-----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, KwOobE/H9K4iTxWv42ZuQ1u+nSi9AAhdWKka+Prn6hedMonpUwuMLni/zh4a8ZIJ ICKBqpx5CYYqiUpiRuunhw== 0000317771-96-000013.txt : 19960513 0000317771-96-000013.hdr.sgml : 19960513 ACCESSION NUMBER: 0000317771-96-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960329 FILED AS OF DATE: 19960509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELLABS INC CENTRAL INDEX KEY: 0000317771 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 363831568 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09692 FILM NUMBER: 96558836 BUSINESS ADDRESS: STREET 1: 4951 INDIANA AVE CITY: LISLE STATE: IL ZIP: 60532 BUSINESS PHONE: 7089698800 MAIL ADDRESS: STREET 1: 4951 INDIANA AVE CITY: LISLE STATE: IL ZIP: 60532 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 29, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-9692 --------- TELLABS, INC. --------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 36-3831568 --------------------------- -------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 4951 Indiana Avenue, Lisle, Illinois 60532 ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (708) 969-8800 ---------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None N/A --------------------------- --------- Securities registered pursuant to Section 12 (g) of the Act: Common shares, with $ .01 par value ----------------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO[ ] On March 29, 1996, 88,919,761 common shares of Tellabs, Inc. were outstanding. -1- TELLABS, INC. INDEX Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Comparative Balance Sheets 3 Condensed Consolidated Comparative Statements of Earnings 4 Condensed Consolidated Comparative Statements of Cash Flow 5 Notes to Condensed Consolidated Comparative Financial Statements 6 Item 2. Management's Discussion and Analysis 7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURE 10 -2- TELLABS, INC. CONDENSED CONSOLIDATED COMPARATIVE BALANCE SHEETS (Unaudited) Mar. 29, Dec. 29, 1996 1995 Assets --------- --------- Current assets (In thousands) Cash and cash equivalents $99,812 $92,485 Investments in marketable securities 75,721 69,751 Accounts receivable, less allowance 125,839 127,565 Inventories Raw materials 29,745 31,302 Work in process 13,124 11,694 Finished goods 23,074 24,719 --------- --------- 65,943 67,715 Other current assets 9,433 8,854 --------- --------- Total Current Assets 376,748 366,370 Property, plant, and equipment 207,205 201,441 Less accumulated depreciation 87,592 84,419 --------- --------- 119,613 117,022 Goodwill 41,627 44,958 Other assets 22,822 23,701 --------- --------- $560,810 $552,051 Liabilities ========= ========= Current Liabilities Accounts payable $28,349 $30,097 Accrued liabilities 30,697 42,183 Income taxes 22,111 26,284 --------- --------- Total Current Liabilities 81,157 98,564 Long-term debt 2,850 2,850 Other long-term liabilities 7,264 6,179 Deferred income taxes 11,051 11,225 Stockholders' Equity Preferred stock, with $.01 par value- 5,000,000 shares authorized, no shares issued - - Common stock, with $.01 par value - 200,000,000 shares authorized 88,919,761 shares issued and outstanding at March 29, 1996 and 88,798,372 at December 29, 1995 889 888 Additional paid-in capital 73,834 72,385 Cumulative foreign currency translation adjustment 1,167 7,842 Unrealized net holding (losses) gains on available-for-sale securities (599) 48 Retained earnings 383,197 352,070 --------- --------- Total Stockholders' Equity 458,488 433,233 --------- --------- $560,810 $552,051 ========= ========= The accompanying notes are an integral part of these statements. -3- TELLABS, INC. CONDENSED CONSOLIDATED COMPARATIVE STATEMENTS OF EARNINGS (Unaudited) Three Months Ended March 29, March 31, 1996 1995 --------- --------- (In thousands, except per share data) Net sales $172,256 $142,212 Cost of sales 74,482 62,943 --------- --------- Gross Profit 97,774 79,269 Marketing, general & administrative expense 33,613 27,670 Research and development expense 21,602 19,788 Goodwill amortization 611 665 --------- --------- Total Operating Expense 55,826 48,123 Operating Profit 41,948 31,146 Interest income (1,975) (1,126) Interest expense 28 31 Other (income) expense, net (572) (70) --------- --------- Earnings before income taxes 44,467 32,311 Income taxes 13,340 9,370 --------- --------- Net Earnings $31,127 $22,941 ========= ========= Earnings per share * $0.34 $0.25 ========= ========= Average number of shares of common stock outstanding * 92,020 91,302 * 1995 share amounts are restated to give effect to the two-for-one stock split effective May 19, 1995. The accompanying notes are an integral part of these statements. -4- TELLABS, INC. CONDENSED CONSOLIDATED COMPARATIVE STATEMENTS OF CASH FLOW (Unaudited) For The Three Months Ended March 29, March 31, 1996 1995 --------- --------- (In thousands) Cash Flows from Operating Activities: Net earnings $31,127 $22,941 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 6,461 5,548 Provision for doubtful receivables 390 289 Deferred income taxes (457) 2,632 Gain on sale of long-term investment ---- (929) Net (increase) decrease in current assets: Accounts receivable (467) 2,389 Inventories 536 (7,488) Other current assets 36 1,185 Net decrease in current liabilities: Accounts payable (1,527) (1,336) Accrued liabilities (10,945) (4,114) Income taxes (3,527) (1,452) Net increase in other assets (325) (1,784) Net increase in other liabilities 1,125 623 --------- --------- Net Cash Provided by Operating Activities 22,427 18,504 Cash Flows from Investing Activities: Acquisition of property, plant and equipment, net (9,371) (7,627) Payments for purchases of marketable securities (39,622) (25,597) Proceeds from sales of marketable securities 33,005 1,364 Proceeds from sale of long-term investment ---- 3,429 --------- --------- Net Cash Used by Investing Activities (15,988) (28,431) Cash Flows from Financing Activities: Common stock sold through stock-option plans 1,450 3,943 --------- --------- Net Cash Provided by Financing Activities 1,450 3,943 Effect of exchange rate changes on cash (562) 1,795 --------- --------- Net increase (decrease) in cash and cash equivalents 7,327 (4,189) Beginning of period cash and cash equivalents 92,485 51,460 --------- --------- End of period cash and cash equivalents $99,812 $47,271 ========= ========= Supplemental Disclosures: Interest paid $32 $26 Income taxes paid $17,550 $4,844 The accompanying notes are an integral part of these statements. -5- TELLABS, INC. NOTES TO CONDENSED CONSOLIDATED COMPARATIVE FINANCIAL STATEMENTS 1. Financial Information: The unaudited financial information reflects all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the statements contained herein. Certain reclassifications have been made in the 1995 financial statements to conform to the 1996 presentation. 2. Basis of Presentation: These financial statements are presented in accordance with the requirements of Form 10-Q and consequently may not include all disclosures normally required by generally accepted accounting principles or those normally reflected in the Company's Annual Report on Form 10-K. Accordingly, the financial statements and notes herein should be read in conjunction with the financial statements and related notes in the Company's Form 10-K for the year ended December 29, 1995. 3. Subsequent Event: On April 17, 1996, Tellabs Operations, Inc., a wholly owned subsidiary of Tellabs, Inc. (the "Company") acquired all of the outstanding shares of Steinbrecher Corporation ("Steinbrecher") located in Burlington, Massachusetts pursuant to a Merger Agreement entered into on March 11, 1996. Steinbrecher supplies wideband base station products for digital cellular and wireless data applications. Effective April 19, 1996, Steinbrecher's name was changed to "Tellabs Wireless, Inc." ("Tellabs Wireless") which will operate within the Tellabs Wireless Systems division, a division of Tellabs International, Inc. The Company intends to continue the Tellabs Wireless business and to coordinate the development and marketing of its products with those of the Tellabs Wireless Systems division. The consideration paid for the purchase of all of the outstanding shares of Steinbrecher was approximately $76 million in cash and was determined through arms-length negotiations. The purchase price was paid with $40 million obtained through a bank loan from Bank of America and the remainder from the Company's existing cash and cash equivalent balances. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES During the first quarter of 1996, the Company's cash, cash equivalents and marketable securities portfolio increased $13,297,000 to an all-time high of $175,533,000. The Company's record first quarter earnings of $31,127,000 were the primary contributor, partially offset by payments of $11,486,000 to reduce accrued liabilities. Accrued liabilities decreased from the December 29, 1995 balance due primarily to payments made during the first quarter for year-end obligations related to employee compensation programs. The Company invested the cash provided by operating activities in higher yielding marketable securities and in property, plant, and equipment. Investments in property, plant, and equipment (net of disposals and translation adjustments) totalled approximately $9,400,000. Additions were made to increase manufacturing capacity at the Company's Texas facility, with a 41,000 square foot addition and accompanying equipment, along with worldwide investments in research and development equipment. The Company currently expects total capital expenditures for 1996 to be approximately $50,000,000. This amount includes approximately $10,000,000 of the $33,000,000 planned for the expansion of the Company's Bolingbrook, Illinois manufacturing and research and development facility. Construction of the addition is expected to begin in the second quarter of 1996 with completion scheduled for mid-1997. The remaining 1996 expenditures are expected to be for manufacturing capacity and research and development equipment in Finland and Texas. Net working capital at March 29, 1996 was $295,591,000, compared with working capital of $267,806,000 at December 29, 1995. The Company's current ratio at the end of the first quarter was 4.6 to 1. This increase in working capital was primarily due to the cash generated by operating activities offset by payments of year end accruals. Management believes that the existing level of working capital will be adequate for the Company's liquidity needs related to normal operations both currently and in the foreseeable future. On April 17, 1996, the Company obtained bank financing of $40,000,000 to finance a portion of the acquisition of Steinbrecher and associated expenses. The Company believes that sufficient resources continue to be available to support the Company's growth either through currently available cash, through cash generated from future operations, or through additional short-term or long-term financing. RESULTS OF OPERATIONS Sales for the first quarter of 1996 were a record $172,256,000, up 21.1 percent from the previous first quarter record of $142,212,000 set in 1995. Sales growth during the first quarter of 1996 was driven primarily by a 66 percent increase in sales of the SONET-based TITAN (a registered trademark of Tellabs Operations, Inc.) 5500 digital cross-connect system. Martis DXX (a trademark of Martis Oy) system sales reached an all time quarterly high. Net earnings for the first quarter of 1996 were $31,127,000, up 35.7 percent from $22,941,000 a year earlier. Earnings per share for the -7- current quarter were 34 cents compared with 25 cents for the first quarter of 1995. The 1995 earnings per share amount has been restated to give effect to the two-for-one stock split effective May 19, 1995. The increase in earnings for the first quarter of 1996 was primarily the result of the aforementioned sales growth, a decrease in operating expenses as a percentage of sales, and an increas in the gross profit margin. Total operating expenses of $55,826,000 for the first quarter of 1996 were 32.4 percent of sales compared to $48,123,000, or 33.8 percent of sales, for the same period in 1995. Increased headcount and the related expenses necessary to support and service domestic and international products were the primary reasons for this increase in operating expenses. The increase in gross profit margin from 55.7 percent for the first quarter of 1995 to 56.8 percent in the first quarter of 1996 was realized through continued efficiencies in manufacturing operations and sales of higher margin products, as volumes increased. Interest income contributed $1,975,000 to pre-tax income in the first quarter of 1996, up 75.4 percent from $1,126,000 in the first quarter of 1995. This increase was due to significantly higher average cash balances and higher market interest rates. Interest expense was $28,000 for the first quarter of 1996 compared to $31,000 for the first quarter of 1995. Interest expense for the remainder of 1996 will increase due to the increase in outstanding debt during the second quarter to support the acquisition of Steinbrecher. Other non-operating income was $572,000 for the first quarter of 1996 compared to $70,000 for the first quarter of 1995. Foreign exchange gains of $411,000 were the primary contributor to 1996's first quarter other non-operating income. The foreign exchange gains were the result of the weakness of the Finnish markka against the Swedish krona and the U.S. dollar. Other non-operating income for the first quarter of 1995 was primarily the result of a gain on the sale of stock held as a long-term investment being partially offset by foreign exchange losses. The effective tax rate was approximately 30 percent for the first quarter of 1996 and 29 percent for the first quarter of 1995. The increase in the effective tax rate for 1996 is reflective of the increase in TITAN 5500 system sales to the domestic market, where the tax rate is significantly higher than at our Ireland and Finland subsidiaries. The 1996 effective tax rate reflects adjustments from the Federal statutory rate primarily attributable to foreign tax rate benefits. -8- PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K (A) Exhibits: Exhibit 10.12 - Bank of America Promissory Note Exhibit 10.13 - Stock Bonus Plan Exhibit 11 - Calculation of Per Share Earnings. Exhibit 27 - Financial Data Schedule. (B) Reports on Form 8-K The Registrant filed a report on Form 8-K on March 11, 1996, to announce its intention to acquire Steinbrecher Corporation. The Registrant filed a report on Form 8-K on May 1, 1996, prior to the filing of this quarterly report of From 10-Q, with respect to the acquisition of Steinbrecher Corporation which included financial statements of Steinbrecher Corporation and pro forma financial statements of Tellabs, Inc. and subsidiaries as required by Item 7 of Form 8-K and Rule 3-05(b) of Regulation S-X. The Registrant also filed a report on Form 8-K/A on May 2, 1996. This amended Form 8-K was filed due to a computer error with regard to the original Form 8-K filed by the Registrant on May 1, 1996. -9- TELLABS, INC. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TELLABS, INC. ---------------- (Registrant) s\ J. Peter Johnson ------------------- J. Peter Johnson Vice President/Controller & Chief Accounting Officer May 9, 1996 - ---------------- (Date) -10- EX-10.12 2 Exhibit 10.12 Promissory Note Chicago, Illinois: April 17, 1996 On the earlier of April 16, 1997 (the "Termination Date") or demand, for value received, Tellabs, Inc. (the "Borrower") hereby promises to pay to the order of BANK OF AMERICA ILLINOIS (the "Bank"), the principal sum of FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00) or, if less, the aggregate unpaid principal amount of all Advances made by the Bank to the undersigned hereunder. The initial Advance, all subsequent Advances and all payments made on account of principal will be recorded by the holder in its records. Capitalized terms used herein and not otherwise defined herein shall have the meanings given such terms in the Loan Agreement, hereinafter defined. The Borrower further promises to pay to the order of the Bank interest on the aggregate unpaid principal amount of this Note outstanding from time to time, from the date of this Note until paid in full, at the rates per annum which shall be determined in accordance with the provisions of the Loan Agreement. Accrued interest shall be payable on the dates specified in the Loan Agreement. All payments of principal and interest under this Note shall be made in lawful money of the United States of America in immediately available funds at the Bank's office at 231 South LaSalle Street, Chicago, Illinois 60697, or at such other place as may be designated by the Bank to the Borrower in writing. This Note is the Note referred to in, and evidences indebtedness incurred under, a Demand Loan Agreement (as it may be amended, modified or supplemented from time to time, the "Loan Agreement"), dated as of April 17, 1996, between the Borrower and the Bank, to which Loan Agreement reference is made for a statement of the terms and provisions thereof. All parties hereto, whether as makers, endorsers or otherwise, severally waive presentment, demand, protest and notice of dishonor in connection with this Note. This Note is governed by the internal laws of the State of Illinois. TELLABS, INC. By: s\ Michael J. Birck ____________________ Michael J. Birck President and Chief Executive Officer By: s\ Peter Guglielmi ____________________ Peter Guglielmi Chief Financial Officer 1000 Remington Boulevard Bolingbrook, Illinois 60440 Attention: Mr. Michael J. Birck President and Chief Executive Officer Telephone: Fax No.: EX-10.13 3 Exhibit 10.13 TELLABS, INC. STOCK BONUS PLAN FOR EMPLOYEES OF STEINBRECHER CORPORATION I. INTRODUCTION 1.1 Purposes. The purposes of the Tellabs, Inc. Stock Bonus Plan for Employees of Steinbrecher Corporation (the "Plan") are (i) to align the interests of the stockholders of Tellabs, Inc. (the "Company") and its subsidiaries from time to time (individually a "Subsidiary" and collectively the Subsidiaries") and the recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Company's growth and success, (ii) to advance the interests of the Company by retaining key employees of Steinbrecher Corporation, a Delaware corporation in the process of becoming a Subsidiary, and (iii) to satisfy the Company's obligations under Section 8.2 of the Agreement of Merger dated as of March 11, 1996, among Tellabs, Inc., Tiger Merger Co. and Steinbrecher Corporation. For purposes of this Plan, references to employment by the Company shall also mean employment by a Subsidiary. 1.2 Certain Definitions. "Board" shall mean the Board of Directors of the Company. "Bonus Stock" shall mean shares of Common Stock awarded under this Plan. "Bonus Stock Award" shall mean an award to an eligible employee of a right to receive Bonus Stock under Article II of this Plan. "Cause" shall mean any act of deliberate dishonesty with respect to the Company or any Subsidiary, conviction of a felony, significant activities harmful to the reputation of the Company or a Subsidiary, refusal to perform or substantial disregard of duties properly assigned or significant violation of any statutory or common law duty of loyalty to the Company or a Subsidiary. "Closing Date" means the date on which Steinbrecher Corporation becomes a Subsidiary. "Committee" shall mean the Compensation Committee of the Board of Directors of the Company. "Common Stock" shall mean the common stock, $.01 par value, of the Company. "Company" has the meaning specified in Section 1.1. "Constructive Discharge" shall mean the voluntary resignation of a holder of a Bonus Stock Award from employment with the Company either (i) as a result of a decision by such holder not to accept a decrease in the rate of his annual salary, or (ii) as a result of a substantial and unreasonable change in such holder's responsibilities or working conditions. "Disability" shall mean the inability of the holder of a Bonus Stock Award to perform substantially such holder's duties and responsibilities for a continuous period of at least six months, as determined by the Committee in its sole discretion. "Fair Market Value" shall mean the average of the high and low transaction prices of a share of Common Stock as reported in the National Association of Securities Dealers Automated Quotation National Market System ("NASDAQNMS") on the date as of which such value is being determined, or, if the Common Stock is not listed on the NASDAQNMS, the average of the high and low transaction prices of a share of Common Stock on the principal national stock exchange on which the Common Stock is traded on the date as of which such value is being determined, or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate. 1.3 Administration. This Plan shall be administered by the Committee. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof and establish rules and regulations it deems necessary or desirable for the administration of this Plan. All such interpretations, rules and regulations shall be conclusive and binding on all parties. The Committee may delegate some or all of its power and authority hereunder to the President and Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate. 1.4 Eligibility. Participants in this Plan shall consist of the employees of the Steinbrecher Corporation whose names appear on Schedule A attached hereto. No other persons shall be eligible to participate in this Plan. 1.5 Shares Available. Subject to adjustment as provided in Section 3.3, 20,212 shares of Common Stock shall be available under this Plan. II. BONUS STOCK AWARDS 2.1 Bonus Stock Awards. Effective on the Closing Date, the Company hereby grants Bonus Stock Awards to the eligible persons whose names are listed on Schedule A hereto. Such grant shall be evidenced by a notice to such effect sent by the Company to each such person as soon as practicable following effectiveness of this Plan. 2.2 Terms of Bonus Stock Awards. Bonus Stock Awards shall be subject to the following terms and conditions. (a) Number of Shares and Other Terms. The number of shares of Common Stock subject to a Bonus Stock Award granted pursuant to this Plan to an employee shall be the number of such shares set forth opposite the name of such employee on Schedule A hereto. (b) Vesting and Forfeiture. One-half of the number of shares of Common Stock subject to a Bonus Stock Award shall vest and be payable on the first anniversary of the Closing Date and the other half of such number shall vest and be payable on the second anniversary of the Closing Date, in each case (subject to Section 2.3(b)) if the holder of such award remains continuously in the employment of the Company or a Subsidiary until such anniversary date of the Closing Date. Such holder shall forfeit the unvested portion of any such shares if such holder does not remain continuously in the employment of the Company as specified above, except as otherwise provided in Section 2.3(b). (c) Share Certificates. Upon the vesting of a portion of a Bonus Stock Award pursuant to Sections 2.2(b) or 2.3(b), in each case subject to the Company's right to require payment of any taxes in accordance with Section 3.2, a certificate or certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to and in the name of the holder of such award. Notwithstanding the foregoing, in lieu of the delivery of shares representing all or a portion of the vested portion of a Bonus Stock Award, the Committee may, in its sole discretion, deliver to the holder cash in an amount equal to the Fair Market Value on the date such shares become vested of the vested portion of such award less any applicable withholding as required by Section 3.2. 2.3 Termination of Employment. (a) Terminations Resulting in Forfeiture. If (i) the employment with the Company of the holder of a Bonus Stock Award is terminated by the Company by reason of Cause, (ii) such employment terminates by reason of the holder's Disability, or death, or (iii) a holder voluntarily terminates his employment with the Company for any reason other than Constructive Discharge, the portion of such award which is not then vested pursuant to Section 2.2(b) shall be forfeited by such holder and such portion shall be cancelled by the Company. (b) Other Termination. If the Company terminates the employment of the holder of a Bonus Stock Award for any reason other than Cause or Disability, or if a holder of a Bonus Stock Award voluntarily terminates his employment with the Company as a result of a Constructive Discharge, the portion of such award which is not otherwise vested shall vest without regard to such termination, and be payable within 30 days of such termination, in accordance with Section 2.2(c). 2.4 Registration. The Company will use its best commercial efforts to cause the shares of Common Stock subject to Bonus Stock Awards to be registered on Form S-8 under the Securities Act of 1933, as amended, on or before the first anniversary of the Closing Date. No such registration shall be required to the extent the Company determines, based on the advice of counsel, that such registration is not required for a holder of a Bonus Stock Award to transfer vested shares of Common Stock issued to such holder hereunder free of the transfer restrictions of the Securities Act of 1933, as amended. III. GENERAL 3.1 Amendments. The Board may amend this Plan as it shall deem advisable, provided, however, that no amendment shall be made if such amendment would increase or decrease the maximum number of shares of Common Stock available under this Plan (subject to Section 3.3). No amendment may impair the rights of a holder of an outstanding award whether vested or unvested without the consent of such holder. 3.2 Tax Withholding. The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the making of any other payment pursuant to an award made hereunder, payment by the holder of such award of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. The Committee may allow shares of Common Stock to be delivered or withheld having an aggregate Fair Market Value not in excess of the minimum amount required to be withheld, and in such event, any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder. 3.3 Adjustment. In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, the number and class of securities available under this Plan, the number and class of securities subject to each outstanding Bonus Stock Award, and/or the asset issuable or payable upon the vesting thereof shall be adjusted or modified accordingly, as determined by the Committee. The decision of the Committee regarding any such adjustment or modification shall be final, binding and conclusive. If any such adjustment or modification would result in a fractional security being subject to an award under this Plan, the Company shall pay the holder of such award, in connection with the first vesting of such award, in whole or in part, occurring after such adjustment or modification, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the Fair Market Value on the vesting date. 3.4 No Assignment. It is a condition of this Plan, and the rights of all holders of Bonus Stock Awards shall be subject thereto, that no right or interest of any such holder shall be assignable or transferable in whole or in part, either directly or by operation of law or otherwise, including, but not by way of limitation, execution, levy, garnishment, attachment, pledge or bankruptcy, and no right or interest of any such holder under this Plan shall be liable for, or subject to, any obligation of any such holder, including claims for alimony or the support of any spouse. 3.5 No Right of Employment. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment of any person at any time without liability hereunder. 3.6 Rights as Stockholder. No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security. The Company's obligation to deliver shares of Common Stock pursuant to this Plan shall be unfunded, and the Company shall not be obligated to set aside any of its assets for the purpose of satisfying its obligations hereunder. The claims of holders of Bonus Stock Awards shall be solely those of an unsecured creditor of the Company. 3.7 Governing Law. The corporate law of the State of Delaware shall govern all issues concerning the relative rights of the Company and the holders of Bonus Stock Awards with respect to this Plan, the Bonus Stock Awards and Bonus Stock issuable under the Plan. The law of the State of Illinois, except its law with respect to choice of law, shall be controlling in all other matters relating to the Plan. 3.8 Effective Date. This Plan shall become effective on the Closing Date. SCHEDULE A - Intentionally Omitted EX-27 4
5 This schedule contains summary financial information extracted from the March 29, 1996, Income Statment and Balance Sheet and is qualified in its entirety by reference to such 10Q. 3-MOS DEC-27-1996 MAR-29-1996 99812 75721 128538 2699 65943 376748 207205 87592 560810 81157 2850 0 0 889 457599 560810 172256 172256 74482 74482 0 390 (1947) 44467 13340 31127 0 0 0 31127 .34 .34
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