be entitled to four (4) weeks vacation as of
your Employment Date. Of course, you will participate in
all other health, medical, dental, life and disability
benefit programs and receive employment perquisites on a
basis consistent with other Polaroid executives.
TERMINATION OF EMPLOYMENT
- -------------------------
If you are terminated prior to a Change in Control, by
Polaroid without Cause or if you voluntarily terminate
after a Constructive Termination (as such terms are
defined below) within twenty-four (24) months of your
hiring date, you will continue to receive a salary for a
period of twenty-four (24) months, at your Base Pay rate
immediately prior to your termination. Moreover, all
stock options granted to such date will be fully vested.
The purpose of this salary continuation shall be to
offset such dislocation. This payment will be based upon
your monthly Base Pay Rate on the date of your
termination. Additionally, Polaroid will provide you
continuation of the medical, dental and life insurance
coverage for two (2) years at its applicable employee
contribution rates. This salary continuation, however,
does not create rights to continued participation in any
other benefit or program not identified. Should you
become eligible to receive payments and benefits under
this Section and die prior to receipt of all such
payments and benefits, the residual payments shall be
made to the beneficiaries identified on your beneficiary
form for the Executive Deferral Compensation Plan. Any
residual family medical and dental benefits which you
were receiving on your date of death shall continue to
the family members you had covered in such medical and
dental plans on such date.
Notwithstanding the foregoing, if your employment is
terminated for serious and willful misconduct, you will
not be entitled to receive any of the benefits as set
forth in this Section and all options shall be
immediately forfeited.
Page 3 of 18
<PAGE>
TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL
- -------------------------------------------------------
1. Defined Terms.
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of
such Person, is the Beneficial Owner of twenty percent
(20%) or more of Common Shares then outstanding, but does
not include any Subsidiary of the Company, any employee
benefit plan of the Company or of any of its subsidiaries
or any Person holding Common Shares for or pursuant to
the terms of any such employee benefit plan.
(b) "Affiliate and Associate", when used with reference
to any Person, shall have the meaning given to such terms
in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act (as defined below).
(c) "Annual Bonus" shall mean the Executive's annual
bonus paid pursuant to the Company's annual bonus plan in
effect at the time (currently the Polaroid Incentive Plan
for Executives). Unless otherwise specifically provided,
the Annual Bonus shall be calculated assuming the
Corporate target is reached and no additional factors are
considered to decrease the Executive's award under the
Plan.
(d) "Base Salary" means your annual rate of base salary
(disregarding any reduction in such rate that constitutes
Constructive Termination) in effect on the date of the
Change in Control or the Termination Date, whichever is
higher.
(e) "Beneficial Owner" shall be a Person deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
or
(ii) which such Person or any of such Person's Affiliates
or Associates has:
(a) the right to acquire (whether such right is
exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, warrants or options,
or otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange
thereunder;
Page 4 of 18
<PAGE>
(b) the right to vote pursuant to any agreement,
arrangement or understanding (written or oral); provided
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding (written or oral)
to vote such security (1) arises solely from a revocable
proxy given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations
under the Exchange Act and (2) is not also then
reportable on Schedule 13D (or any comparable or
successor report) under the Exchange Act; or
(c) which are beneficially owned, directly or
indirectly, by any Person with which such Person or any
of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (written or
oral), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described above)
or disposing of any securities of Polaroid.
(f) "Cause" means either of the following:
(i) Your willful malfeasance having a material adverse
effect on Polaroid; or
(ii) Your conviction of a felony;
provided, that any action or refusal
shall not constitute "Cause" if, in
good faith, you believe such action or
refusal to be in, or not opposed to,
the best interests of Polaroid, or if
you shall be entitled, under applicable
law or under an applicable Polaroid's
Certificate of Incorporation or By-
Laws, as they may be amended or
restated from time to time, to be
indemnified with respect to such action
or refusal.
Page 5 of 18
<PAGE>
(g) "Change in Control" shall occur on:
(i) The date on which a change in control of Polaroid
occurs of a nature that would be required to be reported
(assuming that Polaroid's Common Stock was registered
under the Securities Exchange Act of 1934, as in effect
on the date in question (Exchange Act)) in response to an
item (currently Item 6(e)) of Schedule 14A of Regulation
14A promulgated under the Exchange Act (or any comparable
or successor Schedule), or an item (currently Item 1(a))
of Form 8-K under the Exchange Act(or any comparable or
successor form); or,
(ii) the date on which there is an Acquiring Person and a
change in the composition of the Board of the Company
within two (2) years after the Share Acquisition Date
such that the individuals who constituted the Board prior
to the Share Acquisition Date (the "Incumbent Board")
shall cease for any reason to constitute at least a
majority of the Board; or,
(iii) Any day on or after the Share Acquisition Date
when directly or indirectly, any of the transactions
specified in the following clauses occurs:
(a) Polaroid shall consolidate with, or merge with and
into, any other Person;
(b) any Person shall merge with and into Polaroid;
(c) Polaroid shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its
subsidiaries shall sell, lease, exchange or otherwise
transfer or dispose of), in one or more transactions, the
major part of the assets of Polaroid and its subsidiaries
(taken as a whole) to any other Person or Persons; or,
Page 6 of 18
<PAGE>
(iv) The date when a Person (other than Polaroid, any
Subsidiary of Polaroid, any employee benefit plan of
Polaroid or any of its subsidiaries or any Person holding
Common Shares for or pursuant to the terms of any such
employee benefit plan) alone or together with all
Affiliates and Associates becomes the Beneficial Owner of
thirty percent (30%) or more of Polaroid's Common Shares
then outstanding; or,
(v) The date on which the stockholders of Polaroid
approve a merger or consolidation of Polaroid with any
other corporation other than:
(a) a merger or consolidation which would result in
voting securities of Polaroid outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving or parent entity) fifty
percent (50%) or more of the combined voting power of the
voting securities of Polaroid or such surviving or parent
entity outstanding immediately after such merger or
consolidation; or
(b) a merger or consolidation effected to implement a
recapitalization of Polaroid (or similar transaction) in
which no Person acquires fifty percent (50%) or more of
the combined voting power of Polaroid's then outstanding
securities; or,
(vi) The date stockholders of Polaroid approve a plan of
complete liquidation of Polaroid or an agreement for the
sale or disposition by Polaroid of all or substantially
all of Polaroid's assets (or any transaction having a
similar effect).
(h) "Code" means the Internal Revenue Code of 1986, as
amended.
Page 7 of 18
<PAGE>
(i) "Common Shares". Common Shares shall mean the
outstanding shares of Common Stock of the Company or any
other shares of capital stock of the Company into which
the Common Stock shall be reclassified or changed.
(j) "Confidential Information" means nonpublic
information relating to the business plans, marketing
plans, customers or employees of Polaroid other than
information the disclosure of which cannot reasonably be
expected to adversely affect the business of Polaroid.
(k) "Constructive Termination" shall occur when you
voluntarily terminate your employment with the Company or
retire after the occurrence of one or more of the
following events on or after the Change in Control:
(i) a reduction in the Participant's Base Pay from the
amount of the Participant's Base Pay on the day
immediately preceding the Change in Control;
(ii) the elimination of or reduction of any benefit under
any bonus, incentive or other employee benefit plan in
effect on the day immediately preceding the Change in
Control, without an economically equivalent replacement,
if the Participant was a participant or member of such
plan on the day immediately preceding the Change in
Control;
(iii) the discontinuation of or any reduction in a
Participant's participation or membership in any bonus,
incentive or other benefit plan in which the Participant
was a participant or member on the day immediately
preceding the Change in Control, without an economically
equivalent replacement;
(iv) the reassignment of the Participant without his
consent from his regular shift or regular duties as they
existed on the day immediately preceding the Change in
Control;
(v) the reassignment of the Participant without his
consent to a location more than thirty (30) miles from
his regular workplace on the day immediately preceding
the Change in Control;
Page 8 of 18
<PAGE>
(vi) the reduction in the Participant's job title or
level in effect on the day immediately preceding the
Change in Control;
(vii) the provision of significantly less favorable
working conditions than those provided on the day
immediately preceding the Change in Control; or
(viii) a significant diminution in duties or
responsibilities as they existed on the day immediately
preceding the Change in Control.
(l) "Person" shall mean any individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity.
(m) "Polaroid" means Polaroid and its subsidiaries and
affiliates and, after a Change in Control, any successor
or successors thereto.
(n) "Share Acquisition Date" shall mean the first date
any Person shall become an Acquiring Person.
(o) "Terminated" shall mean:
(i) termination by Polaroid without Cause at any time
within the two (2) years following a Change in Control;
(ii) termination by you due to a Constructive Termination
at any time within the two (2) years following a Change
in Control; or
(iii) termination within three (3) months prior to a
Change in Control at the request of any individual or
entity acquiring ownership and control of Polaroid.
(p) "Termination Date" shall mean the later of the date
there is a Change in Control or the date you are
Terminated.
2. Change in Control Benefits. If your employment with
Polaroid is Terminated, you shall be entitled to the
following benefits:
(a) Change in Control Severance Benefits. If your
employment is Terminated following a Change in Control,
you will continue to receive Compensation and Annual
Bonus for a period of twenty-four (24) months. Moreover,
all stock options granted to such date will be fully
vested. The purpose of this salary continuation shall be
to offset such dislocation. Within 10 business days
after the Termination Date, Polaroid shall pay you a lump
sum amount, in cash, Compensation shall be equal to:
Page 9 of 18
<PAGE>
(i) Two (2) times the sum of:
(a) Your Base Salary; and
(b) Your Annual Bonus; and
(ii) Your Annual Bonus multiplied by a fraction, the
numerator of which shall equal the number of days you
were employed by Polaroid in the calendar year in which
the Termination Date occurs and the denominator of which
shall equal three hundred sixty five (365).
(b) Continued Welfare Benefits. Until the second
anniversary of the Termination Date, you shall be
entitled to participate in the Company's medical, dental,
and life insurance plan, at the highest level provided to
you during the period beginning immediately prior to the
Change in Control and ending on the Termination Date and
at no greater cost than the cost you were paying
immediately prior to Change in Control; provided,
however, that if you become employed by a new employer,
your coverage under the applicable Polaroid plans shall
continue, but your coverage thereunder shall be secondary
to (i.e., reduced by) any benefits provided under like
plans of such new employer.
(c) Payment of Accrued But Unpaid Amounts. Within 10
business days after the Termination Date, Polaroid shall
also pay you:
(i) earned but unpaid compensation, including, without
limitation, any unpaid portion of any bonus accrued with
respect to the full calendar year ended prior to the
Termination Date; and
(ii) all compensation previously deferred by you on a non-
qualified basis but not yet distributedpaid.
(d) Retiree-Medical Benefits. If you are or would
become fifty-five (55) or older and your age and service
equal sixty-five (65) and you have at least five (5)
years of service with the Company within two (2) years of
Change in Control, you are eligible for retiree-medical
benefits (as such are determined immediately prior to
Change in Control). You are eligible to commence
receiving such retiree-medical benefits based on the
terms and conditions of the applicable plans in effect
immediately prior to the Change in Control.
Page 10 of 18
<PAGE>
(e) Supplemental Retirement and Profit Sharing Benefits.
(i) On the Termination Date, you shall become vested in
the benefits provided under Polaroid's non-qualified
defined benefit pension plans or any successor plans (the
"Supplemental Plans").
(ii) Within ten (10) business days after the Termination
Date, Polaroid shall pay you a lump sum cash amount equal
to the present value of your accrued benefit under the
Supplemental Plans. For purposes of computing the lump
sum present value of your accrued benefit under the
Supplemental Plans:
(a) Before applying the enhancement in the "Pension
Retirement" section above, Polaroid shall credit you with
two (2) years of plan participation and service and two
(2) years of age for all purposes (including additional
accruals and eligibility for early retirement) over your
actual years and fractional years of plan participation
and service and age credited to you on the Termination
Date; and
(b) Polaroid shall apply the present value (and any
other actuarial adjustment required by this Agreement)
using the actuarial assumptions set forth in Section 1.01
of the Pension Plan. In determining the Executive's
benefits under this paragraph (e)(ii), the terms of the
Supplemental Plans as in effect immediately prior to the
Change in Control, except as expressly modified in this
paragraph (e), shall govern.
Page 11 of 18
<PAGE>
(f) Effect on Existing Plans. All Change in Control
provisions applicable to you and contained in any plan,
program, agreement or arrangement maintained as of the
date this Agreement is signed (including, but not limited
to, any stock option, restricted stock or pension plan)
shall remain in effect through the date of a Change in
Control, and for such period thereafter as is necessary
to carry out such provisions and provide the benefits
payable thereunder, and may not be altered in a manner
which adversely affects you without your prior written
approval. Notwithstanding the foregoing, no benefits
shall be paid to you, however, under the Polaroid
Extended Severance Plan or any other severance plan
maintained generally for the employees of Polaroid if you
are eligible to receive severance benefits under this
Agreement.
(g) Outplacement Counseling. Outplacement services will
be provided consistent with Polaroid's outplacement
practices in effect prior to the Change in Control.
3. Gross-up.
(a) In the event it shall be determined that any
payment, benefit or distribution (or combination thereof)
by the Company, or one or more trusts established by the
Company for the benefit of its employees, to or for the
benefit of you ("the Executive") (whether paid or payable
or distributed or distributable pursuant to the terms of
this Agreement, or otherwise) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties incurred by the
Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties,
hereinafter collectively referred to as the "Excise
Tax"), the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with
respect thereto) and the Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
Page 12 of 18
<PAGE>
(b) Subject to the provisions of Section 3(c), all
determinations required to be made under this Section 3,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized
certified public accounting firm as may be designated by
the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and
the Executive within fifteen (15) business days of the
receipt of notice from the Executive that there has been
a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is
serving as accountant or auditor for an individual,
entity or group effecting the change in ownership or
effective control (within the meaning of Section 280G of
the Code), the Executive shall appoint another nationally
recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees
and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 3, shall be paid by the Company
to the Executive within five (5) business days after the
receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall so indicate to the Executive
in writing. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As
a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 3(c) and the Executive
thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or
for the Executive's benefit.
(c) The Executive shall notify the Company in writing of
any written claim by the Internal Revenue Service that,
if successful, would require the payment by the Company
of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10)
business days after the Executive is informed in writing
of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is
requested to be paid (but the Executive's failure to
comply with this notice obligation shall not eliminate
his rights under this Section except to the extent
Polaroid's defense against the imposition of the Excise
Tax is actually prejudiced by any such failure). The
Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the
date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such
claim, the Executive shall:
Page 13 of 18
<PAGE>
(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing
from time to time, including, without limitation,
accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order to effectively contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the
Company shall bear and pay directly all costs and
expenses (including additional interest and penalties)
incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-
tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions
of this Section 3(c), the Company shall control all
proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more
appellate courts, as the Company shall reasonably
determine; provided, however, that if the Company directs
the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the
Executive, on an interest-free basis, and shall indemnify
and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and provided, further, that if
the Executive is required to extend the statute of
limitations to enable the Company to contest such claim,
the Executive may limit this extension solely to such
contested amount. The Company's control of the contest
shall be limited to issues with respect to which a Gross-
Up Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
Page 14 of 18
<PAGE>
(d) If, after the Executive receives an amount advanced
by the Company pursuant to Section 3(c), the Executive
receives any refund with respect to such claim, the
Executive shall (subject to the Company's complying with
the requirements of Section 3(c)) promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the Executive receives an amount
advanced by the Company pursuant to Section 3(c), a
determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination,
then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-
Up Payment required to be paid.
4. Termination for Cause. Nothing in this Agreement
shall be construed to prevent Polaroid from terminating
your employment for Cause. If you are terminated for
Cause, Polaroid shall have no obligation to make any
payments under this Agreement, except for payments that
may otherwise be payable under then existing employee
benefit plans, programs and arrangements of Polaroid.
Page 15 of 18
<PAGE>
5. Indemnification; Director's and Officer's Liability
Insurance. You shall, after the Termination Date, retain
all rights to indemnification under applicable law or
under Polaroid's Certificate of Incorporation or By-Laws,
as they may be amended or restated from time to time. In
addition, Polaroid shall maintain Director's and
Officer's liability insurance on behalf of you, at the
level in effect immediately prior to the Termination
Date, for the three (3) year period following the
Termination Date, and throughout the period of any
applicable statute of limitations.
6. Disputes. Any dispute or controversy arising under
or in connection with this Agreement shall be settled
exclusively by arbitration in Boston, Massachusetts in
accordance with the Rules of the American Arbitration
Association then in effect. Judgment may be entered on
an arbitrator's award relating to this Agreement in any
court having jurisdiction.
7. Costs of Proceedings. Polaroid shall pay all of
your costs and expenses, including attorneys' fees and
disbursements, at least monthly, in connection with any
legal proceeding (including arbitration), whether or not
instituted by Polaroid or you, relating to the
interpretation or enforcement of any provision of this
Agreement, except that if you institute the proceeding
and the judge, arbitrator or other individual presiding
over the proceeding affirmatively finds that you
instituted the proceeding in bad faith, you shall pay all
costs and expenses, including attorneys' fees and
disbursements. Polaroid shall pay pre-judgment interest
on any money judgment obtained by you as a result of such
a proceeding, calculated at the prime rate of The Chase
Manhattan Bank (or its successors), as in effect from
time to time, from the date that payment should have been
made to you under this Agreement.
8. Assignment. Except as otherwise provided herein,
this Agreement shall be binding upon, inure to the
benefit of and be enforceable by Polaroid and you and
their respective heirs, legal representatives, successors
and assigns. If Polaroid shall be merged into or
consolidated with another entity, the provisions of this
Agreement shall be binding upon and inure to the benefit
of the entity surviving such merger or resulting from
such consolidation. Polaroid will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all
of the business or assets of Polaroid, by agreement in
form and substance satisfactory to you, to expressly
assume and agree to perform this Agreement in the same
manner and to the same extent that Polaroid would be
required to perform it if no such succession had taken
place. The provisions of this Section 8 shall continue
to apply to each subsequent employer hereunder in the
event of any subsequent merger, consolidation or transfer
of assets of such subsequent employer.
Page 16 of 18
<PAGE>
9. Withholding. Polaroid may, to the extent required by
law, withhold applicable federal, state and local income
and other taxes from any payments due to you hereunder.
CONFIDENTIALITY. Without the prior written consent of
the Company, except to the extent required by an order of
a court having competent jurisdiction or under subpoena
from an appropriate government agency, the Executive
shall comply with the Confidentiality Agreement he
executed when hired and shall not disclose any trade
secrets, customer lists, drawings, designs, information
regarding product development, marketing plans, sales
plans, manufacturing plans, management organization
information (including data and other information
relating to members of the Board and management),
operating policies or manuals, business plans, financial
records or other financial, commercial, business or
technical information relating to the Company or any of
its subsidiaries or information designated as
confidential or proprietary that the Company or any of
its subsidiaries may receive belonging to suppliers,
customers or others who do business with the Company or
any of its subsidiaries (collectively, "Confidential
Information") to any third person unless such
Confidential Information has been previously disclosed to
the public by the Company or is in the public domain
(other than by reason of Executive's breach of this
Agreement).
MISCELLANEOUS. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth
of Massachusetts applicable to contracts made and to be
performed therein. This Agreement with the plans
referenced herein constitutes the entire agreement and
may be changed only by a written agreement executed by
the parties.
Page 17 of 18
<PAGE>
Tom, we are all extremely impressed with you personally
and professionally. You are a valuable addition to
Polaroid Corporation, and we look forward to having you
continue your strong career path as Senior Vice
President, General Counsel and Secretary.
Sincerely,
/s/ Gary T. DiCamillo
Gary T. DiCamillo
Chairman and
Chief Executive Officer
I accept the terms and conditions as outlined in this
letter.
/s/ Thomas M. Lemberg May 12, 1997
- -------------------------- ----------------
Thomas M. Lemberg Date
Page 18 of 18
Exhibit 10.9
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, by and between Polaroid Corporation, a
Delaware corporation, together with its successors and
assigns permitted under this Agreement (the "Company"), and
Gary T. DiCamillo (the "Executive") originally entered into
October 20, 1995, and amended as of December 21, 1995, is
hereby amended and restated this 12th day of May, 1997.
W I T N E S S E T H :
-------------------
WHEREAS, the Company desires to employ the Executive
and to enter into an agreement embodying the terms of such
employment (this "Agreement") and the Executive desires to
enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement;
WHEREAS, the Executive is a skilled and dedicated
employee who has important management responsibilities and
talents which benefit the Company. The Company believes
that its best interests will be served if the Executive is
encouraged to remain with the Company. The Company has
determined that the Executive's ability to perform the
Executive's responsibilities and utilize the Executive's
talents for the benefit of the Company, and the Company's
ability to retain the Executive as an employee, will be
significantly enhanced if the Executive is provided with
fair and reasonable protection from the risks of a change
in ownership or control of the Company.
NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein and for other good and
valuable consideration, the receipt of which is mutually
acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. Definitions.
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
is the Beneficial Owner of twenty percent (20%) or more of
the Stock then outstanding, but does not include any
Subsidiary of the Company, any employee benefit plan of the
Company or any of its Subsidiaries or any Person holding
Stock for or pursuant to the terms of any such employee
benefit plan.
(b) "Affiliate" and "Associate" when used with reference
to any Person, shall have the meaning given to such terms
in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(c) "Annual Bonus" shall mean a bonus amount payable under
the Company's executive annual bonus plan (currently the
Polaroid Incentive Plan for Executives). Unless otherwise
specifically provided, this annual bonus shall be
calculated assuming the Company target has been achieved
and that there are no factors that reduce the ultimate
distribution.
<PAGE>
(d) "Base Salary" shall mean the annual rate of base
salary (disregarding any reduction in such rate that
constitutes Constructive Termination) as provided for in
Section 4 below as increased by the Board from time to
time.
(e) "Beneficial Owner" shall be a Person deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly; or
(ii) which such Person or any of such Person's Affiliates
or Associates has:
(A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(written or oral), or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted
for purchase or exchange thereunder; or
(B) the right to vote pursuant to any agreement,
arrangement or understanding (written or oral); provided
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding (written or oral)
to vote such security (i) arises solely from a revocable
proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the
Exchange Act and (ii) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report).
Page 2 of 21
<PAGE>
(C) which are beneficially owned, directly or indirectly,
by any Person with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (written or oral), for the
purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in Section l(e)(ii)(B) of this
Agreement) or disposing of any securities of the Company.
(f) "Board" shall mean the Board of Directors of the
Company.
(g) "Cause" means either of the following:
(i) Executive's willful malfeasance having a material
adverse effect on the Company; or
(ii) Executive's conviction of a felony;
provided, that any action or refusal by
Executive shall not constitute "Cause"
if, in good faith, Executive believed
such action or refusal to be in, or not
opposed to, the best interests of the
Company, or if Executive shall be
entitled, under applicable law or under
an applicable Certificate of
Incorporation or By-Laws of the Company,
as they may be amended or restated from
time to time, to be indemnified with
respect to such action or refusal.
(h) "Change in Control" shall mean:
(i) the date on which a change in control of the Company
occurs of a nature that would be required to be reported
(assuming that the Company's Stock was registered under the
Exchange Act) in response to an item (currently item 6(e))
of Schedule 14A of Regulation 14A promulgated under the
Exchange Act or an item (currently Item l(a)) of Form 8-K
under the Exchange Act;
(ii) the date on which there is an Acquiring Person and a
change in the composition of the Board of the Company
within two years after the Share Acquisition Date such that
the individuals who constitute the Board prior to the Share
Acquisition Date shall cease for any reason to constitute
at least a majority of the Board;
Page 3 of 21
<PAGE>
(iii) any day on or after the Share Acquisition Date
when directly or indirectly, any of the transactions
specified in the following clauses occurs:
(A) the Company shall consolidate with, or merge with and
into, any other Person;
(B) any Person shall merge with and into the Company; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries
shall sell, lease, exchange or otherwise transfer or
dispose of), in one or more transactions, the major part of
the assets of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons;
(iv) the date when a Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or any of its Subsidiaries or any Person holding
Stock for or pursuant to the terms of any such employee
benefit plan) alone or together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of
thirty percent (30%) or more of the Stock then outstanding;
(v) the date on which the stockholders of the Company
approve a merger or consolidation of the Company with any
other corporation other than:
(A) a merger or consolidation which would result in voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving or parent entity) fifty percent (50%) or more
of the combined voting power of the voting securities of
the Company or such surviving or parent entity outstanding
immediately after such merger or consolidation, or
Page 4 of 21
<PAGE>
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person acquires fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities; or
(vi) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a
similar effect).
(i) "Code" means the Internal Revenue Code of 1986, as
amended.
(j) "Confidential Information" means nonpublic information
relating to the business plans, marketing plans, customers
or employees of the Company other than information the
disclosure of which cannot reasonably be expected to
adversely affect the business of the Company.
(k) "Constructive Termination" shall occur when the
Executive voluntarily terminates his employment with the
Company or retires after the occurrence of one or more of
the following events:
(i) unless effected with the Executive's consent, a
reduction in the Executive's Base Pay or the
discontinuation of or any reduction in an Executive's
participation or membership in any bonus, incentive or
other benefit plan in which the Executive was a participant
or member, without an economically equivalent replacement;
(ii) the reassignment of the Executive without his consent
to a location more than thirty (30) miles from his regular
workplace;
(iii) the reduction in the Executive's job title or
level;
(iv) the provision of significantly less favorable working
conditions; or
(v) a significant diminution of duties or responsibilities
or the reassignment of the Executive to duties which
represent a position of lesser responsibility.
Page 5 of 21
<PAGE>
(l) "Disability" shall mean the Executive's disability
within the meaning of the Polaroid Long Term Disability
Plan.
(m) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as in effect on the date in question.
(n) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity.
(o) "Share Acquisition Date" shall mean the first date any
Person shall become an Acquiring Person.
(p) "Stock" shall mean the outstanding shares of Common
Stock of the Company and any other shares of capital stock
of the Company into which the Common Stock shall be
reclassified or changed.
(q) "Subsidiary" of the Company shall mean any corporation
of which the Company owns, directly or indirectly, more
than fifty percent (50%) of the Voting Stock.
(r) "Term of Employment" shall mean the period specified
in Section 2 below.
(s) "Trading Day" is any day on which the Stock is traded
on the New York Stock Exchange.
(t) "Termination Date" shall mean the date of the
Executive's termination of employment from the Company.
(u) "Voting Stock" shall mean capital stock of any class
or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect
the directors of a corporation.
2. Term of Employment. The Company hereby employs the
Executive, and the Executive hereby accepts such
employment, for the period commencing October 20, 1995 and
ending October 31, 2000, subject to earlier termination as
provided below.
3. Position, Duties and Responsibilities.
(a) During the Term of Employment, the Executive shall be
employed commencing December 1, 1995 as the Chief Executive
Officer of the Company and be responsible for the general
management of the affairs of the Company. It is the
intention of the Parties that the Executive shall be
elected to and serve as a member of the Board and
thereafter shall be Chairman of the Board. The Executive,
in carrying out his duties under this Agreement, shall
report to the Board.
Page 6 of 21
<PAGE>
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from:
(i) serving, subject to approval of the Board, on the
boards of directors of a reasonable number of other
corporations or the boards of a reasonable number of trade
associations and/or charitable organizations,
(ii) engaging in charitable activities and community
affairs, and
(iii) managing his personal investments and affairs,
provided that such activities do not interfere with the
proper performance of his duties and responsibilities as
the Company's Chairman and Chief Executive Officer.
4. Base Salary. The Executive shall be paid an
annualized Base Salary, payable in accordance with the
regular payroll practices of the Company, of no less than
five hundred fifty thousand dollars ($550,000). The Base
Salary shall be reviewed periodically by the Board.
5. Annual Bonus. Commencing January 1, 1996, the
Executive shall participate in the Company's annual bonus
plan using the targets and performance factors set forth in
the Plan, with an annual target award opportunity of at
least eighty percent (80%) of Base Salary. A minimum of
four hundred thousand dollars ($400,000) shall be
guaranteed in 1996.
6. Stock Option Awards. Upon commencement of employment,
the Executive shall be awarded a ten (10) year option, to
purchase two hundred fifty thousand (250,000) shares of
Stock (the "Option"). The Executive shall be eligible to
participate in the ongoing stock option award program
commencing in 1997.
7. Restricted Stock. Upon commencement by the Executive
of his full time duties, he shall be awarded:
(a) twenty five thousand (25,000) shares of restricted
stock which shall vest at the rate of five thousand (5,000)
shares at the end of each of the first five (5) years of
employment and
(b) fifteen thousand (15,000) shares of restricted stock
which shall fully vest if the Executive achieves anytime
within five (5) years from the date of this Agreement the
performance criteria to be established by mutual agreement
of the parties.
Page 7 of 21
<PAGE>
8. Special Payment. Upon commencement of employment, the
Executive shall be paid in cash the amount of five hundred
thousand dollars ($500,000).
9. Employee Benefit Programs. During the Term of
Employment, the Executive shall be entitled to participate
in all employee pension and welfare benefit plans and
programs made available to the Company's senior level
executives, as such plans or programs may be in effect from
time to time, including, without limitation, pension,
savings and other retirement plans or programs, medical,
dental, hospitalization, short-term and long-term
disability and life insurance. Notwithstanding anything in
this Agreement to the contrary, the terms of this Agreement
shall replace the Executive's participation in The Polaroid
Extended Severance Plan.
10. Supplemental Pension. After any additional credit
which may become applicable under the Change in Control
provision set forth in Section 15, the Company shall
provide the Executive an additional monthly retirement
benefit pursuant to the terms of this Agreement which shall
be equal to the excess of (i) the monthly pension benefit
that would be payable to the Executive under the terms of
the Polaroid Pension Plan enhanced by the benefits under
the Polaroid Retirement Parity Plan and the Polaroid
Executive Equalization Retirement Plan ("Retirement
Benefit") as in effect on the date hereof, assuming that
the Executive is credited with one (1) additional year of
service for each of his first ten (10) years of actual
service with the Company over (ii) the monthly Retirement
Benefit which is actually payable to the Executive without
regard to this Section 10. In determining the amount of
any offset as provided in the preceding sentence, such
amount shall be calculated assuming the same frequency of
payment, the same form of annuity and the same commencement
date of payment as the benefits to be paid under this
Section 10. The Retirement Benefit payable to or in
respect of the Executive pursuant to this Section 10 shall
be vested upon completion of two and one-half (2 1/2) years
of service, and shall commence to be paid at the same time
as the Executive's Retirement Benefit. The Retirement
Benefit payable to or in respect of the Executive pursuant
to this Section 10 shall be paid in the form of a straight
life annuity for his lifetime or in such other alternative
form of benefit permitted under the terms of the Plans as
currently in effect as the Executive may elect in
accordance with the election provisions applicable. This
benefit shall be provided pursuant to the Supplemental
Retirement Benefit Plan.
Page 8 of 21
<PAGE>
11. Reimbursement of Business and Other Expenses. The
Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this
Agreement and the Company shall promptly reimburse him for
all business expenses incurred in connection with carrying
out the business of the Company, subject to documentation
in accordance with the Company's policy.
12. Termination Due to Disability or Death. In the event
the Executive's employment is terminated due to his
Disability or death, he, or his estate or his
beneficiaries, as the case may be, shall be entitled to:
(a) Base Salary through the date of termination;
(b) pro-rata portion of the Annual Bonus for the year in
which the Executive's Disability or death occurs. Annual
Bonus to be paid as soon as practicable or consistent with
the Executive's election under the Elective Deferred
Compensation Plan;
(c) other benefits or entitlements in accordance with
applicable plans and programs of the Company.
13. Termination by the Company for Cause. In the event
the Company terminates the Executive's employment for
Cause, he shall be entitled to:
(a) Base Salary through the date of the termination of his
employment for Cause;
(b) other benefits or entitlements, if any, in accordance
with applicable plans or programs of the Company; however,
notwithstanding the foregoing, the Executive shall not be
entitled to any bonus (annual or long term) for the year in
which his termination occurs.
14. A Constructive Termination or a Termination Without
Cause. If prior to Change in Control, the Executive's
employment is terminated without Cause, other than due to
Disability or death, or in the event there is a
Constructive Termination, the Executive shall be entitled
to:
(a) Base Salary through the date of termination of the
Executive's employment;
(b) Base Salary, at the annualized rate in effect on the
date of termination of the Executive's employment for a
period of twenty four (24) months following such
termination (the "Severance Period");
Page 9 of 21
<PAGE>
(c) Annual Bonus payments for the period from the
beginning of the year in which the termination occurs
through the end of the Severance Period based on the actual
performance of the Company(i.e., Company target) without
regard to any other factors that could reduce the ultimate
distribution; any such payment for a period of less than a
full year shall be pro-rated by the number of days for
which payment is made;
(d) Medical, dental and life insurance benefits for twenty
four (24) months following the Executive's Termination Date
at the same rate as active employees similarly situated.
(e) Other benefits or entitlements in accordance with
applicable plans and programs of the Company.
(f) Should the Executive become eligible to receive
payments and benefits under this Section and die prior to
receipt of all such payments and benefits, the residual
payments shall be made to the Executive's beneficiary(ies).
Any residual family medical and dental benefits which the
Executive was receiving on the Executive's date of death
shall continue to the family members the Executive had
covered in such medical and dental plans on such date.
15. Termination of Employment Following a Change in
Control. Notwithstanding anything in this Agreement to the
contrary, if the Executive's employment terminates
(voluntarily or involuntarily) within eighteen (18) months
following a Change in Control for any reason other than
Cause he shall be entitled to the following benefits:
(a) Severance Benefits. Within ten (10) business days
after the Termination Date, the Company shall pay the
Executive a lump sum amount, in cash, equal to:
(i) Three (3) times the sum of:
(A) the Executive's Base Salary; and
(B) the Executive's Annual Bonus; and
(ii) The Executive's Annual Bonus multiplied by a fraction,
the numerator of which shall equal the number of days the
Executive was employed by the Company in the calendar year
in which the Termination Date occurs and the denominator of
which shall equal three hundred sixty five (365).
Page 10 of 21
<PAGE>
(b) Continued Welfare Benefits. Until the third
anniversary of the Termination Date, the Executive shall be
entitled to participate in the Company's medical, dental,
and life insurance, at the highest level provided to the
Executive during the period beginning immediately prior to
the Change in Control and ending on the Termination Date
and at no greater cost than the cost the Executive was
paying immediately prior to Change in Control; provided,
however, that if the Executive becomes employed by a new
employer, the Executive's coverage under the applicable
Company plans shall continue, but the Executive's coverage
thereunder shall be secondary to (i.e., reduced by) any
benefits provided under like plans of such new employer.
(c) Payment of Accrued But Unpaid Amounts. Within ten
(10) business days after the Termination Date, the Company
shall pay the Executive:
(i) earned but unpaid compensation, including, without
limitation, any unpaid portion of the bonus accrued with
respect to the full calendar year ended prior to the
Termination Date; and
(ii) all compensation previously deferred by the Executive
on a non-qualified basis but not yet paid.
(d) Retiree-Medical Benefits. If within three (3) years
after Change in Control, the Executive would be at least
fifty-five (55) with the Executive's age and service equal
to sixty-five (65) and the Executive would have at least
five (5) years of service with the Company, the Executive
shall be eligible for retiree medical benefits (as such are
determined immediately prior to Change in Control). The
Executive shall commence receiving such retiree medical
benefits based on the terms and conditions of the
applicable plans in effect immediately prior to the Change
in Control.
(e) Supplemental Retirement and Profit Sharing Benefits.
(i) On the Termination Date, the Executive shall become
vested in the benefits provided under the Company's non-
qualified defined benefit pension plans or any successor
plans (the "Supplemental Plans").
(ii) Within ten (10) business days after the Termination
Date, the Company shall pay the Executive a lump sum cash
amount equal to the present value of the Executive's
accrued benefit under the Supplemental Plans. For purposes
of computing the lump sum present value of the Executive's
accrued benefit under the Supplemental Plans in addition to
the supplemental benefit provided pursuant to Section 10
above.
Page 11 of 21
<PAGE>
(A) Before applying Section 10 of this Agreement, the
Company shall credit the Executive with three (3) years of
plan participation and service and three (3) years of age
for all purposes (including additional accruals and
eligibility for early retirement) over the Executive's
actual years and fractional years of plan participation
and service and age credited to the Executive on the
Termination Date; and
(B) The Company shall apply the present value (and any
other actuarial adjustment required by this Agreement)
using the actuarial assumptions set forth in Section 1.01
of the Pension Plan. In determining the Executive's
benefits under this paragraph (e)(2), the terms of the
Supplemental Plans as in effect immediately prior to the
Change in Control, except as expressly modified in this
paragraph (e), shall govern.
This benefit shall be provided pursuant to the Supplemental
Retirement Benefit Plan.
(f) Outplacement Counseling. Outplacement services will
be provided consistent with the Company's outplacement
practices in effect prior to the Change in Control.
(g) Indemnification; Director's and Officer's Liability
Insurance. The Executive shall, after the Termination
Date, retain all rights to indemnification under applicable
law or under the Company's Certificate of Incorporation or
By-Laws, as they may be amended or restated from time to
time. In addition, the Company shall maintain Director's
and Officer's liability insurance on behalf of the
Executive, at the better of the level in effect immediately
prior to the Change in Control or the Executive's
Termination Date, for the three (3) year period following
the Termination Date, and throughout the period of any
applicable statute of limitations.
Page 12 of 21
<PAGE>
(h) Costs of Proceedings. The Company shall pay all of
the Executive's costs and expenses, including attorneys'
fees and disbursements, at least monthly, in connection
with any legal proceeding (including arbitration), whether
or not instituted by the Company or the Executive, relating
to the interpretation or enforcement of any provision of
this Agreement, except that if the Executive instituted the
proceeding and the judge, arbitrator or other individual
presiding over the proceeding affirmatively finds that the
Executive instituted the proceeding in bad faith, the
Executive shall pay his own costs and expenses, including
attorneys' fees and disbursements. The Company shall pay
pre-judgment interest on any money judgment obtained by the
Executive as a result of such a proceeding, calculated at
the prime rate of The Chase Manhattan Bank (or its
successors), as in effect from time to time, from the date
that payment should have been made to the Executive under
this Section.
16. Effect on Existing Plans. All Change in Control
provisions applicable to the Executive and contained in any
plan, program, agreement or arrangement maintained as of
the date this Agreement is signed (including, but not
limited to, any stock option, restricted stock or pension
plan) shall remain in effect through the date of a Change
in Control, and for such period thereafter as is necessary
to carry out such provisions and provide the benefits
payable thereunder, and may not be altered in a manner
which adversely affects the Executive without the
Executive's prior written approval. This means that all
awards of options, performance shares or such other awards
as may be granted shall upon Change in Control be fully
vested consistent with there terms. Notwithstanding the
foregoing, no benefits shall be paid to the Executive,
however, under the Polaroid Extended Severance Plan or any
other severance plan maintained generally for the employees
of the Company if the Executive is eligible to receive
severance benefits under this Agreement.
17. Mitigation. Executive shall not be required to
mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or
otherwise, and compensation earned from such employment or
otherwise shall not reduce the amounts otherwise payable
under this Agreement. No amounts payable under this
Agreement shall be subject to reduction or offset in
respect of any claims which Polaroid (or any other Person
or entity) may have against Executive unless specifically
referenced herein.
Page 13 of 21
<PAGE>
18. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the
Company, or one or more trusts established by the Company
for the benefit of its employees, to or for the benefit of
the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement, or
otherwise) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or
penalties incurred by the Executive with respect to such
excise tax (such excise tax, together with any such
interest and penalties, hereinafter collectively referred
to as the "Excise Tax"), the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with
respect thereto) and the Excise Tax imposed upon the Gross-
Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 18(c), all
determinations required to be made under this Section 18,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting
firm as may be designated by the Executive (the "Accounting
Firm") which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (15)
business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for an individual,
entity or group effecting the change in ownership or
effective control (within the meaning of Section 280G of
the Code), the Executive shall appoint another nationally
recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees
and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 18, shall be paid by the Company
to the Executive within five (5) business days after the
receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall so indicate to the Executive in
writing. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of
the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section
18(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit.
Page 14 of 21
<PAGE>
(c) The Executive shall notify the Company in writing of
any written claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim
and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid
(but the Executive's failure to comply with this notice
obligation shall not eliminate his rights under this
Section except to the extent of the Company's defense
against the imposition of the Excise Tax is actually
prejudiced by any such failure). The Executive shall not
pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice
to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
to effectively contest such claim; and
Page 15 of 21
<PAGE>
(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section
18(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed
and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall reasonably
determine; provided, however, that if the Company directs
the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the
Executive, on an interest-free basis, and shall indemnify
and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and provided, further, that if the
Executive is required to extend the statute of limitations
to enable the Company to contest such claim, the Executive
may limit this extension solely to such contested amount.
The Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing
authority.
Page 16 of 21
<PAGE>
(d) If, after the Executive receives an amount advanced by
the Company pursuant to Section 18(c), the Executive
receives any refund with respect to such claim, the
Executive shall (subject to the Company's complying with
the requirements of Section 18(c)) promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the Executive receives an amount
advanced by the Company pursuant to Section 18(c), a
determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination,
then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
19. Termination for Cause. Nothing in this Agreement
shall be construed to prevent the Company from terminating
the Executive's employment for Cause. If the Executive is
terminated for Cause, only Section 13 shall apply.
20. Disputes. Any dispute or controversy arising under or
in connection with this Agreement shall be settled
exclusively by arbitration in Boston, Massachusetts in
accordance with the Rules of the American Arbitration
Association then in effect. Judgment may be entered on an
arbitrator's award relating to this Agreement in any court
having jurisdiction.
21. Noncompetition and Confidentiality.
(a) Noncompetition. During the period in which the
Executive is employed by the Company or any of its
Subsidiaries and during any Severance Period, as provided
pursuant to Section 14 "Constructive Termination or
Termination without Cause", above, but in no event for a
period of less than twelve (12) months following a
termination of his employment, the Executive shall not
engage in any activity or become associated with any entity
or venture, whether as a principal, partner, employee,
consultant, shareholder (other than as a holder of not in
excess of one percent (1%) of the outstanding voting shares
of any publicly traded company) or otherwise, that is in
competition in any geographic area with any business of the
Company in which it is actively engaged on the Executive's
Termination Date and from which the Company the derives at
least twenty percent (20%) of its consolidated revenues.
Page 17 of 21
<PAGE>
(b) Confidentiality. Without the prior written consent of
the Company, except to the extent required by an order of a
court having competent jurisdiction or under subpoena from
an appropriate government agency, the Executive shall
comply with the Confidentiality Agreement he executed at
the time he was hired and shall not disclose any trade
secrets, customer lists, drawings, designs, information
regarding product development, marketing plans, sales
plans, manufacturing plans, management organization
information (including data and other information relating
to members of the Board and management), operating policies
or manuals, business plans, financial records or other
financial, commercial, business or technical information
relating to the Company or any of its Subsidiaries or
information designated as confidential or proprietary that
the Company or any of its Subsidiaries may receive
belonging to suppliers, customers or others who do business
with the Company or any of its Subsidiaries (collectively,
"Confidential Information") to any third Person unless such
Confidential Information has been previously disclosed to
the public by the Company or is in the public domain (other
than by reason of Executive's breach of this Section
19(b)).
(c) Company Property. Promptly following the Executive's
termination of employment, the Executive shall return to
the Company all property of the Company, and all copies
thereof in Executive's possession or under his control.
(d) Nonsolicitation of Employees. During the period in
which the Executive is employed by the Company and any of
its Subsidiaries, during the Severance Period as provided
pursuant to Section 14 "Constructive Termination or
Termination without Cause", the Executive shall not
directly or indirectly induce any employee of the Company
or any of its Subsidiaries to terminate employment with
such entity, and shall not directly or indirectly, either
individually or as owner, agent, employee, consultant or
otherwise, employ or offer employment to any Person who is
employed by the Company or a Subsidiary thereof.
(e) Injunctive Relief with Respect to Covenants.
Executive acknowledges and agrees that the covenants and
obligations of the Executive with respect to
noncompetition, nonsolicitation, confidentiality and
Company property relate to special, unique and
extraordinary matters, including his own skills, and that a
violation of any of the terms of such covenants and
obligations will cause the Company irreparable injury for
which adequate remedies are not available at law.
Therefore, the Executive agrees that the Company shall be
entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond)
restraining Executive from committing any violation of the
covenants and obligations contained in this Section 19.
These injunctive remedies are cumulative and are in
addition to any other rights and remedies the Company may
have at law or in equity.
Page 18 of 21
<PAGE>
(f) The obligations of the Executive set out in
Subsections (a) ("Noncompetition") and (d)
("Nonsolicitation") above shall not extend beyond his
Termination Date where such date follows a Change in
Control.
22. Effect of Agreement on Other Benefits. Except as
specifically provided in this Agreement, the existence of
this Agreement shall not prohibit or restrict the
Executive's entitlement to full participation in the
employee benefit and other plans or programs in which
senior executives of the Company are eligible to
participate.
23. Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of
and be enforceable by the Company and the Executive and
their respective heirs, legal representatives, successors
and assigns. If the Company shall be merged into or
consolidated with another entity, the provisions of this
Agreement shall be binding upon and inure to the benefit of
the entity surviving such merger or resulting from such
consolidation. The Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form
and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be
required to perform it if no such succession had taken
place. The provisions of this Agreement shall continue to
apply to each subsequent employer hereunder in the event of
any subsequent merger, consolidation or transfer of assets
of such subsequent employer.
24. Representation. The Company represents and warrants
that it is fully authorized and empowered to enter into
this Agreement and each of the parties represents and
warrants that the performance of the obligations of such
party under this Agreement will not violate any agreement
between that party and any other Person, firm or
organization.
25. Entire Agreement. This Agreement, with the plans and
grant agreements referenced herein, contains the entire
understanding and agreement between the Parties concerning
the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Parties
with respect thereto.
Page 19 of 21
<PAGE>
26. Amendment or Waiver. No provision in this Agreement
may be amended unless such amendment is agreed to in
writing and signed by the Executive and an authorized
officer of the Company. No waiver by either Party of any
breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or
subsequent time. Any waiver must be in writing and signed
by the Executive or an authorized officer of the Company,
as the case may be.
27. Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid
or unenforceable for any reason, in whole or in part, the
remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the
fullest extent permitted by law.
28. Survivorship. The respective rights and obligations
of the Parties hereunder shall survive any termination of
the Executive's employment to the extent necessary to the
intended preservation of such rights and obligations.
29. Beneficiaries/References. The Executive shall be
entitled to select (and change, to the extent permitted
under any applicable law) a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder
following the Executive's death by giving the Company
written notice thereof. In the event of the Executive's
death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be
deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative. Absent any written
notice the Beneficiary shall be the Executive's estate.
30. Governing Law. This Agreement shall be governed by
and construed and interpreted in accordance with the laws
of Massachusetts without reference to principles of
conflict of laws.
31. Notices. Any notice given to a Party shall be in
writing and shall be deemed to have been given when
delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly
addressed to the Party concerned at the address indicated
below or to such changed address as such Party may
subsequently give such notice of:
Page 20 of 21
<PAGE>
If to the Company:
Polaroid Corporation
549 Technology Square
Cambridge, MA 02139
Attention: Vice President, Human Resources
If to the Executive:
Gary T. DiCamillo
Polaroid Corporation
549 Technology Square
Cambridge, MA 02139
32. Headings. The headings of the sections contained in
this Agreement are for convenience only and shall not be
deemed to control or affect the meaning or construction of
any provision of this Agreement.
33. Counterparts. This Agreement may be executed in two
(2) or more counterparts.
34. Withholding. The Company may, to the extent required
by law, withhold applicable federal, state and local income
and other taxes from any payments due to the Executive
hereunder.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
Polaroid Corporation
By: Joseph Parham
-----------------------------
/s/ Gary T. DiCamillo
- ----------------------
Gary T. DiCamillo
Page 21 of 21
Exhibit 10.10
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 25, 1997 between
Polaroid Corporation ("Polaroid") and William J. O'Neill,
Jr. (the "Executive").
Executive is a skilled and dedicated employee who
has important management responsibilities and talents which
benefit Polaroid. Polaroid believes that its best
interests will be served if Executive is encouraged to
remain with Polaroid. Polaroid has determined that
Executive's ability to perform Executive's responsibilities
and utilize Executive's talents for the benefit of
Polaroid, and Polaroid's ability to retain Executive as an
employee, will be significantly enhanced if Executive is
provided with fair and reasonable protection from the risks
of a change in ownership or control of Polaroid.
Accordingly, Polaroid and Executive agree as follows:
1. Defined Terms.
(a) "Annual Bonus" shall mean the Executive's annual bonus
paid pursuant to the Company's annual bonus plan in effect
at the time (currently the Polaroid Incentive Plan for
Executives). Unless otherwise specifically provided, the
Annual Bonus shall be calculated assuming the Corporate
target is reached and no additional factors are considered
to decrease the Executive's award under the Plan.
(b) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
is the Beneficial Owner of 20% or more of the Stock then
outstanding, but does not include any Subsidiary of the
Company, any employee benefit plan of the Company or of any
of its Subsidiaries or any Person holding Stock for or
pursuant to the terms of any such employee benefit plan.
(c) "Affiliate" and "Associate" when used with reference
to any Person, shall have the meaning given to such terms
in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(d) "Base Salary" shall mean the annual rate of base
salary (disregarding any reduction in such rate that
constitutes Constructive Termination) as increased by the
Board from time to time.
(e) "Beneficial Owner" shall be a Person deemed to
"beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly; or
<PAGE>
(ii) which such Person or any of such Person's Affiliates
or Associates has:
(A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(written or oral), or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted
for purchase or exchange thereunder; or
(B) the right to vote pursuant to any agreement,
arrangement or understanding (written or oral); provided
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding (written or oral)
to vote such security (i) arises solely from a revocable
proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the
Exchange Act and (ii) is not also then reportable on
Schedule 13D (or any comparable or successor report) under
the Exchange Act; or
(C) which are beneficially owned, directly or indirectly,
by any Person with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (written or oral), for the
purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described
in Section l(d)(ii)(B) of this
Agreement) or disposing of any securities of the Company.
(f) "Board" shall mean the Board of Directors of the
Company.
-2-
<PAGE>
(g) "Bonus" means the amount payable to the Executive under any
plan, or agreement offered by Polaroid.
(h) "Cause" means either of the following:
(i) Executive's willful malfeasance having a material
adverse effect on Polaroid; or
(ii) Executive's conviction of a felony;
provided, that any action or refusal by Executive shall not
constitute Cause if, in good faith, Executive believed such
action or refusal to be in, or not opposed to, the best
interests of Polaroid, or if Executive shall be entitled,
under applicable law or under an applicable Polaroid
Certificate of Incorporation or the Polaroid By-Laws, as
they may be amended or restated from time to time, to be
indemnified with respect to such action or refusal.
(i) "Change in Control" shall mean:
(i) the date on which a change in control of the Company
occurs of a nature that would be required to be reported
(assuming that the Company's Stock was registered under the
Exchange Act) in response to an item (currently item 6(e))
of Schedule 14A of Regulation 14A promulgated under the
Exchange Act or an item (currently Item l(a)) of Form 8-K
under the Exchange Act;
(ii) the date on which there is an Acquiring Person and a
change in the composition of the Board of the Company
within two (2) years after the Share Acquisition Date such
that the individuals who constituted the Board prior to the
Share Acquisition Date (the "Incumbent Board") shall cease
for any reason to constitute at least a majority of the
Board;
(iii) any day on or after the Share Acquisition Date
when directly or indirectly, any of the transactions
specified in the following clauses occurs:
(A) the Company shall consolidate with, or merge with and
into, any other Person;
-3-
<PAGE>
(B) any Person shall merge with and into the Company; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its
Subsidiaries shall sell, lease, exchange or
otherwise transfer or dispose of), in one or
more transactions, the major part of
the assets of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons;
(iv) the date when a Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or any of its Subsidiaries or any Person holding
Stock for or pursuant to the terms of any such employee
benefit plan) alone or together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of
30% or more of the Stock then outstanding;
(v) the date on which the stockholders of the Company
approve a merger or consolidation of the Company with any
other corporation other than:
(A) a merger or consolidation which would result in voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving or parent entity) 50% or more of the combined
voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately
after such merger or consolidation, or
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person acquires 50% or more of the combined voting
power of the company's then outstanding securities; or
(vi) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a
similar effect).
-4-
<PAGE>
(j) "Code" means the Internal Revenue Code of 1986, as
amended.
(k) "Confidential Information" means non-public
information relating to the business plans, marketing
plans, customers or employees of Polaroid other than
information the disclosure of which cannot reasonably be
expected to adversely affect the business of Polaroid.
(l) "Constructive Termination" shall occur when the
Executive voluntarily terminates his employment with the
Company or retires after the occurrence of one or more of
the following events on or after the Change in Control:
(i) a reduction in the Participant's Compensation Base Pay
from the amount of the Participant's Base Pay Compensation
on the day immediately preceding the Change in Control;
(ii) the elimination of or reduction of any benefit under
any bonus, incentive or other employee benefit plan in
effect on the day immediately preceding the Change in
Control, without an economically equivalent replacement, if
the Participant was a participant or member of such plan on
the day immediately preceding the Change in Control;
(iii) the discontinuation of or any reduction in a
Participant's participation or membership in any bonus,
incentive or other benefit plan in which the Participant
was a participant or member on the day immediately
preceding the Change in Control, without an economically
equivalent replacement;
(iv) the reassignment of the Participant without his
consent from his regular shift or regular duties as they
existed on the day immediately preceding the Change in
Control;
(v) the reassignment of the Participant without his
consent to a location more than 30 miles from his regular
workplace on the day immediately preceding the Change in
Control;
(vi) the reduction in the Participant's job title or level
in effect on the day immediately preceding the Change in
Control;
-5-
<PAGE>
(vii) the provision of significantly less favorable working
conditions than those provided on the day immediately
preceding the Change in Control; or
(viii) a significant diminution in duties or
responsibilities or the reassignment of the Participant to
duties which represent a position of lesser responsibility
than his duties as they existed on the day immediately
preceding the Change in Control.
(m) "Disability" shall mean the Executive's disability
within the meaning of the Polaroid Long Term Disability
Plan.
(n) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as in effect on the date in question.
(o) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity.
(p) "Share Acquisition Date" shall mean the first date any
Person shall become an Acquiring Person.
(q) "Stock" shall mean the outstanding shares of Common
Stock of the Company and, for purposes of the Change in
Control provision, any other shares of capital stock of the
Company into which the Common Stock shall be reclassified
or changed.
(r) "Subsidiary" of the Company shall mean any corporation
of which the Company owns, directly or indirectly, more
than 50% of the Voting Stock.
(s) "Terminated" shall mean:
(i) termination by Polaroid without Cause at any time
within the two (2) years following a Change in Control;
(ii) your termination due to a Constructive Termination at
any time within the two (2) years following a Change in
Control; or
(iii) termination within three (3) months prior to a
Change of Control at the request of any individual or
entity acquiring ownership and control of Polaroid. If
Executive's employment with Polaroid is terminated prior to
a Change in Control at the request of Acquiring Person,
this Agreement shall become effective upon the
subsequent occurrence of a Change in Control involving such
Acquiring Person. In such situation the Executive's
Termination Date shall be deemed to have occurred
immediately following the Change in Control, and therefore
Executive shall be entitled to the benefits provided in
this Agreement.
-6-
<PAGE>
(t) "Voting Stock" shall mean capital stock of any class
or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect
the directors of a corporation.
2. Effective Date; Term. This Agreement shall be
effective immediately prior to a Change in Control (the
"Effective Date") and shall remain in effect for two (2)
years following such Change in Control, and such additional
time as may be necessary to give effect to the terms of the
Agreement.
3. Change in Control Benefits. If your employment with
Polaroid is Terminated, you shall be entitled to the
following benefits:
(a) Severance Benefits. Within ten (10) business days
after the Termination Date, Polaroid shall pay you a lump
sum amount, in cash, equal to the greater of the severance
benefit you would otherwise be entitled to receive under
the Extended Severance Plan or:
(i) two (2) times the sum of:
(A) Your Base Salary; and
(B) Your Annual Bonus; and
(ii) Your Annual Bonus multiplied by a fraction, the
numerator of which shall equal the number of days you were
employed by Polaroid in the calendar year in which the
Termination Date occurs and the denominator of which shall
equal 365.
(b) Continued Welfare Benefits. Until the second
anniversary of the Termination Date, you shall be entitled
to participate in the Company's medical, dental, and life
insurance plans, at the highest level provided to you
during the period beginning immediately prior to the Change
in Control and ending on the Termination Date and at no
greater cost then the cost you were paying immediately
prior to Change in Control; provided, however, that if you
become employed by a new employer, your coverage under the
applicable Polaroid
plans shall continue, but your coverage thereunder
shall be secondary to (i.e., reduced by) any
benefits provided under like plans of such new
employer.
-7-
<PAGE>
(c) Payment of Accrued But Unpaid Amounts. Within ten
(10) business days after the Termination Date, Polaroid
shall pay you
(i) earned but unpaid compensation, including, without
limitation, any unpaid portion of your Bonus accrued with
respect to the full calendar year ended prior to the
Termination Date; and
(ii) all compensation previously deferred by you on a non-
qualified basis but not yet paid.
(d) Retiree-Medical Benefits. If you are or would become
fifty-five (55) or older and your age and service equal
sixty-five (65) and you have at least five (5) years of
service with the Company within two (2) years of Change in
Control, you are eligible for retiree medical benefits (as
such are determined immediately prior to Change in
Control). You are eligible to commence receiving such
retiree medical benefits based on the terms and conditions
of the applicable plans in effect immediately prior to the
Change in Control.
(e) Supplemental Retirement and Profit Sharing Benefits.
(i) On the Termination Date, you shall become vested in
the benefits provided under Polaroid's non-qualified
defined benefit pension plans or any successor plans (the
"Supplemental Plans").
(ii) Within ten (10) business days after the Termination
Date, Polaroid shall pay you a lump sum cash amount equal
to the present value of your accrued benefit under the
Supplemental Plans. For purposes of computing the lump sum
present value of your accrued benefit under the
Supplemental Plans,
(A) Polaroid shall credit you with two (2) years of plan
participation and service and two (2) years of age for all
purposes (including additional accruals and eligibility for
early retirement) over your actual years and fractional
years of plan participation and service and age credited to
you on the Termination Date; and
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(B) Polaroid shall apply the present value (and any other
actuarial adjustments required by this Agreement) using the
actuarial assumptions set forth in Section 1.01 of the
Pension Plan. In determining your benefits under this
paragraph (e)(B), the terms of the Supplemental Plans as in
effect immediately prior to the Change in Control, except
as expressly modified in this paragraph (e), shall govern.
(f) Effect on Existing Plans. All Change in Control
provisions applicable to you and contained in any plan,
program, agreement or arrangement maintained as of the date
this Agreement is signed (including, but not limited to,
any stock option, restricted stock or pension plan) shall
remain in effect through the date of a Change in Control,
and for such period thereafter as is necessary to carry out
such provisions and provide the benefits payable
thereunder, and may not be altered in a manner which
adversely affects you without your prior written approval.
This means that all awards of options, performance shares
or such other awards as may be granted shall upon Change in
Control be fully vested consistent with their terms.
Notwithstanding the foregoing, and subject to the
limitation provided in Paragraph 3(a), no benefits shall be
paid to you, however, under the Polaroid Extended Severance
Plan or any other severance plan maintained generally for
the employees of Polaroid if you are eligible to receive
severance benefits under this Agreement.
(g) Outplacement Counseling. Outplacement services will
be provided consistent with Polaroid's outplacement
practices in effect prior to the Change in Control.
4. Mitigation. Executive shall not be required to
mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or
otherwise, and compensation earned from such employment or
otherwise shall not reduce the amounts otherwise payable
under this Agreement. No amounts payable under this
Agreement shall be subject to reduction or offset in
respect of any claims which Polaroid (or any other person
or entity) may have against Executive unless specifically
referenced herein.
5. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by
Polaroid, or one or more trusts established by Polaroid for
the benefit of its employees, to or for the benefit
of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this
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Agreement, or otherwise) (a "Payment") would be
subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are
incurred by Executive with respect to such excise
tax (such excise tax, together with any such
interest and penalties, hereinafter collectively
referred to as the "Excise Tax"), Executive shall
be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after
payment by Executive of all taxes (including any
interest or penalties imposed with respect to
such taxes), including, without limitation, any
income taxes (and any interest and penalties
imposed with respect thereto) and the Excise Tax
imposed upon the Gross-Up Payment, Executive
retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 5(c), all
determinations required to be made under this Section 5,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting
firm as may be designated by Executive (the "Accounting
Firm") which shall provide detailed supporting calculations
both to Polaroid and Executive within fifteen (15) business
days of the receipt of notice from Executive that there has
been a Payment, or such earlier time as is requested by
Polaroid. In the event that the Accounting Firm is serving
as accountant or auditor for an individual, entity or group
effecting the change in ownership or effective control
(within the meaning of Section 280G of the Code), Executive
shall appoint another nationally recognized accounting firm
to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by Polaroid. Any Gross-Up
Payment, as determined pursuant to this Section 5, shall be
paid by Polaroid to Executive within five (5) business days
after the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be
binding upon Polaroid and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by Polaroid
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should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event
that Polaroid exhausts its remedies pursuant to Section
5(c) and Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Polaroid to or for
the benefit of Executive.
(c) Executive shall notify Polaroid in writing of any
claim by the Internal Revenue Service that, if successful,
would require the payment by Polaroid of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after
Executive is informed in writing of such claim and shall
apprise Polaroid of the nature of such claim and the date
on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives
such notice to Polaroid (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If Polaroid notifies Executive in writing
prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give Polaroid any information reasonably requested by
Polaroid relating to such claim;
(ii) take such action in connection with contesting such
claim as Polaroid shall reasonably request in writing from
time to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by Polaroid;
(iii) cooperate with Polaroid in good faith in order to
effectively contest such claim; and
(iv) permit Polaroid to participate in any proceedings
relating to such claim;
provided, however, that Polaroid shall
bear and pay directly all costs and
expenses (including additional interest
and penalties) incurred in connection
with such contest and shall indemnify
and hold Executive harmless, on an after-
tax basis, for any Excise Tax or income
tax (including interest and penalties
with respect thereto) imposed as a
result of such representation and
payment of costs and expenses. Without
limitation on the foregoing provisions
of this Section 5(c), Polaroid shall
control all proceedings taken in
connection with such contest and, at its sole
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option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences
with the taxing authority in respect of such
claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such
contest to a determination before any
administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts,
as Polaroid shall determine; provided, however,
that if Polaroid directs Executive to pay such
claim and sue for a refund, Polaroid shall
advance the amount of such payment to Executive,
on an interest-free basis, and shall indemnify
and hold Executive harmless, on an after-tax
basis, from any Excise Tax or income tax
(including interest or penalties with respect
thereto) imposed with respect to such advance or
with respect to any imputed income with respect
to such advance; and provided, further, that if
Executive is required to extend the statute of
limitations to enable Polaroid to contest such
claim, Executive may limit this extension solely
to such contested amount. Polaroid's control of
the contest shall be limited to issues with
respect to which a Gross-Up Payment would be
payable hereunder and Executive shall be entitled
to settle or contest, as the case may be, any
other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount
advanced by Polaroid pursuant to Section 5(c), Executive
receives any refund with respect to such claim, Executive
shall (subject to Polaroid's complying with the
requirements of Section 5(c)) promptly pay to Polaroid the
amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by
Polaroid pursuant to Section 5(c), a determination is made
that Executive shall not be entitled to any refund with
respect to such claim and Polaroid does not notify
Executive in writing of its intent to contest such denial
of refund prior to the expiration of thirty (30) days after
such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
6. Termination for Cause. Nothing in this Agreement
shall be construed to prevent Polaroid from terminating
Executive's employment for Cause. If Executive is
terminated for Cause, Polaroid shall have no obligation to
make any payments under this Agreement, except for payments
that may otherwise be
payable under then existing employee benefit plans,
programs and arrangements of Polaroid.
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7. Indemnification; Director's and Officer's Liability
Insurance. Executive shall, after the Termination Date,
retain all rights to indemnification under applicable law
or under Polaroid Certificate of Incorporation or the
Polaroid By-Laws, as they may be amended or restated from
time to time. In addition, Polaroid shall maintain
Director's and Officer's liability insurance on behalf of
Executive at the better of the level in effect immediately
prior to the Change in Control or the Executive's
Termination Date, for the two (2) year period following the
Termination Date, and throughout the period of any
applicable statute of limitations.
8. Confidentiality. Without the prior written consent of
the Company, except to the extent required by an order of a
court having competent jurisdiction or under subpoena from
an appropriate government agency, the Executive shall
comply with the Confidentiality Agreement he executed when
hired, and shall not disclose any trade secrets, customer
lists, drawings, designs, information regarding product
development, marketing plans, sales plans, manufacturing
plans, management organization information (including data
and other information relating to members of the Board and
management), operating policies or manuals, business plans,
financial records or other financial, commercial, business
or technical information relating to the Company or any of
its subsidiaries or information designated as confidential
or proprietary that the Company or any of its Subsidiaries
may receive belonging to suppliers, customers or others who
do business with the Company or any of its subsidiaries
(collectively, "Confidential Information") to any third
person unless such Confidential Information has been
previously disclosed to the public by the Company or is in
the public domain (other than by reason of Executive's
breach of this Section 8).
9. Disputes. Any dispute or controversy arising under or
in connection with this Agreement shall be settled
exclusively by arbitration in Boston, Massachusetts or, at
the option of Executive, in the county where Executive then
resides, in accordance with the Rules of the American
Arbitration Association then in effect. Judgment may be
entered on an arbitrator's award relating to this Agreement
in any court having jurisdiction.
10. Costs of Proceedings. Polaroid shall pay all costs
and expenses, including attorneys' fees and disbursements,
at least monthly, of Executive in connection with any legal
proceeding (including arbitration), whether or not
instituted by Polaroid or Executive, relating to the
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interpretation or enforcement of any provision of this
Agreement, except that if Executive instituted the
proceeding and the judge, arbitrator or other individual
presiding over the proceeding affirmatively finds that
Executive instituted the proceeding in bad faith, Executive
shall pay all costs and expenses, including attorneys' fees
and disbursements, of Executive. Polaroid shall pay pre-
judgment interest on any money judgment obtained by
Executive as a result of such a proceeding, calculated at
the prime rate of The Chase Manhattan Bank (or its
successors), as in effect from time to time, from the date
that payment should have been made to Executive under this
Agreement.
11. Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of
and be enforceable by Polaroid and Executive and their
respective heirs, legal representatives, successors and
assigns. If Polaroid shall be merged into or consolidated
with another entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the entity
surviving such merger or resulting from such consolidation.
Polaroid will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of
Polaroid, by agreement in form and substance satisfactory
to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that
Polaroid would be required to perform it if no such
succession had taken place. The provisions of this Section
11 shall continue to apply to each subsequent employer of
Executive hereunder in the event of any subsequent merger,
consolidation or transfer of assets of such subsequent
employer.
12. Payments in Event of Death. Should the Executive
become eligible to receive payments and benefits under this
Agreement and die prior to receipt of all such payments and
benefits, the residual payments shall be made to the
beneficiaries identified on the Executive's beneficiary
form for the Executive Deferral Compensation Plan. Any
residual family medical and dental benefits which the
Executive was receiving on the Executive's date of death
shall continue to the family members the Executive had
covered in such medical and dental plans on such date.
13. Withholding. Polaroid may, to the extent required by
law, withhold applicable federal, state and local income
and other taxes from any payments due to Executive
hereunder.
14. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the
Commonwealth of
Massachusetts applicable to contracts made and to be
performed therein.
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15. Entire Agreement. This Agreement constitutes the
entire agreement between the parties and, except as
expressly provided herein, supersedes all other prior
agreements concerning the effect of a Change in Control on
the relationship between Polaroid and Executive. This
Agreement may be changed only by a written agreement
executed by Polaroid and Executive.
IN WITNESS WHEREOF, the parties have executed
this Agreement on the 25 day of April, 1997.
POLAROID CORPORATION
By /s/ Gary T. DiCamillo
-------------------------
Gary T. DiCamillo
/s/ William J. O'Neill, Jr.
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William J. O'Neill, Jr.
Executive
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Exhibit 10.11
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 25, 1997 between
Polaroid Corporation ("Polaroid") and Carole J. Uhrich,
(the "Executive").
Executive is a skilled and dedicated employee who
has important management responsibilities and talents which
benefit Polaroid. Polaroid believes that its best
interests will be served if Executive is encouraged to
remain with Polaroid. Polaroid has determined that
Executive's ability to perform Executive's responsibilities
and utilize Executive's talents for the benefit of
Polaroid, and Polaroid's ability to retain Executive as an
employee, will be significantly enhanced if Executive is
provided with fair and reasonable protection from the risks
of a change in ownership or control of Polaroid.
Accordingly, Polaroid and Executive agree as follows:
1. Defined Terms.
(a) "Annual Bonus" shall mean the Executive's annual bonus
paid pursuant to the Company's annual bonus plan in effect
at the time (currently the Polaroid Incentive Plan for
Executives). Unless otherwise specifically provided, the
Annual Bonus shall be calculated assuming the Corporate
target is reached and no additional factors are considered
to decrease the Executive's award under the Plan.
(b) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
is the Beneficial Owner of 20% or more of the Stock then
outstanding, but does not include any Subsidiary of the
Company, any employee benefit plan of the Company or of any
of its Subsidiaries or any Person holding Stock for or
pursuant to the terms of any such employee benefit plan.
(c) "Affiliate" and "Associate" when used with reference
to any Person, shall have the meaning given to such terms
in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(d) "Base Salary" shall mean the annual rate of base
salary (disregarding any reduction in such rate that
constitutes Constructive Termination) as increased by the
Board from time to time.
(e) "Beneficial Owner" shall be a Person deemed to
"beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly; or
<PAGE>
(ii) which such Person or any of such Person's Affiliates
or Associates has:
(A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(written or oral), or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted
for purchase or exchange thereunder; or
(B) the right to vote pursuant to any agreement,
arrangement or understanding (written or oral); provided
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding (written or oral)
to vote such security (i) arises solely from a revocable
proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the
Exchange Act and (ii) is not also then reportable on
Schedule 13D (or any comparable or successor report) under
the Exchange Act; or
(C) which are beneficially owned, directly or indirectly,
by any Person with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (written or oral), for the
purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described
in Section l(d)(ii)(B) of this
Agreement) or disposing of any securities of the Company.
(f) "Board" shall mean the Board of Directors of the
Company.
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(g) "Bonus" means the amount payable to the Executive under any
plan, or agreement offered by Polaroid.
(h) "Cause" means either of the following:
(i) Executive's willful malfeasance having a material
adverse effect on Polaroid; or
(ii) Executive's conviction of a felony;
provided, that any action or refusal by Executive shall not
constitute Cause if, in good faith, Executive believed such
action or refusal to be in, or not opposed to, the best
interests of Polaroid, or if Executive shall be entitled,
under applicable law or under an applicable Polaroid
Certificate of Incorporation or the Polaroid By-Laws, as
they may be amended or restated from time to time, to be
indemnified with respect to such action or refusal.
(i) "Change in Control" shall mean:
(i) the date on which a change in control of the Company
occurs of a nature that would be required to be reported
(assuming that the Company's Stock was registered under the
Exchange Act) in response to an item (currently item 6(e))
of Schedule 14A of Regulation 14A promulgated under the
Exchange Act or an item (currently Item l(a)) of Form 8-K
under the Exchange Act;
(ii) the date on which there is an Acquiring Person and a
change in the composition of the Board of the Company
within two (2) years after the Share Acquisition Date such
that the individuals who constituted the Board prior to the
Share Acquisition Date (the "Incumbent Board") shall cease
for any reason to constitute at least a majority of the
Board;
(iii) any day on or after the Share Acquisition Date
when directly or indirectly, any of the transactions
specified in the following clauses occurs:
(A) the Company shall consolidate with, or merge with and
into, any other Person;
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(B) any Person shall merge with and into the Company; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its
Subsidiaries shall sell, lease, exchange or
otherwise transfer or dispose of), in one or
more transactions, the major part of
the assets of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons;
(iv) the date when a Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or any of its Subsidiaries or any Person holding
Stock for or pursuant to the terms of any such employee
benefit plan) alone or together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of
30% or more of the Stock then outstanding;
(v) the date on which the stockholders of the Company
approve a merger or consolidation of the Company with any
other corporation other than:
(A) a merger or consolidation which would result in voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving or parent entity) 50% or more of the combined
voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately
after such merger or consolidation, or
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person acquires 50% or more of the combined voting
power of the company's then outstanding securities; or
(vi) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a
similar effect).
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(j) "Code" means the Internal Revenue Code of 1986, as
amended.
(k) "Confidential Information" means non-public
information relating to the business plans, marketing
plans, customers or employees of Polaroid other than
information the disclosure of which cannot reasonably be
expected to adversely affect the business of Polaroid.
(l) "Constructive Termination" shall occur when the
Executive voluntarily terminates his employment with the
Company or retires after the occurrence of one or more of
the following events on or after the Change in Control:
(i) a reduction in the Participant's Compensation Base Pay
from the amount of the Participant's Base Pay Compensation
on the day immediately preceding the Change in Control;
(ii) the elimination of or reduction of any benefit under
any bonus, incentive or other employee benefit plan in
effect on the day immediately preceding the Change in
Control, without an economically equivalent replacement, if
the Participant was a participant or member of such plan on
the day immediately preceding the Change in Control;
(iii) the discontinuation of or any reduction in a
Participant's participation or membership in any bonus,
incentive or other benefit plan in which the Participant
was a participant or member on the day immediately
preceding the Change in Control, without an economically
equivalent replacement;
(iv) the reassignment of the Participant without his
consent from his regular shift or regular duties as they
existed on the day immediately preceding the Change in
Control;
(v) the reassignment of the Participant without his
consent to a location more than 30 miles from his regular
workplace on the day immediately preceding the Change in
Control;
(vi) the reduction in the Participant's job title or level
in effect on the day immediately preceding the Change in
Control;
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(vii) the provision of significantly less favorable working
conditions than those provided on the day immediately
preceding the Change in Control; or
(viii) a significant diminution in duties or
responsibilities or the reassignment of the Participant to
duties which represent a position of lesser responsibility
than his duties as they existed on the day immediately
preceding the Change in Control.
(m) "Disability" shall mean the Executive's disability
within the meaning of the Polaroid Long Term Disability
Plan.
(n) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as in effect on the date in question.
(o) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity.
(p) "Share Acquisition Date" shall mean the first date any
Person shall become an Acquiring Person.
(q) "Stock" shall mean the outstanding shares of Common
Stock of the Company and, for purposes of the Change in
Control provision, any other shares of capital stock of the
Company into which the Common Stock shall be reclassified
or changed.
(r) "Subsidiary" of the Company shall mean any corporation
of which the Company owns, directly or indirectly, more
than 50% of the Voting Stock.
(s) "Terminated" shall mean:
(i) termination by Polaroid without Cause at any time
within the two (2) years following a Change in Control;
(ii) your termination due to a Constructive Termination at
any time within the two (2) years following a Change in
Control; or
(iii) termination within three (3) months prior to a
Change of Control at the request of any individual or
entity acquiring ownership and control of Polaroid. If
Executive's employment with Polaroid is terminated prior to
a Change in Control at the request of Acquiring Person,
this Agreement shall become effective upon the
subsequent occurrence of a Change in Control involving such
Acquiring Person. In such situation the Executive's
Termination Date shall be deemed to have occurred
immediately following the Change in Control, and therefore
Executive shall be entitled to the benefits provided in
this Agreement.
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(t) "Voting Stock" shall mean capital stock of any class
or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect
the directors of a corporation.
2. Effective Date; Term. This Agreement shall be
effective immediately prior to a Change in Control (the
"Effective Date") and shall remain in effect for two (2)
years following such Change in Control, and such additional
time as may be necessary to give effect to the terms of the
Agreement.
3. Change in Control Benefits. If your employment with
Polaroid is Terminated, you shall be entitled to the
following benefits:
(a) Severance Benefits. Within ten (10) business days
after the Termination Date, Polaroid shall pay you a lump
sum amount, in cash, equal to the greater of the severance
benefit you would otherwise be entitled to receive under
the Extended Severance Plan or:
(i) two (2) times the sum of:
(A) Your Base Salary; and
(B) Your Annual Bonus; and
(ii) Your Annual Bonus multiplied by a fraction, the
numerator of which shall equal the number of days you were
employed by Polaroid in the calendar year in which the
Termination Date occurs and the denominator of which shall
equal 365.
(b) Continued Welfare Benefits. Until the second
anniversary of the Termination Date, you shall be entitled
to participate in the Company's medical, dental, and life
insurance plans, at the highest level provided to you
during the period beginning immediately prior to the Change
in Control and ending on the Termination Date and at no
greater cost then the cost you were paying immediately
prior to Change in Control; provided, however, that if you
become employed by a new employer, your coverage under the
applicable Polaroid
plans shall continue, but your coverage thereunder
shall be secondary to (i.e., reduced by) any
benefits provided under like plans of such new
employer.
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(c) Payment of Accrued But Unpaid Amounts. Within ten
(10) business days after the Termination Date, Polaroid
shall pay you
(i) earned but unpaid compensation, including, without
limitation, any unpaid portion of your Bonus accrued with
respect to the full calendar year ended prior to the
Termination Date; and
(ii) all compensation previously deferred by you on a non-
qualified basis but not yet paid.
(d) Retiree-Medical Benefits. If you are or would become
fifty-five (55) or older and your age and service equal
sixty-five (65) and you have at least five (5) years of
service with the Company within two (2) years of Change in
Control, you are eligible for retiree medical benefits (as
such are determined immediately prior to Change in
Control). You are eligible to commence receiving such
retiree medical benefits based on the terms and conditions
of the applicable plans in effect immediately prior to the
Change in Control.
(e) Supplemental Retirement and Profit Sharing Benefits.
(i) On the Termination Date, you shall become vested in
the benefits provided under Polaroid's non-qualified
defined benefit pension plans or any successor plans (the
"Supplemental Plans").
(ii) Within ten (10) business days after the Termination
Date, Polaroid shall pay you a lump sum cash amount equal
to the present value of your accrued benefit under the
Supplemental Plans. For purposes of computing the lump sum
present value of your accrued benefit under the
Supplemental Plans,
(A) Polaroid shall credit you with two (2) years of plan
participation and service and two (2) years of age for all
purposes (including additional accruals and eligibility for
early retirement) over your actual years and fractional
years of plan participation and service and age credited to
you on the Termination Date; and
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(B) Polaroid shall apply the present value (and any other
actuarial adjustments required by this Agreement) using the
actuarial assumptions set forth in Section 1.01 of the
Pension Plan. In determining your benefits under this
paragraph (e)(B), the terms of the Supplemental Plans as in
effect immediately prior to the Change in Control, except
as expressly modified in this paragraph (e), shall govern.
(f) Effect on Existing Plans. All Change in Control
provisions applicable to you and contained in any plan,
program, agreement or arrangement maintained as of the date
this Agreement is signed (including, but not limited to,
any stock option, restricted stock or pension plan) shall
remain in effect through the date of a Change in Control,
and for such period thereafter as is necessary to carry out
such provisions and provide the benefits payable
thereunder, and may not be altered in a manner which
adversely affects you without your prior written approval.
This means that all awards of options, performance shares
or such other awards as may be granted shall upon Change in
Control be fully vested consistent with their terms.
Notwithstanding the foregoing, and subject to the
limitation provided in Paragraph 3(a), no benefits shall be
paid to you, however, under the Polaroid Extended Severance
Plan or any other severance plan maintained generally for
the employees of Polaroid if you are eligible to receive
severance benefits under this Agreement.
(g) Outplacement Counseling. Outplacement services will
be provided consistent with Polaroid's outplacement
practices in effect prior to the Change in Control.
4. Mitigation. Executive shall not be required to
mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or
otherwise, and compensation earned from such employment or
otherwise shall not reduce the amounts otherwise payable
under this Agreement. No amounts payable under this
Agreement shall be subject to reduction or offset in
respect of any claims which Polaroid (or any other person
or entity) may have against Executive unless specifically
referenced herein.
5. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by
Polaroid, or one or more trusts established by Polaroid for
the benefit of its employees, to or for the benefit
of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this
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Agreement, or otherwise) (a "Payment") would be
subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are
incurred by Executive with respect to such excise
tax (such excise tax, together with any such
interest and penalties, hereinafter collectively
referred to as the "Excise Tax"), Executive shall
be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after
payment by Executive of all taxes (including any
interest or penalties imposed with respect to
such taxes), including, without limitation, any
income taxes (and any interest and penalties
imposed with respect thereto) and the Excise Tax
imposed upon the Gross-Up Payment, Executive
retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 5(c), all
determinations required to be made under this Section 5,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting
firm as may be designated by Executive (the "Accounting
Firm") which shall provide detailed supporting calculations
both to Polaroid and Executive within fifteen (15) business
days of the receipt of notice from Executive that there has
been a Payment, or such earlier time as is requested by
Polaroid. In the event that the Accounting Firm is serving
as accountant or auditor for an individual, entity or group
effecting the change in ownership or effective control
(within the meaning of Section 280G of the Code), Executive
shall appoint another nationally recognized accounting firm
to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by Polaroid. Any Gross-Up
Payment, as determined pursuant to this Section 5, shall be
paid by Polaroid to Executive within five (5) business days
after the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be
binding upon Polaroid and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by Polaroid
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should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event
that Polaroid exhausts its remedies pursuant to Section
5(c) and Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Polaroid to or for
the benefit of Executive.
(c) Executive shall notify Polaroid in writing of any
claim by the Internal Revenue Service that, if successful,
would require the payment by Polaroid of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after
Executive is informed in writing of such claim and shall
apprise Polaroid of the nature of such claim and the date
on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives
such notice to Polaroid (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If Polaroid notifies Executive in writing
prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give Polaroid any information reasonably requested by
Polaroid relating to such claim;
(ii) take such action in connection with contesting such
claim as Polaroid shall reasonably request in writing from
time to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by Polaroid;
(iii) cooperate with Polaroid in good faith in order to
effectively contest such claim; and
(iv) permit Polaroid to participate in any proceedings
relating to such claim;
provided, however, that Polaroid shall
bear and pay directly all costs and
expenses (including additional interest
and penalties) incurred in connection
with such contest and shall indemnify
and hold Executive harmless, on an after-
tax basis, for any Excise Tax or income
tax (including interest and penalties
with respect thereto) imposed as a
result of such representation and
payment of costs and expenses. Without
limitation on the foregoing provisions
of this Section 5(c), Polaroid shall
control all proceedings taken in
connection with such contest and, at its sole
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option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences
with the taxing authority in respect of such
claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such
contest to a determination before any
administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts,
as Polaroid shall determine; provided, however,
that if Polaroid directs Executive to pay such
claim and sue for a refund, Polaroid shall
advance the amount of such payment to Executive,
on an interest-free basis, and shall indemnify
and hold Executive harmless, on an after-tax
basis, from any Excise Tax or income tax
(including interest or penalties with respect
thereto) imposed with respect to such advance or
with respect to any imputed income with respect
to such advance; and provided, further, that if
Executive is required to extend the statute of
limitations to enable Polaroid to contest such
claim, Executive may limit this extension solely
to such contested amount. Polaroid's control of
the contest shall be limited to issues with
respect to which a Gross-Up Payment would be
payable hereunder and Executive shall be entitled
to settle or contest, as the case may be, any
other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount
advanced by Polaroid pursuant to Section 5(c), Executive
receives any refund with respect to such claim, Executive
shall (subject to Polaroid's complying with the
requirements of Section 5(c)) promptly pay to Polaroid the
amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by
Polaroid pursuant to Section 5(c), a determination is made
that Executive shall not be entitled to any refund with
respect to such claim and Polaroid does not notify
Executive in writing of its intent to contest such denial
of refund prior to the expiration of thirty (30) days after
such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
6. Termination for Cause. Nothing in this Agreement
shall be construed to prevent Polaroid from terminating
Executive's employment for Cause. If Executive is
terminated for Cause, Polaroid shall have no obligation to
make any payments under this Agreement, except for payments
that may otherwise be
payable under then existing employee benefit plans,
programs and arrangements of Polaroid.
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7. Indemnification; Director's and Officer's Liability
Insurance. Executive shall, after the Termination Date,
retain all rights to indemnification under applicable law
or under Polaroid Certificate of Incorporation or the
Polaroid By-Laws, as they may be amended or restated from
time to time. In addition, Polaroid shall maintain
Director's and Officer's liability insurance on behalf of
Executive at the better of the level in effect immediately
prior to the Change in Control or the Executive's
Termination Date, for the two (2) year period following the
Termination Date, and throughout the period of any
applicable statute of limitations.
8. Confidentiality. Without the prior written consent of
the Company, except to the extent required by an order of a
court having competent jurisdiction or under subpoena from
an appropriate government agency, the Executive shall
comply with the Confidentiality Agreement he executed when
hired, and shall not disclose any trade secrets, customer
lists, drawings, designs, information regarding product
development, marketing plans, sales plans, manufacturing
plans, management organization information (including data
and other information relating to members of the Board and
management), operating policies or manuals, business plans,
financial records or other financial, commercial, business
or technical information relating to the Company or any of
its subsidiaries or information designated as confidential
or proprietary that the Company or any of its Subsidiaries
may receive belonging to suppliers, customers or others who
do business with the Company or any of its subsidiaries
(collectively, "Confidential Information") to any third
person unless such Confidential Information has been
previously disclosed to the public by the Company or is in
the public domain (other than by reason of Executive's
breach of this Section 8).
9. Disputes. Any dispute or controversy arising under or
in connection with this Agreement shall be settled
exclusively by arbitration in Boston, Massachusetts or, at
the option of Executive, in the county where Executive then
resides, in accordance with the Rules of the American
Arbitration Association then in effect. Judgment may be
entered on an arbitrator's award relating to this Agreement
in any court having jurisdiction.
10. Costs of Proceedings. Polaroid shall pay all costs
and expenses, including attorneys' fees and disbursements,
at least monthly, of Executive in connection with any legal
proceeding (including arbitration), whether or not
instituted by Polaroid or Executive, relating to the
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interpretation or enforcement of any provision of this
Agreement, except that if Executive instituted the
proceeding and the judge, arbitrator or other individual
presiding over the proceeding affirmatively finds that
Executive instituted the proceeding in bad faith, Executive
shall pay all costs and expenses, including attorneys' fees
and disbursements, of Executive. Polaroid shall pay pre-
judgment interest on any money judgment obtained by
Executive as a result of such a proceeding, calculated at
the prime rate of The Chase Manhattan Bank (or its
successors), as in effect from time to time, from the date
that payment should have been made to Executive under this
Agreement.
11. Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of
and be enforceable by Polaroid and Executive and their
respective heirs, legal representatives, successors and
assigns. If Polaroid shall be merged into or consolidated
with another entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the entity
surviving such merger or resulting from such consolidation.
Polaroid will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of
Polaroid, by agreement in form and substance satisfactory
to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that
Polaroid would be required to perform it if no such
succession had taken place. The provisions of this Section
11 shall continue to apply to each subsequent employer of
Executive hereunder in the event of any subsequent merger,
consolidation or transfer of assets of such subsequent
employer.
12. Payments in Event of Death. Should the Executive
become eligible to receive payments and benefits under this
Agreement and die prior to receipt of all such payments and
benefits, the residual payments shall be made to the
beneficiaries identified on the Executive's beneficiary
form for the Executive Deferral Compensation Plan. Any
residual family medical and dental benefits which the
Executive was receiving on the Executive's date of death
shall continue to the family members the Executive had
covered in such medical and dental plans on such date.
13. Withholding. Polaroid may, to the extent required by
law, withhold applicable federal, state and local income
and other taxes from any payments due to Executive
hereunder.
14. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the
Commonwealth of
Massachusetts applicable to contracts made and to be
performed therein.
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15. Entire Agreement. This Agreement constitutes the
entire agreement between the parties and, except as
expressly provided herein, supersedes all other prior
agreements concerning the effect of a Change in Control on
the relationship between Polaroid and Executive. This
Agreement may be changed only by a written agreement
executed by Polaroid and Executive.
IN WITNESS WHEREOF, the parties have executed
this Agreement on the 25 day of April, 1997.
POLAROID CORPORATION
By /s/ Gary T. DiCamillo
-------------------------
Gary T. DiCamillo
/s/ Carole J. Uhrich
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Carole J. Uhrich
Executive
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Exhibit 10.12
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 25, 1997 between
Polaroid Corporation ("Polaroid") and Robert M. Delahunt
(the "Executive").
Executive is a skilled and dedicated employee who
has important management responsibilities and talents which
benefit Polaroid. Polaroid believes that its best
interests will be served if Executive is encouraged to
remain with Polaroid. Polaroid has determined that
Executive's ability to perform Executive's responsibilities
and utilize Executive's talents for the benefit of
Polaroid, and Polaroid's ability to retain Executive as an
employee, will be significantly enhanced if Executive is
provided with fair and reasonable protection from the risks
of a change in ownership or control of Polaroid.
Accordingly, Polaroid and Executive agree as follows:
1. Defined Terms.
(a) "Annual Bonus" shall mean the Executive's annual bonus
paid pursuant to the Company's annual bonus plan in effect
at the time (currently the Polaroid Incentive Plan for
Executives). Unless otherwise specifically provided, the
Annual Bonus shall be calculated assuming the Corporate
target is reached and no additional factors are considered
to decrease the Executive's award under the Plan.
(b) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
is the Beneficial Owner of 20% or more of the Stock then
outstanding, but does not include any Subsidiary of the
Company, any employee benefit plan of the Company or of any
of its Subsidiaries or any Person holding Stock for or
pursuant to the terms of any such employee benefit plan.
(c) "Affiliate" and "Associate" when used with reference
to any Person, shall have the meaning given to such terms
in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(d) "Base Salary" shall mean the annual rate of base
salary (disregarding any reduction in such rate that
constitutes Constructive Termination) as increased by the
Board from time to time.
(e) "Beneficial Owner" shall be a Person deemed to
"beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly; or
<PAGE>
(ii) which such Person or any of such Person's Affiliates
or Associates has:
(A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(written or oral), or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted
for purchase or exchange thereunder; or
(B) the right to vote pursuant to any agreement,
arrangement or understanding (written or oral); provided
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding (written or oral)
to vote such security (i) arises solely from a revocable
proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the
Exchange Act and (ii) is not also then reportable on
Schedule 13D (or any comparable or successor report) under
the Exchange Act; or
(C) which are beneficially owned, directly or indirectly,
by any Person with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (written or oral), for the
purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described
in Section l(d)(ii)(B) of this
Agreement) or disposing of any securities of the Company.
(f) "Board" shall mean the Board of Directors of the
Company.
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(g) "Bonus" means the amount payable to the Executive under any
plan, or agreement offered by Polaroid.
(h) "Cause" means either of the following:
(i) Executive's willful malfeasance having a material
adverse effect on Polaroid; or
(ii) Executive's conviction of a felony;
provided, that any action or refusal by Executive shall not
constitute Cause if, in good faith, Executive believed such
action or refusal to be in, or not opposed to, the best
interests of Polaroid, or if Executive shall be entitled,
under applicable law or under an applicable Polaroid
Certificate of Incorporation or the Polaroid By-Laws, as
they may be amended or restated from time to time, to be
indemnified with respect to such action or refusal.
(i) "Change in Control" shall mean:
(i) the date on which a change in control of the Company
occurs of a nature that would be required to be reported
(assuming that the Company's Stock was registered under the
Exchange Act) in response to an item (currently item 6(e))
of Schedule 14A of Regulation 14A promulgated under the
Exchange Act or an item (currently Item l(a)) of Form 8-K
under the Exchange Act;
(ii) the date on which there is an Acquiring Person and a
change in the composition of the Board of the Company
within two (2) years after the Share Acquisition Date such
that the individuals who constituted the Board prior to the
Share Acquisition Date (the "Incumbent Board") shall cease
for any reason to constitute at least a majority of the
Board;
(iii) any day on or after the Share Acquisition Date
when directly or indirectly, any of the transactions
specified in the following clauses occurs:
(A) the Company shall consolidate with, or merge with and
into, any other Person;
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(B) any Person shall merge with and into the Company; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its
Subsidiaries shall sell, lease, exchange or
otherwise transfer or dispose of), in one or
more transactions, the major part of
the assets of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons;
(iv) the date when a Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or any of its Subsidiaries or any Person holding
Stock for or pursuant to the terms of any such employee
benefit plan) alone or together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of
30% or more of the Stock then outstanding;
(v) the date on which the stockholders of the Company
approve a merger or consolidation of the Company with any
other corporation other than:
(A) a merger or consolidation which would result in voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving or parent entity) 50% or more of the combined
voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately
after such merger or consolidation, or
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person acquires 50% or more of the combined voting
power of the company's then outstanding securities; or
(vi) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a
similar effect).
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(j) "Code" means the Internal Revenue Code of 1986, as
amended.
(k) "Confidential Information" means non-public
information relating to the business plans, marketing
plans, customers or employees of Polaroid other than
information the disclosure of which cannot reasonably be
expected to adversely affect the business of Polaroid.
(l) "Constructive Termination" shall occur when the
Executive voluntarily terminates his employment with the
Company or retires after the occurrence of one or more of
the following events on or after the Change in Control:
(i) a reduction in the Participant's Compensation Base Pay
from the amount of the Participant's Base Pay Compensation
on the day immediately preceding the Change in Control;
(ii) the elimination of or reduction of any benefit under
any bonus, incentive or other employee benefit plan in
effect on the day immediately preceding the Change in
Control, without an economically equivalent replacement, if
the Participant was a participant or member of such plan on
the day immediately preceding the Change in Control;
(iii) the discontinuation of or any reduction in a
Participant's participation or membership in any bonus,
incentive or other benefit plan in which the Participant
was a participant or member on the day immediately
preceding the Change in Control, without an economically
equivalent replacement;
(iv) the reassignment of the Participant without his
consent from his regular shift or regular duties as they
existed on the day immediately preceding the Change in
Control;
(v) the reassignment of the Participant without his
consent to a location more than 30 miles from his regular
workplace on the day immediately preceding the Change in
Control;
(vi) the reduction in the Participant's job title or level
in effect on the day immediately preceding the Change in
Control;
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(vii) the provision of significantly less favorable working
conditions than those provided on the day immediately
preceding the Change in Control; or
(viii) a significant diminution in duties or
responsibilities or the reassignment of the Participant to
duties which represent a position of lesser responsibility
than his duties as they existed on the day immediately
preceding the Change in Control.
(m) "Disability" shall mean the Executive's disability
within the meaning of the Polaroid Long Term Disability
Plan.
(n) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as in effect on the date in question.
(o) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity.
(p) "Share Acquisition Date" shall mean the first date any
Person shall become an Acquiring Person.
(q) "Stock" shall mean the outstanding shares of Common
Stock of the Company and, for purposes of the Change in
Control provision, any other shares of capital stock of the
Company into which the Common Stock shall be reclassified
or changed.
(r) "Subsidiary" of the Company shall mean any corporation
of which the Company owns, directly or indirectly, more
than 50% of the Voting Stock.
(s) "Terminated" shall mean:
(i) termination by Polaroid without Cause at any time
within the two (2) years following a Change in Control;
(ii) your termination due to a Constructive Termination at
any time within the two (2) years following a Change in
Control; or
(iii) termination within three (3) months prior to a
Change of Control at the request of any individual or
entity acquiring ownership and control of Polaroid. If
Executive's employment with Polaroid is terminated prior to
a Change in Control at the request of Acquiring Person,
this Agreement shall become effective upon the
subsequent occurrence of a Change in Control involving such
Acquiring Person. In such situation the Executive's
Termination Date shall be deemed to have occurred
immediately following the Change in Control, and therefore
Executive shall be entitled to the benefits provided in
this Agreement.
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(t) "Voting Stock" shall mean capital stock of any class
or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect
the directors of a corporation.
2. Effective Date; Term. This Agreement shall be
effective immediately prior to a Change in Control (the
"Effective Date") and shall remain in effect for two (2)
years following such Change in Control, and such additional
time as may be necessary to give effect to the terms of the
Agreement.
3. Change in Control Benefits. If your employment with
Polaroid is Terminated, you shall be entitled to the
following benefits:
(a) Severance Benefits. Within ten (10) business days
after the Termination Date, Polaroid shall pay you a lump
sum amount, in cash, equal to the greater of the severance
benefit you would otherwise be entitled to receive under
the Extended Severance Plan or:
(i) two (2) times the sum of:
(A) Your Base Salary; and
(B) Your Annual Bonus; and
(ii) Your Annual Bonus multiplied by a fraction, the
numerator of which shall equal the number of days you were
employed by Polaroid in the calendar year in which the
Termination Date occurs and the denominator of which shall
equal 365.
(b) Continued Welfare Benefits. Until the second
anniversary of the Termination Date, you shall be entitled
to participate in the Company's medical, dental, and life
insurance plans, at the highest level provided to you
during the period beginning immediately prior to the Change
in Control and ending on the Termination Date and at no
greater cost then the cost you were paying immediately
prior to Change in Control; provided, however, that if you
become employed by a new employer, your coverage under the
applicable Polaroid
plans shall continue, but your coverage thereunder
shall be secondary to (i.e., reduced by) any
benefits provided under like plans of such new
employer.
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(c) Payment of Accrued But Unpaid Amounts. Within ten
(10) business days after the Termination Date, Polaroid
shall pay you
(i) earned but unpaid compensation, including, without
limitation, any unpaid portion of your Bonus accrued with
respect to the full calendar year ended prior to the
Termination Date; and
(ii) all compensation previously deferred by you on a non-
qualified basis but not yet paid.
(d) Retiree-Medical Benefits. If you are or would become
fifty-five (55) or older and your age and service equal
sixty-five (65) and you have at least five (5) years of
service with the Company within two (2) years of Change in
Control, you are eligible for retiree medical benefits (as
such are determined immediately prior to Change in
Control). You are eligible to commence receiving such
retiree medical benefits based on the terms and conditions
of the applicable plans in effect immediately prior to the
Change in Control.
(e) Supplemental Retirement and Profit Sharing Benefits.
(i) On the Termination Date, you shall become vested in
the benefits provided under Polaroid's non-qualified
defined benefit pension plans or any successor plans (the
"Supplemental Plans").
(ii) Within ten (10) business days after the Termination
Date, Polaroid shall pay you a lump sum cash amount equal
to the present value of your accrued benefit under the
Supplemental Plans. For purposes of computing the lump sum
present value of your accrued benefit under the
Supplemental Plans,
(A) Polaroid shall credit you with two (2) years of plan
participation and service and two (2) years of age for all
purposes (including additional accruals and eligibility for
early retirement) over your actual years and fractional
years of plan participation and service and age credited to
you on the Termination Date; and
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(B) Polaroid shall apply the present value (and any other
actuarial adjustments required by this Agreement) using the
actuarial assumptions set forth in Section 1.01 of the
Pension Plan. In determining your benefits under this
paragraph (e)(B), the terms of the Supplemental Plans as in
effect immediately prior to the Change in Control, except
as expressly modified in this paragraph (e), shall govern.
(f) Effect on Existing Plans. All Change in Control
provisions applicable to you and contained in any plan,
program, agreement or arrangement maintained as of the date
this Agreement is signed (including, but not limited to,
any stock option, restricted stock or pension plan) shall
remain in effect through the date of a Change in Control,
and for such period thereafter as is necessary to carry out
such provisions and provide the benefits payable
thereunder, and may not be altered in a manner which
adversely affects you without your prior written approval.
This means that all awards of options, performance shares
or such other awards as may be granted shall upon Change in
Control be fully vested consistent with their terms.
Notwithstanding the foregoing, and subject to the
limitation provided in Paragraph 3(a), no benefits shall be
paid to you, however, under the Polaroid Extended Severance
Plan or any other severance plan maintained generally for
the employees of Polaroid if you are eligible to receive
severance benefits under this Agreement.
(g) Outplacement Counseling. Outplacement services will
be provided consistent with Polaroid's outplacement
practices in effect prior to the Change in Control.
4. Mitigation. Executive shall not be required to
mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or
otherwise, and compensation earned from such employment or
otherwise shall not reduce the amounts otherwise payable
under this Agreement. No amounts payable under this
Agreement shall be subject to reduction or offset in
respect of any claims which Polaroid (or any other person
or entity) may have against Executive unless specifically
referenced herein.
5. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by
Polaroid, or one or more trusts established by Polaroid for
the benefit of its employees, to or for the benefit
of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this
-9-
<PAGE>
Agreement, or otherwise) (a "Payment") would be
subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are
incurred by Executive with respect to such excise
tax (such excise tax, together with any such
interest and penalties, hereinafter collectively
referred to as the "Excise Tax"), Executive shall
be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after
payment by Executive of all taxes (including any
interest or penalties imposed with respect to
such taxes), including, without limitation, any
income taxes (and any interest and penalties
imposed with respect thereto) and the Excise Tax
imposed upon the Gross-Up Payment, Executive
retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 5(c), all
determinations required to be made under this Section 5,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting
firm as may be designated by Executive (the "Accounting
Firm") which shall provide detailed supporting calculations
both to Polaroid and Executive within fifteen (15) business
days of the receipt of notice from Executive that there has
been a Payment, or such earlier time as is requested by
Polaroid. In the event that the Accounting Firm is serving
as accountant or auditor for an individual, entity or group
effecting the change in ownership or effective control
(within the meaning of Section 280G of the Code), Executive
shall appoint another nationally recognized accounting firm
to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by Polaroid. Any Gross-Up
Payment, as determined pursuant to this Section 5, shall be
paid by Polaroid to Executive within five (5) business days
after the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be
binding upon Polaroid and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by Polaroid
-10-
<PAGE>
should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event
that Polaroid exhausts its remedies pursuant to Section
5(c) and Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Polaroid to or for
the benefit of Executive.
(c) Executive shall notify Polaroid in writing of any
claim by the Internal Revenue Service that, if successful,
would require the payment by Polaroid of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after
Executive is informed in writing of such claim and shall
apprise Polaroid of the nature of such claim and the date
on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives
such notice to Polaroid (or such shorter period ending on
the date that any payment of taxes with respect to such
claim is due). If Polaroid notifies Executive in writing
prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give Polaroid any information reasonably requested by
Polaroid relating to such claim;
(ii) take such action in connection with contesting such
claim as Polaroid shall reasonably request in writing from
time to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by Polaroid;
(iii) cooperate with Polaroid in good faith in order to
effectively contest such claim; and
(iv) permit Polaroid to participate in any proceedings
relating to such claim;
provided, however, that Polaroid shall
bear and pay directly all costs and
expenses (including additional interest
and penalties) incurred in connection
with such contest and shall indemnify
and hold Executive harmless, on an after-
tax basis, for any Excise Tax or income
tax (including interest and penalties
with respect thereto) imposed as a
result of such representation and
payment of costs and expenses. Without
limitation on the foregoing provisions
of this Section 5(c), Polaroid shall
control all proceedings taken in
connection with such contest and, at its sole
-11-
<PAGE>
option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences
with the taxing authority in respect of such
claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such
contest to a determination before any
administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts,
as Polaroid shall determine; provided, however,
that if Polaroid directs Executive to pay such
claim and sue for a refund, Polaroid shall
advance the amount of such payment to Executive,
on an interest-free basis, and shall indemnify
and hold Executive harmless, on an after-tax
basis, from any Excise Tax or income tax
(including interest or penalties with respect
thereto) imposed with respect to such advance or
with respect to any imputed income with respect
to such advance; and provided, further, that if
Executive is required to extend the statute of
limitations to enable Polaroid to contest such
claim, Executive may limit this extension solely
to such contested amount. Polaroid's control of
the contest shall be limited to issues with
respect to which a Gross-Up Payment would be
payable hereunder and Executive shall be entitled
to settle or contest, as the case may be, any
other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount
advanced by Polaroid pursuant to Section 5(c), Executive
receives any refund with respect to such claim, Executive
shall (subject to Polaroid's complying with the
requirements of Section 5(c)) promptly pay to Polaroid the
amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by
Polaroid pursuant to Section 5(c), a determination is made
that Executive shall not be entitled to any refund with
respect to such claim and Polaroid does not notify
Executive in writing of its intent to contest such denial
of refund prior to the expiration of thirty (30) days after
such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
6. Termination for Cause. Nothing in this Agreement
shall be construed to prevent Polaroid from terminating
Executive's employment for Cause. If Executive is
terminated for Cause, Polaroid shall have no obligation to
make any payments under this Agreement, except for payments
that may otherwise be
payable under then existing employee benefit plans,
programs and arrangements of Polaroid.
-12-
<PAGE>
7. Indemnification; Director's and Officer's Liability
Insurance. Executive shall, after the Termination Date,
retain all rights to indemnification under applicable law
or under Polaroid Certificate of Incorporation or the
Polaroid By-Laws, as they may be amended or restated from
time to time. In addition, Polaroid shall maintain
Director's and Officer's liability insurance on behalf of
Executive at the better of the level in effect immediately
prior to the Change in Control or the Executive's
Termination Date, for the two (2) year period following the
Termination Date, and throughout the period of any
applicable statute of limitations.
8. Confidentiality. Without the prior written consent of
the Company, except to the extent required by an order of a
court having competent jurisdiction or under subpoena from
an appropriate government agency, the Executive shall
comply with the Confidentiality Agreement he executed when
hired, and shall not disclose any trade secrets, customer
lists, drawings, designs, information regarding product
development, marketing plans, sales plans, manufacturing
plans, management organization information (including data
and other information relating to members of the Board and
management), operating policies or manuals, business plans,
financial records or other financial, commercial, business
or technical information relating to the Company or any of
its subsidiaries or information designated as confidential
or proprietary that the Company or any of its Subsidiaries
may receive belonging to suppliers, customers or others who
do business with the Company or any of its subsidiaries
(collectively, "Confidential Information") to any third
person unless such Confidential Information has been
previously disclosed to the public by the Company or is in
the public domain (other than by reason of Executive's
breach of this Section 8).
9. Disputes. Any dispute or controversy arising under or
in connection with this Agreement shall be settled
exclusively by arbitration in Boston, Massachusetts or, at
the option of Executive, in the county where Executive then
resides, in accordance with the Rules of the American
Arbitration Association then in effect. Judgment may be
entered on an arbitrator's award relating to this Agreement
in any court having jurisdiction.
10. Costs of Proceedings. Polaroid shall pay all costs
and expenses, including attorneys' fees and disbursements,
at least monthly, of Executive in connection with any legal
proceeding (including arbitration), whether or not
instituted by Polaroid or Executive, relating to the
-13-
<PAGE>
interpretation or enforcement of any provision of this
Agreement, except that if Executive instituted the
proceeding and the judge, arbitrator or other individual
presiding over the proceeding affirmatively finds that
Executive instituted the proceeding in bad faith, Executive
shall pay all costs and expenses, including attorneys' fees
and disbursements, of Executive. Polaroid shall pay pre-
judgment interest on any money judgment obtained by
Executive as a result of such a proceeding, calculated at
the prime rate of The Chase Manhattan Bank (or its
successors), as in effect from time to time, from the date
that payment should have been made to Executive under this
Agreement.
11. Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of
and be enforceable by Polaroid and Executive and their
respective heirs, legal representatives, successors and
assigns. If Polaroid shall be merged into or consolidated
with another entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the entity
surviving such merger or resulting from such consolidation.
Polaroid will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of
Polaroid, by agreement in form and substance satisfactory
to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that
Polaroid would be required to perform it if no such
succession had taken place. The provisions of this Section
11 shall continue to apply to each subsequent employer of
Executive hereunder in the event of any subsequent merger,
consolidation or transfer of assets of such subsequent
employer.
12. Payments in Event of Death. Should the Executive
become eligible to receive payments and benefits under this
Agreement and die prior to receipt of all such payments and
benefits, the residual payments shall be made to the
beneficiaries identified on the Executive's beneficiary
form for the Executive Deferral Compensation Plan. Any
residual family medical and dental benefits which the
Executive was receiving on the Executive's date of death
shall continue to the family members the Executive had
covered in such medical and dental plans on such date.
13. Withholding. Polaroid may, to the extent required by
law, withhold applicable federal, state and local income
and other taxes from any payments due to Executive
hereunder.
14. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the
Commonwealth of
Massachusetts applicable to contracts made and to be
performed therein.
-14-
<PAGE>
15. Entire Agreement. This Agreement constitutes the
entire agreement between the parties and, except as
expressly provided herein, supersedes all other prior
agreements concerning the effect of a Change in Control on
the relationship between Polaroid and Executive. This
Agreement may be changed only by a written agreement
executed by Polaroid and Executive.
IN WITNESS WHEREOF, the parties have executed
this Agreement on the 25 day of April, 1997.
POLAROID CORPORATION
By /s/ Gary T. DiCamillo
-------------------------
Gary T. DiCamillo
/s/ Robert M. Delahunt
- ---------------------------
Robert M. Delahunt
Executive
-15-
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
-----------------------------------------------
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FIRST QUARTER, 1997
PRIMARY COMPUTATION
- -------------------
Net earnings per statement of earnings $ 15.8
========
Weighted average number of common
shares outstanding 44.8
Weighted average number of common
stock equivalents .5
--------
Weighted average number of common
shares, as adjusted 45.3
========
Primary earnings per common share $ .35
========
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FIRST QUARTER, 1997
FULLY DILUTED COMPUTATION
- -------------------------
Net earnings per statement of earnings $ 15.8
Weighted average number of common
shares outstanding used for primary computation 44.8
Weighted average number of common
stock equivalents .5
------
Weighted average number of common
shares, as adjusted 45.3
======
Fully diluted earnings per common share $ .35 (A)
======
(A) This computation is submitted as an exhibit to the Company's Form 10-Q in
accordance with Regulation S-K item 601(b)(11). However, fully diluted
earnings per share are not stated because they are equal to primary
earnings per common share.
-2-
<PAGE>
POLAROID CORPORATION(Continued)
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FIRST QUARTER, 1996
PRIMARY COMPUTATION
- -------------------
Net loss per statement of earnings $ (60.7)
=========
Weighted average number of common
shares outstanding 45.6
Weighted average number of common
stock equivalents --
--------
Weighted average number of common
shares, as adjusted 45.6
========
Primary loss per common share $ (1.33)
========
-3-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FIRST QUARTER, 1996
FULLY DILUTED COMPUTATION
- -------------------------
Net loss per statement of earnings $ (60.7)
Add: effect of elimination of after-tax interest expense
on $140.0 million 8% convertible debentures 1.7
--------
Net loss, as adjusted $ (59.0)
========
Weighted average number of common
shares outstanding used for primary computation 45.6
Weighted average number of common
stock equivalents 1.0
Add: effect of converting $140.0 million
8% debentures into common stock 4.3 (A)
------
Weighted average number of common
shares, as adjusted 50.9
======
Fully diluted loss per common share $(1.16) (B)
=======
(A)Assumes conversion of $140.0 million 8% convertible debentures at a price
of approximately $32.50 per common share in accordance with the terms of
the convertible debentures.
(B)This computation is submitted as an exhibit to the Company's Form 10-Q in
accordance with Regulation S-K item 601(b)(11), although presenting the
computation is not in accord with paragraph 40 of APB Opinion 15 because
the computation produces an antidilutive result.
-4-
Exhibit 15
The Board of Directors
Polaroid Corporation
Ladies and Gentlemen:
Re: Registration statements No. 33-36384 on Form S-8, No. 33-44661
on Form S-3, No.33-51173 on Form S-8, and No. 333-0791 on Form
S-3 of Polaroid Corporation.
With respect to the subject registration statements, we acknowledge
our awareness of the use therein of our report dated April 15, 1997,
related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report
is not considered part of a registration statement prepared or
certified by an accountant or a report prepared or certified by an
accountant within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
May 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Securities and Exchange Commission Form 10-Q for the quarter
ended March 30, 1997 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-30-1997
<CASH> 29,500
<SECURITIES> 5,600
<RECEIVABLES> 524,400
<ALLOWANCES> 22,100
<INVENTORY> 548,800
<CURRENT-ASSETS> 1,324,500
<PP&E> 2,177,500
<DEPRECIATION> 1,517,600
<TOTAL-ASSETS> 2,132,300
<CURRENT-LIABILITIES> 707,500
<BONDS> 497,000
0
0
<COMMON> 75,400
<OTHER-SE> 562,000
<TOTAL-LIABILITY-AND-EQUITY> 2,132,300
<SALES> 457,500
<TOTAL-REVENUES> 457,500
<CGS> 259,800
<TOTAL-COSTS> 438,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 500
<INTEREST-EXPENSE> 11,400
<INCOME-PRETAX> 25,100
<INCOME-TAX> 9,300
<INCOME-CONTINUING> 15,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,800
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0
</TABLE>
