-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CY5Vtp/Yq7u5P1myiI733icw/pZlSCXGnL5yN1ENjCyRlIlWLbnnU5QV8GOJdvic w2lIINCBJE+MApdvVRS2Aw== 0000889812-96-000602.txt : 19960604 0000889812-96-000602.hdr.sgml : 19960604 ACCESSION NUMBER: 0000889812-96-000602 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19960603 SROS: NYSE GROUP MEMBERS: JANE LEWIS GROUP MEMBERS: JOSEPH LEWIS GROUP MEMBERS: MANDARIN INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AVIALL INC CENTRAL INDEX KEY: 0000701650 STANDARD INDUSTRIAL CLASSIFICATION: AIRPORTS, FLYING FIELDS & AIRPORT TERMINAL SERVICES [4581] IRS NUMBER: 650433083 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-43471 FILM NUMBER: 96576298 BUSINESS ADDRESS: STREET 1: 2055 DIPLOMAT DR CITY: DALLAS STATE: TX ZIP: 75234-8989 BUSINESS PHONE: 2149565000 MAIL ADDRESS: STREET 1: 2055 DIPLOMAT DR CITY: DALLAS STATE: TX ZIP: 75234-8989 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MANDARIN INC CENTRAL INDEX KEY: 0001015748 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 40 LEWIS HOUSE CITY: LYFORD CAY BAHAMAS MAIL ADDRESS: STREET 1: PO BOX N7776 CITY: LYFORD BAHAMAS SC 13D 1 GENERAL STATEMENT OF BENEFICIAL OWNERSHIP UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. __________)* Aviall, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 05366B 10 2 - -------------------------------------------------------------------------------- (CUSIP Number) Kurt Butenhoff c/o Bear Stearns & Co. Inc. 245 Park Avenue New York, N.Y. 10167 (212) 272-6849 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 24, 1996 ----------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement /X/. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 29 Pages Exhibit Index on Page 8 SEC 1746(12-91) SCHEDULE 13D CUSIP No. 05366B 10 2 Page 2 of __ Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Mandarin, Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ 3 SEC USE ONLY 4 SOURCE OF FUNDS* WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Bahamas 7 SOLE VOTING POWER NUMBER OF 0 SHARES BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,506,700 EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 1,506,700 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,506,700 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.74% 14 TYPE OF REPORTING PERSON* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 7 SCHEDULE 13D CUSIP No. 05366B 10 2 Page 3 of __ Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Joseph Lewis 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ 3 SEC USE ONLY 4 SOURCE OF FUNDS* Not Applicable 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION United Kingdom 7 SOLE VOTING POWER NUMBER OF 0 SHARES BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,506,700 EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 1,506,700 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,506,700 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.74% 14 TYPE OF REPORTING PERSON* IN *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 7 SCHEDULE 13D CUSIP No. 05366B 10 2 Page 4 of __ Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Jane Lewis 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ 3 SEC USE ONLY 4 SOURCE OF FUNDS* Not Applicable 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION United Kingdom 7 SOLE VOTING POWER NUMBER OF 0 SHARES BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,506,700 EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 1,506,700 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,506,700 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.74% 14 TYPE OF REPORTING PERSON* IN *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 7 Item 1. Security and Issuer This statement relates to shares of the Common Stock, $.01 par value per share (the "Common Stock"), of Aviall, Inc. (the "Issuer"). The executive office of the Issuer is located at 20755 Diplomat Drive, Dallas, Texas 75234. Item 2. Identity and Background Mandarin, Inc. is a Bahamas corporation ("Mandarin") established as an investment vehicle. The shareholders and directors of Mandarin are Joseph Lewis and Jane Lewis. The business address of each of Mandarin, Joseph Lewis and Jane Lewis (the "Reporting Persons") is c/o Lewis House, P.O. Box N7776, Lyford Cay, Bahamas, United Kingdom. Mandarin was organized in the Bahamas. Joseph Lewis and Jane Lewis are permanent residents of the Bahamas and are citizens of the United Kingdom. The principal business of Mandarin is investments. The principal occupation of each of Joseph Lewis and Jane Lewis is private investments and serving as directors of Mandarin. During the last five years, neither Mandarin, Joseph Lewis or Jane Lewis (i) have been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) were a party to a civil proceeding of a judicial or administrative body as a result of which any of such persons was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, United States federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration Mandarin has acquired 1,506,700 shares of the Common Stock in open market purchases at various prices and in varying amounts between February 9, 1996 and May 28, 1996. The source of the funds used to acquire such Common Stock was working capital of Mandarin. Item 4. Purpose of Transactions. The Reporting Persons consider the shares of Common Stock of the Issuer acquired by them to be an attractive investment at the present time and, accordingly, subject to the conditions set forth below, currently intend to continue to purchase or sell Common Stock, as appropriate, through any of the Reporting Persons or otherwise, either in the open market or in privately negotiated transactions. The Reporting Persons' primary interest is to maximize the value of their investment in the Issuer. To this end, the Reporting Persons intend continually to review the Issuer's Page 5 of 29 Pages business affairs and financial position and future prospects, as well as conditions in the securities markets and general economic and industry conditions. Based on such evaluation and review and other factors, the Reporting Persons will continue to consider various alternative courses of action and will in the future take such actions with respect to their investment in the Issuer as they deem appropriate in light of the circumstances existing from time to time. Such actions may involve the purchase of additional shares of Common Stock, or alternatively, may involve the sale of all or a portion of the shares of Common Stock held by the Reporting Persons in the open market or in privately negotiated transactions to one or more purchasers. Except as described above, none of the Reporting Persons has any plans or proposals which relate to or would result in: (a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board of directors of the Issuer; (e) Any material change in the present capitalization or dividend policy of the Issuer; (f) Any other material change in the Issuer's business or corporate structure including but not limited to, if the Issuer is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by Section 13 of the Investment Company Act of 1940, as amended; (g) Changes in the Issuer's charter, by-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (h) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; Page 6 of 29 Pages (i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended (the "Act"); or (j) Any action similar to any of those enumerated above. Item 5. Interest in Securities of the Issuer Mandarin beneficially owns 1,506,700 shares of Common Stock representing 7.74% of such class of securities. The percentage of shares of Common Stock reported beneficially owned is based upon 19,468,922 shares outstanding as of May 3, 1996 as reflected in the Issuer's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996, as filed with the Securities Exchange Commission. The Reporting Persons share voting and dispositive power with respect to all of the shares of Common Stock owned by Mandarin. The trading dates, number of shares purchased or sold, price and manner of trade for Mandarin during the past sixty (60) days, is set forth in Schedule A hereto. The transactions described above constitute the only transactions in the shares of Common Stock of the Issuer which have been effected by any of the Reporting Persons during the past 60 days. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer The shareholders and directors of Mandarin are Joseph Lewis and Jane Lewis. Each of Joseph Lewis and Jane Lewis have discretionary authority to vote and dispose of the shares of Common Stock owned by Mandarin. In addition to the foregoing, on May 9, 1996, Mandarin entered into an agreement (the "Option Agreement") with Bear Stearns & Co. Inc. pursuant to which Mandarin was granted 1,000 put options (at 100 shares per option) at a strike price of $9.28, with respect to the Common Stock. Such options expire on November 8, 1999. A copy of the Option Agreement is attached hereto as Exhibit 2 and is incorporated herein by reference. Except as noted above, the Reporting Persons have no contracts, arrangements, understandings or relationships with respect to the securities of the Issuer. Page 7 of 29 Pages Item 7. Material to be Filed as Exhibits 1. Joint Acquisition Statement as required Page 9 by Rule 13d-1(f)(1) of the Act. 2. Option Agreement, dated May 9, 1996, Page 10 between Mandarin and Bear Stearns & Co. Inc. Signature The undersigned, after reasonable inquiry and to the best of their knowledge and belief, certify that the information set forth in this statement is true, complete and correct. Dated: June 3, 1996 MANDARIN, INC. By: /s/Joseph Lewis ----------------------------------- Joseph Lewis, Director /s/ Joseph Lewis ----------------------------------- Joseph Lewis, Individually /s/Jane Lewis ----------------------------------- Jane Lewis, Individually Page 8 of 29 Pages EX-99.1 2 JOINT ACQUISITION STATEMENT EXHIBIT 1 JOINT ACQUISITION STATEMENT PURSUANT TO RULE 13-D-1(F)(1) The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement of Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint acquisition statements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning him or her contained therein, but shall not be responsible for the completeness and accuracy of the information concerning the other, except to the extent that he or she knows of or has reason to believe that such information is not accurate. Dated: June 3, 1996 MANDARIN, INC. By:/s/Joseph Lewis ------------------------ Joseph Lewis, Director /s/Joseph Lewis ------------------------ Joseph Lewis, Individually /s/Jane Lewis ------------------------ Jane Lewis, Individually Page 9 of 29 Pages EX-99.2 3 OPTION AGREEMENT EXHIBIT 2 BEAR STEARNS BEAR, STEARNS & CO. INC. 245 PARK AVENUE NEW YORK, NEW YORK 10167 (212)272-2000 ATLANTA o BOSTON CHICAGO o DALLAS o LOS ANGELES NEW YORK o SAN FRANCISCO AMSTERDAM o GENEVA o HONG KONG LONDON o PARIS o TOKYO CONFIRMATION Reference Number: NY1741 May 9, 1996 Coded Account Number: 44874-B Dear Ladies and Gentlemen: The purpose of this letter agreement is to confirm the terms and conditions of the Transaction entered into on the Trade Date specified below (the "Transaction") between Bear, Stearns & Co. Inc. ("BSC") and Coded Account Number: 44874-B ("Counterparty"). This letter agreement constitutes a "Confirmation" as referred to in the Master Agreement specified below. 1. This Confirmation is subject to and incorporates the 1991 ISDA Definitions (the "Definitions") as published by the International Swaps Dealers Association, Inc. (which, since June 14, 1993, has been known as the International Swaps and Derivatives Association, Inc., and which shall be referred to herein as "ISDA"). Each of us agrees to negotiate in good faith and to use reasonable efforts to execute and deliver an agreement in the ISDA Master Agreement (Multicurrency--Cross Border) form (the "ISDA Form Master Agreement"), together with the schedule thereto (the "ISDA Schedule") and any other additional documents reasonably requested in connection therewith, each in form and substance as we shall in good faith agree (such agreement, together with the completed ISDA Schedule and any other agreed upon exhibits thereto, being referred to herein as the "Executed Agreement"). Upon the execution and delivery by both of us of the Executed Agreement, this Confirmation shall supplement, form a part of and be subject to the Executed Agreement. Until the Executed Agreement is fully executed and delivered, the ISDA Form Master Agreement (without any ISDA Schedule attached thereto) shall be deemed to have been executed by both of us on the trade date on which we entered into the first "Transaction" (as defined in the ISDA Form Master Agreement), and this Confirmation shall supplement, form a part of and be subject to the ISDA Form Master Agreement. All provisions contained in, or incorporated by reference to, either the Executed Agreement or the ISDA Form Master Agreement (as applicable, the "Master Agreement") shall govern the Transaction referenced in this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and the Definitions or Master Agreement, this Confirmation shall prevail. Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 2 of 14 2. The terms of the particular Transaction to which this Confirmation relates are as follows: General Terms: Trade Date: May 9, 1996 Option Style: American Option Type: Put Seller: Counterparty Buyer: BSC Shares: The common shares of Aviall, Inc. ("AVL") (the "Issuer"). Number of Options: 1,000, subject to adjustment as set forth herein (see "Adjustments"). Option Entitlement: 100 Shares per Option, subject to adjustment as set forth herein (see "Adjustments"). Multiple Exercise: Inapplicable. Strike Price per Share: USD 9.28, subject to adjustment as set forth herein (see "Adjustments"). Premium: USD 78,230.40 Premium Payment Date: May 14, 1996, or, if that date is not a Currency Business Day, the next following Currency Business Day. Seller Business Day: Any day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) and which is a scheduled trading day on local securities exchanges in New York City. Currency Business Day: Any day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in New York City. Exchange: NYSE, or any successor thereto. Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 3 of 14 Related Exchanges: The exchanges or quotation systems, if any, on which options contracts on the Shares are traded or quoted, and as may be selected from time to time by the Calculation Agent. Exchange Business Day: A day that is a Seller Business Day and is a trading day on each of the Exchange and the Related Exchanges other than a day on which trading on any such exchange is scheduled to close prior to its regular weekday closing time. Clearance System: The clearance system through which a sale of Shares executed on the Exercise Date customarily would settle, as selected by the Calculation Agent. Clearance System Business Day: Any Currency Business Day on which the Clearance System is (or, but for the occurrence of a Settlement Disruption Event, would have been) open for the acceptance and execution of settlement instructions. Calculation Agent: BSC, whose determinations and calculations shall be binding in the absence of manifest error. Procedure for Exercise: Exercise Period: Any Exchange Business Day from, and including, May 9, 1996 and the Expiration Date between 9:00 a.m. (New York City time) and 2:00 p.m. (New York City time). Expiration Date: November 8, 1996 or, if that date is not an Exchange Business Day, the next following Exchange Business Day. Expiration Time: 2:00 p.m. (New York City time). Notice of Exercise: Buyer must give irrevocable notice (by telephone, if practicable, and otherwise in writing) in the Exercise Period to Seller of its exercise of an Option, specifying in that notice the number of Options being exercised on the Exercise Date. Failure to specify the number of Options being exercised on the Exercise Date shall be deemed to be an exercise of all unexercised Options. If the notice of exercise is given (a) after the latest permitted time on an Exchange Business Day during the Exercise Period or (b) on a day prior to the Expiration Date that is not an Exchange Business Day, then that notice will be deemed given on the next following Exchange Business Day, Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 4 of 14 if any, in the Exercise Period. Buyer will execute and deliver a written notice confirming the substance of any telephonic notice of exercise within one Seller Business Day of that notice. Failure to provide that written notice will not affect the validity of the telephonic notice. Exercise Date: In relation to each Option, the Exchange Business Day during the Exercise Period on which that Option is or is deemed to be exercised. Automatic Exercise: Inapplicable Settlement Terms: Physical Settlement: Applicable; if an Option is exercised pursuant to the terms set forth in this Confirmation, on the Settlement Date, Buyer will pay to Seller the Settlement Price and Seller will deliver to Buyer the Number of Shares to be Delivered. Such payment and such delivery will be made through the Clearance System at the accounts specified below, in accordance with customary market practice, on a delivery versus payment basis. Settlement Date: The first Clearance System Business Day on which a sale of the Shares executed on the Exercise Date customarily would settle through the Clearance System, unless a Settlement Disruption Event occurs or is continuing on that day. If a Settlement Disruption Event occurs or is continuing on that day, then the Settlement Date will be the first succeeding Clearance System Business Day on which a sale of the Shares could be settled through the Clearance System unless a Settlement Disruption Event occurs or is continuing on each of the ten Clearance System Business Days immediately following the original date that, but for the Settlement Disruption Event, would have been the Settlement Date. In that case, (a) if the Calculation Agent determines that the Shares can be delivered in any other commercially reasonable manner, then the Settlement Date will be the first day on which settlement of a sale of Shares executed on that tenth Clearance System Business Day customarily would take place using such other commercially reasonable manner of delivery (which other manner of delivery will be deemed the Clearance System for purposes of delivery of the relevant Shares), and (b) if the Calculation Agent determines that the Shares cannot be delivered in any other commercially reasonable manner, then Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 5 of 14 an Additional Termination Event will be deemed to have occurred on the close of business on that tenth Clearance System Business Date (with the party that was obligated to deliver the number of Shares to be delivered being the sole Affected Party and the Transaction (after consideration of any partial delivery) being the sole Affected Transaction, as to which Loss will apply for the purpose of determining any payment to be made in respect of such Transaction (irrespective of the payment measure set forth in the Master Agreement)). Settlement Price: The Strike Price per Share multiplied by the Number of Shares to be Delivered. Number of Shares to be Delivered: The number of Shares equal to the number of Options exercised or deemed exercised on the relevant Exercise Date multiplied by the Option Entitlement. Settlement Disruption Event: An event beyond the control of the parties as a result of which the Clearance System cannot clear the transfer of the Shares. Adjustments: (a) Subject to subsections (b) and (c) below, if options on the Shares are then cleared by the Options Clearing Corporation (the "OCC"), following each adjustment to the settlement terms of options on the Shares cleared by the OCC, the Calculation Agent will make a corresponding adjustment to any one or more of the Strike Price per Share, the Number of Options, the Option Entitlement and any other variable relevant to the settlement terms of this Transaction, which adjustment will be effective as of the date determined by the Calculation Agent to be the effective date of the corresponding adjustment made by the OCC. Subject to subsections (b) and (c) below, if options on the Shares are not then cleared by the OCC, the Calculation Agent will make such adjustment, if any, to any one or more of the Strike Price per Share, the Number of Options, the Option Entitlement and any other variable relevant to the settlement terms of this Transaction as the Calculation Agent determines appropriate, with reference to the OCC By-Laws, Rules, Interpretations and Policies (the "OCC Adjustment Rules"), to account for the diluting or concentrating effect of any event that, in the determination of the Calculation Agent, would have given rise to an adjustment Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 6 of 14 under the OCC Adjustment Rules if options on the Shares were then cleared by the OCC. Any such adjustment will be effective as of the date determined by the Calculation Agent. (b) Notwithstanding the OCC Adjustment Rules, (i) all adjustments to the Strike Price per Share shall be rounded to the nearest fourth decimal place, and all adjustments to the Option Entitlement and Number of Options shall be rounded down to eliminate any fraction. If the Option Entitlement or Number of Options is rounded down to eliminate a fraction, the Strike Price per Share shall be adjusted to the nearest fourth decimal place, to reflect any diminution in the value of an Option resulting from the elimination of such fraction in the Option Entitlement or Number of Options. (ii) if an Option is exercised following any (A) reclassification or change of the Shares that results in a transfer of or an irrevocable commitment to transfer all outstanding Shares or (B) consolidation, amalgamation or merger of the Issuer with or into another entity (other than a consolidation, amalgamation or merger in which the Issuer is the continuing entity and which does not result in any such reclassification or change of all outstanding Shares) (any such event being a "Merger Event"), then the deliverer will deliver the number of shares of equity and the amount of other securities and property (including cash) to which a holder of the number of Shares equal to the Option Entitlement would be entitled upon consummation of the Merger Event. (iii) if a tender offer (whether partial or complete) with respect to the Shares or a liquidation, bankruptcy, insolvency or similar proceeding with respect to the Issuer or any other similar event with respect to the Shares or the Issuer occurs, or if the Shares or all or substantially all of the Issuer's property is nationalized, expropriated or otherwise required to be transferred to any governmental agency, authority or entity, or if the Exchange ceases to list or otherwise include the Shares or if there is no Clearance System with respect to the Shares, and the Calculation Agent determines that any such event changes the expected economic consequences Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 7 of 14 of this Transaction in any material respect, the Calculation Agent, acting in good faith, shall make such adjustments to the terms of this Transaction as are necessary to effect the intent of the parties with respect to the expected economic consequences of this Transaction. (c) All adjustments hereunder (which may include cancellation of the Transaction in whole or in part) shall be made by the Calculation Agent, which shall notify both parties of any adjustment pursuant to this section and the date of its effectiveness. Miscellaneous: Delivery Expenses: Following exercise of an Option, all expenses of transfer of the Shares on delivery (such as any stamp duty or stock exchange tax) will be payable by the party that would pay such expenses according to the customary market practice for a sale of the Shares executed on the Exercise Date to be settled through the Clearance System. Representation and Agreement: The party required to deliver the Shares agrees that it will convey, and, on each date that it delivers Shares, represents that it has conveyed, good title to the Shares it is required to deliver, free and clear of any lien, charge, claim or encumbrance (other than a lien routinely imposed on all securities in the Clearance System). Failure to Deliver: If one or more Options are exercised pursuant to the terms set forth in this Confirmation, the failure by a party to deliver, when due, the Number of Shares to be Delivered will constitute an Event of Default unless such party (a) notifies the other party within one Clearance System Business Day following the Exercise Date that, despite its best efforts, such party is unable to obtain the Number of Shares to be Delivered due to market illiquidity or impossibility and (b) delivers such number of Shares, if any, as it can deliver on the Settlement Date, in which event the party's failure to deliver, when due, the Number of Shares to be Delivered shall constitute an Additional Termination Event (with the party that was obligated to deliver the Number of Shares to be Delivered being the sole Affected Party and the Transaction (after consideration of any partial delivery) being the sole Affected Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 8 of 14 Transaction, or if less than all Options have been exercised (or deemed exercised) on the relevant Exercise Date, the Termination Event will occur in respect of a Transaction (after consideration of any partial delivery) consisting of the exercised Options only, as to which Loss will apply for the purpose of determining any payment to be made in respect of such Transaction (irrespective of the payment measure set forth in the Master Agreement)). Indemnification for Failure to Deliver: If, prior to the occurrence or effective designation of an Early Termination Date in respect of this Transaction, a party fails to deliver the Number of Shares to be Delivered, it will indemnify the other party on demand for any costs, losses or expenses (including the costs of borrowing the Shares, if applicable) resulting from such failure incurred during the period from and including the original due date of delivery to but excluding the actual date of delivery. A certificate signed by the deliveree setting out such costs, losses or expenses in reasonable detail will be conclusive evidence that they have been incurred. Additional Provisions: 1) Each party hereto is hereby advised and acknowledges that the other party has engaged in (or refrained from engaging in) substantial financial transactions and has taken (or refrained from taking) other material actions in reliance upon the entry by the parties into the Transaction to which this Confirmation relates on the terms and conditions set forth herein. 2) The parties hereto agree that Section 2(a)(iii) of the Master Agreement is hereby amended by replacing "and (3)" with the following language:", (3) with respect to any payments to be made in connection with this Transaction, the condition precedent that this Confirmation has been fully executed by both BSC and Counterparty and (4)". 3) Each party hereto represents to the other party that (a) it has not received and is not relying upon any legal, tax, regulatory, accounting or other advice (whether written or oral) of the other party regarding the Transaction evidenced by this Confirmation, other than the representations expressly made by that other party in this Confirmation and in the Master Agreement and (b) in respect of the Transaction evidenced by this Confirmation, (i) it has the capacity to evaluate (internally Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 9 of 14 or through independent professional advice) this Transaction and had made its own decision to enter into this Transaction and (ii) it understands the terms, conditions and risks of this Transaction and is willing to assume (financially and otherwise) those risks. Counterparty acknowledges that BSIL has advised Counterparty to consult its own tax, accounting and legal advisors in connection with the Transaction evidenced by this Confirmation and that the Counterparty has done so. 4) The parties agree that subparagraph (ii) of Section 2(c) of the Master Agreement will not apply to any Transactions entered into between the parties that are or will be governed by the Master Agreement. Collateral Provisions: (a) On any Local Business Day requested by either party (any such date referred to as a "Credit Support Valuation Date"), the Calculation Agent shall determine the following: (i) the amount that would be payable at such time by a party ("Pledgor") to the other party ("Secured Party") to replace all of the Transactions that are or may be entered into and governed by the Master Agreement as if they were terminated so as to preserve the economic equivalent of the payment obligations of the parties with respect thereto (such an amount referred to herein as Secured Party's "Exposure"), (ii) the aggregate market value (determined in accordance with the Eligible Collateral Annex hereto) of all Collateral (as defined in the Eligible Collateral Annex), if any, pledged by any party, and (iii) the Credit Support Amount for such date. "Credit Support Amount" means Secured Party's Exposure plus, if Counterparty is Pledgor, the Initial Collateral Requirement (as defined in paragraph (b) below). If the Credit Support Amount exceeds the aggregate market value of all Collateral held by Secured Party by an amount (the "Delivery Amount") equal to or greater than USD 100,000, then Pledgor shall transfer to Secured Party Collateral with a market value equal to or greater than the Delivery Amount. If the aggregate market value of all Collateral held by Secured Party exceeds the Credit Support Amount by an amount (the "Return Amount") equal to or greater than USD 100,000, then Secured Party shall return to Pledgor Collateral with a market value as close as practicable (but not greater than) the Reform Amount. Each delivery or return of Collateral required under this paragraph shall be made by the close of business on the Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 10 of 14 relevant Credit Support Valuation Date if notice requesting such delivery or return is received by Noon New York City time, or by the next Local Business Day if notice is received after Noon New York City time. (b) In addition to any Collateral required to be delivered pursuant to paragraph (a) above, Counterparty shall deliver to and at all times maintain with BSC Collateral having a market value equal to or greater than the Initial Collateral Requirement. The "Initial Collateral Requirement" for any Credit Support Valuation Date shall be equal to the greater of (i) 30% of the Reference Amount minus the Out-of-the-Money Amount (if any) or (ii) 10% of the Reference Amount. The "Reference Amount" shall be equal to the product of the Reference Price times the Number of Options times the Option Entitlement. The "Reference Price" shall be the closing offered price per Share on the Exchange Business Day preceding the related Credit Support Valuation Date. The "Out-of-the-Money Amount" shall be equal to the greater of (i) zero and (ii) the product of (x) the Reference Price minus the Strike Price times (y) the Number of Options times (z) the Option Entitlement. Such Collateral shall be delivered to BSC on or before the Local Business Day following the Trade Date. Any obligation of Counterparty to deliver Collateral to BSIL in order to maintain the Initial Collateral Requirement and any obligation of BSC to return Collateral to Counterparty pursuant to paragraph (a) hereof shall not offset. (c) These Collateral Provisions shall be deemed a security agreement. Notwithstanding anything to the contrary set forth in this Confirmation or the Master Agreement, in the event of any inconsistency between the Master Agreement and these Collateral Provisions, the Master Agreement shall prevail. Any party pledging Collateral hereunder hereby grants a first priority continuing security interest in all Collateral provided hereunder and in any and all substitutions therefor, proceeds thereof and distributions thereon. Monthly interest on any cash Collateral held hereunder shall be credited at a rate equal to the Federal Funds Rate for each day. For purposes of these Collateral Provisions, the term "Local Business Day" shall have the meaning given such term in the Master Agreement, except that references to a payment in clause (b) thereof will be Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 11 of 14 deemed to include a delivery or return of Collateral hereunder. Governing Law: The laws of the State of New York, without reference to the choice or conflicts of law principles thereof. Documentation Expenses: Each party hereto agrees it shall be responsible for its own expenses (including any and all legal fees) relating to the preparation, execution and delivery of all of the documents prepared in connection with the executed Agreement or this Transaction. Credit Support Document: The Guaranty of The Bear Stearns Companies Inc. ("Bear Stearns"), which BSC agrees to provide upon the execution of the Executed Agreement. Bear Stearns shall be a Credit Support Provider of BSC. Transfer: Neither party hereto may transfer this Transaction, in whole or in part, without the prior written consent of the non-transferring party (other than pursuant to a consolidation or amalgamation with, or merger into, or transfer of all or substantially all of its assets to, another entity). Notwithstanding the above, BSC may transfer its rights and obligations under this Transaction, in whole or in part, to any of its Affiliates, provided that if the Affiliate to which BSC transfers its obligations is not Bear Stearns, such Affiliate's obligations with respect to this Transaction shall be guaranteed by Bear Stearns to the same extent that the obligations of BSC are guaranteed by Bear Stearns. Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 12 of 14 3. Account Details and Settlement Information: Payments to BSC: Citibank, N.A., New York ABA Number: 021-0000-89, for the account of Bear, Stearns & Co. Inc. Account Number: 0925-3186 Sub-account Number: X25-04400-21 Attention: Salvatore DiMaggio Payments to Counterparty: Citibank, N.A., New York ABA Number: 021-0000-89, for the account of Bear, Stearns & Co. Inc. Account Number: 0925-3186, for final credit to Sub-account Number: 220-45384-13 Broker/Arranger: None This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the agreement between the parties hereto with respect to the Transaction to which this Confirmation relates by signing in the space provided below and returning to BSIL both a facsimile of the executed Confirmation and an original of the executed Confirmation. Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 13 of 14 We are very pleased to have executed this Transaction with you and we look forward to completing other transactions with you in the near future. Very truly yours, BEAR, STEARNS & CO. INC. By: ----------------------- ------------------------ Name: Bruce Jaeger Title: Managing Director Coded Account Number: 44874-B, acting through its duly authorized signatory, hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade Date. CODED ACCOUNT NUMBER: 44874-B By: ----------------------- Name: Title: (Authorized Signatory) cc: Mr. Kurt Buttenhoff Reference Number: NY1741 Coded Account Number: 44874-B May 9, 1996 Page 14 of 14 ELIGIBLE COLLATERAL ANNEX TO COLLATERAL PROVISIONS The items described below shall constitute "Collateral": Type of Collateral Valuation Percentage ------------------ -------------------- U.S. Government Securities/ remaining years to maturity: -- 2 years and under 100 -- over 2 to 10 years 99 -- over 10 years 98 Fully modified pass-through certificates in book-entry form, the full and timely payment of principal and interest of which are guaranteed by the Government National Mortgage Association* 97 Mortgage participation certificates in book-entry form, the full and timely payment of interest at the applicable certificate rate and the ultimate collection of principal of which are guaranteed by the Federal National Mortgage Association* 97 Mortgage participation certificates in book-entry form, the full and timely payment of interest at the applicable certificate rate and the ultimate collection of principal of which are guaranteed by the Federal Home Loan Mortgage Corporation* 97 The market value of each of the foregoing securities shall be the bid price obtained by the Calculation Agent on a Credit Support Valuation Date, multiplied by the applicable Valuation Percentage. The Pledgee may also accept other forms of collateral acceptable to it from time to time, at such Valuation Percentages as it may determine. - ------------ * Excluding multi-class REMIC pass-through certificates and pass-through certificates backed by adjustable rate mortgages and excluding securities paying interest or principal only. SCHEDULE A ============================================================================== No. of Name of Shares Price How Trade Was Security Trade Date Purchased Per Share Total Cost Effected ============================================================================== - ------------------------------------------------------------------------------ Common Stock 1-Apr-96 9,900 8.9350 88,456.50 Open Market - ------------------------------------------------------------------------------ Common Stock 23-Apr-96 5,000 9.0600 45,300.00 Open Market - ------------------------------------------------------------------------------ Common Stock 26-Apr-96 20,000 9.4350 188,700.00 Open Market - ------------------------------------------------------------------------------ Common Stock 26-Apr-96 5,000 9.4350 47,175.00 Open Market - ------------------------------------------------------------------------------ Common Stock 26-Apr-96 3,000 9.4350 28,305.00 Open Market - ------------------------------------------------------------------------------ Common Stock 26-Apr-96 1,000 9.4350 9,435.00 Open Market - ------------------------------------------------------------------------------ Common Stock 26-Apr-96 1,000 9.4350 9,435.00 Open Market - ------------------------------------------------------------------------------ Common Stock 29-Apr-96 10,000 9.5600 95,600.00 Open Market - ------------------------------------------------------------------------------ Common Stock 29-Apr-96 5,000 9.5600 47,800.00 Open Market - ------------------------------------------------------------------------------ Common Stock 29-Apr-96 5,000 9.5600 47,800.00 Open Market - ------------------------------------------------------------------------------ Common Stock 29-Apr-96 5,000 9.4350 47,175.00 Open Market - ------------------------------------------------------------------------------ Common Stock 30-Apr-96 20,000 9.0600 181,200.00 Open Market - ------------------------------------------------------------------------------ Common Stock 1-May-96 20,000 9.1850 183,700.00 Open Market - ------------------------------------------------------------------------------ Common Stock 2-May-96 25,000 9.0600 226,500.00 Open Market - ------------------------------------------------------------------------------ Common Stock 3-May-96 50,000 9.1850 459,250.00 Open Market - ------------------------------------------------------------------------------ Common Stock 3-May-96 3,500 9.1850 32,147.50 Open Market - ------------------------------------------------------------------------------ Common Stock 3-May-96 2,100 9.0600 19,026.00 Open Market - ------------------------------------------------------------------------------ Common Stock 6-May-96 23,850 9.2636 220,936.86 Open Market - ------------------------------------------------------------------------------ Common Stock 10-May-96 20,000 9.5600 191,200.00 Open Market - ------------------------------------------------------------------------------ Common Stock 14-May-96 53,400 9.5520 510,076.80 Open Market - ------------------------------------------------------------------------------ Common Stock 15-May-96 23,450 9.5581 224,137.45 Open Market - ------------------------------------------------------------------------------ Common Stock 21-May-96 50,000 9.5600 478,000.00 Open Market - ------------------------------------------------------------------------------ Common Stock 23-May-96 50,000 9.5600 478,000.00 Open Market - ------------------------------------------------------------------------------ Common Stock 23-May-96 20,000 9.0600 181,200.00 Open Market - ------------------------------------------------------------------------------ Common Stock 24-May-96 394,000 9.2180 3,631,892.00 Open Market - ------------------------------------------------------------------------------ Common Stock 28-May-96 134,000 9.7941 1,312,409.40 Open Market - ------------------------------------------------------------------------------ Common Stock 28-May-96 10,000 9.6850 96,850.00 Open Market - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ 1,506,700 8.6622 $13,051,395.09 All Open Market Average Cost -----END PRIVACY-ENHANCED MESSAGE-----