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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended
AUGUST 31, 1996
Commission File Number 1-12054
MORRISON KNUDSEN CORPORATION
(FORMERLY WASHINGTON CONSTRUCTION GROUP, INC.)
A Delaware Corporation
IRS Employer Identification No. 33-0565601
MORRISON KNUDSEN PLAZA, BOISE, IDAHO 83729
208 / 386-5000
At October 21, 1996, 53,691,385 shares of the registrant's common stock were
outstanding, including 24,161,421 newly issued shares of common stock in
connection with the merger effective September 11, 1996.
The registrant has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports) and
has been subject to such filing requirements for the past 90 days.
/x/ Yes / / No
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MORRISON KNUDSEN CORPORATION
(FORMERLY WASHINGTON CONSTRUCTION GROUP, INC.)
QUARTERLY REPORT FORM 10-Q FOR THE
THREE MONTH PERIOD ENDED AUGUST 31, 1996
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Consolidated Condensed Financial Statements and Notes Thereto
Statements of Operations for the Three and Nine Month
Periods Ended August 31, 1996 and 1995 I-1
Balance Sheets at August 31, 1996 and
November 30, 1995 I-2
Statements of Cash Flows for the Nine Month Periods
Ended August 31, 1996 and 1995 I-4
Notes to Financial Statements I-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations I-10
PART II. OTHER INFORMATION
Item 2. Changes in Rights of the Corporation's Security Holders II-1
Item 4. Results of Votes of the Corporation's Security Holders II-1
Item 5. Other Information II-1
Item 6. Exhibits and Reports on Form 8-K II-2
Signatures II-2
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PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MORRISON KNUDSEN CORPORATION
(FORMERLY WASHINGTON CONSTRUCTION GROUP, INC.)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE AND NINE MONTH PERIODS ENDED AUGUST 31, 1996 AND 1995 (UNAUDITED)
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
-------------------------- --------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue from construction contracts $ 97,750 $ 71,873 $ 242,449 $ 160,262
Costs of construction contracts (92,834) (64,636) (228,627) (144,514)
Gain (loss) on sale of equipment 136 (50) 488 1,130
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Gross profit 5,052 7,187 14,310 16,878
General and administrative expenses (5,033) (3,410) (12,653) (11,793)
Losses for impairment of long-lived assets (18,200) -- (18,200) --
Reorganization expense -- -- (1,500) --
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Operating income (loss) (18,181) 3,777 (18,043) 5,085
Investment income 605 934 2,212 3,082
Interest expense (182) (20) (564) (65)
Other expense, net (229) (59) (323) (32)
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Income (loss) before income taxes (17,987) 4,632 (16,718) 8,070
Income tax (expense) benefit 6,765 (1,621) 6,322 (2,825)
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Net income (loss) $ (11,222) $ 3,011 $ (10,396) $ 5,245
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Income (loss) per share of common stock $(.38) $.10 $(.35) $.18
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Common shares used to compute income (loss)
per share 29,488,000 29,485,000 29,484,000 29,439,000
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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MORRISON KNUDSEN CORPORATION
(FORMERLY WASHINGTON CONSTRUCTION GROUP, INC.)
CONSOLIDATED CONDENSED BALANCE SHEETS
AT AUGUST 31, 1996 (UNAUDITED) AND NOVEMBER 30, 1995
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS 1996 1995
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CURRENT ASSETS
Cash and cash equivalents $ 24,267 $ 30,035
Accounts receivable, including retentions of $14,510 in 1996 and
$14,513 in 1995 61,383 41,327
Refundable income taxes, net 638 --
Due from affiliates 1,408 355
Costs and estimated earnings in excess of billings on uncompleted contracts 4,542 5,033
Notes receivable 8,746 11,511
Investments in joint ventures 8,002 1,846
Deferred income tax assets 2,447 514
Prepaid and other assets 3,270 3,035
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Total current assets 114,703 93,656
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INVESTMENTS AND OTHER ASSETS
Money market investments 934 886
Land held for sale or lease -- 8,266
Assets held for sale 13,652 --
Cost in excess of net assets acquired,
net of accumulated amortization of $1,408 in 1996 and $1,013 in 1995 16,382 15,777
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Total investments and other assets 30,968 24,929
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PROPERTY, PLANT AND EQUIPMENT 105,450 130,499
LESS ACCUMULATED DEPRECIATION (65,777) (63,783)
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Property, plant and equipment, net 39,673 66,716
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TOTAL ASSETS $185,344 $185,301
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
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<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable $ 11,056 $ 9,747
Subcontracts payable, including retentions of $11,594 in 1996
and $9,778 in 1995 22,992 16,658
Income taxes payable -- 501
Due to affiliates 1,152 1,327
Accrued payroll and other liabilities 11,724 8,718
Current maturities of long-term debt 448 448
Billings in excess of costs and estimated earnings on uncompleted contracts 9,036 4,789
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Total current liabilities 56,408 42,188
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NON-CURRENT LIABILITIES
Deferred income taxes 5,119 9,120
Long-term debt 4,710 5,042
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Total non-current liabilities 9,829 14,162
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COMMITMENTS AND CONTINGENCIES (Note 3).
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STOCKHOLDERS' EQUITY
Preferred stock - par value $.01; authorized 10,000 shares; none
issued and outstanding
Common stock - par value $.01; authorized 100,000 shares; issued
and outstanding 29,648 in 1996 and 29,484 in 1995 296 295
Additional paid in capital 62,632 62,134
Restricted stock - deferred compensation (32) (85)
Retained earnings 56,211 66,607
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Total stockholders' equity 119,107 128,951
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $185,344 $185,301
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</TABLE>
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MORRISON KNUDSEN CORPORATION
(FORMERLY WASHINGTON CONSTRUCTION GROUP, INC.)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTH PERIODS ENDED AUGUST 31, 1996 AND 1995 (UNAUDITED)
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(10,396) $ 5,245
Adjustments to reconcile net income (loss) to net cash provided (used)
by operating activities:
Depreciation and amortization 7,446 6,119
Provisions for impairment losses on long-lived assets 18,200 --
Compensation expense on stock awards 552 149
Gain on sale of equipment (489) (1,130)
Changes in net operating assets (16,944) (8,323)
- --------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities (1,631) 2,060
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INVESTING ACTIVITIES
Additions to property, plant and equipment (5,909) (16,601)
Proceeds from sale of equipment 2,152 2,327
Other (48) (37)
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Net cash used in investing activities (3,805) (14,311)
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FINANCING ACTIVITIES
Repayment of long-term debt (332) (309)
Repayment of real estate loan -- (7,150)
Restricted stock activity, net -- (4)
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Net cash used in financing activities (332) (7,463)
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Decrease in cash and cash equivalents (5,768) (19,714)
Cash and cash equivalents at beginning of period 30,035 44,872
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Cash and cash equivalents at end of period $ 24,267 $ 25,158
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Supplemental disclosure of cash flow information:
Interest paid $563 $ 381
Income taxes paid 755 2,332
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Noncash investing activities:
Land, plant and equipment classified as assets held for sale $ 25,324 $ --
Prepaid assets classified as assets held for sale 428 --
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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MORRISON KNUDSEN CORPORATION
(FORMERLY WASHINGTON CONSTRUCTION GROUP, INC.)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
1. MERGER WITH MORRISON KNUDSEN CORPORATION AND BASIS OF PRESENTATION
As previously disclosed, on September 11, 1996, Morrison Knudsen Corporation, a
Delaware corporation, ("Old MK") merged with and into Washington Construction
Group, Inc. (the "Corporation") pursuant to the Restructuring and Merger
Agreement, dated as of May 28, 1996 (the "Merger Agreement"), by and between the
Corporation and Old MK, with the Corporation being the surviving corporation in
the merger (the "Merger") and being renamed Morrison Knudsen Corporation.
The Merger was an integral part of the reorganization of Old MK pursuant to a
plan of reorganization (the "Plan") filed by Old MK in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Plan
was confirmed by the Bankruptcy Court on August 26, 1996 (the "Confirmation
Date"), and became effective concurrently with the Merger on September 11, 1996
(the "Effective Date").
On the Effective Date, substantially all of Old MK's senior debt obligations
were discharged and all of Old MK's outstanding common stock was cancelled.
Pursuant to the Plan, certain creditors of Old MK have received or will receive
distributions consisting in the aggregate of (i) $47,930 in cash (including
$34,630 in proceeds from the cancellation of the promissory note of MK Rail
Corporation ("MK Rail") owned by Old MK and $13,300 of cash of the Corporation),
(ii) all of the common stock of MK Rail owned by Old MK, (iii) 24,161,421 newly
issued shares of common stock of the Corporation, (iv) 1,800,000 newly issued
shares of preferred stock of the Corporation entitling the holders thereof to
receive up to $18,000 (subject to adjustment) on account of certain tax refunds
that may be received by the Corporation as successor to Old MK, and (v) the
proceeds of exercises of the rights ("Rights") described below (in lieu of a
portion of the distributions described in clauses (i) through (iv) of this
sentence). The cash payments referred to above (other than payments
constituting the proceeds of exercises of Rights) have been or will be made from
cash on deposit.
Pursuant to the Plan, each holder of record of shares of Old MK common stock as
of the close of business on the Confirmation Date (including shares held for
distribution to certain securities litigation plaintiffs) received on the
Effective Date a number of Rights, equal to the number of shares of Old MK
common stock held by such holder, to purchase a portion of the consideration
otherwise distributable under the Plan to certain of Old MK's creditors as
described above and will receive, following proper surrender of the certificates
representing such holder's shares of Old MK common stock in accordance with the
Plan, a pro rata share of warrants exercisable during a term of six and one-half
years to purchase from the Corporation an aggregate of 2,765,000 shares of the
Corporation's common stock at an exercise price of $12.00 per warrant (subject
to adjustment).
The foregoing descriptions of the Plan and Merger Agreement are qualified in
their entirety by the full texts of such documents, which are filed as Exhibits
2.1 and 2.2, respectively, hereto and incorporated herein by this reference.
On September 11, 1996, the Merger will be accounted for under the purchase
method of accounting. Accordingly, the assets and liabilities and operating
results of Old MK are not included in the accompanying unaudited consolidated
condensed financial statements at and for the three and nine month periods ended
August 31, 1996. The total purchase price paid by the Corporation for the
acquired net assets of Old MK has been estimated to be $203,736, consisting of
(i) $13,300 of cash provided by the Corporation, (ii) $186,127 of equity issued
by the Corporaiton and (iii) $4,309 estimated costs of acquisition.
The Corporation will classify as goodwill the excess of the purchase price over
the estimated fair value of the acquired net assets of Old MK. Goodwill will be
amortized on a straight-line method over 40 years. Solely for purposes of
estimating the purchase price, the value of the 24,161,421 shares of common
stock issued by the Corporation in the acquisition is estimated to be $180,486
in the aggregate, or $7.47 per share, and the value of the warrants issued by
the Corporation in the acquisition, which are exercisable to purchase from the
Corporation an aggregate of 2,765,000 shares
I-5
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of the Corporation's common stock, is estimated to be $5,641 in the aggregate,
or $2.04 per warrant. The value of such warrants was estimated through the
application of the Black-Scholes valuation model. The principal assumptions used
in applying the Black-Scholes valuation model included, in addition to the
$12.00 per warrant exercise price and six and one-half year term of the
warrants, an assumed market price of $8.50 per share for the Corporation's
common stock, assumed volatility in such market price during the six and one-
half year exercise period of 25% and an assumed risk-free interest rate
throughout such period of 6.7% per annum. The estimated values set forth above
do not purport to constitute, and should not be viewed as, estimates of the
prices at which the Corporation's common stock or warrants may trade in the
market at any time. The actual market value of such securities will be
influenced by a number of factors, including the Corporation's financial
condition and results of operations, perceptions regarding the Corporation's
prospects and general market and economic conditions, and is likely to vary
from, and may vary materially from the estimated values set forth above.
The accompanying unaudited consolidated condensed financial statements at and
for the three and nine month periods ended August 31, 1996 have been prepared
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain financial information normally included in
financial statements and financial statement footnote disclosures prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. These unaudited consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and financial statement footnotes thereto included in the
Corporation's Annual Report on Form 10-K for the year ended November 30, 1995.
The comparative consolidated balance sheet and financial statement footnotes
included herein as November 30, 1995 amounts have been derived from the audited
balance sheet and financial statement footnotes at November 30, 1995.
The preparation of the Corporation's unaudited consolidated financial statements
in conformity with generally accepted accounting principles necessarily requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the balance sheet dates and the reported amounts of revenues and costs during
the reporting periods for long-term contracts. Actual amounts, events and
circumstances will likely vary from such estimates and assumptions and may
require future adjustments to or otherwise affect such reported amounts and such
disclosure.
The Corporation has a substantial history of making reasonably dependable
estimates of the extent of progress towards completion, contract revenues and
contract costs on its long-term construction contracts. However, due to
uncertainties inherent in the estimation process, the Corporation can give no
assurance that revisions of estimates of completion costs will not occur in the
near term for certain construction projects.
The accompanying unaudited consolidated condensed financial statements reflect
all adjustments, consisting of normal recurring adjustments, which are, in the
opinion of management, necessary to a fair presentation of the results of
operations and cash flows for the interim periods. The results of operations
and cash flows for the nine month period ended August 31, 1996 are not
necessarily indicative of the operating results and cash flows to be expected
for the full year.
2. LOSSES FOR IMPAIRMENT OF LONG-LIVED ASSETS
Financial Accounting Standards Board Statement No. 121 ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF ("FAS
121") requires that long-lived assets and certain identifiable intangible assets
(1) be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable and (2) if
impaired, be reported at the lower of the carrying amount or their fair value,
and if applicable, less the estimated costs of disposition. Changes in
circumstances at August 31, 1996 required application of the provisions of FAS
121 to certain of the Corporation's long-lived assets as follows:
On November 8, 1996, the Corporation's Board of Directors approved a plan to
offer for sale certain assets of a non-core subsidiary with a carrying amount of
$17,486 at August 31, 1996. The Corporation recognized an estimated impairment
loss of $6,500 to reduce the carrying amount of the assets to estimated current
fair value of $10,986 at August 31, 1996. The revenue and net loss for the
subsidiary to be disposed of (excluding the estimated impairment loss of $6,500)
included
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in the Corporation's results of operations for the nine month period ended
August 31, 1996 were $4,010 and $(1,430), respectively.
Management decided to sell land previously held primarily for lease with a
carrying amount of $8,266 at August 31, 1996. The Corporation recognized an
estimated impairment loss of $5,600 and established a new carrying amount of
$2,666 at August 31, 1996, based upon an appraisal of the current fair value net
of the estimated improvement and disposal costs required for a near-term bulk
sale of the land.
As of August 31, 1996, the Corporation recognized an estimated impairment loss
of $6,100 on the land and buildings in Highland, California, which comprised the
Corporation's headquarters. The Corporation is moving its headquarters to Boise,
Idaho, where it is consolidating certain administrative and operating functions.
The loss reflects the change in use and the impairment of the $7,016 carrying
amount of the Highland property. The impairment loss was estimated based on an
appraisal of the current fair value of the Highland property.
3. COMMITMENTS AND CONTINGENCIES
GUARANTEES: The Corporation has commitments and performance guarantees arising
in the ordinary course of its business from construction contracts, including
those of its construction joint ventures.
ENVIRONMENTAL MATTERS: The Corporation's contract mining and environmental
remediation services involve risks for which the Corporation could become
liable under federal, state and local environmental laws and regulations,
including the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"), which imposes strict, joint and several,
retroactive liability upon parties who are responsible for the cost of
environmental remediation under such Act. Old MK has performed, and the
Corporation will continue to perform, environmental remediation work at
Superfund sites as a response action contractor for the U.S. Environmental
Protection Agency (the "EPA") and, as such, is exempt from liability under
any federal law, including CERCLA, for contribution or indemnification and
for death or injury to persons or property resulting from the release of
hazardous substances, unless its conduct was negligent, grossly negligent, or
constitutes intentional misconduct; the Corporation may, however, be entitled
to indemnification from the United States against any liability arising out
of negligent performance of the work. While the Corporation believes that it
is in material compliance with environmental laws and regulations, a
determination that the Corporation is liable under environmental laws and
regulations for the cost of environmental remediation could have a material
adverse effect on the financial position, results of operations and cash
flows of the Corporation. Amendments to, or more stringent implementation of,
current environmental laws and regulations also could have such adverse
effects.
The American Institute of Certified Public Accountants recently issued Statement
of Position ("SOP") 96-1, ENVIRONMENTAL REMEDIATION LIABILITIES. SOP 96-1
addresses specific accounting issues present in the recognition, measurement,
display and disclosure of environmental remediation liabilities. The provisions
of SOP 96-1 are effective beginning December 1, 1997, however, the Corporation
applied the guidance of SOP 96-1 in assessing its potential environmental
remediation liabilities.
The EPA has notified the Corporation of its potential liability in connection
with hazardous substances generated or disposed of at the Summitville Mine
Superfund Site (the "Site") near Del Norte, Colorado, and regards the
Corporation as a PRP with respect to the Site. The EPA has not commenced any
litigation or other proceedings against the Corporation, and the Corporation has
had only preliminary discussions with the EPA regarding the Corporation's
potential responsibility with respect to the Site. However, the EPA has
informally advised the Corporation that the EPA does not believe the Corporaiton
is eligible for a de minimis settlement (as was offered by the EPA to several
PRPs which contributed less than 3% volume and toxicity of the hazardous
substances at the Site).
According to a recently published report, the EPA estimates that the total
remediation costs incurred and to be incurred at the Site will be $120,000. The
EPA has reportedly notified approximately 20 other parties associated with the
Site of their potential liability. The Corporation is not a party to any
agreement regarding an allocation of responsibility among the PRPs (several of
which have entered into de minimis settlements with the EPA) and the EPA has not
made an allocation of responsibility among the PRPs. The Corporation's share,
if any, of the aggregate environmental liability
I-7
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associated with the Site cannot be estimated at this time and depends upon,
among other things, the manner in which liability may be allocated to or among
the Corporation or other PRPs associated with the Site, the efficacy of any
defenses that the Corporation or such other PRPs may have to any assertion of
liability, the willingness and ability of such other PRPs to discharge such
liability as may be allocated to them and the outcome of any negotiations or
settlement discussions between the Corporation and the EPA and/or such other
PRPs.
Management believes that the ultimate resolution of this matter could have a
material adverse effect on the Corporation's financial position and could
materially and adversely effect its results of operations and cash flows in one
or more future periods.
OTHER: The Corporation is a party to various other claims and legal proceedings
incidental to its business. In management's opinion, the outcome of these claims
and proceedings will not have a material adverse effect on the financial
condition, results of operations and cash flows of the Corporation.
4. TRANSACTIONS WITH AFFILIATES OF CONTROLLING STOCKHOLDER
The Corporation purchases goods and services from, and has contracted for
certain administrative, financial and data processing services with, affiliates
of the controlling stockholder on terms comparable to those available from
outside sources. It is anticipated that substantially all of such services will
be performed by the Corporation following the Merger. Transactions with
affiliates for the three and nine month periods ended August 31, 1996 and 1995
were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
1996 1995 1996 1995
- --------------------------------------------------------------------------------
Capital expenditures - equipment $ 53 $ -- $ 545 $ 854
Cost of construction contracts 1,950 1,766 4,474 4,438
General and administrative expenses 635 485 1,688 1,933
The Corporation performs construction services, rents equipment and sells used
parts and equipment to affiliates on terms comparable to those available to
outside parties. Transactions with related parties for the three and nine month
periods ended August 31, 1996 and 1995 were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
1996 1995 1996 1995
- --------------------------------------------------------------------------------
Construction services $ 937 $ 83 $4,389 $ 638
Equipment rental 46 50 312 143
Gain on sale of equipment, net 2 99 234 504
5. SUBSEQUENT EVENTS
MERGER WITH MORRISON KNUDSEN CORPORATION: See Note 1.
NEW REVOLVING CREDIT AGREEMENT: On October 31, 1996, the Corporation obtained
from the Bank of Montreal a five year, $200,000 revolving loan and letter of
credit facility (the "Facility"). Revolving loan borrowings under the Facility
are limited to $125,000. The Facility may be extended each year subject to the
approval of the Corporation and the bank. In connection with the Facility, the
Corporation paid to the bank an underwriting fee of $1,100, and is required to
pay commitment fees on the unused portion of the Facility and letter of credit
fees upon issuance of letters of credit.
The Facility is collateralized by substantially all of the assets of the
Corporation and certain of its material domestic subsidiaries. The Facility
includes a provision releasing such collateral at such time as the Corporation
obtains an
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investment grade credit rating and contains covenants requiring the maintenance
of financial ratios (such as debt service coverage and debt to total
capitalization) and minimum levels of net worth. In addition, the Facility
agreement places limitations on, among other things, additional indebtedness,
investments and loans guarantees.
The Facility agreement provides for revolving loans bearing interest at (i) the
applicable LIBOR rate plus an additional margin or (ii) the base rate (the
higher of (a) prime commercial rate or (b) the Federal Funds Rate plus 1/2%)
plus an additional margin. Both the applicable base rate and LIBOR rate
additional margins are determined by a financial ratio of the Corporation's
funded debt to earnings before interest, taxes, depreciation and amortization,
and could range from 3/4% to 1 1/8% for the LIBOR rate and zero to 1/4% for the
base rate. Interest is payable quarterly in arrears.
CAPITAL STOCK: On September 11, 1996, the Corporation's stockholders approved
certain amendments to the Corporation's Certificate of Incorporation including
(i) increasing the number of total authorized shares of the Corporation's common
stock from 39,000,000 to 100,000,000 and (ii) the number of total authorized
shares of the Corporation's preferred stock from 1,000,000 to 10,000,000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's discussion and analysis of certain significant factors affecting
the operating results and financial condition of the Corporation for the periods
and at the dates reflected in the accompanying unaudited consolidated condensed
financial statements are qualified in their entirety by reference to Item 5,
Other Information in Part II of this Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS
The Corporation incurred net losses for the three and nine month periods
ended August 31, 1996 of $11.2 million ($.38 per share) and $10.4 million
($.35 per share), respectively, compared to net income of $3.0 million ($.10
per share) and $5.2 million ($.18 per share) for the comparable periods of
1995. During the third quarter of 1996, the Corporation applied the
provisions of Financial Accounting Standards Board Statement No. 121
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO
BE DISPOSED OF and recognized pre-tax losses of $18.2 million for impairment
of long-lived assets.
REVENUES: For the first nine months of fiscal 1996, the Corporation had
revenues of $242.4 million compared with $160.3 million for the same period in
1995. For the third quarter of 1996, revenues totaled $97.8 million compared
with $71.9 million for the prior year's third quarter. Revenues increased over
the prior year periods due to a higher contract workload in fiscal 1996. The
year-to-date 1996 revenues were also higher due to unusually heavy rains that
occurred in California in the prior year, which delayed work on public highway
contracts in the first quarter of fiscal 1995. The breakout of contract revenue
by significant contract type for the three and nine month periods of fiscal 1996
and 1995 follows:
THREE MONTHS ENDED NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
1996 1995 1996 1995
- --------------------------------------------------------------------------------
Infrastructure (highway) 50% 54% 56% 50%
Infrastructure (other) 18% 12% 14% 16%
Contract mining 6% 17% 8% 16%
Environmental remediation 14% 8% 8% 6%
Commercial construction and
construction materials 12% 9% 14% 12%
The mix of revenues for the first nine months of fiscal 1996 compared to the
first nine months of fiscal 1995 included more highway projects resulting
primarily from unusually heavy rains that hampered construction at California
highway projects in the 1995 period. The changes in percentages of revenue by
contract type between the third quarter of 1996 versus the prior year's third
quarter primarily reflect differences in the composition of the Corporation's
work.
NEW BUSINESS AND BACKLOG: During the first nine months of fiscal 1996, the
Corporation increased its backlog (anticipated revenues from the uncompleted
portions of existing contracts, including the Corporation's pro rata share of
joint venture contracts). The Corporation's backlog of $419.1 million on August
31, 1996 was $135.1 million higher than its August 31, 1995 backlog (a 48%
increase), and $132.8 million higher than its November 30, 1995 backlog (a 46%
increase). The increase in backlog at August 31, 1996 compared with backlog at
November 30, 1995 is primarily due to increases in new contract awards in the
first nine months of fiscal 1996 which included the Corporation's $135.0 million
pro rata share of a joint venture project to construct a surface storage dam,
contracts totaling approximately $59.0 million with the California Department of
Transportation and approximately $71.0 million of contracts for airport
expansion and road relocation projects in the State of Nevada.
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<PAGE>
The following table shows changes in backlog for the three and nine month
periods ended August 31, 1996 and 1995.
THREE MONTHS ENDED NINE MONTHS ENDED
NEW BUSINESS AND BACKLOG AUGUST 31, AUGUST 31,
(THOUSANDS OF DOLLARS) 1996 1995 1996 1995
- --------------------------------------------------------------------------------
Backlog at beginning of period $418,344 $278,815 $286,347 $158,179
Less revenue recognized (97,750) (71,873) (242,449) (160,262)
New contract awards 73,365 63,903 326,778 244,964
Changes to existing contracts 25,167 13,169 48,450 41,133
- --------------------------------------------------------------------------------
Backlog at end of period $419,126 $284,014 $419,126 $284,014
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Corporation's ending backlog by type of contract, expressed as a percent of
backlog, follows:
AUGUST 31, 1996 NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
Infrastructure (highway) 38% 70%
Infrastructure (other) 43% 8%
Contract mining services 9% 15%
Environmental remediation 8% 1%
Commercial construction and sales of
construction materials 2% 6%
GROSS PROFIT: For the first nine months of fiscal 1996, the gross profit margin
of 6% was down from 11% for the comparable period of 1995 due to (i) higher than
expected costs to complete certain highway construction contracts, (ii) higher
maintenance and equipment operating costs, (iii) increased use of short-term
rental equipment, and (iv) additional operating costs of the sand and gravel
business.
For the third quarter of 1996, the gross profit margin of 5% was down from 10%
for the comparable period of 1995 due to lower claim revenue and increases in
costs to complete certain long-term contracts resulting in lower profit margins,
and, in some instances, provisions for anticipated losses on uncompleted
contracts.
Generally, gains from equipment sales may vary between periods depending upon
the age, type, condition and quantity of equipment sold. The Corporation buys
and sells equipment in the ordinary course of business based on its current and
anticipated contract workload.
Claims for additional revenue may also vary significantly between periods, as
the process of settlement is inherently uncertain and depends upon the nature of
the underlying claims, the customer's willingness to negotiate, the dollar
amounts involved, legal processes and other varying factors.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses for
the first nine months of fiscal 1996 were up $.9 million compared to the same
period in 1995. For the third quarter of fiscal 1996, general and
administrative expenses increased by $1.6 million from the same prior year
period. The increase in general and administrative expenses for the 1996 periods
primarily resulted from (i) $.7 million of compensation expense in connection
with the exercise of stock options, (ii) a $.4 million increase in compensation
expense for additional staff relating to increases in new work booked, and (iii)
a $.2 million increase in outside professional service fees relating to the
settlement of claims for additional revenue.
LOSSES FOR IMPAIRMENT OF LONG-LIVED ASSETS: Financial Accounting Standards Board
Statement No. 121 ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-
LIVED ASSETS TO BE DISPOSED OF ("FAS 121") requires that long-lived assets and
certain identifiable intangible assets (1) be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable and (2) if impaired, be reported at the
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<PAGE>
lower of the carrying amount or their fair value, and if applicable, less the
estimated costs of disposition. Changes in circumstances at August 31, 1996
required application of the provisions of FAS 121 to certain of the
Corporation's long-lived assets as follows:
On November 8, 1996, the Corporation's Board of Directors approved a plan to
offer for sale certain assets of a non-core subsidiary with a carrying amount of
$17.5 million at August 31, 1996. The Corporation recognized an estimated
impairment loss of $6.5 million to reduce the carrying amount of the assets to
estimated current fair value of $11.0 million at August 31, 1996. The revenue
and net loss for the subsidiary to be disposed of (excluding the estimated
impairment loss of $6.5 million) included in the Corporation's results of
operations for the nine month period ended August 31, 1996 were $4.0 million and
$(1.4 million), respectively.
Management decided to sell land previously held primarily for lease with a
carrying amount of $8.3 million at August 31, 1996. The Corporation recognized
an estimated impairment loss of $5.6 million and established a new carrying
amount of $2.7 million at August 31, 1996, based upon an appraisal of the
current fair value net of the estimated improvement and disposal costs required
for a near-term bulk sale of the land.
As of August 31, 1996, the Corporation recognized an estimated impairment loss
of $6.1 million on the land and buildings in Highland, California, which
comprised the Corporation's headquarters. The Corporation is moving its
headquarters to Boise, Idaho, where it is consolidating certain administrative
and operating functions. The loss reflects the change in use and the impairment
of the $7.0 million carrying amount of the Highland property. The impairment
loss was estimated based on an appraisal of the current fair value of the
Highland property.
REORGANIZATION EXPENSE: The Corporation announced in the first fiscal quarter of
1996 the relocation of personnel and consolidation of certain corporate
functions from Montana to its Highland, California, offices. The Corporation
accrued $1.5 million of reorganization expense in the first quarter of 1996.
OTHER INCOME AND EXPENSES: For the first nine months of fiscal 1996, investment
income decreased to $2.2 million from $3.1 million for the same fiscal 1995
period. For the third quarter of fiscal 1996, investment income of $.6 million
was down $.3 million from the prior year's third quarter. Investment income
decreased in the 1996 periods from the same 1995 periods due to reduced interest
bearing cash and cash equivalents and notes receivable balances.
INTEREST EXPENSE: Interest expense for the first nine months of fiscal 1996
increased to $.6 million compared with a nominal expense in the first nine
months of fiscal 1995. For the third quarter of fiscal 1996, interest expense
was $.2 million. The increase between the 1996 and 1995 periods reflects the
cessation of interest capitalization of the Corporation's debt due to the
commencement of operations at the Corporation's sand and gravel business in late
1995. Interest also increased in 1996 compared to 1995 due to financing costs
associated with the Corporation's revolving credit facility.
INCOME TAXES: The income tax benefits for the three and nine month periods of
1996 have been estimated using a blended federal and state tax rate of 38%. The
income tax provisions for the three and nine month periods of 1995, which
include the benefit of a change in a prior year estimate, is 35% of income
before taxes.
FINANCIAL CONDITION
The Corporation had negative cash flow of $5.8 million for the nine months ended
August 31, 1996. Total cash and cash equivalents decreased from $30.0 million to
$24.2 million due to negative operating cash flow of $1.6 million, $3.8 million
of net cash used primarily for equipment purchases and $.4 million for debt
repayments.
In accordance with the Plan and on consummation of the Merger, the Corporation,
subsequent to August 31, 1996, made cash payments of $13.3 million as part of
the total purchase price for the acquisition of the net assets of Old MK and
$33.4 million to retire Old MK's outstanding debtor-in-possession borrowings
upon Old MK's emergence from bankruptcy. The Corporation made such payments from
borrowings under its then four year, $60.0 million revolving credit facility.
As described in Note 5 to the accompanying unaudited consolidated condensed
financial statements, on October
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<PAGE>
31, 1996, the Corporation obtained from the Bank of Montreal a five year, $200.0
million revolving loan and letter of credit facility. Under the new credit
facility, outstanding revolving loan borrowings are limited to $125.0 million.
The Corporation will have three principal sources of liquidity during the period
immediately following the Merger: (i) existing cash and cash equivalents; (ii)
the revolving loan borrowings under its credit facility; and (iii) cash
generated by its operations. The Corporation's liquidity and capital resources
should be sufficient to meet its reasonably foreseeable working capital, capital
expenditure and other anticipated cash outlays. As of the date of this Quarterly
Report on Form 10-Q, the Corporation had no outstanding borrowings under the
five year, $200.0 million revolving credit facility and was in compliance with
its covenants, the most restrictive of which is debt service coverage.
The Corporation anticipates capital expenditures for major mobile construction
equipment during the six month period following August 31, 1996 to meet
equipment requirements of its expanded revenue backlog. These equipment
purchases will reduce overall maintenance costs and short-term rentals. The
Corporation expects to fund approximately $21.0 million in new equipment
purchases from cash from operations and purchase-money financing between
September 1996 and February 1997. Equipment purchases are dependent upon new
contract awards and the availability of used equipment in the Corporation's
equipment fleet.
In the future, the Corporation may undertake opportunities to complement its
existing operations through acquisitions or participation in joint ventures. As
acquisitions or joint venture opportunities arise, the capital resources of the
Corporation may be utilized. The timing and nature of these opportunities cannot
be predicted; therefore, the financing of future acquisitions, joint venture
participation or equipment expenditures may take a variety of forms. In
addition, on limited occasions, certain financing arrangements have been
extended by the Corporation to its customers to accommodate their financial
needs. The Corporation may elect to enter into similar arrangements in the
future.
THE MERGER
Because the Merger will result in the operation of businesses previously
conducted separately by the Corporation and Old MK on a combined basis and under
a new capital structure, the Corporation's financial condition, results of
operations and cash flows as of dates and for periods ending after September 10,
1996 will not be directly comparable to the Corporation's financial condition,
results of operations and cash flows as of dates and for periods prior to
September 11, 1996.
ENVIRONMENTAL MATTERS
The Corporation's contract mining and environmental remediation services involve
risks for which the Corporation could become liable under federal, state and
local environmental laws and regulations, including the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA"), which
imposes strict, joint and several, retroactive liability upon parties who are
responsible for the cost of environmental remediation under such Act. The
Corporation performs, and has performed, environmental remediation work at
Superfund sites as a response action contractor for the U.S. Environmental
Protection Agency (the "EPA") and, as such, is exempt from liability under any
federal law, including CERCLA, for contribution or indemnification and for death
or injury to persons or property resulting from the release of hazardous
substances, unless its conduct was negligent, grossly negligent, or constitutes
intentional misconduct; the Corporation may, however, be entitled to
indemnification from the United States against any liability arising out of
negligent performance of the work. While the Corporation believes that it is in
material compliance with environmental laws and regulations, a determination
that the Corporation is liable under environmental laws and regulations for the
cost of environmental remediation could have a material adverse effect on the
financial position, results of operations and cash flows of the Corporation.
Amendments to, or more stringent implementation of, current environmental laws
and regulations also could have such adverse effects.
The American Institute of Certified Public Accountants recently issued Statement
of Position ("SOP") 96-1, ENVIRONMENTAL REMEDIATION LIABILITIES. SOP 96-1
addresses specific accounting issues present in the recognition, measurement,
display and disclosure of environmental remediation liabilities. The provisions
of SOP 96-1 are effective beginning December 1, 1997, however, the Corporation
applied the guidance of SOP 96-1 in assessing its potential environmental
remediation liabilities.
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<PAGE>
The EPA has notified the Corporation of its potential liability in connection
with hazardous substances generated or disposed of at the Summitville Mine
Superfund Site (the "Site") near Del Norte, Colorado, and regards the
Corporation as a PRP with respect to the Site. The EPA has not commenced any
litigation or other proceedings against the Corporation, and the Corporation has
had only preliminary discussions with the EPA regarding the Corporation's
potential responsibility with respect to the Site. However, the EPA has
informally advised the Corporation that the EPA does not believe the Corporaiton
is eligible for a de minimis settlement (as was offered by the EPA to several
PRPs which contributed less than 3% volume and toxicity of the hazardous
substances at the Site).
According to a recently published report, the EPA estimates that the total
remediation costs incurred and to be incurred at the Site will be $120.0
million. The EPA has reportedly notified approximately 20 other parties
associated with the Site of their potential liability. The Corporation is not a
party to any agreement regarding an allocation of responsibility among the PRPs
(several of which have entered into de minimis settlements with the EPA) and the
EPA has not made an allocation of responsibility among the PRPs. The
Corporation's share, if any, of the aggregate environmental liability associated
with the Site cannot be estimated at this time and depends upon, among other
things, the manner in which liability may be allocated to or among the
Corporation or other PRPs associated with the Site, the efficacy of any defenses
that the Corporation or such other PRPs may have to any assertion of liability,
the willingness and ability of such other PRPs to discharge such liability as
may be allocated to them and the outcome of any negotiations or settlement
discussions between the Corporation and the EPA and/or such other PRPs.
Management believes that the ultimate resolution of this matter could have a
material adverse effect on the Corporation's financial position and could
materially and adversely effect its results of operations and cash flows in one
or more future periods.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN THE RIGHTS OF THE CORPORATION'S SECURITY HOLDERS
At a Special Meeting of the Corporation's stockholders on September 11, 1996,
stockholders were asked to consider and vote upon two related proposals (the
"Merger Proposals"): (i) approval and adoption of the Merger Agreement
("Proposal One"), and (ii) approval of certain amendments to the Corporation's
Restated and Amended Certificate of Incorporation ("Proposal Two").
The response to Item 4.(a) hereof is incorporated herein by this reference.
The information set forth under the captions "Proposal to Amend WCGI's
Certificate of Incorporation" and "Description of WCGI Capital Stock" in the
Corporation's definitive proxy statement relating to the Special Meeting of the
Corporation's stockholders held on September 11, 1996, which was filed with the
Securities and Exchange Commission on August 22, 1996, is incorporated herein by
this reference. A copy of the pertinent pages of such proxy statement is filed
as Exhibit 99.1 hereto.
ITEM 4. RESULTS OF VOTES OF THE CORPORATION'S SECURITY HOLDERS
(a) A special meeting of the Corporation's stockholders was held on September
11, 1996, at Ontario, California. The Corporation's Board of Directors
solicited proxies, pursuant to Regulation 14 of the Securities Exchange Act of
1934, for approval and adoption of the Merger Proposals. Stockholders of record
on July 19, 1996 were entitled to vote 29,481,184 shares of the Corporation's
common stock.
The approval of each of the Merger Proposals was conditioned upon the approval
of both the Proposals.
Results of voting on the Merger Proposals:
PROPOSAL ONE NUMBER OF SHARES PROPOSAL TWO NUMBER OF SHARES
For 22,242,835 For 21,806,425
Against 33,460 Against 761,379
Abstained 145,238 Abstained 51,168
Withheld 7,059,651 Withheld 6,862,212
(b) Directors whose terms of office continue after the Merger: David H.
Batchelder, Dorn Parkinson, Leonard R. Judd and Terry W. Payne.
(c) Pursuant to the Merger Agreement, the following persons were designated as
directors of the Corporation immediately after the Merger, (i) Robert S. Miller
and Robert A. Tinstman, who where designated by Old MK and (ii) William C.
Langley and John D.C. Roach, who were designated by certain creditors of Old MK.
(d) In connection with the Merger, Robert G. Hunt, Robert G. Reid, Robert C.
Wallace, Vincent O. Smith and John H. Wimberly resigned as directors of the
Corporation.
ITEM 5. OTHER INFORMATION
This report and other reports and statements filed by the Corporation from time
to time with the Securities and Exchange Commission (collectively, "SEC
Filings") contain or may contain forward-looking statements. When used in SEC
Filings, the words "anticipate," "believe," "estimate," "expect," "future,"
"intend," "plan," "should" and similar expressions identify such forward-looking
statements. Such forward-looking statements are necessarily based on various
assumptions and estimates and are inherently subject to various risks and
uncertainties, including, in addition to any risks and uncertainties disclosed
in the text surrounding such statements or elsewhere in the SEC Filings, risks
and uncertainties relating to the possible invalidity of the underlying
assumptions and estimates and possible changes or developments in social,
economic,
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<PAGE>
business, industry, market, legal and regulatory circumstances and conditions
and actions taken or omitted to be taken by third parties, including the
Corporation's customers, suppliers, business partners and competitors and
legislative, regulatory, judicial and other governmental authorities and
officials. Should the Corporation's assumptions or estimates prove to be
incorrect, or should one or more of these risks or uncertainties materialize,
actual amounts, results, events and circumstances may vary significantly from
those reflected in such forward-looking statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
FILED IN PART I
None
FILED IN PART II
The Exhibits to this Quarterly Report on Form 10-Q are listed in the
Exhibit Index contained elsewhere in this Quarterly Report.
(b) Reports on Form 8-K
The registrant did not file any current reports on Form 8-K for the
three month period ended August 31, 1996.
All other items required under Part II are omitted because they are not
applicable.
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.
MORRISON KNUDSEN CORPORATION
(formerly Washington Construction Group, Inc.)
/S/Gregory J. Rutherford
--------------------------------------------------
Vice President and Chief Financial Officer,
in his respective capacities as such through
September 10, 1996
/S/Stephen G. Hanks
--------------------------------------------------
Executive Vice President, Chief Legal Officer and
Acting Chief Financial Officer, in his respective
capacities as such after September 10, 1996
Date: November 27, 1996
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<PAGE>
MORRISON KNUDSEN CORPORATION
EXHIBIT INDEX
COPIES OF EXHIBITS WILL BE SUPPLIED UPON REQUEST. EXHIBITS WILL BE
PROVIDED AT A FEE OF $.25 PER PAGE REQUESTED.
EXHIBITS MARKED WITH AN ASTERISK ARE FILED HEREWITH, THE
REMAINDER OF THE EXHIBITS HAVE HERETOFORE BEEN FILED WITH THE
COMMISSION AND ARE INCORPORATED BY REFERENCE.
EXHIBIT
NUMBER EXHIBITS
2.1 First Amended Plan of Reorganization confirmed on August 26, 1996
under Chapter 11 of the United States Bankruptcy Code for the District
of Delaware, Case No. 96-1006(PJW) as filed by Morrison Knudsen
Corporation (Commission File No. 1-8889 - "Old MK") prior to its
merger on September 11, 1996 with and into Washington Construction
Group, Inc. (the "registrant") with the registrant being the surviving
corporation in the merger and being renamed "Morrison Knudsen
Corporation" (filed as Exhibit 2.1 to Old MK's Form 10-Q Quarterly
Report for the quarter ended June 30, 1996 and incorporated herein by
reference).
2.2 Restructuring and Merger Agreement dated May 28, 1996 by and between
the registrant and Old MK (filed as Exhibit 1 to the registrant's
Proxy Statement dated September 11, 1996 and incorporated herein by
reference).
3.1 * The registrant's Restated and Amended Certificate of Incorporation,
including all amendments thereto.
3.2 * The registrant's Restated and Amended Bylaws, including all amendments
thereto.
4.1 * Specimen temporary certificate for the registrant's Common Stock.
4.2 * Specimen certificate for the registrant's Warrants to expire on March
11, 2003.
4.3 * Specimen certificate for the registrant's Series A Preferred Stock.
4.4 * Warrant Agreement dated September 11, 1996 by and between the
registrant and Norwest Bank Minnesota, N.A.
4.5 * Registration Rights Agreement dated September 11, 1996 by and between
the registrant and the Holders of Stock listed on Schedule 1 thereof.
4.6 * Warrant Agreement dated September 11, 1996 among the registrant,
Batchelder & Partners, Inc. and Schroder Wertheim & Co. Incorporated,
including the form of certificate attached thereto as Exhibit A for
certain registrant Warrants to expire on September 11, 2001.
4.7 * Registration Rights Agreement dated September 11, 1996 among the
registrant, Batchelder & Partners, Inc. and Schroder Wertheim & Co.
Incorporated.
10.1 * The registrant's 1994 Stock Option and Incentive Plan for Officers,
Directors and Key Employees of Morrison Knudsen Corporation, amended
and restated to include amendment nos. 1 through 5 (1).
10.2 * Credit Agreement dated October 8, 1996 among the registrant, Bank of
Montreal, individually and as Agent, and the Banks which are parties
thereto.
27. * Financial Data Schedule.
99.1 Pages 60 through 62 ("Proposal to Amend WCGI's Certificate of
Incorporation") and pages 76 through 78 ("Description of WCGI Capital
Stock") of the Corporation's definitive proxy statement dated August
22, 1996 relating to the special meeting of the Corporation's
stockholders held on September 11, 1996.
- ---------------------------------
(1) Management contract or compensatory plan or arrangement.
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<PAGE>
EXHIBIT 3.1
RESTATED AND AMENDED
CERTIFICATE OF INCORPORATION
OF
MORRISON KNUDSEN CORPORATION
ARTICLE I.
The name of the Corporation is Morrison Knudsen Corporation.
ARTICLE II.
The address of the registered office of the Corporation in the State
of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle, 19805. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
ARTICLE III.
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which a corporation may now or
hereafter be organized under the General Corporation Law of the State of
Delaware as set forth in Title 8 of the Delaware Code (the "GCL").
ARTICLE IV.
Section 1. AUTHORIZED CAPITAL STOCK. The total number of
shares of all classes of stock which the Corporation shall have authority to
issue is Hundred Ten Million (110,000,000), consisting of
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<PAGE>
Hundred Million (100,000,000) shares of common stock, par value $0.01 per share
(the "Common Stock"), and Ten Million (10,000,000) shares of preferred stock,
par value $0.01 per share (the "Preferred Stock").
Section 2. PREFERRED STOCK. The Preferred Stock may be issued
in one or more series. The Board of Directors of the Corporation is hereby
authorized to issue the shares of Preferred Stock in such series and to fix from
time to time before issuance the number of shares to be included in any series
and the designation, relative powers, preferences, and rights and
qualifications, limitations, or restrictions of all shares of a series.
a. AUTHORITY OF THE BOARD OF DIRECTORS. The authority of the Board
of Directors with respect to each series will include, without limiting the
generality of the foregoing, the determination of any or all of the
following:
(i) the distinctive designation of and the number of shares
comprising the series, which number may be increased (except where
otherwise provided by the Board of Directors in creating the series)
or decreased (but not below the number of such shares then
outstanding) from time to time by like action of the Board of
Directors;
(ii) the voting powers, if any, and whether such voting powers
are full or limited in such series;
(iii) the redemption provisions, if any, applicable to the
series, including the redemption price or prices to be paid;
(iv) whether dividends, if any, will be cumulative or
noncumulative, the dividend rate of the series, and the dates and
preferences of dividends on the series;
(v) the rights of the series upon the voluntary or involuntary
dissolution of, or upon any distribution of the assets of, the
Corporation;
(vi) the provisions, if any, pursuant to which the shares of the
series are convertible into, or exchangeable for, shares of any other
class or classes or of any other series of the same
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<PAGE>
or any other class or classes of stock, or any other security, of the
Corporation or any other corporation or other entity, and the price or
prices or the rates of exchange applicable thereto;
(vii) the right, if any, to subscribe for or to purchase any
securities of the Corporation or any other corporation or other
entity;
(viii) the provisions, if any, of a sinking fund applicable to
the series; and
(ix) any other relative, participating, optional, or other
special powers, preferences, rights, qualifications, limitations, or
restrictions thereof;
all as may be determined from time to time by the Board of Directors and
stated in the resolution or resolutions providing for the issuance of the
Preferred Stock (collectively, a "Preferred Stock Designation").
b. SERIES A PREFERRED STOCK. The following is a statement of the
powers, preferences, rights, qualifications, limitations and restrictions
of the series of Preferred Stock designated as Series A Preferred Stock.
(i) DESIGNATION AND AMOUNT. The shares of such series of
Preferred Stock shall be designated as "Series A Preferred Stock" and
the number of shares constituting such series shall be 1,800,000.
(ii) RANK. With respect to rights on liquidation, winding up and
dissolution, the Series A Preferred Stock ranks (i) senior to both the
Corporation's Common Stock and to all classes and series of stock of
the Corporation now or hereafter authorized, issued or outstanding
which by their terms expressly provide that they are junior to the
Series A Preferred Stock as to distributions upon the liquidation,
winding up and dissolution of the Corporation or which do not specify
their rank (collectively with the Common Stock, the "Junior
Securities"); (ii) on a parity with each other class or series of
capital stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series will
rank on a parity
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<PAGE>
the Series A Preferred Stock as to distributions upon the liquidation,
winding up and dissolution of the Corporation (collectively referred
to as "Parity Securities"), PROVIDED that any such Parity Securities
that were not approved by the holders of Series A Preferred Stock in
accordance with paragraph (b)(vii)(B) of this Section 2 shall be
deemed to be Junior Securities and not Parity Securities; and (iii)
junior to each other class of capital stock or other series of
Preferred Stock issued by the Corporation after the date hereof the
terms of which have been approved by the holders of the Series A
Preferred Stock in accordance with paragraph (b)(vii)(B) of this
Section 2 and which specifically provide that such class or series
will rank senior to the Series A Preferred Stock as to distributions
upon the liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Senior Securities").
(iii) DIVIDENDS. The holders of shares of Series A Preferred
Stock are not entitled to receive dividends.
(iv) FOREIGN TAX CREDIT SINKING FUND; REDEMPTION.
(A) The Corporation shall create and maintain a sinking
fund ("Foreign Tax Credit Sinking Fund") into which it shall
deposit promptly upon receipt and hold all amounts received by
the Corporation in respect of refunds of federal income tax and
interest thereon associated with amended federal income tax
returns of the Corporation and consolidated subsidiaries for the
calendar years 1982 through 1990 which were filed prior to
January 1, 1996, which change the Corporation's election from
deducting foreign taxes to claiming a credit for those taxes
("Foreign Tax Credit Refunds"); PROVIDED, HOWEVER, that the
cumulative total amount of Foreign Tax Credit Refunds, together
with any amounts contributed pursuant to the sentence prior to
the penultimate sentence of this paragraph, which the Corporation
may deposit to the Sinking Fund shall not exceed $18,000,000. A
majority of the directors of the Corporation present
4
<PAGE>
at a meeting at which a quorum is present has the exclusive power
and authority to determine, in good faith, on the basis of
information known to them after reasonable inquiry, (i) whether
funds received by the Corporation are Foreign Tax Credit Refunds
and (ii) the amount of any Foreign Tax Credit Refunds. The
holders of the Series A Preferred Stock shall have no right to
challenge any such determination unless such challenge is
specifically authorized by the beneficial owners of a majority of
the issued and outstanding shares of the Series A Preferred
Stock. The Corporation may, but shall not be obligated to,
deposit funds other than Foreign Tax Credit Refunds into the
Foreign Tax Credit Sinking Fund; PROVIDED, HOWEVER, that such a
deposit of funds other than Foreign Tax Credit Refunds shall be
made only upon the affirmative vote of two-thirds of the total
number of directors that the Corporation would have if there were
no vacancies. Pending distribution of the amounts in the Foreign
Tax Credit Sinking Fund pursuant to paragraph (b)(iv)(B) of this
Section 2, all such amounts shall be deposited into and
maintained in an interest-bearing account at a bank or other
depository institution at which the Corporation maintains other
interest-bearing deposit accounts. Other than distributions made
pursuant to paragraph (b)(iv)(B) of this Section 2, the
Corporation shall not withdraw any funds from the Foreign Tax
Credit Sinking Fund.
(B) On the fifteenth day of the month following the end of
each calendar quarter, the Corporation shall distribute to each
holder of record of Series A Preferred Stock as of the last day
of such calendar quarter an amount per share equal to a pro rata
portion of (i) the total amount of Foreign Tax Credit Refunds
deposited into the Foreign Credit Sinking Fund during the quarter
and (ii) all interest earned on such total amount during the
quarter. The distribution for the calendar quarter in which the
cumulative total deposits to the sinking fund reaches $18,000,000
will be the final
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<PAGE>
distribution with respect to the Series A Preferred Stock. Upon
this final distribution, all shares of Series A Preferred Stock
will be cancelled and no longer outstanding and will not have the
status of shares of Series A Preferred Stock, and all rights of
the holders thereof as stockholders of the Corporation will
cease.
(C) If the Series A Preferred Stock has not been cancelled
as provided in paragraph (b)(iv)(B) of this Section 2 by the
fifth anniversary of the issuance of the Series A Preferred
Stock, the Corporation shall, on the fifteenth day ("Redemption
Date") of the month following the fifth anniversary of the
issuance of the Series A Preferred Stock, redeem all the
outstanding shares of Series A Preferred Stock at a per share
redemption price ("Redemption Price") equal to the greater of (I)
$0.01, or (II) a pro rata portion of the balance of the Foreign
Tax Credit Sinking Fund (including all interest earned thereon)
as of the fifth anniversary of the issuance of the Series A
Preferred Stock.
(D) In the event that the Corporation redeems shares of
Series A Preferred Stock pursuant to paragraph (b)(iv)(C) of this
Section 2, the Corporation shall send notice of the redemption by
first-class mail, postage prepaid, not less than 30 days prior to
the Redemption Date, to the holders of record of the shares to be
redeemed at their respective addresses as they shall appear in
the records of the Corporation; PROVIDED, HOWEVER, that failure
to give such notice or any defect therein or in the mailing
thereof shall not affect the validity of the proceedings for the
redemption of any shares so to be redeemed except as to the
holder to whom the Corporation has failed to give such notice or
except as to the holder to whom notice was defective. Each such
notice shall state: (i) the Redemption Date; (ii) the number of
shares of Preferred Stock to be redeemed; (iii) the Redemption
Price, and (iv) the place or places where certificates for
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such shares are to be surrendered for payment of the Redemption
Price. Upon surrender of the certificates for the shares
(properly endorsed or assigned for transfer, if the Board of
Directors so requires and a notice by the Corporation so states),
the Corporation shall redeem such shares at the Redemption Price
as aforesaid.
(E) If the Corporation has mailed the notice provided in
paragraph (b)(iv)(D) of this Section 2, then, from and after the
Redemption Date (unless the Corporation defaults in the payment
of the Redemption Price, in which case such rights shall continue
until the Redemption Price is paid), all shares of Series A
Preferred Stock will be deemed to be cancelled and no longer
outstanding, and will not have the status of shares of Series A
Preferred Stock, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive the
Redemption Price) will cease.
(v) LIQUIDATION PREFERENCE.
(A) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, each holder of outstanding shares of Series A
Preferred Stock will be entitled to be paid out of the assets of
the Corporation available for distribution to its stockholders,
before any payment is made or any assets distributed to the
holders of any of the Junior Securities, an amount in cash per
share of Series A Preferred Stock held equal to the greater of
(I) $0.01, or (II) a pro rata portion of the remaining balance of
the Foreign Tax Credit Sinking Fund (including all interest
earned thereon). If the assets of the Corporation are not
sufficient to pay in full the liquidation payments payable to the
holders of outstanding shares of the Series A Preferred Stock and
any Parity Securities, then the holders of all such shares shall
share ratably in such distribution of assets in accordance with
the amount which would be
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payable on such distribution if the amounts to which the holders
of outstanding shares of Series A Preferred Stock and the holders
of outstanding shares of such Parity Securities are entitled were
paid in full.
(B) For the purposes of this paragraph (b)(v), neither the
voluntary sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation
nor the consolidation or merger of the Corporation with any one
or more other corporations shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, unless such voluntary sale, conveyance, exchange or
transfer shall be in connection with a plan of liquidation,
dissolution or winding up of the Corporation.
(vi) REACQUIRED SHARES. Shares of Series A Preferred Stock that
have been issued and reacquired by the Corporation in any manner,
including shares reacquired by redemption pursuant to paragraph
(b)(iv) of this Section 2, shall (upon compliance with any applicable
provisions of the laws of the State of Delaware) have the status of
authorized and unissued shares of Preferred Stock undesignated as to
series, and may be redesignated and reissued as part of any series of
Preferred Stock.
(vii) VOTING RIGHTS. In addition to any voting rights
provided by law, the holders of Series A Preferred Stock have the
following voting rights:
(A) GENERAL. Except as required in this Article IV and as
otherwise required by law, shares of Series A Preferred Stock
shall vote together with shares of Common Stock of the
Corporation as a single class on all matters as to which the
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<PAGE>
shares of Common Stock are entitled to vote generally. Each
share of Series A Preferred Stock is entitled to 1/10,000 of a
vote.
(B) VOTING RIGHTS ON EXTRAORDINARY MATTERS. In addition to
any vote or consent of stockholders required by law, the approval
of holders of at least two-thirds of the outstanding shares of
Series A Preferred Stock, voting as a class, is required (i) to
reclassify any series of Junior Securities as Senior Securities
or Parity Securities, or (ii) to amend, repeal or change any of
the provisions of this Restated and Amended Certificate of
Incorporation or the provisions of this Article IV in any manner
that would alter or change the rights, powers, preferences or
privileges of the shares of Series A Preferred Stock so as to
affect them adversely, including, without limitation, changing
the voting percentage required for approval by the holders of
Series A Preferred Stock of the foregoing matters.
ARTICLE V.
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors consisting of not less than six
(6) directors nor more than twelve (12) directors, the exact number of directors
to be determined from time to time by resolution adopted by the Board of
Directors. The directors shall be divided into three classes, designated Class
I, Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors constituting the entire
Board of Directors. The term of the initial Class I directors shall terminate
on the date of the 1997 annual meeting of stockholders; the term of the initial
Class II directors shall terminate on the date of the 1998 annual meeting of
stockholders; and the term of the initial Class III directors shall terminate on
the date of the 1999 annual meeting of stockholders. At each annual meeting of
stockholders beginning in 1997, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. If the
number of directors is
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<PAGE>
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal as possible,
and any additional directors of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall coincide
with the remaining term of that class, but in no case will a decrease in the
number of directors shorten the term of any incumbent director. A director
shall hold office until the annual meeting for the year in which his term
expires and until his successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement, disqualification or removal
from office. Any vacancy on the Board of Directors, howsoever resulting, may be
filled by a majority of the directors then in office, even if less than a
quorum, or by a sole remaining director. Any director elected to fill a vacancy
shall hold office for a term that shall coincide with the term of the class to
which such director shall have been elected. Notwithstanding anything to the
contrary in this Restated and Amended Certificate of Incorporation or any
provisions of Bylaws of the Corporation, there shall be no cumulative voting.
ARTICLE VI.
Any or all of the directors of the Corporation may be removed from the
Board of Directors for cause only by the affirmative vote of stockholders owning
a majority in amount of the entire capital stock of the Corporation issued and
outstanding and entitled to vote thereon.
ARTICLE VII.
Elections of directors at an annual or special meeting of stockholders
need not be by written ballot unless the Bylaws of the Corporation shall
otherwise provide.
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ARTICLE VIII.
Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time only by a majority of the Board of
Directors or the Chief Executive Officer or the President.
ARTICLE IX.
Any action which may be taken by stockholders of the Corporation at an
annual or special meeting may not be effected except at such an annual or
special meeting by the vote required for the taking of such action, and the
right of stockholders to act by written consent is expressly denied.
ARTICLE X.
The officers of the Corporation shall be chosen in such a manner,
shall hold their offices for such terms and shall carry out such duties as are
determined by the Board of Directors, subject to the right of the Board of
Directors to remove any officer or officers at any time with or without cause.
ARTICLE XI.
A. The Corporation shall indemnify to the full extent authorized or
permitted by law (as now or hereafter in effect) any person made, or threatened
to be made, a defendant or witness to any action, suit or proceeding (whether
civil or criminal or otherwise) by reason of the fact that he, his testator or
intestate, is or was a director or officer of the Corporation or by reason of
the fact that such director or officer, at the request of the Corporation, is or
was serving any other corporation, partnership, joint venture, employee benefit
plan or other enterprise, in any capacity. Nothing contained herein shall
affect any rights to indemnification to which employees other than directors or
officers may be entitled by law. No amendment or repeal of this Section A of
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Article XI shall apply to or have any effect on any right to indemnification
provided hereunder with respect to any acts or omissions occurring prior to such
amendment or repeal.
B. No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director. Notwithstanding the foregoing sentence,
a director shall be liable to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
GCL, or (iv) for any transaction from which such director derived an improper
personal benefit. No amendment to or repeal of this Section B of this Article
XI shall apply to or have any effect on the liability or alleged liability of
any director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
C. In furtherance and not in limitation of the powers conferred by
statute:
(i) the Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would
have the power to indemnify him against such liability under the provisions
of law; and
(ii) the Corporation may create a trust fund, grant a security
interest and/or use other means (including, without limitation, letters of
credit, surety bonds and/or other similar arrangements), as well as enter
into contracts providing indemnification to the full extent authorized or
permitted by law and including as part thereof provisions with respect to
any or all of the foregoing to ensure the payment of such amounts as may
become necessary to effect indemnification as provided therein, or
elsewhere.
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ARTICLE XII.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend or rescind the Bylaws of the Corporation. In addition, the Bylaws of the
Corporation may be adopted, repealed, altered, amended, or rescinded by the
affirmative vote of two-thirds of the issued and outstanding stock of the
Corporation entitled to vote thereon.
ARTICLE XIII.
The Corporation reserves the right to repeal, alter amend, or rescind
any provision contained in this Restated and Amended Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this reservation.
Notwithstanding any other provision of this Restated and Amended Certificate of
Incorporation and any provisions of the Bylaws of the Corporation, any proposal
to amend or repeal Articles V, VI, VIII, IX, or XII, or this Article XIII or any
other proposal to amend this Restated and Amended Certificate of Incorporation
that is inconsistent with any provisions of Articles V, VI, VIII, IX, or XII or
this Article XIII shall require not less than the affirmative vote of two-thirds
of the issued and outstanding stock of the Corporation entitled to vote thereon.
ARTICLE XIV.
The Corporation will not issue nonvoting equity securities to the
extent prohibited by Section 1123 of the United States Bankruptcy Code;
provided, however, that this Article XIV (a) will have no further force and
effect beyond that required under Section 1123 of the United States Bankruptcy
Code, (b) will have such force and effect, if any, only for so long as such
Section 1123 is in effect and applicable to the Corporation, and (c) in all
events may be amended or eliminated in accordance with applicable law as from
time to time in effect.
* * * * *
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EXHIBIT 3.2
RESTATED AND AMENDED BYLAWS
OF
MORRISON KNUDSEN CORPORATION
(FORMERLY WASHINGTON CONSTRUCTION GROUP, INC.)
AMENDED AND RESTATED AS OF SEPTEMBER 12, 1996
<PAGE>
RESTATED AND AMENDED BYLAWS OF MORRISON KNUDSEN CORPORATION
TABLE OF CONTENTS
Page
----
ARTICLE I
OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. REGISTERED OFFICES. . . . . . . . . . . . . . . . . . . . . 1
Section 2. OTHER OFFICES . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
MEETINGS OF STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. PLACE OF MEETINGS . . . . . . . . . . . . . . . . . . . . . 1
Section 2. ANNUAL MEETING OF STOCKHOLDERS. . . . . . . . . . . . . . . 1
Section 3. QUORUM; ADJOURNED MEETINGS AND NOTICE THEREOF . . . . . . . 2
Section 4. VOTING. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. SPECIAL MEETINGS. . . . . . . . . . . . . . . . . . . . . . 3
Section 7. NOTICE OF STOCKHOLDERS' MEETINGS. . . . . . . . . . . . . . 3
Section 8. MAINTENANCE AND INSPECTION OF STOCKHOLDER LIST. . . . . . . 3
Section 9. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . 3
ARTICLE III
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1. THE NUMBER OF DIRECTORS . . . . . . . . . . . . . . . . . . 3
Section 2. VACANCIES . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. POWERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. PLACE OF DIRECTORS' MEETINGS. . . . . . . . . . . . . . . . 5
Section 5. MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6. QUORUM. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7. ACTION WITHOUT MEETING. . . . . . . . . . . . . . . . . . . 5
Section 8. TELEPHONIC MEETINGS . . . . . . . . . . . . . . . . . . . . 5
Section 9. COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . 5
Section 10. MINUTES OF COMMITTEE MEETINGS. . . . . . . . . . . . . . . 6
Section 11. COMPENSATION OF DIRECTORS. . . . . . . . . . . . . . . . . 6
ARTICLE IV
OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1. OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2. ELECTION OF OFFICERS. . . . . . . . . . . . . . . . . . . . 6
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Section 3. SUBORDINATE OFFICEHOLDERS . . . . . . . . . . . . . . . . . 6
Section 4. COMPENSATION OF OFFICERS. . . . . . . . . . . . . . . . . . 6
Section 5. TERM OF OFFICE; REMOVAL AND VACANCIES . . . . . . . . . . . 7
Section 6. CHAIRMAN OF THE BOARD . . . . . . . . . . . . . . . . . . . 7
Section 7. PRESIDENT AND CHIEF EXECUTIVE OFFICER . . . . . . . . . . . 7
Section 8. VICE PRESIDENTS . . . . . . . . . . . . . . . . . . . . . . 7
Section 9. SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 10. ASSISTANT SECRETARY. . . . . . . . . . . . . . . . . . . . 7
Section 11. TREASURER. . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 12. ASSISTANT TREASURER. . . . . . . . . . . . . . . . . . . . 8
ARTICLE V
INDEMNIFICATION OF DIRECTORS,OFFICERS, EMPLOYEES AND AGENTS . . . . . . 8
ARTICLE VI
CERTIFICATES OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2. SIGNATURES ON CERTIFICATES. . . . . . . . . . . . . . . . . 10
Section 3. STATEMENT OF STOCK RIGHTS, PREFERENCES, PRIVILEGES. . . . . 10
Section 4. LOST CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 11
Section 5. TRANSFERS OF STOCK. . . . . . . . . . . . . . . . . . . . . 11
Section 6. FIXED RECORD DATE . . . . . . . . . . . . . . . . . . . . . 11
Section 7. REGISTERED STOCKHOLDERS . . . . . . . . . . . . . . . . . . 11
ARTICLE VII
GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2. PAYMENT OF DIVIDENDS; DIRECTORS' DUTIES . . . . . . . . . . 12
Section 3. CHECKS. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4. FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5. CORPORATE SEAL. . . . . . . . . . . . . . . . . . . . . . . 12
Section 6. MANNER OF GIVING NOTICE . . . . . . . . . . . . . . . . . . 12
Section 7. WAIVER OF NOTICE. . . . . . . . . . . . . . . . . . . . . . 12
Section 8. ANNUAL STATEMENT. . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VIII
AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1. AMENDMENT BY DIRECTORS. . . . . . . . . . . . . . . . . . . 12
Section 2. AMENDMENT BY STOCKHOLDERS . . . . . . . . . . . . . . . . . 12
Section 2. AMENDMENT BY STOCKHOLDERS . . . . . . . . . . . . . . . . . 13
ii
<PAGE>
RESTATED AND AMENDED BYLAWS
OF
MORRISON KNUDSEN CORPORATION
(FORMERLY WASHINGTON CONSTRUCTION GROUP, INC.)
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICES. The registered office shall be in the
City of Dover, County of Kent, State of Delaware.
Section 2. OTHER OFFICES. The corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of stockholders shall be held
at any place within or outside the State of Delaware designated by the Board of
Directors. In the absence of any such designation, stockholders' meetings shall
be held at the principal executive office of the corporation.
Section 2. ANNUAL MEETING OF STOCKHOLDERS. The annual meeting of
stockholders shall be held on such date and at such time and place as may be
fixed by the Board of Directors and stated in the notice of the meeting, for the
purposes of electing directors and for the transaction of such other business as
is properly brought before the meeting in accordance with these Bylaws.
To be properly brought before the annual meeting, business must be
either (i) specified in the annual notice of meeting (or any supplement or
amendment thereto) given by or at the direction of the Board of Directors, (ii)
otherwise brought before the annual meeting by or at the direction of the Board
of Directors, or (iii) otherwise brought before the annual meeting by a
stockholder. In addition to any other applicable requirements, for business to
be brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the corporation. To
be timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation, not less than fifty (50)
days nor more than seventy-five (75) days prior to the meeting; provided,
however, that in the event that less than sixty-five (65) days' notice or prior
public disclosure of the date of the annual meeting is given or made to
stockholders, notice by a stockholder to be timely must be so received not later
than the close of business on the fifteenth (15th) day following the day on
which such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever first occurs. A stockholder's notice to the
Secretary shall set forth (a) as to each matter the stockholder proposes to
bring
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before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of the stockholder
proposing such business, (iii) the class, series and number of shares of the
corporation which are beneficially owned by the stockholder, and (iv) any
material interest of the stockholder in such business and (b) as to the
stockholder giving the notice (i) the name and record address of the stockholder
and (ii) the class and number of shares of capital stock of the corporation
which are beneficially owned by the stockholder. Notwithstanding anything in
the Bylaws to the contrary, no business shall be conducted at the annual meeting
except in accordance with the procedures set forth in this Article II, Section
2. The officer of the corporation presiding at an annual meeting shall, if the
facts warrant, determine and declare to the annual meeting that business was not
properly brought before the annual meeting in accordance with the provisions of
this Article II, Section 2, and if he should so determine, he shall so declare
to the annual meeting and any such business not properly brought before the
meeting shall not be transacted. Written notice of the annual meeting stating
the place, date and hour of the annual meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting.
Section 3. QUORUM; ADJOURNED MEETINGS AND NOTICE THEREOF. A majority
of the stock issued and outstanding and entitled to vote at any meeting of
stockholders, the holders of which are present in person or represented by
proxy, shall constitute a quorum for the transaction of business except as
otherwise provided by law, by the Certificate of Incorporation, or by these
Bylaws. A quorum, once established, shall not be broken by the withdrawal of
enough votes to leave less than a quorum and the votes present may continue to
transact business until adjournment. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, a majority of the
voting stock represented in person or by proxy may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified. If the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote thereat.
Section 4. VOTING. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having power present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall decide any question brought before such meeting, unless the question is
one upon which by express provision of the statutes, or the Certificate of
Incorporation or these Bylaws, a different vote is required in which case such
express provisions shall govern and control the decision of such question.
Directors of the corporation shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Shares represented by proxies that reflect,
with respect to a proposal, abstentions or limited voting authority, including
"broker non-votes" (i.e., shares held by a broker or nominee which are
represented at the meeting, but with respect to which such broker or nominee is
not empowered to vote on a particular proposal or proposals) shall be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. For purposes of determining the outcome of any proposal,
shares represented by such proxies will be treated as not present and not
entitled to vote with respect to the proposal or proposals.
Section 5. PROXIES. At each meeting of the stockholders, each
stockholder having the right to vote may vote in person or may authorize another
person or persons to act for him by proxy appointed by an instrument in writing
subscribed by such stockholder and bearing a date not more than three years
prior to said meeting, unless said instrument provides for a longer period. All
proxies must be filed with the
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Secretary of the corporation at the beginning of each meeting in order to be
counted in any vote at the meeting. Each stockholder shall have one vote for
each share of stock having voting power, registered in his name on the books of
the corporation on the record date set by the Board of Directors as provided in
Article VI, Section 6 hereof. All elections shall be had and all questions
decided by a plurality vote.
Section 6. SPECIAL MEETINGS. Special meetings of the stockholders,
for any purpose, or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called only by a majority of the Board of
Directors or the Chief Executive Officer or the President. Business transacted
at any special meeting of stockholders shall be limited to the purposes stated
in the notice.
Section 7. NOTICE OF STOCKHOLDERS' MEETINGS. Whenever stockholders
are required or permitted to take any action at a meeting, a written notice of
the meeting shall be given which notice shall state the place, date and hour of
the meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. The written notice of any meeting shall be given
to each stockholder entitled to vote at such meeting not less than 10 (ten) nor
more than 60 (sixty) days before the date of the meeting. If mailed, notice is
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation.
Section 8. MAINTENANCE AND INSPECTION OF STOCKHOLDER LIST. The
officer who has charge of the stock ledger of the corporation shall prepare and
make, at least 10 (ten) days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 (ten) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 9. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action which may be taken by stockholders of the corporation at an annual or
special meeting may not be effected except at such an annual or special meeting
by the vote required for the taking of such action, and the right of
stockholders to act by written consent is expressly denied.
ARTICLE III
DIRECTORS
Section 1. THE NUMBER OF DIRECTORS. The number of directors which
shall constitute the whole Board shall be not less than six (6) directors nor
more than twelve (12) directors, the exact number of directors to be determined
from time to time by resolutions adopted by the Board of Directors. The exact
number of directors shall be nine (9) until changed as provided in this Section
1. The directors need not be stockholders. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
corporation at the annual meeting may be made at such meeting by or at the
direction of the Board of Directors, by any committee or persons appointed by
the Board of Directors or by any stockholder of the corporation entitled to vote
for the election of directors at the meeting who complies with the notice
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procedures set forth in this Article III, Section 1. Such nominations by any
stockholder shall be made pursuant to timely notice in writing to the Secretary
of the corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the corporation not
less than fifty (50) days nor more than seventy-five (75) days prior to the
meeting; provided, however, that in the event that less than sixty-five (65)
days notice or prior to public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business of the fifteenth (15th) day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever first occurs. Such stockholder's notice to the
Secretary shall set forth (i) as to each person whom the stockholder proposes to
nominate for election or reelection as a director, (a) the name, age, business
address and residence address of the person, (b) the principal occupation or
employment of the person, (c) the class and number of shares of capital stock of
the corporation which are beneficially owned by the person, and (d) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to the Rules and
Regulations of the Securities and Exchange Commission under Section 14 of the
Securities Exchange Act of 1934, as amended; and (ii) as to the stockholder
giving the notice (a) the name and record address of the stockholder and (b) the
class and number of shares of capital stock of the corporation which are
beneficially owned by the stockholder. The corporation may require any proposed
nominee to furnish such other information as may reasonably be required by the
corporation to determine the eligibility of such proposed nominee to serve as a
director of the corporation. No person shall be eligible for election as a
director of the corporation unless nominated in accordance with the procedures
set forth herein. The officer of the corporation presiding at an annual meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 2 of this Article
III, and each director elected shall hold office until his successor is elected
and qualified; provided, however, that unless otherwise restricted by the
Certificate of Incorporation or by law, any director or the entire Board of
Directors may be removed from the Board of Directors for cause only at any
meeting of stockholders by a majority of the stock represented and entitled to
vote thereat.
Section 2. VACANCIES. Vacancies on the Board of Directors by reason
of death, resignation, retirement, disqualification, removal from office, or
otherwise, and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors then
in office, although less than a quorum, or by a sole remaining director. The
directors so chosen shall hold office for a term that shall coincide with the
term of the class to which such director shall have been elected. If there are
no directors in office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute less than a
majority of the whole Board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
Section 3. POWERS. The property and business of the corporation
shall be managed by or under the direction of its Board of Directors. In
addition to the powers and authorities by these Bylaws expressly conferred upon
them, the Board may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these Bylaws directed or required to be exercised or done by
the stockholders.
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Section 4. PLACE OF DIRECTORS' MEETINGS. The directors may hold
their meetings and have one or more offices, and keep the books of the
corporation outside of the State of Delaware.
Section 5. MEETINGS. The Board of Directors of the corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board of Directors, the President, or by a majority of the
Board of Directors. Notice thereof, stating the place, date and hour of the
meeting, shall be given to each director either by mail not less than four (4)
days before the date of the meeting, or personally or by telephone, telegram,
telex or similar means of communication on twelve (12) hours' notice, or on such
shorter notice as the person or persons calling such meeting may deem necessary
or appropriate in the circumstances.
Section 6. QUORUM. At all meetings of the Board of Directors a
majority of the authorized number of directors shall be necessary and sufficient
to constitute a quorum for the transaction of business, and the vote of a
majority of the directors present at any meeting at which there is a quorum,
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, by the Certificate of Incorporation or by
these Bylaws. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present. If only one director is authorized, such sole director shall
constitute a quorum.
Section 7. ACTION WITHOUT MEETING. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 8. TELEPHONIC MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, members of the Board of Directors,
or any committee designated by the Board of Directors, may participate in a
meeting of the Board of Directors, or any committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at such meeting.
Section 9. COMMITTEES OF DIRECTORS. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each such committee to consist of one or more of the directors of
the corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in
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reference to the following matters: (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by the
Delaware General Corporation Law to be submitted to stockholders for approval or
(ii) adopting, amending or repealing any bylaw of the corporation.
Section 10. MINUTES OF COMMITTEE MEETINGS. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
Section 11. COMPENSATION OF DIRECTORS. Unless otherwise restricted
by the Certificate of Incorporation or these Bylaws, the Board of Directors
shall have the authority to fix the compensation of directors. The directors
may be paid their expenses, if any, of attendance at each meeting of the Board
of Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
ARTICLE IV
OFFICERS
Section 1. OFFICERS. The principal officers of this corporation
shall be chosen by the Board of Directors and shall include a President and a
Secretary. The corporation may also have at the discretion of the Board of
Directors such other officers as are desired, including a Chief Executive
Officer, a Treasurer, one or more Vice Presidents, one or more Assistant
Secretaries and Assistant Treasurers, and such other subordinate officers as it
may deem appropriate, and such other subordinate officeholders as may be
appointed in accordance with the provisions of Section 3 hereof. In the event
there are two or more Vice Presidents, then one or more may be designated as
Executive Vice President, Senior Vice President, or other similar or dissimilar
title. At the time of the election of officers, the directors may by resolution
determine the order of their rank. Any number of offices may be held by the
same person, unless the Certificate of Incorporation or these Bylaws otherwise
provide. The Board of Directors may also appoint a Chairman of the Board who
need not be an officer of the corporation unless specifically designated as such
by the Board.
Section 2. ELECTION OF OFFICERS. The Board of Directors, at its
first meeting after each annual meeting of stockholders, shall choose the
officers of the corporation.
Section 3. SUBORDINATE OFFICEHOLDERS. The Board of Directors may
appoint such other subordinate officeholders and agents as it shall deem
necessary who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board. The Chief Executive Officer may also from time to time appoint
subordinate officeholders, who shall not be corporate officers, to such
positions, with such limited authority and such titles, as the Chief Executive
Officer may determine. Subordinate officeholders shall hold office for such
period, and have such authority and title, and perform such duties as may be
designated by the Chief Executive Officer, provided, that such subordinate
officeholders shall not have or perform authorities or duties co-extensive with
the authorities or duties of principal or subordinate officers chosen by the
Board of Directors.
Section 4. COMPENSATION OF OFFICERS. The salaries of all officers
and agents of the corporation shall be fixed by the Board of Directors.
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Section 5. TERM OF OFFICE; REMOVAL AND VACANCIES. The officers of
the corporation shall hold office until their successors are chosen and qualify
in their stead. Any officer elected or appointed by the Board of Directors may
be removed at any time by the affirmative vote of a majority of the Board of
Directors. If the office of any officer or officers becomes vacant for any
reason, the vacancy shall be filled by the Board of Directors.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if the
Board has appointed one, shall, if present, preside at all meetings of the Board
of Directors and exercise and perform such other powers and duties as may be
from time to time assigned to him by the Board of Directors or prescribed by
these Bylaws. If there is no President or Chief Executive Officer, the Chairman
of the Board shall become the Chief Executive Officer of the corporation and
shall have the powers and duties prescribed in Section 7 of this Article IV.
Section 7. PRESIDENT AND CHIEF EXECUTIVE OFFICER. Subject to such
supervisory powers, if any, as may be given by the Board of Directors to the
Chairman of the Board, if there be a Chairman, the President shall, subject to
the control of the Board of Directors, have general supervision, direction and
control of the business and officers of the corporation. The President shall
preside at all meetings of the stockholders and, in the absence of the Chairman
of the Board, or if there be none, at all meetings of the Board of Directors.
The President shall be an ex-officio member of all committees and shall have the
general powers and duties of management usually vested in the office of
President of corporations, and shall have such other powers and duties as may be
prescribed by the Board of Directors or these Bylaws. The President shall be
the Chief Executive Officer of the corporation, unless the Board of Directors,
in its discretion, elects or appoints a President and a Chief Executive Officer.
If there is a Chief Executive Officer of the corporation, other than the
President, the Chief Executive Officer shall have such powers and duties as may
be prescribed by the Board of Directors or these Bylaws.
Section 8. VICE PRESIDENTS. In the absence or disability of the
President, the Vice Presidents in order of their rank as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the Board of
Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall have such other duties as from time to
time may be prescribed for them, respectively, by the Board of Directors.
Section 9. SECRETARY. The Secretary shall attend all sessions of the
Board of Directors and all meetings of the stockholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose; and shall
perform like duties for the standing committees when required by the Board of
Directors. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or these
Bylaws. The Secretary shall keep in safe custody the seal of the corporation,
and when authorized by the Board, affix the same to any instrument requiring it,
and when so affixed it shall be attested by his signature or by the signature of
an Assistant Secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 10. ASSISTANT SECRETARY. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors, or if there be no such determination, the Assistant
Secretary designated by the Board of Directors, shall, in the absence or
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disability of the Secretary, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 11. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys, and other valuable effects in the name and to the credit of
the corporation, in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as Treasurer and of the financial condition of the corporation. If
required by the Board of Directors, the Treasurer shall give the corporation a
bond, in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors, for the faithful performance of the duties of his office
and for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
Section 12. ASSISTANT TREASURER. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors, or if there be no such determination, the Assistant
Treasurer designated by the Board of Directors, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
ARTICLE V
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
(a) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including
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attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and except that no such indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
corporation shall be successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b), or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under paragraphs (a) and (b) (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper under the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this Article V. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the Board of Directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Article V shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) The Board of Directors may authorize, by a vote of a majority of
a quorum of the Board of Directors, the corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this Article V.
(h) For the purposes of this Article V, references to "the
corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power
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and authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article V with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include service
as a director, officer, employee or agent of the corporation which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants or beneficiaries; and
a person who acted in good faith and in a manner he reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article V shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The corporation shall be required to indemnify a person in
connection with a proceeding (or part thereof) initiated by such person only if
the proceeding (or part thereof) was authorized by the Board of Directors of the
corporation.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. CERTIFICATES. Every holder of stock of the corporation
shall be entitled to have a certificate signed by, or in the name of the
corporation by, the Chairman of the Board of Directors, if the Board has
appointed one, or the President or a Vice President, and by the Secretary or an
Assistant Secretary, or the Treasurer or an Assistant Treasurer of the
corporation, certifying the number of shares represented by the certificate
owned by such stockholder in the corporation.
Section 2. SIGNATURES ON CERTIFICATES. Any or all of the signatures
on the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
Section 3. STATEMENT OF STOCK RIGHTS, PREFERENCES, PRIVILEGES. If
the corporation shall be authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualification, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the corporation shall issue to represent such
class or series of stock, provided that, except as otherwise provided in Section
202 of the
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General Corporation Law of Delaware, in lieu of the foregoing requirements,
there may be set forth on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, a statement
that the corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
Section 4. LOST CERTIFICATES. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 5. TRANSFERS OF STOCK. Upon surrender to the corporation, or
the transfer agent of the corporation, of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 6. FIXED RECORD DATE. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
the stockholders, or any adjournment thereof, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date which shall not be more than 60 (sixty) nor less than 10 (ten) days
before the date of such meeting, nor more than 60 (sixty) days prior to any
other action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 7. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and accordingly shall not be bound to recognize any
equitable or other claim or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of the State of Delaware.
ARTICLE VII
GENERAL PROVISIONS
Section 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
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Section 2. PAYMENT OF DIVIDENDS; DIRECTORS' DUTIES. Before payment
of any dividend there may be set aside out of any funds of the corporation
available for dividends such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve fund to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall think conducive to
the interests of the corporation, and the directors may abolish any such
reserve.
Section 3. CHECKS. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers as the Board of
Directors may from time to time designate.
Section 4. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
Section 5. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware." Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
Section 6. MANNER OF GIVING NOTICE. Whenever, under the provisions
of the statutes or of the Certificate of Incorporation or of these Bylaws,
notice is required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, addressed to such director or stockholder, at his address as it appears on
the records of the corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given by telegram.
Section 7. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
Section 8. ANNUAL STATEMENT. The Board of Directors shall present at
each annual meeting, and at any special meeting of the stockholders, a full and
clear statement of the business and condition of the corporation.
ARTICLE VIII
AMENDMENTS
Section 1. AMENDMENT BY DIRECTORS. These Bylaws may be altered,
amended or repealed or new Bylaws may be adopted by the Board of Directors, when
such power is conferred upon the Board of Directors by the Certificate of
Incorporation, at any regular meeting of the Board of Directors or at any
special meeting of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new Bylaws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal Bylaws is conferred
upon the Board of Directors by the Certificate of Incorporation, it shall not
divest or limit the power of the stockholders to adopt, amend or repeal Bylaws.
12
<PAGE>
Section 2. AMENDMENT BY STOCKHOLDERS. These Bylaws may be altered,
amended or repealed or new Bylaws may be adopted by the stockholders, at any
regular meeting of the stockholders or at any special meeting of the
stockholders if notice of such alteration, amendment, repeal or adoption of new
Bylaws be contained in the notice of such special meeting; provided, however,
any proposal to adopt, amend or repeal Bylaws shall require not less than the
affirmative vote of two-thirds of the issued and outstanding stock of the
Corporation entitled to vote thereon.
* * * * *
13
<PAGE>
Exhibit 4.1
TEMPORARY CERTIFICATE--EXCHANGEABLE FOR DEFINITIVE ENGRAVED CERTIFICATE WHEN
READY FOR DELIVERY
COMMON STOCK COMMON STOCK
[LOGO]
NUMBER [REGISTERED TRADEMARK] SHARES
TMP
MORRISON KNUDSEN CORPORATION
THIS CERTIFICATE IS TRANSFERABLE SEE REVERSE FOR
IN MINNEAPOLIS, MINNESOTA CERTAIN DEFINITIONS
OR IN NEW YORK, NEW YORK
CUSIP 61844A 10 9
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, $.01 PAR VALUE, OF
- --------------------------------------------------------------------------------
- --------------------------MORRISON KNUDSEN CORPORATION--------------------------
- --------------------------------------------------------------------------------
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed.
This Certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile signatures of its duly authorized officers.
/s/ Stephen G. Hanks /s/ Robert A. Tinstman
EXECUTIVE VICE PRESIDENT,
CHIEF LEGAL COUNSEL AND SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
[REGISTERED TRADEMARK - JEFFRIES BANKNOTE COMPANY]
<PAGE>
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS A STATEMENT OR SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK
OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS SO FAR AS THE SAME HAVE BEEN FIXED AND DETERMINED.
ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE SECRETARY OF THE CORPORATION AT ITS
PRINCIPAL OFFICE OR TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though 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)
UNIF TRF MIN ACT -- __________Custodian (until age________)
(Cust)
_________________under Uniform Transfers
(Minor)
to Minors Act___________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, _______________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
--------------------------------------
--------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------Shares
of the common stock represented by the within Certificate, and do hereby
irrevocable constitute and appoint
-------------------------------------Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated___________________________
X
--------------------------------------------
X
--------------------------------------------
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON
NOTICE: THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By
-------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED MEDALLION SIGNATURE GUARANTEE
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
Exhibit 4.2
<TABLE>
<CAPTION>
<S><C>
WARRANTS NOT EXERCISED ON OR
BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
NUMBER MARCH 11, 2003 SHALL BECOME VOID WARRANTS
W
[LOGO]
[REGISTERED TRADEMARK]
THIS CERTIFICATE IS TRANSFERABLE
IN MINNEAPOLIS, MINNESOTA
OR IN NEW YORK, NEW YORK
MORRISON KNUDSEN CORPORATION
WARRANT CERTIFICATE CUSIP 61844A 11 7
This Warrant Certificate certifies that
, or registered assigns,
is the registered holder of Warrants
("the Warrants") expiring at 5:00 p.m., New York City time, on March 11, 2003
(the "Expiration Date"), to purchase Common Stock, $.01 par value per share
(the "Common Stock"), of MORRISON KNUDSEN CORPORATION, a Delaware
corporation (the "Company"). The warrants may be exercised at any time from
9:00 a.m., New York City time, on September 11, 1996 to 5:00 p.m., New York
City time, on the Expiration Date. Each Warrant entitles the holder upon
exercise to receive from the Company, if exercised before 5:00 p.m., New York
City time, on the Expiration Date, one fully paid and nonassessable share of
Common Stock (a "Warrant Share") at the Exercise Price (as defined in the
Warrant Agreement referred to below), payable in lawful money of the United
States of America, upon surrender of this Warrant Certificate and payment of
the Exercise Price at the office or agency of the Warrant Agent, but only
subject to the conditions set forth herein and in the Warrant Agreement. The
Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Expiration Date entitling the
holder on exercise to receive shares of Common Stock of the Company and are
issued or to be issued pursuant to a Warrant Agreement dated as of September
11, 1996 (the "Warrant Agreement"), duly executed and delivered by the
Company to NORWEST BANK MINNESOTA, N.A., a national banking association, as
Warrant Agent (the "Warrant Agent"), which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the
Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the
Warrant Agreement may be obtained by the holder hereof upon written request
to the Company. By accepting initial delivery, transfer or exchange of this
Warrant, the duly registered holder shall be deemed to have agreed to the
terms of the Warrant Agreement as it may be in effect from time to time,
including any amendments or supplements duly adopted in accordance therewith.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the Purchase Form on the
reverse side hereof properly completed and executed, together with payment of
the Exercise Price in the manner described below at the office of the Warrant
Agent. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less that the total number of Warrants
evidenced hereby, there shall be issued to the holder himself or its assignee
a new Warrant Certificate evidencing the number of Warrants not exercised.
Payment of the Exercise Price may be made in cash by wire transfer to the
Warrant Agent for the account of the Company or by certified or official bank
check or checks to the order of the Company or by any combination thereof.
<PAGE>
The Warrant Agreement provides that upon the occurrence of certain events the
number of shares of Common Stock issuable upon the exercise of each Warrant,
and the Exercise Price of each Warrant, may, subject to certain conditions,
be adjusted. No fractions of a share of Common Stock will be issued upon the
exercise of any Warrant, but the Company shall pay the cash value thereof
determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to
the limitations provided in the Warrant Agreement, but without payment of and
service charge, for another Warrant Certificate or Warrant Certificates of
like tenor evidencing in the aggregate a like number of Warrants.
Upon the presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder to any rights of a
stockholder of the Company.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
IN WITNESS WHEREOF, MORRISON KNUDSEN CORPORATION has caused this Warrant
Certificate to be duly executed.
Dated MORRISON KNUDSEN CORPORATION
COUNTERSIGNED
NORWEST BANK MINNESOTA, N.A. Attest: By:
AS WARRANT AGENT /s/ Stephen G. Hanks /s/ Robert A. Tinstman
BY: AUTHORIZED SIGNATORY EXECUTIVE VICE PRESIDENT PRESIDENT
CHIEF LEGAL COUNSEL AND SECRETARY AND CHIEF EXECUTIVE OFFICER
-REGISTERED TRADEMARK-JEFFRIES BANKNOTE COMPANY
</TABLE>
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise this Warrant,
according to the terms and conditions hereof, to the extent of purchasing ______
shares of Common Stock and hereby makes payment of $________ in payment of the
exercise price thereof. If the number of shares shall not be all of the shares
purchasable under this Warrant, a new Warrant Certificate for the balance
remaining shall be issued in the name of the undersigned or its assignee as
indicated on the Assignment Form.
Dated:
-----------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
-------------------------------------------------------
(please typewrite or print in block letters)
Address:
----------------------------------------------------
Signature(s):
------------------------------------------------------
------------------------------------------------------
NOTICE: The signature(s) must correspond with the
name(s) as written upon the face of the certificate in
every particular, without alteration or enlargement or
any change whatever.
Signature(s) Guaranteed:
By
--------------------------------------
The signature(s) should be guaranteed
by an eligible guarantor institution
(banks, stockbrokers, savings and
loan associations and credit unions
with membership in an approved
medallion signature guarantee program),
pursuant to S.E.C. Rule 17Ad-15.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
Name:
-------------------------------------------------------
(please typewrite or print in block letters)
Address:
----------------------------------------------------
Its right to purchase ________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint _____________________
__________________________ Attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
Dated:
-----------------------------
Signature(s):
- ------------------------------------ ------------------------------
Social Security or other identifying
number of Assignee
------------------------------
NOTICE: The signature(s) must
correspond with the name(s) as
written upon the face of the
certificate in every
particular, without alteration
or enlargement or any change
whatever.
Signature(s) Guaranteed:
By
-------------------------------------
The signature(s) should be guaranteed
by an eligible guarantor institution
(banks, stockbrokers, savings and
loan associations and credit unions
with membership in an approved
medallion signature guarantee program),
pursuant to S.E.C. Rule 17Ad-15.
<PAGE>
Exhibit 4.3
<TABLE>
<CAPTION>
<S><C>
PREFERRED STOCK [LOGO] PREFERRED STOCK
NUMBER [REGISTERED TRADEMARK] SHARES
PR
MORRISON KNUDSEN CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
SPECIMEN
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF THE SERIES A PREFERRED STOCK, $.01 PAR VALUE, OF
---------------------------------------------- ----------------------------------------------
- -------------------------------------------------- MORRISON KNUDSEN CORPORATION --------------------------------------------------
---------------------------------------------- ----------------------------------------------
transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate is not valid unless countersigned and registered by the Transfer Agent and
Registrar.
WITNESS the facsimile signatures of its duly authorized officers.
Dated:
/s/ Stephen G. Hanks /s/ Robert A. Tinstman
EXECUTIVE VICE PRESIDENT, PRESIDENT AND CHIEF EXECUTIVE OFFICER
CHIEF LEGAL OFFICER AND SECRETARY
COUNTERSIGNED AND REGISTERED:
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
</TABLE>
<PAGE>
THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE ISSUED AND SHALL BE HELD
SUBJECT TO THE PROVISIONS OF THE CERTIFICATE OF INCORPORATION (INCLUDING THE
PROVISIONS THEREOF PROVIDING FOR THE ISSUE OF THE SHARES REPRESENTED HEREBY) AND
THE BYLAWS OF THE CORPORATION, IN EACH CASE AS AMENDED FROM TIME TO TIME. THE
CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS A
STATEMENT OR SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES
THEREOF (INCLUDING THE SERIES A PREFERRED STOCK, SHARES OF WHICH ARE REPRESENTED
HEREBY) AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES
AND/OR RIGHTS SO FAR AS THE SAME HAVE BEEN FIXED AND DETERMINED. ANY SUCH
REQUEST SHOULD BE ADDRESSED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL
OFFICE OR TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S><C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _______________ Custodian _______________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _____________________________________
in common (State)
UNIF TRF MIN ACT -- __________ Custodian (until age_________)
(Cust)
_________________ under Uniform Transfers
(Minor)
to Minors Act _________________________
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ____________________ hereby sell, assign and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- -------------------------------------------------------------------------------
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OR ASSIGNEE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- ------------------------------------------------------------------------ Shares
of the Series A Preferred Stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
- ---------------------------------------------------------------------- Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
-------------------------
X
---------------------------------------
X
---------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) guaranteed
By
--------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
MEDALLION SIGNATURE GUARANTEE PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
EXHIBIT 4.4
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
BETWEEN
MORRISON KNUDSEN CORPORATION
AND
NORWEST BANK MINNESOTA, N.A.
AS WARRANT AGENT
---------------------------
DATED AS OF SEPTEMBER 11, 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION Page
- ------- ----
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Form of Warrant; Execution; Registration. . . . . . . . . . . 3
2.1 Form of Warrant; Execution of Warrants. . . . . . . . . . . . 3
2.2 Registration. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Countersignature of Warrants. . . . . . . . . . . . . . . . . 3
Section 3. Transfer and Exchange of Warrants . . . . . . . . . . . . . . 3
Section 4. Term of Warrants; Exercise of Warrants; Compliance with
Government Regulation . . . . . . . . . . . . . . . . . . . . 4
4.1 Term of Warrants. . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Exercise of Warrants. . . . . . . . . . . . . . . . . . . . . 4
4.3 Compliance with Government Regulations; Qualification under
Securities Laws . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . 5
Section 6. Mutilated or Missing Warrant Certificates . . . . . . . . . . 6
Section 7. Reservation of Warrant Shares . . . . . . . . . . . . . . . . 6
Section 8. Stock Exchange Listings . . . . . . . . . . . . . . . . . . . 6
Section 9. Adjustment of Exercise Price; Number of Warrant
Shares and Shares of Capital Stock Warrants Are
Exercisable Into . . . . . . . . . . . . . . . . . . . . . . . 6
9.1 Mechanical Adjustments. . . . . . . . . . . . . . . . . . . . . 6
(a) Adjustment for Change in Capital Stock . . . . . . . . . 7
(b) Adjustment for Rights Issue. . . . . . . . . . . . . . . 7
(c) Adjustment for Other Distributions . . . . . . . . . . . 7
(d) Adjustment for Common Stock and Convertible Securities
Issue. . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Current Market Price; Price Per Share. . . . . . . . . . 8
(f) When De Minimis Adjustment May Be Deferred . . . . . . . . 9
(g) Adjustment in Exercise Price . . . . . . . . . . . . . . . 9
(h) When No Adjustment Required. . . . . . . . . . . . . . . 10
(i) Shares of Common Stock . . . . . . . . . . . . . . . . . 10
(j) Expiration of Rights, etc. . . . . . . . . . . . . . . . 10
9.2 Voluntary Adjustment by the Company . . . . . . . . . . . . . 10
9.3 Notice of Adjustment. . . . . . . . . . . . . . . . . . . . . 11
9.4 Preservation of Purchase Rights upon Merger or
Consolidation. . . . . . . . . . . . . . . . . . . . . . . . 11
9.5 Statement on Warrants . . . . . . . . . . . . . . . . . . . . 11
i
<PAGE>
SECTION Page
- ------- ----
Section 10. Fractional Interests . . . . . . . . . . . . . . . . . . 11
Section 11. No Rights as Stockholders; Notices to Holders. . . . . . 12
Section 12. Payments in U.S. Currency. . . . . . . . . . . . . . . . 12
Section 13. Merger or Consolidation or Change of Name
of Warrant Agent. . . . . . . . . . . . . . . . . . . . 12
Section 14. Appointment of Warrant Agent . . . . . . . . . . . . . . 13
14.1 Concerning the Warrant Agent . . . . . . . . . . . . . . 13
14.2 Correctness of Statements. . . . . . . . . . . . . . . . 13
14.3 Breach of Covenants. . . . . . . . . . . . . . . . . . . 13
14.4 Performance of Duties. . . . . . . . . . . . . . . . . . 13
14.5 Reliance on Counsel. . . . . . . . . . . . . . . . . . . 13
14.6 Proof of Actions Taken . . . . . . . . . . . . . . . . . 13
14.7 Compensation . . . . . . . . . . . . . . . . . . . . . . 14
14.8 Legal Proceedings. . . . . . . . . . . . . . . . . . . . 14
14.9 Other Transactions in Securities of Company. . . . . . . 14
14.10 Liability of Warrant Agent . . . . . . . . . . . . . . . 14
14.11 Reliance on Documents. . . . . . . . . . . . . . . . . . 14
14.12 Validity of Agreement. . . . . . . . . . . . . . . . . . 14
14.13 Instructions from Company. . . . . . . . . . . . . . . . 15
Section 15. Change of Warrant Agent. . . . . . . . . . . . . . . . . 15
Section 16. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 17. Cancellation of Warrants . . . . . . . . . . . . . . . . 16
Section 18. Supplements and Amendments . . . . . . . . . . . . . . . 16
Section 19. Successors . . . . . . . . . . . . . . . . . . . . . . . 16
Section 20. Applicable Law . . . . . . . . . . . . . . . . . . . . . 16
Section 21. Benefits of this Agreement . . . . . . . . . . . . . . . 16
Section 22. Counterparts . . . . . . . . . . . . . . . . . . . . . . 16
Section 23. Captions . . . . . . . . . . . . . . . . . . . . . . . . 16
EXHIBIT A FORM OF WARRANT CERTIFICATE. . . . . . . . . . . . . . . A-1
ii
<PAGE>
WARRANT AGREEMENT, dated as of September 11, 1996, between MORRISON KNUDSEN
CORPORATION, formerly known as Washington Construction Group, Inc., a Delaware
corporation (the "COMPANY"), and NORWEST BANK MINNESOTA, N.A., a national
banking association, as Warrant Agent (together with any successors and assigns,
the "Warrant Agent").
W I T N E S E T H :
WHEREAS, Morrison Knudsen Corporation, a Delaware corporation ("Old MK"),
was a Debtor and Debtor-in-Possession in the case (the "CHAPTER 11 CASE") filed
in the United States Bankruptcy Court for the District of Delaware (the
"BANKRUPTCY COURT"), entitled "In re Morrison Knudsen Corporation, Debtor,"
Chapter 11 Case No. 96-1006 (PJW), under the Bankruptcy Code;
WHEREAS, in connection with and as part of the transactions to be
consummated pursuant to the confirmation of a Plan of Reorganization (as
amended, modified or supplemented from time to time) of Old MK in the Chapter 11
Case (the "PLAN"), Old MK has merged with and into the Company pursuant to a
Restructuring and Merger Agreement between the Company and Old MK dated as of
May 28, 1996 (the "Merger Agreement"), and the Company has agreed to issue
Warrants for the purchase of an aggregate (subject to adjustment as herein
provided and in Section 3.5 of the Merger Agreement) of 2,765,000 shares of
Common Stock of the Company (the "WARRANTS").
WHEREAS, by Order dated August 26, 1996, the Bankruptcy Court confirmed the
Plan;
WHEREAS, the Plan and the Merger Agreement contemplate that the Company
will enter into certain agreements, including, without limitation, this Warrant
Agreement;
WHEREAS, the Company desires to issue the Warrants, each of which entitles
the holder thereof to purchase one share of its Common Stock (each of said
shares of Common Stock deliverable upon exercise of the Warrants a "WARRANT
SHARE"); and
WHEREAS, the Company wishes the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act in connection with the
issuance, division, transfer, exchange and exercise of Warrants.
NOW, THEREFORE, in consideration of the foregoing, to implement the terms
of the Plan, and for the purpose of defining the terms and provisions of the
Warrants and the respective rights and obligations thereunder of the Company and
the registered owners of the Warrants and any security into which they may be
exchanged (the "HOLDERS"), the Company and the Warrant Agent hereby agree as
follows:
SECTION 1. DEFINITIONS. The following terms, as used herein, have the
following meanings (all terms defined herein in the singular to have the
correlative meanings when used in the plural and vice versa):
1.1 "AGREEMENT" means this Warrant Agreement, as the same may be amended,
modified or supplemented from time to time.
1.2 "ASSETS" has the meaning ascribed to such term in Section 9.1(c)
hereof.
<PAGE>
1.3 "BUSINESS DAY" means a day other than (a) a Saturday or Sunday,
(b) any day on which banking institutions located in the City of New York, New
York are required or authorized by law or by local proclamation to close or
(c) any day on which the New York Stock Exchange is closed.
1.4 "COMMERCIALLY REASONABLE EFFORTS", when used with respect to any
obligation to be performed or term or provision to be observed hereunder, means
such efforts as a prudent Person seeking the benefits of such performance or
action would make, use, apply or exercise to preserve, protect or advance its
rights or interests, PROVIDED, that such efforts do not require such Person to
incur a material financial cost or a substantial risk of material liability
unless such cost or liability (i) would customarily be incurred in the course of
performance or observance of the relevant obligation, term or provision, (ii) is
caused by or results from the wrongful act or negligence of the Person whose
performance or observance is required hereunder or (iii) is not excessive or
unreasonable in view of the rights or interests to be preserved, protected or
advanced. Such efforts may include, without limitation, the expenditure of such
funds and retention by such Person of such accountants, attorneys or other
experts or advisors as may be necessary or appropriate to effect the relevant
action; the undertaking of any special audit or internal investigation that may
be necessary or appropriate to effect the relevant action; and the commencement,
termination or settlement of any action, suit or proceeding involving such
Person to the extent necessary or appropriate to effect the relevant action.
1.5 "COMMON STOCK" means the common stock, par value $.01, of the Company.
1.6 "CONVERTIBLE SECURITIES" has the meaning ascribed to such term in
Section 9.1(d) hereof.
1.7 "EXERCISE PERIOD" has the meaning ascribed to such term in Section 4.1
hereof.
1.8 "EXERCISE PRICE" means $12.00 per share of Common Stock, as adjusted
pursuant to Section 9 hereof:
1.9 "HOLDER" has the meaning ascribed to such term in the preamble hereto.
1.10 "NASD" has the meaning ascribed to such term in Section 4.2 hereof.
1.11 "PERSON" means a natural person, a corporation, a partnership, a
trust, a joint venture, any regulatory authority or any other entity or
organization.
1.12 "PLAN" has the meaning ascribed to such term in the preamble hereto.
1.13 "PRICE PER SHARE" has the meaning ascribed to such term in Section
9.1(e)(ii) hereof.
1.14 "RIGHTS" has the meaning ascribed to such term in Section 9.1(b)
hereof.
1.15 "TRANSFER AGENT" has the meaning ascribed to such term in Section 7
hereof.
1.16 "SEC" means the United States Securities and Exchange Commission, or
any successor governmental agency or authority thereto.
1.17 "SUBSIDIARY" has the meaning ascribed to such term in Section 9.1(c)
hereof.
1.18 "WARRANT" has the meaning ascribed to such term in the preamble
hereto.
1.19 "WARRANT CERTIFICATE" has the meaning ascribed to such term in Section
2.1 hereof.
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1.20 "WARRANT REGISTER" has the meaning ascribed to such term in Section
2.2 hereof.
1.21 "WARRANT SHARE" has the meaning ascribed to such term in the preamble
hereto.
SECTION 2. FORM OF WARRANT; EXECUTION; REGISTRATION.
2.1 FORM OF WARRANT; EXECUTION OF WARRANTS. The certificates evidencing
the Warrants (the "WARRANT CERTIFICATES") shall be in registered form only and
shall be in the form set forth as Exhibit A hereto. The Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board, President
or one of its Vice Presidents. The signature of any such officer on the Warrant
Certificates may be manual or by facsimile. Any Warrant Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, shall be a proper officer of the Company
to sign such Warrant Certificate. Each Warrant Certificate shall be dated the
date it is countersigned by the Warrant Agent pursuant to Section 2.3 hereof.
2.2 REGISTRATION. The Warrant Certificates shall be numbered and shall be
registered on the books of the Company maintained at the principal office of the
Warrant Agent initially in St. Paul, Minnesota (or such other place in the
continental United States as the Warrant Agent shall from time to time notify
the Company and the Holders in writing) (the "WARRANT REGISTER") as they are
issued. The Company and the Warrant Agent shall be entitled to treat the
registered owner of any Warrant as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other person.
2.3 COUNTERSIGNATURE OF WARRANTS. The Warrant Certificates shall be
countersigned by the Warrant Agent and shall not be valid for any purpose unless
so countersigned. Warrant Certificates may be countersigned, however, by the
Warrant Agent and may be delivered by the Warrant Agent notwithstanding that the
persons whose manual or facsimile signatures appear thereon as proper officers
of the Company shall have ceased to be such officers at the time of such
countersignature, issuance or delivery. The Warrant Agent shall, upon written
instructions of the Chairman of the Board, the President, any Vice President,
the Treasurer or the Secretary of the Company, countersign, issue and deliver
Warrant Certificates entitling the Holders thereof to purchase not more than an
aggregate of 2,765,000 Warrant Shares (subject to adjustment pursuant to
Section 9 hereof and Section 3.5 of the Merger Agreement) and shall countersign,
issue and deliver Warrant Certificates as otherwise provided in this Agreement.
SECTION 3. TRANSFER AND EXCHANGE OF WARRANTS. Subject to the terms hereof,
the Warrant Agent shall initially countersign, register in the Warrant Register
and deliver Warrants hereunder in accordance with the written instructions of
the Company. Subject to the terms hereof and the receipt of such documentation
as the Warrant Agent may reasonably require, the Warrant Agent shall thereafter
from time to time register the transfer of any outstanding Warrants upon the
Warrant Register upon surrender of the Warrant Certificate or Certificates
evidencing such Warrants duly endorsed or accompanied (if so required by it) by
a written instrument or instruments of transfer in form reasonably satisfactory
to the Warrant Agent, duly executed by the registered Holder or Holders thereof
or by the duly appointed legal representative thereof or by a duly authorized
attorney. Subject to the terms of this Agreement, each Warrant Certificate may
be exchanged for another Warrant Certificate or Certificates entitling the
Holder thereof to purchase a like aggregate number of Warrant Shares as the
Warrant Certificate or Certificates surrendered then entitles such Holder to
purchase. Any Holder desiring to exchange a Warrant Certificate or Certificates
shall make such request in writing delivered to the Warrant Agent, and shall
surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by
a written instrument or instruments of transfer in form reasonably satisfactory
to the Warrant Agent, the Warrant Certificate or Certificates to be so
exchanged. Upon registration of transfer, the Company shall issue and the
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Warrant Agent shall countersign and deliver by certified mail a new Warrant
Certificate or Certificates to the persons entitled thereto.
No service charge shall be made for any exchange or registration of
transfer of a Warrant Certificate or of Warrant Certificates, but the Company
may require payment of a sum sufficient to cover any stamp tax or other tax or
other governmental charge that is imposed in connection with any such exchange
or registration of transfer pursuant to Section 5 hereof.
By accepting the initial delivery, transfer or exchange of Warrants, each
Holder shall be deemed to agree to the terms of this Agreement as it may be in
effect from time to time, including any amendments or supplements duly adopted
in accordance with Section 18 hereof.
SECTION 4. TERM OF WARRANTS; EXERCISE OF WARRANTS; COMPLIANCE WITH
GOVERNMENT REGULATION.
4.1 TERM OF WARRANTS. Subject to the terms of this Agreement, each Holder
shall have the right, which may be exercised at any time from 9:00 a.m., New
York City time, on the date of their issuance to 5:00 p.m., New York City time,
on March 11, 2003 (six and one-half years after the Effective Date as defined in
the Plan) (the "EXERCISE PERIOD") to receive from the Company the number of
Warrant Shares which the Holder may at the time be entitled to receive upon
exercise of such Warrants and payment of the Exercise Price then in effect for
such Warrant Shares, and the Warrant Shares issued to a Holder upon exercise of
its Warrants shall be duly authorized, validly issued, fully paid, nonassessable
and shall not have been issued in violation of or subject to any preemptive
rights. Each Warrant not exercised prior to the expiration of the Exercise
Period shall become void, and all rights thereunder and all rights in respect
thereof under this Agreement shall cease as of the expiration of the Exercise
Period.
4.2 EXERCISE OF WARRANTS. During the Exercise Period, each Holder may,
subject to this Agreement, exercise from time to time some or all of the
Warrants evidenced by its Warrant Certificate(s) by (i) surrendering to the
Company at the principal office of the Warrant Agent such Warrant Certificate(s)
with the form of election to purchase on the reverse thereof duly filled in and
signed, which signature shall be guaranteed by a bank or trust company having an
office or correspondent in the United States or a broker or dealer which is a
member of a registered securities exchange or the National Association of
Securities Dealers, Inc. (the "NASD"), and (ii) paying to the Warrant Agent for
the account of the Company the aggregate Exercise Price for the number of
Warrant Shares in respect of which such Warrants are exercised. Warrants shall
be deemed exercised on the date such Warrant Certificate(s) are surrendered to
the Warrant Agent and tender of payment of the aggregate Exercise Price is made.
Payment of the aggregate Exercise Price shall be made in cash by wire transfer
of immediately available funds to the Warrant Agent for the account of the
Company or by certified or official bank check or checks to the order of the
Company or by any combination thereof.
Upon the exercise of any Warrants in accordance with this Agreement, the
Company shall issue and cause to be delivered with all reasonable dispatch, to
or upon the written order of the Holder and in such name or names as the Holder
may designate, a certificate or certificates for the number of full Warrant
Shares issuable upon the exercise of such Warrants and shall take such other
actions at its sole expense as are necessary to complete the exercise of the
Warrants (including, without limitation, payment of any cash with respect to
fractional interests required under Section 10 hereof). The Warrant Agent shall
have no responsibility or liability for such issuance or the determination of
the number of Warrant Shares issuable upon such exercise. The certificate or
certificates representing such Warrant Shares shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date the Warrants are
exercised hereunder. Each Warrant Share, when issued upon exercise of the
Warrants, shall be duly authorized, validly issued, fully paid and non-
assessable and will not have been issued in violation of or subject to any
preemptive rights.
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In the event that less than all of the Warrants evidenced by a Warrant
Certificate are exercised, the Holder thereof shall be entitled to receive a new
Warrant Certificate or Certificates as specified by such Holder evidencing the
remaining Warrant or Warrants, and the Warrant Agent is hereby irrevocably
authorized by the Company to countersign, issue and deliver the required new
Warrant Certificate or Certificates evidencing such remaining Warrant or
Warrants pursuant to the provisions of this Section 4.2 hereof and of Section 3
hereof. The Company, whenever required by the Warrant Agent, will supply the
Warrant Agent with Warrant Certificates duly executed on behalf to the Company
for such purpose.
Upon delivery of the Warrant Shares issuable upon exercise in accordance
herewith and of any required new Warrant Certificates, the Company shall direct
the Warrant Agent by written order to cancel the Warrant Certificates
surrendered upon exercise. Such canceled Warrant Certificates shall then be
disposed of by the Warrant Agent in a manner permitted by applicable laws and
satisfactory to the Company in accordance with its written instructions to the
Warrant Agent. The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay to the Company all amounts
received by the Warrant Agent upon exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices given
or received hereunder available for inspection by the Holders during normal
business hours at its office. The Company shall at its sole expense supply the
Warrant Agent from time to time with such numbers of copies of this Agreement as
the Warrant Agent may reasonably request.
4.3 COMPLIANCE WITH GOVERNMENT REGULATIONS; QUALIFICATION UNDER SECURITIES
LAWS. The Company covenants that if following a due demand to exercise warrants
any shares of Common Stock required to be reserved for purposes of exercise of
such Warrants require, under any federal or state law, registration with or
approval of any governmental authority before such shares may be issued upon
exercise, the Company will, unless the Company has received an opinion of
counsel to the effect that such registration is not then permitted by such laws,
use its Commercially Reasonable Efforts to cause such shares to be duly so
registered or approved, as the case may be; PROVIDED that in no event shall such
shares of Common Stock be issued, and the exercise of all such Warrants shall be
suspended, for the period from the date of such due demand for exercise until
such registration or approval is in effect; PROVIDED, FURTHER, that the Exercise
Period for such Warrants (but only such Warrants) shall be extended one day for
each day (or portion thereof) that any such suspension is in effect. The
Company shall promptly notify the Warrant Agent of any such suspension, and the
Warrant Agent shall have no duty, responsibility or liability in respect of any
shares of Common Stock issued or delivered prior to its receipt of such notice.
The Company shall promptly notify the Warrant Agent of the termination of any
such suspension, and such notice shall set forth the number of days that the
Exercise Period with respect to such Warrants shall be extended as a result of
such suspension.
SECTION 5. PAYMENT OF TAXES. The Company will pay all documentary stamp and
other like taxes, if any, attributable to the initial issuance and delivery of
the Warrants and the initial issuance and delivery of the Warrant Shares upon
the exercise of Warrants, PROVIDED, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer of the
Warrants or involved in the issuance or delivery of any Warrant Shares in a name
other than that of the Holder of the Warrants being exercised, and the Warrant
Agent shall not register any such transfer or issue or deliver any Warrant
Certificate(s) or Warrant Shares unless or until the persons requesting the
registration or issuance shall have paid to the Warrant Agent for the account of
the Company the amount of such tax, if any, or shall have established to the
reasonable satisfaction of the Company that such tax, if any, has been paid.
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SECTION 6. MUTILATED OR MISSING WARRANT CERTIFICATES. In the event that any
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
shall issue, and at the direction of the Company by written order the Warrant
Agent shall countersign and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate or in lieu of and substitution
for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate
of like tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Company and the Warrant Agent
of such loss, theft or destruction of such Warrant Certificate and an indemnity
or bond, if requested by the Company or the Warrant Agent, also reasonably
satisfactory to them. An applicant for such a substitute Warrant Certificate
shall also comply with such other reasonable procedures as the Company or the
Warrant Agent may reasonably require.
SECTION 7. RESERVATION OF WARRANT SHARES. There have been reserved, and the
Company shall at all times keep reserved, out of its authorized Common Stock,
free of all preemptive rights, a number of shares of Common Stock sufficient to
provide for the exercise of the rights of purchase represented by the
outstanding Warrants. The transfer agent for the Common Stock and every
subsequent or other transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the Warrants (each, a "TRANSFER AGENT") will be
and are hereby irrevocably authorized and directed at all times to reserve such
number of authorized shares as shall be required for such purpose. The Company
will keep a copy of this Agreement on file with each Transfer Agent. The
Warrant Agent is hereby irrevocably authorized to requisition from time to time
from the Company or a Transfer Agent, as the case may be, the certificate for
Warrant Shares required to honor outstanding Warrants upon exercise thereof in
accordance with the terms of this Agreement. The Company will supply its
Transfer Agents with duly executed stock certificates for such purposes and will
itself provide or otherwise make available any cash which may be payable as
provided in Section 10 hereof. The Company will furnish to its Transfer Agents
a copy of all notices of adjustments and certificates related thereto,
transmitted to each Holder pursuant to Section 9.3 hereof. The Company will
give the Warrant Agent prompt notice of any change in any Transfer Agent or any
change of address of any Transfer Agent.
Before taking any action which would cause an adjustment pursuant to
Section 9 reducing the Exercise Price, the Company will take any and all
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
SECTION 8. STOCK EXCHANGE LISTINGS. The Company shall use its Commercially
Reasonable Efforts (including requests for waivers) to have the Warrants listed
on the New York Stock Exchange and failing that included for quotation in The
Nasdaq National Market or listed on the American Stock Exchange, and shall use
its Commercially Reasonable Efforts to maintain such listing or inclusion. In
the event the Warrants do not qualify for such listing or inclusion, the Company
will use its Commercially Reasonable Efforts (including, requests for waivers)
to effect such inclusion or listing whenever the Warrants qualify therefor. Any
such listing and inclusion shall be at the Company's sole expense.
SECTION 9. ADJUSTMENT OF EXERCISE PRICE; NUMBER OF WARRANT SHARES AND SHARES
OF CAPITAL STOCK WARRANTS ARE EXERCISABLE INTO. The number and kind of
securities purchasable upon the exercise of each Warrant, and the Exercise
Price, shall be subject to adjustment from time to time upon the happening of
certain events, as hereinafter described.
9.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares purchasable upon
the exercise of each Warrant and the Exercise Price shall be subject to
adjustment as follows:
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(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. Subject to
paragraphs (f) and (h) below, in case the Company shall (i) pay a dividend on
its outstanding shares of Common Stock in shares of Common Stock or make a
distribution of shares of Common Stock on its outstanding shares of Common
Stock, (ii) make a distribution on its outstanding shares of Common Stock in
shares of its capital stock other than Common Stock, (iii) subdivide its
outstanding shares of Common Stock into a greater number of shares of Common
Stock, (iv) combine its outstanding shares of Common Stock into a smaller number
of shares of Common Stock, or (v) issue, by reclassification of its shares of
Common Stock, other securities of the Company (including any such
reclassification in connection with a consolidation or merger in which the
Company is the surviving entity), then the number of Warrant Shares purchasable
upon exercise of each Warrant immediately prior thereto shall be adjusted so
that the Holder of each Warrant shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which such Holder would
have owned or have been entitled to receive upon the happening of any of the
events described above had such Warrant been exercised in full immediately prior
to the happening of such event or any record date with respect thereto. If a
Holder is entitled to receive shares of two or more classes of capital stock of
the Company pursuant to the foregoing upon exercise of Warrants, the allocation
of the adjusted Exercise Price between such classes of capital stock shall be
determined reasonably and in good faith by the Board of Directors of the
Company. After such allocation, the exercise privilege and the Exercise Price
with respect to each class of capital stock shall thereafter be subject to
adjustment on terms substantially identical to those applicable to Common Stock
in this Section 9. An adjustment made pursuant to this paragraph (a) shall
become effective immediately after the record date for such event or, if none,
immediately after the effective date of such event. Such adjustment shall be
made successively whenever such an event occurs.
(b) ADJUSTMENT FOR RIGHTS ISSUE. Subject to paragraphs (f) and (h)
below, in case the Company shall issue rights, options or warrants
(collectively, "RIGHTS") to all holders of its outstanding Common Stock
entitling them to subscribe for or purchase shares of Common Stock at a Price
Per Share (as defined in paragraph (e) below) which is lower at the record date
mentioned below than the then Current Market Price (as defined in paragraph (e)
below) per share of Common Stock, the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by multiplying
the number of Warrant Shares theretofore purchasable upon exercise of each
Warrant by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such Rights plus the
additional Number of Shares (as defined in paragraph (e) below) of Common Stock
offered for subscription or purchase in connection with such Rights and the
denominator of which shall be the number of shares of Common Stock outstanding
on the date of issuance of such Rights plus the number of shares which the
aggregate Proceeds (as defined in paragraph (e) below) received or receivable by
the Company upon exercise of such Rights would purchase at the Current Market
Price per share of Common Stock at such record date. Such adjustment shall be
made whenever Rights are issued, and shall become effective immediately after
the record date for the determination of stockholders entitled to receive
Rights.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS. Subject to paragraphs (f)
and (h) below, in case the Company shall distribute to all holders of its shares
of Common Stock (x) evidences of indebtedness or assets (excluding cash
dividends or distributions payable out of the consolidated earnings or surplus
legally available for such dividends or distributions and dividends or
distributions referred to in paragraphs (a) or (b) above) of the Company or any
corporation or other legal entity a majority of the voting equity or equity
interests of which are owned, directly or indirectly, by the Company (a
"SUBSIDIARY"), or (y) shares of capital stock of a Subsidiary (such evidences of
indebtedness, assets and securities as set forth in clauses (x) and (y) above,
collectively, "ASSETS"), then in each case the number of Warrant Shares
thereafter purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon the
exercise of each Warrant by a fraction, the numerator of which shall be the
Current Market Price per share of Common Stock on the date of such distribution
and the denominator of which shall be such Current Market Price per share of
Common Stock less the fair value as of such record date as determined reasonably
and in good faith by the Board of Directors of the Company of the portion of the
Assets applicable to one share of Common Stock.
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Such adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to the record date for
the determination of stockholders entitled to receive such distribution.
(d) ADJUSTMENT FOR COMMON STOCK AND CONVERTIBLE SECURITIES ISSUE.
Subject to paragraphs (f) and (h) below, in case the Company shall issue shares
of its Common Stock, or securities convertible into, or exchangeable or
exercisable for Common Stock or Rights to subscribe for or purchase such
securities (collectively, "CONVERTIBLE SECURITIES") (excluding the issuance of
(i) Common Stock or Convertible Securities issued in any of the transactions
described in paragraphs (a), (b) or (c) above or (ii) Warrant Shares issued upon
the exercise of the Warrants, at a Price Per Share of Common Stock, in the case
of the issuance of Common Stock, or at a Price Per Share of Common Stock
initially deliverable upon conversion or exercise of exchange of such
Convertible Securities, in each case, together with any other consideration
received by the Company in connection with such issuance, below the then Current
Market Price per share of Common Stock on the date the Company fixed the
offering, conversion or exercise or exchange price of such additional shares,
then the number of Warrant Shares thereafter purchasable upon the exercise of
each Warrant shall be determined by multiplying the number of Warrant Shares
theretofore purchasable upon exercise of each Warrant by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding on such date plus the additional Number of Shares of Common Stock
offered for subscription or purchase and the denominator of which shall be the
number of shares of Common Stock outstanding on such date plus the number of
shares of Common Stock which the aggregate Proceeds of the total amount of
Convertible Securities so offered would purchase at the Current Market Price Per
Share of Common Stock at such record date. In case the Company shall issue and
sell Convertible Securities for a consideration consisting, in whole or in part,
of property other than cash or its equivalent, then in determining the "Price
Per Share" of Common Stock and the "consideration received by the Company" for
purposes of the first sentence and the immediately preceding sentence of this
paragraph (d), the Board of Directors of the Company shall reasonably and in
good faith determine the fair value of such property. The determination of
whether any adjustment is required under this paragraph (d), by reason of the
sale and issuance of any Convertible Securities and the amount of such
adjustment, if any, shall be made at such time and not at the subsequent time of
issuance of shares of Common Stock upon the exercise, conversion or exchange of
Convertible Securities.
(e) CURRENT MARKET PRICE; PRICE PER SHARE. (i) For the purpose of
any computation under Section 4.2 hereof or this Section 9.1, the "CURRENT
MARKET PRICE" per share of Common Stock at any date shall be the average of the
daily closing prices for the 20 consecutive trading days preceding the date of
such computation. The closing price for each day shall be (x) if the Common
Stock shall be then listed or admitted to trading on the New York Stock
Exchange, the closing price on the NYSE -Consolidated Tape (or any successor
composite tape reporting transactions on the New York Stock Exchange) or, if
such a composite tape shall not be in use or shall not report transactions in
the Common Stock, or if the Common Stock shall be listed on a stock exchange
other than the New York Stock Exchange, the last reported sales price regular
way or, in case no such reported sale takes place on such day, the average of
the closing bid and asked prices regular way for such day, in each case on the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading (which shall be the national securities exchange
on which the greatest number of shares of the Common Stock have been traded
during such 20 consecutive trading days) or (y) if the Common Stock is not
listed or admitted to trading, the average of the closing bid and asked prices
of the Common Stock in the over-the-counter market as reported by The Nasdaq
National Market or any comparable system or, if the Common Stock is not included
for quotation in The Nasdaq National Market or a comparable system, the average
of the closing bid and asked prices as furnished by two members of the NASD
selected reasonably and in good faith from time to time by the Board of
Directors for that purpose. In the absence of one or more such quotations, the
Current Market Price per share of the Common Stock shall be determined
reasonably and in good faith by the Board of Directors of the Company.
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(ii) For purposes of this Section 9.1, "PRICE PER SHARE" shall be
defined and determined according to the following formula:
P = R/N
where
P = Price Per Share;
R = the "Proceeds" received or receivable by the Company
which (x) in the case of shares of Common Stock is the
total amount received or receivable by the Company in
consideration for the issuance and sale of such shares;
(y) in the case of Rights or of Convertible Securities
with respect to shares of Common Stock, is the total
amount received or receivable by the Company in
consideration for the issuance and sale of Rights or
such Convertible Securities, plus the minimum aggregate
amount of additional consideration, other than the
surrender of such Convertible Securities, payable to
the Company upon exercise, conversion or exchange
thereof; and (z) in the case of Rights to subscribe for
or purchase such Convertible Securities, is the total
amount received or receivable by the Company in
consideration for the issuance and sale of such Rights
plus the minimum aggregate amount of additional
consideration, other than the surrender of such
Convertible Securities, payable upon the conversion or
exchange or exercise of such Convertible Securities,
PROVIDED that in each case the proceeds received or
receivable by the Company shall be the net cash
proceeds after deducting therefrom any compensation
paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others
performing similar services; and
N = the "Number of Shares," which (x) in the case of Common
Stock is the number of shares issued; and (y) in the
case of Rights or of Convertible Securities with
respect to shares of Common Stock, is the maximum
number of shares of Common Stock initially issuable
upon exercise, conversion or exchange thereof.
(f) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment in the
number of Warrant Shares purchasable hereunder shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
the number of Warrant Shares purchasable upon the exercise of each Warrant,
PROVIDED that any adjustments which by reason of this paragraph (f) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations shall be made to the nearest one-
thousandth of a Warrant Share and the nearest cent.
(g) ADJUSTMENT IN EXERCISE PRICE. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant is adjusted as herein
provided, the Exercise Price payable upon exercise of each Warrant immediately
prior to such adjustment shall be adjusted by multiplying such Exercise Price by
a fraction, the numerator of which shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment and the denominator of which shall be the number of Warrant Shares
purchasable immediately thereafter.
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(h) WHEN NO ADJUSTMENT REQUIRED. No adjustment in the number of
Warrant Shares purchasable upon the exercise of each Warrant need be made under
this Section 9.1 in connection with: (i) the issuance of Common Stock, options,
rights, warrants or other securities pursuant to the Plan; (ii) shares of Common
Stock, options, rights, warrants or other securities issued pursuant to any plan
adopted by the Company or its subsidiaries for the benefit of employees or
directors; (iii) shares of Common Stock, options, rights, warrants or other
securities issued pursuant to any share purchase rights plan adopted by the
Company; (iv) any issuance of shares of Common Stock or securities convertible
into or exchangeable for shares of Common Stock pursuant to an underwritten
public offering for a price per share of Common Stock in the case of an issuance
of shares of Common Stock, or for a price per share of Common Stock initially
deliverable upon conversion or exchange of such securities, that is equal to or
greater than 95% of the Current Market Price per share of Common Stock on the
date the Company fixed the offering, conversion or exchange price of such
additional shares of Common Stock; (v) sales of Common Stock pursuant to a plan
adopted by the Company for reinvestment of dividends or interest; or (vi) shares
of Common Stock issued to shareholders of any corporation that is acquired by,
merged into or made a part or subsidiary of the Company in an arm's-length
transaction. Additionally, no adjustment need be made if the Company issues or
distributes to each Holder of Warrants the shares, rights, options, warrants,
evidences of indebtedness, assets or other securities referred to in those
paragraphs which each Holder of Warrants would have been entitled to receive had
the Warrants been exercised for the number of Warrant Shares for which Warrants
are then exercisable prior to the happening of such event or the record date
with respect thereto. No adjustment in the number of Warrant Shares will be
made for a change in the par value of the shares of Common Stock.
(i) SHARES OF COMMON STOCK. For all purposes of this Agreement, the
term "shares of Common Stock" shall mean (i) the class of stock designated as
the Common Stock of the Company at the date of this Agreement or (ii) any other
class of stock resulting from successive changes or reclassification of such
shares consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time, as a
result of an adjustment made pursuant to this Section 9.1, the Holders shall
become entitled to purchase any securities of the Company other than shares of
Common Stock, thereafter the number of such other shares so purchasable upon
exercise of each Warrant and the Exercise Price of such shares shall be subject
to adjustment from time to time in a manner and on terms substantially identical
to the provisions with respect to the Warrant Shares contained in paragraphs (a)
through (h) above, and the provisions of this Agreement with respect to the
Warrant Shares shall apply on like terms to any such other securities.
(j) EXPIRATION OF RIGHTS, ETC. Upon the expiration of any Rights or
conversion or exchange or exercise rights, if any thereof shall not have been
exercised, the Exercise Price and the number of Warrant Shares purchasable upon
the exercise of each Warrant shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(A) the only shares of Common Stock so issued were the shares of Common Stock,
if any, actually issued or sold upon the exercise of such Rights or conversion
or exchange or exercise rights and (B) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all of such Rights or conversion or
exchange or exercise rights whether or not exercised, PROVIDED that no such
readjustment shall have the effect of increasing the Exercise Price or
decreasing the number of Warrant Shares purchasable upon the exercise of each
Warrant by an amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant of such Rights or conversion or exchange
or exercise rights.
9.2 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at its option,
at any time during the term of the Warrants, reduce the then current Exercise
Price to any amount deemed appropriate by the Board of Directors of the Company.
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<PAGE>
9.3 NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Exercise Price of Warrant
Shares is adjusted, as herein provided, the Company shall cause the Warrant
Agent promptly to mail to each Holder, at the sole expense of the Company by
first class mail, postage prepaid, notice of such adjustment or adjustments and
shall deliver to the Warrant Agent a certificate of a firm of independent public
accounts (who may be the regular accountants employed by the Company) setting
forth the number of Warrant Shares purchasable upon the exercise of each Warrant
and the Exercise Price of Warrant Shares after such adjustment, setting forth a
brief statement of the facts requiring such adjustment and setting forth in
reasonable detail the computations by which such adjustment was made. The
Warrant Agent shall be entitled to rely on such certificate and shall be under
no duty or responsibility with respect to any such certificate, except to
exhibit the same, from time to time, to any Holder requesting an inspection
thereof during reasonable business hours. The Warrant Agent shall not at any
time be under any duty or responsibility to any Holder to determine whether any
facts exist which may require any adjustment of the Exercise Price or the number
of Warrant Shares or other stock or property purchasable on exercise of
Warrants, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed in making such adjustment.
9.4 PRESERVATION OF PURCHASE RIGHTS UPON MERGER OR CONSOLIDATION. In case
of any consolidation of the Company with or merger of the Company into another
entity, the Company or such successor entity shall execute and deliver to the
Warrant Agent an agreement, which shall be binding on the Holders, that each
Holder shall have the right thereafter upon payment of the Exercise Price in
effect immediately prior to such action (after giving effect to any applicable
adjustments under Section 9.1 hereof) to purchase upon exercise of each Warrant
the kind and amount of shares and other securities and property (including cash)
which such Holder would have owned or have been entitled to receive after the
happening of such consolidation or merger had such Warrant been exercised
immediately prior to such action. The Company shall at its sole expense mail by
first class mail, postage prepaid, to each Holder notice of the execution of any
such agreement. Such agreement shall provide for adjustments, which shall be
substantially identical to the adjustments provided for in this Section 9. In
addition, the Company shall not merge or consolidate with or into, any other
entity unless the successor entity (if not the Company), shall expressly assume,
by supplemental agreement reasonably satisfactory in form and substance to the
Warrant Agent in its sole judgment and executed and delivered to the Warrant
Agent, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company. The provisions of this Section 9.4 shall similarly apply to successive
consolidations or mergers. The Warrant Agent shall be under a good faith duty
and responsibility to determine the correctness of any provisions contained in
any such agreement relating to the kind or amount of shares of stock or other
securities or property receivable upon exercise of Warrants or with respect to
the method employed and provided therein for any adjustments and shall be
entitled to rely upon the provisions contained in any such agreement.
9.5 STATEMENT ON WARRANTS. Irrespective of any adjustments in the
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may continue to express
the same Exercise Price and number and kind of Warrant Shares as are stated in
the Warrants initially issuable pursuant to this Agreement.
SECTION 10. FRACTIONAL INTERESTS. Neither the Company nor the Warrant Agent
shall be required to issue fractional Warrant Shares on the exercise of
Warrants. If more than one Warrant shall be exercised at the same time by the
same Holder, the number of full Warrant Shares which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrants so
exercised. If any fraction of a Warrant Share would, except for the provisions
of this Section 10, be issuable on the exercise of any Warrant, the Company
shall pay an amount in cash equal to the closing price for one share of Common
Stock on the date the Warrant
11
<PAGE>
Certificate is presented for exercise (determined in accordance with the second
sentence of Section 9.1(e)(i) hereof), multiplied by such fraction.
SECTION 11. NO RIGHTS AS STOCKHOLDERS; NOTICES TO HOLDERS. Nothing contained
in this Agreement or in any of the Warrants shall be construed as conferring
upon the Holders or their transferees the right to vote or to receive dividends
or to consent or to receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the Company or any other matter,
or any rights whatsoever as stockholders of the Company.
In case:
(a) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of securities or assets (other than cash dividends);
or
(c) of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or
of the conveyance or transfer of a substantial portion of the properties
and assets of the Company for which approval of any stockholders of the
Company is required, or of any reclassification or change of Common Stock
issuable upon exercise of the Warrants (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or a tender offer or exchange
offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each Holder at its address appearing on the Warrant Register, at
least twenty (20) days prior to the applicable record date hereinafter
specified, or promptly in the case of events for which there is no record date,
by first class mail, postage prepaid, a written notice stating (i) the date as
of which the holders of record of shares of Common Stock entitled to receive any
such rights, options, warrants or distribution are to be determined, or (ii) the
initial expiration date set forth in any tender offer or exchange offer for
shares of Common Stock, or (iii) the date on which any such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, as well as the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation, or winding up. The failure to give the
notice required by this Section 11 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation, winding up or action, or the vote upon any of the foregoing.
SECTION 12. PAYMENTS IN U.S. CURRENCY. All payments required to be made
hereunder shall be made in lawful money of the United States of America.
SECTION 13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from
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<PAGE>
any merger or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporation trust business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Warrant Agent under the provisions of Section 15 hereof. In case at the time
such successor to the Warrant Agent shall succeed to the agency created by this
Agreement, any of the Warrant Certificates shall have been countersigned but not
delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrant
Certificates so countersigned; and in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor to the Warrant
Agent may countersign such Warrant Certificates either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent; and in
all such cases such Warrant Certificates shall be fully valid and effective as
provided therein and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignatures under its prior
name and deliver such Warrant Certificates so countersigned; and in case at that
time any of the Warrant Certificates shall not have been countersigned, the
Warrant Agent may countersign such Warrant Certificates either in its prior name
or in its changed name; and in all such cases such Warrant Certificates shall be
fully valid and effective as provided therein and in this Agreement.
SECTION 14. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the
Warrant Agent to act as agent for the Company hereunder and in accordance with
the terms and conditions hereof, and the Warrant Agent hereby accepts such
appointment.
14.1 CONCERNING THE WARRANT AGENT. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders, by their acceptance of
Warrant Certificates, shall be bound:
14.2 CORRECTNESS OF STATEMENTS. The statements contained herein and in the
Warrant Certificates shall be taken as statements of the Company, and the
Warrant Agent assumes no responsibility for the correctness of any of the same
except such as described the Warrant Agent or action taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrant
Certificates or Warrants except as herein otherwise provided.
14.3 BREACH OF COVENANTS. The Warrant Agent shall not be responsible for
any failure of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant to be complied with by the Company.
14.4 PERFORMANCE OF DUTIES. The Warrant Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents and shall not be responsible for
the misconduct or negligence of any attorney or agent (which shall not include
an employee of the Warrant Agent) appointed with due care.
14.5 RELIANCE ON COUNSEL. The Warrant Agent may consult at any time with
legal counsel satisfactory to it (who may be counsel for the Company), and the
Warrant Agent shall incur no liability or responsibility to the Company or to
any Holder in respect to any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
14.6 PROOF OF ACTIONS TAKEN. Whenever in the performance of its duties
under this Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the
13
<PAGE>
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed conclusively to be proved and established by a certificate signed by
the Chairman of the Board, the President, a Vice President, the Treasurer or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
14.7 COMPENSATION. The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the performance
of its duties under this Agreement, to reimburse the Warrant Agent for all
reasonable expenses, taxes and governmental charges and other charges of any
kind and nature incurred by the Warrant Agent in the performance of its duties
under this Agreement (including but not limited to legal fees and expenses), and
to indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for anything done or
omitted by the Warrant Agent or any of its agents in the performance of its
duties under this Agreement, except as a result of the Warrant Agent's gross
negligence or willful misconduct as determined in a final judgment of a court of
competent jurisdiction and authority. The Company's obligations under this
Section 14.6 and any claim arising hereunder shall survive the resignation or
removal of the Warrant Agent and the termination or discharge of the Company's
obligations under this Agreement.
14.8 LEGAL PROCEEDINGS. The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or any one or more Holders shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred or any liabilities which may arise, but this
provision shall not affect the power of the Warrant Agent to take such action as
the Warrant Agent may consider proper, whether with or without any such security
or indemnity. All rights of action of any Holder under this Agreement or under
any of the Warrants may be enforced by the Warrant Agent without the possession
of any of the Warrant Certificates or the production thereof at any trial or
other proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant Agent,
and any recovery of judgment shall be for the ratable benefit of the Holders, as
their respective rights or interests may appear.
14.9 OTHER TRANSACTIONS IN SECURITIES OF COMPANY. The Warrant Agent and
any stockholders, director, officer or employee of the Warrant Agent may buy,
sell or deal in any of the Warrants or any other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be
interested or contract with or lend money to the Company or other wise act as
fully and freely as though it were not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company of for any other legal entity.
14.10 LIABILITY OF WARRANT AGENT. The Warrant Agent shall act
hereunder solely as agent, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own negligence or bad faith.
14.11 RELIANCE ON DOCUMENTS. The Warrant Agent will not incur any
lability or responsibility to the Company or to any Holder for any action taken
in reliance on any notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument reasonably believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
14.12 VALIDITY OF AGREEMENT. The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Warrant Agent) or in
respect of the validity or execution of any Warrant Certificate (except its
countersignature
14
<PAGE>
thereof) or any Warrant; nor shall the Warrant Agent by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Warrant Shares (or other securities) to be issued pursuant to
this Agreement or any Warrant, or as to whether any Warrant Shares (or other
securities) will, when issued, be validly issued, fully paid and nonassessable,
or as to the Exercise Price or the number or amount of Warrant Shares or other
securities or any Assets or other property issuable upon exercise of any
Warrant.
14.13 INSTRUCTIONS FROM COMPANY. The Warrant Agent is hereby
authorized and directed to accept instructions with respect to the performance
of its duties hereunder from the Chairman of the Board, the President, a Vice
President, the Treasurer or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and shall not
be liable for any action taken or suffered to be taken by it in accordance with
instructions of any such officer or officers.
SECTION 15. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company thirty
(30) days' notice in writing. The Warrant Agent may be removed by like notice
to the Warrant Agent and the Holders from the Company, such notice to specify
the date when removal shall become effective. If the Warrant Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Warrant Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after such removal or
notification in writing of such registration or incapacity by the resigning or
incapacitated Warrant Agent or by any Holder (who shall with such notice submit
his Warrant Certificate or Certificates for inspection by the Company), then any
Holder may apply to any court of competent jurisdiction for the appointment of a
successor to the Warrant Agent. Any successor Warrant Agent, whether appointed
by the Company or such a court, shall be a bank or trust Company, in good
standing, incorporated under the laws of the United States of America or any
state thereof and having at the time of its appointment as Warrant Agent a
combined capital and surplus of at least $100,000,000. After appointment and
acceptance of such appointment in writing, the successor Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent with out further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor Warrant Agent
any property at the time held by it hereunder, and shall execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure
to file any notice provided for in this Section 15, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Warrant Agent or the appointment of the successor Warrant Agent, as the
case may be. In the event of such resignation or removal, the successor Warrant
Agent shall mail, by first class mail, postage prepaid, to each Holder, written
notice of such removal or resignation and the name and address of such successor
Warrant Agent.
SECTION 16. NOTICES. Any notice pursuant to this Agreement by the Company or
by any Holder to the Warrant Agent, or by the Warrant Agent or by any Holder to
the Company, shall be in writing and shall be delivered in person or by
facsimile transmission, or mailed first class, postage pre-paid, (a) to the
Company, at its offices at Morrison Knudsen Plaza, Boise Idaho 83729,
Attention: General Counsel, Telecopier No.: (208) 386-5298, or (b) to the
Warrant Agent, at its offices at 161 North Concord Exchange, South St. Paul, MN
55075, Attention: Shareowner Services, Telecopier No.: (612) 450-4078. Each
party hereto may from time to time change the address to which notices to its
are to be delivered or mailed hereunder by notice to the other party.
Any notice mailed pursuant to this Agreement by the Company or the Warrant
Agent to the Holders shall be in writing and shall be mailed first class,
postage prepaid, or otherwise delivered, to such Holders at their respective
addresses in the Warrant Register. The initial address of each Holder shall be
as provided by the Company to the Warrant Agent. Any Holder may change its
address by notice to the Company and the Warrant Agent given in accordance with
this Section 16.
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<PAGE>
SECTION 17. CANCELLATION OF WARRANTS. In the event the Company shall
purchase or otherwise acquire Warrants, the same shall thereupon be delivered to
the Warrant Agent and be cancelled by it and retired. The Warrant Agent shall
cancel any Warrant certificate surrendered for exchange, substitution, transfer
or exercise in whole or in part.
SECTION 18. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement, the Warrants and the
Warrant Certificates without approval of any Holder, in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to comply with
the requirements of any national securities exchange or The Nasdaq National
Market (including but not limited to the deletion of Section 9.2), or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and the Warrant Agent may deem necessary or desirable and which
shall not be inconsistent with the provisions of the Warrants and this
Agreement. Any other supplement or amendment to this Agreement may be made with
the approval of the Holders of a majority of the then outstanding Warrants;
provided, however, that any such amendment or supplement that (i) increases the
Exercise Price; (ii) decreases the number of shares of Common Stock issuable
upon exercise of a Warrant; or (iii) shortens the period during which the
Warrants may be exercised shall require the consent of each Holder of a Warrant
affected thereby.
SECTION 19. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors hereunder.
SECTION 20. APPLICABLE LAW. This Agreement and each Warrant issued hereunder
shall be governed by and construed in accordance with the laws of the state of
Delaware without giving effect to the principles of conflict of laws thereof.
SECTION 21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent and the Holders any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Warrant Agent, their respective successors and the
Holders of the Warrants.
SECTION 22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts; each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 23. CAPTIONS. The captions of the Sections and subsections of this
Agreement have been inserted for convenience only and shall have no substantive
effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
MORRISON KNUDSEN CORPORATION
/s/ John H. Wimberly
By:
----------------------------------
Name: John H. Wimberly
Title: President and Chief Executive
Officer
NORWEST BANK MINNESOTA, N.A.
as Warrant Agent
/s/ Suzanne M. Swits
By:
----------------------------------
Name: Suzanne M. Swits
Title: Assistant Vice President
17
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EXHIBIT A
FORM OF WARRANT CERTIFICATE
No. ______________ ____________________ Warrants
Warrant Certificate
MORRISON KNUDSEN CORPORATION
This Warrant Certificate certifies that _______________________________, or
registered assigns, is the registered holder of __________________________
Warrants (the "Warrants") expiring at 5:00 p.m., New York City time, on March
11, 2003 (the "Expiration Date"), to purchase Common Stock, $.01 par value per
share (the "Common Stock"), of MORRISON KNUDSEN CORPORATION, a Delaware
corporation (the "Company"). The Warrants may be exercised at any time from
9:00 a.m., New York City time, on September 11, 1996 to 5:00 p.m., New York City
time, on the Expiration Date. Each Warrant entitles the holder upon exercise to
receive from the Company, if exercised before 5:00 p.m., New York City time, on
the Expiration Date, one fully paid and nonassessable share of Common Stock (a
"Warrant Share") at the Exercise Price (as defined in the Warrant Agreement
referred to on the reverse side hereof), payable in lawful money of the United
States of America, upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office or agency of the Warrant Agent, but only subject to
the conditions set forth herein and in the Warrant Agreement. The Exercise
Price and number of Warrant Shares issuable upon exercise of the Warrants are
subject to adjustment upon the occurrence of certain events as set forth in the
Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
IN WITNESS WHEREOF, MORRISON KNUDSEN CORPORATION has caused this Warrant
Certificate to be duly executed.
MORRISON KNUDSEN CORPORATION
By:
----------------------------------
Title:
Dated:
--------------------------
Countersigned:
NORWEST BANK MINNESOTA, as Warrant
Agent
By:
-----------------------------
Authorized Signatory
A-1
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Expiration Date entitling the
holder on exercise to receive shares of Common Stock of the Company and are
issued or to be issued pursuant to a Warrant Agreement dated as of September 11,
1996 (the "Warrant Agreement"), duly executed and delivered by the Company to
NORWEST BANK MINNESOTA, N.A., a national banking association, as Warrant Agent
(the "Warrant Agent"), which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or registered holder)
of the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company. By accepting initial delivery,
transfer or exchange of this Warrant, the duly registered holder shall be deemed
to have agreed to the terms of the Warrant Agreement as it may be in effect from
time to time, including any amendments or supplements duly adopted in accordance
therewith.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Exercise Price in the manner described below at the office of the Warrant
Agent. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or its assignee a
new Warrant Certificate evidencing the number of Warrants not exercised.
Payment of the Exercise Price may be made in cash by wire transfer to the
Warrant Agent for the account of the Company or by certified or official bank
check or checks to the order of the Company or by any combination thereof.
The Warrant Agreement provides that upon the occurrence of certain events
the number of shares of Common Stock issuable upon the exercise of each Warrant,
and the Exercise Price of each Warrant, may, subject to certain conditions, be
adjusted. No fractions of a share of Common Stock will be issued upon the
exercise of any Warrant, but the Company shall pay the cash value thereof
determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent
by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-2
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise this Warrant,
according to the terms and conditions hereof, to the extent of purchasing
_______________ shares of Common Stock and hereby makes payment of $_________ in
payment of the exercise price thereof. If the number of shares shall not be all
of the shares purchasable under this Warrant, a new Warrant Certificate for the
balance remaining shall be issued in the name of the undersigned or its assignee
as indicated on the Assignment Form.
Dated:
------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
-------------------------------------------------------------------------
(please typewrite or print in block letters)
Address:
-----------------------------------------------------------------
Signature:
------------------------------------------------------------
-----------------------------------------------------------------
Note: The signature(s) must correspond with the name(s) of
holder as written on the face of this Warrant Certificate in
every particular, without alteration or enlargement or any change
whatever.
Signature(s) Guaranteed:
By
------------------------------------------------
The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations
and credit unions with membership in an approved medallion
signature guarantee program), pursuant to S.E.C. Rule 17Ad-15.
A-3
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Name:
-------------------------------------------------------------------------
(please typewrite or print in block letters)
Address:
----------------------------------------------------------------------
its right to purchase ____________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint __________ Attorney,
to transfer the same on the books of the Company, with full power of
substitution in the premises.
Dated:
--------------
Signature:
- ------------------------------ ------------------------------
Social Security or other ---------------------------------
identifying number
of holder Note: The signature(s)
must correspond with the
name(s) of holder as
written on the face of
this Warrant Certificate
in every particular,
without alteration or
enlargement or any change
whatever.
Signature(s) Guaranteed:
By
----------------------------
The signature(s) should be guaranteed by an eligible
guarantor institution (banks, stockbrokers, savings
and loan associations and credit unions with membership
in an approved medallion signature guarantee program),
pursuant to S.E.C. Rule 17Ad-15.
A-4
<PAGE>
EXHIBIT 4.5
REGISTRATION RIGHTS AGREEMENT
AMONG
MORRISON KNUDSEN CORPORATION
AND
THE HOLDERS OF STOCK TO BE LISTED ON SCHEDULE 1
DATED: SEPTEMBER 11, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Registration under the Securities Act. . . . . . . . . . . . 5
Section 3. Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5. Amendments and Waivers . . . . . . . . . . . . . . . . . . . 19
Section 6. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 19
Section 7. No Third-Party Beneficiary . . . . . . . . . . . . . . . . . 19
Section 8. Invalid Provisions . . . . . . . . . . . . . . . . . . . . . 19
Section 9. Nominees for Beneficial Owners . . . . . . . . . . . . . . . 19
Section 10. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 11. Deemed Acceptance by Investors; Assignment . . . . . . . . . 20
Section 12. Descriptive Headings; Section References . . . . . . . . . . 21
Section 13. Specific Performance . . . . . . . . . . . . . . . . . . . . 21
Section 14. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 15. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . 21
Section 16. Termination of Certain Rights. . . . . . . . . . . . . . . . 21
Section 17. No Inconsistent Agreements . . . . . . . . . . . . . . . . . 21
Section 18. Requisite Holders. . . . . . . . . . . . . . . . . . . . . . 22
Section 19. Completion of Schedule 1 . . . . . . . . . . . . . . . . . . 22
<PAGE>
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement (the Agreement) made and entered
into as of September 11, 1996, among Morrison Knudsen Corporation (formerly
Washington Construction Group, Inc.), a Delaware corporation (the Company) and
the holders of stock of the Company to be listed on Schedule 1 hereto as
prepared and completed by the Company in accordance with Section 19 hereof (the
Investors).
This Agreement is made pursuant to the Restructuring and Merger
Agreement (the Merger Agreement) dated as of May 28, 1996, between the Company
and Morrison Knudsen Corporation, a Delaware corporation (Morrison Knudsen).
NOW THEREFORE, in consideration of the foregoing and to implement
the terms of the Merger Agreement, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
Except as otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Merger Agreement. The
following terms, as used herein, have the following meanings (all terms defined
herein in the singular to have the correlative meanings when used in the plural
and vice versa):
"AFFILIATE" means (i) when used with reference to any
partnership, any Person that, directly or indirectly through one or more
intermediaries, owns or controls 10% or more of either the capital or profit
interests of such partnership or is a general partner of such partnership or is
a Person in which such partnership has a 10% or greater direct or indirect
equity interest and (ii) when used with reference to any corporation, any Person
that, directly or indirectly owns or controls 10% or more of the outstanding
voting securities of such corporation or is a Person in which such corporation
has a 10% or greater direct or indirect equity interest. In addition, the term
Affiliate, when used with reference to any Person, also means any other Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person. As used in the
preceding sentence, (A) the term control means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of the entity referred to, whether through ownership of voting
securities, by contract or otherwise, and (B) the terms controlling" and
controls shall have meanings correlative to the foregoing.
"AFFILIATE OF THE COMPANY" has the meaning ascribed to the term
affiliate in Rule 144(a)(1) promulgated by the SEC pursuant to the Securities
Act, and any successor rule thereto.
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"AGREEMENT" means this Registration Rights Agreement, as the same
may be amended, modified or supplemented from time to time.
"BUSINESS DAY" means any day other than (a) a Saturday or Sunday,
(b) any day on which banking institutions located in the City of New York, New
York are required or authorized by law or by local proclamation to close or (c)
any day on which the New York Stock Exchange is closed.
"COMMERCIALLY REASONABLE EFFORTS" when used with respect to any
obligation to be performed or term or provision to be observed hereunder, means
such efforts as a prudent Person seeking the benefits of such performance or
action would make, use, apply or exercise to preserve, protect or advance its
rights or interests, PROVIDED, that such efforts do not require such Person to
incur a material financial cost or a substantial risk of material liability
unless such cost or liability (i) would customarily be incurred in the course of
performance or observance of the relevant obligation, term or provision, (ii) is
caused by or results from the wrongful act or negligence of the Person whose
performance or observance is required hereunder or (iii) is not excessive or
unreasonable in view of the rights or interests to be preserved, protected or
advanced. Such efforts may include, without limitation, the expenditure of such
funds and retention by such Person of such accountants, attorneys or other
experts or advisors as may be necessary or appropriate to effect the relevant
action; the undertaking of any special audit or internal investigation that may
be necessary or appropriate to effect the relevant action; and the commencement,
termination or settlement of any action, suit or proceeding involving such
Person to the extent necessary or appropriate to effect the relevant action.
"COMMON STOCK" means the Common Stock of the Company.
"DEMAND REGISTRATION" means any registration of Registrable
Securities under the Securities Act effected in accordance with Section 2.1
hereof.
"EFFECTIVE DATE" means the effective date of the Plan as provided
for therein.
"HOLDERS" means, subject to Section 9 hereof, the holders of
record of Registrable Securities, or, in the case of explicit references to
holders of securities of the Company other than Registrable Securities, the
record holders of such securities.
"INDEMNIFIED PARTY" has the meaning ascribed to such term in
Section 2.6(a) hereof.
"LOSS" has the meaning ascribed to such term in Section 2.6(a)
hereof.
"MATERIAL ADVERSE CHANGE" means (i) any general suspension of
trading in, or limitation on prices for, securities on any national securities
exchange or in the over-the-
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<PAGE>
counter market in the United States of America, (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States of America, (iii) the commencement of a war, armed hostilities or
other international or national calamity involving the United States of America,
(iv) any limitation (whether or not mandatory) by any governmental authority on,
or any other event which materially affects the extension of credit by banks or
other financial institutions, (v) any material adverse change in the Company's
business, condition (financial or otherwise) or prospects or (vi) a 15% or more
decline in the Dow Jones Industrial Average or the Standard and Poor's Index of
500 Industrial Companies, in each case from the date a Notice of Demand is made.
"NOTICE OF DEMAND" means a request by Holders pursuant to Section
2.1 hereof that the Company effect the registration under the Securities Act of
the Registrable Securities which specifies: (i) the intended method or methods
and plan of disposition of the Registrable Securities and (ii) whether or not
such requested registration is to be an underwritten offering.
"PARTICIPATING HOLDERS" means, with respect to the Registration
of Registrable Securities by the Company pursuant to this Agreement, the
Requesting Holders and any other Holders that are entitled to participate in,
and are participating in or seeking to participate in, such registration.
"PERSON" means a natural person, a corporation, a partnership, a
trust, a joint venture, any regulatory authority or any other entity or
organization.
"PIGGYBACK REGISTRATION"means any registration of Registrable
Securities under the Securities Act effected in accordance with Section 2.2
hereof.
"PLAN" means the Chapter 11 plan of reorganization of Morrison
Knudsen as described in the Merger Agreement.
"REGISTERED ADDRESS" has the meaning set forth in Section 2.1(c)
hereof.
"REGISTRABLE SECURITIES" means the Common Stock acquired by the
Investors pursuant to the Plan or held by any Investor or any of the respective
Successors or the permitted assigns of any Investor, including, without
limitation, (a) any share of Common Stock issued or issuable on or after the
Effective Date pursuant to the Plan, including the Common Stock to be issued
pursuant to the exercise of Combined Company Rights (as defined in the Plan),
and (b) any securities issued or issuable with respect to Registrable
Securities, whether by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise provided that, (i) if the Common Stock or any
securities issued with respect thereto are listed on any national securities
exchange or included in any interdealer quotation system, then only such
securities held by Persons who
3
<PAGE>
are deemed to be "underwriters" or "affiliates" of the Company for purposes of
the Securities Act shall be deemed to be Registrable Securities and (ii) that
with respect to any permitted transferee of such securities, only such
securities held by permitted transferees that have complied with the assignment
requirements of Section 11 shall be deemed to be Registrable Securities. As to
any particular Registrable Securities, once issued such securities will cease to
be Registrable Securities when a registration statement with respect to the
resale of such securities has become effective under the Securities Act and such
securities shall have been disposed of in accordance with the plan of
distribution set forth in such registration statement.
"REGISTRATION EXPENSES" means all expenses incident to the
Company's performance of or compliance with this Agreement, including, without
limitation, (a) all registration, filing, securities exchange listing, rating
agency and National Association of Securities Dealers, Inc. fees, (b) all
registration, filing, qualification and other fees and expenses of complying
with securities or blue sky laws of all jurisdictions in which the securities
are to be registered and any legal fees and expenses incurred in connection with
the blue sky qualifications of the Registrable Securities and the determination
of their eligibility for investment under the laws of all such jurisdictions,
(c) all word processing, duplicating, printing, messenger and delivery expenses,
(d) the fees and disbursements of counsel for the Company and of its independent
public accountants, including, without limitation, the expenses of any special
audits or cold comfort letters required by or incident to such performance and
compliance, (e) the reasonable fees and disbursements incurred by the Holders of
the Registrable Securities being registered for one counsel or firm of counsel
selected by the Requisite Holders of such Registrable Securities, (f) premiums
and other costs of policies of insurance against liabilities arising out of the
public offering of the Registrable Securities being registered to the extent the
Company elects to obtain such insurance, (g) any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities (but excluding
underwriting discounts and commissions and transfer taxes, if any, relating to
the Registrable Securities being registered) and (h) fees and expenses of other
Persons retained or employed by the Company.
"REGISTRATION STATEMENT" means a registration statement filed
under the Securities Act pursuant to Section 2.1 hereof in accordance with
Section 2.3(a) hereof, including but not limited to a Shelf Registration
Statement.
"REQUESTING HOLDER" means each party providing a Notice of Demand
to the Company pursuant to Section 2.1(a).
"REQUISITE HOLDERS" means any Holder or Holders of a majority in
interest of the Registrable Securities included or to be included in a
registration or other relevant action, as the case may be.
4
<PAGE>
"RULE" 144 means Rule 144 promulgated by the SEC under the
Securities Act, and any successor provision thereto.
"SEC" means the United States Securities and Exchange Commission,
or any successor governmental agency or authority thereto.
"SHELF PERIOD" has the meaning ascribed to such term in Section
2.1(d) hereof.
"SHELF REGISTRATION STATEMENT" means a Registration Statement
filed under Rule 415 under the Securities Act.
"SUCCESSOR" means, with respect to any Person, a successor to
such Person by merger, consolidation, liquidation or other similar transaction.
"SUSPENSION NOTICE" has the meaning ascribed to such term in
Section 2.3(h) hereof.
"SUSPENSION PERIOD" has the meaning ascribed to it such term
Section 2.3(h) hereof.
"UNDERWRITER" has the meaning ascribed to such term in Section 2
of the Securities Act.
SECTION 2. REGISTRATION UNDER THE SECURITIES ACT
2.1 DEMAND REGISTRATION
(a) DEMAND FOR REGISTRATION. As soon as practicable following
the Company's receipt of a Notice of Demand from Holders holding at least
5,000,000 shares of the Registrable Securities (subject to appropriate
adjustments in the case of stock splits), the Company shall prepare and file a
Registration Statement covering the Registrable Securities that the Company has
been requested to register (whether pursuant to the Notice of Demand or pursuant
to notice provided under Section 2.1(c) hereof) and shall use Commercially
Reasonable Efforts to cause the Registration Statement to become effective
within one hundred eighty (180) days of its receipt of such Notice of Demand.
The Holders are entitled to a maximum of two Demand Registrations under this
Section 2.1 during the term of this Agreement; provided, however, that the
Holders may not make a second demand for registration until twelve (12) months
after the date on which the Registration Statement filed pursuant to the first
demand for registration shall have been declared effective; and provided
further, however, that the Holders may not make a second demand for registration
if the average daily trading volume of the Company's Common Stock on the
securities exchange on which the Common Stock is then
5
<PAGE>
listed shall have been one hundred thousand (100,000) shares per day for any
consecutive twenty (20) business day period preceding such second demand.
(b) LIMITATIONS ON DEMAND REGISTRATION. In the event that the
Requesting Holders determine for any reason (other than at the request or
recommendation of the Company or the underwriter or due to the occurrence of a
Material Adverse Change) not to proceed with a registration of Common Stock
requested pursuant to this Section 2.1 at any time before the Registration
Statement has been declared effective by the SEC, and such Registration
Statement, if theretofore filed with the SEC, is withdrawn with respect to the
Common Stock covered thereby, and such Holders reimburse the Company for all
fees, costs and expenses in connection therewith, then the Holders shall not be
deemed to have exercised their right to a Demand Registration pursuant to this
Section 2.1 with respect to such withdrawn Registration Statement. If the
Holders determine not to proceed with such a registration upon the request or
recommendation of the Company or the underwriter or due to the occurrence of a
Material Adverse Change, the Holders will not be required to reimburse the
Company for its fees, costs and expenses and the Holders shall not be deemed to
have exercised their right to a Demand Registration pursuant to this Section 2.1
with respect to such registration.
(c) NOTICE TO HOLDERS. Upon receipt of any Notice of Demand,
the Company will give prompt notice (but in any event within fifteen (15) days
after such receipt) to all Holders of Registrable Securities at the address
provided to the Company in Schedule 1 or as otherwise furnished in writing to
the Company for purposes of this Agreement (the Registered Address) of the
Notice of Demand and of the Holders' rights under this Section 2.1. Upon the
written request of any such Holder made within twenty (20) days after the
receipt by that Holder of the notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method or methods of disposition thereof) the Company shall use
Commercially Reasonable Efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holders thereof, to the extent required to permit the
disposition (in accordance with the intended method or methods thereof as
aforesaid) of the Registrable Securities so to be registered.
(d) CONTINUOUS EFFECTIVENESS OF REGISTRATION STATEMENTS. Once a
Registration Statement is effective pursuant to Section 2.1(a) hereof, the
Company shall use Commercially Reasonable Efforts to cause such Registration
Statement to remain continuously effective (i) in the case of a Registration
Statement other than a Shelf Registration Statement, until the earlier of (x)
the two (2) month anniversary of the date such Registration Statement is
declared effective by the SEC and (y) the date on which all of the Registrable
Securities covered by such Registration Statement have been sold; and (ii) in
the case of a Shelf Registration Statement, until the earlier of (x) six (6)
months following the date such Shelf Registration Statement is declared
effective by the SEC and (y) the date on which all of the Registrable Securities
covered by such Shelf Registration Statement have been sold, but in no event (in
6
<PAGE>
either case) prior to the expiration of the applicable period referred to in
Section 4(3) of the Securities Act and Rule 174 thereunder (such period being
defined as the Effective Period with respect to any such Registration Statement
other than a Shelf Registration Statement and as the Shelf Period with respect
to any such Shelf Registration Statement); PROVIDED, HOWEVER, that (x) with
respect to any Registration Statement the Company may suspend use of such
Registration Statement at any time if the continued effectiveness thereof would
require the Company to disclose a material financing, acquisition or other
corporate transaction, which disclosure the Company shall have determined in
good faith is not in the best interests of the Company and its stockholders
(provided the Effective Period or Shelf Period, as the case may be, shall be
extended by the number of days of any such suspension) and (y) with respect to
any Registration Statement the Company may suspend use of any such Registration
Statement during any period if each of the Company and the Requisite Holders of
the Registrable Securities covered by such Registration Statement consents in
writing to such suspension for such period.
(e) PRIORITY IN DEMAND REGISTRATIONS. If a registration
pursuant to this Section 2.1 involves an underwritten offering and the managing
underwriter of such underwritten offering advises the Company in writing (with a
copy to each Participating Holder) of its belief that the amount of securities
requested to be included in such registration exceeds the amount which can be
sold in (or during the time of) such offering within an acceptable price range,
then the amount of securities to be sold in such offering shall be reduced in
accordance with the advice of such managing underwriter. In the case of any
such reduction, then the Company shall include in such Demand Registration that
amount of Registrable Securities that the Company is so advised can be sold in
(or during the time of) the offering, as follows: FIRST, Registrable Securities
of any Participating Holder that is an underwriter or and affiliate of the
Company in an amount sufficient to include all the shares of Registrable
Securities offered by such Participating Holder or an amount sufficient to
reduce the amount of such Participating Holder's Registrable Securities held
after the offering to a level that would cause such Participating Holder to no
longer be an underwriter or an affiliate of the Company, whichever amount is
less; SECOND, such Registrable Securities requested to be included in such
Registration Statement by any other Participating Holder, PRO RATA on the basis
of the amount of such securities held by such other holder; and THIRD, all other
securities of the Company duly requested to be included in such Registration
Statement.
2.2 PIGGYBACK REGISTRATION
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at
any time proposes to register any of its equity securities under the Securities
Act (other than by a registration on Form S-4 or Form S-8 or any successor or
similar form then in effect and other than pursuant to Section 2.1 hereof) in a
form and in a manner that would permit registration of the Registrable
Securities, whether or not for sale for its own account, it will give prompt
(but in no event less than 30 days prior to the proposed date of filing the
registration statement
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<PAGE>
relating to such registration) notice to all Holders of Registrable Securities
of the Company's intention to do so and of such Holders' rights under this
Section 2.2. Upon the written request of any such Holder made within twenty
(20) days after the receipt by that Holder of the notice (which request shall
specify the Registrable Securities intended to be disposed of by such Holder and
the intended method or methods of disposition thereof), the Company shall use
Commercially Reasonable Efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holders thereof, to the extent required to permit the
disposition (in accordance with the intended method or methods thereof as
aforesaid) of the Registrable Securities so to be registered, PROVIDED that if,
at any time after giving notice of its intention to register any equity
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company determines for any reason not
to register or to delay registration of the equity securities, the Company may,
at its election, give notice of that determination to each such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay all Registration Expenses in
connection therewith as provided in Section 2.3(b) hereof), without prejudice,
however, to the right of the Holders to request that such registration be
effected as a Demand Registration in accordance with Section 2.1 hereof, and
(ii) in the case of a determination to delay registering, shall be permitted to
delay registering any Registrable Securities for the same period as the delay in
registering such other equity securities. No registration effected under this
Section 2.2 will be deemed to have been effected pursuant to Section 2.1 hereof
(except for any right to a Demand Registration which may be exercised pursuant
to the last clause of subsection (i) of the preceding sentence) or will relieve
the Company of its obligation to effect a Demand Registration in accordance with
Section 2.1. hereof.
(b) PRIORITY IN PIGGYBACK REGISTRATIONS. If a registration
pursuant to this Section 2.2 involves an underwritten offering and the managing
underwriter of such underwritten offering advises the Company in writing (with a
copy to each Participating Holder) of its belief that the amount of securities
requested to be included in such registration exceeds the amount which can be
sold in (or during the time of) such offering within an acceptable price range,
then the Company will include in such registration that amount of securities
which the Company is so advised can be sold in (or during the time of) the
offering as follows: FIRST, all securities proposed by the Company to be sold
for its own account; SECOND, Registrable Securities of any Participating Holder
that has properly requested that its Registrable Securities be included in such
registration and that is an underwriter or an affiliate of the Company in an
amount sufficient to include all the Registrable Securities offered by such
Participating Holder or an amount sufficient to reduce the amount of such
Participating Holder's Registrable Securities held after the offering to a level
that would cause such Participating Holder to no longer be an underwriter or an
affiliate of the Company, whichever amount is less; THIRD, such Registrable
Securities requested to be included in such registration statement by any other
Participating Holder, PRO RATA on the basis of the amount of such securities
held by such other
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<PAGE>
Participating Holder; and fourth, all other securities of the Company duly
requested to be included in such registration statement.
2.3 REGISTRATION TERMS AND PROCEDURES
(a) REGISTRATION STATEMENT FORM. Registrations under Section
2.1 hereof shall be on Form S-1 or Form S-3 (if use of such a form is then
available to cover resales of the Registrable Securities) or such other
appropriate form of the SEC as shall permit the sale, resale or other
disposition of such Registrable Securities in accordance with the intended
method or methods of disposition.
(b) REGISTRATION EXPENSES. Subject to Section 2.3(f) hereof,
the Company will pay all Registration Expenses incurred in connection with a
registration to be effected (whether or not effected or deemed effected pursuant
to subsection (c) below) pursuant to Sections 2.1 hereof or 2.2 hereof.
(c) EFFECTIVENESS OF CERTAIN DEMAND REGISTRATIONS. A Demand
Registration will not be deemed to have been effected under Section 2.1 hereof
unless the Registration Statement with respect thereto has been declared
effective by the SEC and, subject to Section 2.3(g)(ii) hereof, (i) in the case
of a Registration Statement other than a Shelf Registration Statement, such
Registration Statement remains effective until the earlier of (x) forty-five
(45) days of the date such Registration Statement is declared effective by the
SEC and (y) the date on which all of the Registrable Securities covered by such
Registration Statement have been sold; and (ii) in the case of a Shelf
Registration Statement, such Shelf Registration Statement remains effective
until the earlier of six (6) months from its effective date (subject to
extension as contemplated by Section 2.1(d) and the last sentence of Section
2.3(h)(ii) hereof) or the date on which all of the Registrable Securities
covered by such Shelf Registration Statement have been sold; PROVIDED, HOWEVER,
in either case, that if (x) after such registration statement has been declared
effective, the marketing of Registrable Securities offered pursuant to such
registration statement is materially disrupted or adversely affected as a result
of any stop order, injunction or other order or requirement of the SEC or any
other governmental agency or court (for reasons other than a misrepresentation
or omission by any Requesting Holder or any Participating Holder) or (y) the
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration have not been
satisfied (for reasons other than a wrongful or bad faith act, omission or
misrepresentation by any Requesting Holder or any Participating Holder), such
registration statement will be deemed not to have become effective. If a
registration pursuant to Section 2.1 hereof is deemed not to have been effected
hereunder, then the Company shall continue to be obligated to effect the
remaining number of unused Demand Registrations in accordance with Section 2.1
hereof.
(d) SELECTION OF UNDERWRITER. If, in connection with a
registration effected pursuant to Section 2.1 hereof, the Requisite Holders so
elect, the offering of
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Registrable Securities pursuant to Section 2.1 hereof shall be in the form of an
underwritten offering. If the Requisite Holders so elect, they shall select one
or more nationally recognized firms of investment bankers to act as the
book-running managing underwriter or underwriters in connection with such
offering, PROVIDED that such selection shall be subject to the consent of the
Company, which consent shall not be unreasonably withheld.
(e) LIMITATION ON SHELF REGISTRATION STATEMENTS.
Notwithstanding the provisions of Section 2.1 hereof, only those Participating
Holders who are deemed to be underwriters or affiliates of the Company for
purposes of the Securities Act shall be permitted to demand the registration of
Registrable Securities pursuant to a Shelf Registration Statement.
(f) WITHDRAWAL. Any Holder participating in a registration
pursuant to this Agreement shall be permitted to withdraw all or part of its
Registrable Securities from such registration at any time prior to the effective
date of the registration statement covering such securities; provided that, in
the event of a withdrawal from a registration effected pursuant to Section 2.1
hereof, such registration shall be deemed to have been effected for purposes of
the first sentence of Section 2.1(b) hereof except as otherwise provided in
Section 2.1(b) hereof.
(g) REGISTRATION PROCEDURES. In connection with the Company's
obligations to register Registrable Securities pursuant to this Agreement, the
Company will use Commercially Reasonable Efforts to effect such registration so
as to permit the sale, resale or other disposition of any Registrable Securities
included in such registration in accordance with the intended method or methods
of distribution thereof, and pursuant thereto the Company will as expeditiously
as possible:
(i) prepare and (as soon thereafter as practicable) file
with the SEC the requisite registration statement containing all information
required thereby to effect such registration and thereafter use Commercially
Reasonable Efforts to cause such registration statement to become and remain
effective in accordance with the terms of this Agreement, PROVIDED that as far
in advance as practicable before filing such registration statement or any
amendment, supplement or exhibit thereto (but, with respect to the filing of
such registration statement, in no event later than seven (7) days prior to such
filing), the Company will furnish to the Participating Holders or their counsel
copies of reasonably complete drafts of all such documents proposed to be filed
(excluding exhibits, which shall be made available upon request by any
Participating Holder), and any such Holder shall have the opportunity to object
to any information contained therein and the Company will make the corrections
reasonably requested by such Holder, in writing, with respect to information
relating to such Holder or the plan of distribution of the Registrable
Securities prior to filing any such registration statement, amendment,
supplement or exhibit;
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(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith (A) as reasonably requested by any Participating Holder, in writing,
to which such registration statement relates (but only to the extent such
request relates to information with respect to such Holder) and (B) as may be
necessary to keep such registration statement effective (x) during the Effective
Period in the case of a Registration Statement other than a Shelf Registration
Statement and (y) during the Shelf Period in the case of a Shelf Registration
Statement, and comply with the provisions of the Securities Act with respect to
the sale, resale or other disposition of all securities covered by such
registration statement during such period in accordance with the intended method
or methods of disposition by the seller or sellers thereof set forth in such
registration statement;
(iii) furnish to each Holder covered by, and each
underwriter or agent participating in the disposition of securities under, such
registration statement such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
excluding all exhibits and documents incorporated by reference, which exhibits
and documents shall be furnished to any such Person upon request), such number
of copies of the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act relating to such Holder's
Registrable Securities, in conformity with the requirements of the Securities
Act, and such other documents as such Holder, underwriter or agent may
reasonably request to facilitate the disposition of such Registrable Securities;
(iv) use Commercially Reasonable Efforts to register or
qualify all Registrable Securities and other securities covered by such
registration statement under all applicable blue sky and other securities laws,
and to keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to (A) qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not but
for the requirements of this clause (iv) be obligated to be so qualified, (B)
subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any jurisdiction;
(v) use Commercially Reasonable Efforts to cause all
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities applicable
to the Company as may be reasonably necessary to enable the seller or sellers
thereof (or underwriter or agent, if any) to consummate the disposition of such
Registrable Securities in accordance with the plan of distribution set forth in
such registration statement;
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(vi) promptly notify each Participating Holder at its
Registered Address and any underwriter or agent participating in the disposition
of Registrable Securities covered by such registration statement, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event known to
the Company as a result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made, and promptly prepare and furnish to such Holder (or
underwriter or agent, if any) a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made;
(vii) otherwise use Commercially Reasonable Efforts to
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable (but not more than
fifteen (15) months) after the effective date of the registration statement, an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 promulgated thereunder, and furnish to each Holder covered by
such registration statement or any participating underwriter or agent a copy of
any amendment or supplement to such registration statement or prospectus five
(5) calendar days (or such shorter period as may be practicable under the
circumstances) prior to the filing thereof with the SEC;
(viii) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(ix) use Commercially Reasonable Efforts to, on or prior
to the effective date of such registration statement, list the Registrable
Securities covered by such registration statement on any securities exchange on
which the Registrable Securities are then listed;
(x) cooperate with each Participating Holder and each
underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc.;
(xi) use Commercially Reasonable Efforts to prevent the
issuance by the SEC or any other governmental agency or court of a stop order,
injunction or other order suspending the effectiveness of such registration
statement and, if such an order is issued, use Commercially Reasonable Efforts
to cause such order to be lifted as promptly as practicable;
(xii) take such other actions as the Requisite Holders of
such Registrable Securities shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
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(xiii) promptly notify each Participating Holder and each
underwriter or agent, if any:
(1) when such registration statement or any prospectus
used in connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any post-effective
amendment thereto, when the same has become effective;
(2) of any written comments from the SEC with respect
to any filing referred to in clause (A) and of any written request by the SEC
for amendments or supplements to such registration statement or prospectus;
(C) of the notification to the Company by the SEC of
its initiation of any proceeding with respect to, or of the issuance by the SEC
of, any stop order suspending the effectiveness of such registration statement;
and
(D) of the receipt by the Company of any notification
with respect to the suspension of the qualification of any Registrable
Securities for sale, resale or other disposition under the applicable securities
or blue sky laws of any jurisdiction;
(xiv) cooperate with each Participating Holder and each
underwriter or agent participating in the distribution of such Registrable
Securities to facilitate the timely preparation and delivery of certificates
(which shall not bear any restrictive legends, other than as required by
applicable law) representing securities sold under a registration statement
hereunder, and enable such securities to be in such denominations and registered
in such names as such seller, underwriter or agent may request and keep
available and make available to the Company's transfer agent, prior to the
effectiveness of such registration statement, an adequate supply of such
certificates;
(xv) not later than the effective date of such
registration statement, provide a CUSIP number for all Registrable Securities
covered by a registration statement hereunder;
(xvi) incorporate in the registration statement or any
amendment, supplement or post-effective amendment thereto such information as
each Participating Holder, each underwriter or agent (if any) or their
respective counsel may reasonably request, in writing, to be included therein
with respect to any Registrable Securities being sold by such Holder to such
underwriter or agent, the purchase price being paid therefor by such underwriter
or agent and any other terms of the offering of such Registrable Securities;
(xvii) during any period when a prospectus is required to be
delivered under the Securities Act, make timely periodic filings with the SEC
pursuant to and containing the information required by the Exchange Act (whether
or not the Company is required to make such filings pursuant to such Act); and
(xviii) in connection with an underwritten offering,
participate, to the extent reasonably requested by the Requisite Holders of the
securities included in the offering or the managing underwriter for the
offering, in customary efforts to sell the securities under the offering.
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(h) AGREEMENTS OF CERTAIN HOLDERS
(i) Each Participating Holder shall furnish to the
Company, in writing, such information regarding such Holder, the Registrable
Securities held by such Holder and the intended plan of distribution of such
securities as the Company may from time to time reasonably request in writing in
connection with such registration.
(ii) Each Participating Holder agrees, by acquisition of
such Registrable Securities, that upon receipt of any notice (a Suspension
Notice) from the Company of the suspension of the use of a Shelf Registration
Statement as contemplated by Section 2.1(d) (as limited pursuant to Section
2.3(e)) or of the happening of any event of the kind described in clause (vi) of
Section 2.3(g) hereof, such Holder will forthwith discontinue such Holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by clause (vi) of
Section 2.3(g) hereof or of a notice that such Holder may resume dispositions of
Registrable Securities pursuant to the registration statement (the period from
the date on which such Holder receives a Suspension Notice to the date on which
such Holder receives copies of the supplemental or amended prospectus being
herein called the Suspension Period). The Company shall take such actions as
are necessary to end the Suspension Period as promptly as practicable. The
applicable time period for effectiveness in Section 2.3(c) shall be extended by
the number of days of a Suspension Period.
2.4 UNDERWRITTEN OFFERINGS
(a) UNDERWRITTEN OFFERINGS IN CONNECTION WITH A DEMAND
REGISTRATION. If requested by the underwriters for any underwritten offering in
connection with a registration pursuant to Section 2.1 hereof, the Company will
enter into an underwriting agreement with such underwriters for such offering,
such agreement (i) to be satisfactory in substance and form to the Company and
to the Requisite Holders, and (ii) to contain such representations and
warranties by the Company and the Participating Holders and such other terms as
are generally prevailing in agreements of such type, including, without
limitation, indemnities to the effect and to the extent provided in Section 2.6
hereof. Each Investor (so long as it or any of its Affiliates holds Registrable
Securities to be included in such registration) shall be a party to such
underwriting agreement and may, at its option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters, also be made to and for its
benefit and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement be conditions precedent to
its obligations thereunder.
(b) UNDERWRITTEN OFFERINGS IN CONNECTION WITH PIGGYBACK
REGISTRATIONS. If the Company at any time proposes to register any of its
equity securities under the Securities Act as contemplated by Section 2.2 hereof
and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any Participating Holder and
subject to Section 2.2(b) hereof, arrange for such underwriters to include
Registrable Securities to be offered and sold by such Holder or Holders among
the securities to be distributed by such underwriters. The Participating
Holders shall be parties to the underwriting agreement between the Company and
such underwriters, such agreement (i) to be satisfactory in substance and form
to the Company and to the Requisite Holders, and (ii) to contain such
representations and warranties by the Company and the Participating Holders and
such other
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terms as are generally prevailing in agreements of such type, including, without
limitation, indemnities to the effect and to the extent provided in Section 2.6
hereof. The Requisite Holders of the Registrable Securities included in such
offering may, at their option, require that any or all of the representations
and warranties by, and the other agreements on the part of, the Company to and
for the benefit of such underwriters, also be made to and for the benefit of the
Participating Holders and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Holders thereunder.
2.5 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give Participating Holders, their
underwriters or agents, if any, and their respective counsel and accountants,
reasonable access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such Holders' and such underwriters' or agents' respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
2.6 INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each
Participating Holder, its directors, officers, shareholders, employees,
investment advisers, agents and Affiliates, either direct or indirect (and each
such Affiliate's directors, officers, shareholders, employees, investment
advisers and agents), and each other Person, if any, who controls such Persons
within the meaning of the Securities Act (each such Person, an Indemnified
Party), from and against any losses, claims, damages, liabilities or expenses,
joint or several (each a Loss and collectively, Losses), to which such
Indemnified Party may become subject under the Securities Act or otherwise, to
the extent that such Losses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act (including all documents incorporated therein by reference), any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such Indemnified Party for any legal or any other expenses reasonably
incurred by it in connection with investigating or defending against any such
Loss, action or proceeding; PROVIDED that in any such case the Company shall not
be liable to any particular Indemnified Party to the extent that such Loss (or
action or proceeding in respect thereof) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Indemnified
Party specifically for inclusion therein; and PROVIDED, FURTHER, that the
Company shall not be liable in any such case to the extent it is finally
determined by a court of competent jurisdiction that any such Loss (or action or
proceeding in respect thereof) arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
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(i) in any such preliminary prospectus, if (A) it was the
responsibility of such Indemnified Party to provide the Person asserting such
Loss with a current copy of the final prospectus or summary prospectus contained
therein and such Indemnified Party failed to deliver or cause to be delivered a
copy of the final prospectus or summary prospectus contained therein to such
Person after the Company had furnished such Indemnified Party with a sufficient
number of copies of the same prior to the sale of Registrable Securities to the
Person asserting such Loss and (B) the final prospectus or summary prospectus
contained therein corrected such untrue statement or omission; or
(ii) in such final prospectus or summary prospectus
contained therein, if such untrue statement or omission is corrected in an
amendment or supplement to such final prospectus or summary prospectus contained
therein and such amendment or supplement has been delivered to the Indemnified
Party prior to the sale of Registrable Securities to the Person asserting such
Loss and the Indemnified Party thereafter fails to deliver the final prospectus
or summary prospectus contained therein as so amended or supplemented prior to
or concurrently with such sale after the Company had furnished such Indemnified
Party (in accordance with the notice provisions contained in Section 10 for
Persons who are parties to this Agreement) with a sufficient number of copies of
the same for delivery to purchasers of securities.
Such indemnity will remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of such securities by such Indemnified Party. The Company shall
also indemnify each other Person who participates (including as an underwriter)
in the offering or sale of Registrable Securities hereunder, their officers and
directors and each other Person, if any, who controls any such participating
Person within the meaning of the Securities Act to the same extent as provided
above with respect to Indemnified Parties.
(b) INDEMNIFICATION BY THE SELLERS. The Company may require, as
a condition to including any Registrable Securities in any registration
statement filed pursuant to Sections 2.1 or 2.2 hereof and as a condition to
indemnifying such sellers pursuant to this Section 2.6, that the Company shall
have received an undertaking reasonably satisfactory to it from each
Participating Holder included in any such offering regarding its agreement to
indemnify and hold harmless and reimburse (in the same manner and to the same
extent as set forth in paragraph (a) of this Section 2.6) the Company, each
director, officer, employee and agent of the Company, and each other Person, if
any, who controls the Company within the meaning of the Securities Act, from and
against any Losses (or actions or proceedings, whether commenced or threatened,
in respect thereof) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
pursuant to which securities of such Holder are registered under the Securities
Act (including all documents incorporated therein by reference), any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission from such
registration statement, preliminary prospectus, final prospectus or summary
prospectus, or any amendment or supplement thereto required to be stated therein
or necessary to make the statements therein not misleading, if (but only if)
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Participating Holder specifically for inclusion
therein; PROVIDED, HOWEVER, that such Participating Holder shall not be
obligated to provide such indemnity to the extent that such
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Losses result, directly or indirectly, from the failure of the Company to
promptly amend or take action to correct or supplement or to deliver timely any
such registration statement, prospectus, amendment or supplement based on
corrected or supplemental information provided in writing by such Participating
Holder to the Company expressly for such purpose; and PROVIDED FURTHER, that the
obligation to provide indemnification pursuant to this Section 2.6(b) shall be
several, and not joint and several, among such indemnifying parties.
Notwithstanding anything in this Section 2.6(b) to the contrary, in no event
shall the liability of any Participating Holder under such indemnity be greater
in amount than the amount of the proceeds received by such Participating Holder
upon the sale of its Registrable Securities in the offering to which the Losses
relate. Such indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director, officer,
employee, agent or participating or controlling Person and shall survive the
transfer of such securities by such Participating Holder.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
Indemnified Party of notice of the commencement of any action or proceeding
involving a claim referred to in paragraph (a) or (b) of this Section 2.6, such
Indemnified Party will, if a claim in respect thereof is to be made against an
indemnifying party, give prompt written notice to the latter of the commencement
of such action, PROVIDED that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section 2.6, except to the extent that the indemnifying
party is actually and materially prejudiced by such failure to give notice. In
case any such action is brought against an Indemnified Party, the indemnifying
party shall be entitled to participate in and to assume the defense thereof
(such assumption to constitute its acknowledgement of its agreement to indemnify
the Indemnified Party with respect to such matters), jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
the indemnifying party to such Indemnified Party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
Indemnified Party for any legal fees or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs of
investigation; PROVIDED, HOWEVER, that if, in such Indemnified Party's
reasonable judgment, a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, such Indemnified Party
shall be entitled to separate counsel reasonably satisfactory to the
indemnifying party at the expense of the indemnifying party; and PROVIDED,
FURTHER, that, unless there exists a conflict of interest among indemnified
parties, all indemnified parties in respect of such claim shall be entitled to
only one counsel or firm of counsel for all such indemnified parties. In the
event an indemnifying party shall not be entitled, or elects not, to assume the
defense of a claim, such indemnifying party shall not be obligated to pay the
fees and expenses of more than one counsel or firm of counsel for all parties
indemnified by such indemnifying party in respect of such claim, unless in the
reasonable judgment of any such Indemnified Party a conflict of interest exists
between such Indemnified Party and any other of such indemnified parties in
respect of such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of one additional counsel or firm of counsel for
such indemnified parties. No indemnifying party shall, without the consent of
the Indemnified Party, consent to entry of any judgment or enter into any
settlement that (i) does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
Losses in respect of such claim or litigation or (ii) would impose injunctive
relief on such Indemnified Party. No indemnifying party shall be subject to any
Losses for any settlement made without its consent, which consent shall not be
unreasonably withheld.
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(d) OTHER INDEMNIFICATION. The provisions of this Section 2.6
shall be in addition to any other rights to indemnification or contribution
which an Indemnified Party may have pursuant to law, equity, contract or
otherwise.
(e) INDEMNIFICATION PAYMENTS. The indemnification required by
this Section 2.6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, promptly as and when bills are
received or Losses are incurred.
(f) CONTRIBUTION. If for any reason the foregoing indemnity and
reimbursement is unavailable or is insufficient to hold harmless an Indemnified
Party under paragraph (a) or (b) of this Section 2.6, then each indemnifying
party shall contribute to the amount paid or payable by such Indemnified Party
as a result of any Loss (or actions or proceedings, whether commenced or
threatened, in respect thereof), including, without limitation, any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such Loss, action or proceeding, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the Indemnified Party on the other. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. Notwithstanding anything in this Section 2.6(f) to the contrary, no
indemnifying party (other than the Company) shall be required pursuant to this
Section 2.6(f) to contribute any amount in excess of the amount by which the net
proceeds received by such indemnifying party from the sale of Registrable
Securities in the offering to which the Losses of the indemnified parties relate
exceeds the amount of any damages which such indemnifying party has otherwise
been required to pay by reason of such untrue statement or omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
SECTION 3. RULE 144
(a) The Company will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
promulgated by the SEC thereunder and will take such further action as any
Holder may reasonably request, to the extent required from time to time to
enable the Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144,
or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of any Holder, the Company will deliver to that Holder a written
statement as to whether it has complied with such requirements, a copy of the
most recent annual or quarterly report of the Company, and such other reports or
documents so filed as a Holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing a Holder to sell any such securities
without registration.
(b) If at any time the Company is not required to file reports
in compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company at its expense will, forthwith upon the request of any Holder make
available adequate current public information with respect to the Company within
the meaning of paragraph (c)(2) of Rule 144.
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SECTION 4. TERM
This Agreement shall enter into force on the date hereof and
shall continue in full force and effect, subject to Section 16 hereof, until the
third (3rd) anniversary of the date hereof.
SECTION 5. AMENDMENTS AND WAIVERS
This Agreement may be amended, supplemented or modified only by a
writing (which makes reference to this Agreement) executed by the Company and
Holders holding at least fifty percent (50%) of the Registrable Securities then
held by all the Holders. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same term or condition of
this Agreement on any future occasion.
SECTION 6. ENTIRE AGREEMENT
This Agreement supersedes all prior discussions and agreements
between the parties with respect to the subject matter hereof and contains the
sole and entire agreement between the parties hereto with respect to the subject
matter hereof.
SECTION 7. NO THIRD-PARTY BENEFICIARY
The terms and provisions of this Agreement are intended solely
for the benefit of each party, their respective Successors or permitted assigns
and it is not the intention of the parties to confer third-party beneficiary
rights upon any other Person other than (i) any Affiliate of any Investor, (ii)
any permitted transferee, direct or indirect, of any of the Registrable
Securities held by any Investor or any of their respective Affiliates, or (iii)
any other Person entitled to notice of the registration of Registrable
Securities under Sections 2.1(c) or 2.2(a) hereof or to indemnity under Section
2.6 hereof.
SECTION 8. INVALID PROVISIONS
If any provision of this Agreement is held to be illegal, invalid
or unenforceable under any present or future law, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
SECTION 9. NOMINEES FOR BENEFICIAL OWNERS
In the event that any Registrable Securities are held by a
nominee for the beneficial owner thereof, the beneficial owner thereof may, at
its election, be treated as the holder of such Registrable Securities for
purposes of request or other action by any Holder or
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Holders pursuant to this Agreement or any determination of any amount of shares
of Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities. For purposes of this Agreement, beneficial ownership and beneficial
owner refer to beneficial ownership as defined in Rule 13d-3 (without regard to
the 60-day provision in paragraph (d)(1)(i) thereof) under the Exchange Act.
SECTION 10. NOTICES
All notices, requests and other communications hereunder must be
in writing and will be deemed to have been duly given only if (a) delivered
personally, (b) by facsimile transmission, (c) by Federal Express or other
nationally recognized courier service or (d) mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
(i) If to the Company, to:
Morrison Knudsen Plaza,
Boise Idaho 83729
Attention: General Counsel
(ii) If to an Investor, to the Registered Address for
that Investor.
With respect to any other Holder of Registrable Securities entitled to
receive notice, requests or other communications hereunder, such notices,
requests and other communications shall be sent to the Registered Addresses and
telecopy numbers provided to the Company and the other parties hereto by notice
as herein provided and referencing this Agreement. All such notices, requests
and other communications will (A) if delivered personally to the address as
provided in this Section 10, be deemed given upon delivery, (B) if delivered by
facsimile transmission to the facsimile number as provided in this Section 10,
be deemed given upon receipt, and (C) if delivered by courier service or by mail
in the manner described above to the address as provided in this Section 10, be
deemed given upon receipt (in each case regardless of whether such notice,
request or other communication is received by any other Person to whom a copy of
such notice is to be delivered pursuant to this Section 10). Any Person from
time to time may change its Registered Address, facsimile number or other
information for the purpose of notices to that Person by giving notice in
accordance with this Section 10 specifying such change to each of the other
parties executing this Agreement.
SECTION 11. DEEMED ACCEPTANCE BY INVESTORS; ASSIGNMENT
Each Investor shall be deemed, by accepting the shares of Common
Stock acquired by such Investor pursuant to the Plan, to agree to the terms of
this Agreement as it may be in effect from time to time, including any
amendments, supplements or waivers duly adopted in accordance with Section 5
hereof.
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This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties and their respective Successors and permitted
assigns of Registrable Securities. Each Investor may assign any of its rights
hereunder (in whole or in part) to one or more permitted transferees of
Registrable Securities; PROVIDED, HOWEVER, that any such permitted transferees
of Registrable Securities agrees in writing, in form and substance satisfactory
to the Company, to be bound by all of the terms and provisions hereof and to
join this Agreement as a party hereto. Without limiting the foregoing, no such
assignment shall be binding upon or obligate the Company to any such assignee
unless and until (a) the Company has received notice of the assignment as herein
provided, which notice (i) references this Agreement and (ii) sets forth the
Registered Address of any assignee for the purpose of any notices hereunder.
SECTION 12. DESCRIPTIVE HEADINGS; SECTION REFERENCES
The descriptive headings of the several sections and paragraphs
of this Agreement are inserted for convenience of reference only and do not
define or limit the provisions hereof or otherwise affect the meaning hereof.
All references in this Agreement to sections are to sections of this agreement
unless otherwise stated.
SECTION 13. SPECIFIC PERFORMANCE
The parties agree that, to the extent permitted by law, (i) the
obligations imposed on them in this Agreement are special, unique and of an
extraordinary character, and that in the event of a breach by any such party
damages would not be an adequate remedy; and (ii) each of the other parties
shall be entitled to specific performance and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled at law or in
equity.
SECTION 14. GOVERNING LAW
This agreement shall be governed by and construed in accordance
with the laws of the state of Delaware without reference to the conflicts of law
principles thereof.
Section 15. ATTORNEYS' FEES
In any action or proceeding brought to enforce any provision of
this Agreement or where any provision hereof is validly asserted as a defense,
the successful party shall, to the extent permitted by applicable law, be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
SECTION 16. TERMINATION OF CERTAIN RIGHTS
The rights and obligations hereunder of each Investor will
terminate with respect to such party at such time when neither it nor any of its
respective Affiliates holds Registrable Securities, PROVIDED that the provisions
of Section 2.3 hereof, the rights of any party hereto with respect to the breach
of any provision hereof, and any obligation accrued as of the date of
termination (including any obligation accrued under Section 2.6 hereof) shall
survive termination of this Agreement.
SECTION 17. NO INCONSISTENT AGREEMENTS
21
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The Company will not hereafter enter into, modify, amend or waive
any agreement with respect to its securities if such agreement, modification,
amendment or waiver would conflict with the rights granted pursuant to this
Agreement to the Holders of Registrable Securities.
SECTION 18. REQUISITE HOLDERS
Each of the parties hereto agrees that the Company may, in
connection with the taking of any action permitted to be taken hereunder with
the consent or approval of the Requisite Holders of the Registrable Securities,
rely in good faith on a certificate from any such holder or holders stating that
it holds or is acting on behalf of a majority in interest of the Registrable
Securities.
SECTION 19. COMPLETION OF SCHEDULE 1
The Company covenants and agrees to duly prepare and complete
Schedule 1 as soon as practicable following the Combined Company Rights
Expiration Date (as defined in the Plan) such that Schedule 1 lists all Persons
that acquire Common Stock pursuant to the Plan, including Persons that acquire
Common Stock pursuant to the exercise of Combined Company Rights (as defined in
the Plan).
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
MORRISON KNUDSEN CORPORATION
By: /s/ John H. Wimberly
--------------------------------------
Name: John H. Wimberly
Title: President and Chief Executive Officer
<PAGE>
SCHEDULES
THE REGISTRANT AGREES TO PROVIDE THE SECURITIES AND EXCHANGE COMMISSION,
UPON REQUEST, WITH COPIES OF THE SCHEDULES HERETO.
<PAGE>
EXHIBIT 4.6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
AMONG
MORRISON KNUDSEN CORPORATION,
BATCHELDER & PARTNERS, INC.
AND
SCHRODER WERTHEIM & CO. INCORPORATED
----------------------------
DATED AS OF SEPTEMBER 11, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Form of Warrant; Execution; Registration. . . . . . . . . . . 2
2.1 Form of Warrant; Execution of Warrants. . . . . . . . . . . . 2
2.2 Registration. . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3. Transfer and Exchange of Warrants . . . . . . . . . . . . . . 3
Section 4. Term of Warrants; Exercise of Warrants; Compliance with
Government Regulation . . . . . . . . . . . . . . . . . . . . 3
4.1 Term of Warrants. . . . . . . . . . . . . . . . . . . . . . . 3
4.2 Exercise of Warrants. . . . . . . . . . . . . . . . . . . . . 3
4.3 Compliance with Government Regulations; Qualification under
Securities Laws . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . 4
Section 6. Mutilated or Missing Warrant Certificates. . . . . . . . . . . 4
Section 7. Reservation of Warrant Shares. . . . . . . . . . . . . . . . . 5
Section 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 9. Adjustment of Exercise Price; Number of Warrant Shares and Shares
of Capital Stock Warrants Are Exercisable Into . . . . . . . . 5
9.1 Mechanical Adjustments . . . . . . . . . . . . . . . . . . . . 5
(a) Adjustment for Change in Capital Stock . . . . . . . . . 5
(b) Adjustment for Rights Issue. . . . . . . . . . . . . . . 6
(c) Adjustment for Other Distributions . . . . . . . . . . . 6
(d) Adjustment for Common Stock and Convertible Securities
Issue. . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Current Market Price; Price Per Share. . . . . . . . . . 7
(f) When De Minimis Adjustment May Be Deferred . . . . . . . 8
(g) Adjustment in Exercise Price . . . . . . . . . . . . . . 8
(h) When No Adjustment Required. . . . . . . . . . . . . . . 8
(i) Shares of Common Stock . . . . . . . . . . . . . . . . . 9
(j) Expiration of Rights, etc. . . . . . . . . . . . . . . . 9
9.2 Voluntary Adjustment by the Company. . . . . . . . . . . . . . 9
9.3 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . 9
9.4 Preservation of Purchase Rights upon Merger or
Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.5 Statement on Warrants. . . . . . . . . . . . . . . . . . . . . 10
Section 10. Fractional Interests. . . . . . . . . . . . . . . . . . . . . 10
i
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SECTION PAGE
- ------- ----
Section 11. No Rights as Stockholders; Notices to Holders . . . . . . . . 10
Section 12. Payments in U.S. Currency . . . . . . . . . . . . . . . . . . 11
Section 13. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 14. Cancellation of Warrants. . . . . . . . . . . . . . . . . . . 11
Section 15. Supplements and Amendments. . . . . . . . . . . . . . . . . . 11
Section 16. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 17. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . 12
Section 18. Benefits of this Agreement. . . . . . . . . . . . . . . . . . 12
Section 19. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 20. Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
EXHIBIT A FORM OF WARRANT CERTIFICATE . . . . . . . . . . . . . . . . . A-1
ii
<PAGE>
WARRANT AGREEMENT, dated as of September 11, 1996 (the "EFFECTIVE DATE"),
between MORRISON KNUDSEN CORPORATION, formerly known as Washington Construction
Group, Inc., a Delaware corporation (the "COMPANY"), Batchelder & Partners, Inc.
and Schroder Wertheim & Co. Incorporated (collectively, the "HOLDERS").
W I T N E S E T H :
WHEREAS, in connection the merger of Morrison Knudsen Corporation, a
Delaware corporation with and into the Company, with the Company continuing as
the surviving corporation, pursuant to a Restructuring and Merger Agreement
between the Company and Morrison Knudsen Corporation dated as of May 28, 1996
(the "MERGER AGREEMENT");
WHEREAS, the Company has engaged the Holders to act as financial advisors
to the Company with respect to the Merger;
WHEREAS, the Company has agreed to issue Warrants (the "WARRANTS") for the
purchase of the number of shares of Common Stock of the Company as set forth in
Schedule A attached hereto to the Holders as part of the compensation for their
services as such financial advisors; and
WHEREAS, each Warrant entitles the Holders to purchase one share of the
Company's Common Stock (each of said shares of Common Stock deliverable upon
exercise of the Warrants, a "WARRANT SHARE").
NOW, THEREFORE, in consideration of the foregoing and for the purpose of
defining the terms and provisions of the Warrants and the respective rights and
obligations thereunder of the Company and Holders, the Company and the Holders
hereby agree as follows:
SECTION 1. DEFINITIONS. The following terms, as used herein, have the
following meanings (all terms defined herein in the singular to have the
correlative meanings when used in the plural and vice versa):
1.1 "AGREEMENT" means this Warrant Agreement, as the same may be amended,
modified or supplemented from time to time.
1.2 "ASSETS" has the meaning ascribed to such term in Section 9.1(c)
hereof.
1.3 "BUSINESS DAY" means a day other than (a) a Saturday or Sunday,
(b) any day on which banking institutions located in the City of New York, New
York are required or authorized by law or by local proclamation to close or
(c) any day on which the New York Stock Exchange is closed.
1.4 "COMMERCIALLY REASONABLE EFFORTS," when used with respect to any
obligation to be performed or term or provision to be observed hereunder, means
such efforts as a prudent Person seeking the benefits of such performance or
action would make, use, apply or exercise to preserve, protect or advance its
rights or interests, PROVIDED, that such efforts do not require such Person to
incur a material financial cost or a substantial risk of material liability
unless such cost or liability (i) would customarily be incurred in the course of
performance or observance of the relevant obligation, term or provision, (ii) is
caused by or results from the wrongful act or negligence of the Person whose
performance or observance is required hereunder or (iii) is not excessive or
unreasonable in view of the rights or interests to be preserved, protected or
advanced. Such efforts may include, without limitation, the expenditure of such
funds and retention by such Person of such accountants,
<PAGE>
attorneys or other experts or advisors as may be necessary or appropriate to
effect the relevant action; the undertaking of any special audit or internal
investigation that may be necessary or appropriate to effect the relevant
action; and the commencement, termination or settlement of any action, suit
or proceeding involving such Person to the extent necessary or appropriate to
effect the relevant action.
1.5 "COMMON STOCK" means the common stock, par value $.01, of the Company.
1.6 "CONVERTIBLE SECURITIES" has the meaning ascribed to such term in
Section 9.1(d) hereof.
1.7 "EXERCISE PERIOD" has the meaning ascribed to such term in Section 4.1
hereof.
1.8 "EXERCISE PRICE" means $12.00 per share of Common Stock, as adjusted
pursuant to Section 9 hereof.
1.9 "HOLDERS" means Batchelder & Partners, Inc. and Schroder Wertheim &
Co. Incorporated, who are the registered owners of the Warrants and any security
into which they may be exchanged (each, a "HOLDER").
1.10 "NASD" has the meaning ascribed to such term in Section 4.2 hereof.
1.11 "PERSON" means a natural person, a corporation, a partnership, a
trust, a joint venture, any regulatory authority or any other entity or
organization.
1.12 "PRICE PER SHARE" has the meaning ascribed to such term in Section
9.1(e)(ii) hereof.
1.13 "RIGHTS" has the meaning ascribed to such term in Section 9.1(b)
hereof.
1.14 "TRANSFER AGENT" has the meaning ascribed to such term in Section 7
hereof.
1.15 "SEC" means the United States Securities and Exchange Commission, or
any successor governmental agency or authority thereto.
1.16 "SUBSIDIARY" has the meaning ascribed to such term in Section 9.1(c)
hereof.
1.17 "WARRANT" has the meaning ascribed to such term in the preamble
hereto.
1.18 "WARRANT CERTIFICATE" has the meaning ascribed to such term in Section
2.1 hereof.
1.19 "WARRANT REGISTER" has the meaning ascribed to such term in Section
2.2 hereof.
1.20 "WARRANT SHARE" has the meaning ascribed to such term in the preamble
hereto.
SECTION 2. FORM OF WARRANT; EXECUTION; REGISTRATION.
2.1 FORM OF WARRANT; EXECUTION OF WARRANTS. The certificates evidencing
the Warrants (the "WARRANT CERTIFICATES") shall be in the form set forth as
Exhibit A hereto. The Warrant Certificates shall be signed on behalf of the
Company by its Chairman of the Board, President or one of its Vice Presidents.
The signature of any such officer on the Warrant Certificates may be manual or
by facsimile. Any Warrant Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company to sign such Warrant Certificate.
2
<PAGE>
2.2 REGISTRATION. The Warrant Certificates shall be numbered and shall be
registered on the books of the Company maintained at its principal office (the
"WARRANT REGISTER") as they are issued. The Company shall be entitled to treat
the registered owner of any Warrant as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in such Warrant on the part of any other person.
SECTION 3. TRANSFER AND EXCHANGE OF WARRANTS. Subject to the terms hereof
and the receipt of such documentation as the Company may reasonably require, the
Company shall thereafter from time to time register the transfer of any
outstanding Warrants upon the Warrant Register upon surrender of the Warrant
Certificate or Certificates evidencing such Warrants duly endorsed or
accompanied (if so required by it) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Company, duly executed by the
registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Subject to the terms
of this Agreement, each Warrant Certificate may be exchanged for another Warrant
Certificate or Certificates entitling the Holder thereof to purchase a like
aggregate number of Warrant Shares as the Warrant Certificate or Certificates
surrendered then entitles such Holder to purchase. Any Holder desiring to
exchange a Warrant Certificate or Certificates shall make such request in
writing delivered to the Company and shall surrender, duly endorsed or
accompanied (if so required by the Company) by a written instrument or
instruments of transfer in form reasonably satisfactory to the Company, the
Warrant Certificate or Certificates to be so exchanged. Upon registration of
transfer, the Company shall issue and deliver by certified mail a new Warrant
Certificate or Certificates to the persons entitled thereto.
No service charge shall be made for any exchange or registration of
transfer of a Warrant Certificate or of Warrant Certificates, but the Company
may require payment of a sum sufficient to cover any stamp tax or other tax or
other governmental charge that is imposed in connection with any such exchange
or registration of transfer pursuant to Section 5 hereof.
By accepting the initial delivery, transfer or exchange of Warrants, each
Holder shall be deemed to agree to the terms of this Agreement as it may be in
effect from time to time, including any amendments or supplements duly adopted
in accordance with Section 15 hereof.
SECTION 4. TERM OF WARRANTS; EXERCISE OF WARRANTS; COMPLIANCE WITH
GOVERNMENT REGULATION.
4.1 TERM OF WARRANTS. Subject to the terms of this Agreement, each Holder
shall have the right, which may be exercised at any time from 9:00 a.m., New
York City time, on September 11, 1996 to 5:00 p.m., New York City time, on
September 11, 2001 (five years after the Effective Date of this Agreement) (the
"EXERCISE PERIOD") to receive from the Company the number of Warrant Shares
which the Holder may at the time be entitled to receive upon exercise of such
Warrants and payment of the Exercise Price then in effect for such Warrant
Shares, and the Warrant Shares issued to a Holder upon exercise of its Warrants
shall be duly authorized, validly issued, fully paid, nonassessable and shall
not have been issued in violation of or subject to any preemptive rights. Each
Warrant not exercised prior to the expiration of the Exercise Period shall
become void, and all rights thereunder and all rights in respect thereof under
this Agreement shall cease as of the expiration of the Exercise Period.
4.2 EXERCISE OF WARRANTS. During the Exercise Period, each Holder may,
subject to this Agreement, exercise from time to time some or all of the
Warrants evidenced by its Warrant Certificate(s) by (i) surrendering to the
Company such Warrant Certificate(s) with the form of election to purchase on the
reverse thereof duly filled in and signed, which signature shall be guaranteed
by a bank or trust company having an office or correspondent in the United
States or a broker or dealer which is a member of a registered securities
exchange or the National Association of Securities Dealers, Inc. (the "NASD"),
and (ii) paying to the Company the aggregate Exercise Price for the number of
Warrant Shares in respect of which such Warrants are exercised. Warrants shall
be deemed exercised on the date such Warrant Certificate(s) are surrendered to
the Company and
3
<PAGE>
tender of payment of the aggregate Exercise Price is made. Payment of the
aggregate Exercise Price shall be made in cash by wire transfer of
immediately available funds to the Company or by certified or official bank
check or checks to the order of the Company or by any combination thereof.
Upon the exercise of any Warrants in accordance with this Agreement, the
Company shall issue and cause to be delivered with all reasonable dispatch, to
or upon the written order of the Holder and in such name or names as the Holder
may designate, a certificate or certificates for the number of full Warrant
Shares issuable upon the exercise of such Warrants and shall take such other
actions at its sole expense as are necessary to complete the exercise of the
Warrants (including, without limitation, payment of any cash with respect to
fractional interests required under Section 10 hereof). The certificate or
certificates representing such Warrant Shares shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date the Warrants are
exercised hereunder. Each Warrant Share, when issued upon exercise of the
Warrants, shall be duly authorized, validly issued, fully paid and nonassessable
and will not have been issued in violation of or subject to any preemptive
rights.
In the event that less than all of the Warrants evidenced by a Warrant
Certificate are exercised, the Holder thereof shall be entitled to receive a new
Warrant Certificate or Certificates as specified by such Holder evidencing the
remaining Warrant or Warrants, and the Company shall issue and deliver the
required new Warrant Certificate or Certificates evidencing such remaining
Warrant or Warrants pursuant to the provisions of this Section 4.2 hereof and of
Section 3 hereof. Upon delivery of the Warrant Shares issuable upon exercise in
accordance herewith and of any required new Warrant Certificates, the Company
shall cancel the Warrant Certificates surrendered upon exercise.
4.3 COMPLIANCE WITH GOVERNMENT REGULATIONS; QUALIFICATION UNDER SECURITIES
LAWS. The Company covenants that if following a due demand to exercise Warrants
any shares of Common Stock required to be reserved for purposes of exercise of
such Warrants require, under any federal or state law, registration with or
approval of any governmental authority before such shares may be issued upon
exercise, the Company will, unless the Company has received an opinion of
counsel to the effect that such registration is not then permitted by such laws,
use its Commercially Reasonable Efforts to cause such shares to be duly so
registered or approved, as the case may be; PROVIDED that in no event shall such
shares of Common Stock be issued, and the exercise of all such Warrants shall be
suspended, for the period from the date of such due demand for exercise until
such registration or approval is in effect; PROVIDED, FURTHER, that the Exercise
Period for such Warrants (but only such Warrants) shall be extended one day for
each day (or portion thereof) that any such suspension is in effect.
SECTION 5. PAYMENT OF TAXES. The Company will pay all documentary stamp and
other like taxes, if any, attributable to the initial issuance and delivery of
the Warrants and the initial issuance and delivery of the Warrant Shares upon
the exercise of Warrants, PROVIDED, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer of the
Warrants or involved in the issuance or delivery of any Warrant Shares in a name
other than that of the Holder of the Warrants being exercised.
SECTION 6. MUTILATED OR MISSING WARRANT CERTIFICATES. In the event that any
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
shall issue and deliver in exchange and substitution for and upon cancellation
of the mutilated Warrant Certificate or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent right or interest, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant Certificate and an indemnity or bond, if requested
by the Company, also reasonably satisfactory to it. An applicant for such a
substitute Warrant Certificate shall also comply with such other reasonable
procedures as the Company may reasonably require.
4
<PAGE>
SECTION 7. RESERVATION OF WARRANT SHARES. There have been reserved, and the
Company shall at all times keep reserved, out of its authorized Common Stock,
free of all preemptive rights, a number of shares of Common Stock sufficient to
provide for the exercise of the rights of purchase represented by the
outstanding Warrants. The transfer agent for the Common Stock and every
subsequent or other transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the Warrants (each, a "TRANSFER AGENT") will be
and are hereby irrevocably authorized and directed at all times to reserve such
number of authorized shares as shall be required for such purpose. The Company
will keep a copy of this Agreement on file with each Transfer Agent. The
Company will supply its Transfer Agents with duly executed stock certificates
for such purposes and will itself provide or otherwise make available any cash
which may be payable as provided in Section 10 hereof. The Company will furnish
to its Transfer Agents a copy of all notices of adjustments and certificates
related thereto, transmitted to each Holder pursuant to Section 9.3 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 9 reducing the Exercise Price, the Company will take any and all
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
SECTION 8. [Intentionally left blank]
SECTION 9. ADJUSTMENT OF EXERCISE PRICE; NUMBER OF WARRANT SHARES AND SHARES
OF CAPITAL STOCK WARRANTS ARE EXERCISABLE INTO. The number and kind of
securities purchasable upon the exercise of each Warrant, and the Exercise
Price, shall be subject to adjustment from time to time upon the happening of
certain events, as hereinafter described.
9.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares purchasable upon
the exercise of each Warrant and the Exercise Price shall be subject to
adjustment as follows:
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. Subject to
paragraphs (f) and (h) below, in case the Company shall (i) pay a dividend on
its outstanding shares of Common Stock in shares of Common Stock or make a
distribution of shares of Common Stock on its outstanding shares of Common
Stock, (ii) make a distribution on its outstanding shares of Common Stock in
shares of its capital stock other than Common Stock, (iii) subdivide its
outstanding shares of Common Stock into a greater number of shares of Common
Stock, (iv) combine its outstanding shares of Common Stock into a smaller number
of shares of Common Stock, or (v) issue, by reclassification of its shares of
Common Stock, other securities of the Company (including any such
reclassification in connection with a consolidation or merger in which the
Company is the surviving entity), then the number of Warrant Shares purchasable
upon exercise of each Warrant immediately prior thereto shall be adjusted so
that the Holder of each Warrant shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which such Holder would
have owned or have been entitled to receive upon the happening of any of the
events described above had such Warrant been exercised in full immediately prior
to the happening of such event or any record date with respect thereto. If a
Holder is entitled to receive shares of two or more classes of capital stock of
the Company pursuant to the foregoing upon exercise of Warrants, the allocation
of the adjusted Exercise Price between such classes of capital stock shall be
determined reasonably and in good faith by the Board of Directors of the
Company. After such allocation, the exercise privilege and the Exercise Price
with respect to each class of capital stock shall thereafter be subject to
adjustment on terms substantially identical to those applicable to Common Stock
in this Section 9. An adjustment made pursuant to this paragraph (a) shall
become effective immediately after the record date for such event or, if none,
immediately after the effective date of such event. Such adjustment shall be
made successively whenever such an event occurs.
5
<PAGE>
(b) ADJUSTMENT FOR RIGHTS ISSUE. Subject to paragraphs (f) and (h)
below, in case the Company shall issue rights, options or warrants
(collectively, "RIGHTS") to all holders of its outstanding Common Stock
entitling them to subscribe for or purchase shares of Common Stock at a Price
Per Share (as defined in paragraph (e) below) which is lower at the record date
mentioned below than the then Current Market Price (as defined in paragraph (e)
below) per share of Common Stock, the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by multiplying
the number of Warrant Shares theretofore purchasable upon exercise of each
Warrant by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such Rights plus the
additional Number of Shares (as defined in paragraph (e) below) of Common Stock
offered for subscription or purchase in connection with such Rights and the
denominator of which shall be the number of shares of Common Stock outstanding
on the date of issuance of such Rights plus the number of shares which the
aggregate Proceeds (as defined in paragraph (e) below) received or receivable by
the Company upon exercise of such Rights would purchase at the Current Market
Price per share of Common Stock at such record date. Such adjustment shall be
made whenever Rights are issued, and shall become effective immediately after
the record date for the determination of stockholders entitled to receive
Rights.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS. Subject to paragraphs (f)
and (h) below, in case the Company shall distribute to all holders of its shares
of Common Stock (x) evidences of indebtedness or assets (excluding cash
dividends or distributions payable out of the consolidated earnings or surplus
legally available for such dividends or distributions and dividends or
distributions referred to in paragraphs (a) or (b) above) of the Company or any
corporation or other legal entity a majority of the voting equity or equity
interests of which are owned, directly or indirectly, by the Company (a
"SUBSIDIARY"), or (y) shares of capital stock of a Subsidiary (such evidences of
indebtedness, assets and securities as set forth in clauses (x) and (y) above,
collectively, "ASSETS"), then in each case the number of Warrant Shares
thereafter purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon the
exercise of each Warrant by a fraction, the numerator of which shall be the
Current Market Price per share of Common Stock on the date of such distribution
and the denominator of which shall be such Current Market Price per share of
Common Stock less the fair value as of such record date as determined reasonably
and in good faith by the Board of Directors of the Company of the portion of the
Assets applicable to one share of Common Stock. Such adjustment shall be made
whenever any such distribution is made, and shall become effective on the date
of distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
(d) ADJUSTMENT FOR COMMON STOCK AND CONVERTIBLE SECURITIES ISSUE.
Subject to paragraphs (f) and (h) below, in case the Company shall issue shares
of its Common Stock, or securities convertible into, or exchangeable or
exercisable for Common Stock or Rights to subscribe for or purchase such
securities (collectively, the "CONVERTIBLE SECURITIES") (excluding the issuance
of (i) Common Stock or Convertible Securities issued in any of the transactions
described in paragraphs (a), (b) or (c) above or (ii) Warrant Shares issued upon
the exercise of the Warrants, at a Price Per Share of Common Stock, in the case
of the issuance of Common Stock, or at a Price Per Share of Common Stock
initially deliverable upon conversion or exercise of exchange of such
Convertible Securities, in each case, together with any other consideration
received by the Company in connection with such issuance, below the then Current
Market Price per share of Common Stock on the date the Company fixed the
offering, conversion or exercise or exchange price of such additional shares,
then the number of Warrant Shares thereafter purchasable upon the exercise of
each Warrant shall be determined by multiplying the number of Warrant Shares
theretofore purchasable upon exercise of each Warrant by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding on such date plus the additional number of shares of Common Stock
offered for subscription or purchase and the denominator of which shall be the
number of shares of Common Stock outstanding on such date plus the number of
shares of Common Stock which the aggregate Proceeds of the total amount of
Convertible Securities so offered would purchase at the Current Market Price per
share of Common Stock at such record date. In case the Company shall issue and
6
<PAGE>
sell Convertible Securities for a consideration consisting, in whole or in part,
of property other than cash or its equivalent, then in determining the "Price
Per Share" of Common Stock and the "consideration received by the Company" for
purposes of the immediately preceding sentence of this paragraph (d), the Board
of Directors of the Company shall reasonably and in good faith determine the
fair value of such property. The determination of whether any adjustment is
required under this paragraph (d), by reason of the sale and issuance of any
Convertible Securities and the amount of such adjustment, if any, shall be made
at such time and not at the subsequent time of issuance of shares of Common
Stock upon the exercise, conversion or exchange of Convertible Securities.
(e) CURRENT MARKET PRICE; PRICE PER SHARE. (i) For the purpose of
any computation under Section 4.2 hereof or this Section 9.1, the "CURRENT
MARKET PRICE" per share of Common Stock at any date shall be the average of the
daily closing prices for the 20 consecutive trading days preceding the date of
such computation. The closing price for each day shall be (x) if the Common
Stock shall be then listed or admitted to trading on the New York Stock
Exchange, the closing price on the NYSE -Consolidated Tape (or any successor
composite tape reporting transactions on the New York Stock Exchange) or, if
such a composite tape shall not be in use or shall not report transactions in
the Common Stock, or if the Common Stock shall be listed on a stock exchange
other than the New York Stock Exchange, the last reported sales price regular
way or, in case no such reported sale takes place on such day, the average of
the closing bid and asked prices regular way for such day, in each case on the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading (which shall be the national securities exchange
on which the greatest number of shares of the Common Stock have been traded
during such 20 consecutive trading days) or (y) if the Common Stock is not
listed or admitted to trading, the average of the closing bid and asked prices
of the Common Stock in the over-the-counter market as reported by The Nasdaq
National Market or any comparable system or, if the Common Stock is not included
for quotation in The Nasdaq National Market or a comparable system, the average
of the closing bid and asked prices as furnished by two members of the NASD
selected reasonably and in good faith from time to time by the Board of
Directors for that purpose. In the absence of one or more such quotations, the
Current Market Price per share of the Common Stock shall be determined
reasonably and in good faith by the Board of Directors of the Company.
(ii) For purposes of this Section 9.1, "PRICE PER SHARE" shall be
defined and determined according to the following formula:
P = R/N
where
P = Price Per Share;
R = the "Proceeds" received or receivable by the Company which
(x) in the case of shares of Common Stock is the total
amount received or receivable by the Company in
consideration for the issuance and sale of such shares;
(y) in the case of Rights or of Convertible Securities with
respect to shares of Common Stock, is the total amount
received or receivable by the Company in consideration for
the issuance and sale of Rights or such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, other than the surrender of such Convertible
Securities, payable to the Company upon exercise, conversion
or exchange thereof; and (z) in the case of Rights to
subscribe for or purchase such Convertible Securities, is
the total amount received or receivable by the Company in
consideration for the issuance and sale of such Rights plus
the minimum aggregate amount of additional consideration,
other than the surrender of such Convertible
7
<PAGE>
Securities, payable upon the conversion or exchange or
exercise of such Convertible Securities, PROVIDED that in
each case the proceeds received or receivable by the Company
shall be the net cash proceeds after deducting therefrom any
compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers
or others performing similar services; and
N = the "Number of Shares," which (x) in the case of Common
Stock is the number of shares issued; and (y) in the case of
Rights or of Convertible Securities with respect to shares
of Common Stock, is the maximum number of shares of Common
Stock initially issuable upon exercise, conversion or
exchange thereof.
(f) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment in the
number of Warrant Shares purchasable hereunder shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
the number of Warrant Shares purchasable upon the exercise of each Warrant,
PROVIDED that any adjustments which by reason of this paragraph (f) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations shall be made to the nearest one-
thousandth of a Warrant Share and the nearest cent.
(g) ADJUSTMENT IN EXERCISE PRICE. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant is adjusted as herein
provided, the Exercise Price payable upon exercise of each Warrant immediately
prior to such adjustment shall be adjusted by multiplying such Exercise Price by
a fraction, the numerator of which shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment and the denominator of which shall be the number of Warrant Shares
purchasable immediately thereafter.
(h) WHEN NO ADJUSTMENT REQUIRED. No adjustment in the number of
Warrant Shares purchasable upon the exercise of each Warrant need be made under
this Section 9.1 in connection with: (i) shares of Common Stock, options,
rights, warrants or other securities issued pursuant to any plan adopted by the
Company or its subsidiaries for the benefit of employees or directors; (ii)
shares of Common Stock, options, rights, warrants or other securities issued
pursuant to any share purchase rights plan adopted by the Company; (iii) any
issuance of shares of Common Stock or securities convertible into or
exchangeable for shares of Common Stock pursuant to an underwritten public
offering for a price per share of Common Stock in the case of an issuance of
shares of Common Stock, or for a price per share of Common Stock initially
deliverable upon conversion or exchange of such securities, that is equal to or
greater than 95% of the Current Market Price per share of Common Stock on the
date the Company fixed the offering, conversion or exchange price of such
additional shares of Common Stock; (iv) sales of Common Stock pursuant to a plan
adopted by the Company for reinvestment of dividends or interest; or (v) shares
of Common Stock issued to shareholders of any corporation that is acquired by,
merged into or made a part or subsidiary of the Company in an arm's-length
transaction. Additionally, no adjustment need be made if the Company issues or
distributes to each Holder of Warrants the shares, rights, options, warrants,
evidences of indebtedness, assets or other securities referred to in those
paragraphs which each Holder of Warrants would have been entitled to receive had
the Warrants been exercised for the number of Warrant Shares for which Warrants
are then exercisable prior to the happening of such event or the record date
with respect thereto. No adjustment in the number of Warrant Shares will be
made for a change in the par value of the shares of Common Stock.
(i) SHARES OF COMMON STOCK. For all purposes of this Agreement, the
term "shares of Common Stock" shall mean (i) the class of stock designated as
the Common Stock of the Company at the date of this Agreement or (ii) any other
class of stock resulting from successive changes or reclassification of such
8
<PAGE>
shares consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time, as a
result of an adjustment made pursuant to this Section 9.1, the Holders shall
become entitled to purchase any securities of the Company other than shares of
Common Stock, thereafter the number of such other shares so purchasable upon
exercise of each Warrant and the Exercise Price of such shares shall be subject
to adjustment from time to time in a manner and on terms substantially identical
to the provisions with respect to the Warrant Shares contained in paragraphs (a)
through (h) above, and the provisions of this Agreement with respect to the
Warrant Shares shall apply on like terms to any such other securities.
(j) EXPIRATION OF RIGHTS, ETC. Upon the expiration of any Rights or
conversion or exchange or exercise rights, if any thereof shall not have been
exercised, the Exercise Price and the number of Warrant Shares purchasable upon
the exercise of each Warrant shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(A) the only shares of Common Stock so issued were the shares of Common Stock,
if any, actually issued or sold upon the exercise of such Rights or conversion
or exchange or exercise rights and (B) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all of such Rights or conversion or
exchange or exercise rights whether or not exercised, PROVIDED that no such
readjustment shall have the effect of increasing the Exercise Price or
decreasing the number of Warrant Shares purchasable upon the exercise of each
Warrant by an amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant of such Rights or conversion or exchange
or exercise rights.
9.2 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at its option,
at any time during the term of the Warrants, reduce the then current Exercise
Price to any amount deemed appropriate by the Board of Directors of the Company.
9.3 NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Exercise Price of Warrant
Shares is adjusted, as herein provided, the Company shall promptly to mail to
each Holder, at the sole expense of the Company by first class mail, postage
prepaid, notice of such adjustment or adjustments and shall deliver to the
Holders a certificate of a firm of independent public accounts (who may be the
regular accountants employed by the Company) setting forth the number of Warrant
Shares purchasable upon the exercise of each Warrant and the Exercise Price of
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth in reasonable detail the
computations by which such adjustment was made.
9.4 PRESERVATION OF PURCHASE RIGHTS UPON MERGER OR CONSOLIDATION. In case
of any consolidation of the Company with or merger of the Company into another
entity, the Company or such successor entity shall execute and deliver to the
Holders an agreement providing that each Holder shall have the right thereafter
upon payment of the Exercise Price in effect immediately prior to such action
(after giving effect to any applicable adjustments under Section 9.1 hereof) to
purchase upon exercise of each Warrant the kind and amount of shares and other
securities and property (including cash) which such Holder would have owned or
have been entitled to receive after the happening of such consolidation or
merger had such Warrant been exercised immediately prior to such action. The
Company shall at its sole expense mail by first class mail, postage prepaid, to
each Holder notice of the execution of any such agreement. Such agreement shall
provide for adjustments, which shall be substantially identical to the
adjustments provided for in this Section 9. In addition, the Company shall not
merge or consolidate with or into, any other entity unless the successor entity
(if not the Company), shall expressly assume, by supplemental agreement
reasonably satisfactory in form and substance to the Holders in their sole
judgment, and executed and delivered to the Holders, the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company. The provisions of this
Section 9.4 shall similarly apply to
9
<PAGE>
successive consolidations or mergers.
9.5 STATEMENT ON WARRANTS. Irrespective of any adjustments in the
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may continue to express
the same Exercise Price and number and kind of Warrant Shares as are stated in
the Warrants initially issuable pursuant to this Agreement.
SECTION 10. FRACTIONAL INTERESTS. The Company shall not be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one Warrant
shall be exercised at the same time by the same Holder, the number of full
Warrant Shares which shall be issuable upon such exercise shall be computed on
the basis of the aggregate number of Warrants so exercised. If any fraction of
a Warrant Share would, except for the provisions of this Section 10, be issuable
on the exercise of any Warrant, the Company shall pay an amount in cash equal to
the closing price for one share of Common Stock on the date the Warrant
Certificate is presented for exercise (determined in accordance with the second
sentence of Section 9.1(e)(i) hereof), multiplied by such fraction.
SECTION 11. NO RIGHTS AS STOCKHOLDERS; NOTICES TO HOLDERS. Nothing contained
in this Agreement or in any of the Warrants shall be construed as conferring
upon the Holders or their transferees the right to vote or to receive dividends
or to consent or to receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the Company or any other matter,
or any rights whatsoever as stockholders of the Company.
In case:
(a) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of securities or assets (other than cash dividends);
or
(c) of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or
of the conveyance or transfer of a substantial portion of the properties
and assets of the Company for which approval of any stockholders of the
Company is required, or of any reclassification or change of Common Stock
issuable upon exercise of the Warrants (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or a tender offer or exchange
offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall give to each Holder at its address appearing on the
Warrant Register, at least twenty (20) days prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first class mail, postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock entitled to
receive any such rights, options, warrants or distribution are to be determined,
or (ii) the initial expiration date set forth in any tender offer or exchange
offer for shares of Common Stock, or (iii) the date on which any such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, as
well as the date as of
10
<PAGE>
which it is expected that holders of record of shares of Common Stock shall
be entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation, or winding up. The failure to give the
notice required by this Section 11 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation, winding up or action, or the vote upon any of the foregoing.
SECTION 12. PAYMENTS IN U.S. CURRENCY. All payments required to be made
hereunder shall be made in lawful money of the United States of America.
SECTION 13. NOTICES. Any notice pursuant to this Agreement shall be in
writing and shall be delivered in person or by facsimile transmission, or mailed
first class, postage pre-paid, (a) to the Company, at its offices at Morrison
Knudsen Plaza, Boise Idaho 83729, Attention: General Counsel, Telecopier No.:
(208) 386-5298, (b) to Batchelder & Partners, Inc., 4330 La Jolla Village Drive,
Suite 200, San Diego, California 92122, Telecopier No.: (619) 456-7969 or (c) to
Schroder Wertheim & Co. Incorporated, Equitable Center 787 Seventh Avenue, New
York, New York 10019, Telecopier No.: (212) 492-7033. Each party hereto may
from time to time change the address to which notices to its are to be delivered
or mailed hereunder by notice to the other party.
SECTION 14. CANCELLATION OF WARRANTS. In the event the Company shall
purchase or otherwise acquire Warrants, the same shall be cancelled by it and
retired. The Company shall cancel any Warrant certificate surrendered for
exchange, substitution, transfer or exercise in whole or in part.
SECTION 15. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Agreement, the Warrants and the Warrant Certificates
without approval of any Holder, in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to comply with the requirements of any
national securities exchange or The Nasdaq National Market (including but not
limited to the deletion of Section 9.2), or to make any other provisions in
regard to matters or questions arising hereunder which the Company may deem
necessary or desirable and which shall not be inconsistent with the provisions
of the Warrants and this Agreement. Any other supplement or amendment to this
Agreement may be made with the approval of each Holder of a Warrant affected
thereby.
SECTION 16. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Holders shall bind and inure to the
benefit of the Company or the Holders and shall bind and inure to the benefit of
their respective successors hereunder.
SECTION 17. APPLICABLE LAW. This Agreement and each Warrant issued hereunder
shall be governed by and construed in accordance with the laws of the state of
Delaware without giving effect to the principles of conflict of laws thereof.
SECTION 18. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Holders and their respective successors.
11
<PAGE>
SECTION 19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts; each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 20. CAPTIONS. The captions of the Sections and subsections of this
Agreement have been inserted for convenience only and shall have no substantive
effect.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
MORRISON KNUDSEN CORPORATION,
/s/ John H. Wimberly
By:
-------------------------------------
Name: John H. Wimberly
Title: President and Chief Executive Officer
Batchelder & Partners, Inc.
/s/ James J. Zehentbauer
By:
---------------------------------------
Name: James J. Zehentbauer
Title: Partner
Schroder Wertheim & Co. Incorporated
/s/ Mark L. Shapiro
By:
---------------------------------------
Name: Mark L. Shapiro
Title: Managing Director
13
<PAGE>
SCHEDULE A
NAME NUMBER OF WARRANT SHARES
- ---- ------------------------
Batchelder & Partners, Inc. 110,500
Schroder Wertheim & Co. Incorporated 77,348
14
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
No. Warrants
------------- ---------
Warrant Certificate
MORRISON KNUDSEN CORPORATION
This Warrant Certificate certifies that __________________________ , or
registered assigns, is the registered holder of ________________________
Warrants (the "Warrants") expiring at 5:00 p.m., New York City time, on
September 11, 2001 (the "Expiration Date"), to purchase Common Stock, $.01 par
value per share (the "Common Stock"), of MORRISON KNUDSEN CORPORATION, a
Delaware corporation (the "Company"). The Warrants may be exercised at any time
from 9:00 a.m., New York City time, on September 11, 1996 to 5:00 p.m., New York
City time, on the Expiration Date. Each Warrant entitles the holder upon
exercise to receive from the Company, if exercised before 5:00 p.m., New York
City time, on the Expiration Date, one fully paid and nonassessable share of
Common Stock (a "Warrant Share") at the Exercise Price (as defined in the
Warrant Agreement referred to on the reverse side hereof), payable in lawful
money of the United States of America, upon surrender of this Warrant
Certificate and payment of the Exercise Price, but only subject to the
conditions set forth herein and in the Warrant Agreement. The Exercise Price
and number of Warrant Shares issuable upon exercise of the Warrants are subject
to adjustment upon the occurrence of certain events as set forth in the Warrant
Agreement.
WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
SEPTEMBER 11, 2001 SHALL BECOME VOID.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, MORRISON KNUDSEN CORPORATION has caused this Warrant
Certificate to be duly executed.
MORRISON KNUDSEN CORPORATION
By:
----------------------------
Title:
A-1
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Expiration Date entitling the
holder on exercise to receive shares of Common Stock of the Company and are
issued or to be issued pursuant to a Warrant Agreement dated as of September 11,
1996 (the "Warrant Agreement"), duly executed and delivered by the Company to
Batchelder & Partners, Inc. and Schroder Wertheim & Co. Incorporated, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. A copy of the Warrant Agreement may be
obtained by the holder hereof upon written request to the Company. By accepting
initial delivery, transfer or exchange of this Warrant, the duly registered
holder shall be deemed to have agreed to the terms of the Warrant Agreement as
it may be in effect from time to time, including any amendments or supplements
duly adopted in accordance therewith.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Exercise Price in the manner described below. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or its assignee a new Warrant Certificate evidencing the
number of Warrants not exercised.
Payment of the Exercise Price may be made in cash by wire transfer to the
Company or by certified or official bank check or checks to the order of the
Company or by any combination thereof.
The Warrant Agreement provides that upon the occurrence of certain events
the number of shares of Common Stock issuable upon the exercise of each Warrant,
and the Exercise Price of each Warrant, may, subject to certain conditions, be
adjusted. No fractions of a share of Common Stock will be issued upon the
exercise of any Warrant, but the Company shall pay the cash value thereof
determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered to the Company by the registered
holder thereof in person or by legal representative or attorney duly authorized
in writing, may be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any service charge,
for another Warrant Certificate or Warrant Certificates of like tenor evidencing
in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate, a new Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
A-2
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise this Warrant,
according to the terms and conditions hereof, to the extent of purchasing
_______________ shares of Common Stock and hereby makes payment of $_________ in
payment of the exercise price thereof. If the number of shares shall not be all
of the shares purchasable under this Warrant, a new Warrant Certificate for the
balance remaining shall be issued in the name of the undersigned or its assignee
as indicated on the Assignment Form.
Dated:
---------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
-------------------------------------------------------------------------
(please typewrite or print in block letters)
Address:
----------------------------------------------------------------------
Signature:
----------------------------------------------------------------
Note: The signature must conform in all respects to name of
holder as specified on the face of this Warrant Certificate
Signature Guaranteed:
A-3
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Name:
------------------------------------------------------------------------
(please typewrite or print in block letters)
Address:
its right to purchase ____________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint __________ Attorney,
to transfer the same on the books of the Company, with full power of
substitution in the premises.
Dated:
------------------------
Signature:
- -------------------------------------- --------------------------
Social Security or other Note: The signature
identifying number of must conform in all
holder respects to name of
holder as specified
the face of this
Warrant Certificate
Signature Guaranteed:
A-4
<PAGE>
EXHIBIT 4.7
REGISTRATION RIGHTS AGREEMENT
AMONG
MORRISON KNUDSEN CORPORATION,
BATCHELDER & PARTNERS, INC. AND
SCHRODER WERTHEIM & CO. INCORPORATED
DATED: SEPTEMBER 11, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
----
Section 1. Definitions................................................... 1
Section 2. Registration under the Securities Act......................... 4
Section 3. Rule 144...................................................... 12
Section 4. [Intentionally left blank].................................... 12
Section 5. Amendments and Waivers........................................ 12
Section 6. Entire Agreement.............................................. 12
Section 7. No Third-Party Beneficiary.................................... 13
Section 8. Invalid Provisions............................................ 13
Section 9. Nominees for Beneficial Owners................................ 13
Section 10. Notices....................................................... 13
Section 11. Deemed Acceptance by Investors; Assignment.................... 14
Section 12. Descriptive Headings; Section References...................... 14
Section 13. Specific Performance.......................................... 14
Section 14. Governing Law................................................. 14
Section 15. Attorneys' Fees............................................... 15
Section 16. Termination of Certain Rights................................. 15
Section 17. No Inconsistent Agreements.................................... 15
Section 18. Counterparts.................................................. 15
<PAGE>
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement (the "Agreement") made and entered
into as of September 11, 1996, among Morrison Knudsen Corporation (formerly
Washington Construction Group, Inc.), a Delaware corporation (the "Company"),
Batchelder & Partners, Inc. and Schroder Wertheim & Co. Incorporated
(collectively, the "Investors").
WHEREAS, in connection the merger of Morrison Knudsen Corporation, a
Delaware corporation ("Old MK") with and into the Company, with the Company
continuing as the surviving corporation, pursuant to a Restructuring and Merger
Agreement between the Company and Old MK dated as of May 28, 1996 (the "Merger
Agreement");
WHEREAS, the Company has engaged the Investors to act as financial advisors
to the Company with respect to the Merger; and
WHEREAS, the Company has agreed to issue Warrants (the "Warrants") pursuant
to the Warrant Agreement (the "Warrant Agreement") dated of even date herewith
by and among the Company and the Investors for the purchase of certain number of
shares of Common Stock of the Company to the Holders as set forth in Schedule A
of the Warrant Agreement as part of the compensation for their services as such
financial advisors.
NOW THEREFORE, in consideration of the foregoing, the parties hereby agree
as follows:
SECTION 1. DEFINITIONS
Except as otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Merger Agreement. The
following terms, as used herein, have the following meanings (all terms defined
herein in the singular to have the correlative meanings when used in the plural
and vice versa):
"AFFILIATE" means (i) when used with reference to any partnership,
any Person that, directly or indirectly through one or more intermediaries,
owns or controls 10% or more of either the capital or profit interests of
such partnership or is a general partner of such partnership or is a Person
in which such partnership has a 10% or greater direct or indirect equity
interest and (ii) when used with reference to any corporation, any Person
that, directly or indirectly owns or controls 10% or more of the outstanding
voting securities of such corporation or is a Person in which such
corporation has a 10% or greater direct or indirect equity interest. In
addition, the term "Affiliate", when used with reference to any Person, also
means any other Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
such Person. As used in the preceding sentence, (A) the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the entity referred to, whether
through ownership of voting securities, by contract or otherwise, and (B) the
terms "controlling" and "controls" shall have meanings correlative to the
foregoing.
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"AFFILIATE OF THE COMPANY" has the meaning ascribed to the term
"affiliate" in Rule 144(a)(1) promulgated by the SEC pursuant to the Securities
Act.
"AGREEMENT" means this Registration Rights Agreement, as the same may
be amended, modified or supplemented from time to time.
"BUSINESS DAY" means any day other than (a) a Saturday or Sunday, (b)
any day on which banking institutions located in the City of New York, New York
are required or authorized by law or by local proclamation to close or (c) any
day on which the New York Stock Exchange is closed.
"COMMERCIALLY REASONABLE EFFORTS" when used with respect to any
obligation to be performed or term or provision to be observed hereunder, means
such efforts as a prudent Person seeking the benefits of such performance or
action would make, use, apply or exercise to preserve, protect or advance its
rights or interests, PROVIDED, that such efforts do not require such Person to
incur a material financial cost or a substantial risk of material liability
unless such cost or liability (i) would customarily be incurred in the course of
performance or observance of the relevant obligation, term or provision, (ii) is
caused by or results from the wrongful act or negligence of the Person whose
performance or observance is required hereunder or (iii) is not excessive or
unreasonable in view of the rights or interests to be preserved, protected or
advanced. Such efforts may include, without limitation, the expenditure of such
funds and retention by such Person of such accountants, attorneys or other
experts or advisors as may be necessary or appropriate to effect the relevant
action; the undertaking of any special audit or internal investigation that may
be necessary or appropriate to effect the relevant action; and the commencement,
termination or settlement of any action, suit or proceeding involving such
Person to the extent necessary or appropriate to effect the relevant action.
"COMMON STOCK" means the common stock, par value $0.01 per share, of
the Company.
"EFFECTIVE PERIOD" means the earlier of (x) the two (2) month
anniversary of the date the applicable Registration Statement is declared
effective by the SEC and (y) the date on which all of the Registrable Securities
covered by such Registration Statement have been sold, but in no event prior to
the expiration of the applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor law.
"HOLDERS" means, subject to Section 9 hereof, the holders of record of
Registrable Securities, or, in the case of explicit references to holders of
securities of the Company other than Registrable Securities, the record holders
of such securities.
"INDEMNIFIED PARTY" has the meaning ascribed to such term in Section
2.5(a) hereof.
"LOSS" has the meaning ascribed to such term in Section 2.5(a) hereof.
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"PARTICIPATING HOLDERS" means, with respect to the registration of
Registrable Securities by the Company pursuant to this Agreement, the Holders
that are entitled to participate in, and are participating in or seeking to
participate in, such registration.
"PERSON" means a natural person, a corporation, a partnership, a
trust, a joint venture, any regulatory authority or any other entity or
organization.
"PIGGYBACK REGISTRATION" means any registration of Registrable
Securities under the Securities Act effected in accordance with Section 2.1
hereof.
"REGISTERED ADDRESS" means for (i) Batchelder & Partners, Inc., 4330
La Jolla Village Drive, Suite 200, San Diego, California 92122, Telecopier No.:
(619) 456-7969 and (ii) Schroder Wertheim & Co. Incorporated, Equitable Center
787 Seventh Avenue, New York, New York 10019, Telecopier No.: (212) 492-7033,
and such other addresses furnished in writing to the Company for purposes of
this Agreement.
"REGISTRABLE SECURITIES" means the Common Stock acquired by the
Investors upon the exercise of the Warrants and any securities issued or
issuable with respect to Registrable Securities, whether by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise
PROVIDED THAT, with respect to any permitted transferee of such securities, only
such securities held by permitted transferees that have complied with the
assignment requirements of Section 11 shall be deemed to be Registrable
Securities. As to any particular Registrable Securities, once issued such
securities will cease to be Registrable Securities when a Registration Statement
with respect to the resale of such securities has become effective under the
Securities Act and such securities shall have been disposed of in accordance
with the plan of distribution set forth in such Registration Statement.
"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with this Agreement, including, without
limitation, (a) all registration, filing, securities exchange listing, rating
agency and National Association of Securities Dealers, Inc. fees, (b) all
registration, filing, qualification and other fees and expenses of complying
with securities or blue sky laws of all jurisdictions in which the securities
are to be registered and any legal fees and expenses incurred in connection
with the blue sky qualifications of the Registrable Securities and the
determination of their eligibility for investment under the laws of all such
jurisdictions, (c) all word processing, duplicating, printing, messenger and
delivery expenses, (d) the fees and disbursements of counsel for the Company
and of its independent public accountants, including, without limitation, the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, (e) the reasonable fees and
disbursements incurred by the Holders of the Registrable Securities being
registered for one counsel or firm of counsel selected by the Investors, (f)
premiums and other costs of policies of insurance against liabilities arising
out of the public offering of the Registrable Securities being registered to
the extent the Company elects to obtain such insurance, (g) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities (but excluding underwriting discounts and commissions and transfer
taxes, if any, relating to the Registrable Securities being registered) and
(h) fees and expenses of other Persons retained or employed by the Company.
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"REGISTRATION STATEMENT" means a registration statement filed under
the Securities Act pursuant to Section 2.1 hereof including but not limited to a
Shelf Registration Statement.
"RULE 144" means Rule 144 promulgated by the SEC under the Securities
Act, and any successor provision thereto.
"SEC" means the United States Securities and Exchange Commission, or
any successor governmental agency or authority thereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor law.
"SHELF PERIOD" means the earlier of (x) six (6) months following the
date the applicable Shelf Registration Statement is declared effective by the
SEC and (y) the date on which all of the Registrable Securities covered by such
Shelf Registration Statement have been sold, but in no event prior to the
expiration of the applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder.
"SHELF REGISTRATION STATEMENT" means a Registration Statement filed
under Rule 415 under the Securities Act.
"SUCCESSOR" means, with respect to any Person, a successor to such
Person by merger, consolidation, liquidation or other similar transaction.
"SUSPENSION NOTICE" has the meaning ascribed to such term in Section
2.2(d) hereof.
"SUSPENSION PERIOD" has the meaning ascribed to it such term Section
2.2(d) hereof.
"UNDERWRITER" has the meaning ascribed to such term in Section 2 of
the Securities Act.
SECTION 2. REGISTRATION UNDER THE SECURITIES ACT.
2.1 PIGGYBACK REGISTRATION
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any
time proposes to register any of its equity securities under the Securities Act
(other than by a registration on Form S-4 or Form S-8 or any successor or
similar form then in effect in a form and in a manner that would permit
registration of the Registrable Securities, whether or not for sale for its own
account, it will give prompt (but in no event less than 30 days prior to the
proposed date of filing the Registration Statement relating to such
registration) notice to the Holders of Registrable Securities of the Company's
intention to do so and of such Holders' rights under this Section 2.1. Upon the
written request of any such Holder made within twenty (20) days after the
receipt by that Holder of the notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method or methods of disposition thereof), the Company shall use
Commercially
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Reasonable Efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Holders thereof, to the extent required to permit the disposition (in
accordance with the intended method or methods thereof as aforesaid) of the
Registrable Securities so to be registered, PROVIDED that if, at any time after
giving notice of its intention to register any equity securities and prior to
the effective date of the Registration Statement filed in connection with such
registration, the Company determines for any reason not to register or to delay
registration of the equity securities, the Company may, at its election, give
notice of that determination to each such Holder and, thereupon, (i) in the case
of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay all Registration Expenses in connection therewith
as provided in Section 2.2(b) hereof), and (ii) in the case of a determination
to delay registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other equity
securities.
(b) PRIORITY IN PIGGYBACK REGISTRATIONS. If a registration
pursuant to this Section 2.1 involves an underwritten offering and the
managing underwriter of such underwritten offering advises the Company in
writing (with a copy to each Participating Holder) of its belief that the
amount of securities requested to be included in such registration exceeds
the amount which can be sold in (or during the time of) such offering within
an acceptable price range, then the Company will include in such registration
that amount of securities which the Company is so advised can be sold in (or
during the time of) the offering as follows: FIRST, all securities proposed
by the Company to be sold for its own account; SECOND, Registrable Securities
of any Participating Holder that has properly requested that its Registrable
Securities be included in such registration and that is an "underwriter" or
an "affiliate" of the Company in an amount sufficient to include all the
Registrable Securities offered by such Participating Holder or an amount
sufficient to reduce the amount of such Participating Holder's Registrable
Securities held after the offering to a level that would cause such
Participating Holder to no longer be an "underwriter" or an "affiliate" of
the Company, whichever amount is less; THIRD, such Registrable Securities
requested to be included in such Registration Statement by any other
Participating Holder, PRO RATA on the basis of the amount of such securities
held by such other Participating Holder; and FOURTH, all other securities of
the Company duly requested to be included in such Registration Statement.
2.2 REGISTRATION TERMS AND PROCEDURES
(a) REGISTRATION EXPENSES. Subject to Section 2.2(b) hereof, the
Company will pay all Registration Expenses incurred in connection with a
registration to be effected pursuant to Section 2.1 hereof.
(b) WITHDRAWAL. Any Holder participating in a registration pursuant
to this Agreement shall be permitted to withdraw all or part of its Registrable
Securities from such registration at any time prior to the effective date of the
Registration Statement covering such securities.
(c) REGISTRATION PROCEDURES. In connection with the Company's
obligations to register Registrable Securities pursuant to this Agreement, the
Company will use Commercially Reasonable Efforts to effect such registration so
as to permit the sale, resale or other disposition of any Registrable Securities
included
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in such registration in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Company will as expeditiously as
possible:
(i) prepare and (as soon thereafter as practicable) file
with the SEC the requisite Registration Statement containing all information
required thereby to effect such registration and thereafter use Commercially
Reasonable Efforts to cause such Registration Statement to become and remain
effective in accordance with the terms of this Agreement, PROVIDED that as far
in advance as practicable before filing such Registration Statement or any
amendment, supplement or exhibit thereto (but, with respect to the filing of
such Registration Statement, in no event later than seven (7) days prior to such
filing), the Company will furnish to the Participating Holders or their counsel
copies of reasonably complete drafts of all such documents proposed to be filed
(excluding exhibits, which shall be made available upon request by any
Participating Holder), and any such Holder shall have the opportunity to object
to any information contained therein and the Company will make the corrections
reasonably requested by such Holder, in writing, with respect to information
relating to such Holder or the plan of distribution of the Registrable
Securities prior to filing any such Registration Statement, amendment,
supplement or exhibit;
(ii) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith (A) as reasonably requested by any Participating Holder, in writing,
to which such Registration Statement relates (but only to the extent such
request relates to information with respect to such Holder) and (B) as may be
necessary to keep such Registration Statement effective (x) during the Effective
Period in the case of a Registration Statement other than a Shelf Registration
Statement and (y) during the Shelf Period in the case of a Shelf Registration
Statement, and comply with the provisions of the Securities Act with respect to
the sale, resale or other disposition of all securities covered by such
Registration Statement during such period in accordance with the intended method
or methods of disposition by the seller or sellers thereof set forth in such
Registration Statement;
(iii) furnish to each Holder covered by, and each underwriter
or agent participating in the disposition of securities under, such Registration
Statement such number of conformed copies of such Registration Statement and of
each such amendment and supplement thereto (in each case excluding all exhibits
and documents incorporated by reference, which exhibits and documents shall be
furnished to any such Person upon request), such number of copies of the
prospectus contained in such Registration Statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under Rule
424 under the Securities Act relating to such Holder's Registrable Securities,
in conformity with the requirements of the Securities Act, and such other
documents as such Holder, underwriter or agent may reasonably request to
facilitate the disposition of such Registrable Securities;
(iv) use Commercially Reasonable Efforts to register or
qualify all Registrable Securities and other securities covered by such
Registration Statement under all applicable blue sky and other securities laws,
and to keep such registration or qualification in effect for so long as such
Registration Statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition of the securities owned by such Holder, except that the Company
shall not for any such purpose be required to (A) qualify generally to do
business as a foreign corporation in any
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jurisdiction wherein it would not but for the requirements of this clause (iv)
be obligated to be so qualified, (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any jurisdiction;
(v) use Commercially Reasonable Efforts to cause all
Registrable Securities covered by such Registration Statement to be registered
with or approved by such other governmental agencies or authorities applicable
to the Company as may be reasonably necessary to enable the seller or sellers
thereof (or underwriter or agent, if any) to consummate the disposition of such
Registrable Securities in accordance with the plan of distribution set forth in
such Registration Statement;
(vi) promptly notify each Participating Holder at its
Registered Address and any underwriter or agent participating in the
disposition of Registrable Securities covered by such Registration Statement,
at any time when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the happening of any
event known to the Company as a result of which, the prospectus included in
such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances under which they were made, and promptly prepare and
furnish to such Holder (or underwriter or agent, if any) a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made;
(vii) otherwise use Commercially Reasonable Efforts to comply
with all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than fifteen
(15) months) after the effective date of the Registration Statement, an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder, and furnish to each Holder covered by such
Registration Statement or any participating underwriter or agent a copy of any
amendment or supplement to such Registration Statement or prospectus five (5)
calendar days (or such shorter period as may be practicable under the
circumstances) prior to the filing thereof with the SEC;
(viii) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such Registration Statement
from and after a date not later than the effective date of such Registration
Statement;
(ix) use Commercially Reasonable Efforts to, on or prior to
the effective date of such Registration Statement, list the Registrable
Securities covered by such Registration Statement on any securities exchange on
which the Registrable Securities are then listed;
(x) cooperate with each Participating Holder and each
underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc.;
(xi) use Commercially Reasonable Efforts to prevent the
issuance by the SEC or any other governmental agency or court of a stop order,
injunction or other order suspending the effectiveness of such Registration
Statement and, if such an order is issued, use Commercially Reasonable Efforts
to cause such order to be lifted as promptly as practicable; and
(xii) promptly notify each Participating Holder and each
underwriter or agent, if any:
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(1) when such Registration Statement or any prospectus used
in connection therewith, or any amendment or supplement thereto, has been filed
and, with respect to such Registration Statement or any post-effective amendment
thereto, when the same has become effective;
(2) of any written comments from the SEC with respect to
any filing referred to in clause (A) and of any written request by the SEC for
amendments or supplements to such Registration Statement or prospectus;
(C) of the notification to the Company by the SEC of its
initiation of any proceeding with respect to, or of the issuance by the SEC of,
any stop order suspending the effectiveness of such Registration Statement; and
(D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable Securities for
sale, resale or other disposition under the applicable securities or blue sky
laws of any jurisdiction;
(xiii) cooperate with each Participating Holder and each
underwriter or agent participating in the distribution of such Registrable
Securities to facilitate the timely preparation and delivery of certificates
(which shall not bear any restrictive legends, other than as required by
applicable law) representing securities sold under a Registration Statement
hereunder, and enable such securities to be in such denominations and registered
in such names as such seller, underwriter or agent may request and keep
available and make available to the Company's transfer agent, prior to the
effectiveness of such Registration Statement, an adequate supply of such
certificates;
(xiv) not later than the effective date of such registration
statement, provide a CUSIP number for all Registrable Securities covered by a
Registration Statement hereunder;
(xv) incorporate in the Registration Statement or any
amendment, supplement or post-effective amendment thereto such information as
each Participating Holder, each underwriter or agent (if any) or their
respective counsel may reasonably request, in writing, to be included therein
with respect to any Registrable Securities being sold by such Holder to such
underwriter or agent, the purchase price being paid therefor by such underwriter
or agent and any other terms of the offering of such Registrable Securities; and
(xvi) during any period when a prospectus is required to be
delivered under the Securities Act, make timely periodic filings with the SEC
pursuant to and containing the information required by the Exchange Act (whether
or not the Company is required to make such filings pursuant to such Act).
(d) AGREEMENTS OF CERTAIN HOLDERS
(i) Each Participating Holder shall furnish to the Company,
in writing, such information regarding such Holder, the Registrable Securities
held by such Holder and the intended plan of distribution of such securities as
the Company may from time to time reasonably request in writing in connection
with such registration.
(ii) Each Participating Holder agrees, by acquisition of
such Registrable Securities, that upon receipt of any notice (a "Suspension
Notice") from the Company of the happening of any event of the kind described in
clause (vi) of Section 2.2(c) hereof, such Holder will forthwith discontinue
such Holder's disposition of Registrable Securities pursuant to the Registration
Statement relating to such Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by clause (vi)
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of Section 2.2(c) hereof or of a notice that such Holder may resume
dispositions of Registrable Securities pursuant to the Registration Statement
(the period from the date on which such Holder receives a Suspension Notice
to the date on which such Holder receives copies of the supplemental or
amended prospectus being herein called the "Suspension Period"). The Company
shall take such actions as are necessary to end the Suspension Period as
promptly as practicable.
2.3 UNDERWRITTEN OFFERINGS IN CONNECTION WITH PIGGYBACK REGISTRATIONS. If
the Company at any time proposes to register any of its equity securities under
the Securities Act as contemplated by Section 2.1 hereof and such securities are
to be distributed by or through one or more underwriters, the Company will, if
requested by any Participating Holder and subject to Section 2.1(b) hereof,
arrange for such underwriters to include Registrable Securities to be offered
and sold by such Holder or Holders among the securities to be distributed by
such underwriters. The Participating Holders shall be parties to the
underwriting agreement between the Company and such underwriters, such agreement
to contain such representations and warranties by the Company and the
Participating Holders and such other terms as are generally prevailing in
agreements of such type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.5 hereof.
2.4 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each Registration Statement under the Securities Act
pursuant to this Agreement, the Company will give Participating Holders, their
underwriters or agents, if any, and their respective counsel and accountants,
reasonable access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such Holders' and such underwriters' or agents' respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
2.5 INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, each Participating
Holder, its directors, officers, shareholders, employees, investment advisers,
agents and Affiliates, either direct or indirect (and each such Affiliate's
directors, officers, shareholders, employees, investment advisers and agents),
and each other Person, if any, who controls such Persons within the meaning of
the Securities Act (each such Person, an "Indemnified Party"), from and against
any losses, claims, damages, liabilities or expenses, joint or several (each a
Loss and collectively, "Losses"), to which such Indemnified Party may become
subject under the Securities Act or otherwise, to the extent that such Losses
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement under which such
securities were registered under the Securities Act (including all documents
incorporated therein by reference), any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and the Company will reimburse such Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or defending
against any such Loss, action or proceeding; PROVIDED that in any such case the
Company shall not be liable to any particular Indemnified Party to the extent
that such Loss (or action or proceeding in respect thereof) arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Party specifically for inclusion therein; and
PROVIDED, FURTHER, that the Company shall not be liable in any such case to the
extent it is finally determined by a court of competent jurisdiction that any
such Loss (or action or proceeding in respect
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thereof) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made
(i) in any such preliminary prospectus, if (A) it was the
responsibility of such Indemnified Party to provide the Person asserting such
Loss with a current copy of the final prospectus or summary prospectus contained
therein and such Indemnified Party failed to deliver or cause to be delivered a
copy of the final prospectus or summary prospectus contained therein to such
Person after the Company had furnished such Indemnified Party with a sufficient
number of copies of the same prior to the sale of Registrable Securities to the
Person asserting such Loss and (B) the final prospectus or summary prospectus
contained therein corrected such untrue statement or omission; or
(ii) in such final prospectus or summary prospectus contained
therein, if such untrue statement or omission is corrected in an amendment or
supplement to such final prospectus or summary prospectus contained therein and
such amendment or supplement has been delivered to the Indemnified Party prior
to the sale of Registrable Securities to the Person asserting such Loss and the
Indemnified Party thereafter fails to deliver the final prospectus or summary
prospectus contained therein as so amended or supplemented prior to or
concurrently with such sale after the Company had furnished such Indemnified
Party (in accordance with the notice provisions contained in Section 10 for
Persons who are parties to this Agreement) with a sufficient number of copies of
the same for delivery to purchasers of securities.
Such indemnity will remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of such securities by such Indemnified Party. The Company shall
also indemnify each other Person who participates (including as an underwriter)
in the offering or sale of Registrable Securities hereunder, their officers and
directors and each other Person, if any, who controls any such participating
Person within the meaning of the Securities Act to the same extent as provided
above with respect to Indemnified Parties.
(b) INDEMNIFICATION BY THE SELLERS. The Company may require, as a
condition to including any Registrable Securities in any Registration Statement
filed pursuant to Section 2.1 hereof and as a condition to indemnifying such
sellers pursuant to this Section 2.5, that the Company shall have received an
undertaking reasonably satisfactory to it from each Participating Holder
included in any such offering regarding its agreement to indemnify and hold
harmless and reimburse (in the same manner and to the same extent as set forth
in paragraph (a) of this Section 2.5) the Company, each director, officer,
employee and agent of the Company, and each other Person, if any, who controls
the Company within the meaning of the Securities Act, from and against any
Losses (or actions or proceedings, whether commenced or threatened, in respect
thereof) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement pursuant to
which securities of such Holder are registered under the Securities Act
(including all documents incorporated therein by reference), any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission from such
Registration Statement, preliminary prospectus, final prospectus or summary
prospectus, or any amendment or supplement thereto required to be stated therein
or necessary to make the statements therein not misleading, if (but only if)
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Participating Holder specifically for inclusion
therein; PROVIDED, HOWEVER, that such Participating Holder shall not be
obligated to provide such indemnity to the extent that such Losses result,
directly or indirectly, from the failure of the Company to promptly amend or
take action to correct or supplement or to deliver timely any such Registration
Statement, prospectus, amendment or supplement based on corrected or
supplemental information provided in writing by such Participating Holder to the
Company expressly for such purpose; and PROVIDED FURTHER, that the obligation to
provide indemnification pursuant to this Section 2.5(b) shall be several, and
not joint and several,
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among such indemnifying parties. Notwithstanding anything in this Section
2.5(b) to the contrary, in no event shall the liability of any Participating
Holder under such indemnity be greater in amount than the amount of the proceeds
received by such Participating Holder upon the sale of its Registrable
Securities in the offering to which the Losses relate. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer, employee, agent or
participating or controlling Person and shall survive the transfer of such
securities by such Participating Holder.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an Indemnified
Party of notice of the commencement of any action or proceeding involving a
claim referred to in paragraph (a) or (b) of this Section 2.5, such Indemnified
Party will, if a claim in respect thereof is to be made against an indemnifying
party, give prompt written notice to the latter of the commencement of such
action, PROVIDED that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under this Section 2.5, except to the extent that the indemnifying party is
actually and materially prejudiced by such failure to give notice. In case any
such action is brought against an Indemnified Party, the indemnifying party
shall be entitled to participate in and to assume the defense thereof (such
assumption to constitute its acknowledgement of its agreement to indemnify the
Indemnified Party with respect to such matters), jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
the indemnifying party to such Indemnified Party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
Indemnified Party for any legal fees or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs of
investigation; PROVIDED, HOWEVER, that if, in such Indemnified Party's
reasonable judgment, a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, such Indemnified Party
shall be entitled to separate counsel reasonably satisfactory to the
indemnifying party at the expense of the indemnifying party; and PROVIDED,
FURTHER, that, unless there exists a conflict of interest among indemnified
parties, all indemnified parties in respect of such claim shall be entitled to
only one counsel or firm of counsel for all such indemnified parties. In the
event an indemnifying party shall not be entitled, or elects not, to assume the
defense of a claim, such indemnifying party shall not be obligated to pay the
fees and expenses of more than one counsel or firm of counsel for all parties
indemnified by such indemnifying party in respect of such claim, unless in the
reasonable judgment of any such Indemnified Party a conflict of interest exists
between such Indemnified Party and any other of such indemnified parties in
respect of such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of one additional counsel or firm of counsel for
such indemnified parties. No indemnifying party shall, without the consent of
the Indemnified Party, consent to entry of any judgment or enter into any
settlement that (i) does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
Losses in respect of such claim or litigation or (ii) would impose injunctive
relief on such Indemnified Party. No indemnifying party shall be subject to any
Losses for any settlement made without its consent, which consent shall not be
unreasonably withheld.
(d) OTHER INDEMNIFICATION. The provisions of this Section 2.5 shall
be in addition to any other rights to indemnification or contribution which an
Indemnified Party may have pursuant to law, equity, contract or otherwise.
(e) INDEMNIFICATION PAYMENTS. The indemnification required by this
Section 2.5 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, promptly as and when bills are received
or Losses are incurred.
(f) Contribution. If for any reason the foregoing indemnity and
reimbursement is unavailable or is insufficient to hold harmless an Indemnified
Party under paragraph (a) or (b) of this Section 2.5, then each indemnifying
party shall contribute to the amount paid or payable by such Indemnified Party
as a result
11
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of any Loss (or actions or proceedings, whether commenced or threatened, in
respect thereof), including, without limitation, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Loss, action or proceeding, in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and the Indemnified
Party on the other. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the Indemnified Party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. Notwithstanding anything
in this Section 2.5(f) to the contrary, no indemnifying party (other than the
Company) shall be required pursuant to this Section 2.5(f) to contribute any
amount in excess of the amount by which the net proceeds received by such
indemnifying party from the sale of Registrable Securities in the offering to
which the Losses of the indemnified parties relate exceeds the amount of any
damages which such indemnifying party has otherwise been required to pay by
reason of such untrue statement or omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
SECTION 3. RULE 144
(a) The Company will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
promulgated by the SEC thereunder and will take such further action as any
Holder may reasonably request, to the extent required from time to time to
enable the Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144,
or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of any Holder, the Company will deliver to that Holder a written
statement as to whether it has complied with such requirements, a copy of the
most recent annual or quarterly report of the Company, and such other reports or
documents so filed as a Holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing a Holder to sell any such securities
without registration.
(b) If at any time the Company is not required to file reports in
compliance with either Section 13 or Section 15(d) of the Exchange Act, the
Company at its expense will, forthwith upon the request of any Holder make
available adequate current public information with respect to the Company within
the meaning of paragraph (c)(2) of Rule 144.
SECTION 4. [Intentionally left blank]
SECTION 5. AMENDMENTS AND WAIVERS
This Agreement may be amended, supplemented or modified only by a
writing (which makes reference to this Agreement) executed by the Company and
the Holders. Any term or condition of this Agreement may be waived at any time
by the party that is entitled to the benefit thereof, but no such waiver shall
be effective unless set forth in a written instrument duly executed by or on
behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same term or condition of this
Agreement on any future occasion.
SECTION 6. ENTIRE AGREEMENT
This Agreement supersedes all prior discussions and agreements between
the parties with respect to the subject matter hereof and contains the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof.
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SECTION 7. NO THIRD-PARTY BENEFICIARY
The terms and provisions of this Agreement are intended solely for the
benefit of each party, their respective Successors or permitted assigns and it
is not the intention of the parties to confer third-party beneficiary rights
upon any other Person other than (i) any Affiliate of any Investor, (ii) any
permitted transferee, direct or indirect, of any of the Registrable Securities
held by any Investor or any of their respective Affiliates, or (iii) any other
Person entitled to notice of the registration of Registrable Securities under
Section 2.1(a) hereof or to indemnity under Section 2.5 hereof.
SECTION 8. INVALID PROVISIONS
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
SECTION 9. NOMINEES FOR BENEFICIAL OWNERS
In the event that any Registrable Securities are held by a nominee for
the beneficial owner thereof, the beneficial owner thereof may, at its election,
be treated as the holder of such Registrable Securities for purposes of request
or other action by any Holder or Holders pursuant to this Agreement or any
determination of any amount of shares of Registrable Securities held by any
Holder or Holders of Registrable Securities contemplated by this Agreement. If
the beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities. For purposes of this Agreement,
"beneficial ownership" and "beneficial owner" refer to beneficial ownership as
defined in Rule 13d-3 (without regard to the 60-day provision in paragraph
(d)(1)(i) thereof) under the Exchange Act.
SECTION 10. NOTICES
All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if (a) delivered
personally, (b) by facsimile transmission, (c) by Federal Express or other
nationally recognized courier service or (d) mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
(i) If to the Company, to:
Morrison Knudsen Plaza
P.O. Box 73
720 Park Blvd.
Boise, Idaho 83729
Attention: General Counsel
(ii) If to an Investor, to the Registered Address for that Investor.
13
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With respect to any other Holder of Registrable Securities entitled to
receive notice, requests or other communications hereunder, such notices,
requests and other communications shall be sent to the Registered Addresses and
telecopy numbers provided to the Company and the other parties hereto by notice
as herein provided and referencing this Agreement. All such notices, requests
and other communications will (A) if delivered personally to the address as
provided in this Section 10, be deemed given upon delivery, (B) if delivered by
facsimile transmission to the facsimile number as provided in this Section 10,
be deemed given upon receipt, and (C) if delivered by courier service or by mail
in the manner described above to the address as provided in this Section 10, be
deemed given upon receipt (in each case regardless of whether such notice,
request or other communication is received by any other Person to whom a copy of
such notice is to be delivered pursuant to this Section 10). Any Person from
time to time may change its Registered Address, facsimile number or other
information for the purpose of notices to that Person by giving notice in
accordance with this Section 10 specifying such change to each of the other
parties executing this Agreement.
SECTION 11. DEEMED ACCEPTANCE BY INVESTORS; ASSIGNMENT
Each Investor shall be deemed, by accepting the shares of Common Stock
acquired by such Investor upon the exercise of the Warrants, to agree to the
terms of this Agreement as it may be in effect from time to time, including any
amendments, supplements or waivers duly adopted in accordance with Section 5
hereof.
This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties and their respective Successors and permitted
assigns of Registrable Securities. Each Investor may assign any of its rights
hereunder (in whole or in part) to one or more permitted transferees of
Registrable Securities; PROVIDED, HOWEVER, that any such permitted transferees
of Registrable Securities agrees in writing, in form and substance satisfactory
to the Company, to be bound by all of the terms and provisions hereof and to
join this Agreement as a party hereto. Without limiting the foregoing, no such
assignment shall be binding upon or obligate the Company to any such assignee
unless and until (a) the Company has received notice of the assignment as herein
provided, which notice (i) references this Agreement and (ii) sets forth the
Registered Address of any assignee for the purpose of any notices hereunder.
SECTION 12. DESCRIPTIVE HEADINGS; SECTION REFERENCES
The descriptive headings of the several sections and paragraphs of
this Agreement are inserted for convenience of reference only and do not define
or limit the provisions hereof or otherwise affect the meaning hereof. All
references in this Agreement to sections are to sections of this agreement
unless otherwise stated.
SECTION 13. SPECIFIC PERFORMANCE
The parties agree that, to the extent permitted by law, (i) the
obligations imposed on them in this Agreement are special, unique and of an
extraordinary character, and that in the event of a breach by any such party
damages would not be an adequate remedy; and (ii) each of the other parties
shall be entitled to specific performance and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled at law or in
equity.
SECTION 14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the state of Delaware without reference to the conflicts of law
principles thereof.
14
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SECTION 15. ATTORNEYS' FEES
In any action or proceeding brought to enforce any provision of this
Agreement or where any provision hereof is validly asserted as a defense, the
successful party shall, to the extent permitted by applicable law, be entitled
to recover reasonable attorneys' fees in addition to any other available remedy.
SECTION 16. TERMINATION OF CERTAIN RIGHTS
The rights and obligations hereunder of each Investor will terminate
with respect to such party at such time when neither it nor any of its
respective Affiliates holds Registrable Securities, PROVIDED that the provisions
of Section 2.3 hereof, the rights of any party hereto with respect to the breach
of any provision hereof, and any obligation accrued as of the date of
termination (including any obligation accrued under Section 2.5 hereof) shall
survive termination of this Agreement.
SECTION 17. NO INCONSISTENT AGREEMENTS
The Company will not hereafter enter into, modify, amend or waive any
agreement with respect to its securities if such agreement, modification,
amendment or waiver would conflict with the rights granted pursuant to this
Agreement to the Holders of Registrable Securities.
SECTION 18. COUNTERPARTS
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
MORRISON KNUDSEN CORPORATION
By: /s/ John H. Wimberly
---------------------------
Name: John H. Wimberly
Title: President and Chief Executive Officer
BATCHELDER & PARTNERS, INC.
By: /s/ James J. Zehentbauer
---------------------------
Name: James J. Zehentbauer
Title: Partner
SCHRODER WERTHEIM & CO. INCORPORATED
By: /s/ Mark L. Shapiro
---------------------------
Name: Mark L. Shapiro
Title: Managing Director
<PAGE>
EXHIBIT 10.1
THE 1994 STOCK OPTION AND INCENTIVE PLAN FOR
OFFICERS, DIRECTORS AND KEY EMPLOYEES OF
MORRISON KNUDSEN CORPORATION
EFFECTIVE JANUARY 19, 1994
RESTATED SEPTEMBER 20, 1996 TO INCLUDE AMENDMENTS 1 THROUGH 5
<PAGE>
THE 1994 STOCK OPTION AND INCENTIVE PLAN FOR
OFFICERS, DIRECTORS AND KEY EMPLOYEES OF
MORRISON KNUDSEN CORPORATION
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
DEFINITIONS...............................................................2
1.1 General............................................................2
1.2 Award Limit .......................................................2
1.3 Beneficiary........................................................2
1.4 Board..............................................................2
1.5 Code...............................................................2
1.6 Committee..........................................................2
1.7 Common Stock.......................................................3
1.8 Company............................................................3
1.9 Director...........................................................3
1.10 Director Fees......................................................3
1.11 Employee...........................................................3
1.12 Expiration Date....................................................3
1.13 Exchange Act.......................................................3
1.14 Fair Market Value..................................................4
1.15 Incentive Stock Option.............................................4
1.16 Independent Director...............................................4
1.17 Non-Qualified Stock Option.........................................4
1.18 Option.............................................................4
1.19 Optionee...........................................................5
1.20 Plan...............................................................5
1.21 Restricted Stock...................................................5
1.22 Restricted Stockholder.............................................5
1.23 Rule 16b-3.........................................................5
1.24 Subsidiary.........................................................5
1.25 Termination Of Directorship........................................6
1.26 Termination of Employment..........................................6
1.27 Gender and Number..................................................7
ARTICLE II
SHARES SUBJECT TO PLAN....................................................7
2.1 Shares Subject to Plan.............................................7
2.2 Unexercised Options and Other Rights...............................8
ARTICLE III
GRANTING OF OPTIONS.......................................................8
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PAGE
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3.1 Eligibility........................................................8
3.2 Disqualification for Stock Ownership...............................8
3.3 Qualification of Incentive Stock Options...........................9
3.4 Granting of Options................................................9
ARTICLE IV
TERMS OF OPTIONS.........................................................10
4.1 Option Agreement..................................................10
4.2 Option Price......................................................11
4.3 Option Term.......................................................11
4.4 Option Vesting....................................................12
4.5 Exercise of Option after Termination of Employment or
Directorship......................................................13
4.6 Consideration.....................................................15
ARTICLE V
EXERCISE OF OPTIONS......................................................15
5.1 Partial Exercise..................................................15
5.2 Manner of Exercise................................................16
5.3 Conditions to Issuance of Stock Certificates......................17
5.4 Rights as Stockholders............................................18
5.5 Ownership and Transfer Restrictions...............................18
ARTICLE VI
AWARD OF RESTRICTED STOCK................................................19
6.1 Eligibility.......................................................19
6.2 Award of Restricted Stock.........................................19
ARTICLE VII
TERMS OF RESTRICTED STOCK................................................20
7.1 Restricted Stock Agreement........................................20
7.2 Consideration to the Company......................................20
7.3 Rights as Stockholders............................................20
7.4 Restriction.......................................................21
7.5 Repurchase of Restricted Stock....................................21
7.6 Escrow............................................................22
7.7 Legend............................................................22
7.8 Section 83(b).....................................................22
ARTICLE VIII
ADMINISTRATION...........................................................23
8.1 Committee.........................................................23
8.2 Duties and Powers of Committee....................................23
8.3 Majority Rule.....................................................24
8.4 Compensation; Professional Assistance; Good Faith Actions.........24
8.5 Delegation of Authority...........................................24
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PAGE
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8.6 No Liability......................................................25
8.7 Indemnification...................................................25
ARTICLE IX
MISCELLANEOUS PROVISIONS.................................................26
9.1 Not Transferable..................................................26
9.2 Amendment, Suspension or Termination of this Plan.................26
9.3 Changes in Common Stock or Assets of the Company..................27
9.4 Merger of the Company.............................................29
9.5 Approval of Plan by Stockholders..................................30
9.6 Tax Withholding...................................................31
9.7 Loans.............................................................31
9.8 Limitations Applicable to Section 16 Persons......................31
9.9 Effect of Plan Upon Options and Compensation Plans................32
9.10 Compliance with Laws..............................................32
9.11 Titles............................................................33
9.12 Governing Law.....................................................33
iii
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THE 1994 STOCK OPTION AND INCENTIVE PLAN FOR
OFFICERS, DIRECTORS AND KEY EMPLOYEES OF
MORRISON KNUDSEN CORPORATION
Kasler Holding Company has adopted The 1994 Stock Option and
Incentive Plan for Officers, Directors and Key Employees of Kasler Holding
Company (the "Plan"), effective January 19, 1994, for the benefit of its
eligible employees and directors. Kasler Holding Company has adopted the Plan
subject to the approval of Kasler Holding Company's stockholders at the 1994
annual meeting of stockholders. The Plan consists of two plans, one for the
benefit of key Employees (as such term is defined below) and one for the benefit
of Independent Directors (as such term is defined below).
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors and key
Employees to further the growth, development and financial success of the
Company by personally benefiting through the ownership of Company stock which
recognizes such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of
directors and key Employees considered essential to the long range success of
the Company by offering them an opportunity to own stock in the Company which
will reflect the growth, development and financial success of the Company.
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ARTICLE I
DEFINITIONS
1.1 GENERAL
Wherever the following terms are used in this Plan they shall have
the meaning specified below, unless the context clearly indicates otherwise.
1.2 AWARD LIMIT
"Award Limit" shall mean not more than 5,000,000 shares of Common
Stock.
1.3 BENEFICIARY
"Beneficiary" shall mean the person or persons properly designated
by the Optionee, including his spouse or heirs at law, to exercise such
Optionee's rights under this Plan in the event of the Optionee's death, or if
the Optionee has not designated such person or persons, or such person or
persons shall all have pre-deceased the Optionee, the executor or administrator
of the Optionee's estate. Designation, revocation and redesignation of
Beneficiaries must be made in writing in accordance with rules established by
the Committee and shall be effective upon delivery to the Committee.
1.4 BOARD
"Board" shall mean the Board of Directors of the Company.
1.5 CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
1.6 COMMITTEE
"Committee" shall mean a Committee of the Board, appointed as
provided in Section 8.1.
2
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1.7 COMMON STOCK
"Common Stock" shall mean the common stock of the Company, par value
$.01 per share, and any equity security of the Company issued or authorized to
be issued in the future, but excluding any warrants, options or other rights to
purchase Common Stock. Debt securities of the Company convertible into Common
Stock shall be deemed equity securities of the Company.
1.8 COMPANY
"Company" shall mean Morrison Knudsen Corporation, a Delaware
corporation.
1.9 DIRECTOR
"Director" shall mean a member of the Board.
1.10 DIRECTOR FEES
"Director Fees" shall mean the annual retainer fee, including
Committee chairperson fees, paid by the Company to an Independent Director.
1.11 EMPLOYEE
"Employee" shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company, or of any
corporation which is then a Subsidiary.
1.12 EXPIRATION DATE
"Expiration Date" shall mean the last day of the term of the Option
as established in Section 4.3.
1.13 EXCHANGE ACT
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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1.14 FAIR MARKET VALUE
"Fair Market Value" shall mean either (i) the average of the closing
bid and asked prices of common stock as quoted in the Over-the-Counter Market
Summary or the closing price (or if there was no sale on the date in question,
the highest asked price per share of common stock on such date) on any exchange
on which common stock may be listed as published in the Western Edition of the
WALL STREET JOURNAL, or (ii) if there is no listing or trading of common stock
either over-the-counter or on an exchange, a price to be established by the
Committee (or the Board in the case of Options granted to Independent Directors
pursuant to Section 3.4(d)) in its discretion.
1.15 INCENTIVE STOCK OPTION
"Incentive Stock Option" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Stock Option by the Committee.
1.16 INDEPENDENT DIRECTOR
"Independent Director" shall mean a member of the Board who is not
an officer or other employee (as defined in accordance with Section 3401(c) of
the Code) of the Company, or of any corporation which is then a Subsidiary or
parent of the Company.
1.17 NON-QUALIFIED STOCK OPTION
"Non-Qualified Stock Option" shall mean an Option which is not
designated as an Incentive Stock Option by the Committee.
1.18 OPTION
"Option" shall mean a stock option granted pursuant to this Plan.
An option granted under this Plan shall, as determined by the Committee, be
either a Non-Qualified Stock Option or an
4
<PAGE>
Incentive Stock Option; PROVIDED, HOWEVER, that Options granted to Independent
Directors shall be Non-Qualified Stock Options.
1.19 OPTIONEE
"Optionee" shall mean an Employee or Independent Director to whom an
Option is granted under the Plan.
1.20 PLAN
"Plan" shall mean The 1994 Stock Option and Incentive Plan for
Officers, Directors and Key Employees of Kasler Holding Company.
1.21 RESTRICTED STOCK
"Restricted Stock" shall mean Common Stock awarded pursuant to
Article VII of this Plan.
1.22 RESTRICTED STOCKHOLDER
"Restricted Stockholder" shall mean an Employee to whom Restricted
Stock has been awarded under this Plan.
1.23 RULE 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended in the future.
1.24 SUBSIDIARY
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
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1.25 TERMINATION OF DIRECTORSHIP
"Termination of Directorship" shall mean the time when an Optionee
who is an Independent Director ceases to be a Director, respectively, for any
reason, including, but not by way of limitation, a termination by resignation,
failure to be elected, death or retirement. The Board, in its sole and absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Directorship.
1.26 TERMINATION OF EMPLOYMENT
"Termination of Employment" shall mean the time when the
employee-employer relationship between the Optionee or Restricted Stockholder
and the Company or a Subsidiary is terminated for any reason, including, but not
by way of limitation, a termination by resignation, discharge, death, permanent
and total disability or retirement; but excluding (i) terminations where there
is a simultaneous reemployment or continuing employment of an Optionee or
Restricted Stockholder by the Company or a Subsidiary and (ii) at the sole and
absolute discretion of the Committee, terminations which result in a temporary
severance of the employee-employer relationship that do not exceed one year.
The Committee, in its sole and absolute discretion, shall determine the effect
of all matters and questions relating to Termination of Employment, including,
but not by way of limitation, the question of whether a Termination of
Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
PROVIDED, HOWEVER, that with respect to Incentive Stock Options, a leave of
absence shall constitute a Termination of Employment if, and to the extent that,
such leave of absence interrupts employment for the purposes of Section
422(a)(2) of the Code and the then applicable regulations and revenue rulings
under said Section. Notwithstanding any other provision of this Plan, the
Company or any Subsidiary has an absolute and unrestricted right to terminate an
Employee's
6
<PAGE>
employment at any time for any reason whatsoever, with or without cause, except
to the extent expressly provided otherwise in writing.
1.27 GENDER AND NUMBER
Wherever the masculine gender is used it shall include the feminine
and neuter and wherever a singular pronoun is used it shall include the plural,
unless the context clearly indicates otherwise.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 SHARES SUBJECT TO PLAN
The shares of stock subject to Options or Restricted Stock Awards
shall be Common Stock, initially shares of the Company's common stock, par value
$.01 per share, as presently constituted. The Committee at its absolute and
sole discretion shall make available for issuance under the Plan for each fiscal
year from and including the fiscal year beginning December 1, 1993, a number of
shares up to the amount of 3% of the total number of issued and outstanding
shares of Common Stock as of December 1 of such fiscal year (the "3% Limit").
In addition, (i) any shares available pursuant to Section 2.2, and (ii) any
unused portion of the 3% Limit for any fiscal year, shall be added to the
aggregate number of shares available for issuance in each fiscal year under the
Plan. In no event, except as subject to adjustment as provided in Section 9.3,
shall the aggregate number of such shares which cumulatively may be available
for issuance upon exercise of Incentive Stock Options exceed 2,900,000. No
individual shall receive Restricted Stock or Options for more than the Award
Limit over any three-year period. The shares of Common Stock issuable upon
exercise or grant of an Option, or as Restricted Stock, may be either previously
authorized but unissued shares or issued
<PAGE>
shares which have been repurchased by
the Company. If any equity securities of the Company, other than Common Stock,
are issued or authorized to be issued, the Committee (or the Board, in the case
of Options granted to Independent Directors pursuant to Section 3.4(d)) shall
determine, on a fair and equitable basis, the appropriate number of shares of
the Company's present common stock to be deemed issued
7
<PAGE>
or issuable with respect to such other equity securities for purposes of this
Section 2.1.
2.2 UNEXERCISED OPTIONS AND OTHER RIGHTS
If any Option expires or is cancelled without having been fully
exercised, the number of shares subject to such Option or other right but as to
which such Option or other right was not exercised prior to its expiration or
cancellation may again be optioned, granted or awarded hereunder.
ARTICLE III
GRANTING OF OPTIONS
3.1 ELIGIBILITY
Subject to the Award Limit, any Employee selected by the Committee
pursuant to Section 3.4(a)(i) shall be eligible to be granted an Option. Each
Independent Director of the Company shall be eligible to receive Options at the
times and in the manner set forth in Section 3.4(d).
3.2 DISQUALIFICATION FOR STOCK OWNERSHIP
No person may be granted an Incentive Stock Option under this Plan
if such person, at the time the Incentive Stock Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any then existing Subsidiary unless such
Incentive Stock Option conforms to the applicable provisions of Section 422 of
the Code.
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3.3 QUALIFICATION OF INCENTIVE STOCK OPTIONS
No Incentive Stock Option shall be granted unless such Option, when
granted, qualifies as an "incentive stock option" under Section 422 of the Code.
Options granted under the Plan to Independent Directors do not qualify as
"incentive stock options" under Section 422 of the Code.
3.4 GRANTING OF OPTIONS
(a) The Committee shall from time to time, in its sole and
absolute discretion:
(i) Determine which Employees are key Employees and select from
among the key Employees (including Employees to whom Options have
previously been granted and/or shares of Restricted Stock have previously
been issued) such of them as in its opinion should be granted Options;
(ii) Determine the number of shares to be subject to such Options
granted to the selected key Employees;
(iii) Determine whether such Options are to be Incentive Stock
Options or Non-Qualified Stock Options; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan, including, but not limited to, such terms and
conditions as may be required by Section 162(m) of the Code.
(b) Upon the selection of a key Employee to be granted an
Option, the Committee shall instruct the Secretary of the Company to issue the
Option and may impose such conditions on the grant of the Option as it deems
appropriate.
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(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such option from treatment as an
"incentive stock option" under Section 422 of the Code.
(d) Each Independent Director may elect to forego cash payment
of all or any portion of his or her Director Fees (the fees subject to such
election are hereinafter referred to as "Discount Fees") and receive an Option
with a price per share equal to 80% of the Fair Market Value of a share of
Common Stock on the date such election is made. The number of shares subject to
such Option shall be the number determined by multiplying the Fair Market Value
of a share of Common Stock on the date such election is made by .80 and dividing
the product into the amount of the Discount Fees. An election pursuant to this
Section 3.4(d) shall be made at least six months prior to the scheduled payment
of the Discount Fees and such election shall be irrevocable.
Notwithstanding this Section 3.4(d) or any other provision of the
Plan, each Independent Director who (i) has made an election under this Section
3.4(d) to receive an Option which would be issuable on October 3, 1996 and
(ii) resigns from the Board as of the effective date of the merger of Morrison
Knudsen Corporation with and into the Company (the "Merger"), will receive the
Option referenced in item (i) above on the earlier of October 3, 1996 and the
effective date of the Merger.
ARTICLE IV
TERMS OF OPTIONS
4.1 OPTION AGREEMENT
Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized officer of the Company
and which shall contain such
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terms and conditions as the Committee (or the Board, in the case of Options
granted to Independent Directors pursuant to Section 3.4(d)) shall determine,
consistent with this Plan, including, but not limited to, such terms and
conditions as may be required by Section 162(m) of the Code. Stock Option
Agreements evidencing Incentive Stock Options shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section 422
of the Code.
4.2 OPTION PRICE
The price per share of the shares subject to each Option shall be
set by the Committee; PROVIDED, HOWEVER, that such price shall be no less than
the par value of a share of Common Stock and in the case of Incentive Stock
Options such price shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the date the Option is granted; and PROVIDED, FURTHER,
that the price of the shares subject to each Option granted to an Independent
Director pursuant to Section 3.4(d) shall equal 80% of the Fair Market Value of
such shares on the date such election is made, without variation hereunder.
4.3 OPTION TERM
The term of an Option shall be set by the Committee in its sole and
absolute discretion; PROVIDED, HOWEVER, that no such term shall exceed a
reasonable time period, and in the case of Incentive Stock Options, the term
shall not be more than ten (10) years from the date the Incentive Stock Option
is granted; and PROVIDED, FURTHER, the term of each such Option granted to an
Independent Director pursuant to Section 3.4(d) shall be ten years, without
variation or acceleration hereunder, but subject to Section 4.5(b). The last
day of the term of the Option shall be the Option's Expiration Date.
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4.4 OPTION VESTING
(a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted; PROVIDED, HOWEVER, that, unless the
Committee or the Board otherwise provides in the terms of the Option or
otherwise, no Option shall be exercisable by any Optionee who is then subject to
Section 16 of the Exchange Act within the period ending six months after the
date the Option is granted; and PROVIDED, FURTHER, that Options granted to
Independent Directors shall become exercisable on the first year anniversary of
the date of Option grant, without variation or acceleration hereunder. At any
time after grant of an Option to an Employee, the Committee may, in its sole and
absolute discretion and subject to whatever terms and conditions it selects,
accelerate the period during which an Option granted to an Employee vests.
Notwithstanding this Section 4.4(a) or any other provision of this Plan, all
Options which are held by Independent Directors who resign from the Board as of
the effective date of the Merger (as defined in Section 3.4(d)) and which are
outstanding at the effective date of the Merger shall become fully exercisable
immediately upon the consummation of the Merger (as defined in Section 3.4(d)).
(b) No portion of an Option which is unexercisable at
Termination of Employment or Termination of Directorship shall thereafter become
exercisable, except as may be otherwise provided by the Committee (or the Board,
in the case of Options granted to Independent Directors pursuant to Section
3.4(d)) either in the Stock Option Agreement or in a resolution adopted
following the grant of such Option.
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(c) To the extent that the aggregate Fair Market Value of stock
with respect to which "incentive stock options" (within the meaning of Section
422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any fiscal year (under the
Plan and all other incentive stock option plans of the Company or any
Subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth
in the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.4(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.
4.5 EXERCISE OF OPTION AFTER TERMINATION OF EMPLOYMENT OR
DIRECTORSHIP.
(a) An Option granted to an Employee pursuant to Section 3.4(a)
is exercisable by an Optionee only while he is an Employee, except as may be
otherwise provided by the Committee either in the Stock Option Agreement or in a
resolution adopted following the grant of the Option.
(1) If the Optionee dies while an Option is exercisable under
the terms of this Plan, the Optionee's Beneficiary may exercise such
rights, to the extent the Optionee could have done so immediately
preceding his death. Any such Option must be exercised within
twelve (12) months after the Optionee's death and the Committee may
in its sole and absolute discretion extend such period to
accommodate such exercise; PROVIDED, HOWEVER, that an Option may not
be exercised later than the Expiration Date.
(2) If the Optionee's employment is terminated due to his
permanent and total disability, as defined in Section 22(e)(3) of
the Code, or in the case of a Non-Qualified Stock Option, upon
retirement at or after age 65, the Optionee may exercise
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his Option, to the extent exercisable as of his Termination of
Employment, within twelve (12) months after termination, but no
later than the Option's Expiration Date.
(3) If the Optionee's employment is terminated for any reason
other than those set forth in subsections (1) or (2) above, the
Optionee may exercise his Option, to the extent exercisable as of
his Termination of Employment, within three (3) months after
Termination of Employment, unless the Employee dies within said
three-month period, but no later than the Option's Expiration Date.
(b) No Option granted to an Independent Director pursuant to
Section 3.4(d) may be exercised to any extent by anyone after the first to occur
of the following events:
(1) The expiration of twelve (12) months from the date of the
Optionee's death, but no later than the Option's Expiration Date; or
(2) The expiration of twelve (12) months from the date of the
Optionee's Termination of Directorship by reason of his permanent
and total disability (within the meaning of Section 22(e)(3) of the
Code), but no later than the Option's Expiration Date; or
(3) The expiration of three (3) months from the date of the
Optionee's Termination of Directorship for any reason other than
such Optionee's death or his permanent and total disability, unless
the Optionee dies within said three-month period, but no later than
the Option's Expiration Date; or
(4) The expiration of ten years from the date the Option was
granted.
Notwithstanding this Section 4.5(b) or any other provision of this
Plan, all Options which are held by Independent Directors who resign from the
Board as of the effective date of the
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Merger (as defined in Section 3.4(d)) and which are outstanding at the effective
date of the Merger shall be exercisable through July 1, 1997.
4.6 CONSIDERATION
In consideration of the granting of a Non-Qualified Stock Option,
the Optionee shall agree, in the written Stock Option Agreement, to remain in
the employ of the Company or a Subsidiary (or to serve as an Independent
Director of the Company) for a period of at least one year after the
Non-Qualified Stock Option is granted (or until the next annual meeting of the
stockholders of the Company, in the case of an Independent Director). In
consideration of the granting of an Incentive Stock Option, the Optionee shall
agree, in the written Stock Option Agreement, to remain in the employ of the
Company or a Subsidiary for a period of at least one year after the Incentive
Stock Option is granted. Nothing in this Plan or in any Stock Option Agreement
hereunder shall confer upon any Optionee any right to continue in the employ of
the Company or any Subsidiary or as a director of the Company.
ARTICLE V
EXERCISE OF OPTIONS
5.1 PARTIAL EXERCISE
An exercisable Option may be exercised in whole or in part.
However, an Option shall not be exercisable with respect to fractional shares
and the Committee (or Board, in the case of Options granted to Independent
Directors pursuant to Section 3.4(d)) may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
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5.2 MANNER OF EXERCISE
All or a portion of an exercisable Option shall be deemed exercised
upon
(a) delivery of all of the following to the Secretary of the
Company or his office:
(i) A written notice complying with the applicable rules
established by the Committee (or Board, in the case of Options granted to
Independent Directors pursuant to Section 3.4(d)) or the Company stating
that the Option, or a portion thereof, is exercised. The notice shall be
signed by the Optionee or other person then entitled to exercise the Option
or such portion;
(ii) Such representations and documents as the Committee (or
Board, in the case of Options granted to Independent Directors pursuant to
Section 3.4(d)), in its sole and absolute discretion, deems necessary or
advisable to effect compliance with all applicable provisions of the
Securities Act of 1933, as amended, and any other federal or state
securities laws or regulations. The Committee or Board may, in its sole
and absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation,
placing legends on share certificates and issuing stop-transfer notices to
agents and registrars; and
(iii) In the event that the Option shall be exercised pursuant to
Section 4.5 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and
(b) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, at the discretion of the Committee, the terms of the Option may
(i) allow payment, in whole or in part, through the delivery of shares of Common
Stock owned by the Optionee, duly endorsed for transfer to the Company with a
Fair
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Market Value on the date of delivery equal to the aggregate exercise price of
the Option or exercised portion thereof; (ii) allow payment, in whole or in
part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; or (iii) allow payment through any combination of cash and the
consideration provided in the foregoing subparagraphs (i) and (ii).
5.3 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the exercise of
any Option or 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 such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body which the Committee shall, in its sole and absolute discretion, deem
necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee (or Board, in the case
of Options granted to Independent Directors pursuant to Section 3.4(d)) shall,
in its sole and absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee (or Board, in the case of Options
granted to Independent Directors pursuant to Section 3.4(d)) may establish from
time to time for reasons of administrative convenience; and
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(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.
5.4 RIGHTS AS STOCKHOLDERS
The holders of Options shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
5.5 OWNERSHIP AND TRANSFER RESTRICTIONS
The Committee (or Board, in the case of Options granted to
Independent Directors pursuant to Section 3.4(d)), in its sole and absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The
Committee may require an Employee to give the Company prompt notice of any
disposition of shares of Common Stock acquired by exercise of an Incentive Stock
Option within (i) two years from the date of granting such Option to such
Employee or (ii) one year after the transfer of such shares to such Employee.
The Committee may direct that the certificates evidencing shares acquired by
exercise of an Option refer to such requirement to give prompt notice of
disposition.
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ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 ELIGIBILITY
Subject to the Award Limit, Restricted Stock may be awarded to any
Employee whom the Committee, pursuant to Section 3.4(a)(i), determines is a key
Employee.
6.2 AWARD OF RESTRICTED STOCK
(a) The Committee shall from time to time, in its sole and
absolute discretion:
(i) Select from among the key Employees (including Employees to
whom Options have previously been granted and/or shares of Restricted Stock
have previously been issued) such of them as in its opinion should be
awarded Restricted Stock; and
(ii) Determine the purchase price and other terms and conditions
applicable to such Restricted Stock, consistent with this Plan.
(b) The Committee shall establish the purchase price and form of
payment for Restricted Stock; PROVIDED, HOWEVER, that such purchase price shall
be no less than the par value of the Common Stock to be purchased. In all
cases, legal consideration shall be required for each issuance of Restricted
Stock.
(c) Upon the selection of a key Employee to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue such Restricted Stock and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate.
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ARTICLE VII
TERMS OF RESTRICTED STOCK
7.1 RESTRICTED STOCK AGREEMENT
Restricted Stock shall be issued only pursuant to a written
Restricted Stock Agreement, which shall be executed by the selected key Employee
and an authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan,
including, but not limited to, such terms and conditions as may be required by
Section 162(m) of the Code.
7.2 CONSIDERATION TO THE COMPANY
As consideration for the issuance of Restricted Stock, in addition
to payment of the purchase price, the selected key Employee shall agree, in the
written Restricted Stock Agreement, to remain in the employ of the Company or a
Subsidiary for a period of at least one year after the Restricted Stock is
issued. Nothing in this Plan or in any Restricted Stock Agreement hereunder
shall confer on any Restricted Stockholder any right to continue in the employ
of the Company or any Subsidiary.
7.3 RIGHTS AS STOCKHOLDERS
Upon delivery of the shares of Restricted Stock to the escrow holder
pursuant to Section 7.6, the Restricted Stockholder shall have all the rights of
a stockholder with respect to said shares, subject to the restrictions in his
Restricted Stock Agreement, including the right to vote the shares and to
receive all dividends and other distributions paid or made with respect to the
shares; PROVIDED, HOWEVER, that in the sole and absolute discretion of the
Committee, any extraordinary distributions with respect to the Common Stock
shall be subject to the restrictions set forth in Section 7.4.
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7.4 RESTRICTION
All shares of Restricted Stock issued under this Plan (including any
shares received by holders thereof with respect to shares of Restricted Stock as
a result of stock dividends, stock splits or any other form of recapitalization)
shall, in the terms of each individual Restricted Stock Agreement, be subject to
such restrictions as the Committee shall provide, which restrictions may
include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment with the
Company, Company performance and individual performance; provided, however, that
by a resolution adopted after the Restricted Stock is issued, the Committee may,
on such terms and conditions as it may determine to be appropriate, remove any
or all of the restrictions imposed by the terms of the Restricted Stock
Agreement. Restricted Stock may not be sold or encumbered until all
restrictions are terminated or expire. Unless provided otherwise by the
Committee, if no consideration was paid by the Restricted Stockholder upon
issuance, a Restricted Stockholder's rights in unvested Restricted Stock shall
lapse upon Termination of Employment or, if applicable, upon the termination of
his consulting relationship with the Company.
7.5 REPURCHASE OF RESTRICTED STOCK
The Committee shall provide in the terms of each individual
Restricted Stock Agreement that the Company shall have the right to repurchase
from the Restricted Stockholder the Restricted Stock then subject to
restrictions under the Restricted Stock Agreement immediately upon a Termination
of Employment for any reason at a cash price per share equal to the price paid
by the Restricted Stockholder for such Restricted Stock; PROVIDED, HOWEVER, that
in the discretion of the Committee, provision may be made that no such right of
repurchase shall exist in the event of a
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Termination of Employment without cause or because of the Restricted
Stockholder's retirement at or after age sixty-five (65), death or permanent and
total disability.
7.6 ESCROW
The Secretary of the Company or such other escrow holder as the
Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Restricted Stock Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.
7.7 LEGEND
In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee may cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Restricted Stock Agreements, which legend or
legends shall make appropriate reference to the conditions imposed thereby.
7.8 SECTION 83(b)
A Restricted Stockholder may make an election under Section 83(b) of
the Code.
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ARTICLE VIII
ADMINISTRATION
8.1 COMMITTEE
The Committee (or a subcommittee of the Board assuming the functions
of the Committee under this Plan) shall consist solely of two or more
Independent Directors appointed by and holding office at the pleasure of the
Board, each of whom is both a "non-employee director" as defined by Rule 16b-3
and an "outside director" for purposes of Section 162(m) of the Code.
Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.
8.2 DUTIES AND POWERS OF COMMITTEE
It shall be the duty of the Committee to conduct the general
administration of this Plan in accordance with its provisions. The Committee
shall have the power to interpret this Plan, the Options and the Restricted
Stock, and the agreements pursuant to which the Options and Restricted Stock are
granted or awarded, and to adopt such rules for the administration,
interpretation, and application of this Plan as are consistent therewith and to
interpret, amend or revoke any such rules. Notwithstanding the foregoing, the
full Board, acting by a majority of its members in office, shall conduct the
general administration of the Plan with respect to Options granted to
Independent Directors pursuant to Section 3.4(d). Any such grant or award under
this Plan need not be the same with respect to each Optionee or Restricted
Stockholder. Any such interpretations and rules with respect to Incentive Stock
Options shall be consistent with the provisions of Section 422 of the Code. In
its sole and absolute discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Committee under this Plan
except with respect to matters which under
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Rule 16b-3 of Section 162(m) of the Code are required to be determined in the
sole and absolute discretion of the Committee.
8.3 MAJORITY RULE
The Committee shall act by a majority of its members in attendance
at a meeting at which a quorum is present or by a memorandum or other written
instrument signed by all members of the Committee.
8.4 COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee or Board incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Board, the Company
and the Company's officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or Board in good faith
shall be final and binding upon all Optionees, Restricted Stockholders, the
Company and all other interested persons. No members of the Committee or Board
shall be personally liable for any action, determination or interpretation made
in good faith with respect to this Plan, any Option or any Restricted Stock, and
all members of the Committee and Board shall be fully protected by the Company
in respect of any such action, determination or interpretation.
8.5 DELEGATION OF AUTHORITY
The Committee may in its sole and absolute discretion delegate to
the Chief Executive Officer of the Company or the Secretary of the Company, or
both, any or all of the administrative duties and authority of the Committee
under this Plan, other than the authority to make grants or
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awards under this Plan to Employees who are "officers" of the Company within the
meaning of Rule 16a-1(b) under the Exchange Act or whose total compensation is
required to be reported to the Company's shareholders under the Exchange Act, to
determine the price, timing or amount of such grants or awards or to determine
any other matter required by Rule 16b-3 or Code Section 162(m) to be determined
in the sole and absolute discretion of the Committee.
8.6 NO LIABILITY
No member of the Board or the Committee, or director, officer or
employee of the Company or any Subsidiary shall be liable, responsible or
accountable in damages or otherwise for any determination made or other action
taken or any failure to act by such person so long as such person is not
determined to be guilty by a final adjudication of willful misconduct with
respect to such determination, action or failure to act.
8.7 INDEMNIFICATION
To the fullest extent permitted by law, each of the members of the
Board and the Committee and each of the directors, officers and employees of the
Company or any Subsidiary shall be held harmless and be indemnified by the
Company for any liability, loss (including amounts paid in settlement), damages
or expenses (including reasonable attorneys' fees) suffered by virtue of any
determinations, acts or failures to act, or alleged acts or failures to act, in
connection with the administration of this Plan so long as such person is not
determined by a final adjudication to be guilty of willful misconduct with
respect to such determination, action or failure to act.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 NOT TRANSFERABLE
Options and Restricted Stock awards under this Plan may not be sold,
pledged, assigned, or transferred in any manner other than by will or the laws
of descent and distribution, unless and until such rights and awards have been
exercised, or the shares underlying such rights or awards have been issued, and
all restrictions applicable to such shares have lapsed. No Option or Restricted
Stock award or interest or right therein shall be liable for the debts,
contracts or engagements of the Optionee or Restricted Stockholder or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect.
During the lifetime of the Optionee, only he or his guardian or
legal representative may exercise an option or other right or award (or an y
portion thereof) granted to him under the Plan. After the death of the
Optionee, any exercisable portion of an Option or other right or award may,
prior to the time when such portion becomes unexercisable under the Plan or the
applicable Stock Option Agreement or other agreement, be exercised by his
personal representative or by any person empowered to do so under the deceased
Optionee's will or under the then applicable laws of descent and distribution.
9.2 AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN
This Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board. However,
without approval of the
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Company's stockholders given within twelve months before or after the action by
the Board, no action of the Board may, except as provided in Section 9.3,
increase the limits imposed in Section 2.1 on the maximum number of shares which
may be issued under this Plan or which may be issued upon exercise of Incentive
Stock Options, and no action of the Board may be taken that would otherwise
require stockholder approval as a matter of applicable law, regulation or rule.
No amendment, suspension or termination of this Plan shall, without the consent
of the holder of an Option or Restricted Stock, alter or impair any rights or
obligations under any Option or Restricted Stock theretofore granted or awarded,
unless the award itself otherwise expressly so provides. No Option or
Restricted Stock may be granted or awarded during any period of suspension nor
after termination of this Plan, and in no event may any Incentive Stock Option
be granted under this Plan after the first to occur of the following events:
(a) the expiration of ten years from the date the Plan is adopted by the Board;
or (b) the expiration of ten years from the date the Plan is approved by the
Company's stockholders under Section 9.5.
9.3 CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY
In the event that the outstanding shares of Common Stock are
hereafter changed into or exchanged for cash or a different number or kind of
shares or other securities of the Company, or of another corporation, by reason
of reorganization, merger, consolidation, recapitalization, reclassification,
stock splitup, stock dividend, or combination of shares, appropriate adjustments
shall be made by the Committee (or the Board, in the case of Options granted to
Independent Directors pursuant to Section 3.4(d)) in the number and kind of
shares for the purchase of which Options may be granted and in the number and
kind of shares of Restricted Stock which may be awarded, including adjustments
of the limitation in Section 2.1 on the maximum number and kind of shares which
may be issued.
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In the event of such a change or exchange, other than for shares or
securities of another corporation or by reason of reorganization, the Committee
(or the Board, in the case of Options granted to Independent Directors pursuant
to Section 3.4(d)) shall also make an appropriate and equitable adjustment in
the number and kind of shares as to which all outstanding Options, or portions
thereof then unexercised, shall be exercisable and in the number and kind of
shares of outstanding Restricted Stock. Such adjustment shall be made with the
intent that after the change or exchange of shares, each Optionee's and each
Restricted Stockholder's proportionate interest shall be maintained as before
the occurrence of such event. Such adjustment in an outstanding Option may
include a necessary or appropriate corresponding adjustment in Option exercise
price, but shall be made without change in the total price applicable to the
Option, or the unexercised portion thereof (except for any change in the
aggregate price resulting from rounding-off of share quantities or prices).
Where an adjustment of the type described above is made to an
Incentive Stock Option under this Section, the adjustment will be made in a
manner which will not be considered a "modification" under the provisions of
subsection 424(h)(3) of the Code.
In the event of a "spin-off" or other substantial distribution of
assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Company's Common Stock, the Committee (or the Board, in the
case of Options granted to Independent Directors pursuant to Section 3.4(d), if
the Board determines that no contravention of the requirements of Rule
16b-3(c)(2)(ii) will result) may in its sole and absolute discretion make an
appropriate and equitable adjustment to the Option exercise price to reflect
such diminution.
Notwithstanding the foregoing, in the event of such a
reorganization, merger, consolidation, recapitalization, reclassification, stock
splitup, stock dividend or combination, or other
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adjustment or event which results in shares of Common Stock being exchanged for
or converted into cash, securities or other property, the Company will have the
right to terminate this Plan as of the date of the exchange or conversion, in
which case all options, rights and other awards under this Plan shall become the
right to receive such cash, securities or other property, net of any applicable
exercise price.
9.4 MERGER OF THE COMPANY
In the event of the merger or consolidation of the Company with or
into another corporation, the exchange of all or substantially all of the assets
of the Company for the securities of another corporation, the acquisition by
another corporation or person of all or substantially all of the Company's
assets or 80% or more of the Company's then outstanding voting stock, or the
liquidation or dissolution of the Company:
(a) At the sole and absolute discretion of the Committee (or the
Board, in the case of Options granted to Independent Directors pursuant to
Section 3.4(d)), the terms of an Option may provide that it cannot be exercised
after such event.
(b) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee (or the Board, in the case of
Options granted to Independent Directors pursuant to Section 3.4(d)) may provide
either by the terms of such Option or by a resolution adopted prior to the
occurrence of such event that, for a specified period of time prior to such
event, such Option shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in (i) Section 4.4 (with the exception
of 4.4(c)) or (ii) the provisions of such Option.
(c) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide either by the
terms of such Restricted Stock or by
29
<PAGE>
a resolution adopted prior to the occurrence of such event that, for a specified
period of time prior to such event, the restrictions imposed under a Restricted
Stock Agreement upon some or all shares of Restricted Stock may be terminated
and/or some or all of such shares may cease to be subject to repurchase under
Section 7.5 after such event.
(d) In its discretion, and on such terms and conditions as it
deems appropriate, the Committee may provide either by the terms of such Option
or by a resolution adopted prior to the occurrence of such event that upon such
event, such Option shall be assumed by the successor corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar options, rights or
awards covering the stock of the successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices.
9.5 APPROVAL OF PLAN BY STOCKHOLDERS
This Plan will be submitted for the approval of the Company's
stockholders within twelve months after the date of the Board's initial adoption
of this Plan. Options may be granted and Restricted Stock may be awarded prior
to such stockholder approval, provided that such Options shall not be
exercisable and such Restricted Stock shall not vest prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Options
previously granted and all Restricted Stock previously awarded under this Plan
shall thereupon be cancelled and become null and void. The Company shall take
such actions with respect to the Plan as may be necessary to satisfy the
requirements of Rule 16b-3.
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9.6 TAX WITHHOLDING
The Company shall be entitled to require payment in cash or
deduction from other compensation payable to each Optionee or Restricted
Stockholder of any sums required by federal, state or local tax law to be
withheld with respect to the issuance, vesting or exercise of any Option or
Restricted Stock. The Committee (or the Board, in the case of Options granted
to Independent Directors) may in its discretion and in satisfaction of the
foregoing requirement allow such Optionee or Restricted Stockholder to elect to
have the Company withhold shares of Common Stock (or allow the return of shares
of Common Stock) having a Fair Market Value equal to the sums required to be
withheld.
9.7 LOANS
The Committee may, in its sole and absolute discretion, extend one
or more loans to key Employees in connection with the exercise or receipt of
outstanding Options granted under this Plan, or the issuance of Restricted Stock
awarded under this Plan. The terms and conditions of any such loan shall be set
by the Committee.
9.8 LIMITATIONS APPLICABLE TO SECTION 16 PERSONS
Notwithstanding any other provision of this Plan, this Plan, and any
Option granted, or Restricted Stock awarded, to a key Employee who is then
subject to Section 16 of the Exchange Act, shall be subject to any additional
limitations set forth in any applicable exemptive rule under Section 16 of the
Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that
are requirements for the application of such exemptive rule. To the extent
permitted by applicable law, the Plan, Options and Restricted Stock granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule. Furthermore, notwithstanding
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any other provision of this Plan, any Option intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and this Plan shall be deemed amended to the extent necessary to conform
to such requirements.
9.9 EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary. Nothing in this
Plan shall be construed to limit the right of the Company (a) to establish any
other forms of incentives or compensation for employees and directors of the
Company or any Subsidiary or (b) to grant or assume options or other rights
otherwise than under this Plan in connection with any proper corporate or
partnership purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, firm or association.
9.10 COMPLIANCE WITH LAWS
This Plan, the granting and vesting of Options or Restricted Stock
under this Plan and the issuance and delivery of shares of Common Stock and the
payment of money under this Plan or under Options granted or Restricted Stock
awarded hereunder are subject to compliance with all applicable federal and
state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions,
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and the person acquiring such securities shall, if requested by the Company,
provide such assurances and representations to the Company as the Company may
deem necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, Options and
Restricted Stock granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.
9.11 TITLES
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Plan.
9.12 GOVERNING LAW
This Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of Delaware
without regard to conflicts of laws thereof.
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EXHIBIT 10.2
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CREDIT AGREEMENT
by and among
MORRISON KNUDSEN CORPORATION
and
BANK OF MONTREAL
individually and as Agent
and
the Banks
which are or may become parties hereto
Dated as of October 8, 1996
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<PAGE>
TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
Section 1. Definitions; Interpretation of Agreement 1
Section 1.1. Definitions. 1
Section 1.2. Accounting Terms 13
Section 2. The Revolving Credit 14
Section 2.1. General Terms 14
Section 2.2. The Loans 14
Section 2.3. Letters of Credit 15
Section 2.4. Manner of Borrowing 19
Section 3. Interest 20
Section 3.1. Options 20
Section 3.2. Base Rate Portion 20
Section 3.3. LIBOR Portions 21
Section 3.4. Computation 21
Section 3.5. Minimum Amounts 21
Section 3.6. Manner of Rate Selection 21
Section 3.7. Funding Indemnity 22
Section 3.8. Change of Law 22
Section 3.9. Unavailability of Deposits or Inability to
Ascertain, or Inadequacy of, LIBOR Rate 23
Section 3.10. Increased Cost and Reduced Return 23
Section 3.11. Lending Offices 24
Section 3.12. Discretion of Banks as to Manner of Funding 24
Section 4. Fees, Payments, Reductions, Applications and
Notations 24
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Section 4.1. Commitment Fee 24
Section 4.2. Letter of Credit Fees 24
Section 4.3. Agent's Fees 25
Section 4.4. Prepayments 25
Section 4.5. Terminations 25
Section 4.6. Place and Application 25
Section 4.7. Notations and Requests 27
Section 4.8. Capital Adequacy 27
Section 4.9. Withholding Taxes 28
Section 5. The Collateral and Guaranties 29
Section 5.1. The Collateral 29
Section 5.2. Further Assurances 30
Section 5.3. Guaranty 30
Section 5.4. Agreement to Release Liens 31
Section 6. Representations and Warranties 31
Section 6.1. Organization and Power 31
Section 6.2. Subsidiaries 32
Section 6.3. Use of Proceeds; Regulation U 32
Section 6.4. Financial Statements 32
Section 6.5. Litigation and Taxes 34
Section 6.6. Burdensome Contracts with Affiliates 34
Section 6.7. ERISA 34
Section 6.8. Full Disclosure 34
Section 6.9. Compliance with Law 35
Section 6.10. Merger 35
Section 6.11. The Plan and Certain Litigation 36
Section 7. Conditions Precedent 36
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Section 7.1. All Advances 36
Section 7.2. Initial Advance 37
Section 7.3. Legal Matters 38
Section 8. Covenants 40
Section 8.1. Maintenance of Business 40
Section 8.2. Maintenance 40
Section 8.3. Taxes 40
Section 8.4. Insurance 40
Section 8.5. Financial Reports 40
Section 8.6. Compliance with Laws. 42
Section 8.7. Nature of Business 42
Section 8.8. Liens 42
Section 8.9. Indebtedness 44
Section 8.10. Consolidated Net Worth 45
Section 8.11. Consolidated Debt/Capital Ratio. 45
Section 8.12. Debt Service Coverage Ratio 45
Section 8.13. Acquisitions, Investments, Loans, Advances and
Guarantees 45
Section 8.14. Dividends and Certain Other Restricted Payments 47
Section 8.15. Mergers. 47
Section 8.16. Sale of Assets. 48
Section 8.17. Burdensome Contracts with Affiliates 48
Section 8.18. No Change in Fiscal Year 48
Section 8.19. Maintenance of Material Subsidiaries. 48
Section 8.20. Formation of Subsidiaries 49
Section 8.21. No Restriction on Subsidiary Dividends 49
Section 8.22. Interest Rate Protection 49
Section 8.23. Agreement to Release Lien Filings 49
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Section 8.24. The Plan 49
Section 9. Events of Default and Remedies 50
Section 10. The Agent and Issuing Banks 53
Section 10.1. Appointment and Authorization 53
Section 10.2. Rights as a Bank 53
Section 10.3. Standard of Care 53
Section 10.4. Costs and Expenses 54
Section 10.5. Indemnity 54
Section 11. Miscellaneous 55
Section 11.1. Waiver of Rights 55
Section 11.2. Non-Business Day 55
Section 11.3. Documentary Taxes 55
Section 11.4. Survival of Representations 55
Section 11.5. Set-off Sharing 55
Section 11.6. Notices 55
Section 11.7. Counterparts 56
Section 11.8. Successors and Assigns 56
Section 11.9. Participants 56
Section 11.10. Costs and Expenses 56
Section 11.11. Construction 57
Section 11.12. Assignment Agreements 57
Section 11.13. Waivers, Modifications and Amendments 58
Section 11.14. Entire Agreement 58
Section 11.15. Headings 59
Section 11.16. Confidentiality 59
Section 11.17. Extensions of the Commitments 59
Section 11.18. Currency 60
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Section 11.19. Exclusive Jurisdiction 60
Section 11.20. Waiver of Jury Trial 60
Section 11.21. Excess Interest 61
Section 11.22. Governing Law 61
Section 11.23. Single Bank 61
Exhibit A -- Revolving Credit Note
Schedule 1.1 -- Lines of Business
Schedule 5.1 -- Excluded Assets
Schedule 6.2 -- Subsidiaries
Schedule 8.8 -- Permitted Existing Liens
Schedule 8.9 -- Permitted Existing Indebtedness
Schedule 8.13(l) -- Existing Investments in, and loans,advances and
guaranties relating to, Unrestricted Subsidiaries
Schedule 8.13(m) -- Permitted Guaranties
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To each of
the Banks which are or
may become parties to
this Agreement
Gentlemen:
The undersigned, Morrison Knudsen Corporation, a Delaware corporation (the
"COMPANY") applies to you for your several commitments, subject to all of the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to make a revolving credit (the "REVOLVING
CREDIT") facility available to the Company, all as more fully hereinafter set
forth.
SECTION 1. Definitions; Interpretation of Agreement
SECTION 1.1. DEFINITIONS. The following terms when used herein shall
have the following meanings, such terms to be equally applicable to both the
singular and the plural of the terms defined:
"ADJUSTED LIBOR RATE" shall mean a rate per annum determined in accordance
with the following formula:
Adjusted LIBOR Rate = LIBOR
____________________________________
100% - Eurodollar Reserve Percentage
"LIBOR" shall mean, with respect to an Interest Period, the rate of
interest per annum determined by the Agent (rounded upwards, if necessary,
to the nearest 1/100 of 1%) at which deposits of United States Dollars in
immediately available and freely transferable funds are offered to the
Agent at 10:00 a.m. (Chicago time) two Business Days prior to the
commencement of such Interest Period by major banks in the London interbank
market upon request by the Agent for a period equal to such Interest Period
and in an amount equal to the Agent's share of the LIBOR Portion scheduled
to be outstanding during such Interest Period.
"EURODOLLAR RESERVE PERCENTAGE" shall mean, for any day during an
Interest Period, the rate at which reserves (including, without limitation,
any supplemental, marginal and emergency reserves) are imposed on such day
by the Board of Governors of the Federal
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<PAGE>
Reserve System (or any successor) on "Eurocurrency liabilities", as defined
in such Board's Regulation D (or in respect of any other category of
liabilities that includes deposits by reference to which the interest rate
on LIBOR Portions is determined on any category of extension of credit or
other assets that includes loans by non-United States offices of any bank
to United States residents), subject to any amendments of such reserve
requirement by such Board or its successor, taking into account any
transitional adjustments thereto. For purposes of this definition, the
LIBOR Portions shall be deemed to be eurocurrency liabilities as defined in
Regulation D without benefit or credit for any prorations, exemptions or
offsets under Regulation D. The Adjusted LIBOR Rate shall automatically be
adjusted as of the date of any change in the Eurodollar Reserve Percentage.
"AFFILIATE" shall mean any Person (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, another Person, (ii) which beneficially owns or holds 5% or more
of any class of the Voting Stock of another Person, or (iii) more than 5% of the
Voting Stock (or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by another
Person. 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 the ownership of Voting Stock, by contract or otherwise.
"AGENT" shall mean Bank of Montreal, and its successors as agent hereunder.
"AGREEMENT" shall mean this Credit Agreement, as the same may be amended,
modified or restated from time to time in accordance with the terms hereof.
"APPLICABLE MARGIN" shall mean the rate per annum specified below for the
type of Portion for which the Applicable Margin is being determined or for
Letter of Credit fees or for the commitment fee (as applicable):
(a) At all times when the Company has a Moody's Rating of at least
Baa3 or a S&P Rating of at least BBB-, then the Applicable Margin shall be
determined as follows:
Applicable Margin Shall Be:
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<PAGE>
<TABLE>
<CAPTION>
For
For For For Financial Non-Financial For
LIBOR Base Letter of Credit Letter of Credit Commitment
Rating Level Portions Rate Portion Fee Fee Fee
<S> <C> <C> <C> <C> <C>
Level I Status .25% Zero .25% .125% .085%
Level II Status .30%Zero .30% .15% .10%
Level III Status .40%Zero .40% .20% .15%
Level IV Status .50%Zero .50% .25% .20%
</TABLE>
PROVIDED, HOWEVER, that the foregoing rates per annum described in this
clause (a) are subject to the following:
(x) changes in the Applicable Margin resulting from a change in
the S&P Rating or Moody's Rating shall become effective five (5)
Business Days after the date the Agent is notified of the relevant
change by the Company (the Company hereby agreeing to promptly notify
the Agent of any such change promptly upon the same becoming
effective); and
(y) if and so long as any Event of Default has occurred and is
continuing and notice of such Event of Default is delivered to the
Company by the Agent at the request of the Required Banks, the
Applicable Margins as otherwise computed hereunder shall be increased
by adding the rate of 2% per annum thereto.
(b) In the event the Company has no Moody's Rating or S&P Rating, or in
the event such rating does not fall within the guidelines of clause (a) above,
then the Applicable Margin shall be determined as follows:
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<PAGE>
(i) At any time on or after November 30, 1996, and thereafter when
Consolidated Debt/EBITDA Ratio is less than 1:50 to 1:00, then:
Applicable Margin Shall Be:
For For For Financial For
LIBOR Base Letter of Credit For Non-Financial Commitment
Portions Rate Portion Fee Letter of Credit Fee Fee
.75% Zero .75% .375% .20%
(ii) At all times prior to November 30, 1996, and thereafter when
Consolidated Debt/EBITDA Ratio is greater than or equal to 1:50 to 1:00 but
less than 3.00 to 1.00, then:
Applicable Margin Shall Be:
For For For Financial For
LIBOR Base Letter of Credit For Non-Financial Commitment
Portions Rate Portion Fee Letter of Credit Fee Fee
.875% .125% .875% .4375% .25%
(iii) At any time on or after November 30, 1996, when Consolidated
Debt/EBITDA Ratio is greater than or equal to 3.00 to 1.00, then:
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Applicable Margin Shall Be:
For For For Financial For
LIBOR Base Letter of Credit For Non-Financial Commitment
Portions Rate Portion Fee Letter of Credit Fee Fee
1.125% .25% 1.125% .5625% .30%
PROVIDED, HOWEVER that the foregoing rates per annum described in this
clause (b) are subject to the following:
(x) the Consolidated Debt/EBITDA Ratio shall be determined
as of the last day of each fiscal quarter of the Company (i.e., the
last day of each February, May, August and November), with any
adjustment in the Applicable Margins resulting from a change in such
Consolidated Debt/EBITDA Ratio to be effective forty-five (45) days
after the last day of each fiscal quarter; and
(y) if and so long as any Event of Default has occurred and
is continuing and notice of such Event of Default is delivered to the
Company by the Agent at the request of the Required Banks, the
Applicable Margins as otherwise computed hereunder shall be increased
by adding the rate of 2% per annum thereto.
"APPLICATIONS" shall have the meaning set forth in Section 2.3(c) hereof.
"ASSIGNMENT AGREEMENT" shall have the meaning set forth in Section 11.12
hereof.
"AUTHORIZED REPRESENTATIVE" means those persons shown on the list of
officers provided by the Company pursuant to Section 7.2(a)(ii) hereof or on any
update of any such list provided by the Company to the Agent, or any further or
different officer of the Company so named by any Authorized Representative of
the Company in a written notice to the Agent.
"AVAILABLE FOREIGN CURRENCY" means any currency other than United States
Dollars, so long
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as such currency is freely transferable and convertible into United States
Dollars and is traded and readily available to the Agent in the London interbank
market.
"BANKS" shall mean the parties signing this Agreement as Banks and all
other lenders becoming parties hereto pursuant to Section 11.12 hereof.
"BASE RATE" means for any day the greater of:
(i) the rate of interest publicly announced by Bank of Montreal from
time to time as its prime commercial rate for United States dollar loans
made in the United States (it being understood that such rate may not be
Bank of Montreal's best or lowest rate), with any change in the Base Rate
resulting from a change in said prime commercial rate to be effective as of
the date of the relevant change in said prime commercial rate; and
(ii) the sum of (x) the rates quoted to the Agent as the prevailing
rates per annum (rounded upward, if necessary, to the next higher 1/100 of
1%) bid at approximately 10:00 a.m. (Chicago time) (or as soon thereafter
as is practicable) on such day by two or more New York Federal funds
dealers of recognized standing selected by the Agent for the purchase at
face value of Federal funds in the secondary market in an amount comparable
to the principal amount owed to the Agent for which such rate is being
determined, or, if such rates are not quoted to the Agent, the rate for
that day set forth opposite the caption "FEDERAL FUND (EFFECTIVE)" in the
daily statistical release designated as "COMPOSITE 3:30 P.M. QUOTATIONS FOR
U.S. GOVERNMENT SECURITIES", or any successor publication, published by the
Federal Reserve Bank of New York PLUS (y) 1/2 of 1%, provided that this
clause (ii) shall be inapplicable to any Loan which is outstanding for 15
days or more (for the foregoing purpose repayments of Loans shall be deemed
applied to outstanding Loans in the same order in which they were made).
"BASE RATE PORTION" is defined in Section 3.1 hereof.
"BORROWING" shall mean the total of Loans of a single type made by all the
Banks on a single date and, if such Loans are to be part of a LIBOR Portion, for
a single Interest Period.
"BLUE DIAMOND" shall mean Blue Diamond Materials, Inc., a Nevada
corporation.
"BUSINESS DAY" shall mean any day other than a Saturday or Sunday on which
banks are open for business in Chicago, Illinois and, when used with reference
to LIBOR Portions, a day on which banks are also open for business and dealing
in United States Dollar deposits in London, England.
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<PAGE>
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall mean all properties, rights, interests and privileges
from time to time subject to the liens and security interests granted to the
Agent for the benefit of the Banks by the Collateral Documents.
"COLLATERAL DOCUMENTS" shall mean all security agreements, pledge
agreements, financing statements and other documents as shall from time to time
secure the Notes and Applications and the other obligations of the Company
hereunder.
"COMMITMENTS" shall mean $200,000,000, as such amount may be reduced from
time to time pursuant hereto. The Commitment of each Bank shall be the amount
specified therefor on Exhibit A attached hereto and made part hereof (as the
same shall be deemed amended after giving effect to the Assignment Agreements
referred to in Section 11.12 hereof), as reduced from time to time pursuant
hereto.
"COMPANY" is defined in the introductory paragraph of this Agreement.
"CONFIRMATION ORDER" is defined in Section 6.11 hereof.
"CONSOLIDATED CAPITAL" shall mean, as of any time the same is to be
determined, the sum of (a) Consolidated Total Indebtedness minus the aggregate
amount of Letters of Credit then outstanding and (b) Consolidated Net Worth.
"CONSOLIDATED DEBT/EBITDA RATIO" shall mean, as of any time the same is to
be determined, the ratio of (a) the difference (but not below zero) of (i)
Consolidated Total Indebtedness at such time minus (ii) the amount by which the
sum of Eligible Cash and Eligible Securities at such time exceeds $5,000,000 to
(b) Earnings Before Interest, Taxes, Depreciation and Amortization for the most
recently completed four fiscal quarters of the Company then ended; PROVIDED,
HOWEVER, that during the initial twelve month period occurring after the Merger,
Earnings Before Interest, Taxes, Depreciation and Amortization shall be computed
by multiplying the actual amount thereof accruing after the date of the Merger
by a fraction, the numerator of which is 365 and the denominator of which is the
number of days elapsed since the date of the Merger.
"CONSOLIDATED TOTAL INDEBTEDNESS" shall mean and include (but without
duplication) all obligations of the Company and each of its Subsidiaries of the
following types, all determined on a consolidated basis for the Company and its
Subsidiaries determined in accordance with GAAP: (i) obligations (whether
recourse or nonrecourse) for borrowed money or for the deferred purchase price
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<PAGE>
of, or which have been incurred in connection with the acquisition of, property
or assets other than current accounts payable, (ii) obligations of the type
described in clause (i) secured by any lien or other charge upon property or
assets owned by the Company or any Subsidiary, even though neither the Company
nor any Subsidiary has assumed or become liable for the payment of such
obligations, (iii) obligations payable over a period in excess of one year to
purchase any property or to obtain the services of another Person if the
contract requires that payment for such property or services be made regardless
of whether such property is delivered or such services are performed other than
employment agreements for management personnel, consulting agreements and
contracts for construction services or supplies entered into in the ordinary
course of business of the Company and its Subsidiaries, (iv) Long-term Rentals,
(v) obligations in respect of financial letters of credit, (vi) all liabilities
referred to in clauses (i), (ii), (iii), (iv) and (v) above which are directly
or indirectly guaranteed by the Company or any Subsidiary or which it has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured a creditor against loss. The amount of Long-term
Rentals payable on a lease to be included in Consolidated Total Indebtedness
shall be discounted at the imputed interest rate applicable to such lease, which
interest rate shall be deemed to be 9% per annum unless otherwise specified in
such lease.
"CONSOLIDATED NET INCOME" for any period shall mean the gross revenues from
any source of the Company and its Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined for the Company
and its Subsidiaries on a consolidated basis in accordance with GAAP, but
excluding in any event any gain arising from the acquisition of any equity
securities of the Company or any Subsidiary.
"CONSOLIDATED NET WORTH" shall mean, as of any date, consolidated net worth
as computed in accordance with GAAP for the Company and its Subsidiaries on a
consolidated basis.
"CONTROLLING PERSON" means any Person who directly or indirectly through
one or more intermediaries (i) controls another Person or (ii) beneficially owns
or holds 5% or more of the Voting Stock or other equity interest in another
Person. The term "control" shall have the same meaning herein as such term has
in the definition of "Affiliate".
"DEBT SERVICE COVERAGE RATIO" shall mean, as of any time the same is to be
determined, the ratio of (a) Consolidated Total Indebtedness minus, to the
extent included in Consolidated Total Indebtedness, the aggregate amount of all
letters of credit then outstanding (whether financial letters of credit,
performance letters of credit or commercial letters of credit) to (b) Earnings
Before Interest,
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Taxes, Depreciation and Amortization for the most recently completed four fiscal
quarters of the Company then ended; PROVIDED, HOWEVER, that during the initial
twelve month period occurring after the Merger, Earnings Before Interest, Taxes,
Depreciation and Amortization shall be computed by multiplying the actual amount
thereof accruing after the date of the Merger by a fraction, the numerator of
which is 365 and the denominator of which is the number of days elapsed since
the date of the Merger.
"DEFAULT" shall mean any event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, constitute an Event of
Default.
"DISCLOSURE STATEMENT" shall mean the Second Amended Disclosure Statement
dated as of July 25, 1996, with respect to the plan of reorganization of Old MK
in the form heretofore delivered to the Banks.
"EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION" shall
mean, with reference to any period, Consolidated Net Income for such period plus
all amounts deducted in arriving at such Consolidated Net Income in respect of
(i) Interest Expense, (ii) taxes imposed on or measured by income or excess
profits, (iii) all charges for depreciation of fixed assets and amortization of
intangibles of the Company and its Subsidiaries, and (iv) all other noncash
charges of the Company and its Subsidiaries determined in accordance with GAAP.
"ELIGIBLE CASH" shall mean all cash and cash equivalents as defined in
accordance with GAAP which are unrestricted and freely available to the Company
or any Subsidiary (other than restrictions in the form of early withdrawal
penalties for time deposits and other similar instruments) and which are free
and clear of any lien, security interest, charge or encumbrance whatsoever other
than a lien or security interest granted in favor of the Agent and any
unasserted rights of offset of the relevant depositary financial institution.
"ELIGIBLE LINES OF BUSINESS" shall mean the general nature of the business
and activities engaged in by the Company and its Subsidiaries (which exist as
Subsidiaries of the Company on the date of this Agreement) on the date of this
Agreement, and shall, in any event, include businesses and activities consisting
of engineering and construction, earthmoving, mining, equipment leasing to
Affiliates of such Person, activities directly relating to the application of CF
Systems Corporation's extraction technologies to food processing environmental
remediation (exclusive of owning or operating a treatment, storage, or disposal
facility for solid, special, or hazardous waste (except, with
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respect to operating any such facility, to the extent of the Company's
operations and functions at such facility shall be substantially similar in
scope and nature as the operations and functions currently performed by the
Company at such facilities and described on Schedule 1.1 hereof)) industrial
maintenance, site and infrastructure development, and manufacturing construction
materials.
"ELIGIBLE SECURITIES" shall mean short-term investments owned by the
Company or any Subsidiary of the type described in Section 8.13(a)-(d) hereof
and is an asset of the Company or such Subsidiary to which it has good and
marketable title, is freely assignable, and is free and clear of any lien,
security interest, charge or encumbrance whatsoever other than a lien or
security interest granted in favor of the Agent for the benefit of the Banks,
but excluding in any event any item constituting Eligible Cash.
"EVENT OF DEFAULT" shall mean any of the events specified in Section 9.1
hereof.
"FEDERAL FUNDS RATE" means the fluctuating interest rate per annum
described in part (x) of clause (ii) of the definition of Base Rate.
"FINANCIAL LETTER OF CREDIT" means a letter of credit classified as a
financial letter of credit for regulatory reporting purposes by the Agent, which
classification shall be conclusive and binding on the Company and the Banks if
reasonably determined.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination and using the applicable
principles of purchase accounting to account for the Merger.
"GUARANTY" is defined in Section 5.3 hereof.
"ICC" means Industrial Construction Corp., a Montana corporation.
"INTEREST EXPENSE" shall mean with reference to any period all interest
charges (including amortization of debt discount and expense and imputed
interest on leases with an original term of one year or more) accrued for such
period, whether or not paid, all as computed on a consolidated basis for the
Company and its Subsidiaries in accordance with GAAP. Imputed interest on
leases shall be deemed to be 9% per annum, unless otherwise specified in the
lease.
"INTEREST PERIOD" shall mean with respect to any LIBOR Portion:
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(a) initially, the period commencing on, as the case may be, the
creation or conversion date with respect to such LIBOR Portion and ending
one, two, three or six months thereafter as selected by the Company in its
notice as provided herein, or such other period of not less than ten days
and not more than twelve months as agreed to at the time by the Company,
the Agent and each of the Banks; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Portion and ending one,
two, three or six months thereafter as selected by the Company in its
notice as provided herein, or such other period of not less than ten days
and not more than twelve months as agreed to at the time by the Company,
the Agent and each of the Banks;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity date of
the Notes;
(iii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such Interest
Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect thereto
the Company will be unable to make a principal payment scheduled to be made
during such Interest Period without paying part of a LIBOR Portion on a
date other than the last day of the Interest Period applicable thereto.
For purposes of determining an Interest Period, a month means a period
starting on one day in a calendar month and ending on a numerically
corresponding day in the next calendar month, PROVIDED, HOWEVER, if an Interest
Period begins on the last day of a month or if there is no numerically
corresponding day in the month in which an Interest Period is to end, then such
Interest Period shall end on the last Business Day of such month.
"ISSUING BANK" means the Agent; PROVIDED that, in the event a Letter of
Credit issued by the Agent is not acceptable to the beneficiary thereof, another
Bank party to this Agreement acceptable
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to such beneficiary may be the Issuing Bank with respect to such Letter of
Credit if agreed to by the Company and such Bank with prior notice to the Agent.
"LETTERS OF CREDIT" shall mean Financial Letters of Credit and
Non-Financial Letters of Credit issued for the account of the Company pursuant
to Section 2.3 hereof.
"LEVEL I STATUS" means the S&P Rating is at least A- or higher OR the
Moody's Rating is at least A3 or higher.
"LEVEL II STATUS" means Level I Status does not exist, but the S&P Rating
is at least BBB+ or higher OR the Moody's Rating is at least Baa1 or higher.
"LEVEL III STATUS" means neither Level I Status nor Level II Status exists,
but the S&P Rating is at least BBB or higher OR the Moody's Rating is at least
Baa2 or higher.
"LEVEL IV STATUS" means none of Level I Status, Level II Status, and Level
III Status exists, but the S&P Rating is at least BBB- or higher OR the Moody's
Rating is at least Baa3 or higher.
"LIBOR PORTION" is defined in Section 3.1 hereof.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Applications,
the Guaranty, the Collateral Documents, and each of the other instruments and
documents to be delivered hereunder or thereunder or otherwise in connection
therewith.
"LOANS" shall have the meaning set forth in Section 2.2 hereof.
"LONG-TERM RENTALS" shall mean and include all fixed rents (including as
such all payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by the Company or
any Subsidiary, as lessee or sublessee under a lease of real or personal
property having an initial term (exclusive of renewal terms which are at the
option of the lessee) in excess of twelve months, but shall be exclusive of any
amounts required to be paid by the Company or any Subsidiary (whether or not
designated as rents or additional rents) on account of maintenance, repairs,
insurance, taxes and similar charges, all computed for the Company and its
Subsidiaries on a consolidated basis. For purposes of any prospective
calculations, fixed rents under any so-called "PERCENTAGE LEASES" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), or results of operations
of the Company and its Subsidiaries taken
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as a whole, (ii) the ability of the Company or any Material Subsidiary to
perform its obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Agent or of the Banks thereunder.
"MATERIAL FOREIGN SUBSIDIARY" means each Unrestricted Subsidiary except to
the extent it has neither (a) assets with a book value at or in excess of 3% of
the Company's consolidated total assets nor (b) net income for the most recently
completed calendar year at or in excess of 3% of the Company's Consolidated Net
Income.
"MATERIAL SUBSIDIARY" means each Restricted Subsidiary designated as a
Material Subsidiary on Schedule 6.2 hereof, and any other Restricted Subsidiary
except to the extent such other Restricted Subsidiary has neither (a) assets
with a book value at or in excess of 3% of the Company's consolidated total
assets nor (b) net income for the most recently completed calendar year at or in
excess of 3% of the Company's Consolidated Net Income.
"MECHANIC'S LIENS" shall have the meaning set forth in Section 8.8(b)
hereof.
"MERGER" means the merger of Old MK with and into the Company, with the
Company surviving the merger and changing its name to Morrison Knudsen
Corporation.
"MERGER DOCUMENTS" means the Restructuring and Merger Agreement dated May
28, 1996, and all amendments thereto entered into prior to the date hereof and
furnished to the Banks under Section 7.2(c) hereof, and all other instruments
and documents executed and delivered in connection therewith or the consummation
of the Merger described therein.
"MOODY'S RATING" means the rating assigned by Moody's Investors Service,
Inc. to the outstanding senior unsecured non-credit enhanced long-term
indebtedness of the Company. Any reference in this Agreement to any specific
rating is a reference to such rating as currently defined by Moody's Investors
Service, Inc. and shall be deemed to refer to the equivalent rating if such
rating system changes.
"NON-FINANCIAL LETTER OF CREDIT" means a letter of credit classified as a
performance letter of credit or as a commercial letter of credit for regulatory
reporting purposes by the Agent, which classification shall be conclusive and
binding on the Company and the Banks if reasonably determined.
"NOTES" shall have the meaning set forth in Section 2.2 hereof.
"OLD MK" means Morrison Knudsen Corporation, a Delaware corporation prior
to giving
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effect to the Merger.
"OVERNIGHT FOREIGN CURRENCY RATE" means, for any amount payable in a
currency other than U.S. Dollars, the rate of interest per annum as determined
by the Agent (rounded upwards, if necessary, to the nearest whole multiple of
one-sixteenth of one percent (1/16 of 1%)) at which overnight or weekend
deposits of the appropriate currency (or, if such amount due remains unpaid more
than three Business Days, then for such period of time not longer than six
months as the Agent may elect in its absolute discretion) for delivery in
immediately available and freely transferable funds would be offered by the
Agent to major banks in the interbank market upon request of such major banks
for the applicable period as determined above and in an amount comparable to the
unpaid principal amount of the related obligation (or, if the Agent is not
placing deposits in such currency in the interbank market, then the Agent's cost
of funds in such currency for such period).
"PERMITTED LIENS" is defined in Section 8.8 hereof.
"PERSONS" shall mean any individual, trust, partnership, firm, corporation,
limited liability company, association, unincorporated organization or any other
entity or organization, including a government or agency or political
subdivision thereof.
"PLAN" shall mean the First Amended Plan of Reorganization of Old MK dated
as of July 25, 1996, in the form heretofore submitted to the Banks, as the same
may from time to time be amended as permitted hereby.
"PORTION" is defined in Section 3.1 hereof.
"PRIOR CREDIT AGREEMENT" means that certain Credit Agreement dated as of
September 8, 1995, as amended, by and among the Company, Bank of Montreal,
individually and as agent, and the other lenders party thereto.
"PURCHASE MONEY LIENS" is defined in Section 8.8(c) hereof.
"REQUIRED BANKS" shall mean Banks holding 51% or more of the outstanding
principal amount of the Loans and the credit risks to the Letters of Credit, or,
if no Loans or Letters of Credit are outstanding, Banks granting 51% or more of
the Commitments.
"RESTRICTED SUBSIDIARY" shall mean each Subsidiary other than an
Unrestricted Subsidiary.
"REVOLVING CREDIT" is defined in the introductory paragraph of this
Agreement.
"S&P RATING" means the rating assigned by Standard & Poor's Ratings
Services Group, a
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division of The McGraw-Hill Companies, Inc., to the outstanding senior unsecured
non-credit enhanced long-term indebtedness of the Company. Any reference in
this Agreement to any specific rating is a reference to such rating as currently
defined by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc., and shall be deemed to refer to the equivalent rating if such
rating system changes.
"SUBSIDIARY" means any corporation more than 50% of the outstanding Voting
Stock of which is at the time directly or indirectly owned by the Company, by
one or more of its Subsidiaries, or by the Company and one or more of its
Subsidiaries.
"TERMINATION DATE" shall mean October 8, 2001, or such later date to which
the same may be extended pursuant to Section 11.17 hereof, or such earlier date
on which the Commitments are terminated in whole pursuant to Section 4.5 or
Section 9 hereof.
"UNRESTRICTED SUBSIDIARY" shall mean Blue Diamond, ICC, and each other
Subsidiary which (i) is organized under the laws of a jurisdiction other than
the United States of America or any state thereof, (ii) conducts substantially
all of its business outside of the United States of America, and (iii) has
substantially all of its assets outside of the United States of America.
"U.S. DOLLARS" and "$" each means the lawful currency of the United States
of America.
"U.S. DOLLAR EQUIVALENT" means the amount of U.S. Dollars which would be
realized by converting the relevant Available Foreign Currency into U.S. Dollars
in the spot market at the exchange rate quoted by the Agent, at approximately
11:00 a.m. (London time) on the date on which a computation thereof is required
to be made, to major banks in the interbank foreign exchange market for the
purchase of U.S. Dollars with such foreign currency.
"VOTING STOCK" shall mean securities of any class or classes of a Person,
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors of such Person (or Persons
performing similar functions).
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors' qualifying shares as
required by law) or other equity interests are owned by the Company and/or one
or more Wholly-Owned Subsidiaries within the meaning of this definition.
Capitalized terms defined in the provisions of this Agreement shall have
the meanings so ascribed to them in all provisions of this Agreement.
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SECTION 1.2. ACCOUNTING TERMS. For purposes of this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to such terms in conformity with GAAP. Financial statements and other
information furnished to the Agent pursuant to Section 8.5 shall be prepared in
accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis. In the event any "Accounting Changes" (as defined below)
shall occur and such changes affect financial covenants, standards or terms in
this Agreement, then the Company, the Agent and the Banks agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of the Company and its
Subsidiaries shall be the same after such Accounting Changes as if such
Accounting Changes had not been made, and until such time as such an amendment
shall have been executed and delivered by the Company, the Agent and the
Required Banks, (A) all financial covenants, standards and terms in this
Agreement shall be calculated and/or construed as if such Accounting Changes had
not been made, and (B) the Company shall prepare footnotes to each compliance
certificate and the financial statements required to be delivered hereunder that
show the differences between the financial statements delivered (which reflect
such Accounting Changes) and the basis for calculating financial covenant
compliance (without reflecting such Accounting Changes). "ACCOUNTING CHANGES"
means: (a) changes in accounting principles required by GAAP and implemented by
the Company and any of its Subsidiaries; (b) changes in accounting principles
recommended by certified public accountants of the Company or any of its
Subsidiaries; or (c) changes in carrying value of the Company's (or any of its
Subsidiaries') assets, liabilities or equity accounts resulting from the
application of purchase accounting principles.
SECTION 2. THE REVOLVING CREDIT.
SECTION 2.1. GENERAL TERMS. Subject to all of the terms and conditions
hereof, the Banks agree to extend a Revolving Credit to the Company which may be
availed of by the Company from time to time, be repaid and used again, during
the period from the date hereof to and including the Termination Date. The
Revolving Credit may be utilized by the Company in the form of Loans or Letters
of Credit, all as more fully hereinafter set forth, provided that (a) the
aggregate amount of Loans and Letters of Credit outstanding at any one time
shall not exceed the Commitments and (b) the aggregate amount of Loans
outstanding at any one time shall not exceed $125,000,000 or, if less, the
aggregate Commitments then in effect. The maximum amount of the Revolving
Credit which each Bank agrees to extend hereunder shall be as set forth opposite
its name on Exhibit A
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attached hereto and made a part hereof (as the same shall be deemed amended
after giving effect to the Assignment Agreements referred to in Section 11.12
hereof). The obligations of the Banks hereunder are several and not joint and
no Bank shall under any circumstance be obligated to extend credit under the
Revolving Credit in excess of its Commitment or its pro rata share of the credit
outstanding hereunder.
SECTION 2.2. THE LOANS. Subject to all of the terms and conditions
hereof, the Revolving Credit may be availed of by the Company in the form of
loans (individually a "LOAN" and collectively the "LOANS"). Each Borrowing
shall be in a minimum amount of $1,000,000 and thereafter in integral multiples
of $100,000 (with LIBOR Portions being in a minimum amount of $5,000,000 and
thereafter in integral multiples of $500,000) and shall be made pro rata from
the Banks in accordance with the amounts of their Commitments. All Loans made
by each Bank shall be made against and evidenced by a Revolving Credit Note
(individually a "NOTE" and collectively the "NOTES") in the form (with
appropriate insertions) annexed hereto as Exhibit B. Each Note shall be in the
amount of the Commitment of the Bank to which it is payable and shall mature on
the Termination Date. The initial Borrowing of Loans under the Revolving Credit
shall consist of the acquisition by the Banks, pro rata in accordance with the
respective amounts of their Commitments, of all loans owing by the Company under
the Prior Credit Agreement (the "ACQUIRED LOANS"). From and after the date of
their acquisition by the Banks, the Acquired Loans shall bear interest as
provided in this Agreement, shall mature on the Termination Date, and shall
otherwise be subject in all respects to the terms and conditions of this
Agreement. On the date of the acquisition of the Acquired Loans, the Company
shall cause to be paid to the lenders party to the Prior Credit Agreement all
accrued interest, commitment and letter of credit fees, and funding indemnity
payments due such lenders as if such Acquired Loans had been prepaid in full on
such date.
SECTION 2.3. LETTERS OF CREDIT.
(a) GENERAL TERMS. Subject to all of the terms and conditions
hereof, the Revolving Credit may be availed of by the Company in the form
of Letters of Credit issued to Persons other than Affiliates of the
Company, provided that the U.S. Dollar Equivalent of Letters of Credit
payable in an Available Foreign Currency outstanding at any one time shall
not exceed $150,000,000 in the aggregate (determined in accordance with
this Section 2.3). The amount of any Letter of Credit for all purposes of
this Agreement shall be the maximum amount which could be drawn thereunder
under any circumstances and over any period of
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time plus all unreimbursed drawings then outstanding with respect thereto.
The Issuing Bank shall issue the Letters of Credit for the account of the
Banks and, accordingly, each Letter of Credit shall be deemed to utilize a
pro rata share of the Commitment of each Bank. Notwithstanding anything
herein to the contrary, all letters of credit issued by Bank of Montreal
pursuant to the Prior Credit Agreement shall constitute "Letters of Credit"
herein for all purposes of this Agreement and all applications and
reimbursement agreements with respect to such letters of credit shall
constitute "Applications" herein for all purposes of this Agreement, in
each case to the same extent, and with the same force and effect, as if
such Letters of Credit and Applications therefor had been issued at the
request of the Company under this Agreement.
(b) GENERAL CHARACTERISTICS. Each Letter of Credit issued hereunder
shall expire not later than the Termination Date then in effect. Each
Letter of Credit issued hereunder shall be payable in U.S. Dollars or in an
Available Foreign Currency, shall conform to the general requirements of
the Issuing Bank for the issuance of letters of credit as to form and
substance, and shall be a letter of credit which the Issuing Bank may
lawfully issue. If an Issuing Bank issues any Letter of Credit with an
expiration date that is automatically extended unless such Issuing Bank
gives notice that the expiration date will not so extend beyond its then
scheduled expiration date, such Issuing Bank will give notice of such
non-renewal before the time necessary to prevent such automatic extension
if before such required notice date (i) the expiration date of such Letter
of Credit if so extended would be after the Termination Date then in
effect, (ii) the Commitments have been terminated, or (iii) a Default or an
Event of Default exists and the Required Banks have given the Issuing Bank
instructions not to so permit the extension of the expiration date of such
Letter of Credit.
(c) APPLICATIONS AND AGREEMENTS. At the time the Company requests a
Letter of Credit to be issued (or prior to the first issuance of a Letter
of Credit, in the case of a continuing application), it shall execute and
deliver to the Issuing Bank an application for such Letter of Credit in the
form then prescribed by the Issuing Bank (the "APPLICATIONS"). Anything
contained in the Applications to the contrary notwithstanding (aa) the
Company shall pay fees in connection with Letters of Credit only as set
forth in Section 4 hereof, (ab) in the event that the Issuing Bank is not
promptly reimbursed for the amount of any draft drawn under a Letter of
Credit issued hereunder after notice to the Company that such draft
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has been received, the obligation of the Company to reimburse the Issuing
Bank for the amount of such draft shall bear interest (which the Company
hereby promises to pay) from and after the date the draft is paid at a
fluctuating rate per annum equal to (x) in the case of a drawing under a
Letter of Credit denominated in U.S. Dollars or a Letter of Credit
denominated in an Available Foreign Currency as to which the Issuing Bank
has requested that the Company reimburse such drawing in U.S. Dollars, the
sum of 2 1/4% plus the Base Rate from time to time in effect, and (y) in
the case of a drawing under a Letter of Credit denominated in an Available
Foreign Currency as to which the Issuing Bank has requested that the
Company reimburse such drawing in the Available Foreign Currency in which
such Letter of Credit is denominated, the sum of 2 1/4% plus the Overnight
Foreign Currency Rate, (ac) so long as no Event of Default has occurred and
is continuing, the Issuing Bank will not call for additional collateral
security for the obligations of the Company under the Applications other
than the collateral security contemplated by this Agreement, and (ad) so
long as no Event of Default has occurred and is continuing, the Issuing
Bank will not call for the funding of a Letter of Credit prior to being
presented with a draft or demand for payment thereunder (or, in the event
the draft is a time draft, prior to its due date). The obligation of the
Company to reimburse the Issuing Bank for all drawings under a Letter of
Credit issued hereunder shall be governed by the Application related to
such Letter of Credit, except that (i) the reimbursement by the Company of
draws made under a Letter of Credit denominated in U.S. Dollars shall be
made in U.S. Dollars, (ii) the reimbursement by the Company of draws made
under a Letter of Credit denominated in an Available Foreign Currency shall
be made by payment in U.S. Dollars of the U.S. Dollar Equivalent,
calculated on the date the Issuing Bank paid such draw, of the amount paid
by the Issuing Bank pursuant to such draw, or, if the Issuing Bank shall
elect by notice to the Company and the Agent by payment in the Available
Foreign Currency which was paid by the Issuing Bank pursuant to such
drawing in an amount equal to such drawing, and (iii) reimbursement in U.S.
Dollars of a drawing paid shall be made to the Issuing Bank (with notice to
the Agent) by no later than 1:00 p.m. (Chicago time) on the date when such
drawing is paid and reimbursement in an Available Foreign Currency of a
drawing paid shall be made to the Issuing Bank (with notice to the Agent)
by no later than 1:00 p.m. local time at the place of payment or, if
earlier, such local time as is necessary for such funds to be received and
transferred to the Issuing Bank for same
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day value on the day such obligation is due; and any payment of a
reimbursement obligation relating to a Letter of Credit received after such
time shall be deemed to have been received by the Issuing Bank on the next
Business Day.
(d) CHANGE IN LAWS. If the Issuing Bank or any Bank shall determine
in good faith that any applicable law, regulation or guideline (including,
without limitation, Regulation D of the Board of Governors of the Federal
Reserve System) or any interpretation of any of the foregoing by any
governmental authority charged with the administration thereof or any
central bank or other fiscal, monetary or other authority having
jurisdiction over the Issuing Bank or such Bank (whether or not having the
force of law) shall after the date hereof:
(aa) impose, modify or deem applicable any reserve, special
deposit or similar requirements against the Letters of Credit or the
Issuing Bank's or such Bank's or the Company's liability with respect
thereto; or
(bb) impose on the Issuing Bank or such Bank any penalty with
respect to the foregoing or any other condition regarding this
Agreement, the Applications or the Letters of Credit;
and the Issuing Bank or such Bank shall determine in good faith that the
result of any of the foregoing is to increase the cost (whether by
incurring a cost or adding to a cost) to the Issuing Bank or such Bank of
issuing, maintaining or participating in the Letters of Credit hereunder
(without benefit of, or credit for, any prorations, exemptions, credits or
other offsets available under any such laws, regulations, guidelines or
interpretations thereof), then the Company shall pay within five (5) days
following demand by the Issuing Bank or such Bank from time to time as
specified by the Issuing Bank or such Bank such additional amounts as the
Issuing Bank or such Bank shall in good faith determine are sufficient to
compensate and indemnify it for such increased cost. If the Issuing Bank
or any Bank makes such a claim for compensation, it shall provide to the
Company and the Agent a written explanation of the circumstances giving
rise to such claim and a certificate setting forth such increased costs as
a result of any event mentioned herein in reasonable detail and such
certificate shall be deemed PRIMA FACIE correct. Neither an Issuing Bank
nor a Bank shall be entitled to compensation under this Section 2.3(d) with
respect to any imposition for any period prior to the earlier of (i) the
date it notifies the Company of the imposition giving rise to the request
for compensation or (ii) the date which is thirty (30) days prior to the
date it
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becomes aware of the imposition giving rise to the request for compensation
if the Company is notified of the adoption or change prior to the lapse of
such 30-day period.
(e) PARTICIPATIONS IN LETTERS OF CREDIT. Each Bank shall participate
on a pro rata basis in the Letters of Credit issued by the Issuing Banks,
which participation shall automatically arise upon the issuance of each
such Letter of Credit (such participations to ratably count against the
Commitments of the Banks when the Letters of Credit are issued). Each Bank
unconditionally agrees that in the event an Issuing Bank is not immediately
reimbursed by the Company for the amount paid by such Issuing Bank on any
draft presented to it under a Letter of Credit issued by it, then such
Issuing Bank shall give prompt notice thereof to each Bank and in that
event each Bank shall thereafter pay to such Issuing Bank (i) in the case
of a reimbursement obligation payable in U.S. Dollars, an amount equal to
such Bank's pro rata share (based on the percentage which its Commitment
bears to the aggregate of the Commitments) of such unpaid reimbursement
obligation, such payment to be made in lawful money in the United States,
in immediately available funds at the Issuing Bank's lending office
designated on its signature page hereof (or on Assignment Agreements
delivered pursuant to Section 11.12 hereof), together with interest on such
amount accrued from the date the related payment was made by the Issuing
Bank to the date of such payment by such participating Bank at a rate per
annum equal to (x) from the date the related payment was made by the
Issuing Bank to the date two (2) Business Days after payment by such Bank
is due hereunder, the Federal Funds Rate for each such day and (y) from the
date two (2) Business Days after the date such payment is due from such
Bank to the date such payment is made by such Bank, the Base Rate in effect
for each such day and (ii) in the case of a reimbursement obligation
payable in an Available Foreign Currency, an amount equal to such Bank's
pro rata share (based on the percentage which its Commitment bears to the
aggregate of the Commitments) of such unpaid reimbursement obligation, such
payment to be made in such Available Foreign Currency in such funds which
are then customary for the settlement of international transactions in such
currency, together with interest on such amount accrued from the date the
related payment was made by the Issuing Bank to the date of such payment by
the participating Bank at a rate per annum equal to (x) from the date the
related payment was made by the Issuing Bank to the date two (2) Business
Days after payment by such Bank is due hereunder, the Overnight Foreign
Currency Rate for each such
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day and (y) from the date two (2) Business Days after the date such payment
is due from such Bank to the date such payment is made by such Bank, the
sum of 1% PLUS the Overnight Foreign Currency Rate for each such day. Each
such participating Bank shall thereafter be entitled to receive its pro
rata share of each payment received in respect of the relevant
reimbursement obligation and of interest paid thereon, with the Issuing
Bank retaining its pro rata share as a Bank hereunder. In the event that
any Bank fails to honor its obligation to reimburse an Issuing Bank for its
pro rata share of the amount of any such draft, then in that event (i) each
other Bank shall pay to such Issuing Bank its pro rata share of the payment
due the Issuing Bank from the defaulting Bank; (ii) the defaulting Bank
shall have no right to participate in any recoveries from the Company in
respect of such draft, and (iii) all amounts to which the defaulting Bank
would otherwise be entitled under the terms of this Agreement shall first
be applied to reimbursing the Banks for their respective pro rata shares of
the defaulting Bank's portion of the draft, together with interest thereon
at the rate provided for herein. Upon reimbursement to the other Banks
(pursuant to clause (iii) above or otherwise) of the amount advanced by
them to the Issuing Bank in respect of the defaulting Bank's share of the
draft, together with interest thereon, the defaulting Bank shall thereupon
be entitled to its participation in such Issuing Bank's rights of recovery
against the Company in respect of the draft paid by the Issuing Bank.
(f) NOTICES. Prior to the issuance of, or amendment to, any Letter
of Credit, the relevant Issuing Bank shall give prompt telephone, telex or
telecopy notice to the Agent of the proposed Letter of Credit specifying
the effective date of such Letter of Credit or amendment, the amount, the
beneficiary, and the expiration date of the proposed Letter of Credit. The
Agent shall promptly thereafter notify the Issuing Bank by telephone, telex
or telecopy as to whether the amount of such Letter of Credit or expiry
date with respect thereto would exceed any restrictions in this Section 2.3
on the amount of Letters of Credit to be issued hereunder or the expiry
dates with respect thereto. Upon the issuance of, or amendment to, any
Letter of Credit hereunder, the relevant Issuing Bank shall promptly notify
the Agent and the Agent shall thereafter promptly give telephone, telex or
telecopy notice to each of the other Banks of the issuance of, or amendment
to, such Letters of Credit specifying the effective date of the Letter of
Credit or amendment, the amount, the beneficiary, and the expiration date
of the Letter of Credit, in each case as established originally or through
the
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relevant amendment, as applicable, each Bank's pro rata participation in
such Letter of Credit, and whether the Agent has classified the Letter of
Credit as a Financial Letter of Credit or a Non-Financial Letter of Credit
for regulatory reporting purposes.
(g) CURRENCY DETERMINATIONS. The Agent shall determine the U.S.
Dollar Equivalent of each Letter of Credit and each obligation due with
respect thereto, and a determination thereof by the Agent shall be
conclusive and binding except in the case of manifest error. The U.S.
Dollar Equivalent of each reimbursement obligation with respect to a Letter
of Credit drawn upon shall be calculated on the date the Issuing Bank pays
on the drawing giving rise to such reimbursement obligation. The U.S.
Dollar Equivalent of each Letter of Credit shall be determined or
redetermined, as applicable, on the date of issuance, increase or extension
of such Letter of Credit and on the first day of each March, June,
September, and December thereafter. At the request of any Bank, the Agent
shall redetermine the U.S. Dollar Equivalent of any Letter of Credit at
such times, and from time to time, as may be requested.
SECTION 2.4. MANNER OF BORROWING. The Company shall give written or
telephonic notice to the Agent (which notice shall be irrevocable once given
and, if given by telephone, shall be promptly confirmed in writing) by no later
than 11:00 a.m. (Chicago time) on the date the Company requests that any
Borrowing of Loans be made to it under the Commitments, and the Agent shall
promptly notify each Bank of the Agent's receipt of each such notice. Each such
notice shall specify the date of the Borrowing of Loans requested (which must be
a Business Day, and which date shall be (x) at least two (2) Business Days
subsequent to the date of such notice in the case of any Borrowing of Loans
aggregating more than $25,000,000 (excluding any continuations or conversions of
such Borrowings) and (y) at least three (3) Business Days subsequent to the date
of such notice in the case of any Borrowing of Loans constituting a LIBOR
Portion) and the amount of such Borrowing. Each Borrowing of Loans shall
initially constitute part of the applicable Base Rate Portion except to the
extent the Company has otherwise timely elected that such Borrowing constitute
part of a LIBOR Portion as provided in Section 3 hereof. The Company agrees
that the Agent may rely upon any written or telephonic notice given by any
person the Agent in good faith believes is an Authorized Representative without
the necessity of independent investigation and, in the event any telephonic
notice conflicts with the written confirmation, such telephonic notice shall
govern if the Agent and the Banks have
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acted in reliance thereon. The Banks undertake to endeavor in good faith to
honor on a same day basis Borrowing requests received later than 11:00 a.m.
(Chicago time) but shall incur no liability to the Company if it is not
reasonably practical for them to honor such requests on a same day basis. Not
later than 1:00 p.m. (Chicago time) on the date specified for any Borrowing of
Loans to be made hereunder, each Bank shall make the proceeds of its Loan
comprising part of such Borrowing available to the Agent in Chicago, Illinois in
immediately available funds. Subject to the provisions of Section 7 hereof, the
proceeds of each Loan shall be made available to the Company at the principal
office of the Agent in Chicago, Illinois, in immediately available funds, upon
receipt by the Agent from each Bank of its pro rata share of such Borrowing.
Unless the Agent shall have been notified by a Bank prior to 1:00 (Chicago time)
on the date a Borrowing is to be made hereunder that such Bank does not intend
to make its pro rata share of such Borrowing available to the Agent, the Agent
may assume that such Bank has made such share available to the Agent on such
date and the Agent may (but shall not be obligated to) in reliance upon such
assumption make available to the Company a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Bank and
the Agent has made such amount available to the Company, the Agent shall be
entitled to receive such amount from such Bank forthwith upon its demand,
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Company and ending
on but excluding the date the Agent recovers such amount at a rate per annum
equal to (x) from the date the related payment was due to the Agent to the date
two (2) Business Days after the date such payment was due, the Federal Funds
Rate for such day (or in the case of a day which is not a Business Day, then for
the preceding day) and (y) thereafter until payment of such amount is received
by the Agent from such Bank, the Base Rate in effect for each such day.
SECTION 3. Interest.
SECTION 3.1. OPTIONS. Subject to all of the terms and conditions of this
Section 3, portions of the principal indebtedness evidenced by the Notes (all of
the indebtedness evidenced by the Notes bearing interest at the same rate for
the same period of time being hereinafter referred to as a "PORTION") shall, at
the option of the Company, bear interest with reference to the Base Rate (the
"BASE RATE PORTIONS") or with reference to the Adjusted LIBOR Rate ("LIBOR
PORTIONS"), and Portions shall be convertible from time to time from one basis
to the other. All of the indebtedness
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evidenced by the Notes which is not part of a LIBOR Portion shall constitute a
single Base Rate Portion. All of the indebtedness evidenced by the Notes which
bears interest with reference to a particular Adjusted LIBOR Rate for a
particular Interest Period shall constitute a single LIBOR Portion. Anything
contained herein to the contrary notwithstanding, there shall not be more than
eight (8) LIBOR Portions applicable to any Note outstanding at any one time and
each Lender shall have a ratable interest in each Portion based on its
Commitment thereof. The Company promises to pay interest on each Portion at the
rates and times specified in this Section 3.
SECTION 3.2. BASE RATE PORTION. Each Base Rate Portion shall bear
interest (which the Company promises to pay at the times herein provided) at the
rate per annum determined by adding the Applicable Margin to the Base Rate as in
effect from time to time. Interest on the Base Rate Portions shall be payable
quarterly in arrears on the first day of each March, June, September and
December in each year and at maturity of the applicable Notes, and interest
after maturity shall be due and payable upon demand.
SECTION 3.3. LIBOR PORTIONS. Each LIBOR Portion shall bear interest
(which the Company promises to pay at the times herein provided) for each
Interest Period selected therefor at a rate per annum equal to the Adjusted
LIBOR Rate for such Interest Period plus the Applicable Margin. Interest on
each LIBOR Portion shall be due and payable on the last day of each Interest
Period applicable thereto and, if an Interest Period is longer than three (3)
months, then at the end of each three month period and at the end of such
Interest Period, and interest after maturity shall be due and payable upon
demand. The Company shall give written or telephonic notice to the Agent (which
notice shall be irrevocable once given and, if given by telephone, shall be
promptly confirmed in writing) on or before 11:00 a.m. (Chicago time) on the
third Business Day preceding the end of an Interest Period applicable to a LIBOR
Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in which
event the Company shall notify the Agent of the new Interest Period selected
therefor, and in the event the Company shall fail to so notify the Agent, such
LIBOR Portion shall automatically be converted into and added to the Base Rate
Portion as of and on the last day of such Interest Period. The Agent shall
promptly notify each Bank of each notice received from the Company pursuant to
the foregoing provisions. Anything contained herein to the contrary
notwithstanding, the obligation of the Banks to create or continue any LIBOR
Portion or to convert any part of the Base Rate Portion into a LIBOR Portion
shall be conditioned upon the fact that at the time no Default or Event of
Default shall have occurred and be continuing, except that during the
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existence of a Default (but not an Event of Default) the Company may request the
continuation of any LIBOR Portion into another LIBOR Portion with an Interest
Period not in excess of one (1) month.
SECTION 3.4. COMPUTATION. All interest on the Notes and all fees,
charges and commissions due hereunder shall be computed on the basis of a year
of 360 days for the actual number of days elapsed, except that interest on the
Base Rate Portion shall be computed on the basis of a year of 365 or 366 days
(as the case may be) for the actual number of days elapsed.
SECTION 3.5. MINIMUM AMOUNTS. Each LIBOR Portion shall be in a minimum
amount of $5,000,000 and thereafter in integral multiples of $500,000.
SECTION 3.6. MANNER OF RATE SELECTION. The Company shall notify the
Agent by 11:00 a.m. (Chicago time) at least three (3) Business Days prior to the
date upon which it requests that any LIBOR Portion be created or that any part
of the Base Rate Portion be converted into a LIBOR Portion (such notice to
specify in each instance the amount thereof and the Interest Period selected
therefor) and the Agent shall promptly advise each Bank of each such notice. If
any request is made to convert a LIBOR Portion into the Base Rate Portion, such
conversion shall only be made so as to become effective as of the last day of
the Interest Period applicable thereto. All requests for the creation,
continuance or conversion of Portions under this Agreement shall be irrevocable.
Such requests may be written or telephonic (provided that if such notice is
given by telephone, the Company shall promptly confirm such notice to the Agent
in writing), and the Agent is hereby authorized to honor telephonic requests for
creations, continuances and conversions received by it from any person the Agent
reasonably believes to be an Authorized Representative, the Company hereby
indemnifying the Agent and the Banks from any liability or loss ensuing from so
acting.
SECTION 3.7. FUNDING INDEMNITY. In the event any Bank shall incur any
loss, cost or expense (including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or re-employment of deposits or other
funds acquired by such Bank to fund or maintain any LIBOR Portion or the
relending or reinvesting of such deposits or amounts paid or prepaid to such
Lender, and any loss of profit) as a result of:
(a) any payment or prepayment of a LIBOR Portion on a date other than
the last day of its Interest Period for any reason, whether before or after
default, and whether or not such payment is required by any of the
provisions of this Agreement;
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(b) any failure (because of a failure to meet the conditions of
Section 7 hereof or otherwise) by the Company to create, borrow, continue
or affect by conversion a LIBOR Portion on the date specified in a notice
given pursuant to this Agreement hereof; or
(c) any failure by the Company to make any payment of principal on
any LIBOR Portion when due (whether by acceleration, mandatory prepayment
or otherwise),
then, upon the demand of such Bank, the Company shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense. If any Bank
makes such a claim for compensation, it shall provide to the Company a
certificate executed by an officer of such Bank setting forth the amount of such
loss, cost or expense in reasonable detail (including an explanation of the
basis for and the computation of such loss, cost or expense) and such
certificate shall be deemed PRIMA FACIE correct.
SECTION 3.8. CHANGE OF LAW. Notwithstanding any other provisions of this
Agreement or any Note, if at any time any change in applicable law or regulation
or in the official interpretation thereof makes it unlawful for any Bank to make
or continue to maintain LIBOR Portions or to give effect to its obligations to
make LIBOR Portions available as contemplated hereby, such Bank shall promptly
give notice thereof to the Company and the Agent and such Bank's obligations to
make or maintain LIBOR Portions under this Agreement shall terminate until it is
no longer unlawful for such Bank to make or maintain LIBOR Portions. To the
extent required to comply with any such law as changed, the Company shall prepay
on demand the outstanding principal amount of any such affected LIBOR Portions,
together with all interest accrued thereon and all other amounts then due and
payable to such Bank under this Agreement; PROVIDED, HOWEVER, subject to all of
the terms and conditions of this Agreement, the Company may then elect to
convert the principal amount of the affected LIBOR Portion from such Bank into
the Base Rate Portion from such Bank that shall not be made ratably by the Banks
but only from such affected Bank. During the period when it is unlawful for any
Bank to make LIBOR Portions, Loans shall continue to be made in such a manner so
that the percentage of each Bank's Commitment in use is identical, but the Banks
affected by such illegality shall make their share of each Borrowing which has
been requested in the form of a LIBOR Portion available in the form of a Base
Rate Portion. Each Bank agrees (to the extent consistent with internal
policies) to designate a different lending office if such designation would
avoid the illegality described in this Section 3.8; PROVIDED, HOWEVER, that such
designation need not be made if it would result in any additional costs,
expenses or risks to such Bank that are not reimbursed by the Company
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pursuant hereto or would, in the reasonable judgment of such Bank, be otherwise
disadvantageous to such Bank.
SECTION 3.9. UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN, OR
INADEQUACY OF, LIBOR RATE. If on or prior to the first day of any Interest
Period for any LIBOR Portion the Agent determines that deposits in United States
Dollars (in the applicable amounts) are not being offered to it or to banks
generally in the offshore eurodollar market for such Interest Period, then 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, the obligations of the Banks to make
any further LIBOR Portions available shall be suspended.
SECTION 3.10. INCREASED COST AND REDUCED RETURN. If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the official interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank (or its
lending office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:
(a) shall subject any Bank (or its lending office) to any charges of
any kind (other than Withholding Taxes covered by Section 4.9 hereof) with
respect to its interest in the LIBOR Portions, its Note or its obligation
to make LIBOR Portions available, or shall change the basis of taxation of
payments to any Bank (or its lending office) of the principal of or
interest on LIBOR Portions or any other amounts due under this Agreement in
respect of its LIBOR Portions or its obligation to make LIBOR Portions; or
(b) shall impose, modify or deem applicable any reserve, special
deposit or similar requirements (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding any such requirement included in an applicable
Eurodollar Reserve Percentage) against assets of, deposits with or for the
account of, or credit extended by, any Bank (or its lending office) or
shall impose on any Bank (or its lending office) or the offshore interbank
market any other condition affecting LIBOR Portions, its Note or its
obligation to make LIBOR Portions available;
and the result of any of the foregoing is to increase the cost to such Bank (or
its lending office) of making or maintaining any LIBOR Portion, or to reduce the
amount of any sum received or
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receivable by such Bank (or its lending office) under this Agreement or under
its Note with respect thereto, by an amount deemed by such Bank to be material,
then, within fifteen (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 for such increased cost or reduction. A certificate
of any Bank claiming compensation under this Section 3.10 and setting forth the
additional amount or amounts in reasonable detail (including an explanation of
the basis therefor and the computation of such amount) to be paid to it
hereunder shall be deemed PRIMA FACIE correct. In determining such amount, such
Bank may use reasonable averaging and attribution methods. A Bank shall not be
entitled to compensation under this Section 3.10 with respect to any adoption or
change for any period prior to the earlier of (i) the date it notifies the
Company of the adoption or change giving rise to the request for compensation or
(ii) the date which is thirty (30) days prior to the date it becomes aware of
the adoption or change giving rise to the request for compensation if the
Company is notified of the adoption or change prior to the lapse of such 30-day
period.
SECTION 3.11. LENDING OFFICES. Each Bank may, at its option, elect to
make its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a "LENDING OFFICE") or at such other of
its branches, offices or affiliates as it may from time to time elect and
designate in a notice to the Company and the Agent (but such funds shall in any
event be made available to the Company at the office of the Agent as herein
provided for).
SECTION 3.12. DISCRETION OF BANKS AS TO MANNER OF FUNDING. Notwithstanding
any other provision of this Agreement, each Bank shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations under this Agreement (including, without limitation, calculations
under Sections 3.7 and 3.10 hereof) shall be made as if each Bank had actually
funded and maintained its interest in each LIBOR Portion through the purchase of
deposits in the offshore interbank market having a maturity corresponding to
such LIBOR Portion's Interest Period and bearing an interest rate equal to LIBOR
for such Interest Period.
SECTION 4. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND NOTATIONS
SECTION 4.1. COMMITMENT FEE. For the period from the date hereof to and
including the Termination Date, the Company shall pay to the Agent for the
ratable account of the Banks a commitment fee at the Applicable Margin on the
average daily unused amount of the Commitments hereunder, such fee to be payable
quarterly in arrears on the first day of each March, June, September
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and December in each year to and including, and on, the Termination Date.
SECTION 4.2. LETTER OF CREDIT FEES.
(a) SHARED FEES. The Company shall pay to the Agent for the ratable
account of the Banks a letter of credit fee computed at the Applicable Margin on
the maximum amount of the Letters of Credit from time to time outstanding, such
fee to be paid quarterly in arrears on the first day of each March, June,
September and December in each year to and including, and on, the Termination
Date.
(b) ISSUING BANK FRONTING FEES. On the date of issuance of each Letter of
Credit, and as a condition thereto, the Company shall pay to the relevant
Issuing Bank a non-refundable letter of credit issuance fee in the amount equal
to (a) with respect to any Financial Letter of Credit, .10% of the amount of the
relevant Letter of Credit to be issued and (b) with respect to any Non-Financial
Letter of Credit, .0625% of the amount of the relevant Letter of Credit to be
issued. In addition, the Company further agrees to pay each Issuing Bank for
its own account such amendment, processing and transaction fees and charges as
the Issuing Bank from time to time customarily imposes in connection with any
amendment, cancellation, negotiation and/or payment of Letters of Credit issued
by such Issuing Bank and draft drawn thereunder.
SECTION 4.3. AGENT'S FEES. On the date hereof, and on the date occurring
on each anniversary of the date hereof (excluding the Termination Date) when any
credit or commitment to extend credit is outstanding hereunder, the Company
shall pay to the Agent, for its own use and benefit, such fees as may be agreed
upon in writing by the Company and the Agent, as the same may be amended from
time to time.
SECTION 4.4. PREPAYMENTS. (A) OPTIONAL PREPAYMENTS. The Company shall
have the privilege of prepaying without premium or penalty and in whole or in
part (but, if in part, then in an amount not less than $1,000,000) (or such
lesser amount as will prepay the Loans in full) the Notes at any time, each such
prepayment to be made by the payment of the principal amount to be prepaid, any
amount due the Banks under Section 3.7 hereof (any failure of the Agent or the
Banks to require payment of any amount due under Section 3.7 not to preclude a
later demand that the amount so due be paid) and, in the case of a prepayment
which prepays the Notes in full after which the Commitments are no longer
outstanding, accrued interest thereon to the date fixed for prepayment.
(b) MANDATORY PREPAYMENT. In the event that the aggregate U.S. Dollar
Equivalent of
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Letters of Credit payable in Available Foreign Currencies exceeds the limit set
forth in Section 2.3(a) hereof as then determined and computed, the Company
shall immediately upon demand pay over the amount of the excess to the Agent to
be applied against, or held as collateral security for, as applicable, such
Letters of Credit and the obligations of the Company with respect thereto.
SECTION 4.5. TERMINATIONS. The Company shall have the privilege at any
time and from time to time upon three Business Days prior notice to the Agent
(which shall promptly notify the Banks) to ratably terminate the Commitments in
whole or in part (but, if in part, then in a minimum amount of $1,000,000),
provided that the Commitments may not be reduced to an amount less than the
aggregate principal amount of Loans and Letters of Credit then outstanding. No
termination of the Commitments may be reinstated unless otherwise agreed to in
writing by the Banks.
SECTION 4.6. PLACE AND APPLICATION. Except as otherwise provided in
Section 2.3 with respect to Letters of Credit issued by a Bank other than the
Agent, all payments of principal, interest and fees shall be made to the Agent
at its office at 115 South LaSalle Street, Chicago, Illinois (or at such other
place as the Agent may specify) in immediately available and freely transferable
funds at the place of payment. All payments due from the Company hereunder
shall be made without set-off or counterclaim and without reduction for, and
free from, any and all present or future taxes, levies, imposts, duties, fees,
charges, deductions, withholdings, restrictions or conditions of any nature
imposed by any government or political subdivision or taxing authority thereof.
Except as otherwise provided in Section 2.3 with respect to Letters of Credit,
payments received by the Agent after 1:00 p.m. (Chicago time) shall be deemed
received as of the opening of business on the next Business Day. Except as
otherwise provided in this Agreement, all payments shall be received by the
Agent for the ratable account of the Banks, and shall be promptly distributed by
the Agent ratably to the Banks except that payments which pursuant to the terms
hereof are for the use and benefit of the Agent shall be retained by it for its
own account and payments received to reimburse an Issuing Bank or a Bank for a
fee or cost peculiar to that Issuing Bank or Bank, as the case may be, shall be
remitted to it. Unless the Company otherwise directs, principal payments on the
Notes shall be first applied to the Base Rate Portion and then to the LIBOR
Portions in the order in which their Interest Periods expire. Reimbursements of
drawings under Letters of Credit shall be promptly remitted to the relevant
Issuing Bank except to the extent the Banks have previously reimbursed the
Issuing Bank for the drawing in question.
Anything contained herein to the contrary notwithstanding, all payments and
collections
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received in respect of the indebtedness evidenced by the Notes or the
Applications and all proceeds of the Collateral received, in each instance, by
the Agent or any of the Banks after the occurrence of an Event of Default shall
be distributed as follows:
(a) first, to the payment of any outstanding costs and expenses
incurred by the Agent in monitoring, verifying, protecting, preserving or
enforcing the liens on the Collateral or in protecting, preserving or
enforcing rights under the Loan Documents and in any event including all
costs and expenses of a character which the Company has agreed to pay under
Section 11.10 hereof (such funds to be retained by the Agent for its own
account unless it has previously been reimbursed for such costs and
expenses by the Banks, in which event such amounts shall be remitted to the
Banks to reimburse them for payments theretofore made to the Agent);
(b) second, to the payment of any outstanding interest or other fees
or amounts due under the Loan Documents other than for principal or in
reimbursement of the principal amount of drafts presented and paid under
Letters of Credit, ratably as among the Banks in accord with the amount of
such interest and other fees or amounts owing each;
(c) third, to the payment of the principal of the Notes and the
amounts of all drafts presented and paid under Letters of Credit, to be
applied ratably as among the Notes and Letter of Credit liabilities;
(d) fourth, to the Agent to be held as collateral security for the
Letters of Credit in an amount equal to the aggregate undrawn balance
thereof, with the funds so held to, if the Company so requests, be invested
in short-term high-grade debt securities, acceptable to and held by and
pledged to the Agent (it being understood that the balance of such
investments and any earnings attributable thereto shall, after the payment
and satisfaction in full of any and all obligations owing to the Agent and
the Banks hereunder and under the other Loan Documents and after the
expiration of all Letters of Credit, be returned to the Company or to
whoever may be lawfully entitled thereto); and
(e) fifth, to whoever may be lawfully entitled thereto.
SECTION 4.7. NOTATIONS AND REQUESTS. All advances made against the Notes
shall be recorded by the Banks on their books or, at their option in any
instance, endorsed on the reverse side of the Notes and the unpaid principal
balances so recorded or endorsed by the Banks shall be PRIMA
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FACIE evidence in any court or other proceeding brought to enforce the Notes of
the principal amount remaining unpaid thereon. Prior to any negotiation of any
Note, the Bank holding such Note shall endorse thereon the principal amount
remaining unpaid thereon.
SECTION 4.8. CAPITAL ADEQUACY. If any Bank shall determine that 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 compliance by such Bank (or its
lending office) with 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 such Bank's capital as a consequence of its obligations hereunder or the
Letters of Credit or credit extended by it hereunder to a level below that which
such Bank could have achieved but for such law, rule, regulation, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time as specified by such Bank the Company shall pay such additional
amount or amounts as will compensate such Bank for such reduction in rate of
return. A certificate of any Bank claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder in
reasonable detail shall be deemed PRIMA FACIE correct. In determining such
amount, such Bank may use any reasonable averaging and attribution methods. A
Bank shall not be entitled to compensation under this Section with respect to
any change, adoption or interpretation (a "CHANGE") for any period prior to the
earlier of (i) the date it notifies the Company of the Change or (ii) the date
which thirty (30) days prior to the date such Bank obtains actual knowledge of
the Change giving rise to the request for compensation if the Company is
notified of the Change prior to the lapse of such 30-day period. Each Bank and
the Agent shall use reasonable efforts to minimize the cost imposed on the
Company in respect of any such increased capital requirement and shall compute
the assessment of any such cost related to such increased capital on a
nondiscriminatory basis among the Company, on the one hand, and other borrowers
to which it applies, on the other hand, and neither such Bank nor any
corporation controlling such Bank nor the Agent shall be entitled to demand
compensation or be compensated for any increased capital requirement from the
Company hereunder in excess of the amount so computed.
SECTION 4.9. WITHHOLDING TAXES. (a) PAYMENTS FREE OF WITHHOLDING. Except
as otherwise required by law and subject to Section 4.9(b) hereof, each payment
by the Company under
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this Agreement or the other Loan Documents shall be made without withholding for
or on account of any present or future taxes (other than overall net income
taxes on the recipient) imposed by or within the jurisdiction in which the
Company is domiciled, any jurisdiction from which the Company makes any payment,
or (in each case) any political subdivision or taxing authority thereof or
therein (herein, "WITHHOLDING TAXES"). If any such Withholding Tax is so
required, the Company shall make the withholding, pay the amount withheld to the
appropriate governmental authority before penalties attach thereto or interest
accrues thereon, and forthwith pay such additional amount as may be necessary to
ensure that the net amount actually received by each Bank and the Agent free and
clear of such Withholding Taxes (including such taxes on such additional amount)
is equal to the amount which that Bank or the Agent (as the case may be) would
have received had such withholding not been made. If the Agent or any Bank pays
any amount in respect of any such Withholding Taxes, penalties or interest, the
Company shall reimburse the Agent or such Bank for that payment on demand in the
currency in which such payment was made. If the Company pays any such taxes,
penalties or interest, it shall deliver official tax receipts evidencing that
payment or certified copies thereof to the Bank or Agent on whose account such
withholding was made (with a copy to the Agent if not the recipient of the
original) on or before the thirtieth day after payment.
(b) U.S. WITHHOLDING TAX EXEMPTIONS. Each Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Company and the Agent on or before the earlier of the date the
initial Borrowing is made hereunder and thirty (30) days after the date hereof,
two duly completed and signed copies of either Form 1001 (relating to such Bank
and entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Bank, including fees, pursuant to the Loan
Documents and the Loans) or Form 4224 (relating to all amounts to be received by
such Bank, including fees, pursuant to the Loan Documents and the Loans) of the
United States Internal Revenue Service. Thereafter and from time to time, each
Bank shall submit to the Company and the Agent such additional duly completed
and signed copies of one or the other of such forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) requested by the Company in a written notice,
directly or through the Agent, to such Bank and (ii) required under then-current
United States law or regulations to avoid or reduce United States withholding
taxes on payments in respect of all amounts to be received by such Bank,
including fees, pursuant to the Loan Documents or the Loans.
(c) INABILITY OF BANK TO SUBMIT FORMS. If any Bank determines, as a
result of any change
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in applicable law, regulation or treaty, or in any official application or
interpretation thereof, that it is unable to submit to the Company or the Agent
any form or certificate that such Bank is obligated to submit pursuant to
subsection (b) of this Section 4.9 or that such Bank is required to withdraw or
cancel any such form or certificate previously submitted or any such form or
certificate otherwise becomes ineffective or inaccurate, such Bank shall
promptly notify the Company and Agent of such fact and the Bank shall to that
extent not be obligated to provide any such form or certificate and will be
entitled to withdraw or cancel any affected form or certificate, as applicable.
(d) BANK REPLACEMENT. If the Company is required to make any reduction or
withholding with respect to any payment due any Bank under this Section 4.9 (in
any such case a "REPLACEABLE BANK"), the Company may, with the consent of the
Agent, propose that another bank (a "REPLACEMENT BANK"), which bank may be an
existing Bank, be substituted for and replace the Replaceable Bank for purposes
of this Agreement. If a Replacement Bank is so substituted for the Replaceable
Bank, the Replaceable Bank shall enter into an Assignment Agreement with the
Replacement Bank, the Company and the Agent to assign and transfer to the
Replacement Bank the Replaceable Bank's Commitment and Loans and credit risk
with respect to Letters of Credit hereunder pursuant to and in accordance with
the provisions and requirements of Section 11.12 hereof and, as a condition to
its execution thereof, the Replaceable Bank shall concurrently receive the full
amount of its Loans, interest thereon, and all accrued fees and other amounts to
which it is entitled under this Agreement.
SECTION 5. THE COLLATERAL AND GUARANTIES.
SECTION 5.1. THE COLLATERAL. The Notes and the other obligations of the
Company to the Agent and the Banks shall be secured by (a) valid, perfected and
enforceable liens in all right, title and interest of the Company and of each
Subsidiary in all capital stock of each Material Subsidiary, whether now owned
or hereafter acquired, and all proceeds thereof and (b) valid, perfected
(subject to the proviso appearing at the end of this sentence) and enforceable
liens in all right, title and interest of the Company and of each Material
Subsidiary in all cash and cash equivalents, accounts, chattel paper, general
intangibles, instruments, investment property, documents, inventory, equipment
and real property of every kind and description, whether now owned or hereafter
acquired, and all proceeds thereof, including, without limitation, all rights
under any leases of goods; PROVIDED, HOWEVER, that until a Default or an Event
of Default has occurred and is continuing and thereafter until otherwise
required by the Required Banks or the Agent, (i) liens on cash or deposit
accounts
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maintained with Persons other than the Banks need not be perfected, (ii) no
liens need be granted on the capital stock of any Unrestricted Subsidiary or
Restricted Subsidiary which fails to qualify as a Material Subsidiary, (iii) no
liens need be granted on real property, (iv) liens need not be perfected on note
receivables having a fair market value of less than $1,000,000 in any instance
and $5,000,000 in the aggregate, (v) liens on investment property (other than
the capital stock of each Material Subsidiary) which cannot be perfected by the
filing of a financing statement need not be perfected, (vi) liens on vehicles
which are subject to a certificate of title law need not be noted on the
certificate of title and (vii) liens on inventory and equipment located at job
sites outside of the United States of America in the ordinary course of business
which, in the aggregate, have a market value of less than $5,000,000 at any one
time need not be perfected. The liens in the Collateral shall be granted to the
Agent for the ratable account of the Banks and shall be valid and perfected
first liens subject, however, to the proviso appearing at the end of the
immediately preceding sentence, and the rights of lessors under leases and
Purchase Money Liens held by vendors providing purchase money financing.
Notwithstanding anything to the contrary contained herein, in no event will any
of the Collateral described above be deemed to include (i) property consisting
of the Cash Distribution (in the amount of $13,300,000), the MK Rail Note
Proceeds, and MK Rail Stock (all as such terms are defined in the Plan), and all
proceeds thereof, held for distribution pursuant to the terms of the Plan, (ii)
foreign tax credit refunds to the extent held in the foreign tax credit sinking
fund for the benefit of the holders of the Company's Series A Preferred Stock,
as provided for in the Company's certificate of incorporation in effect on the
date hereof, and in an amount of not more than $18,000,000 (the property
described in clause (i) and (ii) hereof being referred to herein as the
"SEGREGATED ASSETS FOR PLAN DISTRIBUTION"), (iii) the assets identified in
Schedule 5.1 hereto, (iv) any interests in equipment owned by the Company or any
Material Subsidiary which is subject to a Purchase Money Lien in favor of any
third party (other than the Company or any of its Affiliates) to the extent the
granting of a security interest or lien therein is prohibited by the
agreement(s) pursuant to which such equipment is financed and such prohibition
has not been or is not waived or the consent of the applicable party has not
been or is not obtained, (v) any interests in any leases or licenses to use real
or personal property under which the Company or any Material Subsidiary is
lessee or licensee and a Person other than the Company or an Affiliate of the
Company is lessor or licensor to the extent the granting of a security interest
or lien therein is prohibited by the agreement(s) pursuant to which such
property is leased and such prohibition has not been or is not waived or the
consent
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of the applicable party has not been or is not obtained, or (vi) any interest in
any joint venture or in any contract, contract right, or other similar general
intangible if the granting of a lien therein is prohibited by the terms of the
written agreement creating such joint venture or creating or evidencing such
contract, contract right, or similar general intangible; PROVIDED FURTHER, that
(x) notwithstanding anything set forth in clause (vi) above to the contrary, to
the extent not prohibited by law, the Agent has and shall at all times have a
security interest in all rights to payments of money due or to become due under
any joint venture, contract, contract right, or similar general intangible and
all other proceeds thereof and (y) if and when the prohibition which prevents
the granting of a security interest in any such property is removed, terminated
or otherwise becomes unenforceable as a matter of law, the Agent will be deemed
to have, and at all times to have had, a security interest in such property, and
the Collateral will be deemed to include, and at all times to have included,
such property.
SECTION 5.2. FURTHER ASSURANCES. The Company covenants and agrees that
it shall, and shall cause each Material Subsidiary to, comply with all terms and
conditions of each of the Collateral Documents and that the Company shall, and
shall cause each Material Subsidiary to, at any time and from time to time at
the request of the Agent or the Required Banks execute and deliver such
instruments and documents and do such acts and things as the Agent or the
Required Banks may reasonably request in order to provide for or protect or
perfect the lien of the Agent in the Collateral, subject to the terms of
Section 5.1 above.
SECTION 5.3. GUARANTY. Payment of the Notes and the other obligations of
the Company hereunder and under the other Loan Documents shall at all times be
jointly and severally guaranteed by each Material Subsidiary pursuant to a
Guaranty Agreement issued by such Material Subsidiaries in form and substance
satisfactory to the Agent and the Required Banks (the "GUARANTY"). In the event
any Subsidiary hereafter becomes a Material Subsidiary, whether such Subsidiary
currently exists or is hereafter formed or acquired, the Company shall cause
such Subsidiary to execute a supplement to the Guaranty pursuant to which such
Subsidiary joins in and becomes obligated as a guarantor thereunder, which
supplement shall be in form and substance satisfactory to the Agent, and the
Company shall also cause such Subsidiary to execute such Collateral Documents
(having terms and conditions substantially similar to those executed by the
Company and its existing Material Subsidiaries on the date hereof in connection
with this Agreement) as the Agent may then require granting the Agent for the
benefit of the Banks a security interest in and lien on the assets of such
Subsidiary as collateral security for the Notes, the Applications, and the other
obligations of the
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Company under the Loan Documents, together with such other instruments,
documents, certificates and opinions required by the Agent in connection
therewith.
SECTION 5.4. AGREEMENT TO RELEASE LIENS. In the event the Company has a
Moody's Rating of at least Baa3 or a S&P Rating of at least BBB-, at the request
and expense of the Company (a) the Banks agree that the lien of the Agent in the
Collateral shall be released and (b) the Agent shall execute such termination
statements and other lien releases as the Company may reasonably request.
Thereafter, in the event the Company neither has a Moody's Rating of at least
Baa3 nor a S&P Rating of at least BBB-, then all obligations of the Company
hereunder and under the other Loan Documents shall at all such times be, and the
Company shall at all such times cause such obligations to be, secured by all of
the Collateral described in, and subject to the terms and conditions of, Section
5.1. above. The Company shall, and shall cause the Material Subsidiaries to,
execute and deliver such documents and take such other actions as the Agent may
reasonably require to provide for and protect such liens and evidence the fact
that they have the priority called for by this Agreement, all such documents and
other acts and things to be consistent with the documents and acts and things
required in connection with the initial advance hereunder pursuant to Section
7.2 hereof.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Banks as follows:
SECTION 6.1. ORGANIZATION AND POWER. The Company is duly organized and
existing under the laws of the state of its incorporation, and is duly licensed
or qualified to do business in each state where the nature of the assets owned
or leased by it or business conducted by it requires such licensing or
qualification and in which the failure to be so licensed or qualified would have
a Material Adverse Effect and has all necessary corporate power to carry on its
present business. The Company has full right, power and authority to enter into
this Agreement, to make the borrowings herein provided for, to issue the Notes
in evidence thereof, to execute and deliver the Applications and the other Loan
Documents executed and delivered or to be executed and delivered by it, and to
perform each and all of the matters and things herein and therein provided for.
Each Material Subsidiary has full right, power and authority to enter into the
Loan Documents executed by it and to perform each and all of the matters and
things therein provided for. The Loan Documents do not, nor will the
performance or observance by the Company or any Subsidiary of any of the matters
and things herein or therein provided for, contravene any provision of law or
any charter or by-law provision of the Company or any such Subsidiary or
constitutes a breach or default under any covenant, indenture
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or agreement of or affecting the Company or any such Subsidiary where such
breach or default would have a Material Adverse Effect.
SECTION 6.2. SUBSIDIARIES. Each Subsidiary is duly organized and
existing under the laws of the jurisdiction of its incorporation, and is duly
licensed or qualified to do business in each state or other jurisdiction where
the nature of the assets owned or leased by it or business conducted by it
requires such licensing or qualification and in which the failure to be so
licensed or qualified would have a Material Adverse Effect and has all necessary
corporate power to carry on its present business. Schedule 6.2 hereto
identifies each Subsidiary, the jurisdiction of its incorporation, the
percentage of issued and outstanding shares of each class of its capital stock
owned by the Company and the Subsidiaries and, if such percentage is not 100%
(excluding directors' qualifying shares as required by law), a description of
each class of its authorized capital stock and the number of shares of each
class issued and outstanding, together with a designation of those Subsidiaries
which are Restricted Subsidiaries (including a designation of those which are
Material Subsidiaries) and those which are Unrestricted Subsidiaries. All of
the outstanding shares of capital stock of each Subsidiary are validly issued
and outstanding and fully paid and nonassessable, and all shares of each
Subsidiary indicated on Schedule 6.2 as owned by the Company or a Subsidiary are
owned, beneficially and of record, by the Company or such Subsidiary free and
clear of all liens, security interests, charges and encumbrances, other than the
lien of the Agent on the shares of each Material Subsidiary. There are no
outstanding commitments or other obligations of any Subsidiary to issue, and no
options, warrants or other rights of any Person to acquire, any shares of any
class of capital stock of any Subsidiary, except for options granted in the
ordinary course to officers and employees of non-Material Subsidiaries or of
Unrestricted Subsidiaries which, as to any Subsidiary, do not, if exercised,
aggregate 10% or more of the capital stock of any such Subsidiary.
SECTION 6.3. USE OF PROCEEDS; REGULATION U. The company shall use
proceeds of the Loans and other extensions of credit made available hereunder
solely for the purpose of refinancing the acquisition of Old MK pursuant to the
Merger Documents, refinancing existing debt of the Company and its Subsidiaries
(including refinancing debt of Old MK assumed by operation of law as a result of
the Merger and financing the payment of obligations required to be paid by the
Company under the Plan), and for its working capital and other general corporate
purposes. Neither the Company nor any Subsidiary is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stocks (within
the meaning of Regulation U of the Board of Governors
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of the Federal Reserve System), and no part of the proceeds of any loan or
extension of credit hereunder will be used to purchase or carry any margin stock
or extend credit to others for the purpose of purchasing or carrying any margin
stock if as a result thereof such loan or other extension of credit would
violate Regulation U or any interpretation thereof.
SECTION 6.4. FINANCIAL STATEMENTS. (a) The financial statements of the
Company and its Subsidiaries for the year ended November 30, 1995, including an
audited consolidated balance sheet as of November 30, 1995, and an audited
consolidated statement of profit and loss for the twelve months ended said date,
and the unaudited financial statements of the Company and its Subsidiaries for
the fiscal period ended May 31 1996, including the unaudited consolidated
balance sheet as of May 31, 1996, and unaudited consolidated statement of profit
and loss for the six (6) months ended said date, each prepared by the Company,
and heretofore furnished to the Banks, truly and accurately reflect the
financial condition of the Company and its Subsidiaries taken as a whole as at
said dates and the results of operations for the periods covered thereby. Except
with respect to the potential contingent liability associated with the
environmental matter for the Summitville, Colorado, site specifically disclosed
in the Disclosure Statement and the Final Proxy Statement to the shareholders of
Washington Construction Group, Inc. referred to in Section 7.2(c) hereof, the
Company and its Subsidiaries have no contingent liabilities which are material
to them other than as indicated on said financial statements and, since the date
of such financial statements, there have been no material adverse changes in the
condition, financial or otherwise, business or operations of the Company or its
Subsidiaries taken as a whole nor any changes to the Company and its
Subsidiaries taken as a whole except those occurring in the ordinary course of
business.
(b) The financial statements of Old MK and its subsidiaries set forth in
Old MK's annual report to the Securities and Exchange Commission on Form 10-K
for the fiscal year ended December 31, 1995, and in its quarterly reports to the
Securities and Exchange Commission on Form 10-Q for the three months ended March
31, 1996, and the six months ended June 30, 1996, each in the form heretofore
submitted to the Banks, fairly present the consolidated financial condition of
Old MK and its subsidiaries and the consolidated results of their operations and
cash flows as of the dates of such statements in conformity with generally
accepted accounting principles applied on a consistent basis, subject to
year-end audit adjustments in the case of interim financial statements. Except
with respect to the potential contingent liability associated with the
environmental matter for the Summitville, Colorado, site specifically disclosed
in the Disclosure Statement, Old MK and its
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subsidiaries have no contingent liabilities which are material to them other
than as indicated on said financial statements, and, since the date of such
financial statements, there have been no material adverse changes in the
condition, financial or otherwise, business or operations of Old MK or its
subsidiaries taken as a whole nor any changes to Old MK and its subsidiaries
taken as a whole except those occurring in the ordinary course of business (it
being agreed for purposes of this Section 6.4(b) that the filing by Old MK on
June 25, 1996, of its petition for relief under Chapter 11 of the United States
Bankruptcy Code shall not be deemed a material adverse change).
(c) The unaudited pro forma combined, condensed, and consolidated balance
sheet and combined, condensed, and consolidated statements of operations for the
Company, Old MK and their respective subsidiaries heretofore delivered to the
Banks fairly present (subject to the qualifications and assumptions set forth in
the notes attached thereto) the combined financial condition of the Company, Old
MK and their subsidiaries as at the dates thereof and for the periods covered
thereby after giving effect to the Plan and the Merger based upon the best
information currently available to the Company with respect to such consummation
and the resolution of claims under the Plan.
SECTION 6.5. LITIGATION AND TAXES. Except as disclosed in the Company's
Form 10-K for the fiscal year ending November 30, 1995 and Form 10-Q for the
fiscal quarter ending May 31, 1996, there is no litigation or governmental
proceeding pending, nor to the knowledge of the Company threatened, against the
Company or any Subsidiary which if adversely determined would result in a
Material Adverse Effect. The income tax returns of the Company and its
Subsidiaries for the taxable year ended November 30, 1995 and for all taxable
years ended prior to said date, have been filed with the appropriate
governmental or taxing authorities, and any additional assessments in connection
with any such years have been paid or the applicable statute of limitations
therefor has expired. No objections to or controversies in respect of the
income tax returns of the Company or any Subsidiary are pending or threatened
which, if adversely determined, would result in a Material Adverse Effect. No
authorization, consent, license, or exemption from, or filing or registration
with, any court or governmental department, agency or instrumentality, is or
will be necessary to the valid execution, delivery or performance by the Company
or any Subsidiary of any Loan Document to be executed and delivered by it or to
the consummation of the Plan or the Merger, except for (a) filing of financing
statements and other documents evidencing the Agent's lien in the Collateral and
(b) such consents and approvals with respect to the Merger which have been
obtained and remain in full force and effect.
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SECTION 6.6. BURDENSOME CONTRACTS WITH AFFILIATES. Neither the Company
nor any Subsidiary is a party to any material contracts or agreements with any
of its Affiliates on terms and conditions which are materially less favorable to
the Company or such Subsidiary than would be usual and customary in similar
contracts or agreements between Persons not affiliated with each other.
SECTION 6.7. ERISA. The Company and each Subsidiary are each in
compliance in all material respects with the Employee Retirement Income Security
Act of 1974 ("ERISA") to the extent applicable to it and has received no notice
to the contrary from the Pension Benefit Guaranty Corporation ("PBGC"), and, in
the event of the Company's or any Subsidiary's partial or total withdrawal from
any pension plans, multi-employer pension plans or non-payment by other employer
participants therein, the liability of the Company and its Subsidiaries for any
unfunded vested benefits thereunder would not result in a Material Adverse
Effect.
SECTION 6.8. FULL DISCLOSURE. The statements and information furnished
to the Banks in connection with the negotiation of this Agreement and the
commitments by the Banks to provide all or part of the financing contemplated
hereby do not, taken as a whole, contain any untrue statement of a material fact
or omit a material fact necessary to make the material statements contained
therein or herein not misleading, except for such thereof as were corrected in
subsequent written statements furnished the Banks (the Banks acknowledging that
as to any projections furnished to the Banks, the Company only represents that
the same were prepared on the basis of information and estimates it believes to
be reasonable). There is no fact peculiar to the Company or any Subsidiary
which the Company has not disclosed to the Banks in writing which materially
adversely affects nor, so far as the Company now can reasonably foresee, is
reasonably likely to have a Material Adverse Effect.
SECTION 6.9. COMPLIANCE WITH LAW. (a) Except with respect to the
potential liability relating to the environmental matter for the Summitville,
Colorado, site identified in the disclosure materials referred to in the last
sentence of this Section 6.9, neither the Company nor any Subsidiary is (i) in
default with respect to any order, writ, injunction or decree of any court or
(ii) in default in any material respect under any law, ordinance, order,
regulation, license or demand (including ERISA, the Occupational Safety and
Health Act of 1970 and laws and regulations establishing quality criteria and
standards for air, water, land and toxic waste) of any federal, state, municipal
or other governmental agency, default with respect to or under which is
reasonably likely to result in a Material Adverse Effect; and (b) the Company
and each Subsidiary are each in compliance with all
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applicable state and federal environmental, health and safety statutes and
regulations, including, without limitation, regulations promulgated under the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 ET SEQ.,
except where failure to be in compliance is reasonably likely not to have a
Material Adverse Effect, and, to the Company's knowledge, neither the Company
nor any Subsidiary will have acquired, incurred or assumed, directly or
indirectly, any contingent liability in connection with the release of any toxic
or hazardous waste or substance into the environment which is reasonably likely
to have a Material Adverse Effect. Insofar as known to the responsible officers
of the Company, neither the Company nor any Subsidiary is liable, in whole or in
part, for, nor are any of the assets or property of the Company or any
Subsidiary subject to a lien in favor of any governmental entity for any
material liability arising from or in any way relating to, the costs of cleaning
up, remediating or responding to a release of hazardous substances (including,
without limitation, petroleum, its by-products or derivatives, or other
hydrocarbons) except as specifically disclosed in the 10-K Statement of the
Company dated November 30, 1995, the Disclosure Statement, or the Final Proxy
Statement to the shareholders of Washington Construction Group, Inc. referred to
in Section 7.2(c) hereof.
SECTION 6.10. MERGER. The Company and Old MK each had full right and
authority to enter into the Merger Documents executed by it and to perform its
obligations under, and consummate the transactions described in, the Merger
Documents executed by it. The Merger Documents were duly authorized, executed
and delivered by the Company and Old MK, each constituting the valid and binding
obligation of the Company and Old MK, as applicable, enforceable against it in
accordance with its respective terms; and the Merger Documents do not, nor will
the performance or observance by the Company of any of the matters or things
therein provided for contravene or constitute a default under any provision of
law or any judgment, injunction, order or decree binding upon the Company or any
provision of the charter, articles of incorporation, or by-laws of the Company
or any covenant, indenture, or agreement of or affecting the Company or any of
its assets or properties, or result in the imposition or creation of any lien or
charge on any of the assets or property of the Company. All conditions to the
Merger have been satisfied (including, without limitation, all necessary
shareholder, judicial and governmental consents), all filings and other matters
necessary to make the Merger effective have been done and performed, and the
Merger has become effective in accordance with the terms of the Merger
Documents.
SECTION 6.11. THE PLAN AND CERTAIN LITIGATION. The Plan has been
confirmed by the entry
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of an order of confirmation by the United States Bankruptcy Court for the
District of Delaware (the "CONFIRMATION ORDER") and a true copy of the
Confirmation Order has been delivered to the Banks. The time for filing a
notice of appeal from the Confirmation Order has expired without any such
notices of appeal being filed. All litigation described in the Disclosure
Statement under the heading "Pre-petition Legal Proceedings", other than the
case styled KAROL PILARCZYK ET AL. V. MORRISON KNUDSON CORP. ET AL. pending
before the United States District Court for the Northern District of New York,
has been settled. Such settlements have been approved by the courts having
jurisdiction over such actions by orders which have become final and
non-appealable. The settlements are accurately described in the Disclosure
Statement and no other actions of the type described under such heading are
pending against Old MK or its subsidiaries. The description of the PILARCZYK
matter contained in the Disclosure Statement remains accurate as of the date
hereof. The Company has provided the Banks with its best estimates of (i) the
amount necessary to resolve any claims under the Plan which are payable in cash
or debt securities and which are not in a definite or ascertainable amount and
(ii) of its current plans for the resolution of claims where the Plan provides
the Company (as successor by merger to Old MK) options as to the method of
resolving the claims in question (it being acknowledged that the Company
reserves the right to vary from such estimates if it believes it in its best
interest to do so).
SECTION 7. CONDITIONS PRECEDENT.
SECTION 7.1. ALL ADVANCES. The obligation of the Banks to make any
Borrowing under the Revolving Credit (including the first advance) or of the
Agent to issue any Letter of Credit shall be subject to the provisions of
Sections 9.2 and 9.3 hereof and shall also be subject to the satisfaction of the
following conditions precedent at the time of the making of each Borrowing or
issuance of a Letter of Credit under the Revolving Credit:
(a) each of the representations and warranties set forth herein and
in the other Loan Documents shall be true and correct, as of the date of
such advance or issuance (except that the representations and warranties
made in Section 6.4 hereof shall be deemed to refer to the most recent
financial statements delivered to the Banks pursuant to Section 8.5
hereof);
(b) no material adverse change shall have occurred in the financial
condition, business or operations of the Company and its Subsidiaries taken
as a whole; and
(c) no Default or Event of Default shall have occurred and be
continuing.
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Any request made by the Company to the Agent for a Borrowing or Letter of Credit
hereunder shall be deemed to constitute a representation and warranty that the
foregoing statements are true and correct. In addition, in the case of the
issuance of a Letter of Credit, the Agent shall have received a properly
completed Application therefor.
SECTION 7.2. INITIAL ADVANCE. At or prior to the time of the initial
advance under the Revolving Credit or the issuance of the initial Letter of
Credit, the following conditions precedent shall also have been satisfied:
(a) The Agent shall have received the following for the account of
the Banks (each to be properly executed and completed) and the same shall
have been approved as to form and substance by the Banks:
(i) this Agreement and the Notes; (ii) copies (executed or
certified as may be appropriate) for each Bank of the Articles of
Incorporation and By-laws of the Company and each of its Material
Subsidiaries and of all legal documents or proceedings taken in
connection with the execution and delivery of the Loan Documents to
the extent the Agent or its counsel may reasonably request, including,
without limitation, certificates as to the incumbency and authority
of, and setting forth a specimen signature of, each officer who is to
sign any Loan Document;
(iii) the Guaranty;
(iv) the Collateral Documents and any documentation necessary to
perfect the liens thereby created (including, without limitation, all
certificates of capital stock of the Material Subsidiaries together
with executed blank stock powers therefor, together with all financing
statements requested by the Agent in connection with the Collateral
Documents) to the extent required by Section 5.1 hereof;
(v) evidence of the maintenance of insurance as required hereby
or by the Collateral Documents; and
(vi) a certificate from an authorized officer of the Company
stating whether the pro forma combined and consolidated balance sheet
of the Company, Old MK and their subsidiaries delivered to the Banks
pursuant to Section 6.4(c) hereof would be accurate in all material
respects as of the date the other conditions precedent to the
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initial advance under this Section 7.2 are satisfied or, if not,
setting forth the differences, with such statement to also indicate
whether there have been any changes in the Company's estimates and
assumptions delivered to the Banks pursuant to the last sentence of
Section 6.11 hereof.
(b) The liens and security interests granted to the Agent under the
Collateral Documents shall have been perfected to the extent required by
Section 5.1 hereof in a manner satisfactory to the Agent and the Required
Banks;
(c) The Agent shall have received for the account of the Banks
certified copies of (i) First Amended Plan of Reorganization of Old MK
dated as of July 25, 1996 and any amendments thereto, (ii) Restructuring
and Merger Agreement dated May 28, 1996 and any amendments thereto,
together with all Disclosure Statements of the sellers and purchasers
delivered thereunder, and all instruments and documents executed and
delivered in connection therewith, (iii) Resolutions of Old MK and
Washington Construction Group, Inc., authorizing the Merger, (iv) Final
Proxy Statement to the shareholder of Washington Construction Group, Inc.,
(v) Final US Bankruptcy Court Order confirming the Plan of Reorganization
and the Merger, together with a detailed summary of all appeals thereto now
pending (whether or not stayed), and (vi) Articles of Merger filed with the
Delaware Secretary of State.
(d) The Agent shall have received evidence satisfactory to the Banks
that (i) the "EFFECTIVE DATE" shall have occurred (as that term is defined
in each of the Plan and the Merger Documents) without waiver (other than
waivers approved by the Required Banks) of any of the conditions to such
effective dates occurring, (ii) after giving effect to the Merger, the
assets, liabilities (both absolute and contingent) and businesses of the
Company and its Subsidiaries are materially the same as contemplated by the
Plan, the June 24, 1996 bank compliance package, July 2, 1996 bank
presentation materials, and supplemental materials with respect thereto
submitted in writing to the Banks by the Company, and (iii) the sources and
uses of cash required to finance the Merger are consistent with the
information called for by clause (d)(ii) above;
(e) The Agent shall have received evidence that upon the initial
Borrowing hereunder the Acquired Loans will have been acquired by the Banks
hereunder and the Prior Credit Agreement will be terminated concurrently
therewith;
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(f) The Agent shall have received good standing certificates for the
Company and each of its Material Subsidiaries from the office of the
Secretary of the State in the state of its incorporation dated as of a date
no later than 45 days prior to the date hereof;
(g) The Agent shall have received for the account of itself the fees
referred to in Section 4.3 hereof; and
(h) The Agent shall have received for the account of the Banks such
other agreements, instruments, documents, certificates and opinions as the
Agent or the Required Banks make reasonably request.
SECTION 7.3. LEGAL MATTERS. Legal matters incident to the execution and
delivery of the Loan Documents and the other instruments and documents
contemplated hereby shall be satisfactory to the Agent and its counsel, and the
Banks shall have received the favorable written opinions of acceptable internal
and outside counsel for the Company and each Material Subsidiary party to the
Loan Documents, in form and substance satisfactory to the Agent and its counsel,
with respect to:
(a) the due organization and existence of the Company and each such
Material Subsidiary and the due licensing or qualification of the Company
and each such Material Subsidiary in all jurisdictions where the nature of
the assets owned or leased by them or business conducted by them requires
such licensing or qualification and in which the failure to be so licensed
or qualified would materially and adversely affect the business, properties
or operations of the Company and its Subsidiaries taken as a whole;
(b) the power and authority of the Company and each such Material
Subsidiary to enter into the Loan Documents and to perform and observe all
the matters and things herein and therein provided for and the fact that
the execution and delivery of the Loan Documents will not, nor will the
observance or performance of any of the matters or things therein or herein
provided for, contravene any provision of law or of the Charter or By-Laws
of the Company or any such Material Subsidiary or constitutes a material
breach of or default under any provision of any material covenant,
indenture or agreement binding upon the Company or any such Material
Subsidiary or affecting any of their properties or assets;
(c) the due organization and existence of Old MK and the power and
authority of Old MK and the Company to enter into the Merger Documents and
to perform and observe all of the matters and things therein provided for
and the fact that the execution and
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delivery of the Merger Documents do not, nor does the observance or
performance of any of the matters or things therein provided for,
contravene any provision of law or of the Charter or By-laws of Old MK or
of the Company or constitute a material breach of or default under any
provision of any material covenant, indenture, or agreement binding upon
the Company or affecting any of its properties or assets;
(d) the due authorization for and the validity and enforceability of
the Loan Documents and the due authorization for the Merger Documents;
(e) the fact that no governmental authorization or consent is
required with respect to the lawful execution, delivery and performance of
the Loan Documents or the Merger Documents or, if any such consent is
necessary, that the same been obtained and is in full force and effect;
(f) the lack, to the knowledge of such counsel, of any legal or
administrative proceedings pending or threatened against Old MK, the
Company or any Material Subsidiary which seeks to prevent the Merger or
which, if adversely determined, would result in a material adverse change
in the financial condition or properties, business or operations of the
Company and its Subsidiaries taken as a whole after giving effect to the
Merger;
(g) the fact that the Effective Date has occurred under each of the
Merger Documents and the Plan (in expressing such opinion counsel may rely
as to factual matters on certificates of appropriate officers of the
Company and/or Old MK), and that the Merger has become effective; and
(h) such other matters as the Agent or its counsel may reasonably
require.
SECTION 8. COVENANTS.
The Company agrees that, so long as any credit is available to or in use by
the Company hereunder, except to the extent compliance in any case or cases is
waived in writing by the Required Banks:
SECTION 8.1. MAINTENANCE OF BUSINESS. The Company will, and will cause
each Subsidiary to, preserve and keep in force and effect all licenses and
permits necessary to the proper conduct of their respective businesses expect
where the failure to do so would not result in a Material Adverse Effect.
SECTION 8.2. MAINTENANCE. The Company will, and will cause each
Subsidiary to,
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maintain, preserve and keep their plant, properties and equipment (other than
obsolete or worn out equipment held for sale or disposition) in good repair,
working order and condition (ordinary wear and tear excepted) and the Company
will, and will cause each Subsidiary to, from time to time make all needful and
proper repairs, renewals, replacements, additions and betterments thereto so
that at all times the efficiency thereof shall be substantially preserved and
maintained, in each case where the failure to do so is reasonably likely to have
a Material Adverse Effect.
SECTION 8.3. TAXES. The Company will, and will cause each Subsidiary to,
duly pay and discharge all taxes, rates, assessments, fees and governmental
charges upon or against any of them or against their respective properties, in
each case before the same become delinquent and before penalties accrue thereon,
unless and to the extent that the same are being contested in good faith and by
appropriate proceedings, in each case where the failure to do so is reasonably
likely to have a Material Adverse Effect.
SECTION 8.4. INSURANCE. The Company will, and will cause each Subsidiary
to, insure and keep insured, in good and responsible insurance companies, all
insurable property owned by them which is of a character usually insured by
companies similarly situated and operating like properties; and the Company
will, and will cause each Subsidiary to, insure such other hazards and risks
(including employers' and public liability risks) in good and responsible
insurance companies as and to the extent usually insured by companies similarly
situated and conducting similar businesses. The Company will upon request of the
Agent furnish a certificate setting forth in summary form the nature and extent
of the insurance maintained pursuant to this Section.
SECTION 8.5. FINANCIAL REPORTS. The Company will, and will cause each
Subsidiary to, maintain a standard and modern system of accounting in accordance
with sound accounting practice and will furnish to the Banks and their duly
authorized representatives such information respecting the business and
financial condition of the Company and its Subsidiaries as the Agent may
reasonably request; and without any request, will furnish to the Banks:
(a) within 45 days after the close of each quarterly fiscal period of
the Company (except the last such period in each fiscal year), a copy of
the balance sheet, statement of earnings and statement of changes in cash
flow of the Company and its Subsidiaries for such period, prepared on a
consolidated and consolidating basis in accordance with GAAP, and the notes
thereto, and a schedule of material contracts in progress (with bonded
contracts
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specifically identified), all certified to by the chief financial officer
of the Company;
(b) within 90 days after the close of each fiscal year of the
Company, (i) a copy of the audit report for such year and accompanying
financial statements, including balance sheet, statement of earnings and
statement of cash flow on a consolidated and consolidating basis for the
Company and its Subsidiaries in accordance with GAAP, and the notes
thereto, with the consolidated statements certified by independent public
accountants of recognized standing selected by the Company and satisfactory
to the Required Banks and (ii) a schedule of material contracts in progress
(with bonded contracts specifically identified);
(c) within the periods provided in paragraphs (a) and (b) above, a
certificate of an authorized financial officer of the Company stating that
such officer has reviewed the provisions of this Agreement and setting
forth: (aa) the information and computations (in sufficient detail)
required in order to compute the Consolidated Debt/EBITDA Ratio and to
establish whether the Company was in compliance with the requirements of
Sections 8.10, 8.11 and 8.12 hereof at the end of the period covered by the
financial statements then being furnished, and (ab) to the best such
officer's knowledge, whether there exists on the date of the certificate or
existed at any time during the period covered by such financial statement
any Default or Event of Default and, if any such condition or event exists
on the date of the certificate or existed during such period, specifying
the nature and period of existence thereof and the action the Company is
taking, has taken or proposes to take with respect thereto;
(d) promptly upon the filing thereof, copies of all registration
statements, Form 10-K, Form 10-Q and Form 8-K reports and proxy statements
which the Company or any of its Subsidiaries file with the Securities and
Exchange Commission;
(e) prior written notice of any investment or acquisition by the
Company or any Subsidiary involving either a purchase price of $10,000,000
or more or the purchase of 5% or more of the Voting Stock of any Person;
and
(f) promptly after knowledge thereof shall have come to the attention
of any responsible officer of the Company, written notice of any threatened
or pending litigation or governmental proceeding or assessment against the
Company or any Subsidiary which if adversely determined would materially
adversely affect the business and properties of the Company and its
Subsidiaries taken as a whole or of any Event of Default.
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The Company will, and will cause each Subsidiary to, permit representatives
of any Bank, upon reasonable notice and during normal business hours, to examine
and make extracts from the books and records of the Company and its Subsidiaries
and to examine their assets and access thereto shall be permitted for such
purpose. The Agent and each Bank agree to maintain in confidence and not
disclose to any Person any material non-public information relating to the
Company or its Subsidiaries made available to the Agent or such Bank pursuant to
this Section 8.5; PROVIDED that the Agent and each Bank may make such
disclosures as are permitted by Section 11.20 or as shall be required by law or
to the Agent's or such Bank's auditors or legal counsel who, the Agent or such
Bank, as applicable, agrees will maintain the information so disclosed in
confidence. Upon notice from the Company, the Agent and the Banks shall take
such steps as may be reasonably requested by the Company to enable the Company
or any Subsidiary to comply with the Foreign Ownership Control or Influence
requirements of the United States Government imposed from time to time, provided
that (i) nothing herein shall obligate the Agent or any Bank to take any action
which would adversely affect the validity or enforceability of any lien granted,
or to be granted, to the Agent or the Banks hereunder or the validity or
enforceability of any of the Loan Documents or any rights or remedies of the
Agent or the Banks thereunder or of the Company's or any Material Subsidiary's
obligations thereunder and (ii) neither the Agent nor any Bank shall be liable
to the Company or any Subsidiary as a result of any act or failure to act
hereunder taken or omitted to be taken in good faith.
Section 8.6. COMPLIANCE WITH LAWS. The Company will, and will cause each
Subsidiary to, comply with all laws, ordinances or governmental rules and
regulations to which they are subject, including, without limitation, the
Occupational Safety and Health Act of 1970, as amended, ERISA, and all laws,
ordinances, governmental rules and regulations relating to environmental
protection in all applicable jurisdictions, the violation of which is reasonably
likely to have a Material Adverse Effect or would result in any lien or charge
upon any property of the Company or any Subsidiary which is not a Permitted
Lien.
SECTION 8.7. NATURE OF BUSINESS. The Company will not, nor will it
permit any Subsidiary to, engage in any business or activity if, as a result,
the general nature of the business which would then be engaged in by the Company
and its Subsidiaries taken as a whole would be substantially changed from
Eligible Lines of Business existing as of the date of this Agreement.
SECTION 8.8. LIENS. The Company will not, nor will it permit any
Restricted Subsidiary to, pledge, mortgage or otherwise encumber or subject to,
or permit to exist upon or be subjected
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to, any lien, security interest or charge upon, any assets or property of any
kind or character at any time owned by the Company or any Restricted Subsidiary;
PROVIDED, HOWEVER, that nothing in this Section contained shall operate to
prevent any of the following (collectively, "PERMITTED LIENS"):
(a) liens, pledges or deposits in connection with workmen's
compensation, unemployment insurance, social security obligations, taxes,
assessments, statutory obligations or other similar charges, good faith
deposits in connection with tenders, contracts or leases to which the
Company or any of its Restricted Subsidiaries is a party or other deposits
required to be made in the ordinary course of business and not in
connection with borrowing money or obtaining advances or credit; provided
in each case that the obligation or liability arises in the ordinary course
of business and is not overdue, or if overdue, is being contested in good
faith by appropriate proceedings which prevent enforcement of the matter
under contest and adequate reserves have been established therefor to the
extent required by GAAP;
(b) inchoate statutory, construction, common carrier's,
materialmen's, landlord's, warehousemen's, mechanics, producers' or
operator's liens securing obligations not overdue, or if overdue, being
contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves have been
established therefor to the extent required by GAAP (collectively,
"MECHANIC'S LIENS");
(c) liens given to secure the payment of the purchase price or the
financing thereof incurred in connection with the acquisition of fixed
assets, including liens existing on such assets at the time of acquisition
thereof, provided that (i) the lien shall attach solely to the property
acquired or purchased and (ii) the indebtedness secured by such lien does
not exceed 100% of the lesser of the cost or fair value of the property
financed (collectively, "PURCHASE MONEY LIENS");
(d) the liens created by the Loan Documents;
(e) attachment or judgment liens individually or in the aggregate not
in excess of $1,000,000 (exclusive of (i) any amounts that are duly bonded
to the reasonable satisfaction of the Agent or (ii) any amount adequately
covered by insurance as to which the insurance company has not disclaimed
or disputed in writing its obligations for coverage or has not otherwise
failed to pay when due);
(f) liens for taxes, assessments or other governmental charges not
yet due and
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payable or which are being diligently contested in good faith by the
Company or its applicable Restricted Subsidiary by appropriate proceedings,
PROVIDED that in any such case an adequate reserve is being maintained by
the Company or such Restricted Subsidiary for the payment of same;
(g) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds and other obligations of like nature arising in the
ordinary course of business;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not materially
detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Company or any
Restricted Subsidiary;
(i) liens on assets other than the Collateral owned by newly acquired
Subsidiaries who become Restricted Subsidiaries hereunder existing at the
time of acquisition and not incurred in contemplation of such acquisition;
(j) liens described on Schedule 8.8 attached hereto, encumbering the
assets noted thereon opposite the description of the indebtedness or
obligation secured thereby; and
(k) extensions and renewals of the foregoing Permitted Liens,
PROVIDED that the aggregate amount of such liabilities secured by such
extended or renewed lien is not increased and such extended or renewed
liabilities secured by such lien are on terms and conditions no more
restrictive than the terms and conditions of the same being extended or
renewed.
SECTION 8.9. INDEBTEDNESS. The Company will not, nor will it permit any
Restricted Subsidiary to, issue, incur, assume, create, or have outstanding any
indebtedness for borrowed money (including as such for all purposes of this
Agreement any indebtedness representing the deferred purchase price of property
(accounts payable for the purchase of goods on ordinary trade terms shall not be
deemed indebtedness for the deferred purchase price of property for purposes of
this Agreement), any liability in respect to banker's acceptances, any
indebtedness, whether or not assumed, secured by liens on property acquired by
the Company or any Restricted Subsidiary existing at the time of the acquisition
thereof, and the liability of the Company or any Restricted Subsidiary under any
lease which should be capitalized under GAAP); PROVIDED, HOWEVER, that the
foregoing
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provisions shall not restrict nor operate to prevent:
(a) indebtedness owing to the Agent and the Banks under this
Agreement or any of the other Loan Documents;
(b) purchase money indebtedness;
(c) indebtedness of any Restricted Subsidiary owing to the Company or
any other Subsidiary arising in the ordinary course of business;
(d) indebtedness of any newly-acquired Restricted Subsidiary existing
at the time of the acquisition and not incurred in contemplation of such
acquisition;
(e) indebtedness described on Schedule 8.9 attached hereto; and
(f) indebtedness not otherwise permitted by this Section 8.9
aggregating not more than $2,000,000 at any one time outstanding.
SECTION 8.10. CONSOLIDATED NET WORTH. The Company will at all times
maintain Consolidated Net Worth of not less than the sum of (a) 80% of the
Company's Consolidated Net Worth determined as of the date hereof plus (b) 25%
of Consolidated Net Income for each fiscal quarter ending on or after November
30, 1996, for which Consolidated Net Income for such quarter then ended is a
positive amount; PROVIDED that for purposes of the foregoing clause (b), there
shall be no reduction to the amount of Consolidated Net Worth required to be
maintained hereunder for any fiscal quarter in which such Consolidated Net
Income is less than $0. On or before December 31, 1996, the Company shall
deliver to the Banks a certificate setting forth the Company's Consolidated Net
Worth determined in accordance with clause (a) above.
SECTION 8.11. CONSOLIDATED DEBT/CAPITAL RATIO. The Company will at all
times maintain the ratio of Consolidated Total Indebtedness minus the aggregate
amount of Letters of Credit then outstanding to Consolidated Capital at not more
than .5 to 1.
SECTION 8.12. DEBT SERVICE COVERAGE RATIO. The Company shall as of the
last day of each fiscal quarter have a Debt Service Coverage Ratio of not more
than 4.0 to 1.
SECTION 8.13. ACQUISITIONS, INVESTMENTS, LOANS, ADVANCES AND GUARANTEES.
The Company will not, nor will it permit any Restricted Subsidiary to, directly
or indirectly, make, retain or have outstanding any interest or investments
(whether through purchase of stock or obligations or otherwise) in, or loans or
advances to, any other Person, or acquire all or any substantial part of
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the assets or business of any other Person, or guarantee any indebtedness,
obligation or liability of any other Person or otherwise enter into any
arrangement designed to assure another Person against loss or subordinate any
claim or demand it may have to the claim or demand of any other Person;
PROVIDED, HOWEVER, that the foregoing provisions shall not apply to nor operate
to prevent:
(a) investments by the Company or any Restricted Subsidiary in direct
obligations of the United States of America or of any agency or
instrumentality thereof whose obligations constitute full faith and credit
obligations of the United States of America, provided that any such
obligations shall mature within fifteen months from the date the same are
acquired by the Company or such Restricted Subsidiary;
(b) investments by the Company or any Restricted Subsidiary in
certificates of deposit or time deposits issued by any Bank, or by any
United States commercial bank having capital and surplus of not less than
$100,000,000 and having a maturity of fifteen months or less;
(c) investments by the Company or any Restricted Subsidiary in
commercial paper maturing 270 days or less from the date of issuance which
at the time of acquisition is rated A-2 or better by Standard & Poor's
Corporation and P-2 or better by Moody's Investors Service, Inc.;
(d) investments by the Company or any Restricted Subsidiary in debt
securities issued by U.S. corporations or states of the United States
maturing within fifteen months from the date of acquisition thereof if at
the time of acquisition the investment in question has a rating of not less
than BBB from Standard & Poor's Ratings Services Group, a division of The
McGraw-Hill Companies, Inc. and/or Baa2 from Moody's Investors Services,
Inc.;
(e) investments by the Company or any Restricted Subsidiary in
preferred stock of any corporation organized under the laws of any state of
the United States which is subject to a remarketing undertaking at
intervals not exceeding fifteen months issued by any substantial broker and
which is rated BBB or better by Standard & Poor's Ratings Services Group, a
division of The McGraw-Hill Companies, Inc. and/or Baa2 or better by
Moody's Investors Services, Inc.;
(f) acquisitions by the Company or any Restricted Subsidiary of the
stock or assets of Persons primarily engaged in any Eligible Line of
Business if and only so long as
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prior to consummation of any such transaction the Company shall have
notified the Banks of the proposed transaction in reasonable detail as to
the terms thereof (including sources and uses of funds therefor) and the
Company shall have furnished the Banks with historic and pro forma
financial information and compliance calculations reasonably satisfactory
to the Required Banks demonstrating no Default or Event of Default exists
or, on a pro forma basis, would occur after giving effect to such
transaction;
(g) ordinary course of business investments in, directly or
indirectly, joint ventures with other Persons formed to provide services in
an Eligible Line of Business and loans and guaranties (made ratably with
the other venturers) to such joint ventures;
(h) loans and advances by the Company or any Restricted Subsidiary to
other Restricted Subsidiaries;
(i) one or more unsecured guaranties issued by the Company or any
Restricted Subsidiary guaranteeing indebtedness and obligations of Blue
Diamond outstanding from time to time in an aggregate principal not to
exceed $6,000,000 at any one time;
(j) the Guaranty made by the Material Subsidiaries in favor of the
Agent and the Banks;
(k) investments held by any Restricted Subsidiary acquired after the
date of this Agreement existing at the time of its acquisition by the
Company or other existing Restricted Subsidiary and not acquired by such
Restricted Subsidiary in contemplation of such acquisition;
(l) existing investments in, loans and advances to, and guaranties of
the obligations of, Unrestricted Subsidiaries disclosed on Schedule 8.13(l)
attached hereto and made a part hereof; together with additional
investments in, loans and advances to, and guaranties of the obligations
of, Unrestricted Subsidiaries not disclosed on Schedule 8.13(l) in an
aggregate account not to exceed $35,000,000 at any one time outstanding;
(m) guaranties existing on the date hereof described on, and
supporting the obligations set forth on, Schedule 8.13(m) hereof;
(n) performance guaranties supporting performance obligations of
Subsidiaries arising under contracts in Eligible Lines of Business;
(o) investments in, loans and advances to, and guaranties of the
obligations of,
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Persons (other than Subsidiaries), not otherwise permitted by this Section,
that are engaged in an Eligible Line of Business, and at no time
aggregating more than $10,000,000; and
(p) investments in, loans and advances to, and guaranties of the
obligations of Persons other than Subsidiaries not otherwise permitted by
this Section at no time aggregating more than $1,000,000.
In determining the amount of investments, loans and advances permitted under
this Section, investments shall always be taken at the original cost thereof,
regardless of any subsequent appreciation (including retained earnings) or
depreciation therein, and loans and advances shall be taken at the principal
amount thereof then remaining unpaid.
SECTION 8.14. DIVIDENDS AND CERTAIN OTHER RESTRICTED PAYMENTS. The
Company will not declare or pay any dividends on any class of its capital stock
(other than (i) dividends payable solely in its capital stock and (ii)
redemptions and distributions in respect to the Company's Series A Preferred
Stock to the extent required by the Company's amended certificate of
incorporation as in effect on the date hereof and paid out of the proceeds of
foreign tax credit refunds up to $18,000,000, plus interest thereon) or directly
or indirectly purchase, redeem or otherwise acquire or retire any of its capital
stock (such declarations, payments, purchases, redemption's, acquisitions and
retirements being hereinafter referred to as "RESTRICTED PAYMENTS") if any
Default or Event of Default then exists or would arise after giving effect
thereto.
SECTION 8.15. MERGERS. The Company will not, nor will it permit any
Restricted Subsidiary to, consolidate or be a party to a merger with any other
Person, except that so long as no Default or Event of Default has occurred and
is continuing or would arise as a result thereof (i) any Restricted Subsidiary
of the Company may merge with and into the Company if the Company is the
surviving corporation and (ii) the Company or any Restricted Subsidiary may
engage in a merger with another Person if the Company or such Restricted
Subsidiary is the surviving corporation.
SECTION 8.16. SALE OF ASSETS. The Company will not, nor will it permit
any Restricted Subsidiary to, sell, lease or otherwise dispose of all or any
substantial part of its property or assets (including any disposition of
property as part of a sale and leaseback transaction, but excluding the leasing
of property by WCG Leasing, Inc., a Montana corporation, made in the ordinary
course of its business) or in any event sell or discount, with or without
recourse, any of its notes or accounts receivable; PROVIDED, that nothing
contained therein shall prohibit (i) sales of inventory in the ordinary
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course of business; (ii) sales or dispositions of obsolete or worn out property
disposed of in the ordinary course of business; and (iii) sales of individual
items of Collateral or other assets with a book value of less than (x)
$10,000,000 in the aggregate during the fiscal year ending on or about November
30, 1997, and (y) $15,000,000 in the aggregate during any other fiscal year. In
the event the Company sells CF Systems Corporation during the fiscal year ending
on or about November 30, 1997, such sale shall not count against the $10,000,000
permitted amount provided for in clause (iii)(x) above for purposes of this
Section 8.16 or Section 8.19 below. At the request of the Company, so long as
no Default or Event of Default then exists or would arise as a result of such
disposition, the Agent is hereby authorized and directed to release its lien on
any property sold pursuant to the forgoing provisions.
SECTION 8.17. BURDENSOME CONTRACTS WITH AFFILIATES. The Company will not,
nor will it permit any Restricted Subsidiary to, enter into or be a party to any
contract or agreement with an Affiliate on terms and conditions materially less
favorable to the Company or such Restricted Subsidiary than would be usual and
customary in similar contracts or agreements between Persons not affiliated with
each other.
SECTION 8.18. NO CHANGE IN FISCAL YEAR. The Company will not, nor will it
permit any Restricted Subsidiary to, change its fiscal year, provided that the
Banks shall not unreasonably withhold their consent to such a change if in
connection therewith the provisions of this Agreement measuring covenant
compliance with reference to fiscal periods are renegotiated in a manner
reasonably acceptable to them.
SECTION 8.19. MAINTENANCE OF MATERIAL SUBSIDIARIES. The Company will not,
nor will it permit any Subsidiary to, directly or indirectly, sell, transfer, or
otherwise dispose of its equity interest in any Material Subsidiary, provided
that the Company or any Subsidiary may sell or otherwise dispose of 100% of its
equity interest in any one or more Material Subsidiaries if and only so long as
each of the following conditions are met: (i) such sale or disposition,
together with the sale and other disposition of assets of the Company and its
Subsidiaries made during such fiscal year, would be a permitted disposition of
assets under Section 8.16(iii) hereof, (ii) no Default or Event of Default
exists prior to or would arise immediately after giving effect to the
transaction, (iii) the Company has notified the Banks of the proposed
transaction in reasonable detail and has provided the Banks pro forma financial
information and compliance calculations reasonably satisfactory to the Required
Banks demonstrating no Default or Event of Default exists or would arise after
giving effect to such
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transaction, and (iv) no Material Adverse Effect shall occur as a result of such
transaction. In connection with the sale of the capital stock of a Material
Subsidiary permitted hereby, at the request of the Company and so long as no
Default or Event of Default then exists or would arise as a result thereof, the
Agent is hereby authorized and directed to release such Material Subsidiary from
the Guaranty and to release its lien on any stock or assets of such Material
Subsidiary.
SECTION 8.20. FORMATION OF SUBSIDIARIES. In the event any Restricted
Subsidiary is formed or acquired after the date hereof, unless with respect to
any newly formed or acquired Subsidiary such Subsidiary shall not be a Material
Subsidiary, the Company shall within thirty (30) Business Days thereof cause
such newly-form or acquired Subsidiary to become a party to the Guaranty and
execute such Collateral Documents to the extent required by Section 5 hereof (on
terms substantially similar to those executed in connection with this Agreement)
as the Agent may then require granting the Agent for the benefit of the Banks a
security interest in and lien on the personal property of such Subsidiary as
collateral security for the Notes, the Applications, and the other obligations
of the Company under the Loan Documents, together with such other instruments,
documents, certificates and opinions required by the Agent in connection
therewith. Thereafter, such Subsidiary shall be deemed a Material Subsidiary
hereunder and Schedule 6.2 of this Agreement shall be deemed amended to include
reference to such Subsidiary.
SECTION 8.21. NO RESTRICTION ON SUBSIDIARY DIVIDENDS. Neither the Company
nor any Subsidiary (excluding majority-owned joint ventures referred to in
Section 8.13(g) hereof) is a party to, nor will the Company or any Subsidiary
(excluding majority-owned joint ventures referred to in Section 8.13(g) hereof)
become a party to, any agreement prohibiting or otherwise restricting the
declaration or payment of any dividends by any such Subsidiary.
SECTION 8.22. INTEREST RATE PROTECTION. The Company hereby agrees that in
the event its Consolidated Total Indebtedness bearing interest at a floating
rate exceeds $100,000,000, the Company agrees to enter into good faith
discussions with the Banks pursuant to which the Company agrees to consider
entering into one or more interest rate hedging agreements mutually satisfactory
to the Company and the Agent.
SECTION 8.23. AGREEMENT TO RELEASE LIEN FILINGS. The Company represents
and warrants to the Banks that no UCC financing statements or other lien filings
are of record in any filing office other than (a) UCC financing statements and
other lien recording instruments perfecting Permitted Liens and (b) UCC
financing statements and other lien recording instruments securing obligations
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which have been discharged as a matter of law pursuant to the Plan. The Company
hereby agrees, at its cost and expense, to cause all UCC financing statements
and other lien recording instruments filed securing the obligations described in
clause (b) above to be released of record within thirty (30) days of the
Company's receipt of the Agent's post-filing financing statement searches and
the Company shall furnish the Agent evidence as to the release of all such liens
in form and substance satisfactory to the Agent.
SECTION 8.24. THE PLAN. The Company will comply with its obligations
under the Plan and Confirmation Order and consummate the Plan in accordance with
its terms. The Company will not consent to or acquiescence in any amendment or
modification to the Plan or Confirmation Order without the written consent of
the Required Banks; PROVIDED, HOWEVER, that the Company may consent or acquiesce
in any such amendment or modification which does not materially impair the
assets of the Company and its Subsidiaries, increase in any material respect the
consolidated liabilities of the Company and its Subsidiaries, or change in any
material respect the terms for repayment of obligations of the Company under the
Plan. The Company shall provide copies of all amendments or modifications to
the Plan or Confirmation Order to the Banks, whether or not the same are
material.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
SECTION 9.1. Any one or more of the following shall constitute an "EVENT
OF DEFAULT" hereunder:
(a) default in the payment of any installment of the principal of or
interest on any Note or Application when due, whether at the stated
maturity thereof or at any other time provided for in this Agreement and
the continuance of such default for two Business Days after notice thereof
to the Company from the Agent or any Bank, or default in the payment when
due of any fee, charge or other amount payable by the Company hereunder or
under any other Loan Document and the continuance of such default for five
Business Days after notice thereof to the Company from the Agent or any
Bank;
(b) default in the observance or performance of any covenant set
forth in Sections 8.13, 8.14, 8.15 or 8.16 hereof or of any Collateral
Document dealing with the use, disposition or remittance of the proceeds of
Collateral or the maintenance of insurance thereon;
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(c) default in the observance or performance of any other provision
hereof or any of the other Loan Documents which is not remedied within 30
days after written notice thereof to the Company by any Bank or by the
holder of any Note;
(d) default shall occur in the payment when due (whether by lapse of
time, acceleration or otherwise) of any indebtedness (including as such all
obligations included in Consolidated Total Indebtedness as such term is
defined herein) aggregating in excess of $10,000,000 issued, assumed or
guaranteed by the Company or any Subsidiary or any other event of default
shall occur with respect to any such indebtedness beyond any period of
grace provided therefor if the effect thereof is to permit the maturity of
such indebtedness to be accelerated or to permit the holders thereof to
elect a majority of the Board of Directors of the Company;
(e) any representation or warranty made herein or in any of the other
Loan Documents or in any statement or certificate furnished pursuant hereto
or thereto, or in connection with any advance or issuance made hereunder or
by any person in connection with the transactions contemplated hereby,
proves untrue in any material respect as of the date of the issuance or
making thereof, and shall not be made good within 30 days after notice
thereof to the Company by any Bank or by the holder of any Note;
(f) any judgment or judgments, writ or writs or warrant or warrants
or attachment, or any similar process or processes in an aggregate amount
in excess of $2,000,000 more than the amount, if any, covered by insurance
(as to which the insurer has not disclaimed or disputed in writing its
obligations for coverage or otherwise failed to pay when due) shall be
entered or filed against the Company or any Subsidiary or against any of
the property or assets of any of them and remains undischarged, unvacated,
unbonded or unstayed for a period of 30 days;
(g) any event occurs or condition exists which is specified as an
event of default under any of the other Loan Documents after the expiration
of any applicable notice or grace periods;
(h) any of the Loan Documents shall for any reason not be or shall
cease to be in full force and effect, or any of the Loan Documents is
declared to be null and void, or the Company or any Material Subsidiary
takes any action for the purpose of repudiating or
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rescinding any Loan Document executed by it or the obligations of such
Person thereunder;
(i) 50% or more of the issued and outstanding Voting Stock of the
Company is owned or controlled, either legally or beneficially, by any
Person or by any group of Persons affiliated with each other or acting in
concert (Persons shall not be deemed to have acted in concert merely as a
result of voting the same way or taking the same position if the decision
to vote or to take a position were made independently and without prior
consultation) other than Dennis R. Washington and/or his wife and/or his
descendants and/or trusts or estates for the benefit of his wife and/or
descendants;
(j) the Company or any Material Subsidiary or any Material Foreign
Subsidiary becomes insolvent or bankrupt or bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other proceedings for
relief under any bankruptcy law or laws for the relief of debtors are
instituted against the Company or any Material Subsidiary or any Material
Foreign Subsidiary and are not dismissed within 60 days after such
institution or a decree or order of a court having jurisdiction in the
premises for the appointment of a trustee or receiver or custodian for the
Company or any Material Subsidiary or any Material Foreign Subsidiary or
for the major part of any of their property is entered and the trustee or
receiver or custodian appointed pursuant to such decree or order is not
discharged within 60 days after such appointment; or
(k) the Company or any Material Subsidiary or any Material Foreign
Subsidiary shall institute bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings for relief under
any bankruptcy law or laws for the relief of debtors or shall consent to
the institution of such proceedings against it by others or to the entry of
any decree or order adjudging it bankrupt or insolvent or approving as
filed any petition seeking reorganization under any bankruptcy or similar
law or shall apply for or shall consent to the appointment of a receiver or
trustee or custodian for it or for the major part of its property or shall
make an assignment for the benefit of creditors or shall admit in writing
its inability to pay its debts as they mature or shall take any corporate
action in contemplation or in furtherance of any of the foregoing purposes.
SECTION 9.2. When any Event of Default described in subsections 9.1(a) to
9.1(i), both inclusive, has occurred and is continuing, the Agent may (and
shall, upon request of the Required Banks), by notice to the Company, take any
or all of the following actions:
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(a) terminate the obligation of the Banks to extend any further
credit hereunder on the date (which may be the date thereof) stated in such
notice (such termination shall be effective upon verbal notification, the
Agent hereby agreeing to provide written notification thereof to the
Company as soon as practical thereafter);
(b) declare the principal of and the accrued interest on the Notes to
be forthwith due and payable and thereupon the Notes, including both
principal and interest, and all fees, charges and commissions payable
hereunder, shall be and become immediately due and payable without further
demand, presentment, protest or notice of any kind;
(c) demand that the Company immediately provide to the Agent cash
collateral for the full amount of each Letter of Credit and the Company
agrees to immediately provide such cash collateral and acknowledges and
agrees that the Banks would not have an adequate remedy at law for failure
by the Company to honor any such demand and that the Banks shall have the
right to require the Company to specifically perform such undertaking
whether or not any draws have been made under the Letters of Credit, with
the funds so paid to, if the Company so requests, be invested in short-term
high-grade debt securities, acceptable and pledged to and held by the Agent
in accordance with Section 4.6(d) hereof; and
(d) enforce any and all rights and remedies available under the Loan
Documents or applicable law.
SECTION 9.3. When any Event of Default described in subsections 9.1(j) or
(k) has occurred and is continuing, then (a) the then unpaid balance of the
Notes, including both principal and interest, and all fees, charges and
commissions payable hereunder or under the Applications, shall immediately
become due and payable without presentment, demand, protest or notice of any
kind, (b) the obligation of the Banks to extend further credit pursuant to any
of the terms hereof shall immediately and automatically terminate, (c) the
Company shall immediately provide to the Agent cash collateral for the full
amount of all Letters of Credit, whether or not draws have been made thereon,
the Company acknowledging that the Banks would not have an adequate remedy at
law for failure by the Company to honor any such demand, and the Banks shall
have the right to require the Company to specifically perform such undertaking
whether or not any draws have been made under the Letters of Credit, and (d) the
Agent may exercise all remedies available to it under the Loan Documents or
applicable law.
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SECTION 10. THE AGENT AND ISSUING BANKS.
SECTION 10.1. APPOINTMENT AND AUTHORIZATION. Each Bank hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers hereunder and under the Loan Documents as are designated to
the Agent by the terms hereof and thereof together with such powers as are
reasonably incidental thereto. The Agent may resign at any time by sending
twenty (20) days prior written notice to the Company and the Banks and may be
removed by the Required Banks upon twenty (20) days prior written notice to the
Company and the Banks. In the event of any such resignation or removal the
Required Banks may appoint a new agent, which shall succeed to all the rights,
powers and duties of the Agent hereunder and under the Loan Documents, such new
Agent to be subject to the reasonable consent of the Company unless a Default or
Event of Default has occurred and is continuing. Any resigning or removed Agent
shall be entitled to the benefit of all the protective provisions hereof with
respect to its acts as an agent hereunder, but no successor Agent shall in any
event be liable or responsible for any actions of its predecessor. If the Agent
resigns or is removed and no successor is appointed, the rights and obligations
of such Agent shall be automatically assumed by the Required Banks and (i) the
Company shall be directed to make all payments due each Bank hereunder directly
to such Bank and (ii) the Agent's rights in the Loan Documents shall be assigned
without representation, recourse or warranty to the Banks as their interests may
appear.
SECTION 10.2. RIGHTS AS A BANK. The Agent has and reserves all of the
rights, powers and duties hereunder and under the other Loan Documents as any
Bank may have and may exercise the same as though it were not the Agent and the
terms "BANK" or "BANKS" as used herein and in all of such documents shall,
unless the context otherwise expressly indicates, include the Agent in its
individual capacity as a Bank. The Agent reserves the right to engage in other
business transactions with the Company, the Subsidiaries and their Affiliates.
SECTION 10.3. STANDARD OF CARE. The Banks acknowledge that they have
received and approved copies of the Loan Documents, and such other information
and documents concerning the transactions contemplated and financed hereby as
they have requested to receive and/or review. The Agent makes no
representations or warranties of any kind or character to the Banks with respect
to the validity, enforceability, genuineness, perfection, value, worth or
collectibility hereof or of the other Loan Documents or of the liens provided
for thereby or of any other documents called for hereby or thereby or of the
Collateral. The Agent need not verify the worth or existence of the
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Collateral and may rely exclusively on reports provided by the Company. The
Banks agree that neither the Agent nor any director, officer employee, agent or
representative thereof (including any security trustee therefor) shall in any
event be liable for any clerical errors or errors in judgment, inadvertence or
oversight, or for action taken or omitted to be taken by it or them hereunder or
under the Loan Documents or in connection herewith or therewith except for its
or their own gross negligence or willful misconduct. The Agent shall incur no
liability under or in respect of this Agreement or the other Loan Documents by
acting upon any notice, certificate, warranty, instruction or statement (oral or
written) of anyone (including anyone in good faith believed by it to be
authorized to act on behalf of the Company), unless it has actual knowledge of
the untruthfulness of same. The Agent agrees to use the same care in protecting
the interests of the Banks in the Loans as it uses for similar loans held by it
solely for its own account. The Agent shall be entitled to assume that no
Default or Event of Default exists, absent actual knowledge thereof, unless
notified to the contrary by a Bank. The Agent shall in all events be fully
protected in acting or failing to act in accord with the instructions of the
Required Banks. Upon the occurrence of an Event of Default hereunder, the Agent
shall take such action with respect to the enforcement of its liens on the
Collateral and the preservation and protection thereof as it shall be directed
to take by the Required Banks (and shall consult with the Banks as to actions to
be taken) but unless and until the Required Banks have given such direction the
Agent shall take or refrain from taking such actions as it deems appropriate and
in the best of interest of all Banks. The Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall be indemnified
to its reasonable satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent may treat the owner of any Note as the holder
thereof until written notice of transfer shall have been filed with it as
provided in Section 11.12 hereof signed by such owner in form satisfactory to
the Agent. Each Bank acknowledges that it has independently and without
reliance on the Agent or any other Bank and based upon such information,
investigations and inquiries as it deems appropriate made its own credit
analysis and decision to extend credit to the Company. It shall be the
responsibility of each Bank to keep itself informed as to the creditworthiness
of the Company and each Subsidiary and the Agent shall have no liability to any
Bank with respect thereto.
SECTION 10.4. COSTS AND EXPENSES. Each Bank agrees to reimburse the Agent
and each Issuing Bank for all out-of-pocket costs and expenses suffered or
incurred by the Agent or any such
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Issuing Bank or any security trustee in performing its duties hereunder and
under the other Loan Documents or in the exercise of any right or power imposed
or conferred upon the Agent or any such Issuing Bank hereby or thereby, to the
extent that the Agent or such Issuing Bank is not promptly reimbursed for same
by the Company or out of the Collateral, all such costs and expenses to be borne
by the Banks ratably in accordance with the amounts of their respective
Commitments. If any Bank fails to reimburse the Agent or such Issuing Bank for
its share of any such costs and expenses, such costs and expenses shall be paid
pro rata by the remaining Banks, but without in any manner releasing the
defaulting Bank from its liability hereunder.
SECTION 10.5. INDEMNITY. The Banks shall ratably indemnify and hold the
Agent and each Issuing Bank, and each of their directors, officers, employees,
agents or representatives (including as such any security trustee therefor)
harmless from and against any liabilities, losses, costs or expenses suffered or
incurred by them under this Agreement or any of the other Loan Documents or in
connection with the transactions contemplated hereby or thereby, regardless of
when asserted or arising, except to the extent they are promptly reimbursed for
the same by the Company or out of the Collateral and except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified. If any Bank defaults in its
obligations hereunder, its share of the obligations shall be paid pro rata by
the remaining Banks, but without in any manner releasing the defaulting Bank
from its liability hereunder.
SECTION 11. MISCELLANEOUS..
SECTION 11.1. WAIVER OF RIGHTS. No delay or failure on the part of any
Bank or the holder or holders of any Note in the exercise of any power or right
shall operate as a waiver thereof or as an acquiescence in any default, nor
shall any single or partial exercise thereof, or the exercise of any other power
or right, preclude any other right or the further exercise of any other rights.
The rights and remedies hereunder of the Company, the Agent, the Banks and of
the holder or holders of any Note are cumulative to, and not exclusive of, any
rights or remedies which any of them would otherwise have.
SECTION 11.2. NON-BUSINESS DAY. If any payment of principal shall fall
due on a day which is not a Business Day, interest at the rate such principal
bears for the period prior to maturity shall continue to accrue on such
principal from the stated due date thereof to and including the next succeeding
Business Day on which the same is payable.
SECTION 11.3. DOCUMENTARY TAXES. The Company agrees to pay any
documentary, stamp
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or similar taxes payable in respect to this Agreement or any other Loan
Document, including interest and penalties, in the event any such taxes are
assessed irrespective of when such assessment is made and whether or not any
credit is then in use or available hereunder.
SECTION 11.4. SURVIVAL OF REPRESENTATIONS. All representations and
warranties made in the Loan Documents or pursuant thereto or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and of the other Loan Documents, and shall continue in full force
and effect with respect to the date as of which they were made as long as any
credit is in use or available hereunder.
SECTION 11.5. SET-OFF SHARING. Each Bank agrees with each other Bank a
party hereto that in the event such Bank shall receive and retain any payment,
whether by set-off or application of deposit balances or otherwise ("SET-OFF"),
on or in respect of any Note or other obligation outstanding under this
Agreement in excess of its ratable share of payments on all Notes and other
obligations then outstanding to the Banks, then such Bank shall purchase for
cash at face value, but without recourse, ratably from each of the other Banks
such amount of the Notes or other obligations held by each such other Bank (or
interest therein) as shall be necessary to cause such Bank to share such excess
payment ratably with all the other Banks; PROVIDED, HOWEVER, that if any such
purchase is made by any Bank, and if such excess payment or part thereof is
thereafter recovered from such purchasing Bank, the related purchases from the
other Banks shall be rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without interest.
SECTION 11.6. NOTICES. All communications provided for herein shall be in
writing or by telex or by telegraph, except as otherwise specifically provided
for hereinabove, addressed, if to the Company at 720 Park Boulevard, Boise,
Idaho 83712, Attention: Chief Financial Officer or if to the Agent or Banks at
their respective addresses set forth opposite their respective signatures
hereto, or at such other address as shall be designated by any party hereto in a
written notice to each other party pursuant to this Section 11.6. Any notice in
writing shall be deemed to have been given or made when served personally or
when received if sent by United States mail, and any notice given by telex or
telegraphic means shall be deemed given when transmitted (answer back
confirmed); provided that any notice to the Agent or any Bank under Sections 2
and 3 hereof shall only be effective upon receipt.
SECTION 11.7. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and by the different parties on different counterparts, each of
which when executed shall
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be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 11.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Company and its successors and assigns, and shall be binding upon and
inure to the benefit of the Agent and the Banks and their respective successors
and assigns permitted pursuant to Section 11.12, including any subsequent holder
of any Note. The Company may not assign its rights or obligations hereunder
without the prior written consent of the Banks.
SECTION 11.9. PARTICIPANTS. Each Bank shall have the right at its own
cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made by such Bank and credit risks
in Letters of Credit held by such Bank at any time and from time to time to one
or more other financial institutions, provided that no such participant shall
have any rights under this Agreement or any other Loan Document (the
participant's rights against the Bank granting its participation to be those set
forth in the participation agreement between the participant and such Bank);
PROVIDED, FURTHER, that no Bank shall transfer or grant any participation under
which the participant shall have rights to approve any amendment to or waiver of
this Agreement or any other loan Document except to the extent such amendment or
waiver would extend the final scheduled maturity of any Loan, Note or Letter of
Credit (unless such Letter of Credit is not extended beyond the Termination
Date) in which such participant is participating, or reduce the rate or extend
the time of payment of interest or fees thereon (except in connection with a
waiver of applicability of any post-default increase in interest rates) or
reduce the principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Commitment or of a mandatory prepayment shall not constitute a change in the
terms of such participation, and that an increase in any Commitment or Loan
shall be permitted without the consent of any participant if the participant's
participation is not increased as a result thereof. Each such Bank selling a
participation shall be entitled to the benefits of Sections 2.3(d), 3 and 4.8
hereof to the extent such Bank would have been so entitled had no such
participation been sold.
SECTION 11.10. COSTS AND EXPENSES. The Company agrees to pay within 10
days of demand therefor all reasonable out-of-pocket costs and expenses of the
Agent in connection with the negotiation, preparation, execution, delivery,
recording and/or filing and/or release of the Loan Documents and the other
instruments and documents to be delivered hereunder or thereunder or in
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connection with the transactions contemplated hereby or thereby or in connection
with any consents hereunder or thereunder or waivers or amendments hereto or
thereto, including the reasonable fees and out-of-pocket expenses of counsel for
the Agent with respect to all of the foregoing, and all recording, filing or
other fees, costs and taxes incident to perfecting a lien upon the collateral
security for the Notes and other obligations of the Company, and all reasonable
costs and expenses (including reasonable attorneys' fees), incurred by the
Agent, any security trustee for the Banks, the Banks or any other holders of a
Note in connection with a default or the enforcement of any of the Loan
Documents and the other instruments and documents to be delivered hereunder or
thereunder. The Company agrees to indemnify and save the Banks, the Agent and
any security trustee for the Banks harmless from any and all liabilities,
losses, costs and expenses incurred by the Banks or the Agent in connection with
any action, suit or proceeding brought against the Agent, security trustee or
any Bank by any person which arises out of the transactions contemplated or
financed hereby or by the other Loan Documents or out of any action or inaction
by the Agent, any security trustee or any Bank hereunder or thereunder, except
for such thereof as is caused by the gross negligence or willful misconduct of
the party indemnified. The provisions of this Section 11.10 and the protective
provisions of Section 3 hereof shall survive payment of the Notes and the other
obligations owing to the Banks hereunder.
SECTION 11.11. CONSTRUCTION. The parties hereto acknowledge and agree
that this Agreement shall not be construed more favorably in favor of one than
the other based upon which party drafted the same, it being acknowledged that
all parties hereto contributed substantially to the negotiation of this
Agreement.
SECTION 11.12. ASSIGNMENT AGREEMENTS. Each Bank may, from time to time,
with the consent of the Company and the Agent, which will not be unreasonably
withheld, assign to other financial institutions part of the indebtedness
evidenced by the Notes and credit risks with respect to Letters of Credit then
owned by it together with an equivalent proportion of its obligation to make
Loans and participate in Letters of Credit hereunder pursuant to written
agreements executed by the assignor, the assignees, the Company and the Agent,
which agreements shall specify in each instance the portion of the indebtedness
evidenced by the Notes and Applications which is to be assigned to each such
assignee and the portion of the Commitment of the assignor to be assumed by it
(the "ASSIGNMENT AGREEMENTS"); provided, however, that (i) each such assignment
shall be of a constant, and not a varying, percentage of the assigning Bank's
rights and obligations under this Agreement
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and the assignment shall cover the same percentage of such Bank's Commitment,
Loans, Note, and credit risk with respect to Letters of Credit; (ii) unless each
of the Agent and the Company otherwise consents, the aggregate amount of the
Commitment, Loans, Note, and credit risk with respect to Letters of Credit of
the assigning Bank being assigned pursuant to each such Assignment Agreement
(determined as of the effective date of the relevant Assignment Agreement) shall
in no event be less than $20,000,000 (unless such assignment is to another Bank
party hereto in which event such minimum amount shall be $10,000,000) and shall
be an integral multiple of $1,000,000 and, unless the assigning Bank shall have
assigned all of its Commitment, Loans, Note, and credit risk with respect to
Letters of Credit, the aggregate amount of the Commitment, Loans, Note and
credit risk with respect to Letters of Credit retained by the assigning Lender
shall in no event be less than $20,000,000; and (iii) the assigning Bank must
pay to the Agent a processing and recordation fee of $2,000 and any
out-of-pocket attorney's fees and expenses incurred by the Agent in connection
with each such Assignment Agreement. Upon the execution of each Assignment
Agreement by the assignor, the assignee and the Company (i) such assignee shall
thereupon become a "BANK" for all purposes of this Agreement with a Commitment
in the amount set forth in such Assignment Agreement (and Exhibit A hereto shall
be deemed amended to reflect the aggregate Commitments of the Banks after giving
effect thereto) and with all the rights, powers and obligations afforded a Bank
hereunder, provided that the assigning Bank shall retain the benefit of all
indemnities of the Company with respect to matters arising prior to the
effective date of such Assignment Agreement, which shall survive and inure to
the benefit of the assigning Bank, (ii) such assigning Bank shall have no
further liability for funding the portion of its Commitment assumed by such
other Bank and (iii) the address for notices to such Bank shall be as specified
in the Assignment Agreement executed by it. Concurrently with the execution and
delivery of such Assignment Agreement by the assignor, the assignee, the Company
and the Agent, the Company shall execute and deliver a Note to the assignee Bank
in the amount of its Commitment and a new Note to such assigning Bank in the
amount of its Commitment after giving effect to the reduction occasioned by such
assignment, all such notes to constitute "NOTES" for all purposes of this
Agreement.
SECTION 11.13. WAIVERS, MODIFICATIONS AND AMENDMENTS. Any provision
hereof or of any of the other Loan Documents may be amended, modified, waived or
released and any Default or Event of Default and its consequences may be
rescinded and annulled upon the written consent of the Required Banks; PROVIDED,
HOWEVER, that without the consent of all Banks no such amendment,
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modification or waiver shall increase the amount or extend the terms of any
Bank's Commitment or reduce the interest rate applicable to or extend the
maturity of any Loan, fee or other obligation owed to it or reduce the amount of
the fees to which it is entitled hereunder or release any Material Subsidiary
from its obligations under the Guaranty (except for releases expressly
contemplated by this Agreement) or release any substantial (in value) part of
the collateral security afforded by the Collateral Documents (except in
connection with a sale or other disposition required to be effected by the
provisions hereof or of the Collateral Documents and except for releases of the
Agent's lien thereon expressly contemplated by this Agreement), or change this
Section 11.13 or change the definition of "REQUIRED BANKS" or change the number
of Banks required to take any action hereunder or under any of the other Loan
Documents; it being understood (i) that waivers or modifications of covenants,
Defaults or Events of Default (other than those set forth in Section 9.1(j) and
(k) hereof) or of a mandatory reduction in the Commitments or of a mandatory
prepayment may be made at the discretion of the Required Banks and shall not
constitute an increase of the Commitment of any Bank, and that any resulting
increase in the available portion of any Commitment of any Bank shall not
constitute an increase in the Commitment of such Bank, and (ii) any waiver of
applicability of any post-default increase in interest rates may be made at the
discretion of the Required Banks. No amendment, modification or waiver of the
Agent's or an Issuing Bank's protective provisions shall be effective without
the prior written consent of the Agent or the relevant Issuing Bank. SECTION
11.14. ENTIRE AGREEMENT. This Agreement and the Loan Documents constitutes
the entire understanding of the parties with respect to the subject matter
hereof and any prior agreements, whether written or oral, with respect thereto
are superseded hereby.
SECTION 11.15. HEADINGS. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
SECTION 11.16. CONFIDENTIALITY. (a) Any information disclosed by the
Company or any of its Subsidiaries to the Agent or any of the Banks shall be
used solely for purposes of this Agreement and for the purpose of determining
whether or not to extend other credit or financial accommodations to the Company
or its Subsidiaries 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
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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 right or remedy under the Loan Documents, provided that such
Bank or the Agent, as applicable, shall give the Company prior written notice of
any such disclosure 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 obligation or
Commitment.
(b) The Agent and the Banks acknowledge that the Company and its
Subsidiaries perform classified contracts funded by and/or for the benefit of
the United States Government and, accordingly, neither the Company nor any
Subsidiary will be obligated to release, disclose or otherwise make available to
the Agent or any Bank any classified or special nuclear material to any parties
not in possession of a valid security clearance and authorized by the
appropriate agency of the United States Government to receive such material.
The Agent and the Banks agree that in connection with any exercise of a right or
remedy the United States Government may remove classified information or
government-issued property prior to any remedial action implicating such
classified information or government-issued property. Upon notice from the
Company, the Agent and the Banks shall take such steps in accordance with this
Agreement as may be reasonably requested by the Company to enable the Company or
any Subsidiary to comply with the Foreign Ownership Control or Influence
requirements of the United States Government imposed from time to time.
SECTION 11.17. EXTENSIONS OF THE COMMITMENTS. Not less than 60 days or
more than 120 days prior to each anniversary of the date hereof, the Company may
advise the Agent in writing of its desire to extend the Termination Date for an
additional 12 months and the Agent shall promptly notify the Banks of each such
request; PROVIDED not more than one such request for the extension of the
Termination Date may be made in any one calendar year. In the event that the
Banks are agreeable to such extension (it being understood that any Bank may
accept or decline such a request in its sole discretion and on any terms such
Bank may elect), the Company, the Material Subsidiaries, the Banks and the Agent
shall enter into such documents as the Agent may reasonably deem necessary or
appropriate to reflect such extension and to assure that all extensions of
credit pursuant to the Commitments as so extended are secured by the Liens of
the Collateral Documents and guaranteed by the Guaranty, all costs and expenses
incurred by the Agent in connection therewith to
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be paid by the Company.
SECTION 11.18. CURRENCY. Each reference in this Agreement to U.S. Dollars
or to an Available Foreign Currency (the "RELEVANT CURRENCY") is of the essence.
To the fullest extent permitted by law, the obligation of the Company in respect
of any amount due in the relevant currency under this Agreement shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Agent or Bank entitled to receive such payment may,
in accordance with normal banking procedures, purchase with the sum paid in such
other currency (after any premium and costs of exchange) on the Business Day
immediately following the day on which such party receives such payment. If the
amount in the relevant currency so purchased for any reason falls short of the
amount originally due in the relevant currency, the Company shall pay such
additional amounts, in the relevant currency, as may be necessary to compensate
for the shortfall. Any obligations of the Company not discharged by such
payment shall, to the fullest extent permitted by applicable law, be due as a
separate and independent obligation and, until discharged as provided herein,
shall continue in full force and effect.
SECTION 11.19. EXCLUSIVE JURISDICTION. (A) EXCEPT AS PROVIDED IN
SUBSECTION (B), THE COMPANY, THE BANKS AND THE AGENT AGREE THAT ALL DISPUTES
BETWEEN OR AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN COOK
COUNTY, ILLINOIS, BUT EACH OF THE COMPANY, THE BANKS AND THE AGENT ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF COOK COUNTY, ILLINOIS. THE COMPANY WAIVES IN ALL DISPUTES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. THE COMPANY AGREES THAT THE AGENT AND THE BANKS
SHALL EACH HAVE THE RIGHT TO PROCEED AGAINST THE COMPANY OR ITS PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE THE AGENT OR ANY BANK TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE
AGENT OR ANY BANK. THE COMPANY AGREES THAT IT SHALL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THIS PROVISION BY THE
AGENT OR ANY BANK TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE AGENT OR ANY
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<PAGE>
BANK. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH THE AGENT OR ANY BANK HAS COMMENCED A PROCEEDING DESCRIBED IN
THIS SUBSECTION.
SECTION 11.20. WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT AND THE BANKS
EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN THE AGENT OR ANY BANK
AND THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
THEREWITH OR THE TRANSACTIONS RELATED THERETO. THE COMPANY, THE AGENT AND THE
BANKS EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
SECTION 11.21. EXCESS INTEREST. Notwithstanding any provision to the
contrary contained herein or in any other Loan Document, no such provision shall
require the payment or permit the collection of any amount in excess of the
maximum amount of interest permitted by applicable law to be charged for the use
or detention, or the forbearance in the collection, of all or any portion of the
Loans or other obligations outstanding under this Agreement or any other Loan
Document ("EXCESS INTEREST"). If any Excess Interest is provided for, or is
adjudicated to be provided for, herein or in any other Loan Document, then in
such event (a) the provisions of this Section 11.21 shall govern and control;
(b) neither the Company nor any guarantor or endorser shall be obligated to pay
any Excess Interest; (c) any Excess Interest that the Agent or any Bank may have
received hereunder shall, at the option of the Agent, be (i) applied as a credit
against the then outstanding principal amount of Loans hereunder, accrued and
unpaid interest thereon (not to exceed the maximum amount permitted by
applicable law) and any other obligations, or all of the foregoing; (ii)
refunded to the Company, or (iii) any combination of the foregoing; (d) the
interest rate payable hereunder or under any other Loan Document shall be
automatically subject to reduction to the maximum lawful contract rate allowed
under applicable usury laws, and this Agreement and the other Loan Documents
shall be deemed to have been, and shall be, reformed and modified to reflect
such reduction in the relevant interest rate; and (e) neither the Company nor
any guarantor or endorser shall have any action against the Agent or any Bank
for any damages whatsoever arising out of the
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<PAGE>
payment or collection of any Excess Interest.
SECTION 11.22. GOVERNING LAW. This Agreement and the Notes, and the rights
and duties of the parties hereto, shall be construed and determined in
accordance with the laws of the State of Illinois.
SECTION 11.23. SINGLE BANK. If and so long as Bank of Montreal is the only
Bank hereunder, Bank of Montreal shall have all rights, powers and privileges
afforded to the Agent, the Issuing Banks, the Banks, and the Required Banks
hereunder and under the other Loan Documents.
[SIGNATURE PAGE TO FOLLOW]
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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set
forth.
Executed and delivered as of this 8th day of October, 1996.
MORRISON KNUDSEN CORPORATION
By /s/ Jonathan M. Robertson
--------------------------
Its Assistant Secretary
--------------------------
Accepted and agreed to in Chicago, Illinois as of the day and year last
above written.
BANK OF MONTREAL
individually and as Agent
By /s/ J. K. Harche
--------------------------
Its Director
--------------------------
Mailing Address:
Los Angeles Representative Office
601 South Figueroa Street
Suite 4900
Los Angeles, California 90017
Attention: Director
LENDING OFFICE:
Bank of Montreal
115 South LaSalle Street
Chicago, Illinois 60603
Attention: Manager-Loan
Operations
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<PAGE>
EXHIBIT A
AGGREGATE COMMITMENTS
BANK COMMITMENT
Bank of Montreal $200,000,000
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<PAGE>
EXHIBIT B
MORRISON KNUDSEN CORPORATION
REVOLVING CREDIT NOTE
Chicago, Illinois
$______________
_____________, 1996
For value received, the undersigned, Morrison Knudsen Corporation, a
Delaware corporation (the "COMPANY"), hereby promises to pay to the order of
_____________________________ (the "BANK"), at the principal office of Bank of
Montreal in Chicago, Illinois (i) the principal sum of
_________________________________ Dollars ($_________), or (ii) such lesser
amount as may at the time of the maturity hereof, whether by acceleration or
otherwise, be the aggregate unpaid principal amount of all Loans owing from the
Company to the Bank under the Revolving Credit provided for in the Credit
Agreement hereinafter mentioned on the Termination Date.
This Note evidences indebtedness constituting the "BASE RATE PORTION" and
"LIBOR PORTIONS" as such terms are defined in that certain Credit Agreement
dated as of October 8, 1996, by and among the Company, Bank of Montreal
individually and as Agent and certain lenders which are or may from time to time
become parties thereto (the "CREDIT AGREEMENT") made and to be made to the
Company by the Bank under the Revolving Credit provided for under the Credit
Agreement and the Company hereby promises to pay interest at the office
specified above on each loan evidenced hereby at the rates and times specified
therefor in the Credit Agreement. Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Credit Agreement, and
this Note is subject to the terms of the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Bank to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Base Rate Portion or a LIBOR Portion and the interest rates and interest periods
applicable thereto shall be endorsed by the holder hereof on the reverse side of
this Note or recorded on the books and records of the holder hereof (provided
that such entries shall be endorsed on the reverse side hereof prior to any
negotiation hereof) and the Company agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so
endorsed on the reverse side hereof or recorded on the books and records of the
Bank shall be PRIMA
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<PAGE>
FACIE evidence of the unpaid balance of this Note and the status of each loan
from time to time as part of a Base Rate Portion or a LIBOR Portion and the
interest rates and interest periods applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured, inter alia, by certain security agreements and
other instruments and documents from the Company and certain of its
Subsidiaries, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, equally and
ratably with all other indebtedness thereby secured, to which reference is
hereby made for a statement thereof. This Note may be declared to be, or be and
become, due prior to its expressed maturity upon the occurrence of an Event of
Default specified in the Credit Agreement, voluntary prepayments may be made
hereon, and certain prepayments are required to be made hereon, all in the
events, on the terms and with the effects provided in the Credit Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAW.
The Company hereby waives presentment for payment.
MORRISON KNUDSEN CORPORATION
By
Its
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<PAGE>
SCHEDULES
THE REGISTRANT AGREES TO PROVIDE THE SECURITIES AND EXCHANGE COMMISSION,
UPON REQUEST, WITH COPIES OF THE SCHEDULES HERETO.
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
accompanying consolidated financial statements and financial statement footnotes
of Morrison Knudsen Corporation at August 31, 1996 and for the nine month period
ended August 31, 1996, and is qualified in its entirety by reference to such
consolidated financial statements and financial statement footnotes.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> AUG-31-1996
<CASH> 24,267
<SECURITIES> 0
<RECEIVABLES> 70,129
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 114,703
<PP&E> 105,450
<DEPRECIATION> (65,777)
<TOTAL-ASSETS> 185,344
<CURRENT-LIABILITIES> 56,408
<BONDS> 0
0
0
<COMMON> 296
<OTHER-SE> 118,811
<TOTAL-LIABILITY-AND-EQUITY> 119,107
<SALES> 4,010
<TOTAL-REVENUES> 242,449
<CGS> 5,278
<TOTAL-COSTS> (228,627)
<OTHER-EXPENSES> (32,353)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (564)
<INCOME-PRETAX> (16,718)
<INCOME-TAX> 6,322
<INCOME-CONTINUING> (10,396)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,396)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> 0
</TABLE>
