<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10/A
(AMENDMENT NO. 2)
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
------------------------
THE DIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 51-0374887
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
DIAL TOWER
1850 NORTH CENTRAL AVENUE 85077
PHOENIX, ARIZONA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (602) 207-2800
---------------------
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
<S> <C>
COMMON STOCK, PAR VALUE $0.01 PER SHARE NEW YORK STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
</TABLE>
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE DIAL CORPORATION
I. INFORMATION INCLUDED IN INFORMATION STATEMENT
AND INCORPORATED IN FORM 10 BY REFERENCE
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10
<TABLE>
<CAPTION>
ITEM ITEM
NO. CAPTION LOCATION IN INFORMATION STATEMENT
- ---- --------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Business......................... "SUMMARY OF CERTAIN INFORMATION;" "INTRODUCTION;"
"THE DISTRIBUTION -- Background and Reasons for the
Distribution;" "BUSINESS AND PROPERTIES;" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS."
2. Financial Information............ "SUMMARY OF CERTAIN INFORMATION;" "THE
DISTRIBUTION -- Risk Factors;" "THE DIAL CORP
CONSUMER PRODUCTS BUSINESS SELECTED COMBINED
FINANCIAL AND OTHER DATA;" "THE DIAL CORP CONSUMER
PRODUCTS BUSINESS UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION;" "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS;" and "FINANCIAL STATEMENTS."
3. Properties....................... "BUSINESS AND PROPERTIES."
4. Security Ownership of Certain
Owners and Management.......... "THE DISTRIBUTION -- Listing and Trading of Company
Common Stock;" "BOARD OF DIRECTORS AND EXECUTIVE
OFFICERS;" and "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS OF COMPANY COMMON STOCK."
5. Directors and Executive
Officers....................... "ARRANGEMENTS BETWEEN DIAL AND THE COMPANY RELATING
TO THE DISTRIBUTION;" "BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS;" and "LIABILITY AND
INDEMNIFICATION OF DIRECTORS AND OFFICERS."
6. Executive Compensation........... "ARRANGEMENTS BETWEEN DIAL AND THE COMPANY RELATING
TO THE DISTRIBUTION;" "DIRECTORS' COMPENSATION;"
"EXECUTIVE COMPENSATION;" and "BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS."
7. Certain Relationships and Related
Transactions................... "SUMMARY OF CERTAIN INFORMATION;" "INTRODUCTION;"
"THE DISTRIBUTION -- Background and Reasons for the
Distribution" and "-- Risk Factors;" "ARRANGEMENTS
BETWEEN DIAL AND THE COMPANY RELATING TO THE
DISTRIBUTION;" "BOARD OF DIRECTORS AND EXECUTIVE
OFFICERS;" and "FINANCIAL STATEMENTS."
8. Legal Proceedings................ "BUSINESS AND PROPERTIES -- Legal Matters."
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM ITEM
NO. CAPTION LOCATION IN INFORMATION STATEMENT
- ---- --------------------------------- -----------------------------------------------------
<C> <S> <C>
9. Market Price of and Dividends
on the Registrant's Common
Equity and Related
Stockholder Matters............ "SUMMARY OF CERTAIN INFORMATION;" "THE
DISTRIBUTION -- Listing and Trading of Company Common
Stock" and "-- Risk Factors."
11. Description of Registrant's
Securities to be Registered.... "DESCRIPTION OF COMPANY CAPITAL STOCK;" "CERTAIN
ANTITAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE
CERTIFICATE OF INCORPORATION, THE BYLAWS, THE RIGHTS,
AND DELAWARE LAW."
12. Indemnification of Directors
and Officers................... "LIABILITY AND INDEMNIFICATION OF DIRECTORS AND
OFFICERS" and Annex B -- FORM OF RESTATED CERTIFICATE
OF INCORPORATION OF THE DIAL CORPORATION
13. Financial Statements and
Supplementary Data............. "SUMMARY OF CERTAIN INFORMATION;" "THE DIAL CORP
CONSUMER PRODUCTS BUSINESS SELECTED COMBINED
FINANCIAL AND OTHER DATA;" "THE DIAL CORP CONSUMER
PRODUCTS BUSINESS UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION;" "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS;" and "FINANCIAL STATEMENTS."
15. Financial Statements and
Exhibits.
(a) Financial Statements and
Schedules*..................... "FINANCIAL STATEMENTS" and "INDEX TO FINANCIAL
STATEMENTS."
</TABLE>
- ---------------
* No schedules are included in the Information Statement because the amounts in
question are insufficient to require inclusion or because the information
required is presented in the combined financial statements contained in the
Information Statement.
2
<PAGE> 4
II. INFORMATION NOT INCLUDED IN INFORMATION STATEMENT
Item 10. Recent Sales of Unregistered Securities.
None.
Item 14. Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 15. Financial Statements and Exhibits.
(b) Exhibits:
<TABLE>
<C> <S> <C>
2 Form of Distribution Agreement (attached to Information Statement as Annex A)
3(a) Form of Restated Certificate of Incorporation of The Dial Corporation (attached
to Information Statement as Annex B)
3(b) Form of Bylaws of The Dial Corporation (attached to Information Statement as
Annex C)
4 Form of Rights Agreement
10(a) Form of Interim Services Agreement
10(b) Form of Tax Sharing Agreement
10(c) Form of Letter of Understanding on Trademarks
10(d) Form of The Dial Corporation 1996 Stock Incentive Plan
10(e) Form of Deferred Compensation Plan for Directors of The Dial Corporation
10(f) Form of The Dial Corporation Director's Charitable Award Program
10(g) Form of The Dial Corporation Deferred Compensation Plan
10(h) Form of Employment Agreements with certain executive officers of The Dial
Corporation
10(i) Employment Agreement between The Dial Corp and Malcolm Jozoff
10(j) Form of Credit Agreement
10(k) Form of The Dial Corporation Employee Equity Trust
21 Subsidiaries of The Dial Corporation
27 Financial Data Schedule*
</TABLE>
- ---------------
* Previously filed by The Dial Corporation.
3
<PAGE> 5
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
THE DIAL CORPORATION
By /s/ Peter J. Novak
--------------------------------------
Peter J. Novak
Vice President and General Counsel
July 26, 1996
4
<PAGE> 6
INFORMATION STATEMENT
THE DIAL CORPORATION
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
PREFERRED SHARE PURCHASE RIGHTS
This Information Statement is being furnished to stockholders of The Dial
Corp ("Dial") in connection with the distribution (the "Distribution") by Dial
to its stockholders of all of the outstanding shares of common stock of its
wholly owned subsidiary, The Dial Corporation (the "Company"), along with the
associated preferred share purchase rights (the "Rights"). Concurrently with the
Distribution, the name of The Dial Corp will be changed to "Viad Corp".
References herein to "Dial" include the newly-named Viad Corp following the
Distribution.
The Distribution will be effected on August 15, 1996 (the "Distribution
Date"), and shares of Company common stock will be distributed to the holders of
record of Dial common stock as of August 5, 1996 (the "Record Date"), on the
basis of one share of common stock of the Company for each share of Dial common
stock held. No consideration will be paid by stockholders of Dial for the shares
of common stock of the Company to be received by them in the Distribution, nor
will they be required to surrender or exchange shares of Dial in order to
receive common stock of the Company.
There is no current public market for the common stock of the Company. The
common stock of the Company has been approved for listing, subject to official
notice of issuance, on the New York Stock Exchange.
------------------------
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
------------------------
THIS INFORMATION STATEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. ANY SUCH OFFERING
MAY ONLY BE MADE BY MEANS OF A SEPARATE PROSPECTUS PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND
OTHERWISE IN COMPLIANCE WITH APPLICABLE LAW.
The date of this Information Statement is , 1996.
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION................................................................. iv
SUMMARY OF CERTAIN INFORMATION........................................................ v
The Distribution.................................................................... v
The Dial Corporation................................................................ vi
Summary Financial Information....................................................... ix
INTRODUCTION.......................................................................... 1
THE DISTRIBUTION...................................................................... 2
Background and Reasons for the Distribution......................................... 2
Risk Factors........................................................................ 4
Manner of Effecting the Distribution................................................ 6
Material Federal Income Tax Consequences of the Distribution........................ 6
Listing and Trading of Company Common Stock......................................... 8
Conditions and Termination.......................................................... 9
ARRANGEMENTS BETWEEN DIAL AND THE COMPANY
RELATING TO THE DISTRIBUTION........................................................ 9
Distribution Agreement.............................................................. 9
Interim Services Agreement.......................................................... 12
Aircraft Joint Ownership Agreement.................................................. 12
Letter of Understanding on Trademarks............................................... 13
Office Lease........................................................................ 13
Tax Sharing Agreement............................................................... 13
FINANCING............................................................................. 13
BUSINESS AND PROPERTIES............................................................... 15
Overview............................................................................ 15
Business Strategy................................................................... 15
Products............................................................................ 17
Marketing........................................................................... 20
Suppliers........................................................................... 21
Raw Materials....................................................................... 21
Competition......................................................................... 21
Research and Development............................................................ 21
Patents and Trademarks.............................................................. 22
Government Regulation............................................................... 22
Environmental....................................................................... 22
Employees........................................................................... 23
Properties.......................................................................... 23
Legal Matters....................................................................... 24
THE DIAL CORP CONSUMER PRODUCTS BUSINESS SELECTED
COMBINED FINANCIAL AND OTHER DATA................................................... 25
</TABLE>
i
<PAGE> 8
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE DIAL CORP CONSUMER PRODUCTS BUSINESS UNAUDITED
PRO FORMA COMBINED FINANCIAL INFORMATION............................................ 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS........................................................... 32
Restructuring Charges and Asset Write-Downs......................................... 32
Results of Operations............................................................... 32
Recent Developments................................................................. 35
Liquidity and Capital Resources..................................................... 35
Business Outlook.................................................................... 36
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS............................................. 37
Directors of the Company............................................................ 37
Certain Board Committees............................................................ 38
Executive Officers of the Company................................................... 38
DIRECTORS' COMPENSATION............................................................... 41
Cash Compensation................................................................... 41
Directors' Stock Awards............................................................. 41
Directors' Retirement Benefits...................................................... 41
EXECUTIVE COMPENSATION................................................................ 43
Historical Compensation............................................................. 43
Compensation Following the Distribution............................................. 46
Adjustments to Outstanding Dial Stock Awards........................................ 47
Employment and Change in Control Arrangements....................................... 48
Pension Plans....................................................................... 49
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF
COMPANY COMMON STOCK................................................................ 51
By Management....................................................................... 51
By Others........................................................................... 52
DESCRIPTION OF COMPANY CAPITAL STOCK.................................................. 53
CERTAIN ANTITAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, THE BYLAWS, THE RIGHTS, AND DELAWARE LAW............................. 53
Classified Board of Directors....................................................... 53
Number of Directors, Filling Vacancies and Removal.................................. 54
No Stockholder Action by Written Consent and Special Meetings....................... 54
Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals..... 55
Company Preferred Stock............................................................. 56
Business Combinations............................................................... 57
Amendment of Certain Provisions of the Certificate of Incorporation and Bylaws...... 57
Rights.............................................................................. 57
Antitakeover Legislation............................................................ 60
Comparison with Rights of Holders of Dial Common Stock.............................. 60
</TABLE>
ii
<PAGE> 9
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS............................... 60
Limitation of Liability of Directors................................................ 60
Indemnification of Directors and Officers........................................... 61
Indemnification Agreements.......................................................... 62
INDEX TO FINANCIAL STATEMENTS......................................................... F-1
Annex A Form of Distribution Agreement by and among The Dial Corp, The Dial Corporation
and Exhibitgroup Inc.
Annex B Form of Restated Certificate of Incorporation of The Dial Corporation
Annex C Form of Bylaws of The Dial Corporation
</TABLE>
iii
<PAGE> 10
AVAILABLE INFORMATION
The Dial Corporation (the "Company") has filed a Registration Statement on
Form 10 (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), with respect to the Company Common Stock (as
defined and described herein) and the Rights (as defined and described herein).
This Information Statement does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto. For further
information, reference is made hereby to the Registration Statement and such
exhibits and schedules. Statements contained herein concerning any documents are
not necessarily complete and, in each instance, reference is made to the copies
of such documents filed as exhibits to the Registration Statement. Each such
statement is qualified in its entirety by such reference. Copies of these
documents may be inspected without charge at the principal office of the
Commission at 450 5th Street, N.W., Washington, D.C. 20549, and at the Regional
Offices of the Commission at 7 World Trade Center, Suite 1300, New York, New
York 10048 and at Northwestern Atrium Center, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661 and copies of all or any part thereof may be
obtained from the Commission upon payment of the charges prescribed by the
Commission.
Following the Distribution, the Company will be required to comply with the
reporting requirements of the Exchange Act and will file annual, quarterly and
other reports with the Commission. The Company will also be subject to the proxy
solicitation requirements of the Exchange Act and, accordingly, will furnish
audited financial statements to its stockholders in connection with its annual
meetings of stockholders. Following the listing of the Company Common Stock on
the New York Stock Exchange (the "NYSE"), the Company will be required to file
with the NYSE copies of such reports, proxy statements and other information
which then can be inspected at the offices of the NYSE at 20 Broad Street, New
York, New York 10005.
NO PERSON IS AUTHORIZED BY DIAL OR THE COMPANY TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS INFORMATION
STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
iv
<PAGE> 11
SUMMARY OF CERTAIN INFORMATION
This summary is qualified by the more detailed information set forth
elsewhere in this Information Statement, which should be read in its entirety.
THE DISTRIBUTION
Distributing Company....... The Dial Corp, a Delaware corporation ("Dial").
Concurrently with the Distribution, the name of The
Dial Corp will be changed to "Viad Corp".
References to "Dial" herein include the newly-named
Viad Corp following the Distribution.
Shares to be Distributed... Approximately 94.8 million shares of common stock,
par value $0.01 per share ("Company Common Stock"),
of The Dial Corporation, a Delaware corporation
(the "Company"), based on approximately 94.8
million shares of common stock, par value $1.50 per
share, of Dial ("Dial Common Stock") currently
outstanding.
Distribution Ratio......... One share of Company Common Stock for each share of
Dial Common Stock. No consideration will be paid by
Dial's stockholders for the shares of Company
Common Stock to be received in the Distribution.
See "THE DISTRIBUTION -- Manner of Effecting the
Distribution."
Federal Income Tax
Consequences............. Dial has received a ruling from the Internal
Revenue Service (the "IRS") to the effect that no
gain or loss will be recognized by holders of Dial
Common Stock upon receipt of Company Common Stock
in the Distribution, and no gain or loss will be
recognized by Dial in respect of the Distribution.
Cash received by participants in the dividend
reinvestment plan of Dial in lieu of fractional
shares will be taxable. Dial stockholders are urged
to consult their own tax advisors as to the
specific tax consequences to them of the
Distribution. See "THE DISTRIBUTION -- Material
Federal Income Tax Consequences of the
Distribution."
Risk Factors............... Stockholders should consider the factors discussed
under "THE DISTRIBUTION -- Risk Factors."
Trading Market............. Dial Common Stock will continue to be listed and
traded on the New York Stock Exchange (the "NYSE")
after the Distribution, but with a new symbol
"VVI". The Company Common Stock has been approved
for listing on the NYSE subject to official notice
of issuance. See "THE DISTRIBUTION -- Listing and
Trading of Company Common Stock" and "-- Conditions
and Termination."
Record Date................ August 5, 1996 (the "Record Date").
Distribution Date.......... August 15, 1996 (the "Distribution Date"). On, or
as soon as practicable after, the Distribution
Date, Dial, as distribution agent, will commence
mailing certificates representing shares of Company
Common Stock to holders of record as of the Record
Date of Dial Common Stock. Dial stockholders will
not be required to make any payment or to take any
other action to receive their Company Common Stock.
See "THE DISTRIBUTION -- Manner of Effecting the
Distribution."
Distribution Agent......... Dial.
Conditions to the
Distribution............... The Distribution is conditioned upon, among other
things, confirmation of investment grade credit
ratings for the senior debt of each of Dial and the
Company. Dial has received preliminary indications
from the credit-rating agencies that, following the
Distribution, the senior debt of both
v
<PAGE> 12
Dial and the Company will carry investment grade
ratings. Dial expects to receive confirmation of
such ratings following declaration of the
Distribution by the Board of Directors of Dial (the
"Dial Board"). Any of the conditions to the
Distribution may be waived, at any time prior to
the Distribution Date, for any reason, in the sole
discretion of the Dial Board. Even if all
conditions are satisfied, the Dial Board has
reserved the right to abandon, defer or modify the
Distribution and the related transactions described
herein at any time prior to the Distribution Date.
See "THE DISTRIBUTION -- Conditions and
Termination."
Principal Businesses to Be
Retained by Dial........... Following the Distribution, Dial will change its
name to "Viad Corp," and will continue to operate
its current services businesses consisting of the
airline catering and services, convention services,
and travel and leisure and payment services
businesses. Immediately prior to the Distribution,
Exhibitgroup Inc., a wholly owned subsidiary of
Dial which operates part of Dial's convention
services business ("Exhibitgroup"), will be merged
with and into Dial. See "INTRODUCTION" and
"ARRANGEMENTS BETWEEN DIAL AND THE COMPANY RELATING
TO THE DISTRIBUTION -- Distribution Agreement."
Interests of Certain
Persons
in the Distribution........ Malcolm Jozoff, who is currently President and
Chief Executive Officer of the Consumer Products
Business (as defined below) and who will become
Chairman, President and Chief Executive Officer of
the Company effective as of the Distribution Date,
will receive an increase in salary and will be
eligible to receive certain additional compensation
as a result of the Distribution. See "EXECUTIVE
COMPENSATION -- Employment and Change in Control
Arrangements." Certain adjustments will or may be
made under a number of benefit plans of Dial,
including the option plans and incentive plans, in
order to preserve benefits accrued under such plans
as of the Distribution Date while taking into
account the impact of the Distribution on such
plans. Such adjustments are not intended to create
any material additional benefit as a result of the
Distribution, and will apply to all participants in
the respective plans. See "EXECUTIVE
COMPENSATION -- Compensation Following the
Distribution" and "-- Adjustments to Outstanding
Dial Stock Awards."
THE DIAL CORPORATION
The Company................ Following the Distribution, the Company will own
and operate the consumer products business
currently being conducted by Dial (the "Consumer
Products Business"). References to the "Company"
herein for time periods prior to the Distribution
mean the Consumer Products Business as conducted by
Dial and, for time periods following the
Distribution, mean the Company as capitalized by
Dial with the assets and liabilities of the
Consumer Products Business pursuant to the
Distribution Agreement by and among Dial, the
Company and Exhibitgroup.
In the fiscal year ended December 30, 1995, the
Company had aggregate revenues and operating income
before restructuring charges and asset write-downs
of approximately $1.4 billion and $111.9 million,
respectively, and in the thirteen-week period ended
March 30, 1996, had aggregate revenues of $352.4
million and operating income of $36.3 mil-
vi
<PAGE> 13
lion. For the thirteen weeks ended June 29, 1996,
the Company had aggregate revenues of $353.8
million and operating income of $42.6 million. The
Company produces and markets personal care,
detergent, household and shelf-stable food
products, including such national brand names as
DIAL, TONE, BRECK, PUREX, RENUZIT, BRILLO and
ARMOUR STAR. See "THE DIAL CORP CONSUMER PRODUCTS
BUSINESS SELECTED COMBINED FINANCIAL AND OTHER
DATA;" "THE DIAL CORP CONSUMER PRODUCTS BUSINESS
UNAUDITED PRO FORMA COMBINED FINANCIAL
INFORMATION;" "BUSINESS AND PROPERTIES;"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- Recent
Developments" and "FINANCIAL STATEMENTS." The
principal corporate offices of the Company are
located at the Dial Tower, 1850 North Central
Avenue, Phoenix, Arizona 85077 and its telephone
number is (602) 207-2800.
Financing.................. In connection with the Distribution, Dial expects
to borrow approximately $280 million under a new
$350 million credit facility to be assumed by the
Company as of the Distribution Date (the "New
Credit Facility"). In conjunction with the
Distribution, intercompany debt owed by the Company
or its subsidiaries to Dial will be deemed
contributed to capital and thereby cancelled. The
New Credit Facility will be used in conjunction
with commercial paper and a receivables sales
facility to provide the working capital required by
the Company following the Distribution. See "THE
DISTRIBUTION -- Risk Factors" and "FINANCING."
Management of the
Company.................... Effective as of the Distribution, the Board of
Directors of the Company (the "Company Board") will
consist of six directors, including Malcolm Jozoff,
who is currently President and Chief Executive
Officer of the Consumer Products Business, and who
will serve as Chairman of the Board, and five
directors who are currently directors of Dial. Mr.
Jozoff will also serve as President and Chief
Executive Officer of the Company and the other
executive officers of the Company will include
persons who are currently serving in the senior
management of the Consumer Products Business. See
"BOARD OF DIRECTORS AND EXECUTIVE OFFICERS."
Trading Market............. There is not currently a public market for the
Company Common Stock, although a "when-issued"
trading market (as described in "THE
DISTRIBUTION -- Listing and Trading of Company
Common Stock") is expected to develop prior to the
Distribution Date. The Company Common Stock has
been approved for listing on the NYSE upon official
notice of issuance. See "THE
DISTRIBUTION -- Listing and Trading of Company
Common Stock" and "-- Risk Factors."
Preferred Share Purchase
Rights of the Company...... The Company has adopted a preferred share purchase
rights plan, effective as of the Distribution Date.
Certificates issued in the Distribution
representing shares of Company Common Stock will
also represent an equivalent number of associated
Rights. See "CERTAIN ANTITAKEOVER EFFECTS OF
CERTAIN PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, THE BYLAWS, THE RIGHTS, AND DELAWARE
LAW."
vii
<PAGE> 14
Certain Antitakeover
Effects of
Certain Provisions of the
Certificate of
Incorporation
and Bylaws............... Certain provisions of the Company's Restated
Certificate of Incorporation (the "Certificate of
Incorporation") and Bylaws, as amended, as each
will be in effect as of the Distribution, may have
the effect of making more difficult an acquisition
of control of the Company in a transaction not
approved by the Company Board. See "CERTAIN
ANTITAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE
CERTIFICATE OF INCORPORATION, THE BYLAWS, THE
RIGHTS, AND DELAWARE LAW." The Certificate of
Incorporation would, in some circumstances,
eliminate certain liabilities of the Company
directors in connection with the performance of
their duties. See "LIABILITY AND INDEMNIFICATION OF
DIRECTORS AND OFFICERS."
Post-Distribution
Dividend Policy.......... It is anticipated that, following the Distribution,
Dial will initially pay quarterly cash dividends at
the annual rate of $0.32 per share of Dial Common
Stock and that the Company will initially pay
dividends at the annual rate of $0.32 per share of
Company Common Stock, resulting in the aggregate
annual dividends paid by Dial and the Company being
equivalent to the current annual dividend rate of
$0.64 per share of Dial Common Stock. However, no
such anticipated dividends have been declared, the
declaration of dividends by each of Dial and the
Company will be in the discretion of the Company
Board and the Dial Board, respectively, and there
can be no assurance that either company will
declare such anticipated dividends. The Company
expects to implement a dividend reinvestment plan
after the Distribution Date.
Transfer Agent and
Registrar.................. Harris Trust and Savings Bank.
viii
<PAGE> 15
SUMMARY FINANCIAL INFORMATION
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
SUMMARY COMBINED FINANCIAL AND OTHER DATA
The following summary financial data of the Company should be read in
conjunction with the historical combined financial statements and notes thereto
included elsewhere in this Information Statement. See "THE DIAL CORP CONSUMER
PRODUCTS BUSINESS SELECTED COMBINED FINANCIAL AND OTHER DATA" and "FINANCIAL
STATEMENTS." For earnings data for the thirteen and twenty-six week periods
ended June 29, 1996 and July 1, 1995, see "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Recent Developments."
<TABLE>
<CAPTION>
THIRTEEN
WEEKS ENDED FISCAL YEAR ENDED
-------------------- ------------------------------------------------------------------------
MARCH 30, APRIL 1, DECEMBER 30, DECEMBER 31, DECEMBER 25, DECEMBER 26, DECEMBER 28,
1996 1995 1995 1994 1993 1992 1991
--------- -------- ------------ ------------ ------------ ------------ ------------
(000 OMITTED, EXCEPT NUMBER OF EMPLOYEES)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net sales................. $352,392 $337,862 $1,365,290 $1,511,362 $1,420,173 $1,275,447 $1,196,499
Operating income
(loss)(1)............... 36,342 33,802 (23,656) 160,008 139,213 118,616 110,605
Income (loss) before
cumulative effect of
change in accounting
principle (1)........... 19,608 18,247 (27,489) 91,072 84,181 74,501 71,411
Net income (loss)(1)(2)... 19,608 18,247 (27,489) 91,072 84,181 31,068 71,411
FINANCIAL POSITION AT
PERIOD END
Total assets.............. $806,032 $842,608 $ 798,405 $ 887,373 $ 857,516 $ 685,266 $ 662,195
Total debt (3)............ 309 3,726 3,320 3,510 6,063 31,502 31,130
Working capital........... 45,469 84,671 45,663 56,188 (10,177) (50,790) (22,434)
Dial investment and
advances................ 499,244 575,472 496,230 555,703 502,199 350,799 410,759
OTHER DATA
EBITDA, as defined (4).... $ 43,672 $ 42,860 $ 141,062 $ 194,918 $ 172,796 $ 150,158 $ 139,933
Depreciation and
amortization............ 7,330 9,058 29,118 34,910 33,583 31,542 29,328
Total capital
expenditures............ 8,034 4,692 27,214 37,471 40,605 45,508 53,398
Number of employees (end
of period).............. 4,002 3,886 3,985 3,995 4,000 4,197 4,279
Number of employees
(average)............... 4,001 3,943 3,992 3,983 4,121 4,186 4,296
</TABLE>
- ---------------
(1) After deducting restructuring charges and asset write-downs of $135,600,000
($82,100,000 after-tax) in the third fiscal quarter of 1995. Also, after
deducting $6,800,000 ($4,310,000 after-tax) in 1992 for increased ongoing
expenses (above 1991 levels) resulting from the adoption of Statement of
Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," effective as of January 1,
1992.
(2) Cumulative effect of a change in accounting principle amounted to
$43,433,000 in 1992 from initial application of SFAS No. 106.
(3) Total debt includes the current portion of long-term debt and short-term
bank loans.
(4) EBITDA is defined as net income (loss) before interest expense, income
taxes, depreciation and amortization, restructuring charges and asset
write-downs and cumulative effect of change in accounting principle. EBITDA
data is presented as a measure of the Company's ability to service debt,
fund capital expenditures and finance growth. Such data should not be
considered an alternative to net income, operating income, cash flows from
operations or other operating or liquidity performance measures prescribed
by generally accepted accounting principles. Cash expenditures for various
long-term assets, interest expense and income taxes have been, and will be,
incurred which are not reflected in the EBITDA presentations.
ix
<PAGE> 16
INTRODUCTION
On February 15, 1996, The Dial Corp, a Delaware corporation ("Dial"),
announced that its Board of Directors (the "Dial Board") had approved a proposal
for a strategic restructuring to separate Dial into two publicly-traded
companies by means of a distribution as a dividend to Dial's stockholders of the
consumer products business (the "Consumer Products Business") currently being
conducted by Dial directly and through certain of its subsidiaries (the
"Distribution"). Effective as of the date of the Distribution, August 15, 1996
(the "Distribution Date"), Dial will contribute all of the assets and
liabilities of the Consumer Products Business, including the stock of certain
subsidiaries, to The Dial Corporation, a newly formed Delaware corporation (the
"Company") and a wholly owned subsidiary of Dial. References to the "Company"
herein for time periods prior to the Distribution mean the Consumer Products
Business as conducted by Dial and, for time periods following the Distribution,
mean the Company as capitalized by Dial with the assets and liabilities of the
Consumer Products Business pursuant to the Distribution Agreement (the
"Distribution Agreement") by and among Dial, the Company and Exhibitgroup Inc.
("Exhibitgroup"). Dial has received a ruling from the Internal Revenue Service
(the "IRS") to the effect that the transaction will be a tax-free spin-off for
federal income tax purposes (the "Tax Ruling"). The Distribution is subject,
among other conditions, to confirmation that the senior debt of each of Dial and
the Company will retain investment grade credit ratings after the Distribution.
Dial has received preliminary indications from the credit-rating agencies that,
following the Distribution, the senior debt of both Dial and the Company will
carry investment grade ratings. Dial expects to receive confirmation of such
ratings following declaration of the Distribution by the Dial Board. Any of the
conditions to the Distribution may be waived, at any time prior to the
Distribution Date, for any reason, in the sole discretion of the Dial Board. See
"THE DISTRIBUTION -- Conditions and Termination."
The Distribution will be effected by distributing to holders of the common
stock, par value $1.50 per share, of Dial ("Dial Common Stock"), all of the
outstanding common stock, par value $0.01 per share, of the Company ("Company
Common Stock"), including the associated preferred share purchase rights (the
"Rights"). Prior to the Distribution Date, the Company will deliver certificates
for the shares of Company Common Stock to Dial as the distribution agent (the
"Distribution Agent") for transfer and distribution to the holders of Dial
Common Stock as of the Record Date (as defined herein) for the Distribution. The
Distribution will occur on August 15, 1996. In conjunction with the
Distribution, immediately prior to the Distribution Date, Exhibitgroup, a
Delaware corporation and a wholly owned subsidiary of Dial which operates part
of Dial's convention services business, will be merged with and into Dial, with
Dial as the surviving corporation (the "Merger"). The Company's principal
executive offices are located at the Dial Tower, 1850 North Central Avenue,
Phoenix, Arizona 85077 and its telephone number is (602) 207-2800.
Stockholders of Dial with inquiries relating to the Distribution should
contact Dial Shareholder Services, at The Dial Corp, Dial Tower, 1850 North
Central Avenue, Phoenix, Arizona 85077, telephone number (800) 453-2235. After
the Distribution Date, stockholders of the Company with inquiries relating to
their investment in the Company should contact The Dial Corporation, Dial Tower,
1850 North Central Avenue, Phoenix, Arizona 85077, telephone number (602)
207-2800.
NO ACTION IS REQUIRED BY DIAL STOCKHOLDERS IN ORDER TO RECEIVE THE COMPANY
COMMON STOCK TO WHICH THEY WILL BE ENTITLED IN THE DISTRIBUTION UPON PAYMENT OF
THE DIVIDEND.
<PAGE> 17
THE DISTRIBUTION
BACKGROUND AND REASONS FOR THE DISTRIBUTION
The Dial Board has determined, for the reasons set forth below, to separate
Dial's businesses into two publicly owned companies: the Company, which will own
and operate the Consumer Products Business currently conducted by Dial; and
Dial, which will be renamed "Viad Corp" ("Viad") and will continue to own and
operate its airline catering and services business, convention services business
and travel and leisure and payment services business (the "Services Business").
For more than ten years, Dial has actively sought to implement a focused
business strategy through acquisitions and divestitures. Dial, formerly The
Greyhound Corporation, has acted to strengthen its core Consumer Products
Business and Services Business through acquisitions of various brands and
complementary service businesses. In addition, since 1983, Dial has divested
non-core businesses, including its meat packing business, its inter-city bus
business, its computer leasing business, its financial services and insurance
business, and its transportation manufacturing and replacement parts business.
The Dial Board believes that the Distribution should be beneficial to each
of Dial's current businesses, because, among other things, it will separate
businesses with distinct financial, investment and operating characteristics so
that each can adopt strategies and pursue objectives more appropriate to its
specific businesses than is possible under Dial's present combined structure.
The purpose of the Distribution is to enhance the prospects for profitable
growth of each of the Consumer Products Business and the Services Business. Dial
believes that each of these businesses should be expanded through internal
growth and acquisitions. However, Dial also believes that its ability to expand
the Consumer Products Business is significantly limited due to the market
valuation of the Dial Common Stock. Dial believes that the market has discounted
the value of the Dial Common Stock due to the fact that the Consumer Products
Business has been combined with the Services Business. This belief is derived
primarily from Dial's assessment of the lower price earnings multiple assigned
to its stock, as a conglomerate, compared to that assigned to household and
personal care consumer products companies, including the Procter & Gamble
Company ("P&G"), The Clorox Company ("Clorox"), Colgate-Palmolive Company
("Colgate"), and The Gillette Company. As a result of the lower price earnings
multiple attributed to Dial because of its conglomerate status, than that
assigned to other comparable consumer products companies, Dial has been forced
to expand the Consumer Products Business by incurring debt rather than issuing
equity. Dial has also been limited in its ability to make acquisitions in the
Services Business lest it unbalance Dial's current business mix and cause
further discounting of the market valuation of the Consumer Products Business.
The Dial Board believes that, as a result of the Distribution, the
Company -- which will consist solely of the Consumer Products Business -- will
be in a better position to raise capital and make acquisitions using common
stock because it is anticipated that the market will value such stock based on a
price earnings multiple closer to the higher price earnings multiples of
comparable consumer products companies. As an independent entity, the Company
will also be able to attract and compensate qualified employees with stock-based
compensation and incentive plans directly related to the performance of the
Consumer Products Business. In conjunction with the strategy of the Company to
expand its business through internal growth and acquisitions, the Company
currently intends to issue at least $100 million in additional equity within six
to twelve months following the Distribution Date, in the form of a sale of stock
in the public or private equity markets. In addition to, or in lieu of, a sale
of stock, the Company may seek to make an acquisition or acquisitions utilizing
stock. No specific acquisitions are, however, currently contemplated or being
negotiated.
The Dial Board also believes that, by enhancing the prospects for
profitable growth, the Distribution will create a greater potential for
increasing the long-term value of the investment of Dial's stockholders. The
Dial Board believes that the Distribution will allow investors to evaluate
better the performance and investment characteristics and the future prospects
of the Consumer Products Business and the Services Business now conducted by
Dial, enhancing the likelihood that each will achieve appropriate market
recognition of its performance and potential. As indicated above, the Dial Board
approved the Distribution in order to eliminate the constraints on growth which
the Dial Board believes are inherent in Dial's current structure and would
2
<PAGE> 18
continue if the status quo were maintained. The Dial Board also took into
account that while, as with any public company, a number of alternative
transactions might be available to Dial, the Distribution was designed to
enhance the prospects for profitable growth of the Consumer Products Business
and the Services Business, each of which would be in a position to pursue
alternative transactions following the Distribution should their respective
boards of directors determine it to be advisable.
For the reasons stated above, the Dial Board believes that the Distribution
is in the best interests of Dial and its stockholders.
On July 8, 1996, Heine Securities Corporation ("HSC") and Michael F. Price
filed an amendment to a Schedule 13D originally filed in January, 1996, and
amended April 2, 1996. HSC and Mr. Price reported beneficial ownership on behalf
of advisory clients of approximately 8.8% of the outstanding shares of Dial
Common Stock in January 1996. Following announcement of the proposed
Distribution, HSC increased its position to approximately 9.9% of the
outstanding shares.
In the July amendment to the Schedule 13D, HSC stated that based on its
review of the Distribution, HSC has concluded that certain aspects of the
proposed transaction are not in the best interests of Dial stockholders, that
the Distribution should be modified as outlined by HSC and delayed pending
review and implementation of such modifications. The "flaws" cited by HSC were:
-- an "overleveraging" of the Company (the Consumer Products Business) and
the immediate need to issue $100 million of new equity in a dilutive
offering to strengthen the balance sheet of the Company;
-- the dependence of Dial on sales of assets subsequent to the Distribution
to maintain its investment grade debt rating whereas, if such assets
were sold before the Distribution, a different allocation of assets and
liabilities among the Services Business and the Consumer Products
Business could alleviate the need for a stock offering by the Company;
and
-- the failure to establish a "strong and independent" Board for Dial
following the Distribution.
The Dial Board has carefully considered the HSC 13D amendment and has
determined that it is in the best interests of the Dial stockholders to continue
with the Distribution, as proposed. The reasons for these conclusions include
the following:
1. The allocation of assets and liabilities between Dial and the
Company was carefully studied over a number of months by Dial's management,
outside financial and legal advisors and the Dial Board. The allocation is
designed to create two well-capitalized companies, each positioned for
profitable growth. Dial believes that it has accomplished that objective
and that neither company is "overleveraged." It is a condition of the
Distribution that the senior debt of each company be rated investment
grade. Based on discussions with the rating agencies, management believes
this condition will be fulfilled. In any event, the Dial Board does not
intend to waive such condition.
2. The primary purpose of the equity offering by the Company following
the Distribution is to fund future growth, both internally and through
acquisitions. As indicated above, the ability to grow the Consumer Products
Business has been constrained by the need to use debt rather than equity
financing. An objective of the Distribution is to free the Consumer
Products Business from the lower price earnings multiple assigned to Dial
as a whole, to permit it to raise capital using a stock assigned a price
earnings multiple closer to those assigned to its consumer products peers.
HSC has claimed that such an offering would be "dilutive" to stockholders
of the Company following the Distribution. While there is no assurance that
the anticipated price earnings multiples will be achieved, Dial has
estimated that if $100 million in Company Common Stock were sold at prices
reflecting price-earnings multiples of 18 to 20, and if the proceeds of
such offering were used only to pay down debt, earnings per share would be
reduced by approximately 2%. Moreover, the proceeds of the offering are
intended to be used for internal growth and acquisitions, so that the
intention is that the net result of the offering and the use of proceeds
will result in accretion to earnings, not dilution.
3. Contrary to the implication in the HSC filing, Dial has been
pursuing, and will continue to pursue, the sale of non-core assets. Dial is
actively pursuing the sale of the Dial Tower office building in
3
<PAGE> 19
Phoenix, Arizona, has entered into a contract to sell one of its two
corporate aircraft (with the remaining aircraft to be shared by Dial and
the Company as described in "ARRANGEMENTS BETWEEN DIAL AND THE COMPANY
RELATING TO THE DISTRIBUTION"), and has had its cruise business on the
market for some time. While Dial believes it is more important to optimize
the price and terms obtained for the sale of such assets than to place a
specific deadline on their disposition, Dial will continue an aggressive
program of identifying and disposing of non-core assets.
4. The Nominating Committee of the Dial Board consisting of three
independent directors -- Messrs. Thomas L. Gossage, Donald E. Guinn and
Jess Hay -- determined how the existing Dial Board would be divided into
two groups which would constitute the Boards of Dial and the Company
following the Distribution. The Nominating Committee (and the entire Dial
Board) believe that, as composed, each Board will consist of strong
independent directors. Moreover, each Board will include only one member of
management. The Dial Board has actively monitored, and following the
Distribution each Board will continue to actively monitor, on behalf of the
stockholders, corporate and management performance and conduct, and each
Board will seek to eliminate corporate expenditures where practicable.
RISK FACTORS
Readers should be aware of the following risk factors to which the Company
has been subject in the past, is currently and may in future be subject, and
which could materially adversely affect the performance of the Company. The
Company also cautions readers that, in addition to the historical information
included herein, this Information Statement includes certain forward-looking
statements and information that are based on management's beliefs as well as on
assumptions made by and information currently available to management. When used
in this Information Statement, the words "anticipate," "intend," "plan,"
"believe," "estimate" and similar expressions are intended to identify
forward-looking statements. Such statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions, including,
but not limited to, the following factors which could cause the Company's future
results and stockholder values to differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company.
Intense Competition in the Consumer Products Industry. The consumer
products industry in which the Company participates is intensely competitive.
Among the Company's competitors are larger companies which may have
significantly greater resources than the Company and may be willing to commit
significant resources to capturing market share from the Company, particularly
in the detergent, personal care and air freshener categories, or to protecting
their own market share from incursions by the Company.
Dependence on Domestic Markets. While a number of the Company's
competitors have diversified their revenues to include a strong international
component, the Company is currently dependent primarily on United States
markets. With respect to a number of the Company's most significant product
categories, including detergents and bar soaps, the United States markets are
mature and characterized by high household penetration. The Company's growth in
these markets will depend on increasing usage by consumers and in capturing
market share from competitors. There can be no assurance that the Company will
succeed in implementing its strategies to achieve such growth.
Continued Price Pressure. Products in the consumer products industry, and
particularly in the value segment, are subject to intense price competition. In
1996, the Company undertook a pricing initiative to lower the everyday list
price point of its PUREX detergent products by approximately 15%. Failure of the
Company's lower everyday pricing strategy for its PUREX detergent products to
increase volumes sufficient to achieve increased overall revenues and income
growth, and continued competitive and consumer pressure to lower prices,
particularly in the value segment, could have an adverse effect on the
performance of the Company.
Risk of Changes in Consumer Preferences and Demand Levels; Need to
Introduce New Products and Line Extensions. The consumer products industry is
dependent on responding to consumer demand. The Company's performance may be
adversely affected by changes in general economic conditions in the
4
<PAGE> 20
United States that reduce consumer spending. The Company's performance may also
be adversely affected by changes in consumer needs and preferences, particularly
with respect to products with antibacterial qualities and value-priced and
"ultra" concentrated detergent and cleaning products, or failure by the Company
to anticipate consumer needs and demands and successfully and efficiently to
design, produce and market new products or line extensions to meet such needs
and demands. The Company also faces the risk that its competitors may be able
successfully to develop similar products that will compete with the Company's
products. In addition, the Company faces the risk that consumer preferences and
perceptions may be influenced by adverse publicity with respect to any of the
Company's products or brand names.
Need to Achieve and Maintain Production Efficiencies; Increases in
Costs. The Company's performance may be adversely affected by a failure in the
future to achieve and to maintain cost efficiencies in manufacturing and
distribution, including through maintaining consistent trade inventory levels.
Lower than anticipated levels of plant utilization may also result in higher
costs. In addition, the Company's performance may be adversely affected by
future increases in costs associated with problems or delays in introducing new
products or line extensions on a cost effective basis, or by the availability
and pricing levels of raw materials important in the manufacture of the
Company's products, particularly fats and oils. See "BUSINESS AND
PROPERTIES -- Raw Materials." The Company's costs may also be increased in the
future by a need to incur increased costs for trade and consumer promotions and
advertising to maintain or increase market share and to introduce and establish
new products and line extensions.
Customer Pressure. The Company faces the risk that large customers may in
the future reduce inventories or seek pricing concessions or better trade terms.
The Company's performance is also dependent upon the overall retailing
environment and could be adversely affected by changes in that environment and
financial difficulties by discount retailers.
Adverse Developments in the Legal and Regulatory Environment. The Company
is subject to the risks which may be associated with future adverse changes in
laws, regulations and policies of governments, agencies and similar
organizations in the United States and elsewhere affecting antibacterial soaps
and cleaning products and consumer products generally, as well as those laws,
regulations and policies affecting taxes, environmental compliance, corporate
restructuring, product liability, and accounting standards, among other matters.
Risks Associated with International Expansion. In fiscal 1995, the
international business of the Company represented approximately 5% of total
revenues for the Company, while, as noted above, a number of the Company's
competitors derive substantially greater proportions of their revenues from
international markets. The Company has adopted a strategy to enter new markets
internationally. In implementing this strategy, the Company faces the risk of
competition from other companies which have already established global
businesses and other risks generally associated with international acquisitions,
including exposure to currency fluctuations, limitations on foreign investment,
import/export controls, nationalizations, unstable governments and legal
systems, and the additional expense and risks inherent in operating in
geographically and culturally diverse locations. There can be no assurance that
the Company will succeed in increasing its international business, and a failure
to expand internationally may have an adverse affect on the Company's future
performance.
No Prior Market for Company Common Stock. There has been no prior trading
market for Company Common Stock and there can be no assurance as to the prices
at which the Company Common Stock will trade following the Distribution. Until
the Company Common Stock is fully distributed and an orderly market develops,
the prices at which the Company Common Stock trades may fluctuate significantly.
Prices for the Company Common Stock will be determined in the trading markets
and may be influenced by many factors, including the depth and liquidity of the
market for Company Common Stock, investor perceptions of the Company and its
business, the Company's dividend policy and general economic and market
conditions. In addition, the non-inclusion of the Company Common Stock in the
Standard & Poor's 500 Index or other stock indices in which Dial Common Stock is
currently included may affect the combined trading prices of the Dial Common
Stock and Company Common Stock. There is no assurance that the combined prices
of the
5
<PAGE> 21
Company Common Stock and the Dial Common Stock following the Distribution will
be equal to or greater than the trading price of Dial Common Stock prior to the
Distribution.
Potential Stock Issuance and Acquisition Strategy. There can be no
assurance that the Company Common Stock after the Distribution will trade at a
price reflecting a price-earnings multiple closer to that of other consumer
products companies. Failure of the Company Common Stock to trade at the higher
multiple or general market conditions could make future equity issuances in a
sale of stock or stock acquisitions less desirable or feasible. There can also
be no assurance that the Company will succeed in its contemplated growth
strategy. The Company may be unable to locate attractive acquisitions at
appropriate prices and acquisitions themselves carry risks, including, but not
limited to, the absorption of management resources in seeking and successfully
consummating acquisitions, and problems and costs involved in integrating new
acquisitions into the Company's existing portfolio of branded products or into
the Company's current management, production and marketing structures.
MANNER OF EFFECTING THE DISTRIBUTION
It is expected that the Distribution will be consummated on August 15,
1996, the Distribution Date. At the time of the Distribution, share certificates
for Company Common Stock will be delivered to Dial, as Distribution Agent, for
transfer. On or as soon as practicable after the Distribution Date, the
Distribution Agent will commence mailing such share certificates to holders of
Dial Common Stock as of the close of business on August 5, 1996 (the "Record
Date") on the basis of one share of Company Common Stock and associated Right
for each share of Dial Common Stock held on the Record Date. All such shares of
Company Common Stock will be validly issued, fully paid, nonassessable and free
of preemptive rights. See "DESCRIPTION OF COMPANY CAPITAL STOCK."
Shares of Company Common Stock distributed in the Distribution will be
remitted directly to participants in the existing Dividend Reinvestment Plan of
Dial (the "Dial DRP") based upon the aggregate number of shares of Dial Common
Stock credited to such participant's account under the Dial DRP and any shares
of Dial Common Stock registered in such participant's name, as of the Record
Date, and may not be reinvested as a dividend under the Dial DRP. As an
administrative and cost-saving convenience, no certificates or scrip
representing fractional shares of Company Common Stock will be issued to
participants in the Dial DRP. An independent agent will, as soon as practicable,
aggregate and sell such fractional interests on the NYSE or otherwise at then
prevailing market prices and remit the net proceeds (after deduction of
brokerage fees) to participants entitled to fractional shares. See "-- Material
Federal Income Tax Consequences of the Distribution."
Following the Distribution Date, the Company intends to establish a
dividend reinvestment plan (the "Company DRP"). The Company will provide
information to its stockholders with respect to procedures for enrolling in the
new Company DRP.
NO HOLDER OF DIAL COMMON STOCK WILL BE REQUIRED TO PAY ANY CASH OR OTHER
CONSIDERATION FOR THE SHARES OF COMPANY COMMON STOCK TO BE RECEIVED IN THE
DISTRIBUTION OR TO SURRENDER OR EXCHANGE SHARES OF DIAL COMMON STOCK OR TO TAKE
ANY OTHER ACTION IN ORDER TO RECEIVE COMPANY COMMON STOCK. THE DISTRIBUTION WILL
NOT AFFECT THE NUMBER OF, OR THE RIGHTS ATTACHING TO, OUTSTANDING SHARES OF DIAL
COMMON STOCK.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
Dial has received a Tax Ruling from the IRS to the effect that, among other
things, the Distribution will qualify as a tax-free distribution under Section
355 of the Internal Revenue Code of 1986, as amended (the "Code") and that,
accordingly, so long as the Distribution qualifies under Section 355 of the
Code, neither Dial nor the Company will recognize any income, gain or loss with
respect to the Distribution, and Dial stockholders will not recognize any
income, gain or loss upon the receipt of Company Common Stock.
6
<PAGE> 22
A Dial stockholder's tax basis for the Dial Common Stock with respect to
which Company Common Stock is received will be apportioned between such shares
of Dial Common Stock and such shares of Company Common Stock (including any
fractional shares) in proportion to the fair market values of each on the date
of Distribution. For example, assume a stockholder owns 1,000 shares of Dial
Common Stock in which he has an adjusted tax basis of $15 per share and that, on
the Distribution Date, the mean between the high and low trading prices on the
NYSE of Dial Common Stock and the Company Common Stock are $14 and $16,
respectively. Under these assumptions, a stockholder would apportion his basis
as follows: $7 to each share of Dial Common Stock (15 X 14/30) and $8 to each
share of Company Common Stock (15 X 16/30). Such allocation must be calculated
separately for each block of shares of Dial Common Stock with respect to which
Company Common Stock is received, that is, separately for each block of shares
of Dial Common Stock that was purchased at different times or at different
costs. The holding period for such Company Common Stock received will include
the period during which such shares of Dial Common Stock were held (provided
that such Dial shares are held as a capital asset). Cash received by Dial DRP
participants with respect to fractional shares will be taxable.
Treasury regulations governing Section 355 of the Code require that each
Dial stockholder who receives Company Common Stock pursuant to the Distribution
attach a statement to his or her federal income tax return for the taxable year
in which he or she receives such Company Common Stock, which statement shows the
applicability of Section 355 of the Code to the Distribution. Dial will provide
each Dial stockholder with the information necessary to comply with this
requirement.
The Tax Ruling is based on certain factual representations and assumptions
concerning Dial and the Company. Dial is not aware of any present facts or
circumstances which should cause such representations and assumptions to be
untrue. However, certain future events not within the control of Dial or the
Company, including certain extraordinary purchases of Dial Common Stock or
Company Common Stock, could cause the Distribution not to qualify as tax free.
The Tax Sharing Agreement (as defined herein) provides that if, as a result of
any transaction, act or omission involving the Company or its subsidiaries which
is inconsistent with the tax-free status of the Distribution, including a
failure of any representation made to the IRS in the request for the Tax Ruling
concerning the Company, or an omission by the Company that causes a failure to
fulfill any condition of the Tax Ruling or any assumption on which it is based,
the Distribution fails to qualify as a tax-free spin-off under the provisions of
Section 355 of the Code, the Company will indemnify Dial for all taxes,
including penalties and interest, incurred by Dial by reason of the Distribution
being a taxable event. In order to avoid adversely affecting the intended tax
consequences of the Distribution, and incurring indemnification obligations
under the Tax Sharing Agreement, the Company intends not to (1) liquidate or
merge with any other corporation, (2) engage in certain repurchases of stock, or
(3) cease to engage in the active conduct of the trade or business conducted by
it immediately after the Distribution, unless it obtains a satisfactory opinion
of counsel or tax ruling. The Company does not expect these limitations to
significantly inhibit its financing or acquisition activities or its ability to
respond to unanticipated developments. See "ARRANGEMENTS BETWEEN DIAL AND THE
COMPANY RELATING TO THE DISTRIBUTION -- Tax Sharing Agreement."
Should the Distribution ultimately be determined not to qualify under
Section 355 of the Code, Dial stockholders would be required to recognize
ordinary dividend income upon their receipt of Company Common Stock (including
fractional shares for participants in the Dial DRP) in an amount equal to the
fair market value of such Company Common Stock on the date of the Distribution.
Dial stockholders would have a tax basis for such Company Common Stock equal to
such fair market value, and their tax basis for their Dial Common Stock would
not be affected. Dial would recognize gain upon the Distribution equal to the
excess, if any, of the fair market value of the Company Common Stock distributed
on the date of the Distribution over Dial's tax basis for such Company Common
Stock. Depending upon the market price of the Company Common Stock immediately
following the Distribution, the corporate level gain could be well in excess of
$1 billion.
Any of the conditions to the Distribution may be waived, at any time prior
to the Distribution Date, for any reason, in the sole discretion of the Dial
Board. However, Dial does not presently intend to effect the Distribution if,
prior to the Distribution Date, Dial becomes aware of circumstances that would
result in the Distribution being a taxable transaction.
7
<PAGE> 23
THE FOREGOING SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
DISTRIBUTION MAY NOT APPLY TO DIAL STOCKHOLDERS WHO ACQUIRED THEIR SHARES IN
CONNECTION WITH THE GRANT OF A SHARE OF RESTRICTED STOCK OR OTHERWISE AS
COMPENSATION, WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES, OR WHO ARE
OTHERWISE SUBJECT TO SPECIAL TREATMENT UNDER THE CODE. ALL DIAL STOCKHOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF
THE DISTRIBUTION TO THEM, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN
TAX LAWS.
LISTING AND TRADING OF COMPANY COMMON STOCK
There is not currently a public market for Company Common Stock. The
Company Common Stock has been approved for listing on the New York Stock
Exchange (the "NYSE") upon official notice of issuance. Prices at which Company
Common Stock may trade prior to the Distribution on a "when-issued" basis (see
the following paragraph) or after the Distribution cannot be predicted. Until
the Company Common Stock is fully distributed and an orderly market develops,
the prices at which trading in such stock occurs may fluctuate significantly.
The prices at which the Company Common Stock will trade will be determined by
the marketplace, and may be influenced by many factors, including, among others,
the proportional value of the Company's asset base, cash flows, profits or other
measure of value in relation to the prices of the Dial Common Stock prior to the
Distribution, the depth and liquidity of the market for such shares, investors'
perceptions of the Company and the industry in which it participates, the
Company's dividend policy, and general economic and market conditions. Such
prices may also be affected by certain provisions of the Company's Restated
Certificate of Incorporation (the "Certificate of Incorporation") and Bylaws, as
amended (the "Bylaws"), as each will be in effect following the Distribution,
that are substantially similar to existing provisions of Dial's Certificate of
Incorporation and Bylaws, as well as the Rights, which may make the acquisition
of control of the Company without the approval of the Board of Directors of the
Company (the "Company Board") more difficult than would be the case in the
absence of such provisions. See "CERTAIN ANTITAKEOVER EFFECTS OF CERTAIN
PROVISIONS OF THE CERTIFICATE OF INCORPORATION, THE BYLAWS, THE RIGHTS, AND
DELAWARE LAW."
In "when-issued" trading, contracts for the purchase and sale of shares of
stock are made prior to the issuance of such shares in the same manner as
currently issued shares, except that when-issued contracts are settled by
delivery of and payment for the shares on a date chosen by the particular
exchange on which such shares are to be listed. Ordinarily, in connection with a
distribution of stock such as described in this Information Statement, the date
fixed for settlement of when-issued contracts relating to such stock is the
fourth business day after distribution of such stock. Stockholders who may wish
to effect a when-issued trade in Company Common Stock should consult their
brokers for additional details.
Based on the number of record holders of Dial Common Stock as of July 8,
1996, the Company will initially have approximately 68,380 stockholders of
record and based on the estimated number of beneficial owners of Dial Common
Stock as of March 15, 1996, the Company will initially have approximately
103,000 record and beneficial holders. Approximately 94.8 million shares of
Company Common Stock will be outstanding based on the number of shares of Dial
Common Stock outstanding as of July 8, 1996. The transfer agent and registrar
for the Company Common Stock will be Harris Trust and Savings Bank. For certain
information regarding options to purchase Company Common Stock that are expected
to be outstanding after the Distribution, see "EXECUTIVE COMPENSATION."
Shares of Company Common Stock and associated Rights distributed to Dial
stockholders in the Distribution will be freely transferable, except for
securities received by persons who may be deemed to be "affiliates" of the
Company under the Securities Act of 1933, as amended (the "Securities Act").
Persons who may be deemed to be affiliates of the Company after the Distribution
generally include individuals or entities that control, are controlled by, or
are under common control with, the Company and may include certain officers and
directors of the Company as well as principal stockholders of the Company, if
any. Persons who are affiliates of the Company will be permitted to sell their
shares of Company Common Stock only pursuant to an effective registration
statement under the Securities Act or an exemption from the registration
requirements of the Securities Act.
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CONDITIONS AND TERMINATION
The Distribution is conditioned upon (1) certain transactions (including
transfers of certain assets and liabilities to the Company contemplated by the
Distribution Agreement) having been consummated in all material respects (see
"ARRANGEMENTS BETWEEN DIAL AND THE COMPANY RELATING TO THE
DISTRIBUTION -- Distribution Agreement"); (2) the Company Common Stock having
been approved for listing on the NYSE subject to official notice of issuance;
(3) the Registration Statement on Form 10 (the "Registration Statement") having
been filed with the Securities and Exchange Commission (the "Commission") and
having become effective and no stop order being in effect with respect thereto;
(4) all authorizations, consents, approvals and clearances of all federal,
state, local and foreign governmental agencies required to permit the valid
consummation of the transactions contemplated by the Distribution Agreement
having been obtained, without any conditions being imposed that would have a
material adverse effect, and all statutory requirements for such valid
consummation having been fulfilled; (5) Dial having provided the NYSE with prior
written notice of the Record Date as required by the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and regulations of the NYSE;
(6) no preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a government, regulatory or
administrative agency or commission, and no statute, rule, regulation or
executive order promulgated or enacted by any governmental authority, being in
effect preventing the payment of the Distribution; (7) the Distribution being
payable in accordance with applicable law; (8) the New Credit Facility (as
defined herein) being in place, with all conditions to borrowing thereunder
being satisfied and the ability to maintain in place certain financing
facilities relating to Dial and its subsidiaries or to the Company and its
subsidiaries (including through the receipt of waivers, consents or amendments),
or the refinancing thereof, on terms satisfactory to Dial and the Company; and
(9) the Company and/or its subsidiaries having been substituted for Dial in
respect of all financial support agreements for the benefit of the Consumer
Products Business with respect to which Dial, or any subsidiary that is part of
the Services Business, is the obligor. To the knowledge of the Company, the only
material governmental authorizations required to permit the valid consummation
of the transactions contemplated by the Distribution Agreement are the Tax
Ruling and the effectiveness of the Registration Statement.
In addition, the Distribution is conditioned upon (1) confirmation of
investment grade credit ratings for the senior debt of each of Dial and the
Company and (2) receipt of the Tax Ruling. Dial has received preliminary
indications from the credit-rating agencies that, following the Distribution,
the senior debt of both Dial and the Company will carry investment grade
ratings. Dial expects to receive confirmation of such ratings following the
declaration of the Distribution by the Dial Board. Any of the conditions to the
Distribution may be waived, at any time prior to the Distribution Date, for any
reason, in the sole discretion of the Dial Board. As discussed above, the Tax
Ruling has been received. Even if all the above conditions are satisfied, the
Distribution Agreement may be amended or terminated, and the Distribution may be
abandoned, at any time prior to the Distribution Date for any reason, in the
sole discretion of the Dial Board.
ARRANGEMENTS BETWEEN DIAL AND
THE COMPANY RELATING TO THE DISTRIBUTION
For the purpose of governing certain of the relationships between Dial and
the Company after the Distribution, Dial and the Company will enter into the
various agreements described below. The Distribution Agreement appears as Annex
A hereto and the Interim Services Agreement (the "Interim Services Agreement"),
the Letter of Understanding on Trademarks (the "Letter of Understanding on
Trademarks"), and the Tax Sharing Agreement (the "Tax Sharing Agreement") are
included as exhibits to the Registration Statement filed with the Commission, of
which this Information Statement is a part. The following summaries are
qualified in their entirety by reference to the agreements as filed.
DISTRIBUTION AGREEMENT
The Distribution Agreement will provide for, among other things, the
principal corporate transactions required to effect the Distribution and certain
other matters governing the relationship between Dial and the
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<PAGE> 25
Company with respect to or in consequence of the Distribution. The Distribution
Agreement also provides that, in conjunction with the Distribution, immediately
prior to the Distribution Date, Exhibitgroup will be merged with and into Dial.
The text of the Distribution Agreement is attached to this Information Statement
as Annex A.
Assets and Liabilities. Subject to certain exceptions described below, the
Distribution Agreement contains provisions designed principally to place with
the Company (1) the assets and personnel currently involved in the Consumer
Products Business and (2) financial responsibility for known and contingent or
unknown liabilities which relate directly to the Consumer Products Business as
conducted on the Distribution Date. In addition, certain assets and liabilities
of Dial described in the Distribution Agreement will be contributed to, or
assumed by, the Company. Such assets include a joint ownership interest in an
aircraft held by Dial, and such liabilities arise out of specified pension and
post-retirement plans for former employees of Armour and Company, which was
formerly a subsidiary of Dial ("Armour Retirees"): the Armour Pension Plan
Established 1952 (Inactive), the Armour Supplemental/Transfer Pension Plan, the
Armour Long-Term Disability Plan, and the Armour Retiree Medical Benefits Plan
(collectively, the "Assumed Armour Plans").
Contingent Claims and Insurance. There is pending litigation relating to
the Consumer Products Business which will be the responsibility of the Company
following the Distribution. See "BUSINESS AND PROPERTIES -- Legal Matters."
Under the Distribution Agreement, the Company will be entitled to the benefit of
insurance coverage under Dial policies, to the extent such insurance coverage
existed, for claims relating to the ownership or operation of the Consumer
Products Business by Dial prior to the Distribution Date subject to, among other
things, the obligation to reimburse Dial for increases in insurance premiums as
a result of payments for such claims.
Employee Benefits. The Distribution Agreement contains a number of
provisions for allocating between Dial and the Company the assets and
liabilities relating to current and former employees. The provisions are
generally designed to assure that Dial and its subsidiaries will be responsible
for the payment of liabilities and obligations under employee benefit plans or
otherwise, with respect to current and former employees of Dial who are not and
were not employed in connection with the Consumer Products Business (excluding
participants in the Assumed Armour Plans, the "Dial Individuals") arising prior
to or following the Distribution Date, and that the Company and its subsidiaries
will be responsible for the payment of such liabilities and obligations with
respect to Company employees and certain other individuals ("Company
Individuals"), as well as the Assumed Armour Plans, arising prior to or
following the Distribution Date.
The Distribution Agreement provides that for any current plan year Dial
will be responsible for the payment of all liabilities and obligations for
benefits with respect to Dial Individuals, and the Company will be responsible
for the payment of all liabilities and obligations for benefits with respect to
Company Individuals, under The Dial Corp Management Incentive Plan (the "Dial
MIP") and The Dial Corp Performance Unit Incentive Plan (the "Dial PUIP" and,
together with the Dial MIP, the "Dial Incentive Plans"). The outstanding awards
under the Dial Incentive Plans will be equitably adjusted where necessary to
take into account the effects of the Distribution in accordance with the terms
of the plans.
The Distribution Agreement provides that, as soon as practicable, and
effective as of the last day of the calendar month immediately preceding the
Distribution Date, or if such day is less than fourteen days before the
Distribution Date, the last day of the next preceding calendar month (the
"Cut-Off Date"), the Company will take, or will cause to be taken, all action
necessary to establish and administer one or more employee pension benefit plans
(each of which is hereinafter referred to as a "Company Plan") which will
provide benefits to Company Individuals who, immediately prior to the Cut-Off
Date, were participants in or otherwise entitled to benefits under The Dial
Companies Retirement Income Plan (the "Dial Retirement Plan") or the Dial
Companies Capital Accumulation Plan (the "Dial TRIM" and, together with the Dial
Retirement Plan, the "Joint Plans"). Dial has agreed in the Distribution
Agreement to transfer certain funds, based on formulas set forth in the
Distribution Agreement, from each of the Joint Plans into the applicable Company
Plan as soon as practicable after the Distribution Date. The Company has also
agreed to assume all liabilities and obligations of Dial under a number of
stand-alone qualified plans which relate solely to Company Individuals and Dial
has agreed to transfer the trusts funding such plans to the Company.
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<PAGE> 26
The Distribution Agreement also provides that, as of the Distribution Date,
the Company will assume or retain, or cause one or more of its subsidiaries to
assume or retain all liabilities or obligations of Dial in connection with
claims under The Dial Corp Supplemental Pension Plan, The Dial Corp Supplemental
TRIM Plan (the "Dial Supplemental TRIM Plan") and The Dial Corp Deferred
Compensation Plan (the "Dial Deferred Compensation Plan") in respect of any
Company Individual.
In connection with the Distribution, it is expected that The Dial Corp
Director's Retirement Benefit Plan (the "Dial Director's Retirement Plan") will
be amended and terminated, to change the vesting schedule and to provide that
the present value of vested accrued benefits (1) of each director who will
remain a director of Dial will be converted into restricted stock units of Dial
and will be the responsibility of Dial and (2) of each director who will become
a director of the Company will be converted into restricted stock units of the
Company and will be the responsibility of the Company; provided that, in each
case, a director may elect to receive accrued benefits in the form of cash under
the amended terms of the plan.
With respect to any director of Dial who becomes a director of the Company
and ceases to be a director of Dial, the Distribution Agreement provides that,
as of the Distribution Date, the Company or one or more of its subsidiaries will
assume or retain all liabilities and obligations in connection with claims under
The Dial Corp Deferred Compensation Plan for Directors (the "Dial Directors'
Deferred Compensation Plan") and The Dial Corp Director's Charitable Award
Program. Dial will retain all such liabilities with respect to directors of Dial
who are not directors of the Company. Within 120 days of the Distribution Date,
Dial will fund a portion of the liabilities with respect to directors assumed by
the Company, including under the Dial Director's Retirement Plan described
above. In addition, the Dial Directors' Deferred Compensation Plan will be
amended prior to the Distribution to provide that where a director has elected
to defer compensation in the form of stock units, such director's stock unit
account will be credited with a number of units representing Company Common
Stock equal to the number of stock units credited to such account as of the
Distribution Date.
The Distribution Agreement provides that, as of the Distribution Date, the
Company or one or more of its subsidiaries will assume or retain all liabilities
and obligations of the Company, Dial, or their subsidiaries in connection with
(1) claims under any of certain welfare benefit plans described in the
Distribution Agreement in respect of any Company Individual and (2) benefits of
retirees of Armour and Company under the Assumed Armour Plans. Except for the
Armour Pension Plan Established 1952 (Inactive), these liabilities are unfunded,
and Dial will transfer no cash or other funds to the Company in connection with
the Company's assumption of these liabilities.
The Distribution Agreement provides that Dial and the Company will take all
action necessary to amend the option plans of Dial and to adopt an option plan
of the Company so that adjustments can be made to outstanding Dial Options, Dial
Restricted Stock and performance-based Dial Restricted Stock awards, as defined
and described in "EXECUTIVE COMPENSATION."
The Distribution Agreement provides that Dial and the Company will take all
action necessary so that, effective as of the Distribution Date, the trustee of
the trust funding the Dial employee stock ownership plan (the "Dial ESOP") will
transfer to the trustee of a newly established Company savings plan the
aggregate account balances of Company Individuals under the Dial ESOP.
The Distribution Agreement provides that Dial and the Company will take all
action necessary so that, effective as of the Distribution Date, the Company
will establish The Dial Corporation Employee Equity Trust (the "Company Equity
Trust") to receive and hold for the benefit of Company Individuals all shares of
Company Common Stock received in the Distribution in respect of shares of Dial
Common Stock held in The Dial Corp Employee Equity Trust (the "Dial Equity
Trust"). Dial will amend the Dial Equity Trust to the extent necessary to
effectuate these actions.
In the Distribution Agreement, the Company and Dial will agree that, with
respect to individuals who, in connection with the Distribution, cease to be
employees of Dial or one of its subsidiaries and become employees of the Company
or one of its subsidiaries, such cessation will not be deemed a severance of
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<PAGE> 27
employment from either for purposes of any Dial Incentive Plans or for purposes
of any plan providing for the payment of severance, salary continuation or
similar benefits.
Except for individuals who are officers of both Dial and the Company, the
Distribution Agreement provides that officers and employees of Dial, the
Company, or either of their subsidiaries who are employed in the Consumer
Products Business immediately prior to the Distribution Date will be officers
and employees of the Company and its subsidiaries immediately following the
Distribution Date. Except as otherwise agreed by the parties to the Distribution
Agreement, effective as of the Distribution Date, (1) all officers or employees
of Dial and its subsidiaries who are acting as directors or officers of the
Company or its subsidiaries and are not employed in the business of the Company
will resign from such positions with the Company and its subsidiaries, and (2)
all officers or employees of the Company and its subsidiaries who are acting as
directors or officers of Dial and its subsidiaries and are not employed in the
business of Dial will resign from such positions with Dial and its subsidiaries.
Notwithstanding the foregoing, nothing in the Distribution Agreement will give
to any individual a right of employment, or continued employment, by the Company
or any of its subsidiaries.
Pursuant to the Distribution Agreement, the Distribution is subject to a
number of conditions which are described under "THE DISTRIBUTION -- Conditions
and Termination." Dial does not believe that the consent of any employees or
other beneficiaries under any plans maintained by Dial, in their capacity as
such, is required to consummate the transactions contemplated by the
Distribution Agreement, but reserves its right to obtain written consents from
employees with respect to the treatment of awards under various plans. The
Distribution Agreement may be amended or terminated, and the Distribution may be
abandoned, or conditions thereto may be waived, at any time prior to the
Distribution Date for any reason, in the sole discretion of the Dial Board.
INTERIM SERVICES AGREEMENT
Dial and the Company will enter into the Interim Services Agreement prior
to the Distribution Date under which each of Dial and the Company will provide
certain services on an interim basis to the other. The principal services to be
provided by Dial to the Company include: certain office and administrative
support services, tax matters services, public relations and investor relations
services, audit, tax accounting and financial reporting consulting services,
environmental consulting services, cash management services, human resources
services, insurance accounting and claims processing services, government
relations services, fleet leasing services and telecommunication services. The
principal services to be provided by the Company to Dial will be certain
employee benefits accounting, consulting and administration services and travel
accounting and other travel-related services. The services will be provided for
a term beginning on the Distribution Date and expiring on the earlier,
generally, of three years from the Distribution Date or ninety days following
the date on which the recipient of such services notifies the provider that no
further services will be required. Each of Dial and the Company will charge a
fee for services provided to the other which fee will be determined and
allocated according to methods consistent with those in place prior to the
Distribution Date, with a view toward reimbursing the provider of services for
the fully allocated direct and indirect costs of providing the service, without
any profit.
The Interim Services Agreement provides that the recipient of a service
may, at any time, request termination upon ninety days' advance notice to the
provider and, to the extent practicable, the parties will agree to an orderly
reduction or phase-out of such services. Once a provider discontinues such a
service, the provider will not be obligated to reinstate it.
AIRCRAFT JOINT OWNERSHIP AGREEMENT
Dial and the Company will enter into an Aircraft Joint Ownership Agreement
(the "Aircraft Joint Ownership Agreement") prior to the Distribution Date which
provides for a joint ownership and shared use arrangement with respect to an
aircraft currently held by Dial, with Dial retaining a two-thirds interest and
the Company a one-third interest. The Aircraft Joint Ownership Agreement will
also give the Company the right,
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<PAGE> 28
at any time, to sell its interest to Dial for the higher of book value or fair
market value, after deducting, in each case, certain lease and financing costs.
LETTER OF UNDERSTANDING ON TRADEMARKS
Dial and the Company will execute the Letter of Understanding on Trademarks
prior to the Distribution Date wherein Dial will agree to forego use of the Dial
name in connection with any consumer products business following the
Distribution.
OFFICE LEASE
Prior to the Distribution Date, an affiliate of Dial and the Company will
enter into an agreement pursuant to which the Company will lease from such
affiliate of Dial office space in Dial Tower, Phoenix, Arizona for use as the
Company's headquarters (the "New Lease"). Such office space is currently being
used by the Consumer Products Business. The New Lease provides that, upon the
consummation of the Distribution, a Dial affiliate will become the lessor, and
the Company will become the lessee, under the New Lease. Pursuant to the New
Lease, the Company will pay an annual rent at a fixed base rate of $15 per
square foot, plus taxes and operating expenses. The New Lease will have a term
commencing on the Distribution Date and ending on the tenth anniversary of the
Distribution Date, unless the New Lease expires or terminates before that date
pursuant to any of the conditions or covenants thereof, or pursuant to law. The
Company will have the right to sublease to a third party the space, in whole or
in part, for any portion, or all, of the term of the New Lease.
TAX SHARING AGREEMENT
Through the Distribution Date, the results of the operations of the
divisions and domestic corporations that constitute the Consumer Products
Business group (the "Company Group") will be included in Dial's consolidated
United States federal income tax returns. As part of the Distribution, the
Company and Dial will enter into the Tax Sharing Agreement which provides, among
other things, for the allocation among the parties thereto of federal, state,
local and foreign tax liabilities for all periods through the Distribution Date.
In general, the Tax Sharing Agreement provides that the Company will be liable
for all federal, state, local and foreign tax liabilities, including any such
liabilities resulting from the audit or other adjustment to previously filed tax
returns, which are attributable to the Company Group through the Distribution
Date, and that Dial will be responsible for all other such taxes. Though valid
as between the parties thereto, the Tax Sharing Agreement is not binding on the
IRS and does not affect the joint and several liability of the Company and Dial,
and their respective subsidiaries, to the IRS for all federal taxes of the
consolidated group relating to periods prior to the Distribution Date.
While the Tax Sharing Agreement provides that the Company should be liable
generally only for items attributable to the Company Group's operations, it also
provides that if, as a result of any transaction, act or omission involving the
Company or any of its subsidiaries, including a failure of any representation
made to the IRS in the request for the Tax Ruling concerning the Company, or an
omission by the Company that causes a failure to fulfill any condition of the
Tax Ruling or any assumption on which it is based, the Distribution fails to
qualify as a tax-free spin-off under the provisions of Section 355 of the Code,
the Company will indemnify Dial for all taxes, including penalties and interest,
incurred by Dial by reason of the Distribution being a taxable event. In the
event that the Distribution failed to so qualify, Dial would recognize gain upon
the Distribution equal to the excess, if any, of the fair market value of the
Company Common Stock distributed on the Distribution Date over Dial's tax basis
for such Company Common Stock. Depending upon the market price of the Company
Common Stock immediately following the Distribution, the corporate level gain
could be well in excess of $1 billion.
FINANCING
Prior to the Distribution, the Consumer Products Business will continue to
be financed through Dial. In connection with the Distribution, a portion of
Dial's outstanding indebtedness will effectively be transferred to the Company,
as of the Distribution Date, as follows: (1) Dial will borrow approximately $280
million under a
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<PAGE> 29
new $350 million bank credit facility (the "New Credit Facility") which will
provide that, upon effectiveness of the Distribution, the obligations under the
New Credit Facility will be assigned to, and assumed by, the Company with the
effect that Dial will have no further obligation thereunder; (2) the amount
borrowed by Dial will be used to repay outstanding third-party indebtedness of
Dial; (3) the Company will assume from Dial, and will indemnify Dial from, all
liabilities under the New Credit Facility, including the obligation to repay the
approximately $280 million initially borrowed; (4) all intercompany receivables,
payables, loans or advances between Dial and the Company will be deemed
contributed to capital and cancelled without the payment of any cash by either
Dial or the Company to the other; (5) the Company will have the sole right to
make further borrowings under the New Credit Facility; and (6) Dial will not be
obligated with respect to, and will have no right to make, any such further
borrowings under the New Credit Facility. The New Credit Facility will be
entered into pursuant to a credit agreement (the "Credit Agreement"), a copy of
the form of which has been filed as an exhibit to the Registration Statement of
which this Information Statement is a part. The following summary is qualified
in its entirety by reference to the Credit Agreement as filed.
The New Credit Facility to be assumed by the Company will provide for a
five-year revolving credit facility (provided that, annually at the Company's
request and with the consent of the banks, the five-year term may be extended
for additional one-year periods) under which borrowings can be made up to a
maximum of $350 million at any time outstanding. As described above, as of the
Distribution Date, Dial will have borrowed approximately $280 million under the
New Credit Facility and the Company will have assumed, and Dial will have been
released from, the obligation to repay the approximately $280 million borrowing.
The interest rate applicable to borrowings under the New Credit Facility
will be, at the Company's option, indexed to (1) the Base Rate (as defined in
the Credit Agreement), or (2) the Adjusted Eurodollar Rate (as defined in the
Credit Agreement), plus an appropriate spread over such rate during the period
of the New Credit Facility. The New Credit Facility also provides for a facility
fee on the $350 million commitment. Such spread and fee will change moderately
should the Company's debt ratings change. There are also administration and
agents' fees.
The Credit Agreement contains certain restrictive covenants applicable to
the Company that (1) limit its ability, or the ability of its subsidiaries, to
create or suffer to exist certain liens and (2) restrict the ability of the
Company, or its material subsidiaries, to merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of all or a substantial portion of
its or their assets, or enter into any partnership, joint venture, syndicate,
pool or other combination, unless no event of default has occurred or would
result therefrom and, in the case of a merger or consolidation, the Company is
the surviving entity or the surviving entity assumes all of the Company's
obligations under the Credit Agreement in a manner satisfactory to the requisite
lenders. The financial covenants of the Credit Agreement require that (1) the
Company not permit at any time its Net Worth (as defined in the Credit
Agreement) to be less than the sum of (a) 80% of its Net Worth as of the
Distribution Date, (b) 25% of Net Income (as defined in the Credit Agreement)
from the Distribution Date to the then most recent twenty-six week period or
fiscal year end and (c) all Additions to Capital (as defined in the Credit
Agreement) from the Distribution Date to the then most recent twenty-six week
period or fiscal year end, and (2) the ratio of Funded Debt (as defined in the
Credit Agreement) to EBITDA (as defined in the Credit Agreement) on a rolling
four quarter basis may not exceed 3.00 to 1.00 at any time.
In conjunction with the indebtedness which will be transferred to the
Company, Dial will also transfer an interest rate swap agreement in the notional
amount of $65 million which will convert the floating interest rate on $65
million borrowed under the New Credit Facility into a fixed interest rate (a
pay-fixed swap). The interest rate swap agreement, which has a fixed pay rate of
8.87% and a current receive rate of 5.66%, expires December 1997.
The Company has participated in Dial's financing plan of selling
receivables to accelerate cash flow. Receivables sold under this plan amounted
to $76.7 million at December 30, 1995, $91 million at December 31, 1994 and $97
million at December 25, 1993. The proceeds from the sale of such receivables
have been remitted to Dial. The Company expects to establish a comparable
receivables financing plan which will be used in conjunction with commercial
paper and the New Credit Facility to provide the working capital required by the
Company following the Distribution.
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BUSINESS AND PROPERTIES
OVERVIEW
The Company is a leading producer and marketer of personal care, detergent,
household and shelf-stable food products. The Company reported annual revenues
for fiscal 1995 of approximately $1.4 billion and operating income before
restructuring charges and asset write-downs of $111.9 million. For the
thirteen-week period ended March 30, 1996, revenues for the Company were $352.4
million and operating income was $36.3 million, and for the thirteen-week period
ended June 29, 1996, revenues and operating income were $353.8 million and $42.6
million, respectively. As described herein, the Company maintains a significant
market presence in soaps, laundry detergents and household products, with such
well-known household brands as DIAL and LIQUID DIAL soaps, PUREX detergents and
RENUZIT air fresheners. As described herein, in 1995, the Company was the
leading seller of antibacterial bar and liquid soaps in the United States
measured by unit sales, and the third largest seller of bar soaps generally in
the United States measured by unit sales (where in each case, unit sales of soap
are measured by ounces sold). The Company was the third largest seller of
detergents, and the leader in the growing value segment of the detergent market,
in the United States measured by standard cases sold in 1995. In the domestic
market for air freshener products, the Company was the second largest seller
measured by dollar retail sales in 1995. Soaps, detergent and air freshener
products represented more than 70% of revenues and more than 75% of operating
income before restructuring charges and asset write-downs for the Company in
1995. With respect to the Company, references to years and periods are to fiscal
years and periods, and with respect to comparative industry data, the years are
calendar years.
The Company operates production facilities and maintains sales offices in
the United States, Canada, Mexico, Guatemala and England and also conducts
business in certain other foreign countries. The Company's corporate
headquarters and certain division and subsidiary activities are located in
Phoenix, Arizona.
With the exception of 1995, the Company has a solid record of steadily
increasing revenues and operating income: from $1.2 billion in revenues and
$110.6 million in operating income in 1991 to $1.5 billion in revenues and $160
million in operating income in 1994. Revenues in 1995 decreased 10% from 1994
due to actions by the Company to reduce trade customers' inventories, in part
through reduced promotional programs, across most product lines. Discontinuation
of low margin products also contributed to the shortfall. The Company took
$135.6 million of restructuring charges and asset write-downs in 1995 to provide
for a business-based reorganization through plant closings, workforce reductions
and correction of certain product lines. The charges resulted in an operating
loss of $23.7 million for 1995, versus operating income of $160 million in 1994.
The actions taken in 1995 were intended to permit the Company to pursue its
business strategies described below, by focusing on growing the strong core
brands and continuing to introduce line extensions and new products while
achieving substantial cost efficiencies in manufacturing and distribution.
Revenues for the thirteen weeks ended March 30, 1996 were $352.4 million, an
increase of $14.5 million or 4.3% over revenues in the comparable period in
1995. Operating income for the first fiscal quarter of 1996 was $36.3 million,
an increase of $2.5 million or 7.5% over the first fiscal quarter of 1995.
BUSINESS STRATEGY
The Company originated as the grocery products division of Armour and
Company, which entered the soap business in the 1800's and founded the DIAL
brand in 1948. The introduction of antibacterial ingredients using
hexachlorophene for "around-the-clock" protection in 1948 made DIAL soap the
first antibacterial soap marketed to retail consumers. The Company has been
expanded in recent years to include PUREX household and laundry products, 20
MULE TEAM and BORAXO household and industrial specialty products, BRECK hair
care products, RENUZIT air fresheners and other consumer products.
The Company's strategy will be to continue to seek growth in revenues and
income from its strong core brands, as well as by expanding existing lines and
introducing new products, to cut costs, to develop its international business
and further to expand its business through strategic acquisitions.
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Build on Strong Core Brands. The soap, detergent and air freshener
categories in which the Company operates represented approximately $1.9 billion,
$4.1 billion and $700 million, respectively, in total domestic retail sales in
1995. While each category has demonstrated relatively slow growth in the United
States on both a unit and a dollar sales basis, due largely to high household
penetration and low population growth, as described below, the Company believes
that there is opportunity for growth from its core brand products, principally
through increased usage by consumers and enhanced market share. The strategy for
growth varies by product category. As described below, together, DIAL and LIQUID
DIAL soaps are the leading antibacterial soap products in the United States
measured by unit sales. The Company believes that the bacteria-killing
capability of its soap products will be increasingly important to the consumer.
In the detergent area, as described below, the Company competes primarily in the
value segment of the category and expects this segment to continue to be an
important and growing part of the category. In the air freshener category, the
Company has built the RENUZIT market share from 1993 when it was acquired from
S.C. Johnson & Son, Inc. ("S.C. Johnson"), to approximately 18% for the latest
twelve-month period, measured by retail sales, with the category increasing in
size during such period.
Line Extensions and New Products. The Company intends to continue its
consistent strategy of developing extensions of, or enhancements to, its
existing products, as well as developing new products, while at the same time
phasing out low-margin products from its portfolio. The Company has a record of
innovation, as well as a demonstrated ability to respond quickly to developments
within each product category. In the personal care category, the Company was the
first to market an antibacterial soap for retail consumption. As described
below, the Company led the rapid growth in the liquid soap segment of the
personal care category and has established a meaningful presence in the recently
invigorated body wash segment. In the detergent category, the Company has
demonstrated an ability to enhance existing products and extend product lines
while continuing to aim at the value segment of the market. Line extensions and
new products are particularly important in the household products category where
sales of such products represented 14% of household products revenues in 1995.
During 1995, the Company also began to extend the use of its core brand
names across product categories. For example, the strength of the DIAL brand
with its antibacterial function was extended to dishwashing detergents and
surface kitchen cleaners with the introduction of DIAL Dishwashing Detergent &
Antibacterial Hand Cleanser and DIAL Antibacterial Kitchen Cleaner in 1995.
Similarly, the PUREX, BRILLO and PARSONS' brand names have been extended to a
new value-oriented line of household cleaning products including BRILLO Scrub &
Scour Liquid Cleanser, PUREX Carpet Cleaner, PUREX All Purpose Cleaner, PUREX
Disinfectant Spray, PUREX All-Clean and PARSONS' Glass Cleaner.
Reduce Costs. The Company pursued a cost-cutting strategy in 1995. A major
restructuring was undertaken in 1995 which involved the planned closing of six
manufacturing plants, correction of certain product lines through the
elimination of slow-selling, obsolete or non-strategic stock-keeping units
("SKUs"), and a reduction in workforce of approximately 15% (approximately 700
people), aimed at increasing efficiency and lowering costs. As of June 30, 1996,
four plants had been closed, two of which had been sold, and 555 of the 700
people had been terminated. The remaining actions are expected to be completed
by the end of 1996. Future earnings are expected to benefit from efficiencies
resulting from streamlining and consolidating product lines for the remaining
facilities through increased volume and reduced costs. The Company expects to
pursue further cost savings opportunities, including continued efforts to
flatten production and distribution schedules by maintaining consistent trade
inventory levels, to consolidate its distribution facilities and to lower
packaging and distribution costs through increased production of concentrated
detergent products, and direct manufacturing of body wash in the soap category.
International Markets and Opportunities. The Company's products are
currently sold in approximately forty countries throughout the world. The
Company's most significant foreign businesses are in Canada, Puerto Rico, Mexico
and Guatemala, with manufacturing facilities in Mexico, the United Kingdom and
Guatemala. The Company believes that the DIAL and PUREX brands are recognized in
many parts of the world and that, as described below, the international personal
care, detergent and household products categories represent a meaningful growth
opportunity for the Company. To date, the Company has not aggressively marketed
its products internationally.
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<PAGE> 32
The Company is pursuing a three-part strategy to expand its core business
internationally. First, the Company has repatriated its brands in most
countries, by either replacing license arrangements with sales by the Company
through distributors or terminating such license arrangements. Second, the
Company has sought to increase its sales in Canada, Puerto Rico and Mexico,
where the Company has established businesses, by increasing those markets'
awareness of its products and carrying out its domestic strategies for those
products in the international markets. Finally, the Company continuously
evaluates additional markets for possible expansion where it is believed that
the Company's products could be successfully marketed to consumers. The Company
believes that it can be most effective in entering new markets globally by
forming ventures or other alliances with, or by acquiring, small to medium-sized
local businesses which either have established distribution channels which can
be utilized for Company products or offer a technical capability which can be
expanded to include the production of Company products. Consistent with this
strategy, in 1995 the Company acquired ISC International Ltd., a manufacturer of
translucent-based soaps, located in Guatemala. The Company is actively pursuing
expansion in the Pacific rim and elsewhere through joint ventures and strategic
alliances, acquisitions and internal growth.
Although the Company is strongly committed to expanding its international
business, several of the Company's competitors are substantially larger than the
Company, have substantially greater resources than the Company and have already
established global businesses. Accordingly, there can be no assurance that the
Company's international strategy will be successful.
Acquisitions. For the long term, the key strategic goal of the Company is
to achieve significant growth in order to compete more effectively with its
larger competitors. Following the Distribution, it is believed that the share
price of the Company as an independent entity will better reflect the market
value of the Consumer Products Business, with a price/earnings multiple closer
to that of other consumer product companies. With a better valued stock, the
Company believes that it will be better positioned to raise capital and to make
acquisitions that will complement and build upon its existing product brands.
Consistent with this strategy of expansion through internal growth and
acquisition, the Company currently intends to issue at least $100 million in
additional equity within six to twelve months following the Distribution Date,
in the form of the sale of stock in the public or private equity markets. In
addition to, or in lieu of, a sale of stock, the Company may seek to make an
acquisition or acquisitions utilizing stock.
PRODUCTS
The Company is currently organized into four major categories, as follows:
Personal Care. The Company has a consistent record of innovation and
leadership in the personal care category. The Company was the first to market an
antibacterial soap for retail consumption. In 1987, with the introduction of
LIQUID DIAL, the Company led the rapid growth in what had been a relatively
small, slow-growth liquid soap segment of the category. Similarly in 1993, the
Company recognized the growth potential of the body wash segment of the
business, introducing MOISTURIZING DIAL PLUS BODY WASH. The liquid soap and body
wash segments represented approximately 20% of the overall category in 1995, up
from approximately 15% in 1994.
In 1994, the Company introduced the DIAL FOR KIDS line, which achieved
revenues of $18 million in 1995. In 1995, the Company introduced three new
product lines: the DIAL ULTRA SKIN CARE line, NATURE'S ACCENTS, a complete line
of skin care products, and KAYA, a line of aromatherapy hair care products
utilizing all natural botanical extracts. The DIAL ULTRA SKIN CARE line is a
unique combination of antibacterial efficacy and skin conditioning ingredients,
and includes bar soap, liquid soap and body wash. The NATURE'S ACCENTS line is
designed to capitalize on consumer interest in more indulgent bath products,
through colorful graphics, upscale fragrances, and brilliant product hues.
NATURE'S ACCENTS features translucent soap, shower and bath gel, foaming face
wash, hand and body lotion and bath crystals. The KAYA line is intended to
compete with expensive salon products but is offered through traditional retail
outlets at more affordable prices. Several of the DIAL ULTRA SKIN CARE and
NATURE'S ACCENTS products are produced in Guatemala by ISC International Ltd.
which was acquired by Dial in July 1995.
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<PAGE> 33
Personal care products are currently marketed under a number of brand
names, including DIAL, MOISTURIZING DIAL PLUS, MOUNTAIN FRESH DIAL, DIAL FOR
KIDS, TONE, NATURE'S ACCENTS, PURE & NATURAL, SPIRIT and FELS NAPTHA soaps,
LIQUID DIAL antibacterial soap, BORAXO powdered hand soap and DIAL antibacterial
antiperspirant. The Company also markets the BRECK line of hair care products,
including hairsprays, shampoos and hair conditioners. Together, DIAL bar soap
and LIQUID DIAL soap are the nation's leading antibacterial soaps measured by
unit sales. SPIRIT bar soap, a three-in-one combination bar that cleans,
moisturizes and provides deodorant protection, is distributed nationally, as is
TONE, a complexion and moisturizing bar with cocoa butter. The Company also
markets hotel amenity products, including personal-size bar soaps under the
DIAL, TONE and PURE & NATURAL labels, and industrial specialties products,
including hand soaps sold under the BORAXO and 20 MULE TEAM trademarks, hand and
body cleansers for the medical market and hand cleaners for the automotive
market.
The Company intends to continue to pursue a combined strategy in the
personal care category of growing its core brands based on product quality and
functionality and expanding those businesses to meet trends in the personal care
markets. In addition, while the Company's personal care business has not
benefitted significantly from its hair care and underarm deodorant products in
the past, the Company believes that there is a meaningful opportunity for growth
in those segments.
Cost cutting will also be part of the strategy for the personal care
products category. The Company manufactures all of its bar and liquid soap
products, while currently outsourcing its body wash products. The bar soap plant
in Aurora, Illinois is viewed in the industry as a low-cost production facility.
In connection with the plant closings and job eliminations announced by the
Company in 1995, two plants, and 320 jobs, relate to the personal care category.
These steps, combined with manufacturing and distribution efficiencies from the
continued efforts to maintain consistent trade inventory levels, are expected to
contribute to the profitability of this category.
Detergent. In the detergent category, the Company has pursued a strategy
of growth in the value segment of the detergent market while keeping pace with
the trends toward concentrated "ultra" detergents, as well as liquid detergents.
The Company believes that "ultra" detergent products account for approximately
90% of powder detergent cases and 65% of liquid detergent cases sold in the
United States in 1995, whereas concentrated ultra detergents did not exist in
the United States prior to 1990. The Company also believes that liquid
detergents now account for approximately 40% of the category in the United
States, based on standard cases sold, up from approximately 30% in 1990. The
Company expects that the overall detergent category will, consistent with its 5%
growth in 1995 and growth rate of approximately 3% year-to-date for the first
five months of 1996, experience slow growth in the United States consistent with
household formation on a national basis. However, the Company also believes
there is opportunity for growth by the Company in this category because the
Company competes primarily in the value segment, which has grown at a higher
rate than the overall category, increasing 8% in 1995 and 9% year-to-date.
Further, the Company is pursuing growth through initiatives to improve market
share, such as the PUREX pricing strategy, line extensions and new value-priced
products described below.
The Company acquired the PUREX brand with the acquisition of Purex
Corporation in 1985 at a time when the Company believes that Purex was the fifth
largest producer and marketer of detergents in the United States, based on
standard cases sold. The Company currently is the third largest producer and
marketer of detergents in the United States, on the same basis, and the leader
in the value segment. Detergent products include brands such as PUREX liquid and
powder laundry detergents, TREND liquid and powder detergents, DUTCH and INSTANT
FELS powder detergents, and PUREX BABY SOFT powder and liquid detergents.
Nationally, PUREX was the third largest brand in the detergent category for 1995
and the second largest brand year-to-date, in each case measured by standard
cases sold. The Company believes that the value segment currently accounts for
approximately 35% to 40% of detergent volume domestically, based on standard
cases sold. The Company believes that its ability to compete in this segment
depends both on product formulations and functionality and on its pricing
strategies. In 1996, the Company introduced a Color Shield feature for its PUREX
detergents, the only value detergent offering this feature. In 1996, the Company
also undertook a pricing initiative designed to lower the every day list price
point of PUREX detergent products by
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<PAGE> 34
approximately 15%. While this initiative will reduce revenues and income per
unit of sales, the objective is to increase volume to the point where, together
with improved margins from reduced costs, overall revenue and income growth is
achieved.
The Company plans to pursue logical line extensions and new products as
opportunities arise. In 1995, the PUREX BABY SOFT powder and liquid line of
detergents -- which is designed to create a lower-priced alternative to the
principal brands in the baby clothes detergent market -- was introduced on a
national basis. TREND liquid detergent was expanded nationally in 1995.
Cost control is also very important in the detergent category because it
enables the Company to maintain lower prices on its products. The Company
manufactures the majority of its detergent products, but procures packaging from
third-party sources. As described above, the Company is closing six
manufacturing facilities, one of which produced predominantly detergent
products, and eliminating 93 jobs relating to that plant. As a result,
substantial cost savings are expected as production volume is absorbed by the
three remaining facilities which manufacture detergents. The Company is
exploring logistical efficiencies in the area of distribution by means of a move
to fewer distribution centers, reduction of SKUs, increasing full truck
shipments and other means, and also may achieve cost savings as the continuing
trend toward concentrated detergent products permits lower packaging and
distribution costs.
Household. The household products category is a dynamic part of the
Company's business. The Company established a major presence in this category
with the acquisition of RENUZIT air fresheners in 1993. The Company has built
market share in the air freshener category from 1993 to 18.1% for the latest
twelve-month period, measured by retail sales, with the category increasing in
size during such period. In 1995, the Company reorganized its product lines for
reporting purposes. The laundry category was reclassified as detergents only,
and all non-detergent products were reclassified from the laundry category to
the household products category. The household products category currently
includes brands such as RENUZIT air fresheners, including RENUZIT Adjustable,
RENUZIT Aerosol, RENUZIT ROOMMATE and RENUZIT LONGLAST ELECTRIC, BRILLO soap
pads, SNO BOL toilet bowl cleaners, CAMEO powdered cleanser, PARSONS' and
BO-BEEP ammonia, BRUCE floor care products, PUREX TOSS 'N SOFT sheet fabric
softeners, PUREX RINSE 'N SOFT and STA PUF liquid fabric softeners, MAGIC sizing
and starch, STA-FLO starch and 20 MULE TEAM BORAX laundry additive.
Line extensions and new, or enhanced forms of, products are particularly
important in the household products category as the Company and its competitors
seek enhanced market share on the basis of product features and price. Line
extensions, new products, and products with enhanced features represented 14% of
household product revenues in 1995. The Company introduced RENUZIT NEW NATURALS,
a line of premium aerosol air fresheners, in 1995, and in 1996 introduced
RENUZIT AROMASENSE scented candles. At the same time, the Company is
continuously reviewing its product portfolio in order to phase-out low margin
products. In 1995, the Company eliminated PUREX liquid bleach from its household
products category, which accounted for $15 million in revenues in 1994.
During 1995, the Company also began to extend the use of its brand names
across product categories, with the use of the DIAL brand name in conjunction
with dishwashing detergents and surface cleaners with antibacterial ingredients,
as well as with the use of the PUREX, BRILLO and PARSONS' names in connection
with a new line of household cleaning products directed at the value segment of
the household products market.
The Company pursues a several part cost-containment strategy in the
household products category. As one part of this strategy, while the Company
performs its own development work internally, it relies on external research and
development by suppliers for many product and packaging developments, thereby
minimizing non-applied research and development expenditures. In addition, while
the household division manufactures BRILLO and certain other household products,
it contracts for the manufacture of all air freshener products, and a number of
other products, thereby reducing capital expenditures relating to manufacturing
and packaging for new products. This strategy provides flexibility to meet the
frequently changing needs and tastes of consumers, particularly with respect to
air freshener products.
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Food. In the shelf-stable food category, the Company markets ARMOUR STAR
canned meats, and CREAM corn starch. ARMOUR STAR products maintain a strong
market position in the canned meats category currently ranking second in the
canned meat market based on unit sales in the United States. ARMOUR STAR Vienna
sausage, potted meat and sliced dried beef lead their respective segments on a
national basis, based on unit sales in 1995, and ARMOUR STAR canned meats
accounted for approximately one-sixth of all canned meat sales in the United
States, based on unit sales in 1995. The Company's strategy with respect to the
shelf-stable food category will be to increase penetration geographically, to
revitalize core products and to introduce new products. In 1995, the Company
began a program of redesigning packaging for a number of products, including its
ARMOUR STAR chili. During 1995, the food category introduced two product line
extensions, ULTIMATE CHILI LOVERS' CHILI and DELI STYLE salads, and a new
product line, ARMOUR STAR BIG ONES MEAT STICKS.
MARKETING
Customers. The Company sells to thousands of customers, primarily in the
United States, including supermarkets, drug stores, wholesalers, mass
merchandisers, membership club stores, distributors and other outlets. Wal-Mart
Stores Inc. was the largest customer of the Company in fiscal 1995, accounting
for approximately 11% of net sales. The Company's payment terms to customers
range from thirty to sixty days.
Sales. The Company's customers are served by a national sales organization
of approximately 320 employees organized into four individual sales regions plus
specialized sales operations which sell to large mass merchandisers, membership
club stores, chain drug stores, vending and military customers. In addition,
customers are served by a national broker sales organization and a national
retail merchandising organization. The Company's sales representatives focus
their efforts both on sales of products to the Company's direct customers, as
well as on designing and executing programs to ensure sales to ultimate product
consumers. Programs directed at ultimate product consumers provide combinations
of in-store merchandising, price reductions and discounts, and include
cooperative advertising efforts.
Advertising and Promotion. The Company expends a significant portion of
its revenues for the advertising and promotion of its products. In the last
three years, over $1 billion has been spent for advertising and promotional
activities. The Company believes that such expenditures are necessary to
maintain and increase market share in an industry highly dependent on product
image and quality, consumer support and consumer trends. The Company spent $341
million in 1995, or 25% of 1995 net sales, for these purposes and the Company
plans to spend approximately the same percentage of net sales for these purposes
in 1996. Advertising typically constitutes 15% to 20% of these expenditures.
Distribution. Products are shipped by the Company from seven warehouses
located at domestic manufacturing facilities and seventeen regional warehouses.
Regional warehouses are operated by third parties except for one warehouse owned
and operated by the Company. Total distribution space at regional warehouses is
approximately 2,000,000 square feet and at warehouses located at manufacturing
facilities is approximately 530,000 square feet. The Company uses principally
outside carriers to transport its products.
In addition, in April 1996, the Company established two large distribution
centers in St. Louis, Missouri, and Allentown, Pennsylvania, for the
distribution of detergent products. Shipments from these centers and, to some
extent, from detergent manufacturing facilities are in lots of twenty-eight
pallets and 44,000 pounds. Efficiencies and lower costs are attained because
full pallets are shipped without warehouse personnel picking and assembling
product for shipment. In addition, these large distribution centers use the Chep
Mark 55, a four-way pallet, which can be turned in any direction and packed in a
more compact manner, saving space on the trailers and reducing damage in
shipment.
The Company began a program of continuous, automatic replenishment of
certain of its trade customers' inventories in May 1990. The primary objective
of the Continuous Replenishment Program is to improve service to customers and
reduce costs by shortening the order-to-delivery pipeline, i.e., by anticipating
customer needs based on historical sales, by shipping the product just before
those needs arise, and by eliminating redundancy, errors, and interruption
throughout the replenishment process. This is accomplished by using information
systems to track customer inventory levels and the movement of each product at
the
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customers' distribution centers, and to manage the customers' warehouse
inventories. Since its inception, the Company has expanded the Continuous
Replenishment Program and sales under the Continuous Replenishment Program
currently account for approximately 15% of the Company's net sales.
SUPPLIERS
As described above, the Company relies on a number of third parties for
research and development, manufacturing, and packaging. Many of the Company's
arrangements with respect to new products contain limited mutual exclusivity
provisions designed to permit both the Company and the supplier to profit from
the product enhancement or innovation before the Company uses an alternative
supplier or the supplier sells to one of the Company's competitors. Most
outsourcing arrangements can be terminated without material penalties on an
average of three months' notice.
RAW MATERIALS
The Company believes that ample sources of raw materials are generally
available with respect to all of its major products. Paper, fats and oils,
detergent chemicals and meat are the raw materials which generally have the most
significant impact on the Company's costs. Generally, the Company purchases such
raw materials from a variety of suppliers in the United States. While the
Company believes that it can respond to price increases with respect to the raw
materials used in its business, rapid increases in the prices of fats and oils
could have a short-term adverse impact on results. In addition, there is a
single supplier, Ciba-Geigy Corporation, for the antibacterial agent currently
used in certain liquid DIAL products, including LIQUID DIAL soap. Although the
Company has an adequate supply of this ingredient for its current and
foreseeable needs, and the supplier is expected to increase output later this
year, a disruption in this supply could also have a short-term adverse impact on
results.
COMPETITION
The Company competes primarily on the basis of brand equity, brand
advertising, customer service, product performance and product quality at
competitive retail price points. The Company's operations must compete with
numerous well-established local, regional, national and international companies,
some of which are very large and act aggressively in obtaining and defending
their products' market shares and brands. The principal competitors of the
Company in the personal care category are P&G, Colgate and Lever Brothers Co., a
division of Unilever United States Inc. ("Lever"); in detergent are P&G, Lever,
Colgate, Church & Dwight Co., Inc. and USA Detergents; in household are S.C.
Johnson, Clorox, P&G, Colgate and Reckitt & Colman Inc.; and in food are Hormel
Foods Corp., American Home Food Products Inc., and the Libby's business of
Nestle.
RESEARCH AND DEVELOPMENT
The Company conducts research and development at its facility in
Scottsdale, Arizona. As described above, the Company engages primarily in
applied research and development, relying on outside sources for general
research and development activities. Internal research and development is
directed at improving existing products and developing new products as well as
providing technical assistance and support to the Company's manufacturing
activities. Approximately 130 employees are engaged in research and development.
The Company's research and development expenditures totalled approximately $14.9
million, $15.3 million and $12.5 million for 1995, 1994 and 1993, respectively.
The Company relies on industry and other sources, various attitude and
usage studies prepared by independent marketing firms on behalf of the Company
and direct sales information from its largest customers to identify consumer
needs and attempt to anticipate shifts in consumer preferences to allow the
Company to develop line extensions and new products to meet changing demands.
The Company's marketing and product development groups and research and
development laboratories work together to redesign and reformulate existing
products and to develop new products.
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PATENTS AND TRADEMARKS
United States patents are currently granted for a term of seventeen years
from the date a patent application is filed. As of the Distribution Date, the
Company will own a number of patents currently owned by Dial which will give the
Company competitive advantages in the marketplace. The Company will also have
the right, pursuant to license agreements, to operate under certain third-party
patents covering specific technologies.
United States trademark registrations are for a term of ten years,
renewable every ten years so long as the trademarks are used in the regular
course of trade. As of the Distribution Date, the Company will maintain a
portfolio of trademarks, currently maintained by Dial, representing substantial
goodwill in the businesses using the marks.
Many trademarks used by the Consumer Products Business, including DIAL,
PURE & NATURAL, ARMOUR STAR, TONE, TREET, PARSONS, BRUCE, CAMEO, PUREX, DUTCH,
RENUZIT, BRILLO, SNO BOL, BRECK, TREND, PUREX TOSS 'N SOFT, PUREX STA PUF, PUREX
RINSE 'N SOFT, 20 MULE TEAM, BORAXO, and MAGIC, have substantial importance and
value. Use of the ARMOUR and ARMOUR STAR trademarks by the Company will be
permitted by a perpetual license granted by ConAgra, Inc. and use of the 20 MULE
TEAM trademark is permitted by a perpetual license granted by U.S. Borax, Inc.
GOVERNMENT REGULATION
Substantially all of the operations of the Company are or may become
subject to various federal laws and agency regulations. These include the
Federal Food, Drug, and Cosmetic Act, which is administered by the Food and Drug
Administration (the "FDA") and regulates the manufacturing, labeling, and sale
of the Company's over-the-counter drug and cosmetic products; the Federal
Insecticide, Fungicide, and Rodenticide Act and the Toxic Substances Control
Act, which are administered by the Environmental Protection Agency (the "EPA")
and regulate the Company's disinfectant products and all the substances used in
the manufacturing of its products, respectively; the Federal Meat Inspection
Act, which is administered by the Department of Agriculture and regulates the
Company's meat products; the Federal Hazardous Substances Act, which is
administered by the Consumer Product Safety Commission, and regulates the
labeling of the Company's household products; and the Fair Packaging and
Labeling Act, which is administered by the Federal Trade Commission (FTC), and
regulates the packaging and labeling of all the Company's products. The
Company's products are also subject to regulation by various state laws and
state regulatory agencies. In addition, the Company is subject to similar laws
and regulations imposed by foreign jurisdictions.
Federal, state, local and foreign environmental compliance may from time to
time require changes in product formulation or packaging. Such changes have not
had, and are not expected to have, a material effect on revenues, capital
expenditures or earnings of the Company.
The FDA's regulation of most of the over-the-counter drug products in the
United States (such as the Dial antibacterial products), has remained in a state
of flux since the mid 1970s, and many final rules regarding such products have
not been issued, and may not be issued for many years. In addition, the FTC
continually monitors the advertising practices of consumer products companies
with respect to claims made relating to product functionality and efficacy. In
that respect, the Company's advertising includes, among other things, claims as
to the superior antibacterial function of its DIAL and LIQUID DIAL soap
products. The Company believes it has substantial scientific data supporting
such claims, and has fully responded to an FTC request for such information. One
or more regulatory agencies may, nonetheless, determine to challenge the
Company's claims in this, or some other, respect in the future.
ENVIRONMENTAL
The Company is subject to the following United States environmental laws:
Clean Air Act, Comprehensive Environmental Response, Compensation, and Liability
Act, Emergency Planning and Community Right-to-Know Act, Federal Water Pollution
Control Act, Oil Pollution Act of 1990, Resource Conservation and
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<PAGE> 38
Recovery Act, Safe Drinking Water Act and Toxic Substances Control Act, all as
amended. The Company is subject to the United States environmental regulations
promulgated under these acts, and also is subject to state and local
environmental regulations which have their foundation in the foregoing United
States environmental laws. The Company is further subject to the environmental
laws of Canada, Mexico, Guatemala, and Great Britain.
As is the case with many companies, the Company faces exposure to actual or
potential claims and lawsuits involving environmental matters. Although there
are a number of pending environmental disputes involving the Consumer Products
Business, the Company has not suffered, and does not anticipate that it will
suffer, a material adverse effect as a result of any past, current or pending
action by any governmental agency or other party, or as a result of compliance
with such environmental laws and regulations.
EMPLOYEES
As of December 30, 1995, the Company employed approximately 4,000
individuals, of whom approximately 1,700 were covered by collective bargaining
agreements. Dial announced in the third fiscal quarter of 1995 that it intended
to close six plants engaged in the Consumer Products Business which would result
in a reduction in workforce of approximately 700 employees. Of these employees,
555 had been terminated by June 30, 1996.
The Company believes that relations with its employees are satisfactory and
that collective bargaining agreements expiring in 1996 will be renegotiated in
the ordinary course without an adverse effect on the Company's operations.
As of the Distribution Date, the Company will have approximately 725
employees in its corporate office, providing management, financial and
accounting, tax, administrative, legal and other services to its operating
units.
PROPERTIES
The Company's headquarters will occupy approximately 119,000 square feet
leased from an affiliate of Dial in a building in Phoenix, Arizona, owned by a
joint venture between two subsidiaries of Dial. As of the Distribution Date, the
Company will own a 200,000 square foot facility in Scottsdale, Arizona,
currently owned by Dial, which is used to conduct much of the Company's
research, technical, administrative and other activities.
The Company operates nine plants in the United States, one plant in Mexico,
one plant in Guatemala, one plant in England, and sales and administration
offices in Puerto Rico, Canada and the United Kingdom. Eleven of the plants are
owned; one plant and three of the offices are leased. Principal manufacturing
plants are as follows:
<TABLE>
<CAPTION>
LOCATION SQ. FEET PRODUCTS MANUFACTURED
- ------------------------- -------- -----------------------------------------------
<S> <C> <C>
Aurora, Illinois......... 451,000 Bar Soaps
Fort Madison, Iowa....... 447,000 Canned Meats, Microwaveable Meals
St. Louis, Missouri...... 272,400 Liquid and Dry Laundry Detergents, Fabric
Softeners
Bristol, Pennsylvania.... 261,800 Dry Detergents
Hazelton, Pennsylvania... 214,470 Dial Liquid Soaps, Liquid Detergents, Ammonia,
Scouring Pads, Fabric Softeners
London, Ohio............. 140,000 Scouring Pads and Fabric Softeners
Guatemala................ 100,000 Translucent Bar Soaps
</TABLE>
Management believes that the facilities of the Company in the aggregate are
adequate and suitable for their purposes and that capacity is sufficient for
current needs.
23
<PAGE> 39
LEGAL MATTERS
As is the case with many companies, the Company faces exposure to actual or
potential claims and lawsuits involving its business and assets. There is
pending litigation relating to the Consumer Products Business which will be the
responsibility of the Company following the Distribution. The litigation
consists of ordinary, routine litigation incidental to the Consumer Products
Business, including general and product liability and workers compensation
claims. Under the Distribution Agreement, the Company will be entitled to the
benefit of insurance coverage under Dial policies, to the extent such insurance
coverage existed, for claims relating to the ownership or operation of the
Consumer Products Business by Dial prior to the Distribution Date subject to,
among other things, the obligation to reimburse Dial for increases in insurance
premiums as a result of payments for such claims. Most of the claims are covered
by insurance. The Company believes that any liabilities resulting from such
claims after taking into account amounts already provided for, but exclusive of
any potential insurance recovery, should not have a material adverse effect on
the Company's financial position or results of operations.
24
<PAGE> 40
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
SELECTED COMBINED FINANCIAL AND OTHER DATA
The following table presents selected financial statement data derived from
the Company's Combined Financial Statements. The selected balance sheet data as
of December 30, 1995 and December 31, 1994 and income statement data for each of
the three fiscal years in the period ended December 30, 1995 have been derived
from the audited combined financial statements of the Company which are included
elsewhere herein. The income statement data for each of the two fiscal years
ended December 26, 1992 and December 28, 1991 and the thirteen weeks ended March
30, 1996 and April 1, 1995 and the balance sheet data as of March 30, 1996 and
April 1, 1995 and December 25, 1993, December 26, 1992 and December 28, 1991
were derived from the unaudited combined financial statements of the Company. In
the opinion of management, such unaudited financial statements include all
material adjustments necessary to present fairly the information set forth
therein and were prepared as if the Company were a separate entity for all
periods presented. The following data should be read in conjunction with the
Company's Combined Financial Statements and the notes thereto, "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and
the other financial information included elsewhere herein. Per share data for
net income (loss) and dividends have not been presented, as the Company was not
a publicly held company during the periods presented. For earnings data for the
thirteen and twenty-six week periods ended June 29, 1996 and July 1, 1995, see
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- Recent Developments."
<TABLE>
<CAPTION>
THIRTEEN
WEEKS ENDED FISCAL YEAR ENDED
-------------------- ------------------------------------------------------------------------
MARCH 30, APRIL 1, DECEMBER 30, DECEMBER 31, DECEMBER 25, DECEMBER 26, DECEMBER 28,
1996 1995 1995 1994 1993 1992 1991
--------- -------- ------------ ------------ ------------ ------------ ------------
(000 OMITTED, EXCEPT NUMBER OF EMPLOYEES)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net sales................. $352,392 $337,862 $1,365,290 $1,511,362 $1,420,173 $1,275,447 $1,196,499
Operating income
(loss)(1)............... 36,342 33,802 (23,656) 160,008 139,213 118,616 110,605
Income (loss) before
cumulative effect of
change in accounting
principle (1)........... 19,608 18,247 (27,489) 91,072 84,181 74,501 71,411
Net income (loss)(1)(2)... 19,608 18,247 (27,489) 91,072 84,181 31,068 71,411
FINANCIAL POSITION AT
PERIOD END
Total assets.............. $806,032 $842,608 $ 798,405 $ 887,373 $ 857,516 $ 685,266 $ 662,195
Total debt (3)............ 309 3,726 3,320 3,510 6,063 31,502 31,130
Working capital........... 45,469 84,671 45,663 56,188 (10,177) (50,790) (22,434)
Dial investment and
advances................ 499,244 575,472 496,230 555,703 502,199 350,799 410,759
OTHER DATA
EBITDA, as defined (4).... $ 43,672 $ 42,860 $ 141,062 $ 194,918 $ 172,796 $ 150,158 $ 139,933
Depreciation and
amortization............ 7,330 9,058 29,118 34,910 33,583 31,542 29,328
Total capital
expenditures............ 8,034 4,692 27,214 37,471 40,605 45,508 53,398
Number of employees (end
of period).............. 4,002 3,886 3,985 3,995 4,000 4,197 4,279
Number of employees
(average)............... 4,001 3,943 3,992 3,983 4,121 4,186 4,296
</TABLE>
- ---------------
(1) After deducting restructuring charges and asset write-downs of $135,600,000
($82,100,000 after-tax) in the third fiscal quarter of 1995. Also, after
deducting $6,800,000 ($4,310,000 after-tax) in 1992 for increased ongoing
expenses (above 1991 levels) resulting from the adoption of Statement of
Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," effective as of January 1,
1992.
(2) Cumulative effect of change in accounting principle amounted to $43,433,000
in 1992 from initial application of SFAS No. 106.
(3) Total debt includes the current portion of long-term debt and short-term
bank loans.
(4) EBITDA is defined as net income (loss) before interest expense, income
taxes, depreciation and amortization, restructuring charges and asset
write-downs and cumulative effect of change in accounting principle. EBITDA
data is presented as a measure of the Company's ability to service debt,
fund capital expenditures and finance growth. Such data should not be
considered an alternative to net income, operating income, cash flows from
operations or other operating or liquidity performance measures prescribed
by generally accepted accounting principles. Cash expenditures for various
long-term assets, interest expense and income taxes have been, and will be,
incurred which are not reflected in the EBITDA presentations.
25
<PAGE> 41
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited Pro Forma Combined Balance Sheet of the Company as
of March 30, 1996 and the unaudited Pro Forma Statements of Combined Income for
the year ended December 30, 1995 and the thirteen weeks ended March 30, 1996 and
April 1, 1995 have been prepared to reflect the following transactions and
adjustments: (1) the transfer from Dial to the Company of certain liabilities
and related deferred income tax assets of the Assumed Armour Plans, along with
the related expenses arising from such plans; (2) to record assumption of debt
and an interest rate swap agreement and reflect estimated interest expense; (3)
to record additional expenses for aircraft services and public company costs
expected to be incurred to operate the Company on a stand-alone basis in excess
of the historical charges by Dial; (4) to adjust state income taxes to a
separate return basis; (5) to reclassify expenses of receivables sales program;
(6) to record income tax impact of pro forma income statement adjustments; (7)
to record Dial investment and advances as a capital contribution; and (8) to
record the Company's portion of estimated transaction costs of the Distribution.
The unaudited Pro Forma Combined Balance Sheet has been prepared as if such
transactions occurred on March 30, 1996; the unaudited Pro Forma Statements of
Combined Income have been prepared as if such transactions occurred on the first
day of the periods presented. The following data should be read in conjunction
with the Company's Combined Financial Statements and the notes thereto,
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" and the other financial information included elsewhere herein.
26
<PAGE> 42
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
PRO FORMA COMBINED BALANCE SHEET
(UNAUDITED)
MARCH 30, 1996
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(000 OMITTED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 4,326 $ $ 4,326
Receivables......................................... 39,537 39,537
Inventories......................................... 159,270 159,270
Deferred income taxes............................... 31,585 573(A) 32,158
Other current assets................................ 5,272 5,272
-------- -------- --------
Total current assets........................ 239,990 573 240,563
Property and equipment................................ 204,139 204,139
Deferred income taxes................................. 28,765 63,642(A) 92,407
Intangibles........................................... 332,566 332,566
Other assets.......................................... 572 572
-------- -------- --------
$ 806,032 $ 64,215 $ 870,247
======== ======== ========
LIABILITIES AND EQUITY
Current liabilities:
Short-term bank loans............................... $ 309 $ (309)(B) $ --
Trade accounts payable.............................. 87,685 87,685
Income taxes payable................................ 14,736 14,736
Other current liabilities........................... 91,791 3,748(A) 99,539
4,000(I)
-------- -------- --------
Total current liabilities................... 194,521 7,439 201,960
Long-term debt........................................ 280,000(B) 280,000
Pension and other benefits............................ 105,024 142,255(A) 247,279
Other liabilities..................................... 7,243 7,243
Dial investment and advances.......................... 499,244 (81,788)(A) --
(279,691)(B)
(137,765)(G)
Stockholders' equity.................................. 137,765(G) 133,765
(4,000)(I)
-------- -------- --------
$ 806,032 $ 64,215 $ 870,247
======== ======== ========
</TABLE>
27
<PAGE> 43
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
PRO FORMA STATEMENT OF COMBINED INCOME
(UNAUDITED)
FISCAL YEAR ENDED DECEMBER 30, 1995
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(000 OMITTED, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales............................................ $1,365,290 $ $1,365,290
---------- --------- -------
Costs and expenses:
Cost of products sold.............................. 709,176 709,176
Selling, general and administrative expenses....... 544,170 5,793(C) 547,640
(2,323)(E)
Restructuring charges and asset write-downs........ 135,600 135,600
---------- --------- -------
1,388,946 3,470 1,392,416
---------- --------- -------
Operating income (loss)............................ (23,656) (3,470) (27,126)
---------- --------- -------
Interest expense..................................... 23,360 (21,821)(B) 20,425
18,886(B)
Other expense........................................ -- 9,823(A) 12,146
2,323(E)
---------- --------- -------
23,360 9,211 32,571
---------- --------- -------
Income (loss) before income taxes.................... (47,016) (12,681) (59,697)
Income taxes (benefit)............................... (19,527) 1,242(D) (23,539)
(5,254)(F)
---------- --------- -------
NET INCOME (LOSS).................................... $ (27,489) $ (8,669) $ (36,158)
========== ========= =======
INCOME (LOSS) PER COMMON SHARE....................... $ (0.42)
=======
DIAL COMMON SHARES OUTSTANDING (H)................... 86,865
=======
</TABLE>
28
<PAGE> 44
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
PRO FORMA STATEMENT OF COMBINED INCOME
(UNAUDITED)
THIRTEEN WEEKS ENDED MARCH 30, 1996
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ---------
(000 OMITTED, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales................................................ $ 352,392 $ $ 352,392
-------- -------- -------
Costs and expenses:
Cost of products sold.................................. 173,350 173,350
Selling, general and administrative expenses........... 142,700 1,350(C) 143,866
(184)(E)
-------- -------- -------
316,050 1,166 317,216
-------- -------- -------
Operating income....................................... 36,342 (1,166) 35,176
-------- -------- -------
Interest expense......................................... 4,603 (4,180)(B) 5,145
4,722(B)
Other expense............................................ -- 2,100(A) 2,284
184(E)
-------- -------- -------
4,603 2,826 7,429
-------- -------- -------
Income before income taxes............................... 31,739 (3,992) 27,747
Income taxes............................................. 12,131 200(D) 10,744
(1,587)(F)
-------- -------- -------
NET INCOME............................................... $ 19,608 $ (2,605) $ 17,003
======== ======== =======
INCOME PER COMMON SHARE.................................. $ 0.19
=======
DIAL COMMON SHARES OUTSTANDING (H)....................... 88,277
=======
</TABLE>
29
<PAGE> 45
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
PRO FORMA STATEMENT OF COMBINED INCOME
(UNAUDITED)
THIRTEEN WEEKS ENDED APRIL 1, 1995
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(000 OMITTED, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales............................................. $ 337,862 $ $ 337,862
-------- -------- -------
Costs and expenses:
Cost of products sold............................... 172,887 172,887
Selling, general and administrative expenses........ 131,173 1,448(C) 131,504
(1,117)(E)
-------- -------- -------
304,060 331 304,391
-------- -------- -------
Operating income.................................... 33,802 (331) 33,471
-------- -------- -------
Interest expense...................................... 4,343 (4,173)(B) 4,892
4,722(B)
Other expenses........................................ -- 2,802(A) 3,919
1,117(E)
-------- -------- -------
4,343 4,468 8,811
-------- -------- -------
Income before income taxes............................ 29,459 (4,799) 24,660
Income taxes.......................................... 11,212 225(D) 9,534
(1,903)(F)
-------- -------- -------
NET INCOME............................................ $ 18,247 $ (3,121) $ 15,126
======== ======== =======
INCOME PER COMMON SHARE............................... $ 0.18
=======
DIAL COMMON SHARES OUTSTANDING (H).................... 86,108
=======
</TABLE>
30
<PAGE> 46
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
A. To record the transfer of certain liabilities and related deferred income tax
assets of the Assumed Armour Plans along with the related expenses arising
from such plans.
B. To eliminate interest expense charged to the Company by Dial, record the
assumption from Dial of $280 million of debt and an interest rate swap
agreement in the notional amount of $65 million, and reflect estimated
interest expense at an assumed effective rate of 6% on the debt plus an
estimated annual cost of the swap of $2,086,000. The assumed effective rate
of 6% is the short-term interest rate, based on current applicable rates,
which would be required to be paid under the New Credit Facility. The
interest rate swap agreement, which expires December 1997, has a fixed pay
rate of 8.87% and a current receive rate of 5.66%.
C. To record additional expenses for aircraft services and public company costs
expected to be incurred to operate the Company on a stand-alone basis,
including costs associated with corporate administrative services such as
tax, treasury, risk management and insurance, legal, director fees and
expenses and stockholder relations. Such estimated incremental public company
costs are based on amounts incurred by Dial for similar functions. Additional
expenses for aircraft services are based on prior usage and the expected
costs under the Aircraft Joint Ownership Agreement.
D. To adjust state income taxes to a separate return basis.
E To reclassify expenses of receivables sales program.
F. To record the income tax impact of the above pro forma income statement
adjustments.
G. To record Dial investment and advances as a capital contribution.
H. The weighted average number of outstanding common shares is based on Dial's
weighted average number of outstanding common shares which exclude average
shares held by the Dial Equity Trust of 5,976,333 shares for the thirteen
weeks ended March 30, 1996, 6,397,685 shares for the year ended December 31,
1995 and 6,671,465 shares for the thirteen weeks ended April 1, 1995. Shares
held by the Dial Equity Trust are not considered outstanding for net income
per share calculations until the shares are released from the Dial Equity
Trust.
I. To record estimated transaction costs of the Distribution, representing 25%
of estimated total transaction costs, allocated to the Company by Dial.
31
<PAGE> 47
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of
operations of the business of the Company. The discussion should be read in
conjunction with the historical and pro forma financial statements and notes
thereto included elsewhere in this Information Statement.
As described in "BUSINESS AND PROPERTIES," the Company produces and markets
personal care, detergent, household and shelf-stable food products which
constitute a single business segment. The Company's net sales by major product
category for 1995, 1994, and 1993 were as follows (amounts in millions).
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Personal Care................................... $ 401 30% $ 443 29% $ 472 33%
Detergent....................................... 386 28% 440 29% 388 27%
Household....................................... 318 23% 329 22% 270 19%
Food............................................ 196 14% 239 16% 235 17%
International and Other......................... 64 5% 60 4% 55 4%
------ ---- ------ ---- ------ ----
$1,365 100% $1,511 100% $1,420 100%
====== ==== ====== ==== ====== ====
</TABLE>
RESTRUCTURING CHARGES AND ASSET WRITE-DOWNS
In the third fiscal quarter of 1995, the Company recorded restructuring
charges and asset write-downs totaling $135.6 million to provide for a
business-based reorganization through plant closings, workforce reductions and
correction of certain product lines. The charges provided for the closing of six
plants (Clearing, Illinois; Burlington, Iowa; Auburndale, Florida; Omaha,
Nebraska; Memphis, Tennessee; and New Berlin, Wisconsin) and the reduction of
the workforce by 700 people, substantially all of whom were or are based in the
plants to be closed.
As of June 30, 1996, four plants had been closed, two of which have been
sold, and 555 of the 700 employees had been terminated. The remaining actions
are expected to be completed by the end of 1996. Future earnings are expected to
benefit from efficiencies resulting from streamlining and consolidating product
lines for the remaining facilities through increased volume and reduced costs.
In conjunction with the restructuring, the recoverability of intangibles
was evaluated based on current projections of the undiscounted operating income
of the related business unit. Based upon these evaluations, the carrying amounts
of certain intangibles, primarily trademarks, were determined to be impaired and
were written off as part of the third quarter charge.
Other asset write-downs primarily represent the excess of the net book
value of plants and equipment to be disposed of over estimated net recoveries.
Severance pay and benefits and exit costs, primarily facility closure
costs, have been recognized in accordance with Emerging Issues Task Force Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." Remaining severance and exit cost reserves of $24.8 million at
December 30, 1995 are believed to be adequate and are expected to be paid
utilizing cash flow from operating activities. Severance and exit costs paid and
charged to such reserves in the first fiscal quarter of 1996 amounted to $1.1
million.
RESULTS OF OPERATIONS
Thirteen weeks ended March 30, 1996 vs. Thirteen weeks ended April 1,
1995. Revenues for the thirteen weeks ended March 30, 1996 were $352.4 million,
an increase of $14.5 million or 4% over revenues in the comparable period in
1995. Operating income for the first fiscal quarter of 1996 was $36.3 million,
an increase
32
<PAGE> 48
of $2.5 million or 8% over the first fiscal quarter of 1995. Overall, operating
margins improved to 10.3% in the first fiscal quarter of 1996 from 10% in the
first fiscal quarter of 1995.
Revenues for personal care products for the first fiscal quarter of 1996
increased by $11 million over the first fiscal quarter of 1995 due to increases
in consumer consumption of DIAL soaps and to revenues from new products such as
NATURE'S ACCENTS and the DIAL ULTRA SKIN CARE line. However, operating income
declined by $0.3 million in the first fiscal quarter of 1996 largely due to
higher advertising and marketing expenses to support the Dial brands.
Detergent revenues increased by $0.5 million in the first fiscal quarter of
1996 over the comparable period in 1995, with increases in PUREX and TREND
liquid detergents overcoming decreases in dry detergents. Operating income for
the first fiscal quarter of 1996 was $3.2 million higher than in the first
fiscal quarter of 1995 due to lower manufacturing costs and transportation and
delivery expenses.
Revenues and operating income for household products were down by $3.9
million and $0.4 million, respectively, in the first fiscal quarter of 1996
compared to the first fiscal quarter of 1995 due to softness in the fabric care
business and the discontinuation of liquid bleach and private label products,
which were partially offset by strong growth in RENUZIT sales.
Revenues for the food category were up $5.2 million in the first fiscal
quarter of 1996 as compared to the first fiscal quarter of 1995 principally due
to the 1995 inventory reduction program which resulted in lower revenues in
1995. The decline in operating income of $0.7 million in the first fiscal
quarter of 1996 was largely due to higher meat costs in 1996.
Revenues for the Company's international business in the first fiscal
quarter of 1996 increased by $1.7 million and operating income increased by $0.7
million over the comparable period in 1995. The revenue increase was due to
increased exports to Canada and the revenues from ISC International Ltd. in
Guatemala which was acquired in the third fiscal quarter of 1995. Operating
income improved in the first fiscal quarter of 1996 due to the sale of European
subsidiaries which had low operating margins in 1995 and the sale of higher
margin products in Canada in 1996.
1995 vs. 1994. Revenues of $1.4 billion in 1995 were down $146.1 million
or 10% from those of 1994. The revenue decrease was due to the completion of the
1995 program to effect reductions of trade customers' inventories. This
initiative, coupled with more rapid replenishment as consumers purchase the
products off the shelf, addresses the retailers' increased emphasis on efficient
consumer response. In addition, a sales shortfall of $54.1 million in the fourth
fiscal quarter of 1995 resulted from a softness in orders due to the effects of
reduced promotional programs in connection with the 1995 trade inventory
reduction initiative, as well as certain orders received late in the fourth
fiscal quarter that were deferred and shipped in the first quarter of 1996 to
achieve efficiency in the distribution network. A planned reduction of
microwavable meals volume and other discontinued low margin products also
contributed to the variance. The Company reported an operating loss of $23.7
million for the year, after deducting $135.6 million of restructuring charges
and asset write-downs, versus operating income of $160 million in 1994.
Excluding these charges, operating income for 1995 was $111.9 million. On the
same basis, overall operating margins declined to 8.2% in 1995 from 10.6% in
1994, as the effects of the volume shortfall discussed above more than offset
the initial cost savings from the inventory reduction program. The following
discussion of operating results excludes the effects of the restructuring
charges and asset write-downs.
During the third fiscal quarter of 1995, the Company's product lines were
reorganized for reporting purposes. All non-detergent products were reclassified
from laundry products to household products. The remainder of laundry products
became the detergent category. All prior years' results have been restated to
give effect to the reclassifications.
1995 revenues and operating income for personal care products declined
$42.2 million and $9.3 million, respectively, from those of 1994. Sales volumes
in 1995 were down as a result of the 1995 trade inventory reduction program.
Loss in marketplace consumption of DIAL bar soap and other brands in 1995 was
partially offset by growth in DIAL FOR KIDS and revenues from new products such
as the DIAL ULTRA SKIN CARE line. Operating income for 1995 decreased from the
effects of the aforementioned revenue decrease.
33
<PAGE> 49
Revenues for detergent products in 1995 decreased $53.7 million from 1994
levels, due to volume softness in dry detergents and the effects of the 1995
inventory reduction program. Operating income for 1995 declined $17 million from
1994 results due to reduced sales volume and increased promotion and
distribution expenses.
1995 revenues for household products decreased $10.9 million from those of
1994. Increased revenues from DIAL Dishwashing Detergent and new RENUZIT
products in 1995 were offset by the impact of the trade inventory reduction
initiative and volume softness in fabric softeners which faced intensive price
and promotion competition during 1995. Operating income decreased $18.1 million
in 1995 from 1994, due to the effects of the revenue decrease and heavy
promotional expenses for DIAL Dishwashing Detergent and RENUZIT products.
For food products, 1995 revenues declined $43.1 million from those of 1994,
due to a phasing-out of microwavable meals, lower sales of chili and stew and
the trade inventory reduction program. Operating income in 1995 decreased $6.3
million from that of 1994 from the effects of the aforementioned lower sales
volumes, offset partially by lower manufacturing costs.
1995 revenues and operating income for the Company's international business
improved $3.8 million and $2.6 million, respectively, over those of 1994. These
increases were due principally to an acquisition made early in the third quarter
of 1995, offset partially by the effect of devaluation of the Mexican peso in
the first quarter of 1995. In addition, exports to Canada increased in 1995, as
PUREX Heavy Duty Liquid Detergent became the leading liquid laundry detergent in
three Canadian provinces and DIAL soap market share reached all-time highs in
British Columbia.
The increase in interest expense of $10.9 million in 1995 compared to 1994
is due to higher interest-bearing advances to the Company from Dial and
increases in the prime lending rate.
Excluding the effects of the restructuring charges and asset write-downs,
the 1995 effective tax rate was 38.4% as compared to 38.3% in 1994.
1994 vs. 1993. 1994 revenues of $1.5 billion were up $91.2 million or 6%
from those of 1993. Operating income in 1994 of $160 million was up $20.8
million or 15% over 1993 amounts. Overall, operating margins improved to 10.6%
from 9.8% in 1993.
The revenues and operating income of personal care products in 1994 were
down $28.7 million and $2.3 million, respectively, as sales of bar and liquid
soaps to distributors were down from 1993 levels. However, Dial's market share
for bar soap in 1994 was up from that of 1993, reflecting continuing high
consumer acceptance of these products. Lower raw material costs and marketing
expenses partially offset the effect of the volume declines in 1994.
The revenues and operating income of detergent products were up $52 million
and $4.1 million, respectively, in 1994 compared to 1993 levels, led by strong
volume increases in liquid detergents due to changing consumer preferences which
more than offset volume decreases in dry detergents.
For household products, revenues and operating income in 1994 were up $59
million and $11.2 million, respectively, from 1993 levels. The RENUZIT product
line, acquired in May of 1993, accounted for most of the improvement in 1994.
Other household product lines contributed to the increased operating income in
1994 with lower costs and expenses, while ammonia products followed industry
trends with lower sales and operating income.
Revenues and operating income for food products in 1994 were up $4.2
million and $2.4 million, respectively, from 1993 levels. Higher revenue and
operating income due to increased sales volume of most food categories for 1994
more than offset reductions in the microwavable category. Lower raw material and
other production costs contributed to the increase in 1994 operating income.
1994 revenues for the Company's international business were up $4.7 million
from 1993 levels, driven by higher volume in Mexico, Canada and Germany. A $5.4
million increase in operating results in 1994 was due mostly to eliminating
unprofitable operations, plus contributions from the higher revenue.
Interest expense increased by $6.6 million in 1994 from 1993 levels due to
higher interest-bearing advances to the Company from Dial and increases in the
prime lending rate, offset partially by a $2.9 million decrease in interest
resulting from the reduction of third-party indebtedness.
34
<PAGE> 50
The effective income tax rate in 1994 was 38.3% as compared to 36.9% in
1993. The 1993 rate was reduced for the effect on deferred tax assets of a 1%
increase in the United States corporate income tax rate which was signed into
law on August 10, 1993.
RECENT DEVELOPMENTS
In connection with the release by Dial of revenue and income information
for the thirteen and twenty-six week periods ended June 29, 1996, Dial announced
certain information concerning the Company for such periods. Set forth below is
a summary of the unaudited revenue and income information of the Company for the
thirteen week and twenty-six week periods ended June 29, 1996 and July 1, 1995.
<TABLE>
<CAPTION>
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
---------------------------- ----------------------------
JUNE 29, 1996 JULY 1, 1995 JUNE 29, 1996 JULY 1, 1995
------------- ------------ ------------- ------------
(000 OMITTED)
<S> <C> <C> <C> <C>
Net sales....................................... $ 353,758 $363,893 $ 706,150 $701,755
Operating income................................ 42,633 51,134 78,975 84,936
Net income...................................... 23,289 27,868 42,897 46,115
</TABLE>
The Company's revenues and operating income for the second quarter
reflected solid performance even though reported revenues declined 2.8% and
operating income was lower by 16.6%. On a comparative basis, revenues for the
second quarter of 1996 would have been higher than last year by approximately
4.5% after adjusting for the effects of everyday low pricing for detergents
effective April 1, 1996, the discontinuation of certain product lines, and the
sale of a foreign business. The decline in reported operating income was largely
due to reinstituted product advertising expenditures intended to build brand
equity and, to a much lesser degree, an unfavorable sales mix among certain
products. For the twenty-six weeks ended June 30, 1996, the Company's operating
income declined 7% on an increase in reported revenues of slightly less than 1%.
LIQUIDITY AND CAPITAL RESOURCES
Over the past three fiscal years the Company has generated cash from
operating activities totaling $265 million which has been used to finance
capital expenditures (net of asset dispositions) of $96 million, two cash
acquisitions totaling $103 million and debt repayments and remittances to Dial
of $63 million.
Cash flows from operating activities were $90.3 million in 1995, $85.2
million in 1994 and $89.5 million in 1993 while capital expenditures for these
years were $27.2 million, $37.5 million and $40.6 million, respectively.
The Company has participated in Dial's financing plan of selling
receivables to accelerate cash flow. Receivables sold under this plan amounted
to $76.7 million at December 30, 1995, $91 million at December 31, 1994 and $97
million at December 25, 1993. The proceeds from the sale of such receivables
have been remitted to Dial. The Company expects to establish a comparable
receivables financing plan subsequent to the Distribution.
For the foreseeable future, the Company believes that cash generated by
operating activities will be sufficient to finance its capital expenditures, pay
dividends on the Company Common Stock and make scheduled repayments of the debt
assumed from Dial in the Distribution. In addition, as of the Distribution Date,
the Company will have available approximately $70 million of unused credit
facility available for general corporate purposes under the New Credit Facility.
See "FINANCING." In conjunction with the strategy of the Company to expand its
business through internal growth and acquisitions, it is also the Company's
current intention to issue at least $100 million in additional equity within six
to twelve months following the Distribution in the form of a sale of stock for
cash. In addition to, or in lieu of, a sale of stock, the Company may seek to
make an acquisition using stock. However, such a sale or transaction is
dependent upon stock market conditions, the economy, the Company's performance,
acquisition prospects and other factors. As a result there can be no assurance
when or in what form such a sale of stock or acquisition will occur.
As of March 30, 1996, on a pro forma basis, the Company will have deferred
income tax assets totaling $124.6 million, which the Company believes will be
fully realizable in future years. The realization of such
35
<PAGE> 51
benefits will require average annual taxable income over the next fifteen years
of $24 million. The Company's average United States annual taxable income,
exclusive of non-deductible goodwill amortization, but after deducting
restructuring charges and asset write-downs, over the past three years has been
approximately $81 million ($126 million before deducting restructuring charges
and asset write-downs). In addition, approximately $87 million of such deferred
tax assets relate to pension and other benefits which will become deductible for
income tax purposes as they are paid, which will occur over many years.
The Company is subject to various environmental laws and regulations of the
United States as well as of the states and other countries in whose
jurisdictions the Company has or had operations. As is the case with many
companies, the Company faces exposure to actual or potential claims and lawsuits
involving environmental matters. The Company believes that any liabilities
resulting therefrom, after taking into consideration amounts already provided
for, but exclusive of any potential insurance recoveries, should not have a
material adverse effect on its financial position or results of operations.
BUSINESS OUTLOOK
The challenge for the Company in 1996 and the years ahead is to continue to
grow revenues while continuing to reduce costs and expenses. Revenue growth must
come from the protection of existing brands through advertising and sales
promotions, line extensions and product enhancements, the introduction of new
products, and acquisitions. A reduction of costs and expenses is expected to
result from the plant closings, employee reductions, and distribution facility
consolidation announced in 1995. Management of the Company believes that revenue
growth and cost efficiencies as shown by past results will continue in the
future.
36
<PAGE> 52
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS OF THE COMPANY
Effective as of the Distribution Date, the Company Board is expected to
consist of the individuals named below. Following the Distribution, directors
for each class will be elected at the annual meeting of stockholders held in the
year in which the term for such class expires and will serve thereafter for
three years. The expiration of the initial term of each director is indicated
below.
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND
NAME AGE PRINCIPAL BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
- ------------------- --- ------------------------------------------------------------------
<S> <C> <C>
Thomas L. Gossage 62 Chairman and Chief Executive Officer and a director of Hercules
Incorporated, a worldwide producer of chemicals and related
products. Also a director of Alliant Techsystems Inc. and
Wilmington Trust Corporation.
Dennis C. Stanfill 69 President of the Dennis Stanfill Company, a private investment and
venture capital firm, and prior thereto was Senior Advisor, Credit
Lyonnais, a global bank; Co-Chairman and Co-Chief Executive
Officer of Metro-Goldwyn-Mayer Inc.; Chairman or President of
AME, Inc., a video post production company; and President and a
principal stockholder of Stanfill Bowen & Co., Inc., a private
investment and venture capital firm.
Joe T. Ford 59 Chairman and Chief Executive Officer and a director of ALLTEL
Corporation, a telecommunications and information services
company.
A. Thomas Young 58 Formerly Executive Vice President of Lockheed Martin Corporation
and prior thereto was President and Chief Operating Officer of
Martin Marietta Corporation. Also a director of Cooper Industries,
Inc., Potomac Electric Power Co., B.F. Goodrich, Science
Applications International Corp. and Memotec Communications Inc.
Donald E. Guinn 63 Chairman Emeritus of Pacific Telesis Group, a telecommunications
holding company. Also a director of Pacific Mutual Life Insurance
Company and BankAmerica Corporation and its subsidiary, Bank of
America, NT&SA.
Malcolm Jozoff 57 As of the Distribution Date, Chairman, President and Chief
Executive Officer of the Company. Prior to the Distribution, Mr.
Jozoff is serving as President and Chief Executive Officer of the
Consumer Products Business, positions to which he was appointed in
May 1996. From October 1993 to September 1995, he was Chairman and
Chief Executive Officer of Lenox, Inc., a manufacturer of consumer
durables. From 1967 to 1992, he was employed by The Procter &
Gamble Company, a manufacturer of consumer products where, in
1990, he achieved the positions of President -- Health Care Sector
and Corporate Group Vice President. Mr. Jozoff is also a director
of The Columbia Gas System, Inc. and ChemTrak Incorporated. In
1993, in connection with a civil proceeding brought by the
Commission, Mr. Jozoff consented, without admitting or denying the
allegations, to the entry of an order enjoining him from violating
Section 10(b) of the Exchange Act.
</TABLE>
The Certificate of Incorporation and Bylaws provide that the Company Board
will be divided into three classes of directors, with the classes to be as
nearly equal in number as possible, and that, of the initial directors of the
Company following the Distribution as identified above, one-third will continue
to serve until the 1997 Annual Meeting of Stockholders, one-third will continue
to serve until the 1998 Annual Meeting of Stockholders and one-third will
continue to serve until the 1999 Annual Meeting of Stockholders. Of the initial
directors, Thomas L. Gossage and Dennis C. Stanfill will serve until the 1997
Annual Meeting of Stockholders; Joe T. Ford and A. Thomas Young will serve until
the 1998 Annual Meeting of Stockholders; and Donald E. Guinn and Malcolm Jozoff
will serve until the 1999 Annual Meeting of Stockholders. Starting
37
<PAGE> 53
with the 1997 Annual Meeting of Stockholders, one class of directors will be
elected each year for a three-year term. The Bylaws provide that annual meetings
of stockholders shall be held on the first Tuesday in May or such other date as
may be fixed by resolution of the Company Board. The first annual meeting for
which proxies will be solicited from stockholders is expected to be held in May,
1997. See "CERTAIN ANTITAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE CERTIFICATE
OF INCORPORATION, THE BYLAWS, THE RIGHTS, AND DELAWARE LAW -- Classified Board
of Directors."
CERTAIN BOARD COMMITTEES
The Company Board is expected to establish an Executive Committee, an Audit
Committee, an Executive Compensation Committee (the "Compensation Committee")
and a Nominating Committee. The duties and membership of such committees will be
established at the initial meeting of the Company Board following the
Distribution.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information concerning the
individuals who are expected to serve as executive officers of the Company
immediately following the Distribution. Each such individual will be elected to
the indicated office with the Company in anticipation of the Distribution and
will serve at the pleasure of the Company Board. Those individuals who have been
officers and/or employees of Dial will relinquish such positions in connection
with the Distribution.
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND
PRINCIPAL BUSINESS AFFILIATIONS DURING PAST FIVE
NAME AGE YEARS
- ------------------------------ ----- -----------------------------------------------------
<S> <C> <C>
Malcolm Jozoff................ 57 Chairman, President and Chief Executive Officer of
the Company. Prior to the Distribution, Mr. Jozoff is
serving as President and Chief Executive Officer of
the Consumer Products Business, positions to which he
was appointed in May 1996. Mr. Jozoff's background
and other principal business affiliations are
described above under "-- Directors of the Company."
</TABLE>
<TABLE>
<S> <C> <C>
Brent D. Bailey............... 43 Senior Vice President of the Company and General
Manager, Household. Prior to the Distribution, Mr.
Bailey is serving as Senior Vice President of the
Consumer Products Business and General Manager,
Household, positions to which he was appointed in
June 1993. From October 1992 until June 1993 he was a
Vice President of the Consumer Products Business, for
Marketing, Household and Laundry. From June 1991
until February 1992 Mr. Bailey was Vice President of
Marketing for a division of McGaw, Inc., a health
care company. From January 1990 to June 1991 he was
Executive Vice President and General Manager of New
Business Development for the then personal care
division of Weyerhauser Company.
Joseph L. Fischer............. 45 Senior Vice President of the Company and General
Manager, International. Prior to the Distribution,
Mr. Fischer is serving as Senior Vice President of
the Consumer Products Business, and General Manager,
International, a position he had held since November
1995. From January 1994 until November 1995, Mr.
Fischer was a consultant with respect to venture
capital investments in the consumer products
industry. From August 1992 to December 1993 he served
as a Group Executive, Personal Products, for Johnson
& Johnson, a manufacturer and marketer of products in
the health care field. From May 1989 to August 1992
he was a Company President at Johnson & Johnson,
Montreal, Canada.
</TABLE>
38
<PAGE> 54
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND
PRINCIPAL BUSINESS AFFILIATIONS DURING PAST FIVE
NAME AGE YEARS
- ------------------------------ ----- -----------------------------------------------------
<S> <C> <C>
John E. Greenwell............. 48 Executive Vice President of the Company and General
Manager, Detergents. Prior to the Distribution, Mr.
Greenwell is serving as Executive Vice President of
the Consumer Products Business and General Manager,
Detergents, positions to which he was appointed in
January 1996. He was a Senior Vice President of the
Consumer Products Business and General Manager,
Detergents, from June 1995 to January 1996. He also
served as General Manager, Food, from May 1994 to
June 1995. From October 1992 to May 1994, he served
as Vice President of Marketing in the Food category,
and from March 1985 to October 1992 he was Director
of Marketing for Detergents in the Household and
Laundry category.
Jane Melville................. 51 Senior Vice President of the Company for Product
Supply. Prior to the Distribution, Ms. Melville is
serving as the Senior Vice President, Product Supply,
of the Consumer Products Business, a position to
which she was appointed in June 1995. Prior to that
time, Ms. Melville held a number of positions at
Sterling Winthrop, Inc. then the pharmaceutical and
consumer health division of Eastman Kodak Company,
serving most recently as Senior Vice President,
Corporate Manufacturing from October 1993 to January
1995. From October 1992 to October 1994 she was
Corporate Vice President, Manufacturing Services, and
from January 1989 to October 1992 she was President,
Sterling Organics, at Sterling Winthrop.
Ray Reed...................... 39 Senior Vice President of the Company, and General
Manager, Food. Prior to the Distribution, Mr. Reed is
serving as Senior Vice President of the Consumer
Products Business and General Manager, Food,
positions to which he was appointed in July 1995. He
was Vice President of Marketing, Food, from September
1994 to July 1995. From October 1993 to September
1994 he served as General Manager, New Products and
Marketing Services, for Weight Watchers Food Company,
a wholly owned subsidiary of H.J. Heinz Company, a
processed food products company. From August 1992 to
October 1993 he served as General Manager, Grocery
Marketing, and from August 1991 to August 1992 he was
Senior Product Manager, Entrees and New Products, for
Weight Watchers Food Company.
Mark R. Shook................. 41 Executive Vice President of the Company and General
Manager, Personal Care. Prior to the Distribution,
Mr. Shook is serving as an Executive Vice President
of the Consumer Products Business, a position to
which he was appointed in September 1990. He was also
General Manager, Food, from September 1990 to
September 1993, General Manager, Food and
International, from September 1993 to April 1994,
General Manager, Laundry and International, from
April to September, 1994, General Manager, Soaps and
Detergents, from September 1994 to July 1995, and
became General Manager, Personal Care, in July 1995.
</TABLE>
39
<PAGE> 55
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND
PRINCIPAL BUSINESS AFFILIATIONS DURING PAST FIVE
NAME AGE YEARS
- ------------------------------ ----- -----------------------------------------------------
<S> <C> <C>
Robert B. Stearns............. 44 Senior Vice President and Chief Financial Officer of
the Company. Prior to the Distribution, Mr. Stearns
is serving as Senior Vice President and Chief
Financial Officer of the Consumer Products Business,
a position to which he was appointed in July 1996.
Prior to that time he was Vice President of Corporate
Development of Dial, a position to which he was
appointed in May 1995. From April 1992 to May 1995,
he was President of R.B. Stearns and Company, a New
York based merchant bank focused on emerging markets.
From January 1991 to April 1992, he was managing
director in charge of investment banking (North
America) for UBS Securities, Inc., a New York
investment bank.
Bernhard J. Welle............. 47 Vice President, Human Resources, of the Company.
Prior to the Distribution, Mr. Welle is serving as
Vice President, Human Resources of the Consumer
Products Business, a position he has held since
October 1987.
</TABLE>
40
<PAGE> 56
DIRECTORS' COMPENSATION
Nonemployee directors of the Company will receive compensation consisting
of annual cash retainers, meeting fees and stock option awards.
CASH COMPENSATION
It is expected that directors who are not employees of the Company will be
paid an annual retainer for Company Board service of $30,000, a fee of $1,500
for each Company Board meeting attended and a fee of $1,000 for each committee
meeting attended. Directors who are employees of the Company will not be paid
any fee or additional remuneration for services as members of the Company Board
or any committee thereof.
It is also anticipated that nonemployee directors will be able to elect to
participate in the Deferred Compensation Plan for Directors of The Dial
Corporation (the "Company Directors' Deferred Compensation Plan") under which
payment of part or all of their directors' fees and retainers will be deferred.
The Company Directors' Deferred Compensation Plan will provide participants with
the option to defer their compensation in the form of stock units related to the
price of the Company Common Stock, as well as the option to defer in the form of
cash. Such accumulated compensation plus interest thereon at the long-term
medium-quality bond rate for cash accounts, or dividend equivalents reinvested
for stock units accounts, as the case may be, will be payable to the director or
to the director's estate or beneficiary, over such period as may be designated,
upon termination of his or her service as a director. Under the Dial Directors'
Deferred Compensation Plan, any stock unit accounts of directors of Dial,
including directors of Dial who become directors of the Company, will be
credited with an appropriate number of shares of Company Common Stock to reflect
the Distribution. The Company will assume all liabilities and obligations with
respect to Company directors under the Dial Directors' Deferred Compensation
Plan. Directors of the Company who cease to be directors of Dial in connection
with the Distribution will not be deemed to be terminated for purposes of the
Dial Directors' Deferred Compensation Plan.
DIRECTORS' STOCK AWARDS
Pursuant to The Dial Corporation 1996 Stock Incentive Plan (the "1996
Company Plan"), each director of the Company who is not an employee of the
Company or any of its subsidiaries or affiliates will, upon his or her first
election as a director of the Company (which will be August 15, 1996 for
directors elected in connection with the Distribution)(the "Initial Grant"), and
on August 15, 1996 and thereafter annually during such director's term (the
"Annual Grant"), automatically be granted nonqualified stock options to purchase
Company Common Stock having an exercise price per share of 100% of the fair
market value of the Company Common Stock at the date of grant of such
nonqualified stock option. The number of shares subject to each such Initial
Grant and each such Annual Grant shall be equal to the amount of the annual
retainer then in effect divided by an amount equal to one third ( 1/3) of such
fair market value at the date of grant, rounded to the nearest 100 shares. A
director elected during the course of a year will receive, upon election, a
prorated annual grant for the year in which such election occurs, based on the
number of months between the director's election and the next annual grant date.
Each holder of a Company director stock option will also have certain rights in
the event of a change in control of the Company.
Options to purchase Dial Common Stock ("Dial Options") held by directors of
Dial who become directors of the Company and who are not also directors of Dial
will become options to purchase Company Common Stock ("Company Options") and
will be adjusted in the same manner as Dial Options held by Dial employees who
become Company Individuals, as described under "EXECUTIVE COMPENSATION --
Compensation Following the Distribution" and " -- Adjustments to Outstanding
Dial Stock Awards."
DIRECTORS' RETIREMENT BENEFITS
Dial has maintained the Dial Director's Retirement Plan pursuant to which
nonemployee directors of Dial have been able to receive retirement benefits for
a period of ten years, such benefits ranging from 15% to 100% of the annual
retainer at retirement, based on their years of service ranging from four to ten
years; in the event of a change of control of Dial (as defined in the plan), the
years of service are accelerated to ten. Dial has also provided such directors
with accidental death and dismemberment insurance benefits of $300,000 and, in
addition, travel accident insurance benefits of $250,000 when traveling on the
company's business.
41
<PAGE> 57
In connection with the Distribution, it is expected that the Dial
Director's Retirement Plan will be amended to change the vesting schedule and to
provide that the present value of vested accrued benefits of each director who
will become a Company director will either be converted into Company restricted
stock units or will be paid in cash under the plan and will, in each case, be
the responsibility of the Company and that the plan will then be terminated.
Under The Dial Corporation Director's Charitable Award Program each
director of the Company as of the Distribution Date (but not directors elected
subsequently unless otherwise approved by the Company Board) will be eligible to
contribute $100,000 per year over a period of ten years following the director's
death to one or more charitable organizations selected by the director. The
Company will assume the obligations of Dial under a similar program with respect
to those Company directors who were Dial directors but ceased being Dial
directors in connection with the Distribution.
42
<PAGE> 58
EXECUTIVE COMPENSATION
HISTORICAL COMPENSATION
The following table sets forth, for the chief executive officer of the
Company and the individuals who will be executive officers of the Company as of
the Distribution Date and were, based on compensation paid by Dial, or any of
its subsidiaries, the most highly compensated such employees for the fiscal year
ended December 30, 1995 (the "Named Executive Officers"), information concerning
compensation paid in fiscal 1993 through 1995 to such individuals by Dial or any
of its subsidiaries. The principal positions listed in the table are those which
will be held by the Named Executive Officers with the Company as of the
Distribution Date.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------ LONG-TERM COMPENSATION
OTHER -----------------------------------
ANNUAL RESTRICTED SECURITIES LONG-TERM ALL OTHER
COMPEN- STOCK UNDERLYING INCENTIVE COMPEN-
FISCAL SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2) (#) ($) ($)(3)
- --------------------------- ------ -------- -------- -------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MALCOLM JOZOFF(4).......... 1995 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
President and 1994 0 0 0 0 0 0 0
Chief Executive Officer 1993 0 0 0 0 0 0 0
BRENT D. BAILEY(5)......... 1995 164,826 33,000 11,362 0 8,100 0 4,500
Senior Vice President and 1994 152,360 104,400 6,123 0 6,800 0 4,571
General Manager, 1993 133,666 81,900 3,023 0 6,400 0 0
Household
JOHN E. GREENWELL.......... 1995 170,232 34,000 11,362 0 8,100 0 4,276
Executive Vice President 1994 146,922 100,600 11,175 0 11,500 0 4,407
and General Manager, 1993 120,520 73,300 812 0 5,800 0 3,462
Detergent
MARK R. SHOOK.............. 1995 221,950 44,400 11,362 0 13,400 0 6,659
Executive Vice President 1994 190,797 124,600 25,607 0 13,600 158,600 5,585
and General Manager, 1993 170,745 117,200 7,196 0 11,200 135,700 5,103
Personal Care
ROBERT B. STEARNS(5)....... 1995 113,609 23,000 7,717 0 9,000 0 0
Senior Vice President and 1994 0 0 0 0 0 0 0
Chief Financial Officer 1993 0 0 0 0 0 0 0
</TABLE>
- ---------------
(1) Amounts shown represent financial counseling services, medical premiums,
automobile usage, and other benefits paid during 1993-1995.
(2) Dividends were paid on restricted stock of Dial ("Dial Restricted Stock")
and performance-based Dial Restricted Stock at the same rates as paid to all
stockholders. On December 30, 1995, the following persons held the following
amounts of Dial Restricted Stock and/or performance-based Dial Restricted
Stock valued at then current market values: Mr. Bailey, 5,800 shares at
$171,825; Mr. Greenwell, 5,800 shares at $171,825; and Mr. Shook, 8,706
shares at $257,915.
(3) Amounts represent matching contributions under the Dial TRIM Plan and the
Dial Supplemental TRIM Plan.
(4) Mr. Jozoff was appointed to his current position with the Company on May 14,
1996. Mr. Jozoff's employment agreement (the "Employment Agreement")
provides for an annual base salary of $600,000 to be paid by Dial prior to
the Distribution, and an annual base salary of $650,000 to be paid by the
Company after the Distribution. See "-- Employment and Change in Control
Arrangements."
(5) Amounts shown do not include relocation reimbursements (which include a tax
gross-up) for the following: Mr. Bailey, $170,670 in 1993; and Mr. Stearns,
$70,090 in 1995. Mr. Stearns' salary represents compensation for
approximately seven months of 1995.
43
<PAGE> 59
The following table shows grants of Dial Options under The Dial Corp 1992
Stock Incentive Plan (the "1992 Dial Plan") to the Named Executive Officers
during the 1995 fiscal year. The amounts shown for each executive officer as
potential realizable values are based on assumed annualized rates of stock price
appreciation of 5% and 10% over the full ten-year term of the Dial Options,
which would result in stock appreciation per share of $15.45 and $39.15,
respectively. These potential realizable values are based solely on assumed
rates of appreciation required by applicable regulations of the Commission.
Actual gains, if any, on option exercises and common stockholdings are dependent
on the future performance of Dial Common Stock and overall stock market
conditions. There can be no assurance that the potential realizable values shown
in this table will be achieved. As a result of the Distribution, Dial Options
held by the Named Executive Officers listed below will be converted into Company
Options and, as a result, their value will depend on the future value of Company
Common Stock.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES IN EXERCISE FOR OPTION TERM
GRANTED FISCAL PRICE ---------------------
NAME (#)(1) YEAR(2) ($/SHARE) EXPIRATION DATE 5% ($) 10% ($)
- ---------------------- ---------- ------------ --------- --------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Malcolm Jozoff(3)..... 0 0% $ 0 $ 0 $ 0
Brent D. Bailey....... 8,100 0.61% 24.5625 08/16/2005 125,121 317,083
John E. Greenwell..... 8,100 0.61% 24.5625 08/16/2005 125,121 317,083
Mark R. Shook......... 13,400 1.01% 24.5625 08/16/2005 206,990 524,556
Robert B. Stearns..... 9,000 0.68% 24.5625 08/16/2005 139,023 352,314
</TABLE>
- ---------------
(1) The exercise prices are the fair market values of Dial Common Stock on the
grant date. Fifty percent of these Dial Options are exercisable one year
after grant and the balance are exercisable two years after grant; and each
such Dial Option contains the right to surrender such Dial Option for cash
upon a "change in control" (as defined in the 1992 Dial Plan). The exercise
price may be paid by delivery of already owned shares and tax withholding
obligations related to exercise may be paid by offset of the underlying
shares, subject to certain conditions.
(2) Percentages given are based on the number of Dial Options granted to all
Dial employees in 1995; as a percentage of the number of Dial Options
granted to employees of the Consumer Products Business in 1995, the
percentages would have been 1.77% for Mr. Bailey, 1.77% for Mr. Greenwell,
2.92% for Mr. Shook, and 1.96% for Mr. Stearns.
(3) Mr. Jozoff was granted an option to purchase 50,000 shares of Dial Common
Stock upon entering into the Employment Agreement in May 1996, and,
following the Distribution, will be eligible to participate in all stock
option plans adopted by the Company and to receive a grant of not less than
100,000 shares annually. The option to purchase 50,000 shares was made at an
exercise price of the fair market value of Dial Common Stock on May 15, 1996
and was immediately vested, although the shares issuable upon exercise are
subject to transfer restrictions for the first year from the date of grant,
and fifty percent remain subject to such restrictions for two years from the
date of grant. Other terms of the Dial Option are as described in footnote
(1). See "-- Employment and Change in Control Arrangements."
44
<PAGE> 60
The following table provides the information indicated with respect to Dial
Options exercised by any of the Named Executive Officers during the 1995 fiscal
year. The amounts set forth in the two columns relating to unexercised Dial
Options, unlike the amounts set forth in the column headed "Value Realized,"
have not been, and might never be, realized. The underlying Dial Options might
not be exercised; and actual gains on exercise, if any, would depend on the
value of Dial Common Stock on the date of exercise, and there can be no
assurance that these values would be realized. As a result of the Distribution,
Dial Options held by the Named Executive Officers listed below will be converted
into Company Options, and, as a result, their value will depend on the future
value of Company Common Stock.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 30, 1995 DECEMBER 30, 1995(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Malcolm Jozoff(2)........... 0 $0 0 0 $ 0 $ 0
Brent D. Bailey............. 0 0 16,200 11,500 156,525 63,531
John E. Greenwell........... 0 0 21,438 13,850 237,256 79,100
Mark R. Shook............... 0 0 53,884 20,200 695,335 112,888
Robert B. Stearns........... 0 0 0 9,000 0 45,563
</TABLE>
- ---------------
(1) Based on the closing price of the Dial Common Stock on December 29, 1995
($29.625).
(2) For Dial Options granted to Mr. Jozoff in 1996, see footnote (3) above and
"-- Employment and Change in Control Arrangements."
The following table sets forth information on grants under the Dial PUIP
and on grants of performance-based Dial Restricted Stock under the 1992 Dial
Plan for 1995, including the performance period until payout and, for the Dial
PUIP, the estimated ranges of the payout under the Dial PUIP, for any of the
Named Executive Officers.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED PLANS
PERFORMANCE -------------------------------------
NUMBER OF PERIOD THRESHOLD TARGET MAXIMUM
NAME UNITS(1)(2) UNTIL PAYOUT (# UNITS) (# UNITS) (# UNITS)
- ----------------------------------- ----------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Malcolm Jozoff(3).................. 0 N/A N/A N/A N/A
0 N/A N/A N/A N/A
Brent D. Bailey.................... 2,800(1) 3 years 700 2,800 5,600
2,900(2) 3 years N/A N/A N/A
John E. Greenwell.................. 2,950(1) 3 years 738 2,950 5,900
2,900(2) 3 years N/A N/A N/A
Mark R. Shook...................... 4,700(1) 3 years 1,175 4,700 9,400
2,900(2) 3 years N/A N/A N/A
Robert B. Stearns.................. 0 N/A N/A N/A N/A
0 N/A N/A N/A N/A
</TABLE>
- ---------------
(1) Granted pursuant to the Dial PUIP, under which the assumed value of the
units awarded is equal to $25.187 which was the price of the Dial Common
Stock on the initial date of grant. The value of the units for any payment
of an award is based on the average price of Dial Common Stock during the
month following the performance period. The closing price of the Dial Common
Stock on December 29, 1995 was $29.625. Payouts of awards are dependent upon
achievement of return on equity and income targets which are established at
the beginning of the performance period.
(2) Performance-based Dial Restricted Stock granted under the 1992 Dial Plan,
which is earned proportionately as total stockholder return performance
targets are met or exceeded relative to the Standard & Poor's Composite-500
Stock Index and an index of comparator companies as set forth in the Dial
1996 Proxy Statement.
45
<PAGE> 61
(3) Pursuant to the Employment Agreement, Mr. Jozoff will be eligible following
the Distribution, to receive a long-term performance bonus for the remaining
term of the Employment Agreement up to 100% of his base salary for such
remaining term. See "-- Employment and Change in Control Arrangements."
COMPENSATION FOLLOWING THE DISTRIBUTION
Total compensation for the Company's executive officers following the
Distribution is expected to include base salary, annual and long-term
incentives, benefits and other perquisites, as described below. The Company's
executive compensation strategy will be to closely align the financial interests
of senior managers with those of the stockholders. Accordingly, a significant
portion of executive compensation will be tied to achieving specific business
goals that favorably impact the price of Company Common Stock. Set forth below
is a summary of each component of executive compensation following the
Distribution, along with a summary of adjustments that will be made to
outstanding awards under Dial plans for those individuals who will be executives
of the Company following the Distribution.
Base Salary. Base salary for the most highly compensated officers of the
Company, other than Mr. Jozoff, whose base salary is described under
"-- Employment and Change in Control Arrangements", is expected, effective as of
the Distribution, to be at levels consistent with the amounts shown in the
summary compensation table under "-- Historical Compensation." Such salaries
will be subject to review by the Compensation Committee on an annual basis,
based on the executive's performance and competitive practice.
Annual Incentives. It is anticipated that following the Distribution, the
Company will adopt a Management Incentive Plan (a "Company MIP") pursuant to
which executives will be eligible for an annual bonus based on achieving
performance targets established each year. Under such a Company MIP, annual
performance targets would be set by the Compensation Committee at the beginning
of the performance period. Pursuant to such a Company MIP, the Compensation
Committee would fix individual target bonuses as a percentage of the executive's
base salary, depending on the level of responsibility. Such a Company MIP would
include a deferred compensation arrangement whereby a participant will be able
to defer part or all of his incentive award pursuant to The Dial Corporation
Deferred Compensation Plan (the "Company Deferred Compensation Plan").
Dial currently makes annual incentive awards to executives under the Dial
MIP. The Company will be responsible for payment of outstanding Dial MIP awards
for 1996 for Company executives. The outstanding awards will be equitably
adjusted, as appropriate, to reflect the effects of the Distribution.
Long-Term Incentives. To accomplish the objectives of the executive
compensation program and to discourage short-term actions inconsistent with
longer-term improvement, the Company intends to design long-term incentive plans
to reward measurable performance and build stock ownership among executive
officers. Three long-term incentive vehicles may be used to achieve these
objectives: performance units, stock options and performance stock.
Performance Units. It is anticipated that, following the Distribution, the
Company will adopt a Performance Unit Incentive Plan (a "Company PUIP"), under
which key employees of the Company or its subsidiaries would be eligible, at the
end of a specified performance period, to earn awards if certain financial
objectives are achieved. Performance unit grants under such a Company PUIP would
be based on the price of the Company Common Stock on the date of the grant and a
multiple of salary determined by an independent consulting firm to reflect the
competitive practice of certain comparator companies. Participant awards would
be earned depending on the degree of achievement of specified financial goals
based on a percentage of the number of award units originally granted. Award
payments would depend on the stock price during the month following the end of
the performance period. The maximum amount of award units would be earned if the
maximum performance targets for the period are met. Proportionately fewer units
would be earned for less than maximum results. If performance is below the
threshold levels, no units would be earned.
Dial currently makes certain of its long-term incentive awards to
executives under the Dial PUIP. The Company will be responsible for payment of
outstanding Dial PUIP awards to Company executives. The outstanding awards will
be equitably adjusted, as appropriate, to reflect the effects of the
Distribution.
46
<PAGE> 62
Stock Incentives. The Company will have in place the 1996 Company Plan,
under which executives will be awarded Company Options and other stock-based
awards. It is expected that the amounts of Company Options granted will be based
on multiples of salaries based on competitive practices of the Company's
comparator companies. In addition, under the 1996 Company Plan, certain
executive officers may be eligible for performance-based awards of restricted
stock of the Company ("Company Restricted Stock"), which would be earned only if
performance targets are met or exceeded.
1996 Company Plan. Prior to the Distribution, it is anticipated that the
1996 Company Plan will be adopted by the Company Board and approved by Dial, as
the Company's sole stockholder. The Company Board believes that the adoption of
the 1996 Company Plan will help the Company to attract, retain and provide
appropriate incentives for management personnel. The 1996 Company Plan is also
intended to facilitate the adjustment of Dial Options as described under
"-- Adjustments to Outstanding Dial Stock Awards." The 1996 Company Plan is
expected to provide for grants or awards of options (either as incentive stock
options within Section 422 of the Code or as non-qualified options, "Options")
to purchase Company Common Stock or preferred stock, par value $0.01 per share
("Company Preferred Stock"), stock appreciation rights ("SARs"), limited stock
appreciation rights, and Company Restricted Stock. Officers and employees of the
Company, its subsidiaries and its affiliates, will be eligible to be selected as
participants in the 1996 Plan. The 1996 Company Plan will also provide for the
grant of Options to directors of the Company. See "DIRECTORS'
COMPENSATION -- Directors' Stock Awards." The 1996 Company Plan will be included
as an exhibit to the Registration Statement of which this Information Statement
is a part, and any description herein is qualified in its entirety by reference
to such exhibit.
ADJUSTMENTS TO OUTSTANDING DIAL STOCK AWARDS
Dial has outstanding Dial Options to purchase Dial Common Stock under The
Dial Corp 1983 Stock Option and Incentive Plan (the "1983 Dial Plan") and under
the 1992 Dial Plan. Under the 1983 Dial Plan and the 1992 Dial Plan, Dial Option
awards may also include stock appreciation rights ("Dial SARs") and limited
stock appreciation rights ("Dial LSARs"). The 1983 Dial Plan and the 1992 Dial
Plan also provide for the grant of restricted stock ("Dial Restricted Stock").
In connection with the Distribution, each Dial Option, related Dial LSAR and
related Dial SAR outstanding and unexercised as of the Distribution Date held by
a Company Individual will be automatically converted into a Company Option (and
a related limited stock appreciation right and/or a related SAR where
applicable) for a number of shares of Company Common Stock, and at an exercise
price, intended to preserve for such Company Individual the economic value of
the shares subject to the Dial Option including the spread between the exercise
price and the fair market value of the shares subject to the Dial Option.
Each Company Individual who immediately prior to the Distribution Date is
the holder of any shares of Dial Restricted Stock will be credited with a number
of shares of Company Restricted Stock equal to the number of shares of Dial
Restricted Stock held by such Company Individual immediately prior to the
Distribution Date. Such shares of Dial Restricted Stock and Company Restricted
Stock will be held by such Company Individual subject to the rights, obligations
and restrictions in the restricted stock agreement previously applicable to the
shares of Dial Restricted Stock, except that the fact that such Company
Individual is no longer an employee of Dial will not cause a forfeiture
thereunder.
As of the Distribution Date, each Company Individual who immediately prior
thereto is the holder of an award of performance-based Dial Restricted Stock
will receive a number of shares of Company Common Stock equal to the number of
shares of Dial Common Stock subject to such award, such Company Common Stock to
be held subject to the rights, obligations and restrictions applicable to the
Dial Common Stock subject to such award, except that performance will be
measured by the combined performance of the Dial Common Stock and the Company
Common Stock through the remainder of the measuring period.
All Company Options and shares of Company Restricted Stock issued in
connection with adjustments to outstanding awards under Dial plans will be
issued pursuant to the 1996 Company Plan, as described above.
47
<PAGE> 63
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
On May 13, 1996, Dial entered into the three-year Employment Agreement with
Mr. Jozoff, providing for Mr. Jozoff to serve as President and Chief Executive
Officer of the Consumer Products Business and, effective as of the Distribution,
as Chairman, President and Chief Executive Officer of the Company, which will
assume the Employment Agreement. Mr. Jozoff will not be employed by Dial in any
capacity following the Distribution. Prior to the Distribution, the Employment
Agreement provides for a base salary of $600,000 per annum to be paid by Dial
and makes Mr. Jozoff eligible for a discretionary bonus to be paid by Dial up to
100% of the base salary received by him prior to the Distribution on the basis
of criteria established by the Dial Board. Upon entering into the Employment
Agreement, Mr. Jozoff was granted a one-time bonus of $150,000 and options to
purchase 50,000 shares of Dial Common Stock with an exercise price set by the
closing market price of the Dial Common Stock on May 15, 1996. These Dial
Options are fully vested but the shares of Dial Common Stock issuable upon
exercise are subject to transfer restrictions for the first year from the date
of grant, and fifty percent remain subject to such restrictions for two years
from the date of grant. The Employment Agreement also provides that Mr. Jozoff
is eligible for a further $150,000 bonus to be paid by the Company after the
Distribution, based on his contribution to the successful completion of the
Distribution.
Following the Distribution, the Employment Agreement provides that the
Company will pay Mr. Jozoff a base salary of $650,000 per annum and that Mr.
Jozoff will be eligible to receive an annual bonus grant from the Company up to
100% of his base salary determined on the basis of criteria approved by the
Company Board, a long-term performance bonus for the remaining term of the
Employment Agreement up to 100% of his base salary for such remaining term, upon
reasonable criteria to be determined by the Company Board, and an annual grant
of Options to purchase not less than 100,000 shares of Company Common Stock.
The Employment Agreement also provides that Mr. Jozoff will be eligible to
participate in all employee benefit plans of Dial or the Company (as applicable)
available to senior executives, and to receive life insurance, pension benefits,
supplemental pension benefits and other welfare benefits from Dial or the
Company (as applicable) on terms no less favorable in the aggregate than those
of other executives of Dial or the Company, respectively, provided that, if Mr.
Jozoff is still employed by Dial or the Company at the end of the term of the
Employment Agreement, he will receive, retroactively and until termination of
his employment, two years of employment credit toward retirement for each one
year employed. The Employment Agreement further provides for the reimbursement
of relocation expenses, including the purchase of Mr. Jozoff's current residence
under certain circumstances. Should the Distribution not be accomplished for any
reason on or before December 31, 1996, Mr. Jozoff may continue as President and
Chief Executive Officer of the Consumer Products Business. Mr. Jozoff also has a
right to terminate the Employment Agreement as a result of a decision not to
consummate the Distribution or if the Distribution does not take place by
December 31, 1996, at any time prior to February 28, 1997 and to receive a
severance payment of $900,000. Upon such termination, all salaries, bonuses,
options and benefits accrued or to be paid under the Employment Agreement will
be forfeited.
Effective as of the Distribution Date, the Company will enter into
executive severance agreements with certain executive officers, including
Messrs. Jozoff, Shook, Greenwell, Stearns and Bailey, providing that if, within
two years after a change of control of the Company, an executive's employment is
terminated involuntarily for any reason (other than because of death,
disability, or for cause), or the executive terminates his employment for good
reason, or for any reason during the thirty-day period following the first
anniversary of the change in control, then such executive shall receive as
severance compensation (1) cash equal to three times the sum of (a) the
executive's annual base salary plus (b) the executive's highest annual bonus and
(2) a gross-up of any taxes resulting from the application of Section 4999 of
the Code. For purposes of these agreements, the executive's annual base salary
is to be at least equal to twelve times the highest monthly base salary paid to
the executive during the twelve months preceding the change in control, and the
highest annual bonus is to be the higher of (1) the highest annual cash bonus
paid to the executive in any of the three fiscal years prior to the change in
control and (2) the annual bonus paid or payable for the most recently completed
fiscal year during the employment period under the agreement.
48
<PAGE> 64
PENSION PLANS
At December 30, 1995, Dial and certain of its subsidiaries provided
retirement benefits for most of their employees under the Dial Retirement Plan
and executives participated in the plan of their employer. For the benefit of
certain executives, Dial also maintains The Dial Corp Supplemental Pension Plan
(the "Dial Supplemental Pension Plan") which prevents the loss of pension
benefits otherwise payable except for the limitation of Section 415 of the Code.
The following table shows estimated annual retirement benefits payable to a
covered participant who retires at age sixty-five or later, for the years of
service and remuneration level indicated, under the Dial Retirement Plan and the
schedule of the Dial Supplemental Pension Plan which prevents the loss of
pension benefits otherwise payable except for the limitations of Section 415 of
the Code. The remuneration covered by the Dial Retirement Plan is annual salary
and annual bonus, as reported in the summary compensation table above. The final
remuneration will be calculated on the basis of the average of the participant's
last five years of covered remuneration prior to retirement.
PENSION PLAN TABLE(1)(2)
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION 15 20 25 30(3)
- ------------------------------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 125,000................................. $ 30,869 $ 41,158 $ 51,448 $ 61,737
150,000................................. 37,431 49,908 62,385 74,862
175,000................................. 43,994 58,658 73,323 87,987
200,000................................. 50,556 67,408 84,260 101,112
225,000................................. 57,119 76,158 95,198 114,237
250,000................................. 63,681 84,908 106,135 127,362
300,000................................. 76,806 102,408 128,010 153,612
400,000................................. 103,056 137,408 171,760 206,112
500,000................................. 129,306 172,408 215,510 258,612
600,000................................. 155,556 207,408 259,260 311,112
700,000................................. 181,806 242,408 303,010 363,612
800,000................................. 208,056 277,408 346,760 416,112
900,000................................. 234,306 312,408 390,510 468,612
1,000,000................................ 260,556 347,408 434,260 521,112
1,100,000................................ 286,806 382,408 478,010 573,612
</TABLE>
- ---------------
(1) The Code and the Employee Retirement Income Security Act of 1974, as amended
("ERISA") limit the annual benefits which may be paid from a tax-qualified
retirement plan. As permitted by the Code and ERISA, the Dial Supplemental
Pension Plan authorizes the payment of benefits calculated under provisions
of the retirement plan which may be above the limits permitted under the
Code and ERISA for those executives entitled to participate in the Dial
Supplemental Pension Plan.
(2) Benefits are computed on a single-life annuity basis. Such benefits reflect
a reduction to recognize some of the Social Security benefits to be received
by the employee. The amounts set forth are before any adjustment and
survivorship provisions, which would reduce, in some cases, the amounts
shown in the table.
(3) The Dial Retirement Plan limits the years of service credited for purposes
of calculating benefits to a maximum of thirty years. The Dial Supplemental
Pension Plan contains similar limits.
The number of credited years of service for Messrs. Shook, Greenwell,
Stearns and Bailey are 13, 11, 1 and 3, respectively. Messrs. Shook, Greenwell,
Stearns and Bailey's estimated retirement benefits are $133,000, $102,000,
$72,922, and $85,000, respectively. Mr. Jozoff currently has no credited years
of service.
Dial maintains the Dial TRIM, a defined contribution plan which is intended
to qualify under Section 401(k) of the Code. Dial also maintains, for certain
executives, the Dial Supplemental TRIM Plan, which provides benefits beyond the
limitations under the Dial TRIM under Section 402 of the Code.
Pursuant to the Distribution Agreement, effective as of the Cut-Off Date,
the Company will establish employee pension benefit plans (within the meaning of
Section 3(2) of ERISA) which constitute qualified
49
<PAGE> 65
plans under Section 401(a) of the Code ("Company Pension Plans"). Such Company
Pension Plans will provide benefits for Company Individuals who, immediately
prior to the Cut-Off Date, are active or inactive participants in or otherwise
entitled to benefits under the Dial Retirement Plan, the Dial TRIM, the related
supplemental plans and certain stand-alone plans maintained by Dial solely for
Company Individuals, and are expected to provide benefits substantially
identical to those provided by the plans in which such Company Individuals
currently participate.
Dial ESOP. The Distribution Agreement provides that Dial and the Company
will take all action necessary so that, effective as of the Distribution Date,
the trustee of the trust funding the Dial ESOP will transfer to the trustee of a
newly established Company savings plan the aggregate account balances of Company
Individuals under the Dial ESOP.
Equity Trust. Dial currently uses the Dial Equity Trust as a source of
funding for certain existing employee compensation and benefit plans. As of July
8, 1996, the Dial Equity Trust held 5,670,818 shares of Dial Common Stock to
fund such benefits. Effective as of the Distribution Date, the Company will
establish the Company Equity Trust to receive and hold for the benefit of
Company Individuals all shares of Company Common Stock received in the
Distribution in respect of shares of Dial Common Stock held in the Dial Equity
Trust. Following the Distribution, the Company will use the Company Equity Trust
as a source of funding for certain of its employee compensation and benefit
plans. Dial will amend the Dial Equity Trust and related documents, to the
extent necessary, to effectuate this action.
50
<PAGE> 66
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS OF COMPANY COMMON STOCK
BY MANAGEMENT
The following table sets forth the number of shares of Company Common Stock
expected to be beneficially owned following the Distribution, directly or
indirectly, by each director, each Named Executive Officer and all directors and
executive officers as a group, based upon the beneficial ownership by such
persons of Dial Common Stock as of July 8, 1996. A list of the individuals who
are expected to be executive officers of the Company immediately following the
Distribution is set forth under "BOARD OF DIRECTORS AND EXECUTIVE OFFICERS."
Except as otherwise indicated, each individual named is expected to have sole
investment and voting power with respect to the securities shown.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(A) CLASS
--------------------------------------------------------- ----------------- ----------
<S> <C> <C>
Brent D. Bailey.......................................... 30,427 *
Joe T. Ford.............................................. 32,168 *
Thomas L. Gossage........................................ 15,500 *
John E. Greenwell........................................ 44,389 *
Donald E. Guinn.......................................... 33,620 *
Malcolm Jozoff........................................... 68,000 *
Mark R. Shook............................................ 81,906 *
Dennis C. Stanfill....................................... 33,404 *
Robert B. Stearns........................................ 10,400 *
A. Thomas Young.......................................... 26,168 *
All directors and executive officers
(14 persons)........................................... 463,595 *
</TABLE>
- ---------------
* Less than 1%.
(a) Includes shares of Dial Common Stock subject to Dial Options which are
presently exercisable or will become exercisable within sixty days
thereafter. The number of shares of Dial Common Stock subject to such
exercisable Dial Options include 50,000 held by Mr. Jozoff, 65,644 held by
Mr. Shook, 31,238 held by Mr. Greenwell, 4,500 held by Mr. Stearns and
23,650 held by Mr. Bailey, and 373,660 for all directors and executive
officers as a group. In connection with the Distribution, such Dial Options
will be replaced with Company Options to purchase an adjusted number of
shares of Company Common Stock at an adjusted exercise price, with such
adjustments designed to preserve the existing economic benefit of the Dial
Options for the individuals. For example, at assumed prices of $20 per share
of Company Common Stock immediately following the Distribution, and $30 per
share of Dial Common Stock immediately prior to the Distribution, the number
of shares subject to such Company Options would be 75,000 for Mr. Jozoff,
98,466 for Mr. Shook, 46,857 for Mr. Greenwell, 6,750 for Mr. Stearns,
35,475 for Mr. Bailey and 560,490 for all directors and executive officers
as a group. The stock prices assumed are for illustrative purposes only.
51
<PAGE> 67
BY OTHERS
The following table sets forth each person or entity that is expected to
beneficially own more than 5% of the Company Common Stock outstanding
immediately following the Distribution, based upon the ownership of Dial Common
Stock as known to the Company as of July 8, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
--------------------------------------------------------- ----------------- ----------
<S> <C> <C>
Brinson Partners, Inc.................................... 4,990,768(1) 5.3%
Brinson Trust Company
Brinson Holdings, Inc.
SBC Holding (USA), Inc.
and Swiss Bank Corporation
209 S. LaSalle
Chicago, IL 60604
Michael F. Price and Heine............................... 9,254,300(2) 9.99%
Securities Corporation
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Trustee of The Dial Corporation.......................... 5,670,818(3) 6.0%
Employee Equity Trust
</TABLE>
- ---------------
(1) The ownership information set forth herein is based in its entirety on
material contained in a Schedule 13G, dated February 9, 1996, filed with the
Commission by Brinson Partners, Inc., Brinson Trust Company, Brinson
Holdings, Inc., SBC Holding (USA), Inc. and Swiss Bank Corporation with
respect to Dial Common Stock. With respect to the shares held, such
stockholders, in the aggregate, have sole voting power and sole dispositive
power for all shares owned. Based on the foregoing, Brinson Partners, Inc.,
Brinson Trust Company, Brinson Holdings, Inc., SBC Holdings (USA), Inc. and
Swiss Bank Corporation would beneficially own 4,990,768 shares of Company
Common Stock immediately following the Distribution.
(2) The ownership information set forth herein is based in its entirety on
material contained in a Schedule 13D, dated January 17, 1996, as amended on
April 2, 1996, and July 8, 1996, filed with the Commission by Michael F.
Price and Heine Securities Corporation with respect to dispositive power for
all shares owned. Based on the foregoing, Michael F. Price and Heine
Securities Corporation would beneficially own 9,254,300 shares of Company
Common Stock immediately following the Distribution.
(3) Pursuant to the Distribution Agreement, effective as of the Distribution
Date, Dial and the Company will establish the Company Equity Trust to
receive all shares of Dial Common Stock received in the Distribution in
respect of shares of Dial Common Stock held in the Dial Equity Trust.
According to information supplied to Dial by the trustee of the Dial Equity
Trust (Wells Fargo Bank of Arizona, N.A.), the Dial Equity Trust held
5,670,818 shares of Dial Common Stock as of July 8, 1996. Based on the
foregoing, the Company Equity Trust would beneficially own 5,670,818 shares
of Company Common Stock immediately following the Distribution.
52
<PAGE> 68
DESCRIPTION OF COMPANY CAPITAL STOCK
Prior to the Distribution Date, the Company Board and Dial, as sole
stockholder of the Company, will approve and adopt the Certificate of
Incorporation. Under the Certificate of Incorporation, the total number of
shares of all classes of stock that the Company has authority to issue is
310,000,000 consisting of 10,000,000 shares of Company Preferred Stock, and
300,000,000 shares of Company Common Stock. No shares of Company Preferred Stock
are being issued in connection with the Distribution. An aggregate of up to
approximately 94.8 million shares of Company Common Stock is expected to be
distributed in the Distribution, based on the number of shares of Dial Common
Stock outstanding on July 8, 1996 (the actual number will depend upon the number
of shares outstanding as of the Record Date). The Company plans to have
authorized and reserved for issuance 1,500,000 shares of Company Junior
Participating Preferred Stock (as defined herein) in connection with the Rights
to be issued by the Company in connection with the Distribution.
The holders of Company Common Stock are entitled to one vote per share on
all matters voted on by the stockholders, including the elections of directors,
and, except as otherwise required by law or provided in any resolution (a
"Preferred Stock Designation") adopted by the Company Board with respect to any
series of Company Preferred Stock, the holders of such shares exclusively
possess all voting power. The Certificate of Incorporation does not provide for
cumulative voting in the election of directors. Subject to any preferential
rights of any outstanding series of Company Preferred Stock, the holders of
Company Common Stock are entitled to such dividends as may be declared from time
to time by the Company Board from funds available therefor, and upon liquidation
are entitled to receive pro rata all assets of the Company available for
distribution to such holders. All shares of Company Common Stock received in the
Distribution will be fully paid and nonassessable and the holders thereof will
not have any preemptive rights. See "CERTAIN ANTITAKEOVER EFFECTS OF CERTAIN
PROVISIONS OF THE CERTIFICATE OF INCORPORATION, THE BYLAWS, THE RIGHTS, AND
DELAWARE LAW."
The Company Board is authorized to provide for the issuance of shares of
Company Preferred Stock, in one or more series, to establish the number of
shares in each series and to fix the designation, powers, preferences and rights
of each such series and the qualifications, limitations or restrictions thereof.
See "CERTAIN ANTITAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, THE BYLAWS, THE RIGHTS, AND DELAWARE LAW -- Company Preferred
Stock."
CERTAIN ANTITAKEOVER EFFECTS OF CERTAIN
PROVISIONS OF THE CERTIFICATE OF INCORPORATION,
THE BYLAWS, THE RIGHTS, AND DELAWARE LAW
The Certificate of Incorporation, the Bylaws and the Rights contain certain
provisions that could make more difficult the acquisition of the Company by
means of a tender offer, a proxy contest or otherwise. The description set forth
below is intended as a summary only and is qualified in its entirety by
reference to the Certificate of Incorporation and the Bylaws, which are attached
to this Information Statement as Annex B and Annex C, respectively, and the
Rights Agreement, which is filed as an exhibit to the Registration Statement.
CLASSIFIED BOARD OF DIRECTORS
The Certificate of Incorporation and Bylaws provide that the Company Board
will be divided into three classes of directors, with the classes to be as
nearly equal in number as possible. The Company Board is expected to consist of
the persons referred to under "BOARD OF DIRECTORS AND EXECUTIVE OFFICERS." The
Certificate of Incorporation and the Bylaws provide that, of the initial
directors of the Company, approximately one-third will continue to serve until
the 1997 Annual Meeting of Stockholders, approximately one-third will continue
to serve until the 1998 Annual Meeting of Stockholders and approximately
one-third will continue to serve until the 1999 Annual Meeting of Stockholders.
Of the initial directors, Mr. Gossage and Mr. Stanfill will serve until the 1997
Annual Meeting of Stockholders, Mr. Ford and Mr. Young will serve until the 1998
Annual Meeting of Stockholders and Mr. Guinn and Mr. Jozoff will
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<PAGE> 69
serve until the 1999 Annual Meeting of Stockholders. Starting with the 1997
Annual Meeting of Stockholders, one class of directors will be elected each year
for a three-year term.
The classification of directors will have the effect of making it more
difficult for stockholders to change the composition of the Company Board. At
least two annual meetings of stockholders, instead of one, will generally be
required to effect a change in a majority of the Company Board. Such a delay may
help ensure that the Company's directors, if confronted by a holder attempting
to force a proxy contest, a tender or exchange offer, or an extraordinary
corporate transaction, would have sufficient time to review the proposal as well
as any available alternatives to the proposal and to act in what they believe to
be the best interests of the stockholders. The classification provisions will
apply to every election of directors, however, regardless of whether a change in
the composition of the Company Board would be beneficial to the Company and its
stockholders and whether or not a majority of the Company's stockholders believe
that such a change would be desirable.
The classification provisions could also have the effect of discouraging a
third party from initiating a proxy contest, making a tender offer or otherwise
attempting to obtain control of the Company, even though such an attempt might
be beneficial to the Company and its stockholders. The classification of the
Company Board could thus increase the likelihood that incumbent directors will
retain their positions. In addition, because the classification provisions may
discourage accumulations of large blocks of the Company's stock by purchasers
whose objective is to take control of the Company and remove a majority of the
Company Board, the classification of the Company Board could tend to reduce the
likelihood of fluctuations in the market price of Company Common Stock that
might result from accumulations of large blocks. Accordingly, stockholders could
be deprived of certain opportunities to sell their shares of Company Common
Stock at a higher market price than might otherwise be the case.
NUMBER OF DIRECTORS, FILLING VACANCIES AND REMOVAL
The Certificate of Incorporation provides that, subject to any rights of
holders of Company Preferred Stock to elect additional directors under specified
circumstances, the number of directors will be fixed in the manner provided in
the Bylaws. The Bylaws provide that, subject to any rights of holders of Company
Preferred Stock to elect directors under specified circumstances, the number of
directors will be fixed from time to time exclusively pursuant to a resolution
adopted by directors constituting a majority of the total number of directors
that the Company would have if there were no vacancies on the Company Board (the
"Whole Board"), but must consist of not more than eleven nor less than three
directors. In addition, the Certificate of Incorporation and Bylaws provide
that, subject to any rights of holders of Company Preferred Stock, and unless
the Company Board otherwise determines, any vacancies or newly created
directorships will be filled only by the affirmative vote of a majority of the
remaining directors, though less than a quorum. Accordingly, absent an amendment
to the Certificate of Incorporation and Bylaws, the Company Board could prevent
any stockholder from enlarging the Company Board and filling the new
directorships with such stockholder's own nominees.
Under the Delaware General Corporation Law (the "DGCL"), unless otherwise
provided in the Certificate of Incorporation, directors serving on a classified
board may only be removed by the stockholders for cause. In addition, the
Certificate of Incorporation and the Bylaws provide that directors may be
removed only for cause and only upon the affirmative vote of holders of at least
80% of the voting power of all the then outstanding shares of stock entitled to
vote generally in the election of directors ("Voting Stock"), voting together as
a single class.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT AND SPECIAL MEETINGS
The Certificate of Incorporation and the Bylaws provide that, subject to
the rights of any holders of Company Preferred Stock, stockholder action can be
taken only at an annual or special meeting of stockholders and prohibit
stockholder action by written consent in lieu of a meeting. The Bylaws provide
that, subject to the rights of holders of any series of Company Preferred Stock,
special meetings of stockholders can be called only by the Chairman of the
Company Board or by the Company Board pursuant to a resolution adopted by a
majority of the Whole Board. Stockholders are not permitted to call a special
meeting or to
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require that the Company Board call a special meeting of stockholders. Moreover,
the business permitted to be conducted at any special meeting of stockholders is
limited to the business brought before the meeting pursuant to the notice of
meeting given by the Company.
The provisions of the Certificate of Incorporation and the Bylaws
prohibiting stockholder action by written consent may have the effect of
delaying consideration of a stockholder proposal until the next annual meeting
unless a special meeting is called by the Chairman or at the request of a
majority of the Whole Board. These provisions would also prevent the holders of
a majority of the voting power of the Voting Stock from unilaterally using the
written consent procedure to take stockholder action and from taking action by
consent. Moreover, a stockholder could not force stockholder consideration of a
proposal over the opposition of the Chairman and the Company Board by calling a
special meeting of stockholders prior to the time the Chairman or a majority of
the Whole Board believes such consideration to be appropriate.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER PROPOSALS
The Bylaws establish an advance notice procedure for stockholders to make
nominations of candidates for election as directors, or bring other business
before an annual meeting of stockholders of the Company (the "Stockholder Notice
Procedure").
The Stockholder Notice Procedure provides that only individuals who are
nominated by, or at the direction of, the Company Board, or by a stockholder who
has given timely written notice to the Secretary of the Company prior to the
meeting at which directors are to be elected, will be eligible for election as
directors of the Company. The Stockholder Notice Procedure provides that at an
annual meeting only such business may be conducted as has been brought before
the meeting by, or at the direction of, the Chairman or the Company Board or by
a stockholder who has given timely written notice to the Secretary of the
Company of such stockholder's intention to bring such business before such
meeting. Under the Stockholder Notice Procedure, for notice of stockholder
nominations to be made at an annual meeting to be timely, such notice must be
received by the Company not less than seventy days nor more than ninety days
prior to the first anniversary of the previous year's annual meeting (or, if the
date of the annual meeting is advanced by more than twenty days, or delayed by
more than seventy days, from such anniversary date, not earlier than the
ninetieth day prior to such meeting and not later than the later of (1) the
seventieth day prior to such meeting and (2) the tenth day after public
announcement of the date of such meeting is first made) provided that, with
respect to the annual meeting to be held in 1997, the anniversary date shall be
deemed to be May 7, 1997. Notwithstanding the foregoing, in the event that the
number of directors to be elected is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Company Board made by the Company at least eighty days prior to
the first anniversary of the preceding year's annual meeting, a stockholder's
notice will be timely, but only with respect to nominees for any new positions
created by such increase, if it is received by the Company not later than the
tenth day after such public announcement is first made by the Company. Under the
Stockholder Notice Procedure, for notice of a stockholder nomination to be made
at a special meeting at which directors are to be elected to be timely, such
notice must be received by the Company not earlier than the ninetieth day before
such meeting and not later than the later of (1) the seventieth day prior to
such meeting and (2) the tenth day after public announcement of the date of such
meeting is first made.
Under the Stockholder Notice Procedure, a stockholder's notice to the
Company proposing to nominate an individual for election as a director must
contain certain information, including, without limitation, the identity and
address of the nominating stockholder, the class and number of shares of stock
of the Company which are owned by such stockholder, and all information
regarding the proposed nominee that would be required to be included in a proxy
statement soliciting proxies for the proposed nominee. Under the Stockholder
Notice Procedure, a stockholder's notice relating to the conduct of business
other than the nomination of directors must contain certain information about
such business and about the proposing stockholders, including, without
limitation, a brief description of the business the stockholder proposes to
bring before the meeting, the reasons for conducting such business at such
meeting, the name and address of such stockholder, the class and number of
shares of stock of the Company beneficially owned by such stockholder, and any
material interest of such stockholder in the business so proposed. If the
Chairman of the Board or
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other officer presiding at a meeting determines that a person was not nominated,
or other business was not brought before the meeting, in accordance with the
Stockholder Notice Procedure, such person will not be eligible for election as a
director, or such business will not be conducted at such meeting, as the case
may be.
By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure will afford the Company Board an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the Company Board, to inform stockholders about such
qualifications. By requiring advance notice of other proposed business, the
Stockholder Notice Procedure will also provide a more orderly procedure for
conducting annual meetings of stockholders and, to the extent deemed necessary
or desirable by the Company Board, will provide the Company Board with an
opportunity to inform stockholders, prior to such meetings, of any business
proposed to be conducted at such meetings, together with any recommendations as
to the Company Board's position regarding action to be taken with respect to
such business, so that stockholders can better decide whether to attend such a
meeting or to grant a proxy regarding the disposition of any such business.
Although the Bylaws do not give the Company Board any power to approve or
disapprove stockholder nominations for the election of directors or proposals
for action, they may have the effect of precluding a contest for the election of
directors or the consideration of stockholder proposals if the proper procedures
are not followed, and of discouraging or deterring a third party from conducting
a solicitation of proxies to elect its own slate of directors or to approve its
own proposal, without regard to whether consideration of such nominees or
proposals might be harmful or beneficial to the Company and its stockholders.
COMPANY PREFERRED STOCK
The Certificate of Incorporation authorizes the Company Board to establish
one or more series of Company Preferred Stock and to determine, with respect to
any series of Company Preferred Stock, the terms and rights of such series,
including (1) the designation of the series, (2) the number of shares of the
series, which number the Company Board may thereafter (except where otherwise
provided in the Preferred Stock Designation) increase or decrease (but not below
the number of shares thereof then outstanding), (3) whether dividends, if any,
will be cumulative or noncumulative and the dividend rate and the preferences,
if any, of the series, (4) the dates at which dividends, if any, will be
payable, (5) the redemption rights and price or prices, if any, for shares of
the series, (6) the terms and amounts of any sinking fund provided for the
purchase or redemption of shares of the series, (7) the amounts payable on
shares of the series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, (8) whether the shares
of the series will be convertible into or exchangeable for shares of any other
class or series, or any other security, of the Company or any other corporation,
and, if so, the specification of such other class or series or such other
security, the conversion or exchange price or prices or rate or rates, any
adjustments thereof, the date or dates as of which such shares shall be
convertible or exchangeable and all other terms and conditions upon which such
conversion or exchange may be made, (9) restrictions on the issuance of shares
of the same series or of any other class or series, and (10) the voting rights,
if any, of the holders of such series.
Dial and the Company believe that the ability of the Company Board to issue
one or more series of Company Preferred Stock will provide the Company with
flexibility in structuring possible future financings and acquisitions, and in
meeting other corporate needs which might arise. The authorized shares of
Company Preferred Stock, as well as shares of the Company Common Stock, will be
available for issuance without further action by the Company's stockholders,
unless such action is required by applicable law or the rules of any stock
exchange or automated quotation system on which the Company's securities may be
listed or traded. The NYSE currently requires stockholder approval as a
prerequisite to listing shares in several instances, including where the present
or potential issuance of shares could result in an increase in the number of
shares of common stock, or in the amount of voting securities, outstanding of at
least 20%. If the approval of the Company's stockholders is not required for the
issuance of shares of Company Preferred Stock or the Company Common Stock, the
Company Board may determine not to seek stockholder approval.
Although the Company Board has no intention at the present time of doing
so, it could issue a series of Company Preferred Stock that could, depending on
the terms of such series, impede the completion of a
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merger, tender offer or other takeover attempt. The Company Board will make any
determination to issue such shares based on its judgment as to the best
interests of the Company and its stockholders. The Company Board, in so acting,
could issue Company Preferred Stock having terms that could discourage an
acquisition attempt through which an acquiror may be able to change the
composition of the Company Board, including a tender offer or other transaction
that some, or a majority of, the Company's stockholders might believe to be in
their best interests or in which stockholders might receive a premium for their
stock over the then current market price of such stock.
BUSINESS COMBINATIONS
The Certificate of Incorporation provides that certain "business
combinations" (as defined in the Certificate of Incorporation) must be approved
by the holders of at least 66 2/3% of the voting power of the shares not owned
by an "interested shareholder" (as defined in the Certificate of Incorporation,
the beneficial owner of 10% of the outstanding Voting Stock), unless the
business combinations are approved by the "Continuing Directors" (as defined in
the Certificate of Incorporation) or meet certain requirements regarding price
and procedure.
AMENDMENT OF CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS
Under the DGCL, the stockholders have the right to adopt, amend or repeal
the bylaws and, with the approval of the board of directors, the certificate of
incorporation of a corporation. In addition, if the certificate of incorporation
so provides, the bylaws may be adopted, amended or repealed by the board of
directors. The Certificate of Incorporation provides that, in addition to
approval by the Company Board, the affirmative vote of the holders of at least
80% of the voting power of the outstanding shares of Voting Stock, voting
together as a single class, is required to amend provisions of the Certificate
of Incorporation relating to the prohibition of stockholder action without a
meeting; the number, election and term of the Company's directors; the filling
of vacancies on the Company Board; the removal of directors and the amendment of
the Bylaws. Approval by the Company Board, together with the vote of the holders
of a majority of the voting power of the outstanding shares of Voting Stock, is
required to amend all other provisions of the Certificate of Incorporation. The
Certificate of Incorporation further provides that the Bylaws may be amended by
the Company Board or by the affirmative vote of the holders of at least 80% of
the voting power of the outstanding shares of Voting Stock, voting together as a
single class. The Certificate of Incorporation also provides that, in addition
to approval by the Company Board, the affirmative vote of the holders of at
least 66 2/3% of the voting power of the outstanding shares of Voting Stock,
including the affirmative vote of the holders of at least 66 2/3% of the voting
power of the outstanding shares of Voting Stock not owned directly or indirectly
by an interested stockholder or any affiliate thereof, is required to amend
provisions of the Certificate of Incorporation regarding certain business
combinations. These supermajority voting requirements will have the effect of
making more difficult any amendment by stockholders of the Bylaws or of any of
the provisions of the Certificate of Incorporation described above, even if a
majority of the Company's stockholders believe that such amendment would be in
their best interests.
RIGHTS
The Company Board has declared a dividend of one preferred share purchase
right (each a "Right" and, collectively, the "Rights"), effective as of the
Distribution Date, to be paid on the Distribution Date in respect of each share
of the Company Common Stock to the holder of record thereof as of the close of
business on the Distribution Date. Each Right will entitle the registered holder
to purchase from the Company one one-hundredth of a share of junior
participating preferred stock, par value $0.01 per share ("Company Junior
Preferred Stock") of the Company at a price of $75.00 per one one-hundredth of a
share (the "Purchase Price"), subject to adjustment. The terms of the Rights
will be set forth in a Rights Agreement (the "Rights Agreement") between the
Company and Wells Fargo Bank of Arizona, N.A. (the "Rights Agent").
Until the earlier to occur of (1) ten days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 20% or more of the then
outstanding shares of the Company Common Stock or (2) ten business days (or such
later date as
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may be determined by action of Company Board prior to such time as any person or
group becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of the outstanding shares of Company Common Stock (the
earlier of such dates being called the "Rights Distribution Date"), the Rights
will be evidenced by the certificates representing shares of Company Common
Stock.
The Rights Agreement will provide that until the Rights Distribution Date
(or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the shares of Company Common Stock. Until the
Rights Distribution Date (or earlier redemption or expiration of the Rights),
certificates representing shares of Company Common Stock will contain a notation
incorporating the terms of the Rights by reference. Until the Rights
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates representing shares of Company Common
Stock will also constitute the transfer of the Rights associated with the shares
of Company Common Stock represented by such certificate. As soon as practicable
following the Rights Distribution Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to holders of record of the shares
of Company Common Stock as of the close of business on the Rights Distribution
Date and such separate Rights Certificates alone will evidence the Rights.
The Rights will not be exercisable until the Rights Distribution Date. The
Rights will expire on August 15, 2006 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of shares of Company Junior
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (1) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares of Company Junior Preferred Stock, (2) upon the
grant to holders of the shares of Company Junior Preferred Stock of certain
rights or warrants to subscribe for or purchase shares of Company Junior
Preferred Stock at a price, or securities convertible into shares of Company
Junior Preferred Stock with a conversion price, less than the then-current
market price of the shares of Company Junior Preferred Stock or (3) upon the
distribution to holders of the shares of Company Junior Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in shares of
Company Junior Preferred Stock) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
share of Company Junior Preferred Stock issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of Company Common Stock
or a stock dividend on Company Common Stock payable in Company Common Stock or
subdivisions, consolidations or combinations of Company Common Stock occurring,
in any such case, prior to the Rights Distribution Date.
Shares of Company Junior Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each share of Company Junior Preferred Stock will
be entitled to a minimum preferential quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend equal to 100 times the
dividend declared per share of Company Common Stock. In the event of
liquidation, the holders of the Junior Preferred Stock will be entitled to a
minimum preferential liquidation payment of $100 per share but will be entitled
to an aggregate payment equal to 100 times the payment made per share of Company
Common Stock. Each share of Company Junior Preferred Stock will have 100 votes,
together with Company Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which Company Common Stock is exchanged,
each share of Company Junior Preferred Stock will be entitled to receive an
amount equal to 100 times the amount received per share of Company Common Stock.
These rights are protected by customary antidilution provisions.
Because of the nature of the dividend, liquidation and voting rights of
Company Junior Preferred Stock, the value of the one one-hundredth interest in a
share of Company Junior Preferred Stock purchasable upon exercise of each Right
should approximate the value of one share of Company Common Stock.
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In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision will be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter have the right to receive upon
exercise thereof at then current exercise price that number of shares of Company
Common Stock having a market value of two times the exercise price of the Right
(such right being referred to as a "Flip-in Right"). In the event that, at any
time on or after the date that any person has become an Acquiring Person, the
Company is acquired in a merger or other business combination transaction or 50%
or more of its consolidated assets or earning power are sold, proper provision
will be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right.
At any time after any person or group of affiliated or associated persons
becomes an Acquiring Person and prior to the acquisition by such person or group
of 50% or more of the outstanding shares of Company Common Stock, the Company
Board may exchange the Rights (other than Rights owned by such person or group
which will have become void), in whole or in part, at an exchange ratio of one
share of Company Common Stock, or one one-hundredth of a share of Company Junior
Preferred Stock, per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Company Junior Preferred Stock will
be issued (other than fractions which are integral multiples of one
one-hundredth of a share of Company Junior Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
shares of Company Junior Preferred Stock on the last trading day prior to the
date of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
shares of Company Common Stock, the Company Board may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Company Board in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Company Board without the
consent of the holders of the Rights, including an amendment to lower (1) the
threshold at which a person becomes an Acquiring Person and (2) the percentage
of Company Common Stock proposed to be acquired in a tender or exchange offer
that would cause the Rights Distribution Date to occur, to not less than the
greater of (1) the sum of .001% and the largest percentage of the outstanding
Company Common Stock then known to the Company to be beneficially owned by any
person or group of affiliated or associated persons and (2) 10%, except that,
from and after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person, no such amendment may adversely affect the
interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights will have certain antitakeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
and thereby effect a change in the composition of the Company Board on terms not
approved by the Company Board, including by means of a tender offer at a premium
to the market price, other than an offer conditioned on a substantial number of
Rights being acquired. The Rights should not interfere with any merger or
business combination approved by the Company Board since the Rights may be
redeemed by the Company at the Redemption Price prior to the time that a person
or group has become an Acquiring Person.
The foregoing summary of certain terms of the Rights is qualified in its
entirety by reference to the form of the Rights Agreement, a copy of which has
been filed as an exhibit to the Registration Statement. The
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Rights are being registered under the Exchange Act, together with Company Common
Stock, pursuant to the Registration Statement in which this Information
Statement is included. In the event that the Rights become exercisable, the
Company will register the shares of the Company Junior Preferred Stock for which
the Rights may be exercised, in accordance with applicable law.
ANTITAKEOVER LEGISLATION
Section 203 of the DGCL provides that, subject to certain exceptions
specified therein, a corporation shall not engage in any business combination
with any "interested stockholder" for a three-year period following the time
that such stockholder becomes an interested stockholder unless (1) prior to such
time, the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (2) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares), or
(3) on or subsequent to such time, the business combination is approved by the
board of directors of the corporation and by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder. Except as specified in Section 203 of the DGCL, an interested
stockholder is defined to include (a) any person that is the owner of 15% or
more of the outstanding voting stock of the corporation, or is an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation, at any time within three years immediately
prior to the relevant date and (b) the affiliates and associates of any such
person.
Under certain circumstances, Section 203 of the DGCL makes it more
difficult for a person who would be an "interested stockholder" to effect
various business combinations with a corporation for a three-year period,
although the stockholders may elect to exclude a corporation from the
restrictions imposed thereunder. The Certificate of Incorporation does not
exclude the Company from the restrictions imposed under Section 203 of the DGCL.
It is anticipated that the provisions of Section 203 of the DGCL may encourage
companies interested in acquiring the Company to negotiate in advance with the
Company Board, since the stockholder approval requirement would be avoided if a
majority of the directors then in office approve either the business combination
or the transaction which results in the stockholder becoming an interested
stockholder.
COMPARISON WITH RIGHTS OF HOLDERS OF DIAL COMMON STOCK
Dial's charter documents are substantially similar to the Certificate and
Bylaws with respect to (1) classification of the board of directors; (2)
inability of stockholders to act by written consent or to call special meetings;
(3) advance notice requirements for stockholder nominations and proposals; (4)
the supermajority voting requirement to amend provisions of the Certificate of
Incorporation relating to the prohibition of stockholder action without a
meeting, the number, election and term of the Company's directors, or the
removal of directors; (5) the supermajority voting requirement for stockholders
to amend the Bylaws related to classification of the Company Board or
establishing the size of the Company Board; (6) the elimination of director
liability in certain circumstances; and (7) the application of Section 203 of
the DGCL.
LIABILITY AND INDEMNIFICATION
OF DIRECTORS AND OFFICERS
LIMITATION OF LIABILITY OF DIRECTORS
The Certificate of Incorporation provides that a director of the Company
will not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (1) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (3) under Section 174 of the DGCL,
which concerns unlawful payments of dividends, stock purchases or redemptions,
or (4) for any transaction from which the director derived an improper personal
benefit.
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While the Certificate of Incorporation provides directors with protection
from awards for monetary damages for breaches of their duty of care, it does not
eliminate such duty. Accordingly, the Certificate of Incorporation will have no
effect on the availability of equitable remedies such as an injunction or
rescission based on a director's breach of his or her duty of care. The
provisions of the Certificate of Incorporation described above apply to an
officer of the Company only if he or she is a director of the Company and is
acting in his or her capacity as director, and do not apply to officers of the
Company who are not directors.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation provides that each person who is or was or
had agreed to become a director or officer of the Company, or each such person
who is or was serving or who had agreed to serve at the request of the Company
as a director or officer of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executors, administrators or
estate of such person), will be indemnified by the Company, in accordance with
the Bylaws, to the fullest extent permitted from time to time by the DGCL, as
the same exists or may hereafter be amended (but, if permitted by applicable
law, in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than said law
permitted the Company to provide prior to such amendment) or any other
applicable laws as presently or hereafter in effect. The Company may, by action
of the Company Board, provide indemnification to employees and agents of the
Company, and to persons serving as employees or agents of another corporation,
partnership, joint venture, trust or other enterprise, at the request of the
Company, with the same scope and effect as the foregoing indemnification of
directors and officers. The Company may be required to indemnify any person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Company Board or is a proceeding to enforce such person's
claim to indemnification pursuant to the rights granted by the Certificate of
Incorporation or otherwise by the Company. In addition, the Company may enter
into one or more agreements with any person providing for indemnification
greater or different than that provided in the Certificate of Incorporation.
The Bylaws provide that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he or she or a person of whom he or
she is the legal representative is or was a director or officer of the Company
or is or was serving at the request of the Company as a director or officer of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such Proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving as a director or
officer, will be indemnified and held harmless by the Company to the fullest
extent authorized by the DGCL as the same exists or may in the future be amended
(but, if permitted by applicable law, in the case of any such amendment, only to
the extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification will continue as to a person who
has ceased to be a director or officer and will inure to the benefit of his or
her heirs, executors and administrators; provided, however, except as described
in the second following paragraph with respect to Proceedings to enforce rights
to indemnification, the Company will indemnify any such person seeking
indemnification in connection with a Proceeding (or part thereof) initiated by
such person only if such Proceeding (or part thereof) was authorized by the
Company Board.
Pursuant to the Bylaws, to obtain indemnification, a claimant is to submit
to the Company a written request for indemnification. Upon such written request
by a claimant, a determination, if required by applicable law, with respect to
the claimant's entitlement to indemnification will be made, if requested by the
claimant, by independent legal counsel, or if the claimant does not so request,
by the Company Board by a majority vote of the disinterested directors even
though less than a quorum or, if there are no disinterested directors or the
disinterested directors so direct, by independent legal counsel in a written
opinion to the Company Board, or if the disinterested directors so direct, by
the stockholders of the Company. In the event
61
<PAGE> 77
the determination of entitlement to indemnification is to be made by independent
legal counsel at the request of the claimant, the independent legal counsel will
be selected by the Company Board unless there shall have occurred within two
years prior to the date of the commencement of the action, suit or proceeding
for which indemnification is claimed a Change of Control, in which case the
independent legal counsel will be selected by the claimant unless the claimant
requests that such selection be made by the Company Board.
Pursuant to the Bylaws, if a claim described in the preceding paragraph is
not paid in full by the Company within thirty days after a written claim
pursuant to the preceding paragraph has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant will be entitled to be paid also the expense of prosecuting such claim.
The Bylaws provide that it will be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
Proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Company) that the claimant has not
met the standard of conduct which make it permissible under the DGCL for the
Company to indemnify the claimant for the amount claimed, but the burden of
proving such defense will be on the Company. Neither the failure of the Company
(including the disinterested directors, independent legal counsel or
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
DGCL, nor an actual determination by the Company (including the disinterested
directors, independent legal counsel or stockholders) that the claimant has not
met such applicable standard of conduct, will be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct. However, the Company will be bound by a determination pursuant to the
procedures set forth in the Bylaws that the claimant is entitled to
indemnification in any suit brought by a claimant pursuant to the Bylaws.
The Bylaws provide that the right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final disposition
conferred in the Bylaws will not be exclusive of any other right which any
person may have or may in the future acquire under any statute, provision of the
Certificate of Incorporation, the Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise. The Bylaws permit the Company to maintain
insurance, at its expense, to protect itself and any director, officer, employee
or agent of the Company or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether or not
the Company would have the power to indemnify such person against such expense,
liability or loss under the DGCL. The Company intends to obtain directors' and
officers' liability insurance providing coverage to its directors and officers.
In addition, the Bylaws authorize the Company, to the extent authorized from
time to time by the Company Board, to grant rights to indemnification and rights
to be paid by the Company the expenses incurred in defending any Proceeding in
advance of its final disposition, to any employee or agent of the Company to the
fullest extent of the provisions of the Bylaws with respect to the
indemnification and advancement of expenses of directors and officers of the
Company.
The Bylaws provide that the right to indemnification conferred therein is a
contract right and includes the right to be paid by the Company the expenses
incurred in defending any Proceeding in advance of its final disposition, except
that if the DGCL requires, the payment of such expenses incurred by a director
or officer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a Proceeding, will be made only upon
delivery to the Company of an undertaking by or on behalf of such director or
officer, to repay all amounts so advanced if it is ultimately determined that
such director or officer is not entitled to be indemnified under the Bylaws or
otherwise.
INDEMNIFICATION AGREEMENTS
It is anticipated that the Company will authorize indemnification
agreements for each of the Company's directors (each, an "Indemnification
Agreement," and, collectively, the "Indemnification Agreements"). The
Indemnification Agreements will, among other things, require the Company to
indemnify the officers and directors to the fullest extent permitted by law, and
to advance to the directors all related expenses, subject to reimbursement if it
is subsequently determined that indemnification is not permitted. The Company
must also indemnify and advance all expenses incurred by directors seeking to
enforce their rights under the
62
<PAGE> 78
Indemnification Agreements, and cover directors under the Company's directors'
liability insurance. Although the Indemnification Agreements will offer
substantially the same scope of coverage afforded by provisions in the
Certificate of Incorporation and the Bylaws, they provide greater assurance to
directors that indemnification will be available, because, as contracts, they
cannot be modified unilaterally in the future by the Company Board or by the
stockholders to eliminate the rights provided, an action that is possible with
respect to the relevant provisions of the Bylaws, at least as to prospective
elimination of such rights.
There has not been in the past and there is not presently pending any
litigation or proceeding involving a director, officer, employee or agent of the
Company in which indemnification would be required or permitted by the new
Indemnification Agreements. In addition, the Company Board is not aware of any
threatened litigation or proceeding which may result in a claim for
indemnification under any Indemnification Agreement.
The DGCL provides that a contract between a corporation and a director
thereof is not void or voidable solely because the interested director is
present at the meeting authorizing the contract if the material facts relating
to the contract are known to the board of directors and the board of directors
in good faith authorizes the contract by the affirmative vote of a majority of
the disinterested directors, or the material facts relating to the contract are
known to the stockholders and the stockholders in good faith authorize the
contract, or the contract is fair to the corporation at the time it is
authorized or approved. It is anticipated that Dial will ratify and approve the
Company Board's authorization of the Indemnification Agreements.
63
<PAGE> 79
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report........................................................... F-2
Combined Balance Sheet at December 30, 1995 and December 31, 1994...................... F-3
Statement of Combined Income for each of the three fiscal years in the period ended
December 30, 1995.................................................................... F-4
Statement of Combined Cash Flows for each of the three fiscal years in the period ended
December 30, 1995.................................................................... F-5
Notes to Combined Financial Statements................................................. F-6
Combined Balance Sheet at March 30, 1996 (Unaudited)................................... F-17
Statement of Combined Income for the thirteen weeks ended March 30, 1996 and
April 1, 1995 (Unaudited)............................................................ F-18
Statement of Combined Cash Flows for the thirteen weeks ended March 30, 1996 and April
1, 1995 (Unaudited).................................................................. F-19
Notes to Combined Financial Statements (Unaudited)..................................... F-20
</TABLE>
F-1
<PAGE> 80
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of The Dial Corp:
We have audited the accompanying combined balance sheet of The Dial Corp
Consumer Products Business as of December 30, 1995 and December 31, 1994, and
the related combined statements of income and cash flows for each of the three
fiscal years in the period ended December 30, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the financial position of The Dial Corp Consumer Products
Business as of December 30, 1995 and December 31, 1994, and the results of its
operations and its cash flows for each of the three fiscal years in the period
ended December 30, 1995 in conformity with generally accepted accounting
principles.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Phoenix, Arizona
May 24, 1996
F-2
<PAGE> 81
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
COMBINED BALANCE SHEET
(000 OMITTED)
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 5,884 $ 5,897
Receivables, less allowance of $3,826 and $3,898................. 39,647 93,167
Inventories...................................................... 153,813 155,806
Deferred income taxes............................................ 32,301 23,081
Other current assets............................................. 3,418 4,572
-------- --------
Total current assets..................................... 235,063 282,523
Property and equipment............................................. 201,076 261,005
Deferred income taxes.............................................. 26,881 4,302
Intangibles........................................................ 334,708 337,360
Other assets....................................................... 677 2,183
-------- --------
$798,405 $887,373
======== ========
LIABILITIES AND DIAL INVESTMENT AND ADVANCES
Current liabilities:
Short-term bank loans............................................ $ 317 $ 16
Trade accounts payable........................................... 79,502 99,815
Income taxes payable............................................. 2,765 23,003
Other current liabilities........................................ 106,266 102,951
Current portion of long-term debt................................ 550 550
-------- --------
Total current liabilities................................ 189,400 226,335
Long-term debt..................................................... 2,453 2,944
Pension and other benefits......................................... 103,137 95,498
Other liabilities.................................................. 7,185 6,893
Commitments and contingent liabilities (Notes K, L, M and N).......
Dial investment and advances....................................... 496,230 555,703
-------- --------
$798,405 $887,373
======== ========
</TABLE>
See Notes to Combined Financial Statements.
F-3
<PAGE> 82
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
STATEMENT OF COMBINED INCOME
(000 OMITTED)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 25,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net sales............................................. $1,365,290 $1,511,362 $1,420,173
---------- ---------- ----------
Costs and expenses:
Cost of products sold............................... 709,176 745,963 701,884
Selling, general and administrative expenses........ 544,170 605,391 579,076
Restructuring charges and asset write-downs......... 135,600
---------- ---------- ----------
1,388,946 1,351,354 1,280,960
---------- ---------- ----------
Operating income (loss)............................. (23,656) 160,008 139,213
Interest expense...................................... 23,360 12,468 5,909
---------- ---------- ----------
Income (loss) before income taxes..................... (47,016) 147,540 133,304
Income taxes (benefit)................................ (19,527) 56,468 49,123
---------- ---------- ----------
NET INCOME (LOSS)..................................... $ (27,489) $ 91,072 $ 84,181
========== ========== ==========
</TABLE>
See Notes to Combined Financial Statements.
F-4
<PAGE> 83
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
STATEMENT OF COMBINED CASH FLOWS
(000 OMITTED)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 25,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income (loss)................................... $(27,489) $ 91,072 $ 84,181
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization.................... 29,118 34,910 33,583
Deferred income taxes............................ (34,733) 875 (5,253)
Restructuring charges and asset write-downs...... 135,600
Change in operating assets and liabilities:
Receivables.................................... 70,802 (23,453) (27,264)
Inventories.................................... 5,695 (542) (16,567)
Trade accounts payable......................... (22,356) 3,182 17,930
Other assets and liabilities, net.............. (66,329) (20,801) 2,896
-------- -------- ---------
Net cash provided by operating activities........... 90,308 85,243 89,506
-------- -------- ---------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Capital expenditures................................ (27,214) (37,471) (40,605)
Acquisitions of businesses, net of cash acquired.... (23,558) (79,000)
Proceeds from sales of property and equipment....... 7,099 1,313 667
-------- -------- ---------
Net cash used by investing activities............... (43,673) (36,158) (118,938)
-------- -------- ---------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Payments on long-term borrowings.................... (491) (495) (25,043)
Net change in short-term bank loans................. 301 (2,058) (396)
Net change in receivables sold...................... (14,290) (6,000) (15,000)
Cash transfers (to) from Dial, net.................. (32,168) (35,829) 67,977
-------- -------- ---------
Net cash provided (used) by financing activities.... (46,648) (44,382) 27,538
-------- -------- ---------
Net (decrease) increase in cash and cash
equivalents...................................... (13) 4,703 (1,894)
Cash and cash equivalents, beginning of year........ 5,897 1,194 3,088
-------- -------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR................ $ 5,884 $ 5,897 $ 1,194
======== ======== =========
</TABLE>
See Notes to Combined Financial Statements.
F-5
<PAGE> 84
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS
FISCAL YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994
AND DECEMBER 25, 1993
A. BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND RELATED INFORMATION.
On February 15, 1996, The Dial Corp ("Dial") announced that its Board of
Directors had approved a proposal for a strategic restructuring which would
separate Dial's consumer products and services businesses so that each would
become an independent and more focused publicly traded company. Common
stockholders of Dial are expected to receive a special dividend of one share of
the consumer products company for each Dial common share owned on the record
date (the "Distribution").
The Distribution is subject to final approval by the Dial Board of
Directors and to certain conditions, including the receipt of a ruling from the
Internal Revenue Service that the proposed transaction is tax-free and
confirmation that each of the two separate companies will retain
investment-grade credit ratings for the senior debt. The Distribution is
expected to be effected in August 1996.
Principles of Combination. The Combined Financial Statements present the
financial position, results of operations and cash flows of the divisions and
subsidiaries comprising the Consumer Products Business (the "Company") of Dial
as if the Company had been formed as a separate entity for all periods
presented. Dial's historical cost basis of the assets and liabilities have been
carried over to the Company. All material intercompany balances and transactions
among the entities comprising the Company have been eliminated. Per share data
for net income (loss) and dividends have not been presented, as the Company was
not a publicly held company during the periods presented.
Description of Business. The Company operates in a single business segment
which includes four product categories: Personal Care, Detergent, Household and
Food. Through the four product categories, the Company manufactures and markets
an array of brand-name consumer products such as DIAL liquid and bar soaps,
RENUZIT air fresheners, BRILLO cleaning pads, PUREX detergents, and ARMOUR STAR
canned meats, among others.
Products are produced in shared manufacturing plants or by contract
manufacturers, shipped from common distribution facilities and sold through a
national sales organization and brokers, principally in North America. Research
and administrative functions are centralized.
B. SIGNIFICANT ACCOUNTING POLICIES
The Combined Financial Statements are prepared in accordance with generally
accepted accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The Company's fiscal year ends on the last Saturday in December. Fiscal
years 1995 and 1993 consisted of 52 weeks and 1994 consisted of 53 weeks.
Revenue Recognition. Sales are recorded at the time products are shipped
to trade customers.
Major Customers. Major customers are defined as those which individually
accounted for more than 10% of the Company's sales. Sales to a major customer
accounted for 11%, 12% and 9% of the Company's combined sales in 1995, 1994 and
1993, respectively.
Marketing and Research and Development Costs. All expenditures for
marketing and research and development are charged against earnings in the year
incurred and are reported in the Statement of Combined Income under the caption,
"Selling, general and administrative expenses." Marketing costs include the
costs of advertising and various sales promotional programs.
F-6
<PAGE> 85
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Cash Equivalents. The Company considers all highly liquid investments with
original maturities of three months or less from date of purchase as cash
equivalents.
Inventories. Generally, inventories are stated at the lower of cost
(first-in, first-out and average cost methods) or market.
Impairment of Long-Lived Assets. In the fourth fiscal quarter of 1995, the
Company elected the early adoption of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." The adoption of SFAS No. 121 had
no material effect on the combined financial statements. SFAS No. 121
establishes the accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets which are
to be held and used and for long-lived assets and certain identifiable
intangibles which are to be disposed of.
In accordance with the provisions of SFAS No. 121, the Company reviews the
carrying values of its long-lived assets and identifiable intangibles for
possible impairment whenever events or changes in circumstances indicate that
the carrying amount of assets to be held and used may not be recoverable. SFAS
No. 121 requires that for assets to be held and used, if the sum of the expected
future undiscounted cash flows is less than the carrying amount of the asset, an
impairment loss should be recognized, measured as the amount by which the
carrying amount exceeds the fair value of the asset. For assets to be disposed
of, the Company reports long-lived assets and certain identifiable intangibles
at the lower of carrying amount or fair value less cost to sell.
Property and Equipment. Property and equipment are stated at cost, net of
impairment write-downs.
Depreciation is provided principally by use of the straight-line method at
annual rates as follows:
<TABLE>
<S> <C>
Buildings.................................... 2% to 5%
Machinery and other equipment................ 5% to 33%
Leasehold improvements....................... Lesser of lease term or useful life
</TABLE>
Intangibles. Intangibles are carried at cost less accumulated
amortization. Intangibles which arose prior to November 1, 1970, as a result of
Dial's initial investment in the Company, are not being amortized. Goodwill
arising on or after November 1, 1970 is amortized on the straight-line method
over the periods of expected benefit, but not in excess of 40 years. Trademarks
are amortized on the straight-line method over 40 years. The customer list arose
from the acquisition of Purex and is being amortized over 30 years. The Company
evaluates the carrying value of goodwill and other intangible assets at each
reporting period for possible impairment in accordance with the provisions of
SFAS No. 121 described above. Prior to the adoption of SFAS No. 121, the Company
evaluated the possible impairment of goodwill and other intangible assets based
on the undiscounted projected operating income of the related business unit.
Pension and Other Benefits. Trusteed, noncontributory pension plans cover
substantially all employees, with benefit levels supplemented in most cases by
defined matching common stock contributions to employees' 401(k) plans. Defined
benefits are based primarily on final average salary and years of service.
Funding policies provide that payments to defined benefit pension trusts shall
be at least equal to the minimum funding required by applicable regulations.
The Company has defined benefit postretirement plans that provide medical
and life insurance for eligible retirees and dependents. The related
postretirement benefit liabilities are recognized over the period that services
are provided by employees.
Foreign Currency Translation. In accordance with SFAS No. 52, "Foreign
Currency Translation," the assets and liabilities of the Company's foreign
subsidiaries are translated into U.S. dollars at exchange rates in effect at the
balance sheet date, with resulting unrealized translation gains and losses
included in Dial
F-7
<PAGE> 86
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
investment and advances. Income and expense items are converted into U.S.
dollars at average rates of exchange prevailing during the year.
Stock-Based Compensation. In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation."
SFAS No. 123 defines a fair value based method of accounting for an employee
stock option or similar equity instrument. As permitted by SFAS No. 123, the
Company has currently elected to continue to measure cost for its stock-based
compensation plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly, beginning in 1996, the Company will be
required to make pro forma disclosures of net income and earnings per share, as
if the fair value based method of accounting defined in SFAS No. 123 had been
applied.
C. ACQUISITIONS OF BUSINESSES
The Company acquired a small foreign soap manufacturer in 1995 and an air
freshener line in 1993. Both acquisitions were accounted for as purchases. The
purchase prices, including acquisition costs, were allocated to the net tangible
and intangible assets acquired based on estimated fair values at the dates of
the acquisitions. The difference between the purchase prices and the related
fair values of net assets acquired represents goodwill which is being amortized
on a straight-line basis over 40 years. The fair value of patents and other
intangible assets included in the acquisitions is amortized over their estimated
useful lives. The results of the acquired operations have been included in the
Statement of Combined Income from the dates of acquisition. The results of
operations of the acquired businesses from the beginning of the year to the
dates of acquisition are not material.
Net cash paid, assets acquired and debt and other liabilities assumed in
all acquisitions for the fiscal years ended 1995 and 1993 were as shown in the
table below. There were no acquisitions of businesses in 1994.
<TABLE>
<CAPTION>
1995 1993
------- --------
(000 OMITTED)
<S> <C> <C>
Assets acquired:
Property and equipment........................................ $ 4,766 $ 4,500
Intangibles................................................... 10,515 77,363
Other assets.................................................. 10,361 14,687
Debt and other liabilities assumed.............................. (2,084) (17,550)
------- --------
Net cash paid................................................... $23,558 $ 79,000
======= ========
</TABLE>
D. RESTRUCTURING CHARGES AND ASSET WRITE-DOWNS
In the third fiscal quarter of 1995, the Company recorded restructuring and
other charges to provide for a business-based reorganization through plant
closings, workforce reductions and correction of certain product lines. The
Company is closing six plants (Clearing, Illinois; Burlington, Iowa; Auburndale,
Florida; Omaha, Nebraska; Memphis, Tennessee; and New Berlin, Wisconsin) and is
reducing its workforce by approximately 15 percent, or 700 people, substantially
all of whom are based in the plants to be closed. As of December 30, 1995, the
Clearing plant had been closed and sold, and the Consumer Products workforce had
been reduced by approximately 100 employees. The remaining actions are expected
to be completed by the end of 1996. Future earnings are expected to benefit from
efficiencies resulting from streamlining/consolidating product lines for the
remaining facilities through increased volume and reduced costs.
In conjunction with the restructuring, the recoverability of intangibles
was evaluated based on current projections of the undiscounted operating income
of the related business unit. Based upon these evaluations,
F-8
<PAGE> 87
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
the carrying amount of certain intangibles, primarily trademarks, were
determined to be impaired and were written off as part of the third-quarter
charge.
Other asset write-downs primarily represent the excess of the net book
value of plants and equipment to be disposed of over estimated net recoveries.
Severance pay and benefits and exit costs (primarily facility closure costs)
have been recognized in accordance with Emerging Issues Task Force Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." As of December 30, 1995, severance and exit costs totaling
$1,800,000 and $11,500,000, respectively, had been paid and charged against
these reserves. Remaining severance and exit cost reserves of $24,800,000 are
believed to be adequate. These remaining obligations are expected to be paid
from cash provided by operating activities.
The total amount of charges recorded was $156,000,000 (before tax benefit),
of which $20,400,000 was charged to cost of products sold and $135,600,000 was
classified in the Statement of Combined Income under the caption, "Restructuring
charges and asset write-downs," as follows:
<TABLE>
<CAPTION>
(000 OMITTED)
<S> <C>
Asset write-downs:
Intangibles................................................... $ 10,500
Other assets.................................................. 87,000
Severance pay and benefits...................................... 14,800
Exit costs...................................................... 23,300
--------
135,600
Tax benefit..................................................... (53,500)
--------
Restructuring charges and asset write-downs..................... $ 82,100
========
</TABLE>
E. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(000 OMITTED)
<S> <C> <C>
Raw materials and supplies................................. $ 42,659 $ 43,877
Work in process............................................ 8,495 5,035
Finished goods............................................. 102,659 106,894
-------- --------
Inventories................................................ $153,813 $155,806
======== ========
</TABLE>
F-9
<PAGE> 88
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
F. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(000 OMITTED)
<S> <C> <C>
Land....................................................... $ 5,475 $ 11,571
Buildings and leasehold improvements....................... 79,845 100,829
Machinery and other equipment.............................. 301,763 363,072
Construction in progress................................... 16,517 29,215
--------- ---------
403,600 504,687
Less accumulated depreciation.............................. (202,524) (243,682)
--------- ---------
Property and equipment..................................... $ 201,076 $ 261,005
========= =========
</TABLE>
G. INTANGIBLES
Intangibles consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(000 OMITTED)
<S> <C> <C>
Goodwill(1)................................................ $233,854 $225,534
Trademarks................................................. 73,967 83,244
Customer list and other intangibles........................ 99,939 97,418
-------- --------
407,760 406,196
Less accumulated amortization.............................. (73,052) (68,836)
-------- --------
Intangibles................................................ $334,708 $337,360
======== ========
</TABLE>
- ---------------
(1) Includes $155,259,000 of goodwill which arose prior to November 1, 1970, and
is not being amortized.
H. OTHER CURRENT LIABILITIES
Other current liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(000 OMITTED)
<S> <C> <C>
Accrued compensation....................................... $ 14,046 $ 21,060
Accrued trade promotions................................... 22,378 26,221
Severance and exit cost reserves........................... 24,800
Other...................................................... 45,042 55,670
-------- --------
Other current liabilities.................................. $106,266 $102,951
======== ========
</TABLE>
I. DEBT
Long-term debt at December 30, 1995 and December 31, 1994 consisted of
Industrial Revenue Bonds at 6.75% interest, payable to 2003. Such long-term debt
was prepaid in March 1996 to permit the sale of the related facility. In
addition, the Company has certain foreign revolving credit loans from banks
under agreements which provide for credit of $6,625,000 (stated in U.S. dollar
equivalent), of which $317,000 and
F-10
<PAGE> 89
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
$16,000 was outstanding at December 30, 1995 and December 31, 1994,
respectively, and is reflected in the accompanying Combined Balance Sheet under
the caption, "Short-term bank loans."
Interest paid was not significantly different from interest expense for
1995, 1994 and 1993.
J. INCOME TAXES
Dial generally credits or charges the U.S. operations of the Company an
amount equal to the tax reductions realized or tax payments made by Dial as a
result of including the Company's U.S. tax results and credits in Dial's
consolidated federal income tax return and Dial's state income tax returns.
Under Dial's policies, income taxes charged will not be more, and may be less,
than taxes determined on a separate return basis.
Deferred income tax assets (liabilities) included in the Combined Balance
Sheet related to the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(000 OMITTED)
<S> <C> <C>
Property and equipment..................................... $(21,938) $(38,323)
Pension and other employee benefits........................ 39,433 35,364
Provisions for losses...................................... 26,785 15,679
Amortization of intangibles................................ 7,087 4,016
Deferred state income taxes................................ 3,739 1,441
Other deferred income tax assets........................... 9,287 11,501
Other deferred income tax liabilities...................... (5,211) (2,295)
-------- --------
Deferred tax assets........................................ $ 59,182 $ 27,383
======== ========
</TABLE>
The combined provision (benefit) for income taxes consisted of the
following:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
(000 OMITTED)
<S> <C> <C> <C>
Current:
United States:
Federal......................................... $ 11,518 $48,019 $51,598
State........................................... 549 7,367 4,435
Foreign............................................ 3,139 207 (1,657)
-------- ------- -------
15,206 55,593 54,376
-------- ------- -------
Deferred:
United States:
Federal......................................... (28,057) 683 (4,749)
State........................................... (3,778) 192 (504)
Foreign............................................ (2,898)
-------- ------- -------
(34,733) 875 (5,253)
-------- ------- -------
Provision (benefit) for income taxes................. $(19,527) $56,468 $49,123
======== ======= =======
</TABLE>
Income taxes paid in 1995, 1994 and 1993 amounted to $32,237,000,
$67,550,000 and $30,849,000, respectively.
F-11
<PAGE> 90
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the provision for income taxes and the amount that
would be computed using statutory federal income tax rates was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(000 OMITTED)
<S> <C> <C> <C>
Computed income taxes (benefit) at statutory
federal income tax rate of 35%................... $(16,456) $51,639 $46,656
Nondeductible goodwill amortization................ 972 565 640
State income taxes (benefit)....................... (2,099) 4,913 2,555
Adjustment of deferred tax assets at January 1,
1993 for enacted change in tax rate.............. (535)
Other, net......................................... (1,944) (649) (193)
-------- ------- -------
Provision (benefit) for income taxes............... $(19,527) $56,468 $49,123
======== ======= =======
</TABLE>
United States and foreign income (loss) before income taxes was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(000 OMITTED)
<S> <C> <C> <C>
United States...................................... $(47,031) $145,960 $137,027
Foreign............................................ 15 1,580 (3,723)
------- -------- --------
Income (loss) before income taxes.................. $(47,016) $147,540 $133,304
======= ======== ========
</TABLE>
K. PENSION AND OTHER BENEFITS
The Company's employees have participated in Dial's incentive compensation,
pension, stock option and other benefit plans as described elsewhere herein. In
connection with the Distribution, the Company expects to adopt employee benefit
plans which are substantially similar to certain of the Dial plans.
Pension Benefits. The Company's U.S. employees have participated primarily
in Dial pension plans. Dial has maintained trusteed, noncontributory pension
plans covering substantially all U.S. based employees of the Company. Net
periodic pension cost is based on the provisions of SFAS No. 87, "Employers'
Accounting for Pensions."
Net periodic pension cost included the following components:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
(000 OMITTED)
<S> <C> <C> <C>
Service cost benefits earned during the period....... $ 4,483 $ 5,225 $ 4,218
Interest cost on projected benefit obligation........ 6,951 6,533 6,219
Actual return on plan assets - (gain) loss........... (14,841) 174 (5,721)
Net amortization and deferral........................ 8,973 (4,788) 1,292
Other items, primarily defined contribution and
multiemployer plans................................ 3,154 2,625 3,713
-------- ------- -------
Net pension cost..................................... $ 8,720 $ 9,769 $ 9,721
======== ======= =======
</TABLE>
Weighted average assumptions used were:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Discount rate for obligation......................... 8.0% 8.5% 7.75%
Rate of increase in compensation levels.............. 5.0% 5.0% 5.0%
Long-term rate of return on assets................... 9.5% 9.5% 9.5%
</TABLE>
F-12
<PAGE> 91
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The following table indicates the plans' funded status and amounts
recognized in the Company's Combined Balance Sheet:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED BENEFITS
ACCUMULATED BENEFITS EXCEED ASSETS
----------------------------- -----------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 30, DECEMBER 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
(000 OMITTED)
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation............. $ 40,179 $ 35,450 $ 24,661 $ 21,349
======= ======== ======== =======
Accumulated benefit obligation........ $ 45,550 $ 40,434 $ 28,585 $ 25,639
======= ======== ======== =======
Projected benefit obligation.......... $ 65,392 $ 56,929 $ 35,663 $ 27,375
Market value of plan assets, primarily
equity and fixed income
securities(1)......................... 58,546 46,435 24,515 20,286
------- -------- -------- -------
Plan assets under projected benefit
obligation............................ (6,846) (10,494) (11,148) (7,089)
Unrecognized transition (asset)
obligation............................ (145) (163) 1,727 2,542
Unrecognized prior service cost
(reduction)........................... (748) (989) 6,665 2,531
Unrecognized net (gain) loss............ 2,047 6,106 (4,286) (3,257)
Additional minimum liability............ (143) (406)
------- -------- -------- -------
Accrued pension cost.................... $ (5,692) $ (5,540) $ (7,185) $ (5,679)
======= ======== ======== =======
</TABLE>
- ---------------
(1) The assets reported represent primarily the portion of the trust assets
funding Dial's joint defined benefit plan allocated to the Company under
separate SFAS No. 87 calculations. In conjunction with the Distribution,
assets will be transferred from the trust funding the joint defined benefit
plan to a new trust funding the Company's defined benefit plan based upon
actuarial determinations made in conformity with regulatory requirements,
with provision for payment by Dial (from a source other than the trust) to
the Company of an amount in cash equal to the excess of the amount of assets
allocated to the Company under separate SFAS No. 87 calculations over the
amount allocated in accordance with regulatory requirements. Preliminary
estimates indicate that the plan trust assets at the Distribution Date
attributable to Company plan participants will exceed the accumulated
benefit obligation for such participants determined in accordance with SFAS
No. 87. For all free-standing qualified plans attributable directly to the
Company, the related trust assets will be transferred based upon the amounts
in the respective plans' trusts.
Postretirement Benefits Other Than Pensions. The Company has defined
benefit postretirement plans that provide medical and life insurance for
eligible employees, retirees and dependents.
F-13
<PAGE> 92
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The status of the plans was as follows:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(000 OMITTED)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $ 28,887 $ 27,862
Fully eligible active plan participants.................. 19,512 17,203
Other active plan participants........................... 38,089 39,077
------- -------
Accumulated postretirement benefit obligation.............. 86,488 84,142
Unrecognized prior service reduction....................... 2,410
Unrecognized net gain...................................... 7,272 5,850
------- -------
Accrued postretirement benefit cost........................ $ 96,170 $ 89,992
======= =======
Discount rate for obligation............................... 8.0% 8.5%
</TABLE>
The assumed health care cost trend rate used in measuring the 1995
accumulated postretirement benefit obligation was 12% gradually declining to 5%
by the year 2002 and remaining at that level thereafter for retirees below age
65, and 8.5% gradually declining to 5% by the year 2002 and remaining at that
level thereafter for retirees above age 65. This is a 0.5% decrease from the
trend rates used for 1995 and later years in 1994's valuations.
A one-percentage-point increase in the assumed health care cost trend rate
for each year would increase the accumulated postretirement benefit obligation
as of December 30, 1995 by approximately 17% and the ongoing annual expense by
approximately 21%.
The net periodic postretirement benefit cost includes the following
components:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------- ------
(000 OMITTED)
<S> <C> <C> <C>
Service cost-benefits attributed to service during the
period................................................ $2,979 $ 3,623 $2,687
Interest cost on the accumulated postretirement benefit
obligation............................................ 6,695 6,572 6,406
Net amortization and deferral........................... (233)
------ ------- ------
Net periodic postretirement benefit cost................ $9,441 $10,195 $9,093
====== ======= ======
</TABLE>
L. LEASES
One plant, certain offices and equipment are leased. The leases expire in
periods ranging generally from one to five years and some provide for renewal
options ranging from one to eight years. Leases which expire are generally
renewed or replaced by similar leases. Net rent expense paid in 1995, 1994 and
1993 totaled $3,234,000, $3,319,000 and $3,249,000, respectively.
At December 30, 1995, the Company's future minimum rental payments with
respect to noncancellable operating leases with terms in excess of one year were
as follows: $3,760,000 (1996), $1,893,000 (1997), $1,146,000 (1998), $442,000
(1999) and $154,000 (2000).
M. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND FAIR VALUE OF FINANCIAL
INSTRUMENTS
Financial Instruments with Off-Balance-Sheet Risk. At December 30, 1995,
Dial had an agreement to sell undivided participating interests in a defined
pool of trade accounts receivable from customers of the Company and other Dial
businesses in an amount not to exceed $140,000,000 as a means of accelerating
cash flow. From time to time, as collections reduce accounts receivable included
in the pool, Dial sells participating
F-14
<PAGE> 93
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
interests in new receivables. The Company's expenses of selling receivables
amounted to approximately $2,323,000, $3,941,000 and $3,341,000 in 1995, 1994
and 1993, respectively, and are included in the Statement of Combined Income
under the caption, "Selling, general and administrative expenses." Under the
terms of the agreement the Company has retained substantially the same risk of
credit loss as if the receivables had not been sold as Dial is obligated to
replace uncollectible receivables with new accounts receivable. The Company's
accounts receivable sold totaled $76,710,000 and $91,000,000 at December 30,
1995 and December 31, 1994, respectively. The Company's average balance of
accounts receivable sold approximated $33,500,000, $79,700,000 and $89,000,000
during 1995, 1994 and 1993, respectively. The agreement has a maturity date of
the earlier of February 1997 or the date on which the Company becomes a new
publicly traded company, unless separate replacement agreements are put in
place.
Fair Value of Financial Instruments. The carrying values of cash and cash
equivalents, receivables, accounts payable and short-term bank loans approximate
fair values due to the short-term maturities of these instruments. As disclosed
in Note I of Notes to Combined Financial Statements, the Company's long-term
debt was prepaid in March 1996.
N. LITIGATION AND CLAIMS
The Company is party to various legal actions, proceedings and pending
claims. Some of the foregoing involve, or may involve, compensatory, punitive or
other damages in material amounts. Litigation is subject to many uncertainties
and it is possible that some of the legal actions, proceedings or claims
referred to above could be decided against the Company. Although the amount of
liability at December 30, 1995 with respect to these matters is not
ascertainable, the Company believes that any resulting liability will not
materially affect the Company's financial position or results of operations.
The Company is subject to various environmental laws and regulations of the
United States as well as of the states and other countries in whose
jurisdictions the Company has or had operations and is subject to certain
international agreements. As is the case with many companies, the Company faces
exposure to actual or potential claims and lawsuits involving environmental
matters. Although the Company is a party to certain environmental disputes, the
Company believes that any liabilities resulting therefrom, after taking into
consideration amounts already provided for, but exclusive of any potential
insurance recoveries, will not have a material adverse effect on the Company's
financial position or results of operations.
O. TRANSACTIONS WITH THE DIAL CORP
Dial provides office space and services to the Company, and Dial's
executive, financial, legal, tax and other corporate staff departments perform
certain services for the Company at charges which are intended to provide no
profit to Dial. Expenses incurred by Dial and allocated to its subsidiaries,
including the Company, are primarily determined based on specific identification
of the individual services and expense items or are allocated to individual
entities primarily based on assets, operating income or square footage.
Management is of the opinion that such methods of expense allocation are
reasonable. It is not practicable to estimate the expenses that would have been
incurred by the Company if it had been operated on a stand-alone basis.
Allocated expenses totaled $9,634,000, $11,233,000 and $10,849,000 for 1995,
1994 and 1993, respectively, and are included in the Statement of Combined
Income under the caption, "Selling, general and administrative expenses."
Interest expense charged to the Company by Dial was $21,821,000, $11,437,000 and
$1,961,000 for 1995, 1994 and 1993, respectively. The average balance of
interest-bearing advances from Dial was $240,221,000, $163,074,000 and
$46,610,000 for 1995, 1994 and 1993, respectively. Interest is charged by Dial
based on the prime lending rate.
F-15
<PAGE> 94
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
An analysis of the activity in "Dial investment and advances" was as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(000 OMITTED)
<S> <C> <C> <C>
Balance, beginning of year......................... $555,703 $502,199 $350,799
Net income (loss)................................ (27,489) 91,072 84,181
Unrealized translation gain (loss)............... 184 (1,739) (758)
Cash transfers (to) from Dial, net............... (32,168) (35,829) 67,977
-------- -------- --------
Balance, end of year............................... $496,230 $555,703 $502,199
======== ======== ========
</TABLE>
Pursuant to the Distribution, the Company and Dial will enter into several
agreements, including the Distribution Agreement, Tax Sharing Agreement, Lease
Agreement, Interim Services Agreement, and Aircraft Joint Ownership Agreement.
Reference is made to the summaries of these agreements included elsewhere
herein.
P. CONDENSED COMBINED QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
FISCAL QUARTER FISCAL QUARTER FISCAL QUARTER FISCAL QUARTER
--------------------- --------------------- ---------------------- ---------------------
1995 1994 1995 1994 1995 1994 1995 1994
-------- -------- -------- -------- --------- -------- -------- --------
(000 OMITTED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.............. $337,862 $330,340 $363,893 $408,115 $ 308,110 $363,399 $355,425 $409,508
======== ======== ======== ======== ======== ======== ======== ========
Gross profit........... $164,975 $167,418 $178,206 $211,867 $ 139,679 $183,586 $173,254 $202,528
======== ======== ======== ======== ======== ======== ======== ========
Operating income
(loss)(1)............ $ 33,802 $ 30,152 $ 51,134 $ 49,978 $(124,444) $ 40,427 $ 15,852 $ 39,451
======== ======== ======== ======== ======== ======== ======== ========
Net income (loss)(1)... $ 18,247 $ 16,662 $ 27,868 $ 28,553 $ (78,109) $ 22,820 $ 4,505 $ 23,037
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
- ---------------
(1) After deducting restructuring charges and asset write-downs of $135,600,000
($82,100,000 after-tax) in the 1995 third quarter.
F-16
<PAGE> 95
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
COMBINED BALANCE SHEET
(UNAUDITED)
MARCH 30, 1996
(000 OMITTED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................... $ 4,326
Receivables, less allowance of $3,798........................................... 39,537
Inventories..................................................................... 159,270
Deferred income taxes........................................................... 31,585
Other current assets............................................................ 5,272
--------
Total current assets............................................................ 239,990
Property and equipment............................................................ 204,139
Deferred income taxes............................................................. 28,765
Intangibles....................................................................... 332,566
Other assets...................................................................... 572
--------
$806,032
========
LIABILITIES AND DIAL INVESTMENT AND ADVANCES
Current liabilities:
Short-term bank loans........................................................... $ 309
Trade accounts payable.......................................................... 87,685
Income taxes payable............................................................ 14,736
Other current liabilities....................................................... 91,791
--------
Total current liabilities....................................................... 194,521
Pension and other benefits........................................................ 105,024
Other liabilities................................................................. 7,243
Dial investment and advances...................................................... 499,244
--------
$806,032
========
</TABLE>
See Notes to Combined Financial Statements.
F-17
<PAGE> 96
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
STATEMENT OF COMBINED INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------------------
MARCH 30, 1996 APRIL 1, 1995
-------------- -------------
(000 OMITTED)
<S> <C> <C>
Net sales......................................................... $352,392 $ 337,862
-------- --------
Costs and expenses:
Cost of products sold........................................... 173,350 172,887
Selling, general and administrative expenses.................... 142,700 131,173
-------- --------
316,050 304,060
-------- --------
Operating income.................................................. 36,342 33,802
Interest expense.................................................. 4,603 4,343
-------- --------
Income before income taxes........................................ 31,739 29,459
Income taxes...................................................... 12,131 11,212
-------- --------
NET INCOME........................................................ $ 19,608 $ 18,247
======== ========
</TABLE>
See Notes to Combined Financial Statements.
F-18
<PAGE> 97
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
STATEMENT OF COMBINED CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------------------
MARCH 30, 1996 APRIL 1, 1995
-------------- -------------
(000 OMITTED)
<S> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income........................................................ $ 19,608 $ 18,247
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................... 7,330 9,058
Deferred income taxes........................................... (1,232) 2,532
Change in operating assets and liabilities:
Receivables.................................................. (1,099) 33,713
Inventories.................................................. (5,457) (2,923)
Trade accounts payable....................................... 8,183 (37,735)
Other assets and liabilities, net............................ (3,055) (27,004)
--------- ---------
Net cash provided (used) by operating activities.................. 24,278 (4,112)
--------- ---------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Capital expenditures.............................................. (8,034) (4,692)
Proceeds from sales of property and equipment..................... 125 137
--------- ---------
Net cash used by investing activities............................. (7,909) (4,555)
--------- ---------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Payments on long-term borrowings.................................. (3,003)
Net change in short-term bank loans............................... (8) 203
Net change in receivables sold.................................... 1,209 3,900
Cash transfers (to) from Dial, net................................ (16,125) 1,723
--------- ---------
Net cash provided (used) by financing activities.................. (17,927) 5,826
--------- ---------
Net decrease in cash and cash equivalents......................... (1,558) (2,841)
Cash and cash equivalents, beginning of year...................... 5,884 5,897
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD:......................... $ 4,326 $ 3,056
========= =========
</TABLE>
See Notes to Combined Financial Statements.
F-19
<PAGE> 98
THE DIAL CORP CONSUMER PRODUCTS BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
THIRTEEN WEEKS ENDED MARCH 30, 1996 AND APRIL 1, 1995
A. BASIS OF PRESENTATION
These financial statements should be read in conjunction with the financial
statements set forth in The Dial Corp Consumer Products Business Combined
Financial Statements and the notes thereto for each of the three years in the
period ended December 30, 1995. Accounting policies utilized in the preparation
of these financial statements are the same as set forth in such combined
Financial Statements except as modified for interim accounting policies which
are within the guidelines set forth in Accounting Principles Board Opinion No.
28,"Interim Financial Reporting."
The interim combined financial statements are unaudited. In the opinion of
management, all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position as of March 30, 1996, and the
results of operations and cash flows for the thirteen weeks ended March 30, 1996
and April 1, 1995, have been included. Interim results of operations are not
necessarily indicative of the results of operations for the year.
F-20
<PAGE> 99
ANNEX A
FORM OF
DISTRIBUTION AGREEMENT
BY AND AMONG
THE DIAL CORP,
A DELAWARE CORPORATION,
THE DIAL CORPORATION,
A DELAWARE CORPORATION,
AND
EXHIBITGROUP INC.,
A DELAWARE CORPORATION
<PAGE> 100
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <C> <S> <C>
I. Definitions...................................................................... A-1
1.01 General.................................................................. A-1
1.02 References to Time....................................................... A-8
II. Certain Transactions Prior to the Distribution Date.............................. A-8
2.01 Share Purchase Rights Plan; Certificate of Incorporation; Bylaws......... A-8
2.02 Issuance of Stock........................................................ A-8
2.03 Transfer of Assets and Assumption of Liabilities......................... A-8
2.04 Conduct of Business Pending the Distribution Date........................ A-8
2.05 Refinancing.............................................................. A-8
2.06 Registration and Listing................................................. A-8
2.07 Merger................................................................... A-9
2.08 Name Change.............................................................. A-9
III. The Distribution................................................................. A-9
3.01 Record Date and Distribution Date........................................ A-9
3.02 The Agent................................................................ A-9
3.03 Delivery of Share Certificates to the Agent.............................. A-9
3.04 Distribution............................................................. A-9
3.05 Payment in Lieu of Fractional Shares..................................... A-9
IV. Survival, Assumption and Indemnification......................................... A-9
4.01 Survival of Agreements................................................... A-9
4.02 Taxes and Employee-Related Assets and Liabilities........................ A-9
4.03 Assumption and Indemnification........................................... A-10
4.04 Procedure for Indemnification............................................ A-11
4.05 Remedies Cumulative...................................................... A-12
</TABLE>
<TABLE>
<C> <C> <S> <C>
V. Certain Additional Covenants..................................................... A-12
5.01 Further Assurances....................................................... A-12
5.02 Dial Consumer Products Board............................................. A-13
5.03 Continuing Contractual Arrangements...................................... A-13
5.04 Intercompany Accounts.................................................... A-13
5.05 Cash Accounts............................................................ A-13
5.06 Other Agreements......................................................... A-13
5.07 Transfer Taxes........................................................... A-13
5.08 Consumer Products Support Agreements..................................... A-13
VI. Access to Information............................................................ A-14
6.01 Provision of Corporate Records........................................... A-14
6.02 Access to Information.................................................... A-14
6.03 Production of Witnesses.................................................. A-14
</TABLE>
<PAGE> 101
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<C> <C> <S> <C>
6.04 Retention of Records..................................................... A-14
6.05 Confidentiality.......................................................... A-14
VII. Employee Benefits................................................................ A-15
7.01 Qualified Plans.......................................................... A-15
7.02 Supplemental Plans....................................................... A-16
7.03 Deferred Compensation Plan............................................... A-17
7.04 Welfare Plans............................................................ A-17
7.05 Certain Armour Plans..................................................... A-17
7.06 Stock Options; Restricted Stock.......................................... A-18
7.07 Dial Performance-Based Stock............................................. A-19
7.08 Dial ESOP................................................................ A-19
7.09 Dial Employee Equity Trust............................................... A-21
7.10 Dial Incentive Plans..................................................... A-21
7.11 Severance Pay............................................................ A-21
7.12 Directors' Plans......................................................... A-21
7.13 Dial Miscellaneous Plans; Post-Distribution Liabilities.................. A-23
7.14 Other Balance Sheet Adjustments.......................................... A-23
7.15 Preservation of Rights to Amend or Terminate Plans....................... A-23
7.16 Reimbursement; Indemnification........................................... A-23
7.17 Further Transfers........................................................ A-23
7.18 Officers and Employees................................................... A-24
7.19 Employment Agreements.................................................... A-24
7.20 Other Liabilities........................................................ A-24
7.21 Compliance............................................................... A-24
VIII. No Representations or Warranties; Exceptions..................................... A-24
8.01 No Representations or Warranties; Exceptions............................. A-24
IX. Insurance........................................................................ A-24
9.01 Insurance Policies and Rights Included Within Consumer Products Assets... A-24
9.02 Post-Distribution Date Claims............................................ A-25
9.03 Administration and Reserves.............................................. A-25
9.04 Insurance Premiums....................................................... A-25
9.05 Allocation of Insurance Proceeds; Cooperation............................ A-25
9.06 Reimbursement of Expenses................................................ A-25
9.07 Insurer Insolvency....................................................... A-26
9.08 Letters of Credit........................................................ A-26
9.09 No Reduction of Coverage................................................. A-26
9.10 Future Insurance Coverage................................................ A-26
9.11 Assistance, Waiver of Conflict and Shared Defense........................ A-26
</TABLE>
ii
<PAGE> 102
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<C> <C> <S> <C>
X. Miscellaneous.................................................................... A-26
10.01 Conditions to Obligations................................................ A-26
10.02 Complete Agreement....................................................... A-27
10.03 Expenses................................................................. A-27
10.04 Governing Law............................................................ A-28
10.05 Notices.................................................................. A-28
10.06 Amendment and Modification............................................... A-28
10.07 Successors and Assigns; No Third-Party Beneficiaries..................... A-28
10.08 Counterparts............................................................. A-28
10.09 Interpretation........................................................... A-28
10.10 Legal Enforceability..................................................... A-28
10.11 References; Construction................................................. A-29
10.12 Termination.............................................................. A-29
SIGNATURES.............................................................................. A-29
</TABLE>
EXHIBITS
A -- Aircraft Joint Ownership Agreement between Dial and Dial Consumer Products
B -- Interim Services Agreement between Dial and Dial Consumer Products
C -- Lease Agreement with Dial Consumer Products
D -- Tax Sharing Agreement between Dial and Dial Consumer Products
E -- Trademark Letter of Understanding
F -- Form of Restated Certificate of Incorporation of Dial Consumer Products
G -- Form of Bylaws of Dial Consumer Products
SCHEDULES
<TABLE>
<S> <C>
1.01(a) Collective Bargaining Agreements
1.01(b)(i) Other Assets to be Transferred to Dial Consumer Products
1.01(b)(ii) Other Liabilities of Dial Consumer Products
1.01(c) Consumer Products Insurance Policies
1.01(d) Consumer Products Subsidiaries
1.01(e) Certain Dial Liabilities
1.01(f) Dial Miscellaneous Plans
1.01(g) Insurance Policies Relating to both Dial and Dial Consumer Products
1.01(h) Welfare Plans
7.01 Consumer Products Free-Standing Qualified Plans
</TABLE>
iii
<PAGE> 103
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, dated as of July 25, 1996, by and among The
Dial Corp, a Delaware corporation ("Dial"), The Dial Corporation, a newly formed
Delaware corporation which is a wholly owned subsidiary of Dial ("Dial Consumer
Products") and Exhibitgroup Inc., a Delaware corporation and a wholly owned
subsidiary of Dial ("Exhibitgroup").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Dial and Dial Consumer Products have
determined that it is appropriate and desirable: (1) to consolidate into Dial
Consumer Products certain of the businesses currently conducted by Dial directly
and through certain of its subsidiaries and (2) to distribute to the holders of
the issued and outstanding shares of common stock, par value $1.50 per share, of
Dial all of the issued and outstanding shares of common stock, par value $0.01
per share, of Dial Consumer Products in accordance with Article III hereof (the
"Distribution");
WHEREAS, such Distribution is intended to qualify as a tax-free spinoff
under Section 355 of the Internal Revenue Code of 1986, as amended;
WHEREAS, in connection with the Distribution, (1) Exhibitgroup will merge
with and into Dial, with Dial being the surviving corporation and assuming all
of the rights and obligations of Exhibitgroup in accordance with Section 253 of
the Delaware General Corporation Law ("DGCL") (the "Exhibitgroup Merger") and
(2) LEN Inc., a wholly owned subsidiary of Dial, will merge with and into Dial,
with Dial being the surviving corporation and assuming all of the rights and
obligations of LEN Inc. in accordance with Section 253 of the DGCL, and, as a
result of such merger, the name of Dial will be changed as set forth in Section
2.08; and
WHEREAS, the parties hereto have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
such Distribution and to set forth other agreements that will govern certain
other matters prior to or following such Distribution;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound thereby, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.01 GENERAL. As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Affiliate: with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person;
provided, however, that for purposes of this Agreement, no member of either
Group shall be deemed to be an Affiliate of any member of the other Group.
Agent: Dial, which shall act as distribution agent to distribute the
shares of Dial Consumer Products Common Stock pursuant to the Distribution.
Aircraft Joint Ownership Agreement: the Aircraft Joint Ownership
Agreement to be entered into between Dial and Dial Consumer Products, in
the form attached hereto as Exhibit A, with such changes as may be mutually
satisfactory to Dial and Dial Consumer Products.
Asset: any and all assets and properties, tangible or intangible,
including the following: (1) cash, notes and accounts receivable (whether
current or non-current); (2) certificates of deposit, banker's acceptances,
stock, debentures, evidences of indebtedness, certificates of interest or
participation in profit-sharing agreements, collateral-trust certificates,
preorganization certificates or subscriptions, transferable shares,
investment contracts, voting-trust certificates, fractional undivided
interests in oil, gas or other
<PAGE> 104
mineral rights, puts, calls, straddles, options and other securities of any
kind; (3) trade secrets, confidential information, registered and
unregistered trademarks, service marks, service names, trade styles and
trade names, product bar codes and associated goodwill; statutory, common
law and registered copyrights; applications for any of the foregoing,
rights to use the foregoing and other rights in, to and under the
foregoing; (4) rights under leases, contracts, licenses, permits,
distribution arrangements, sales and purchase agreements, other agreements
and business arrangements; (5) real estate and buildings and other
improvements thereon; (6) leasehold improvements, fixtures, trade fixtures,
machinery, equipment (including transportation and office equipment),
tools, dies and furniture; (7) office supplies, production supplies, spare
parts, other miscellaneous supplies and other tangible property of any
kind; (8) raw materials, work-in-process, finished goods, consigned goods
and other inventories; (9) prepayments or prepaid expenses; (10) claims,
causes of action, choses in action, rights of recovery and rights of
set-off of any kind; (11) the right to receive mail, payments on accounts
receivable and other communications; (12) lists of advertisers, records
pertaining to advertisers and accounts, personnel records, lists and
records pertaining to suppliers and agents, and books, ledgers, files and
business records of every kind; (13) advertising materials and other
printed or written materials; (14) goodwill as a going concern and other
intangible properties; (15) employee contracts, including any rights
thereunder to restrict an employee from competing in certain respects; and
(16) licenses and authorizations issued by any governmental authority.
Assumed Armour Plans: those Plans of Armour and Company for which
Dial Consumer Products has agreed to indemnify Dial, pursuant to Section
7.05 of this Agreement.
Business Day: any day other than a Saturday, a Sunday or a day on
which banking institutions located in the States of Arizona, New York or
Delaware are authorized or obligated by law or executive order to close.
Claims Administration: the processing of claims made under the
Insurance Policies, including the reporting of claims to the insurance
carrier, management and defense of claims and providing for appropriate
releases upon settlement of claims.
Code: the Internal Revenue Code of 1986, as amended, or any successor
legislation and the regulations promulgated thereunder.
Collective Bargaining Agreement: any collective bargaining or other
labor agreement to which any member of either Group is a party, including
those listed on Schedule 1.01(a).
Consumer Products Assets: subject to the provisions of the Other
Agreements, (1) all of the Assets held by any member of either Group
immediately prior to the Distribution Date, which Assets are used or held
for use or necessary primarily in the operation of the Consumer Products
Business rather than the Dial Business, (2) all of the outstanding shares
of all classes of capital stock of the Consumer Products Subsidiaries and
(3) all of the Assets listed on Schedule 1.01(b)(i).
Consumer Products Business: all of the businesses conducted
immediately prior to the Distribution Date by any member of either Group
and reported by Dial in the "Consumer Products" segment in the footnotes to
the Dial consolidated financial statements (or which would have been so
reported had it been conducted as of December 31, 1995) in the Annual
Report on Form 10-K for the year ended December 31, 1995.
Consumer Products Claim: any claim against any Consumer Products
Employee, Consumer Products Individual or member of the Consumer Products
Group with respect to any injury, loss, Liability, damage or expense that
(1) is or was incurred or asserted to have been incurred prior to the
Distribution Date in, or in connection with, the conduct of the Dial
Assets, the Consumer Products Assets, the Dial Business or the Consumer
Products Business and (2) arose or may have arisen out of one or more
occurrences or events that are or may be insured or insurable under one or
more of the Dial Policies.
Consumer Products Director: any individual who is a director of Dial
Consumer Products.
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Consumer Products Employee: any individual who (1) immediately prior
to the Distribution Date is an officer or employee of any member of either
Group and (a) is primarily employed in the Consumer Products Business or
(b) will be an employee of the Consumer Products Group immediately
following the Distribution or (2) immediately prior to the Distribution
Date is not an officer or employee of any member of either Group but at any
time prior to the Distribution Date was an officer or employee of any
member of either Group and throughout such period was primarily employed in
the Consumer Products Business.
Consumer Products Free-Standing Qualified Plans: the plans listed in
Schedule 7.01 hereto.
Consumer Products Group: Dial Consumer Products and the Consumer
Products Subsidiaries.
Consumer Products Individual: any individual who (1) is a Consumer
Products Employee or (2) is a beneficiary of any individual specified in
clause (1).
Consumer Products Liabilities: subject to the provisions of the Other
Agreements, all of the Liabilities of any member of either Group (1) which
relate directly to the Consumer Products Assets or the Consumer Products
Business as conducted immediately prior to the Distribution Date, whether
incurred or arising prior to, or after, the Distribution Date, (2) which
are specifically assumed by Dial Consumer Products under an express
provision of this Agreement or (3) which are listed on Schedule
1.01(b)(ii).
Consumer Products Option Plan: a new Plan to be adopted by Dial
Consumer Products in connection with the Distribution, pursuant to which,
among other things, options to purchase, and restricted, shares of Dial
Consumer Products Common Stock may be granted to Consumer Products
Employees and Consumer Products Directors.
Consumer Products Plan: any Plan maintained or contributed to by any
member of either Group prior to the Distribution Date primarily for the
benefit of Consumer Products Employees.
Consumer Products Policies: all Insurance Policies, current and past,
which relate to the Consumer Products Business and do not relate to the
Dial Business, including the Insurance Policies listed on Schedule 1.01(c).
Consumer Products Qualified Plan: a Qualified Plan that (1) will be
sponsored or maintained by any member of the Consumer Products Group, (2)
will provide benefits for Consumer Products Individuals who, immediately
prior to the Cut-Off Date, are active or inactive participants in or
otherwise entitled to benefits under any Joint Qualified Plan or Consumer
Products Free-Standing Qualified Plan and (3) is expected to provide
benefits substantially identical to those provided by the Joint Qualified
Plan or Consumer Products Free-Standing Qualified Plan in which such
Consumer Products Individual currently participates.
Consumer Products Restricted Stock: shares of Dial Consumer Products
Common Stock issued to an individual pursuant to the Consumer Products
Option Plan subject to forfeiture in the event that certain terms and
conditions are not satisfied.
Consumer Products Subsidiaries: all of the corporations listed on
Schedule 1.01(d).
Consumer Products Support Agreements: any obligation or agreement of
the Dial Group under any guarantee, letter of credit, letter of comfort or
working capital maintenance agreement obtained prior to the Distribution
Date for the benefit of the Consumer Products Business or any member of the
Consumer Products Group.
Current Plan Year: the plan year or fiscal year, to the extent
applicable with respect to any Plan, during which the Distribution Date
occurs.
Cut-Off Date: the last day of the calendar month immediately
preceding the Distribution Date or, if such day is less than 14 days before
the Distribution Date, the last day of the next preceding calendar month.
Deferred Compensation Plan: the Deferred Compensation Plan of Dial.
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<PAGE> 106
DGCL: the Delaware General Corporation Law.
Dial: as defined in the recitals to this Agreement; provided that,
for periods from and after the Distribution, references herein to "Dial"
shall mean Dial as renamed: "Viad Corp".
Dial Assets: subject to the provisions of the Other Agreements, all
of the Assets, other than the Consumer Products Assets, held immediately
prior to the Distribution Date by any member of either Group.
Dial Business: all of the businesses, other than the Consumer
Products Business, conducted immediately prior to the Distribution Date by
any member of either Group.
Dial Common Stock: the common stock, par value $1.50 per share, of
Dial.
Dial Consumer Products: as defined in the recitals to this Agreement.
Dial Consumer Products Common Stock: the common stock, par value
$0.01 per share, of Dial Consumer Products.
Dial Director: any individual who is a director of Dial following the
Distribution.
Dial Employee: any individual who at any time prior to the
Distribution Date is or was an officer or employee of any member of any
Group, other than a Consumer Products Employee.
Dial Employee Equity Trust: The Dial Corp Employee Equity Trust.
Dial ESOP: The Dial Companies Employees' Stock Ownership Plan, a
Qualified Plan which is intended to meet the requirements of Section
4975(e)(7) of the Code.
Dial Group: Dial and its Affiliates, other than members of the
Consumer Products Group.
Dial Incentive Plan: The Dial Corp Management Incentive Plan, and The
Dial Corp Performance Unit Incentive Plan.
Dial Individual: any individual who (1) is a Dial Employee, (2) at
any time prior to the Distribution Date is or was an officer or employee of
any Former Dial Business or (3) is a beneficiary of any individual
specified in clause (1) or (2).
Dial Liabilities: subject to the provisions of the Other Agreements,
all of the Liabilities, other than the Consumer Products Liabilities, of
any member of either Group including, without limitation, all liabilities
specified on Schedule 1.01(e).
Dial Miscellaneous Plans: any Dial Plan other than (1) the Dial ESOP,
(2) the Dial Option Plan, (3) any Qualified Plan, (4) the Dial Supplemental
Plans, (5) the Deferred Compensation Plan, (6) any Welfare Plan, (7) any
Dial Incentive Plan, (8) any Plan that provides for the payment of
severance, salary continuation or similar benefits, (9) the Directors'
Plans, (10) the Dial Employee Equity Trust and (11) any Plan that is
governed by a Collective Bargaining Agreement. The Dial Miscellaneous Plans
include but are not limited to the Plans listed on Schedule 1.01(f).
Dial Option: an option to purchase shares of Dial Common Stock
granted pursuant to the Dial Option Plan, together with any stock
appreciation right or limited stock appreciation right issued in connection
therewith.
Dial Option Plan: the 1983 Stock Option and Incentive Plan of Dial
and The Dial Corp 1992 Stock Incentive Plan.
Dial Performance Based Stock: Dial Restricted Stock issued under The
Dial Corp 1992 Stock Incentive Plan subject to forfeiture if certain
performance-based conditions are not met.
Dial Plan: any Plan maintained or contributed to by any member of
either Group prior to the Distribution Date, other than a Consumer Products
Plan.
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Dial Policies: all Insurance Policies, current and past, which relate
to both the Dial Business and the Consumer Products Business, including the
Insurance Policies listed on Schedule 1.01(g).
Dial Restricted Stock: shares of Dial Common Stock issued to an
individual pursuant to the Dial Option Plan subject to forfeiture in the
event that certain terms and conditions are not satisfied.
Dial Supplemental Plans: The Dial Corp Supplemental Pension Plan and
The Dial Corp Supplemental TRIM Plan.
Directors' Plans: the Deferred Compensation Plan for Directors, the
Director's Retirement Benefit Plan and The Dial Corp Director's Charitable
Award Program.
Disclosure Document: the Registration Statement on Form 10 and the
related Information Statement.
Distribution: the distribution to holders of shares of Dial Common
Stock to be effected pursuant to Article III on the basis of one share of
Dial Consumer Products Common Stock for each share of Dial Common Stock
held of record as of the Record Date.
Distribution Date: the date, to be determined by the Board of
Directors of Dial, or the Executive Committee thereof, as of which the
Distribution shall be effected.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, or any successor legislation, and any regulations promulgated
thereunder.
Exchange Act: the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
Exhibitgroup Merger: as defined in the recitals to this Agreement.
Final Date: the fifteenth Business Day after the Distribution Date.
Foreign Exchange Rate: with respect to any currency other than United
States dollars as of any date, the average of the opening bid and asked
rates on such date at which such currency may be exchanged for United
States dollars as quoted by Citibank, N.A., except that, with respect to
any Indemnifiable Loss covered by insurance, the Foreign Exchange Rate for
such currency shall be determined as set forth in Section 4.03(e)(2).
Former Dial Businesses: all of the businesses and operations, (1)
heretofore but not currently conducted by any member of the Dial Group or
(2) currently or heretofore conducted by any former Subsidiary of any such
member.
Gains Tax: the New York State Tax on Gains Derived from Certain Real
Property Transfers.
Group: the Dial Group or the Consumer Products Group.
Hewitt: Hewitt Associates, a human resources consulting firm.
Indemnifiable Losses: all losses, Liabilities, damages, claims,
demands, judgments or settlements of any nature or kind, known or unknown,
fixed, accrued, absolute or contingent, liquidated or unliquidated,
including all reasonable costs and expenses (legal, accounting or otherwise
as such costs are incurred) relating thereto, suffered by an Indemnitee.
Indemnifying Party: a Person who or which is obligated under this
Agreement to provide indemnification.
Indemnitee: a Person who may seek indemnification under this
Agreement.
Indemnity Payment: an amount that an Indemnifying Party is required
to pay to an Indemnitee pursuant to Article IV.
Information: all records, books, contracts, instruments, computer
data and other data and information.
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<PAGE> 108
Information Statement: the Information Statement to be sent to the
holders of shares of Dial Common Stock in connection with the Distribution.
Insurance Administration: with respect to each Insurance Policy, (1)
the accounting for premiums (including retrospectively-rated premiums),
defense costs, indemnity payments, deductibles and retentions as
appropriate under the terms and conditions of each of the Insurance
Policies, (2) the reporting to excess insurance carriers of any losses or
claims which may cause the per-occurrence or aggregate limits of any
Insurance Policy to be exceeded and (3) the distribution of Insurance
Proceeds as contemplated by this Agreement.
Insurance Policy: insurance policies and insurance contracts of any
kind that are owned or maintained by any member of either Group as the
insured interest, including primary and excess policies, comprehensive
general liability policies, automobile, aircraft and workers' compensation
insurance policies, and self-insurance and captive insurance company
arrangements, together with the rights, benefits and privileges thereunder.
Insurance Proceeds: those monies received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of the insured,
in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, cost or reserve paid
or held by or for the benefit of such insured.
Insured Claims: those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the
Insurance Policies, whether or not subject to deductibles, coinsurance,
uncollectability or retrospectively-rated premium adjustments, but only to
the extent that such Liabilities are within applicable Insurance Policy
limits, including aggregates.
Interim Services Agreement: an interim services agreement to be
entered into between Dial and Dial Consumer Products, in the form attached
hereto as Exhibit B, with such changes as may be satisfactory to Dial and
Dial Consumer Products, providing for (1) the Dial Group to make available
certain personnel and services to the Consumer Products Group and (2) the
Consumer Products Group to make available certain personnel and services to
the Dial Group, in each case for a period of time following the
Distribution Date.
IRS: the Internal Revenue Service.
Joint Defined Benefit Plan: the Dial Companies Retirement Income
Plan.
Joint Qualified Plan: the Joint Defined Benefit Plan or the Joint
Savings Plan.
Joint Savings Plan: the Dial Companies Capital Accumulation Plan.
Lease Agreement: a lease agreement to be entered into between an
Affiliate of Dial and Dial Consumer Products, in the form attached hereto
as Exhibit C, with such changes as may be mutually satisfactory to Dial and
Dial Consumer Products, pursuant to which Dial Consumer Products will lease
from such Affiliate of Dial certain premises located at Dial Tower, 1850
North Central Avenue, Phoenix, Arizona 85077.
Liabilities: all debts, liabilities and obligations, whether absolute
or contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and whether or not the same
would properly be reflected on a balance sheet, including all costs and
expenses relating thereto.
New Credit Facility: the credit facility to be entered into pursuant
to Section 5.04(a).
NYSE: the New York Stock Exchange, Inc.
Other Agreements: the Interim Services Agreement, the Lease
Agreement, the Trademark Letter of Understanding, the Aircraft Joint
Ownership Agreement and the Tax Sharing Agreement.
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<PAGE> 109
Person: an individual, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization or a government or any department
or agency thereof.
Plan: any plan, policy or arrangement or contract or agreement
providing benefits (including bonuses, deferred compensation, incentive
compensation, savings, stock purchases, pensions, profit sharing or
retirement or other retiree benefits, including retiree medical benefits)
for any group of employees or former employees or individual employee or
former employee, or the beneficiary or beneficiaries of any such employee
or former employee, whether formal or informal or written or unwritten and
whether or not legally binding, and including any means, whether or not
legally required, pursuant to which any benefit is provided by an employer
to any employee or former employee or the beneficiary or beneficiaries of
any such employee or former employee.
Prior Plan Year: to the extent applicable with respect to any Plan,
any plan year or fiscal year that ended on or prior to the Cut-Off Date.
Qualified Plan: a Plan which is an employee pension benefit plan
(within the meaning of Section 3(2) of ERISA) and which constitutes or is
intended in good faith to constitute a qualified plan under Section 401(a)
of the Code.
Record Date: the date to be determined by the Board of Directors of
Dial, or the Executive Committee thereof, as the record date for
determining stockholders of Dial entitled to receive the Distribution.
Registration Statement: a registration statement on Form 10 to effect
the registration of the Dial Consumer Products Common Stock pursuant to the
Exchange Act.
Representative: with respect to any Person, any of such Person's
directors, officers, employees, agents, consultants, advisors, accountants,
attorneys and representatives.
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as amended, together with
the rules and regulations promulgated thereunder.
Service Agreement: any third-party administrator or claims handling
agreement of any kind or nature to which any member of either Group is
directly or indirectly a party, in effect as of the date hereof, related to
the handling of Consumer Products Claims.
Subsidiary: with respect to any specified Person, any corporation or
other legal entity of which such Person or any of its Subsidiaries controls
or owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote on the election of members to the board of
directors or similar governing body; provided, however, that for purposes
of this Agreement, (1) the Consumer Products Subsidiaries shall be deemed
to be Subsidiaries of Dial Consumer Products and (2) the Consumer Products
Subsidiaries shall not be deemed to be Subsidiaries of Dial or any of
Dial's Subsidiaries.
Tax: as defined in the Tax Sharing Agreement.
Tax Sharing Agreement: a tax sharing agreement to be entered into
between Dial and Dial Consumer Products substantially in the form attached
hereto as Exhibit D, with such changes as may be mutually satisfactory to
Dial and Dial Consumer Products.
Third-Party Claim: any claim, suit, arbitration, inquiry, proceeding
or investigation by or before any court, any governmental or other
regulatory or administrative agency or commission or any arbitration
tribunal asserted by a Person who is not a party hereto.
Trademark Letter of Understanding: a letter of understanding with
respect to trademarks to be entered into between Dial and Dial Consumer
Products, in the form attached hereto as Exhibit E, with such changes as
may be mutually satisfactory to Dial and Dial Consumer Products.
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<PAGE> 110
Transfer Tax: the New York State Real Estate Transfer Tax and the New
York City Real Property Transfer Tax.
Welfare Plan: any Plan, including but not limited to the Plans listed
on Schedule 1.01(h), which is not a Qualified Plan and which provides
medical, health, disability, accident, life insurance, death, dental or
other welfare benefits, including any post-employment benefits or retiree
medical benefits.
1.02 REFERENCES TO TIME. All references in this Agreement to times of the
day shall be to New York City time.
ARTICLE II
CERTAIN TRANSACTIONS PRIOR TO THE DISTRIBUTION DATE
2.01 SHARE PURCHASE RIGHTS PLAN; CERTIFICATE OF INCORPORATION;
BYLAWS. Prior to the Distribution Date, Dial Consumer Products shall adopt a
share purchase rights plan in a form mutually agreeable to Dial and Dial
Consumer Products. Dial and Dial Consumer Products shall take all action
necessary so that, at the Distribution Date, the Certificate of Incorporation
and Bylaws of Dial Consumer Products shall be in the forms attached hereto as
Exhibits F and G, respectively.
2.02 ISSUANCE OF STOCK. Prior to or as of the Distribution Date, the
parties hereto shall take all steps necessary to reclassify the outstanding
shares of Dial Consumer Products Common Stock so that, except as otherwise
contemplated by this Agreement, immediately prior to or as of the Distribution
Date the number of shares of Dial Consumer Products Common Stock outstanding and
held by Dial shall equal the number of shares of Dial Common Stock outstanding
on the Record Date.
2.03 TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES. Prior to the
Distribution Date, the parties hereto shall take all action necessary to
transfer to Dial Consumer Products, and to cause Dial Consumer Products to
assume, as the case may be, effective as of the Distribution Date, (1) all of
the shares of capital stock of the Consumer Products Subsidiaries held by the
Dial Group, (2) all of the right, title and interest of the Dial Group in the
Consumer Products Assets and (3) all of the Consumer Products Liabilities.
2.04 CONDUCT OF BUSINESS PENDING THE DISTRIBUTION DATE. Each of the
parties hereto agrees that from the date hereof until the Distribution Date,
except as otherwise contemplated by this Agreement, it will use its best efforts
to carry on the Consumer Products Business diligently in the ordinary course and
substantially in the same manner as heretofore conducted and to preserve intact
the business organization and goodwill of the Consumer Products Business
(including using its best efforts to cause its Subsidiaries to take such
actions).
2.05 REFINANCING. Each of the parties hereto agrees that it will use
reasonable efforts to arrange the New Credit Facility, and to obtain, prior to
the Distribution Date, all necessary consents, waivers or amendments to each
bank credit agreement, debt security or other financing facility to which it and
its Subsidiaries is a party or by which it or any of its Subsidiaries is bound,
or to refinance such agreement, security or facility, in each case on terms
satisfactory to Dial and Dial Consumer Products and to the extent necessary to
permit the Distribution to be consummated without any material breach of the
terms of such agreement, security or facility.
2.06 REGISTRATION AND LISTING. Prior to the Distribution Date:
(a) Dial and Dial Consumer Products shall prepare the Information
Statement and the Registration Statement. Dial Consumer Products shall file
the Registration Statement with the SEC. Dial and Dial Consumer Products
shall use reasonable efforts to cause the Registration Statement to become
effective under the Exchange Act as promptly as reasonably practicable.
Dial and Dial Consumer Products shall prepare the Information Statement;
and after the Registration Statement becomes effective, Dial shall mail the
Information Statement to the holders of Dial Common Stock as of the Record
Date.
(b) The parties hereto shall use their best efforts to take all such
action as may be necessary or appropriate under state securities and Blue
Sky laws in connection with the transactions contemplated by this
Agreement.
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(c) Dial and Dial Consumer Products shall prepare, and Dial Consumer
Products shall file and seek to make effective, an application for the
listing of the Dial Consumer Products Common Stock on the NYSE, subject to
official notice of issuance.
(d) The parties hereto shall cooperate in preparing, filing with the
SEC and causing to become effective any registration statements or
amendments thereto which are necessary or appropriate in order to effect
the transactions contemplated hereby or to reflect the establishment of, or
amendments to, any Plans contemplated hereby.
2.07 MERGER. Immediately prior to the Distribution Date, Exhibitgroup
shall be merged with and into Dial in accordance with, and with the effects set
forth in, Section 253 of the DGCL.
2.08 NAME CHANGE. Immediately following the Distribution, LEN Inc. shall
be merged with and into Dial in accordance with, and with the effects set forth
in, Section 253 of the DGCL, and, as a result of such merger, the name of Dial
shall be changed to "Viad Corp".
ARTICLE III
THE DISTRIBUTION
3.01 RECORD DATE AND DISTRIBUTION DATE. Subject to the satisfaction of
the conditions set forth in Section 10.01(a), the Board of Directors of Dial, or
the Executive Committee thereof, if so authorized by the Board of Directors,
shall establish the Record Date and the Distribution Date and any appropriate
procedures in connection with the Distribution.
3.02 THE AGENT. Prior to the Distribution Date, Dial, as Agent, shall
make appropriate arrangements for, among other things, the payment of the
Distribution to the holders of Dial Common Stock in accordance with this Article
III.
3.03 DELIVERY OF SHARE CERTIFICATES TO THE AGENT. Prior to or as of the
Distribution Date, Dial Consumer Products shall deliver to Dial, as Agent, a
share certificate representing all of the outstanding shares of Dial Consumer
Products Common Stock to be distributed in connection with the payment of the
Distribution. After the Distribution Date, upon the request of Dial, as Agent,
Dial Consumer Products shall provide all certificates for shares of Dial
Consumer Products Common Stock that the Agent shall require in order to effect
the Distribution.
3.04 DISTRIBUTION. Except as otherwise contemplated by this Agreement,
Dial, as Agent, shall distribute, as of the Distribution Date, one share of Dial
Consumer Products Common Stock in respect of each share of Dial Common Stock
held by holders of record of Dial Common Stock on the Record Date. All shares of
Dial Consumer Products Common Stock issued in the Distribution shall be duly
authorized, validly issued, fully paid and nonassessable.
3.05 PAYMENT IN LIEU OF FRACTIONAL SHARES. In lieu of the payment of
fractional shares of Company Common Stock to participants in the Dividend
Reinvestment Plan of Dial (the "Dial DRP"), an independent agent for the
participants who would otherwise be entitled to receive such fractional shares
will cause all such fractional shares to be aggregated and the resulting shares
sold for the account of such participants. Such sales shall be effected as soon
as practicable after the Distribution Date.
ARTICLE IV
SURVIVAL, ASSUMPTION AND INDEMNIFICATION
4.01 SURVIVAL OF AGREEMENTS. All covenants and agreements of the parties
hereto contained in this Agreement shall survive the Distribution Date.
4.02 TAXES AND EMPLOYEE-RELATED ASSETS AND LIABILITIES. This Article IV
shall not be applicable to any Plan Assets or any Indemnifiable Losses or
Liabilities related to (1) Taxes which shall be governed by the Tax Sharing
Agreement or (2) the current or former employment of any Dial Individual or
Consumer Products Individual, or the compensation or benefits for any Dial
Director or Consumer Products Director, under any Plan or otherwise, which shall
be governed by Article VII hereof.
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4.03 ASSUMPTION AND INDEMNIFICATION.
(a) Subject to Section 4.02, the Tax Sharing Agreement and Article
VII, from and after the Distribution Date, Dial shall retain or assume, as
the case may be, and shall indemnify, defend and hold harmless each
Consumer Products Individual and each member of the Consumer Products
Group, and each of their Representatives and Affiliates, from and against,
(1) all liabilities for third party claims, and directly related insurance
premium increases, relating to, arising out of or due to, directly or
indirectly, the Distribution or to the service by any Consumer Products
Individual as an officer, director or employee of any member of the Dial
Group prior to the Distribution, except to the extent covered by insurance
and provided such indemnification would be permitted by law if such
officer, director or employee made a claim for indemnification, (2) all
Liabilities of the Dial Group under this Agreement or any of the Other
Agreements, and (3) all Indemnifiable Losses of any such Consumer Products
Individual, member of the Consumer Products Group, Representative or
Affiliate relating to, arising out of or due to, directly or indirectly,
the Dial Assets, the Dial Liabilities, the Dial Business, the Dial
Individuals or the Dial Group's Representatives, whether relating to or
arising out of occurrences prior to or after the Distribution Date. Dial's
indemnity under and pursuant to this Section 4.03(a) shall include, without
limitation, any liabilities incurred by Dial Consumer Products or any
member of the Consumer Products Group due to loss of insurance by Dial
Consumer Products or any member of the Consumer Products Group as a result
of any act or failure to act by Dial or any Dial Employee or any Dial Group
Representative in connection with the procurement by Dial of insurance for
Dial Consumer Products or any member of the Consumer Products Group or in
connection with Dial's failure to give any notice to the underwriters of
any such insurance.
(b) Subject to Section 4.02, the Tax Sharing Agreement and Article
VII, and except as specifically provided in Section 4.03(a), from and after
the Distribution Date, Dial Consumer Products shall assume, and shall
indemnify, defend and hold harmless each Dial Individual and each member of
the Dial Group, and each of their Representatives and Affiliates, from and
against, (1) all Liabilities of the Consumer Products Group under this
Agreement or any of the Other Agreements and (2) all Indemnifiable Losses
of any such Dial Individual, member of the Dial Group, Representative or
Affiliate relating to, arising out of or due to, directly or indirectly,
the Consumer Products Assets, the Consumer Products Liabilities, the
Consumer Products Business, the Consumer Products Employees or the Consumer
Products Group's Representatives, whether relating to or arising out of
occurrences prior to or after the Distribution Date.
(c) If an Indemnitee realizes a Tax benefit or detriment by reason of
having incurred an Indemnifiable Loss for which such Indemnitee receives an
Indemnity Payment from an Indemnifying Party or by reason of receiving an
Indemnity Payment, then such Indemnitee shall pay to such Indemnifying
Party an amount equal to the Tax benefit, or such Indemnifying Party shall
pay to such Indemnitee an additional amount equal to the Tax detriment
(taking into account any Tax detriment resulting from the receipt of such
additional amounts), as the case may be. If, in the opinion of counsel to
an Indemnifying Party reasonably satisfactory in form and substance to the
affected Indemnitee, there is a substantial likelihood that the Indemnitee
will be entitled to a Tax benefit by reason of an Indemnifiable Loss, the
Indemnifying Party promptly shall notify the Indemnitee and the Indemnitee
promptly shall take any steps (including the filing of such returns,
amended returns or claims for refunds consistent with the claiming of such
Tax benefit) that, in the reasonable judgment of the Indemnifying Party,
are necessary and appropriate to obtain any such Tax benefit. If, in the
opinion of counsel to an Indemnitee reasonably satisfactory in form and
substance to the affected Indemnifying Party, there is a substantial
likelihood that the Indemnitee will be subjected to a Tax detriment by
reason of an Indemnification Payment, the Indemnitee promptly shall notify
the Indemnifying Party and the Indemnitee promptly shall take any steps
(including the filing of such returns or amended returns or the payment of
Tax underpayments consistent with the settlement of any Liability for Taxes
arising from such Tax detriment) that, in the reasonable judgment of the
Indemnitee, are necessary and appropriate to settle any Liabilities for
Taxes arising from such Tax detriment. If, following a payment by an
Indemnitee or an Indemnifying Party pursuant to this Section 4.03(c) in
respect of a Tax benefit or detriment, there is an adjustment to the amount
of such Tax benefit or detriment, then each of Dial and Dial Consumer
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Products shall make appropriate payments to the other, including the
payment of interest thereon at the federal statutory rate then in effect,
to reflect such adjustments.
(d) The amount which an Indemnifying Party is required to pay to any
Indemnitee pursuant to this Section 4.03 shall be reduced (including
retroactively) by any Insurance Proceeds and other amounts actually
recovered by such Indemnitee in reduction of the related Indemnifiable
Loss, it being understood and agreed that each of Dial and Dial Consumer
Products shall use its best efforts to collect any such proceeds or other
amounts to which it or any of its Subsidiaries is entitled, without regard
to whether it is the Indemnifying Party hereunder. If an Indemnitee
receives an Indemnity Payment in respect of an Indemnifiable Loss and
subsequently receives Insurance Proceeds or other amounts in respect of
such Indemnifiable Loss, then such Indemnitee shall pay to such
Indemnifying Party an amount equal to the difference between (1) the sum of
the amount of such Indemnity Payment and the amount of such Insurance
Proceeds or other amounts actually received and (2) the amount of such
Indemnifiable Loss, adjusted (at such time as appropriate adjustment can be
determined) in each case to reflect any premium adjustment attributable to
such claim. Notwithstanding anything to the contrary in this Section 4.03,
each party's indemnity under this Section 4.03 shall include the increased
cost and expense of purchasing insurance against future losses, provided
and to the extent that such cost and expense is directly attributable to
Indemnifiable Losses.
(e) If any Indemnity Payment required to be made hereunder or under
any Other Agreement is denominated in a currency other than United States
dollars, the amount of such payment shall be translated into United States
dollars using the Foreign Exchange Rate for such currency determined in
accordance with the following rules:
(1) with respect to an Indemnifiable Loss arising from payment by a
financial institution under a guarantee, comfort letter, letter of
credit, foreign exchange contract or similar instrument, the Foreign
Exchange Rate for such currency shall be determined as of the date on
which such financial institution is reimbursed;
(2) with respect to an Indemnifiable Loss covered by insurance, the
Foreign Exchange Rate for such currency shall be the Foreign Exchange
Rate employed by the insurance company providing such insurance in
settling such Indemnifiable Loss with the Indemnifying Party; and
(3) with respect to an Indemnified Loss not described in clause (1)
or (2) of this Section 4.03(e), the Foreign Exchange Rate for such
currency shall be determined as of the date that notice of the claim
with respect to such Indemnifiable Loss is given to the Indemnitee.
4.04 PROCEDURE FOR INDEMNIFICATION.
(a) If any Indemnitee receives notice of the assertion of any
Third-Party Claim with respect to which an Indemnifying Party is obligated
under this Agreement to provide indemnification, such Indemnitee shall give
such Indemnifying Party notice thereof promptly after becoming aware of
such Third-Party Claim; provided, however, that the failure of any
Indemnitee to give notice as provided in this Section 4.04 shall not
relieve any Indemnifying Party of its obligations under this Article IV,
except to the extent that such Indemnifying Party is actually prejudiced by
such failure to give notice. Such notice shall describe such Third-Party
Claim in reasonable detail and, if practicable, shall indicate the
estimated amount of the Indemnifiable Loss that has been or may be
sustained by such Indemnitee.
(b) An Indemnifying Party, at such Indemnifying Party's own expense
and through counsel chosen by such Indemnifying Party (which counsel shall
be reasonably satisfactory to the Indemnitee), may elect to defend any
Third-Party Claim; provided, however, that such an election by the
Indemnifying Party shall be deemed an admission of its obligation to
indemnify the Indemnitee with respect to such Third-Party Claim. If an
Indemnifying Party elects to defend a Third-Party Claim, then, within ten
Business Days after receiving notice of such Third-Party Claim (or sooner,
if the nature of such Third-Party Claim so requires), such Indemnifying
Party shall notify the Indemnitee of its intent to do so, and such
Indemnitee shall cooperate in the defense of such Third-Party Claim. Such
Indemnifying Party shall pay such Indemnitee's reasonable out-of-pocket
expenses incurred in connection with such
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cooperation. After notice from an Indemnifying Party to an Indemnitee of
its election to assume the defense of a Third-Party Claim, such
Indemnifying Party shall not be liable to such Indemnitee under this
Article IV for any legal or other expenses subsequently incurred by such
Indemnitee in connection with the defense thereof; provided, however, that
such Indemnitee shall have the right to employ one law firm as counsel to
represent such Indemnitee (which firm shall be reasonably acceptable to the
Indemnifying Party) if, in such Indemnitee's reasonable judgment, either a
conflict of interest between such Indemnitee and such Indemnifying Party
exists in respect of such claim or there may be defenses available to such
Indemnitee which are different from or in addition to those available to
such Indemnifying Party, and in that event (1) the reasonable fees and
expenses of such separate counsel shall be paid by such Indemnifying Party
and (2) each of such Indemnifying Party and such Indemnitee shall have the
right to run its own defense in respect of such claim. If an Indemnifying
Party elects not to defend against a Third-Party Claim, or fails to notify
an Indemnitee of its election as provided in this Section 4.04 within the
period of ten Business Days described above, such Indemnitee may defend,
compromise and settle such Third-Party Claim; provided, however, that no
such Indemnitee may compromise or settle any such Third-Party Claim without
the prior written consent of the Indemnifying Party, which consent shall
not be withheld unreasonably. Notwithstanding the foregoing, the
Indemnifying Party shall not, without the prior written consent of the
Indemnitee, (1) settle or compromise any Third-Party Claim or consent to
the entry of any judgment which does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to the Indemnitee of a
written release from all Liability in respect of such Third-Party Claim or
(2) settle or compromise any Third-Party Claim in any manner that may
adversely affect the Indemnitee.
4.05 REMEDIES CUMULATIVE. The remedies provided in this Article IV shall
be cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any other remedies against any Indemnifying Party.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
5.01 FURTHER ASSURANCES.
(a) In addition to the actions specifically provided for elsewhere in
this Agreement, each of the parties hereto shall use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done,
all things reasonably necessary, proper or advisable under applicable laws,
regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the
foregoing, each party hereto shall cooperate with the other parties, and
execute and deliver, or use its best efforts to cause to be executed and
delivered, all instruments, including instruments of conveyance, assignment
and transfer, and to make all filings with, and to obtain all consents,
approvals or authorizations of, any governmental or regulatory authority or
any other Person under any permit, license, agreement, indenture or other
instrument, and take all such other actions as such party may reasonably be
requested to take by any other party hereto from time to time, consistent
with the terms of this Agreement, in order to effectuate the provisions and
purposes of this Agreement and the transfers of Assets and Liabilities and
the other transactions contemplated hereby. If any such transfer of Assets
or Liabilities is not consummated prior to or at the Distribution Date,
then the party hereto retaining such Asset or Liability shall thereafter
hold such Asset in trust for the use and benefit of the party entitled
thereto (at the expense of the party entitled thereto), or shall retain
such Liability for the account of the party by whom such Liability is to be
assumed pursuant hereto, as the case may be, and shall take such other
action as may be reasonably requested by the party to whom such Asset is to
be transferred, or by whom such Liability is to be assumed, as the case may
be, in order to place such party, insofar as reasonably possible, in the
same position as if such Asset or Liability had been transferred as
contemplated hereby. If and when any such Asset or Liability becomes
transferable, such transfer shall be effected forthwith. The parties hereto
agree that, as of the Distribution Date, each party hereto shall be deemed
to have acquired complete and sole beneficial ownership of all of the
Assets, together with all
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rights, powers and privileges incident thereto, and shall be deemed to have
assumed in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities incident
thereto, that such party is entitled to acquire or required to assume
pursuant to the terms of this Agreement.
(b) Without limiting the generality of Section 5.01(a), Dial, as the
sole stockholder of Dial Consumer Products and Exhibitgroup, shall ratify
any actions which are reasonably necessary or desirable to be taken by Dial
Consumer Products or Exhibitgroup to effectuate the transactions
contemplated by this Agreement in a manner consistent with the terms of
this Agreement, including the following: (1) the Exhibitgroup Merger and
(2) the preparation and implementation of appropriate Plans for Consumer
Products Employees.
5.02 DIAL CONSUMER PRODUCTS BOARD. Prior to, or simultaneously with, the
Distribution Date, Dial Consumer Products shall take such actions as are
necessary such that its Board of Directors is comprised of those individuals
named as directors in the Information Statement.
5.03 CONTINUING CONTRACTUAL ARRANGEMENTS. Notwithstanding anything in
this Agreement to the contrary, except as set forth in Sections 5.04 and 5.05,
to the extent that any member of either Group is now providing or selling, or in
the future may provide or sell, to any member of the other Group any services,
benefits or products pursuant to any written or oral agreement or understanding
whatsoever, such agreement or understanding shall not be deemed altered, amended
or terminated as a result of this Agreement or the consummation of the
transactions contemplated hereby.
5.04 INTERCOMPANY ACCOUNTS. Effective as of the Distribution Date:
(a) Dial shall borrow $280 million under a new $350 million bank
credit facility (the "New Credit Facility") which shall provide that upon
effectiveness of the Distribution, the obligations under the facility shall
be assigned to, and assumed by, Dial Consumer Products with the effect that
Dial shall have no further obligation thereunder;
(b) the amount borrowed by Dial shall be used to repay outstanding
third-party indebtedness of Dial;
(c) Dial Consumer Products shall assume from Dial, and indemnify Dial
from, all liabilities under the New Credit Facility; and
(d) all intercompany receivables, payables, loans or advances between
Dial and Dial Consumer Products shall be deemed contributed to capital and
thereby cancelled without the payment of any cash by either Dial or Dial
Consumer Products to the other.
5.05 CASH ACCOUNTS. The cash accounts on the Distribution Date of Dial and
each Dial Subsidiary and Dial Consumer Products and each Consumer Products
Subsidiary shall remain the property of each respective company or Subsidiary.
5.06 OTHER AGREEMENTS. Each of Dial and Dial Consumer Products shall use
reasonable efforts to enter into, or to cause the appropriate members of its
Group to enter into, the Other Agreements prior to the Distribution Date. If
there shall be a conflict between the provisions of this Agreement and the
provisions of the Other Agreements, the provisions of the Other Agreements shall
control.
5.07 TRANSFER TAXES. Dial shall pay any Gains Tax, Transfer Tax and
similar transfer Taxes in any jurisdiction (and any penalties and interest with
respect to such Taxes), which become payable in connection with the Distribution
on behalf of the stockholders of Dial or Dial Consumer Products. Dial shall
indemnify and hold harmless the stockholders of Dial and Dial Consumer Products
from and against any Liability with respect to such Taxes (including any
penalties, interest and reasonable professional fees). Dial shall prepare and
file any required returns with respect to such Taxes (including returns on
behalf of the stockholders of Dial and Dial Consumer Products).
5.08 CONSUMER PRODUCTS SUPPORT AGREEMENTS. Effective as of the
Distribution Date, Dial Consumer Products shall cause itself or one or more
members of the Consumer Products Group to be substituted in all
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respects for the Dial Group or any member thereof in respect of all Consumer
Products Support Agreements. Subsequent to the Distribution Date, with respect
to any uncancelled Consumer Products Support Agreement for which no substitution
has yet been effected, Dial Consumer Products shall indemnify the Dial Group
against any Liabilities under any such Consumer Products Support Agreement in
accordance with the provisions of Article IV.
ARTICLE VI
ACCESS TO INFORMATION
6.01 PROVISION OF CORPORATE RECORDS. Prior to or as promptly as
practicable after the Distribution Date, Dial shall deliver to Dial Consumer
Products all corporate books and records of the Consumer Products Group and
copies of all corporate books and records of the Dial Group relating to the
Consumer Products Assets, the Consumer Products Liabilities, or the Consumer
Products Business, including in each case all active agreements, active
litigation files and government filings. From and after the Distribution Date,
all books, records and copies so delivered shall be the property of Dial
Consumer Products.
6.02 ACCESS TO INFORMATION. From and after the Distribution Date, each of
Dial and Dial Consumer Products shall afford to the other and to the other's
Representatives reasonable access and duplicating rights during normal business
hours to all Information within such party's possession relating to such other
party's businesses, Assets or Liabilities, insofar as such access is reasonably
required by such other party. Without limiting the foregoing, Information may be
requested under this Section 6.02 for audit, accounting, claims, litigation and
Tax purposes, as well as for purposes of fulfilling disclosure and reporting
obligations.
6.03 PRODUCTION OF WITNESSES. After the Distribution Date, each of Dial
and Dial Consumer Products shall use reasonable efforts to make available to the
other, upon written request, its directors, officers, employees and agents as
witnesses to the extent that any such Person may reasonably be required (giving
consideration to business demands of such Persons) in connection with any legal,
administrative or other proceedings in which the requesting party may from time
to time be involved.
6.04 RETENTION OF RECORDS. Except as otherwise required by law or agreed
in writing, or as otherwise provided in the Tax Sharing Agreement, each of Dial
and Dial Consumer Products shall retain, for a period of at least ten years
following the Distribution Date, all significant Information in such party's
possession or under its control relating to the business, Assets or Liabilities
of the other party and, after the expiration of such ten-year period, prior to
destroying or disposing of any of such Information, (a) the party proposing to
dispose of or destroy any such Information shall provide no less than 30 days'
prior written notice to the other party, specifying the Information proposed to
be destroyed or disposed of, and (b) if, prior to the scheduled date for such
destruction or disposal, the other party requests in writing that any of the
Information proposed to be destroyed or disposed of be delivered to such other
party, the party proposing to dispose of or destroy such Information promptly
shall arrange for the delivery of the requested Information to a location
specified by, and at the expense of, the requesting party.
6.05 CONFIDENTIALITY. From and after the Distribution Date, each of Dial
and Dial Consumer Products shall hold, and shall use its reasonable best efforts
to cause its Affiliates and Representatives to hold, in strict confidence all
Information concerning the other party obtained by it prior to the Distribution
Date or furnished to it by such other party pursuant to this Agreement or the
Other Agreements and shall not release or disclose such Information to any other
Person, except its Representatives, who shall be bound by the provisions of this
Section 6.05; provided, however, that Dial and Dial Consumer Products may
disclose such Information to the extent that (a) disclosure is compelled by
judicial or administrative process or, in the opinion of such party's counsel,
by other requirements of law, or (b) such party can show that such Information
was (1) available to such party on a nonconfidential basis prior to its
disclosure by the other party, (2) in the public domain through no fault of such
party or (3) lawfully acquired by such party from other sources after the time
that it was furnished to such party pursuant to this Agreement or the Other
Agreements. Notwithstanding the foregoing, each of Dial and Dial Consumer
Products shall be deemed to have satisfied its obligations under this Section
6.05 with respect to any Information if it exercises the same care with regard
to such Information as it takes to preserve confidentiality for its own similar
Information.
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ARTICLE VII
EMPLOYEE BENEFITS
7.01 QUALIFIED PLANS.
(a) As soon as practicable after the date hereof and effective as of
the Cut-Off Date, Dial Consumer Products shall take, or cause to be taken,
all action necessary and appropriate to establish and administer one or
more Consumer Products Qualified Plans and to provide benefits thereunder
for all Consumer Products Individuals who, immediately prior to the Cut-Off
Date, were participants in or otherwise entitled to benefits under any
Joint Qualified Plan. Dial Consumer Products agrees that each such Consumer
Products Individual shall be, to the extent applicable, entitled, for all
purposes under any applicable Consumer Products Qualified Plan, to be
credited with the term of service and any accrued benefit or account
balance credited to such Consumer Products Individual as of the Cut-Off
Date under the terms of any applicable Joint Qualified Plan as if such
service had been rendered to Dial Consumer Products and as if such accrued
benefit or account balance had originally been credited to such Consumer
Products Individual under the Consumer Products Qualified Plan. Dial agrees
to provide Dial Consumer Products, as soon as practicable after the
Distribution Date (with the cooperation of Dial Consumer Products to the
extent that relevant information is in the possession of the Consumer
Products Group), with a list of the Consumer Products Individuals who were,
to the best knowledge of Dial, participants in or otherwise entitled to
benefits under each Joint Qualified Plan immediately prior to the Cut-Off
Date, together with a listing, if requested by Dial Consumer Products, of
each such Consumer Products Individual's term of service for eligibility
and vesting purposes under such Plan and a listing of each such Consumer
Products Individual's accrued benefit or account balance thereunder. Dial
shall, as soon as practicable after the Distribution Date, provide Dial
Consumer Products with such additional information (in the possession of
the Dial Group and not already in the possession of the Consumer Products
Group) as may be reasonably requested by Dial Consumer Products and
necessary in order for the Consumer Products Group to establish and
administer effectively any Consumer Products Qualified Plan.
(b) Dial agrees, as soon as practicable following the Distribution
Date, to direct the trustee of the trust funding the Joint Defined Benefit
Plan to transfer to the trustee or other funding agent of any applicable
Consumer Products Qualified Plan, in cash, securities, other property or a
combination thereof, as reasonably determined by Dial, an amount equal to
(A) plus (B) less (C), as adjusted by (D); where (A) equals the amount of
assets allocated to the Consumer Products Individuals under the Joint
Defined Benefit Plan as of the Cut-Off Date, in accordance with Section
4044 of ERISA as determined by Hewitt; where (B) equals the amount of all
contributions, if any, attributable to Consumer Products Individuals made
subsequent to the Cut-Off Date to such applicable Joint Defined Benefit
Plan through the date of complete transfer; where (C) equals aggregate
payments made from the trust relating to such applicable Joint Defined
Benefit Plan in respect of Consumer Products Individuals from the Cut-Off
Date through the date of complete transfer; and where (D) equals the amount
of the net earnings or losses, as the case may be, from the Cut-Off Date
through the date of transfer, on the average of the daily balances of (A),
(B) and (C) and based upon the actual rate of return earned by such
applicable Joint Defined Benefit Plan during such period. To the extent
that (A) is less than the portion of the Joint Defined Benefit Plan's
assets that are internally allocated by Dial to Consumer Products
Individuals as of the Cut-Off Date (consistent with Hewitt's past
determinations of assets for financial statement purposes), Dial will
transfer to Dial Consumer Products, from a source other than the trust
funding the Joint Defined Benefit Plan, an amount equal to the difference
plus interest at 9.5% per annum from the Cut-Off Date to the date of
transfer.
(c) Dial agrees, as soon as practicable following the Distribution
Date, to direct the trustee of the trust funding each Joint Qualified Plan
which is a Joint Savings Plan to transfer to the trustee or other funding
agent of any applicable Consumer Products Qualified Plan in cash,
securities or other property or a combination thereof, as reasonably
determined by Dial, an amount equal to the account balances as of the date
of transfer attributable to the participants and beneficiaries in such
Joint Savings Plan who are Consumer Products Individuals plus the portion
of any unallocated contributions and trust earnings
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attributable to such participants and beneficiaries who are Consumer
Products Individuals. To the extent practicable such transfers shall be
effected so as to preserve investment elections of the participants and
beneficiaries in each Joint Savings Plan.
(d) In connection with the transfers described in this Section 7.01,
Dial and Dial Consumer Products shall cooperate in making any and all
appropriate filings required under the Code or ERISA, and the regulations
thereunder, and any applicable securities laws and take all such action as
may be necessary and appropriate to cause such transfers to take place as
soon as practicable after the Distribution Date; provided, however, that
each such transfer shall not take place until as soon as practicable after
the later of (1) the expiration of a 30-day period following the date of
filing the required Forms 5310-A (or any successor form thereto) with the
IRS and (2) the earlier of (A) the receipt of a favorable IRS determination
letter with respect to the qualification of each applicable Consumer
Products Qualified Plan under Section 401(a) of the Code or (B) the receipt
by Dial of an opinion of counsel reasonably satisfactory in form and
substance to Dial and Dial Consumer Products to the effect that such
counsel believes each applicable Consumer Products Qualified Plan is
qualified under Section 401(a) of the Code. Dial and Dial Consumer Products
agree to provide to such counsel such information in the possession of the
Dial Group and the Consumer Products Group, respectively, as may be
reasonably requested by such counsel in connection with the issuance of
such opinion. Dial agrees, during the period ending with the date of
complete transfer of assets and liabilities to each such Consumer Products
Qualified Plan, to cause distributions in respect of terminated or retired
participants who are Consumer Products Individuals to be made, on behalf of
Dial Consumer Products, from the relevant Joint Qualified Plan in
accordance with applicable law and pursuant to plan provisions.
(e) Dial and Dial Consumer Products shall take, or cause to be taken,
all such action as may be necessary or appropriate in order to establish
Dial Consumer Products or one or more members of the Consumer Products
Group, as appropriate, as successor to all rights, assets, duties,
Liabilities and obligations as of the Distribution Date under, or with
respect to, each Consumer Products Free-Standing Qualified Plan. Dial
agrees that, prior to the Distribution Date or as soon as practicable
thereafter, it shall provide Dial Consumer Products with all information
(in the possession of the Dial Group and not already in the possession of
the Consumer Products Group) as may be reasonably requested by Dial
Consumer Products and necessary for the Consumer Products Group to
administer effectively such Consumer Products Free-Standing Qualified Plan.
(f) Except as specifically set forth in this Section 7.01, from and
after the Distribution Date, (1) the Dial Group shall cease to have any
liability or obligation whatsoever with respect to Consumer Products
Individuals under the Joint Qualified Plans, and Dial Consumer Products
shall assume or retain, as the case may be, and shall be solely responsible
for, all liabilities and obligations whatsoever of either Group with
respect to Consumer Products Individuals under the Joint Qualified Plans
and shall be solely responsible for all liabilities and obligations
whatsoever under the Dial Consumer Products Qualified Plans and (2) the
Dial Group shall cease to have any liability or obligation whatsoever under
the Consumer Products Free-Standing Qualified Plans and Dial Consumer
Products shall assume or retain, as the case may be, and shall be solely
responsible for, all liabilities and obligations whatsoever of either group
under the Consumer Products Free-Standing Plans; provided, however, that
Dial shall either be responsible for or make all required contributions, no
later than the later of the Distribution Date and the date such
contributions are legally required to be made (A) in respect of Consumer
Products Individuals with respect to each Joint Qualified Plan and (B) with
respect to all participants in the Consumer Products Free-Standing
Qualified Plans in each case for all Prior Plan Years and for the portion
of the Current Plan Year ending on the Cut-Off Date, to the extent not
previously made.
7.02 SUPPLEMENTAL PLANS. As of the Distribution Date, Dial Consumer
Products shall assume or retain, or cause one or more members of the Consumer
Products Group to assume or retain, as the case may be, and shall be solely
responsible for, all liabilities and obligations whatsoever of either Group
whether or not incurred prior to the Distribution Date in connection with claims
under any Dial Supplemental Plan in respect of any Consumer Products Individual
and the Dial Group shall cease to have any such liability or obligation.
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7.03 DEFERRED COMPENSATION PLAN. As of the Distribution Date, Dial
Consumer Products shall assume or retain, or cause one or more members of the
Consumer Products Group to assume or retain, as the case may be, and shall be
solely responsible for, all liabilities and obligations whatsoever of either
Group whether or not incurred prior to the Distribution Date in connection with
claims under the Deferred Compensation Plan in respect of any Consumer Products
Individual and the Dial Group shall cease to have any such liability or
obligation.
7.04 WELFARE PLANS.
(a) As of the Distribution Date, Dial Consumer Products shall assume
or retain, or cause one or more members of the Consumer Products Group to
assume or retain, as the case may be, and shall be solely responsible for,
or cause its insurance carriers to be responsible for all liabilities and
obligations whatsoever of either Group whether or not incurred prior to the
Distribution Date in connection with claims under any Welfare Plan
(including any Welfare Plan providing for post-retirement or retiree
medical benefits) in respect of any Consumer Products Individual and the
Dial Group shall cease to have any liability or obligation with respect
thereto.
(b) Dial Consumer Products shall take, or cause to be taken, all
actions necessary and appropriate on behalf of itself and the Consumer
Products Group (1) to assume any existing Welfare Plan of either Group,
which Welfare Plan, as of the Distribution Date, provides benefits solely
for Consumer Products Individuals or (2) otherwise to adopt such Welfare
Plans as necessary to provide welfare benefits, effective as of the
Distribution Date, and to assume the liabilities and obligations to
Consumer Products Individuals which are or shall become the responsibility
of Dial Consumer Products to the extent specified in Section 7.04(a). For
this purpose, with respect to any Consumer Products Individual, Dial
Consumer Products or a member of the Consumer Products Group shall, to the
extent applicable, credit such Consumer Products Individual with any term
of service provided to any member of either Group, and consider such
Consumer Products Individual to have satisfied any other eligibility
criteria (including satisfaction of applicable deductibles or coinsurance
amounts) to the extent so satisfied as of the Distribution Date, as if such
service had been rendered to Dial Consumer Products or the member of the
Consumer Products Group and as if such eligibility criteria had been
satisfied while employed by Dial Consumer Products or the member of the
Consumer Products Group. In connection with the foregoing, Dial agrees to
provide Dial Consumer Products or its designated insurance representative
with such information (in the possession of the Dial Group and not already
in the possession of the Consumer Products Group) as may be reasonably
requested by Consumer Products and necessary for the Consumer Products
Group to assume or establish any such Welfare Plan.
(c) The Dial Group shall assume, or retain, all liabilities and
obligations whatsoever of either Group for benefits under any Welfare Plan
other than as set forth in Section 7.04(a) or Section 7.05.
7.05 CERTAIN ARMOUR PLANS.
(a) From and after the Distribution Date, Dial Consumer Products shall
indemnify Dial with respect to, or cause one or more members of the
Consumer Products Group to indemnify Dial with respect to, and shall be
responsible for, or cause its insurance carriers to be responsible for, all
Liabilities and obligations whatsoever of either Group whether or not
incurred prior to the Distribution Date in connection with the following
Plans of Armour and Company ("Armour"): (1) the Armour Pension Plan
Established 1952 (Inactive), (2) the Armour Supplemental/Transfer Pension
Plan, (3) the Armour Long-Term Disability Plan and (4) the Armour Retiree
Medical Benefits Plan (collectively, the "Assumed Armour Plans").
(b) Dial Consumer Products shall take, or cause to be taken, all
actions necessary and appropriate to establish Dial Consumer Products, or
one or more members of the Consumer Products Group, as appropriate, as
successor to all rights, assets, duties, Liabilities and obligations as of
the Distribution Date under, or with respect to, the Assumed Armour Plans.
For this purpose, with respect to any participant in an Assumed Armour
Plan, Dial Consumer Products or a member of the Consumer Products Group
shall, to the extent applicable, credit such participant with any term of
service provided to any member of either
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Group, and consider such participant to have satisfied any other
eligibility criteria (including satisfaction of applicable deductibles or
coinsurance amounts) to the extent so satisfied as of the Distribution Date
as if such service had been rendered to Dial Consumer Products or the
member of the Consumer Products Group, and as if such eligibility criteria
had been satisfied while employed by Dial Consumer Products or the member
of the Consumer Products Group. Dial shall be responsible for, or make, any
required contributions no later than the later of the Distribution Date and
the date such contributions are legally required to be made with respect to
all participants in any funded Assumed Armour Plan, in each case for all
Prior Plan Years and for the portion of the Current Plan Year ending on the
Cut-Off Date, to the extent not previously made. In connection with the
foregoing, Dial agrees to provide Dial Consumer Products or its designated
insurance representative with such information (in the possession of the
Dial Group and not already in the possession of the Consumer Products
Group) as may be reasonably requested by Dial Consumer Products and
necessary for the Consumer Products Group to assume or establish any such
Plan.
7.06 STOCK OPTIONS; RESTRICTED STOCK. Dial and Dial Consumer Products
shall cooperate and take all action necessary (including obtaining the consent
of the holders of Dial Options and Dial Restricted Stock (other than Dial
Performance-Based Stock which is covered in Section 7.07), if required) to amend
(if necessary), or otherwise provide for adjustments of outstanding awards
under, the Dial Option Plan, and to adopt the Consumer Products Option Plan, so
that:
(a) Effective immediately after the Distribution Date, the number of
shares of Dial Common Stock subject to, and the exercise price of, each
Dial Option which immediately prior to the Record Date is outstanding and
not exercised and is held by a Dial Individual shall be adjusted by Dial in
order to reflect the difference in the fair market value of the Dial Common
Stock attributable to the Distribution, in accordance with the requirements
of Section 424 of the Code and the regulations promulgated thereunder,
based upon (1) the average of the high and low trading prices on the NYSE
Composite Index for the Dial Common Stock on the last trading day prior to
the Distribution Date provided, however, that if the Dial Common Stock
trades ex-dividend prior to the Distribution, then the average of the high
and low trading prices on the last day on which Dial Common Stock is traded
regular way prior to the Distribution Date shall be used and (2) the
average of the high and low trading prices on the NYSE Composite Index for
the Dial Common Stock on the first trading day following the Distribution
Date on which Dial Common Stock is traded regular way on the NYSE.
(b) As of the Distribution Date, each Dial Option which immediately
prior to the Distribution Date is outstanding and not exercised and is held
by a Consumer Products Individual shall, without any action on the part of
the holder thereof, be converted into an option to purchase shares of Dial
Consumer Products Common Stock, with the number of shares of Dial Consumer
Products Common Stock subject to, and the exercise price of, such option to
be determined in accordance with the requirements of Section 424 of the
Code and the regulations promulgated thereunder, based upon (1) the average
of the high and low trading prices on the NYSE Composite Index for the Dial
Common Stock on the last trading day prior to the Distribution Date;
provided, however, that if the Dial Common Stock trades ex-dividend prior
to the Distribution, then the average of the high and low trading prices on
the last day on which Dial Common Stock is traded regular way prior to the
Distribution Date shall be used and (2) the average of the high and low
trading prices on the NYSE Composite Index for the Dial Consumer Products
Common Stock on the first trading day following the Distribution Date on
which the Dial Consumer Products Common Stock is traded regular way on the
NYSE. The exercise price of any such option shall be rounded to the nearest
whole cent; the number of shares subject to any such option shall be
rounded to the nearest share.
(c) As of the Distribution Date, the dividend escrow account of each
Dial Individual who immediately prior thereto is the holder of any shares
of Dial Restricted Stock shall be credited with a number of shares of Dial
Consumer Products Common Stock equal to the number of shares of Dial
Restricted Stock held of record in such dividend account as of the Record
Date. The Dial Consumer Products Common Stock so credited shall be held by
the Dial Individual, together with the Dial Restricted Stock, subject to
the same rights, obligations and restrictions as the Dial Restricted Stock.
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(d) As of the Distribution Date, each Consumer Products Individual who
immediately prior thereto is the holder of any shares of Dial Restricted
Stock shall be credited with a number of shares of Dial Consumer Products
Restricted Stock equal to the number of shares of Dial Restricted Stock
held by such Consumer Products Individual immediately prior to the
Distribution Date. To the extent such shares of Dial Restricted Stock were
held in The Dial Corp Restricted Stock Trust, a new identical trust shall
be established by Dial Consumer Products to which such shares shall be
transferred by the Dial Restricted Stock Trust. The Dial Restricted Stock
and Dial Consumer Products Restricted Stock shall be held by such Consumer
Products Individual subject to the rights, obligations and restrictions in
the restricted stock agreement theretofore applicable to the Dial
Restricted Stock, it being understood that the fact that such individual is
no longer an employee of Dial shall cause no forfeiture thereunder.
7.07 DIAL PERFORMANCE-BASED STOCK.
(a) As of the Distribution Date, each Dial Individual and each
Consumer Products Individual who immediately prior thereto is the holder of
an award of Dial Performance-Based Stock shall be credited with a number of
shares of Dial Consumer Products Common Stock equal to the number of shares
of Dial Common Stock subject to such award. The shares of Dial Consumer
Products Common Stock so credited shall be held by such individuals subject
to the same rights, obligations and restrictions as the Dial
Performance-Based Stock to which it relates, except that the adjustments
set forth in paragraph (b) of this Section 7.07 shall be made.
(b) Awards under the Dial Performance-Based Stock Plan outstanding as
of the Distribution Date held by Dial Individuals and Consumer Products
Individuals shall remain outstanding, using the same number of shares of
Dial Common Stock theretofore underlying the award plus an equal number of
shares of Dial Consumer Products Common Stock. For awards outstanding on
the Distribution Date, "performance" shall be measured by the combined
performance of the Dial Common Stock and the Dial Consumer Products Common
Stock through the remainder of the measuring period, using the comparator
groups in use immediately prior to the Distribution Date. The respective
Boards of Directors of Dial and Dial Consumer Products will determine
comparator groups for new awards to Dial Individuals and Dial Consumer
Products Individuals following the Distribution Date.
7.08 DIAL ESOP.
(a) Dial and Dial Consumer Products shall take all action necessary so
that, effective as of the Distribution Date, Dial Consumer Products may
establish a Consumer Products Qualified Plan (which may be the same Plan
that receives account balances of Consumer Products Individuals under the
Joint Savings Plan pursuant to Section 7.01(c)) to include therein all
Consumer Products Individuals who immediately prior to the Distribution
Date were participants in the Dial ESOP. The Consumer Products Qualified
Plan shall contain provisions deemed by Dial Consumer Products to be
necessary or appropriate to accept the transfer from the trust funding the
Dial ESOP of the account balances of Consumer Products Individuals. Each
Consumer Products Individual shall, for all purposes under the Consumer
Products Qualified Plan, be credited with the term of service and any
account balance credited to such Dial Consumer Products Individual as of
the Distribution Date under the terms of the Dial ESOP as if such service
had been rendered to the Consumer Products Group and as if such account
balance had originally been credited to such Consumer Products Individual
under the Consumer Products Qualified Plan. Dial shall amend the Dial ESOP
to the extent necessary to effectuate this Section 7.08. Dial shall provide
to Dial Consumer Products, as soon as practicable after the Distribution
Date (with the cooperation of Dial Consumer Products to the extent that
relevant information is in the possession of any member of the Consumer
Products Group) with a list of the Consumer Products Individuals who were,
to the best knowledge of Dial, participants in the Dial ESOP immediately
prior to the Distribution Date, together with a listing of each such
Consumer Products Individual's term of service for eligibility purposes
under the Dial ESOP and a listing of each such Consumer Products
Individual's account balance thereunder, together with such additional
information (in the possession of the Dial Group and not already in the
possession of the Consumer Products Group) as may be reasonably requested
by Dial
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Consumer Products and necessary in order for the Consumer Products Group
effectively to establish and administer the Consumer Products Qualified
Plan.
(b) Dial shall direct the trustee of the trust funding the Dial ESOP
to swap, or sell, in open-market transactions, all shares of Dial Consumer
Products Common Stock received by the Dial ESOP in the Distribution in
respect of unallocated shares of Dial Common Stock held by the Dial ESOP
and to reinvest the proceeds of such sale in Dial Common Stock as promptly
as practicable. Investments in Dial Common Stock may be made through open
market purchases, private transactions or (with Dial's consent) purchases
from Dial on an arm's-length basis.
(c) Shares of Dial Common Stock held by the Dial ESOP which have been
allocated to Dial Individuals ("Dial Participants") together with shares of
Dial Consumer Products Common Stock received with respect thereto in the
Distribution shall be retained in the Dial ESOP in the accounts of such
Dial participants or, if necessary, shall be transferred to the accounts of
such Dial Individuals in the Dial Companies Capital Accumulation Plan. Dial
Participants shall be given the opportunity during a specified period
following the Distribution Date to direct that such shares of Dial Consumer
Products Common Stock be sold and reinvested in Dial Common Stock.
(d) Dial shall direct the trustee of the trust funding the Dial ESOP
to transfer to the trustee or other funding agent of the Consumer Products
Qualified Plan, the aggregate account balances of the Consumer Products
Individuals as of the date of transfer, which shall include the number of
shares of Dial Common Stock in such account together with all shares of
Dial Consumer Products Common Stock received with respect thereto in the
Distribution plus that portion of any unallocated contributions and
earnings thereon which are attributable to the Consumer Products
Individuals, other than Dial Common Stock held in the Dial ESOP suspense
account. Participants in the Consumer Products Qualified Plan shall be
given the opportunity during a specified period following the Distribution
Date to direct that shares of Dial Common Stock held in their accounts be
sold and reinvested in Dial Consumer Products Common Stock.
(e) In connection with the transfers described in Section 7.08(d),
Dial and Dial Consumer Products shall cooperate in making any and all
appropriate filings required under the Code or ERISA, the regulations
thereunder and any applicable securities laws, and shall take all such
actions as may be necessary and appropriate to cause such transfers to take
place as soon as practicable after the Distribution Date; provided,
however, that such transfers shall not take place until as soon as
practicable after the later of (1) the expiration of a 30-day period
following the date of filing the required Forms 5310-A (or any successor
form thereto) with the IRS and (2) the earlier of (A) the receipt of a
favorable IRS determination letter with respect to the qualification of the
Consumer Products Qualified Plan under Section 401(a) of the Code or (B)
the receipt by Dial of an opinion of counsel reasonably satisfactory in
form and substance to Dial and Dial Consumer Products to the effect that
such counsel believes the Consumer Products Qualified Plan is qualified
under Section 401(a) of the Code. Dial and Dial Consumer Products agree to
provide to such counsel such information in the possession of the Dial
Group and the Consumer Products Group, respectively, as may be reasonably
requested by such counsel in connection with the issuance of such opinion.
(f) Except as specifically set forth in this Section 7.08, from and
after the Distribution Date, the Dial Group shall cease to have any
Liability with respect to Consumer Products Individuals under the Dial
ESOP, and the Consumer Products Group shall assume or retain, as the case
may be, and shall be solely responsible for, all Liabilities of either
Group with respect to Consumer Products Individuals under the Dial ESOP and
shall be solely responsible for all Liabilities under the Consumer Products
Qualified Plan. Notwithstanding the foregoing, Dial shall be solely
responsible for contributing or causing to be contributed, no later than
such time as may be required by law or such earlier time as may be required
under the Dial ESOP, an amount equal to the contribution which would have
been required to be made by the Dial Group in respect of Consumer Products
Individuals for any Prior Plan Year and for the Current Plan Year up to the
Distribution Date to the extent such contribution has not been previously
made.
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7.09 DIAL EMPLOYEE EQUITY TRUST.
Dial and Dial Consumer Products shall take all action necessary so that,
effective as of the Distribution Date, Dial Consumer Products may establish the
Consumer Products Employee Equity Trust to receive and hold for the benefit of
Consumer Products Individuals all shares of Dial Consumer Products Common Stock
received in the Distribution in respect of shares of Dial Common Stock held in
the Dial Employee Equity Trust. Dial shall amend the Dial Employee Equity Trust
to the extent necessary to effectuate this Section 7.09, including without
limitation to: (a) amend the promissory note from the Dial Employee Equity Trust
to Dial by providing for two notes (one from the Dial Employee Equity Trust to
Dial, the other from the Consumer Products Employee Equity Trust to Dial
Consumer Products) in amounts proportionate to the relative market
capitalizations of Dial and Dial Consumer Products immediately following the
Distribution and (b) adjust the amounts in Schedules B and C to the Dial
Employee Equity Trust in the same manner.
7.10 DIAL INCENTIVE PLANS.
(a) Dial shall be responsible for the payment of any liabilities and
obligations for benefits due and payable but unpaid as of and through the
Distribution Date under each Dial Incentive Plan with respect to any Prior
Plan Year (other than the Current Plan Year). Any deferred bonuses that
were earned with respect to any Prior Plan Year and are not paid as of the
Distribution Date shall be treated as benefits for the Current Plan Year in
accordance with Section 7.10(b).
(b) For any Current Plan Year under each Dial Incentive Plan, the Dial
Group shall be responsible for the payment of all liabilities and
obligations for benefits with respect to Dial Individuals, and the Consumer
Products Group shall be responsible for the payment of all liabilities and
obligations with respect to Consumer Products Individuals. Each of Dial and
Dial Consumer Products will, to the extent practicable, either continue
each such Dial Incentive Plan or adopt a new Plan in substitution therefor
and, in this connection, if necessary, adjust, in a manner equitable to
participants, any incentive goals or other terms contained in each Dial
Incentive Plan or such new Plan to reflect the Distribution.
(c) For purposes of the Dial Incentive Plans, individuals who, in
connection with the Distribution, cease to be employees of Dial and become
Dial Consumer Products Employees shall not be deemed to have terminated
employment for purposes of any deferral elections made by such individuals,
and service with Dial Consumer Products shall be deemed continuous service
with Dial.
7.11 SEVERANCE PAY.
(a) Dial and Dial Consumer Products agree that, with respect to
individuals who, in connection with the Distribution, cease to be employees
of the Dial Group and become employees of the Consumer Products Group, such
cessation shall not be deemed a severance of employment from either Group
for purposes of any Plan that provides for the payment of severance, salary
continuation or similar benefits and shall, in connection with the
Distribution, if and to the extent appropriate obtain waivers from
individuals against any such assertion.
(b) The Dial Group shall assume and be solely responsible for all
liabilities and obligations whatsoever in connection with claims made by or
on behalf of Dial Individuals and the Consumer Products Group shall assume
and be solely responsible for all liabilities and obligations whatsoever in
connection with claims made by or on behalf of Consumer Products
Individuals in respect of severance pay, salary continuation and similar
obligations relating to the termination or alleged termination of any such
person's employment either before, to the extent unpaid, or on or after the
Distribution Date.
7.12 DIRECTORS' PLANS.
(a) As of the Distribution Date, the Director's Retirement Benefit
Plan will be amended and terminated, to change the vesting schedule to 10%
per year and to provide that the present value of vested accrued benefits
of each participant (1) who will be a director of Dial following the
Distribution be converted into restricted units representing Dial Common
Stock (the payment for which will be the responsibility of Dial) and (2)
who will be a director of Dial Consumer Products following the
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Distribution be converted into restricted units representing Dial Consumer
Products Common Stock (the payment for which will be the responsibility of
Dial Consumer Products).
(b) (1) As of the Distribution Date, Dial Consumer Products shall
assume or retain, or cause one or more members of the Consumer Products
Group to assume or retain, as the case may be, and shall be solely
responsible for, all liabilities and obligations whatsoever of either Group
whether or not incurred prior to the Distribution Date in connection with
claims under the Dial Deferred Compensation Plan for Directors in respect
of any Consumer Products Director and the Dial Group shall cease to have
any such liability or obligation with respect thereto. Dial shall retain,
and shall be solely responsible for, all liabilities and obligations
whatsoever of either Group whether or not incurred prior to the
Distribution Date in connection with claims under the Dial Deferred
Compensation Plan for Directors in respect of (1) any individual who ceased
being a director of Dial prior to the Distribution Date and (2) any
individual who is a director of Dial but not Dial Consumer Products
immediately following the Distribution Date.
(2) For purposes of the Deferred Compensation Plan for Directors,
individuals who, in connection with the Distribution, cease to be
directors of Dial and become directors of Dial Consumer Products shall
not be deemed to have terminated their service as directors for purposes
of any deferral elections made by such individuals.
(3) Section 4.B. of the Dial Deferred Compensation Plan for
Directors shall be amended to provide that in the case of the
Distribution, where a Director has elected to defer compensation in the
form of stock units, such Director's stock unit account shall be
credited with a number of units representing Dial Consumer Products
Common Stock equal to the number of stock units credited to such account
as of the Distribution Date.
(c) (1) As of the Distribution Date, Dial Consumer Products shall
assume or retain, or cause one or more members of the Consumer Products
Group to assume or retain, as the case may be, and shall be solely
responsible for, all liabilities and obligations whatsoever of either Group
whether or not incurred prior to the Distribution Date in connection with
The Dial Corp Director's Charitable Award Program in respect of any
Consumer Products Director and the Dial Group shall cease to have any such
liability or obligation with respect thereto. Dial shall retain, and shall
be solely responsible for, all liabilities and obligations whatsoever of
either Group whether or not incurred prior to the Distribution Date in
connection with The Dial Corp Director's Charitable Award Program in
respect of (A) any individual who ceased being a director of Dial prior to
the Distribution Date and (B) any individual who is a director of Dial both
immediately prior to and immediately following the Distribution Date. To
the extent practicable, Dial shall assign to Dial Consumer Products life
insurance policies heretofore naming Dial as beneficiary with respect to
Consumer Products Directors.
(d) Within 120 days of the Distribution Date, Dial shall provide
funding to Dial Consumer Products for the liabilities assumed by Dial
Consumer Products under paragraphs (a) and (b) of this Section 7.12, in an
amount which bears the same proportion to the total amount funding such
liabilities with respect to all directors of Dial immediately prior to the
Distribution Date, as the proportion that the present value of the
liabilities allocable to Consumer Products Directors, as a group, bears to
the present value of such liabilities for all directors of Dial, as a
group, immediately prior to the Distribution.
(e) Following the Distribution, the Dial Option Plan will be amended
to provide, and the Consumer Products Option Plan will provide, that each
non-employee director will, upon his or her first election as a director,
automatically be granted options to purchase common stock of the applicable
company having an exercise price equal to fair market value at the date of
grant, with the number of shares subject to such option equal to the amount
of the directors' annual retainer divided by an amount equal to one third
(1/3) of such fair market value of the common stock on the date of grant.
Each non-employee director will also receive an automatic annual grant of
options to purchase common stock of the applicable company having an
exercise price equal to fair market value at the date of grant, with the
number of shares subject to such option equal to the amount of the
directors' annual retainer divided by an amount equal to one third (1/3)
of such fair market value of the common stock on the date of grant. For a
director elected
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during the course of a year, the first such annual grant will be made upon
his or her election on a prorata basis, based upon the number of months
between such election and the next regular annual grant date.
7.13 DIAL MISCELLANEOUS PLANS; POST-DISTRIBUTION LIABILITIES.
(a) The Dial Group shall be solely responsible for the payment of all
liabilities and obligations whatsoever with respect to any Dial Individual
unpaid as of and through the Distribution Date under any Dial Miscellaneous
Plan and the Consumer Products Group shall assume and be solely responsible
for the payment of all liabilities and obligations whatsoever with respect
to any Consumer Products Individual unpaid as of and through the
Distribution Date under any Dial Miscellaneous Plan.
(b) The Dial Group shall be solely responsible for the payment of all
liabilities and obligations whatsoever arising with respect to any Dial
Individual and attributable to any period subsequent to the Distribution
Date and the Consumer Products Group shall be solely responsible for the
payment of all liabilities and obligations whatsoever arising with respect
to any Consumer Products Individual and attributable to any period
subsequent to the Distribution Date.
7.14 OTHER BALANCE SHEET ADJUSTMENTS. To the extent not otherwise
provided in this Agreement, Dial and Dial Consumer Products shall take such
action as is necessary to effect an adjustment to the books of Dial and Dial
Consumer Products so that, as of the Distribution Date, the prepaid expense
balances and accrued employee liabilities with respect to any employee liability
or obligation assumed or retained as of the Distribution Date by the Dial Group
and the Consumer Products Group are appropriately reflected on the consolidated
balance sheets as of the Distribution Date of Dial and Dial Consumer Products,
respectively.
7.15 PRESERVATION OF RIGHTS TO AMEND OR TERMINATE PLANS. No provisions of
this Agreement, including the agreement of Dial or Dial Consumer Products that
it, or any member of the Dial Group or the Consumer Products Group, will make a
contribution or payment to or under any Plan herein referred to for any period,
shall be construed as a limitation on the right of Dial or Dial Consumer
Products or any member of the Dial Group or the Consumer Products Group to amend
such Plan or terminate its participation therein which Dial or Dial Consumer
Products or any member of the Dial Group or the Consumer Products Group would
otherwise have under the terms of such Plan or otherwise, and no provision of
this Agreement shall be construed to create a right in any employee or former
employee or beneficiary of such employee or former employee under a Plan which
such employee or former employee or beneficiary would not otherwise have under
the terms of the Plan itself.
7.16 REIMBURSEMENT; INDEMNIFICATION. Each of the parties hereto
acknowledges that the Dial Group, on the one hand, and the Consumer Products
Group, on the other hand, may incur costs and expenses (including contributions
to Plans and the payment of insurance premiums) arising from or related to any
of the Plans which are, as set forth in this Agreement, the responsibility of
the other party hereto. Accordingly, Dial and Dial Consumer Products agree to
reimburse each other, as soon as practicable but in any event within 30 days of
receipt from the other party of appropriate verification, for all such costs and
expenses reduced by the amount of any tax reduction or recovery of tax benefit
realized by Dial or Dial Consumer Products, as the case may be, in respect of
the corresponding payment made by it; provided, however, that notwithstanding
anything in this Section 7.16 to the contrary, costs and expenses or other
recovery arising from any challenge by the U.S. Government to the allocation of
assets set forth in Section 7.01 shall not be subject to reimbursement, and
indemnification under this Agreement or the Distribution Agreement.
7.17 FURTHER TRANSFERS. Dial and Dial Consumer Products recognize that
there may be Consumer Products Individuals who will, after the Distribution
Date, become employed by Dial and there may be Dial individuals who become
employed, after the Distribution Date, by Dial Consumer Products. If Dial and
Dial Consumer Products so agree with respect to any such individuals, the assets
and liabilities with respect to such employees which are associated with the
plans and programs described in this Agreement may be transferred and assumed in
a manner consistent with this Agreement. Any such transfers or assumptions will
be considered to be governed by the terms of this Agreement and shall not
require the agreement of Dial and Dial Consumer Products if they occur within 3
months of the Distribution Date.
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7.18 OFFICERS AND EMPLOYEES.
(a) Except for officers of Dial Consumer Products who are also
officers of Dial, officers and employees of either Group who are employed
in the Consumer Products Business immediately prior to the Distribution
Date shall be officers and employees of the Consumer Products Group
immediately following the Distribution Date; provided, however, that
nothing herein shall give to any individual a right of employment, or
continued employment, by any member of the Consumer Products Group.
(b) Except as otherwise agreed by the parties hereto, effective as of
the Distribution Date, (1) all officers or employees of the Dial Group who
are acting as directors or officers of the Consumer Products Group and are
not employed in the Consumer Products Business shall resign from such
positions with the Consumer Products Group and (2) all officers or
employees of the Consumer Products Group who are acting as directors or
officers of the Dial Group and are not employed in the Dial Business shall
resign from such positions with the Dial Group.
7.19 EMPLOYMENT AGREEMENTS. Prior to the Distribution Date, Dial and Dial
Consumer Products shall use their best efforts to induce such individuals as
they mutually agree to enter into employment agreements with Dial Consumer
Products on terms which are mutually agreeable to Dial and Dial Consumer
Products; provided, however, that, except as otherwise provided in this
Agreement, Dial shall have no obligation to make any payments to such
individuals to induce them to enter into such employment agreements.
7.20 OTHER LIABILITIES. As of the Distribution Date: (a) Dial Consumer
Products shall assume and be solely responsible for all Liabilities whatsoever
of the Dial Group with respect to claims made by the Consumer Products
Individuals relating to any employment-related Liability not otherwise expressly
provided for in this Agreement, including earned salary, wages, severance
payments or other compensation and accrued holiday, vacation, health, dental or
retirement benefits, regardless of whether such employment-related Liability was
incurred before or after the Distribution Date and (b) Dial shall retain all
such Liabilities with respect to (1) Dial Individuals and (2) directors of Dial
who served as such prior to the Distribution Date.
7.21 COMPLIANCE. Notwithstanding anything to the contrary in this Article
VII, to the extent any actions of the parties contemplated in this Article are
determined prior to Distribution to violate law or result in unintended tax
liability for Dial Individuals or Consumer Products Individuals, such action may
be modified to avoid such violation of law or unintended tax liability.
ARTICLE VIII
NO REPRESENTATIONS OR WARRANTIES; EXCEPTIONS
8.01 NO REPRESENTATIONS OR WARRANTIES; EXCEPTIONS. Dial Consumer Products
understands and agrees that no member of the Dial Group is, in this Agreement or
in any other agreement or document, representing or warranting to Dial Consumer
Products in any way as to the Consumer Products Assets, the Consumer Products
Liabilities, or the Consumer Products Business or as to any consents or
approvals required in connection with the consummation of the transactions
contemplated by this Agreement, it being agreed and understood that Dial
Consumer Products shall take all of the Consumer Products Assets "as is, where
is" and that, except as provided in Section 5.01, Dial Consumer Products shall
bear the economic and legal risk that conveyances of the Consumer Products
Assets shall prove to be insufficient or that the title of any member of the
Consumer Products Group to any Consumer Products Assets shall be other than good
and marketable and free from encumbrances.
ARTICLE IX
INSURANCE
9.01 INSURANCE POLICIES AND RIGHTS INCLUDED WITHIN CONSUMER PRODUCTS
ASSETS. Without limiting the generality of the definition of Consumer Products
Assets set forth in Section 1.01, the Consumer Products Assets shall include (a)
any and all rights of an insured party under each of the Dial Policies,
including rights
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of indemnity and the right to be defended by or at the expense of the insurer,
with respect to all Consumer Products Claims; provided, however, that nothing in
this clause (a) shall be deemed to constitute (or to reflect) the assignment of
any of the Dial Policies to Dial Consumer Products, and (b) the Dial Consumer
Products Policies. Dial Consumer Products shall be entitled to receive from Dial
any Insurance Proceeds paid to any member of the Dial Group with respect to any
third-party Dial Consumer Products Claim under any Dial Policy.
9.02 POST-DISTRIBUTION DATE CLAIMS. If, subsequent to the Distribution
Date, any Person shall assert a Consumer Products Claim, then Dial shall at the
time such Consumer Products Claim is asserted be deemed to assign, without need
of further documentation, to Dial Consumer Products all of the Dial Group's
rights, if any, as an insured party under the applicable Dial Policy with
respect to such Consumer Products Claim, including rights of indemnity and the
right to be defended by or at the expense of the insurer; provided, however,
that nothing in this Section 9.02 shall be deemed to (1) constitute (or to
reflect) the assignment of any of the Dial Policies to Dial Consumer Products or
(2) affect the Dial indemnity set forth in Section 4.03 of this Agreement.
9.03 ADMINISTRATION AND RESERVES. Notwithstanding the provisions of
Article IV, from and after the Distribution Date:
(a) Dial shall be responsible for (1) Insurance Administration with
respect to the Dial Policies and (2) Claims Administration with respect to
any Liabilities of Dial; provided, however, that the retention of the Dial
Policies by Dial is in no way intended to limit, inhibit or preclude any
right to insurance coverage for any Insured Claim of a named insured under
the Dial Policies;
(b) Dial Consumer Products shall be responsible for (1) Insurance
Administration with respect to the Consumer Products Policies, and (2)
Claims Administration with respect to any Liabilities of Dial Consumer
Products; provided, however, that the retention of the Consumer Products
Policies by Dial Consumer Products is in no way intended to limit, inhibit
or preclude any right to insurance coverage for any Insured Claim of a
named insured under the Consumer Products Policies;
(c) Dial shall be entitled to reserves established by any member of
either Group, or the benefit of reserves held by any insurance carrier,
with respect to any Dial Liabilities; and
(d) Dial Consumer Products shall be entitled to reserves established
by any member of either Group, or the benefit of reserves held by any
insurance carrier, with respect to any Consumer Products Liabilities.
9.04 INSURANCE PREMIUMS. Dial Consumer Products shall pay premiums
(retrospectively-rated or otherwise) under the Dial Policies with respect to
Consumer Products Liabilities which are Insured Claims under the Dial Policies.
Dial shall have the right but not the obligation to pay premiums
(retrospectively-rated or otherwise) under the Dial Policies with respect to
Consumer Products Liabilities which are Insured Claims under the Dial Policies
to the extent that Dial Consumer Products does not pay such premiums, whereupon
Dial Consumer Products shall forthwith reimburse Dial for any premiums paid by
Dial with respect to such Consumer Products Liabilities.
9.05 ALLOCATION OF INSURANCE PROCEEDS; COOPERATION. Insurance Proceeds
received with respect to claims, costs and expenses under the Insurance Policies
shall be paid to Dial with respect to Dial Liabilities which are Insured Claims
under the Dial Policies and to Dial Consumer Products with respect to the
Consumer Products Liabilities which are Insured Claims under the Dial Policies.
Payment of the allocable portions of indemnity costs of Insurance Proceeds
resulting from the Liability Policies will be made to the appropriate party upon
receipt from the insurance carrier. In the event of the exhaustion of coverage
under any Dial Policy, Dial and Dial Consumer Products shall allocate Insurance
Proceeds equitably based upon the bona fide claims of the Dial Group and the
Consumer Products Group, respectively. The parties hereto agree to use their
best efforts to cooperate with respect to insurance matters.
9.06 REIMBURSEMENT OF EXPENSES. Dial Consumer Products shall (a) upon the
request of Dial, reimburse the relevant insurer or the relevant third-party
administrator, to the extent required under any
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Insurance Policy or Service Agreement with respect to any and all Consumer
Products Claims which are paid, settled, adjusted, defended and/or otherwise
handled by such insurer or third-party administrator pursuant to the terms and
conditions of such Insurance Policy or Service Agreement and (b) to the extent
the cost incurred exceeds internal charges made by Dial to Dial Consumer
Products prior to the Distribution Date, pay and/or reimburse Dial, or such
third party as Dial may require, for any and all costs, premiums, expenses,
losses paid, attorneys' fees and/or charges incurred prior to the Distribution
Date by either Group or after the Distribution Date by the Dial Group arising
directly or indirectly in connection with the payment, settlement, adjustment,
defense and/or handling of any such Consumer Products Claim or under the terms
and conditions of any Insurance Policies or Service Agreements (including any
reimbursement paid by Dial with respect to any such Consumer Products Claim to
any insurer or third-party administrator pursuant to the terms of any Insurance
Policy or Service Agreement). Dial Consumer Products shall make any
reimbursement required by clause (a) of this Section 9.06 at the time required
by the relevant Insurance Policy or Service Agreement. Dial Consumer Products
shall make any reimbursement required by clause (b) of this Section 9.06, on a
monthly basis.
9.07 INSURER INSOLVENCY. Dial shall not be obligated to reimburse Dial
Consumer Products for any Consumer Products Claim under any Insurance Policies
where such Consumer Products Claim would have been paid by the insurer or other
third party, but for the insolvency of such insurer or other third party or the
refusal by any insurer or other third party to pay such Consumer Products Claim.
9.08 LETTERS OF CREDIT. Dial Consumer Products shall post such letters of
credit in favor of such Persons as Dial may reasonably request for any amounts
due or reasonably expected to come due under Section 9.06. Dial Consumer
Products shall make reasonable efforts to negotiate agreements with any and all
insurers or third-party administrators whereby Dial Consumer Products shall
assume direct responsibility for any and all Liabilities related to it under any
Insurance Policies and/or Service Agreements and Dial shall provide reasonable
assistance in this effort.
9.09 NO REDUCTION OF COVERAGE. Dial shall take no action to eliminate or
materially reduce coverage under any Dial Policy or Service Agreement for any
Consumer Products Claim.
9.10 FUTURE INSURANCE COVERAGE. For a period of one year following the
Distribution Date, Dial shall assist Dial Consumer Products, to the extent
reasonably requested by Dial Consumer Products with the efforts of the Consumer
Products Group to secure alternative insurance coverage or claim handling
services.
9.11 ASSISTANCE, WAIVER OF CONFLICT AND SHARED DEFENSE. Each of the
parties hereto agrees to provide reasonable assistance to the other parties
hereto as regards any dispute with any third party (including insurers,
third-party administrators and state guaranty funds) as to any matter related to
the Insurance Policies or Service Agreements, but only insofar as such dispute
arises out of the acts or omissions of any third party with respect to a
Consumer Products Claim. In the event that Insured Claims of more than one Group
exist relating to the same occurrence, the parties hereto agree to defend such
Insured Claims jointly and to waive any conflict of interest necessary to the
conduct of such joint defense. Nothing in this Section 9.11 shall be construed
to limit or otherwise alter in any way the indemnity obligations of the parties
hereto, including those created by this Agreement or by operation of law.
ARTICLE X
MISCELLANEOUS
10.01 CONDITIONS TO OBLIGATIONS.
(a) The obligations of the parties hereto to consummate the payment of
the Distribution are subject to the satisfaction of each of the following
conditions:
(1) The transactions contemplated by Sections 2.01, 2.02, 2.03,
2.05, 2.06 and 2.07 shall have been consummated in all material
respects;
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(2) The Dial Consumer Products Common Stock shall have been
approved for listing on the NYSE, subject to official notice of
issuance;
(3) The Registration Statement shall have been filed with the SEC
and shall have become effective, and no stop order with respect thereto
shall be in effect;
(4) All authorizations, consents, approvals and clearances of all
federal, state, local and foreign governmental agencies required to
permit the valid consummation by the parties hereto of the transactions
contemplated by this Agreement shall have been obtained; and no such
authorization, consent, approval or clearance shall contain any
conditions which would have a material adverse effect on (A) the Dial
Business or the Consumer Products Business, (B) the Assets, results of
operations or financial condition of the Dial Group or the Consumer
Products Group, in each case taken as a whole, or (C) the ability of
Dial or Dial Consumer Products to perform its obligations under this
Agreement; and all statutory requirements for such valid consummation
shall have been fulfilled;
(5) Dial shall have provided the NYSE with the prior written notice
of the Record Date required by Rule 10b-17 of the Exchange Act and the
rules and regulations of the NYSE;
(6) No preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by a
government, regulatory or administrative agency or commission, and no
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, shall be in effect preventing the payment of
the Distribution;
(7) The Distribution shall be payable in accordance with applicable
law;
(8) The New Credit Facility shall be in place and all conditions to
borrowing thereunder shall have been satisfied, and all necessary
consents, waivers or amendments to each bank credit agreement, debt
security or other financing facility to which any member of the Dial
Group or the Consumer Products Group is a party or by which any such
member is bound shall have been obtained, or each such agreement,
security or facility shall have been refinanced, in each case on terms
satisfactory to Dial and Dial Consumer Products and to the extent
necessary to permit the Distribution to be consummated without any
material breach of the terms of such agreement, security or facility;
(9) Dial shall have received a ruling from the Internal Revenue
Service that the Distribution is tax-free;
(10) One or more of members of the Consumer Products Group shall
have been substituted, as of the Distribution Date, in all respects for
the Dial Group in respect of all Consumer Products Support Agreements;
and
(11) Investment grade ratings for the senior debt of each of Dial
and Dial Consumer Products shall have been confirmed.
(b) Any determination made by the Board of Directors of Dial in good
faith prior to the Distribution Date concerning the satisfaction or waiver
of any or all of the conditions set forth in Section 10.01(a) shall be
conclusive.
10.02 COMPLETE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto and the agreements and other documents referred to herein shall
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and shall supersede all previous negotiations, commitments
and writings with respect to such subject matter.
10.03 EXPENSES. Except as otherwise provided in this Agreement and the
Other Agreements, all costs and expenses of any party hereto in connection with
the preparation, execution, delivery and implementation of this Agreement and
with the consummation of the transactions contemplated by this Agreement shall
be paid by the party for whose benefit such costs and expenses are incurred,
with any costs and expenses that cannot be allocated on the foregoing basis to
be divided equally among the parties hereto.
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10.04 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (other than the laws regarding
choice of laws and conflicts of laws) as to all matters, including matters of
validity, construction, effect, performance and remedies.
10.05 NOTICES. All notices, requests, claims, demands and other
communications hereunder (collectively, "Notices") shall be in writing and shall
be given (and shall be deemed to have been duly given upon receipt) by delivery
in person, by cable, telegram, telex or other standard form of
telecommunications, or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to Dial, or Exhibitgroup:
Viad Corp
Dial Tower
Phoenix, Arizona 85077
Attention: General Counsel
If to Dial Consumer Products:
The Dial Corporation
Dial Tower
Phoenix, Arizona 85077
Attention: General Counsel
or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 10.05. Copies of
all notices, requests, claims, demands and other communications hereunder shall
also be given to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Patricia A. Vlahakis, Esq.
10.06 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified
or supplemented only by a written agreement signed by all of the parties hereto.
10.07 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their successors and permitted assigns,
but neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any party hereto without the prior written
consent of each of the other parties (which consent shall not be unreasonably
withheld). Except for the provisions of Sections 4.03 and 4.04 relating to
Indemnities, which are also for the benefit of the Indemnitees, this Agreement
is solely for the benefit of the parties hereto and their Subsidiaries and
Affiliates and is not intended to confer upon any other Persons any rights or
remedies hereunder.
10.08 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.09 INTERPRETATION. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement.
10.10 LEGAL ENFORCEABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Each party acknowledges
that money damages would be an inadequate remedy for any breach of the
provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
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10.11 REFERENCES; CONSTRUCTION. References to any "Article", "Exhibit",
"Schedule" or "Section", without more, are to Appendices, Articles, Exhibits,
Schedules and Sections to or of this Agreement. Unless otherwise expressly
stated, clauses beginning with the term "including" set forth examples only and
in no way limit the generality of the matters thus exemplified.
10.12 TERMINATION. Notwithstanding any provision hereof this Agreement
may be terminated and the Distribution abandoned at any time prior to the
Distribution Date by and in the sole discretion of the Board of Directors of
Dial without the approval of any other party hereto or of Dial's stockholders.
In the event of such termination, no party hereto shall have any Liability to
any Person by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
THE DIAL CORP,
a Delaware corporation
By:
--------------------------------------
THE DIAL CORPORATION,
a Delaware corporation
By:
--------------------------------------
EXHIBITGROUP INC.,
a Delaware corporation
By:
--------------------------------------
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ANNEX B
FORM OF
RESTATED CERTIFICATE OF INCORPORATION
OF
THE DIAL CORPORATION
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
The Dial Corporation
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington,
County of New Castle. The name of the Corporation's registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is Three Hundred and Ten Million (310,000,000), consisting of
Ten Million (10,000,000) shares of Preferred Stock, par value $0.01 per share
(hereinafter referred to as "Preferred Stock"), and Three Hundred Million
(300,000,000) shares of Common Stock, par value $0.01 per share (hereinafter
referred to as "Common Stock").
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby authorized to provide for the issuance of
shares of Preferred Stock in series and, by filing a certificate pursuant to the
applicable law of the State of Delaware (hereinafter referred to as a "Preferred
Stock Designation"), to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
and restrictions thereof. The authority of the Board of Directors with respect
to each series shall include, but not be limited to, determination of the
following:
(1) The designation of the series, which may be by distinguishing
number, letter or title.
(2) The number of shares of the series, which number the Board of
Directors may thereafter (except where otherwise provided in the Preferred
Stock Designation) increase or decrease (but not below the number of shares
thereof then outstanding).
(3) The amounts payable on, and the preferences, if any, of shares of
the series in respect of dividends, and whether such dividends, if any,
shall be cumulative or noncumulative.
(4) Dates at which dividends, if any, shall be payable.
(5) The redemption rights and price or prices, if any, for shares of
the series.
(6) The terms and amount of any sinking fund provided for the purchase
or redemption of shares of the series.
(7) The amounts payable on, and the preferences, if any, of shares of
the series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.
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(8) Whether the shares of the series shall be convertible into or
exchangeable for shares of any other class or series, or any other
security, of the Corporation or any other corporation, and, if so, the
specification of such other class or series of such other security, the
conversion or exchange price or prices or rate or rates, any adjustments
thereof, the date or dates at which such shares shall be convertible or
exchangeable and all other terms and conditions upon which such conversion
or exchange may be made.
(9) Restrictions on the issuance of shares of the same series or of
any other class or series.
(10) The voting rights, if any, of the holders of shares of the
series.
The Common Stock shall be subject to the express terms of the Preferred
Stock and any series thereof. Except as may be provided in this Certificate of
Incorporation or in a Preferred Stock Designation, the holders of shares of
Common Stock shall be entitled to one vote for each such share upon all
questions presented to the stockholders, the Common Stock shall have the
exclusive right to vote for the election of directors and for all other
purposes, and holders of Preferred Stock shall not be entitled to receive notice
of any meeting of stockholders at which they are not entitled to vote.
The Corporation shall be entitled to treat the person in whose name any
share of its stock is registered as the owner thereof for all purposes and shall
not be bound to recognize any equitable or other claim to, or interest in, such
share on the part of any other person, whether or not the Corporation shall have
notice thereof, except as expressly provided by applicable law.
ARTICLE V
In furtherance of, and not in limitation of, the powers conferred by law,
the Board of Directors is expressly authorized and empowered:
(1) to adopt, amend or repeal the Bylaws of the Corporation; provided,
however, that the Bylaws adopted by the Board of Directors under the powers
hereby conferred may be amended or repealed by the Board of Directors or by
the stockholders having voting power with respect thereto, provided further
that, in the case of amendments by stockholders, the affirmative vote of
the holders of at least 80 percent of the voting power of the then
outstanding Voting Stock, voting together as a single class, shall be
required in order for the stockholders to alter, amend or repeal any
provision of the Bylaws or to adopt any additional Bylaw; and
(2) from time to time to determine whether and to what extent, and at
what times and places, and under what conditions and regulations, the
accounts and books of the Corporation, or any of them, shall be open to
inspection of stockholders; and, except as so determined or as expressly
provided in this Certificate of Incorporation or in any Preferred Stock
Designation, no stockholder shall have any right to inspect any account,
book or document of the Corporation other than such rights as may be
conferred by applicable law.
The Corporation may in its Bylaws confer powers upon the Board of Directors
in addition to the foregoing and in addition to the powers and authorities
expressly conferred upon the Board of Directors by applicable law.
Notwithstanding anything contained in this Certificate of Incorporation to the
contrary, and in addition to approval by the Board of Directors, the affirmative
vote of the holders of at least 80 percent of the voting power of the then
outstanding Voting Stock, voting together as a single class, shall be required
to amend, repeal or adopt any provision inconsistent with paragraph (1) of this
Article V. For the purposes of this Certificate of Incorporation, "Voting Stock"
shall mean the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors.
ARTICLE VI
Subject to the rights of the holders of any series of Preferred Stock or
any other series or class of stock as set forth in the Certificate of
Incorporation, any action required or permitted to be taken by the stockholders
of the Corporation must be effected at a duly called annual or special meeting
of stockholders of the Corporation
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and may not be effected by any consent in writing in lieu of a meeting of such
stockholders. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, and in addition to approval by the Board of
Directors, the affirmative vote of at least 80 percent of the voting power of
the then outstanding Voting Stock, voting together as a single class, shall be
required to amend, repeal or adopt any provision inconsistent with this Article
VI.
ARTICLE VII
Subject to the rights of the holders of any series of Preferred Stock or
any other series or class of stock as set forth in the Certificate of
Incorporation to elect additional directors under specified circumstances, the
number of directors of the Corporation shall be fixed by the Bylaws of the
Corporation and may be increased or decreased from time to time in such a manner
as may be prescribed by the Bylaws.
Unless and except to the extent that the Bylaws of the Corporation shall so
require, the election of directors of the Corporation need not be by written
ballot.
The directors, other than those who may be elected by the holders of any
series of Preferred Stock or any other series or class of stock as set forth in
the Certificate of Incorporation, shall be divided into three classes, as nearly
equal in number as possible. One class of directors shall be initially elected
for a term expiring at the annual meeting of stockholders to be held in 1997,
another class shall be initially elected for a term expiring at the annual
meeting of stockholders to be held in 1998, and another class shall be initially
elected for a term expiring at the annual meeting of stockholders to be held in
1999. Members of each class shall hold office until their successors are elected
and qualified. At each annual meeting of the stockholders of the Corporation
commencing with the 1997 annual meeting, (1) directors elected to succeed those
directors whose terms then expire shall be elected by a plurality vote of all
votes cast at such meeting to hold office for a term expiring at the third
succeeding annual meeting of stockholders after their election, with each
director to hold office until his or her successor shall have been duly elected
and qualified, and (2) only if authorized by a resolution of the Board of
Directors, directors may be elected to fill any vacancy on the Board of
Directors, regardless of how such vacancy shall have been created.
Subject to the rights of the holders of any series of Preferred Stock, or
any other series or class of stock as set forth in this Certificate of
Incorporation, to elect additional directors under specified circumstances, and
unless the Board of Directors otherwise determines, vacancies resulting from
death, resignation, retirement, disqualification, removal from office or other
cause, and newly created directorships resulting from any increase in the
authorized number of directors, may be filled only by the affirmative vote of a
majority of the remaining directors, though less than a quorum of the Board of
Directors, and directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class to which
they have been elected expires and until such director's successor shall have
been duly elected and qualified. No decrease in the number of authorized
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
Subject to the rights of the holders of any series of Preferred Stock or
any other series or class of stock as set forth in the Certificate of
Incorporation to elect additional directors under specified circumstances, any
director may be removed from office at any time, but only for cause and only by
the affirmative vote of the holders of at least 80 percent of the voting power
of the then outstanding Voting Stock, voting together as a single class.
Notwithstanding anything contained in this Certificate of Incorporation to
the contrary, and in addition to approval by the Board of Directors, the
affirmative vote of the holders of at least 80 percent of the voting power of
the then outstanding Voting Stock, voting together as a single class, shall be
required to amend, repeal or adopt any provision inconsistent with this Article
VII.
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ARTICLE VIII
(1) Vote Required for Certain Business Combinations.
(a) Higher Vote for Certain Business Combinations. In addition to any
affirmative vote required by law or this Certificate of Incorporation, and
except as otherwise expressly provided in Section 2 of this Article VIII:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested Stockholder
(as hereinafter defined), or (b) any other corporation (whether or not
itself any Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate (as hereinafter defined) of an
Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with
any Interested Stockholder, including all Affiliates of the Interested
Stockholder, of any assets of the Corporation or any Subsidiary having
an aggregate Fair Market Value (as hereinafter defined) of $10,000,000
or more; or
(iii) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Interested Stockholder,
including all Affiliates of the Interested Stockholder, in exchange for
cash, securities or other property (or a combination thereof) having an
aggregate Fair Market Value of $10,000,000 or more; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliates of any Interested Stockholder; or
(v) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
other transaction (whether or not an Interested Stockholder is a party
thereto) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary which are
directly or indirectly owned by any Interested Stockholder or one or
more Affiliates of the Interested Stockholder;
shall require the affirmative vote of the holders of at least 66 2/3% of
the voting power of the then outstanding Voting Stock, voting together as a
single class, including the affirmative vote of the holders of at least
66 2/3% of the voting power of the then outstanding Voting Stock not owned
directly or indirectly by any Interested Stockholder or any Affiliate of
any Interested Stockholder, unless the requirement of such vote is not
permitted under Delaware law. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be permitted, by law or in any agreement with any national
securities exchange or otherwise.
(b) Definition of "Business Combination." The term "Business
Combination" as used in this Article VIII shall mean any transaction
described in any one or more of clauses (i) through (v) of paragraph (a) of
this Section (1).
(2) When Higher Vote is Not Required. The provisions of Section (1) of this
Article VIII shall not be applicable to any particular Business Combination, and
such Business Combination shall require only such affirmative vote as is
required by law or any other provision of this Certificate of Incorporation, if
the conditions specified in either of the following paragraphs (a) or (b) are
met:
(a) Approval by Continuing Directors. The Business Combination shall
have been approved by a majority of the Continuing Directors (as
hereinafter defined).
(b) Price and Procedure Requirements. All of the following conditions
shall have been met:
(i) The aggregate amount of the cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of the Business
Combination of consideration other than cash, to be
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received per share by holders of Common Stock in such Business
Combination, shall be at least equal to the highest of the following:
(A) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any shares of Common Stock
acquired by it (1) within the two-year period immediately prior to
the first public announcement of the proposal of such Business
Combination (the "Announcement Date"), or (2) in the transaction in
which it became an Interested Stockholder, whichever is higher;
(B) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder
became an Interested Stockholder (the "Determination Date"),
whichever is higher; and
(C) (if applicable) the price per share equal to the Fair Market
Value per share of Common Stock determined pursuant to paragraph
(b)(i)(B) above, multiplied by the ratio of (1) the highest per share
price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder for any
shares of Common Stock acquired by it within the two-year period
immediately prior to the Announcement Date to (2) the Fair Market
Value per share of Common Stock on the first day in such two-year
period upon which the Interested Stockholder acquired any shares of
Common Stock.
(ii) The aggregate amount of the cash and the Fair Market Value as
of the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders of
shares of any other class, other than Common Stock or Excluded Preferred
Stock, of outstanding Voting Stock shall be at least equal to the
highest of the following (it being intended that the requirements of
this paragraph (b)(ii) shall be required to be met with respect to every
such class of outstanding Voting Stock, whether or not the Interested
Stockholder has previously acquired any shares of a particular class of
Voting Stock):
(A) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any shares of such class of
Voting Stock acquired by it (1) within the two-year period
immediately prior to the Announcement Date, or (2) in the transaction
in which it became an Interested Stockholder, whichever is higher;
(B) (if applicable) the highest preferential amount per share to
which the holders of shares of such class of Voting Stock are
entitled in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
(C) the Fair Market Value per share of such class of Voting
Stock on the Announcement Date or on the Determination Date,
whichever is higher; and
(D) (if applicable) the price per share equal to the Fair Market
Value per share of such class of Voting Stock determined pursuant to
paragraph (b)(ii)(C) above, multiplied by the ratio of (1) the
highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the Interested
Stockholder for any shares of such class of Voting Stock acquired by
it within the two-year period immediately prior to the Announcement
Date to (2) the Fair Market Value per share of such class of Voting
Stock on the first day in such two-year period upon which the
Interested Stockholder acquired any shares of such class of Voting
Stock.
(iii) The consideration to be received by holders of a particular
class of outstanding Voting Stock (including Common Stock and other than
Excluded Preferred Stock) shall be in cash or in the same form as the
Interested Stockholder has previously paid for shares of such class of
Voting Stock. If the Interested Stockholder has paid for shares of any
class of Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either cash
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or the form used to acquire the largest number of shares of such class
of Voting Stock previously acquired by it.
(iv) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination:
(A) there shall have been no failure to declare and pay at the regular
date therefor any full quarterly dividends (whether or not cumulative)
on any outstanding preferred stock, except as approved by a majority of
the Continuing Directors; (B) there shall have been no reduction in the
annual rate of dividends paid on the Common Stock (except as necessary
to reflect any subdivision of the Common Stock), except as approved by a
majority of the Continuing Directors; (C) there shall have been an
increase in the annual rate of dividends as necessary fully to reflect
any recapitalization (including any reverse stock split), reorganization
or any similar reorganization which has the effect of reducing the
number of outstanding shares of the Common Stock, unless the failure so
to increase such annual rate is approved by a majority of the Continuing
Directors; and (D) such Interested Stockholder shall not have become the
Beneficial Owner of any additional Voting Stock except as part of the
transaction which results in such Interested Stockholder becoming an
Interested Stockholder.
(v) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages provided
by the Corporation, whether in anticipation of or in connection with
such Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations thereunder
(or any subsequent provisions replacing such Act, rules or regulations)
shall be mailed to stockholders of the Corporation at least thirty (30)
days prior to the consummation of such Business Combination (whether or
not such proxy or information statement is required to be mailed
pursuant to such Act or subsequent provisions).
(3) Certain Definitions. For purposes of this Article VIII:
(a) "Person" shall mean any individual, firm, corporation or other
entity.
(b) "Interested Stockholder" shall mean any Person (other than the
Corporation or any Subsidiary) who or which:
(i) itself, or along with its Affiliates, is the Beneficial Owner,
directly or indirectly, of more than 10% of the then outstanding Voting
Stock; or
(ii) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was itself, or
along with its Affiliates, the Beneficial Owner, directly or indirectly,
of 10% or more of the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any Voting
Stock which was at any time within the two-year period immediately prior
to the date in question beneficially owned by an Interested Stockholder,
if such assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(c) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations of the Securities Exchange
Act of 1934, as in effect on August 15, 1996. In addition, a Person shall
be the "Beneficial Owner" of any Voting Stock which such Person or any of
its Affiliates or Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise, provided that, in the case of rights issued pursuant to the
Rights Agreement between the Corporation and Wells Fargo Bank of Arizona,
N.A., as rights agent, dated as of August 15, 1996, or any successor rights
agreement, once such
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rights are exercisable, a holder thereof shall not be deemed to be a
"Beneficial Owner" for purposes of this provision of the shares of Voting
Stock issuable pursuant to such rights unless and until such holder, on or
after the date that such rights become exercisable, acquires any additional
such rights or shares of Voting Stock, or (ii) the right to vote pursuant
to any agreement, arrangement or understanding (but neither such Person nor
any such Affiliate or Associate shall be deemed to be the Beneficial Owner
of any shares of Voting Stock solely by reason of a revocable proxy granted
for a particular meeting of stockholders, pursuant to a public solicitation
of proxies for such meeting, and with respect to which shares neither such
Person nor any such Affiliate or Associate is otherwise deemed the
Beneficial Owner).
(d) For the purpose of determining whether a Person is an Interested
Stockholder pursuant to paragraph (b) of this Section (3), the number of
shares of Voting Stock deemed to be outstanding shall include shares deemed
owned through application of paragraph (c) of this Section (3) but shall
not include any other shares of Voting Stock which may be issuable pursuant
to any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options or otherwise.
(e) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on August 15, 1996.
(f) "Subsidiary" shall mean any corporation of which a majority of any
share of equity security is owned, directly or indirectly, by the
Corporation, provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph (b) of this Section (3), the
term "Subsidiary" shall mean only a corporation of which a majority of each
share of equity security is owned, directly or indirectly, by the
Corporation.
(g) "Continuing Director" shall mean any member of the Board of
Directors of the Corporation (the "Board") who is unaffiliated with the
Interested Stockholder and was a member of the Board prior to the time that
the Interested Stockholder became an Interested Stockholder, and any
director who is thereafter chosen to fill any vacancy on the Board or who
is elected and who, in either event, is unaffiliated with the Interested
Stockholder and in connection with his or her initial assumption of office
is recommended for appointment or election by a majority of Continuing
Directors then on the Board.
(h) "Fair Market Value" shall mean (i) in the case of stock, the
highest closing sale price during the 30-day period immediately preceding
the date in question of a share of such stock on the Composite Tape for New
York Stock Exchange listed stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is not
listed on such exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the
30-day period preceding the date in question on the National Association of
Securities Dealers, Inc. National Market System, or, if such stock is not
quoted thereon, on the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use in its stead, or if
no such quotations are available, the fair market value on the date in
question of a share of such stock as determined by the Board in accordance
with Section (4) of this Article VIII; and (ii) in the case of property
other than cash or stock, the fair market value of such property on the
date in question as determined by the Board in accordance with Section (4)
of this Article VIII.
(i) In the event of any Business Combination in which the Corporation
survives, the phrase "other consideration to be received" as used in
paragraphs (b)(i) and (ii) of Section (2) of this Article VIII shall
include the shares of Common Stock and/or the shares of any other class of
outstanding Voting Stock retained by the holders of such shares.
(j) "Excluded Preferred Stock" means any series of Preferred Stock
with respect to which a majority of the Continuing Directors have approved
a Preferred Stock Designation creating such series that expressly provides
that the provisions of this Article VIII shall not apply.
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(4) The Continuing Directors of the Corporation shall have the power and
duty to determine for the purposes of this Article VIII, on the basis of
information known to them after reasonable inquiry, all facts necessary to
determine compliance with this Article VIII, including, without limitation (a)
whether a Person is an Interested Stockholder, (b) the number of shares of
Voting Stock beneficially owned by any Person, (c) whether a Person is an
Affiliate or Associate of another, (d) whether the applicable conditions set
forth in paragraph (b) of Section (2) of this Article VIII have been met with
respect to any Business Combination, (e) the Fair Market Value of stock or other
property, in accordance with paragraph (h) of Section (3) of this Article VIII,
and (f) whether the assets which are the subject of any Business Combination
have, or the consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business Combination has,
an aggregate Fair Market Value of $10,000,000 or more.
(5) No Effect on Fiduciary Obligations of Interested Stockholders. Nothing
contained in this Article VIII shall be construed to relieve any Interested
Stockholder from any fiduciary obligation imposed by law.
(6) Amendment, Repeal, etc. Notwithstanding any other provisions of this
Certificate of Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that a lesser percentage may be permitted by law, this
Certificate of Incorporation or the Bylaws of the Corporation), but in addition
to any affirmative vote of the holders of any particular class of the Voting
Stock required by law or this Certificate of Incorporation and in addition to
approval by the Board of Directors, the affirmative vote of the holders of at
least 66 2/3% of the voting power of the shares of the then outstanding Voting
Stock voting together as a single class, including the affirmative vote of the
holders of at least 66 2/3% of the voting power of the then outstanding Voting
Stock not owned directly or indirectly by any Interested Stockholder or any
Affiliate of any Interested Stockholder, shall be required to amend or repeal,
or adopt any provisions inconsistent with, this Article VIII of this Certificate
of Incorporation.
ARTICLE IX
Each person who is or was or had agreed to become a director or officer of
the Corporation, or each such person who is or was serving or who had agreed to
serve at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise (including
the heirs, executor, administrators or estate of such person), shall be
indemnified by the Corporation, in accordance with the Bylaws of the
Corporation, to the fullest extent permitted from time to time by the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended (but, if permitted by applicable law, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment) or any other applicable laws as presently or
hereafter in effect. The Corporation may, by action of the Board of Directors,
provide indemnification to employees and agents of the Corporation, and to
persons serving as employees or agents of another corporation, partnership,
joint venture, trust or other enterprise, at the request of the Corporation,
with the same scope and effect as the foregoing indemnification of directors and
officers. The Corporation shall be required to indemnify any person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors or is a proceeding to enforce such person's claim to
indemnification pursuant to the rights granted by this Certificate of
Incorporation or otherwise by the Corporation. Without limiting the generality
or the effect of the foregoing, the Corporation may enter into one or more
agreements with any person which provide for indemnification greater or
different than that provided in this Article IX. Any amendment or repeal of this
Article IX shall not adversely affect any right or protection existing hereunder
in respect of any act or omission occurring prior to such amendment or repeal.
ARTICLE X
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (1) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (2) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) under Section 174 of the General
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Corporation Law of the State of Delaware, or (4) for any transaction from which
the director derived an improper personal benefit. Any amendment or repeal of
this Article X shall not adversely affect any right or protection of a director
of the Corporation existing hereunder in respect of any act or omission
occurring prior to such amendment or repeal.
ARTICLE XI
Except as may be expressly provided in this Certificate of Incorporation,
the Corporation reserves the right at any time and from time to time to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation or a Preferred Stock Designation, and any other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed herein or by
applicable law, and all rights, preferences and privileges of whatsoever nature
conferred upon stockholders, directors or any other persons whomsoever by and
pursuant to this Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the right reserved in this Article XI;
provided, however, that any amendment or repeal of Article IX or Article X of
this Certificate of Incorporation shall not adversely affect any right or
protection existing hereunder in respect of any act or omission occurring prior
to such amendment or repeal, and provided further that no Preferred Stock
Designation shall be amended after the issuance of any shares of the series of
Preferred Stock created thereby, except in accordance with the terms of such
Preferred Stock Designation and the requirements of applicable law.
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ANNEX C
FORM OF
BYLAWS
OF
THE DIAL CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
ARTICLE I
OFFICES AND RECORDS
SECTION 1.1. Delaware Office. The principal office of the Corporation in
the State of Delaware shall be located in the City of Wilmington, County of New
Castle, and the name and address of its registered agent is The Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware.
SECTION 1.2. Other Offices. The Corporation may have such other offices,
either within or without the State of Delaware, as the Board of Directors may
designate or as the business of the Corporation may from time to time require.
SECTION 1.3. Books and Records. The books and records of the Corporation
may be kept at the Corporation's headquarters in Phoenix, Arizona or at such
other locations outside the State of Delaware as may from time to time be
designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION 2.1. Annual Meeting. Commencing in 1997, the annual meeting of the
stockholders of the Corporation shall be held on the first Tuesday in May of
each year, if not a legal holiday, and if a legal holiday then on the next
succeeding business day, at 10:00 a.m., local time, at the principal executive
offices of the Corporation, or at such other date, place and/or time as may be
fixed by resolution of the Board of Directors.
SECTION 2.2. Special Meeting. Subject to the rights of the holders of any
series of preferred stock, par value $0.01 per share, of the Corporation (the
"Preferred Stock") or any other series or class of stock as set forth in the
Certificate of Incorporation, special meetings of the stockholders may be called
only by the Chairman of the Board or by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of directors specified in
the resolution pursuant to Section 3.2 which the Corporation would have if there
were no vacancies (the "Whole Board").
SECTION 2.3. Place of Meeting. The Board of Directors may designate the
place of meeting for any meeting of the stockholders. If no designation is made
by the Board of Directors, the place of meeting shall be the principal office of
the Corporation.
SECTION 2.4. Notice of Meeting. Written or printed notice, stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be prepared and delivered by the Corporation not less
than ten days nor more than sixty days before the date of the meeting, either
personally, or by mail, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail with postage thereon prepaid, addressed to the
stockholder at his address as it appears on the stock transfer books of the
Corporation. Such further notice shall be given as may be required by law. Only
such business shall be conducted at a special meeting of stockholders as shall
have been brought before the meeting pursuant to the Corporation's notice of
meeting. Meetings may be held without notice if all stockholders entitled to
vote are present (except as otherwise provided by law), or if notice is waived
by those not present in accordance with Section 6.4 of these Bylaws. Any
previously scheduled meeting of the stockholders may be postponed, and (unless
the Certificate of Incorporation otherwise provides) any special meeting of the
stockholders may be cancelled, by resolution of
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the Board of Directors upon public notice given prior to the time previously
scheduled for such meeting of stockholders.
SECTION 2.5. Quorum and Adjournment. Except as otherwise provided by law
or by the Certificate of Incorporation, the holders of a majority of the voting
power of the outstanding shares of the Corporation entitled to vote generally in
the election of directors (the "Voting Stock"), represented in person or by
proxy shall constitute a quorum at a meeting of stockholders, except that when
specified business is to be voted on by a class or series voting as a class, the
holders of a majority of the voting power of the shares of such class or series
shall constitute a quorum for the transaction of such business. The chairman of
the meeting or a majority of the shares of Voting Stock so represented may
adjourn the meeting from time to time, whether or not there is such a quorum
(or, in the case of specified business to be voted on by a class or series, the
chairman or a majority of the shares of such class or series so represented may
adjourn the meeting with respect to such specified business). No notice of the
time and place of adjourned meetings need be given except as required by law.
The stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
SECTION 2.6. Proxies. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing by the stockholder or as may be permitted by
law, or by his duly authorized attorney-in-fact. Such proxy must be filed with
the Secretary of the Corporation or his representative at or before the time of
the meeting.
SECTION 2.7. Notice of Stockholder Business and Nominations.
(A) Annual Meetings of Stockholders. (1) Nominations of persons for
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice of meeting delivered
pursuant to Section 2.4 of these Bylaws, (b) by or at the direction of the
Chairman or the Board of Directors or (c) by any stockholder of the Corporation
who is entitled to vote at the meeting, who complied with the notice procedures
set forth in clauses (2) and (3) of this paragraph (A) of this Bylaw and who was
a stockholder of record at the time such notice is delivered to the Secretary of
the Corporation.
(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of
this Bylaw, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice shall
be delivered to the Secretary at the principal executive offices of the
Corporation not less than seventy days nor more than ninety days prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that with respect to the annual meeting to be held in 1997, the anniversary date
shall be deemed to be May 7, 1997; and provided, further, that in the event that
the date of the annual meeting is advanced by more than twenty days, or delayed
by more than seventy days, from such anniversary date, notice by the stockholder
to be timely must be so delivered not earlier than the ninetieth day prior to
such annual meeting and not later than the close of business on the later of the
seventieth day prior to such annual meeting or the tenth day following the day
on which public announcement of the date of such meeting is first made. In no
event shall the public announcement of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice as described
in this Section 2.7(A). Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule
14a-11 thereunder, including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected; (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner,
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if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of
this Bylaw to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there is
no public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Corporation at least eighty
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Bylaw shall also be considered timely, but
only with respect to nominees for any new positions created by such increase, if
it shall be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth day following the
day on which such public announcement is first made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting pursuant to Section
2.4 of these Bylaws. Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (a) by or at
the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is entitled to vote at the meeting, who complies with the notice
procedures set forth in this Bylaw and who is a stockholder of record at the
time such notice is delivered to the Secretary of the Corporation. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate such number of persons for election to such position(s) as are
specified in the Corporation's Notice of Meeting, if the stockholder's notice as
required by paragraph (A)(2) of this Bylaw shall be delivered to the Secretary
at the principal executive offices of the Corporation not earlier than the
ninetieth day prior to such special meeting and not later than the close of
business on the later of the seventieth day prior to such special meeting or the
tenth day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a new time period
for the giving of a stockholder's notice as described above.
(C) General. (1) Only persons who are nominated in accordance with the
procedures set forth in this Bylaw shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Bylaw. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, the chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Bylaw and, if any proposed nomination or business is not in compliance
with this Bylaw, to declare that such defective proposal or nomination shall be
disregarded.
(2) For purposes of this Bylaw, "public announcement" shall mean disclosure
in a press release reported by the Dow Jones News Service, Associated Press or
comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw, a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
Bylaw. Nothing in this Bylaw shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 2.8. Procedure for Election of Directors. Election of directors at
all meetings of the stockholders at which directors are to be elected shall be
by written ballot, and, except as otherwise set forth in the Certificate of
Incorporation with respect to the right of the holders of any series of
Preferred Stock or any other series or class of stock to elect additional
directors under specified circumstances, a plurality of the votes cast thereat
shall elect directors. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, all matters other than the election of directors
submitted to the stockholders at any meeting shall be
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decided by the affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting and entitled to vote thereon.
SECTION 2.9. Inspectors of Elections; Opening and Closing the Polls.
(A) The Board of Directors by resolution shall appoint one or more
inspectors, which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives of the Corporation, to act at the meeting
and make a written report thereof. One or more persons may be designated as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate has been appointed to act, or if all inspectors or alternates who
have been appointed are unable to act, at a meeting of stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspectors
shall have the duties prescribed by the General Corporation Law of the State of
Delaware.
(B) The chairman of the meeting shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter upon
which the stockholders will vote at a meeting.
SECTION 2.10. No Stockholder Action by Written Consent. Subject to the
rights of the holders of any series of Preferred Stock or any other series or
class of stock as set forth in the Certificate of Incorporation, any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at an annual or special meeting of stockholders of the Corporation and
may not be affected by any consent in writing by such stockholders.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. General Powers. The business and affairs 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 of Directors may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these Bylaws required to be exercised or done by the
stockholders.
SECTION 3.2. Number, Tenure and Qualifications. Subject to the rights of
the holders of any series of Preferred Stock, or any other series or class of
stock as set forth in the Certificate of Incorporation, to elect directors under
specified circumstances, the number of directors shall be fixed from time to
time exclusively pursuant to a resolution adopted by a majority of the Whole
Board, but shall consist of not more than eleven nor less than three directors.
The directors, other than those who may be elected by the holders of any series
of Preferred Stock, or any other series or class of stock as set forth in the
Certificate of Incorporation, shall be divided, with respect to the time for
which they severally hold office, into three classes, as nearly equal in number
as possible, with the term of office of the first class to expire at the 1997
annual meeting of stockholders, the term of office of the second class to expire
at the 1998 annual meeting of stockholders and the term of office of the third
class to expire at the 1999 annual meeting of stockholders. Each director shall
hold office until his or her successor shall have been duly elected and
qualified. At each annual meeting of stockholders, commencing with the 1997
annual meeting, (i) directors elected to succeed those directors whose terms
then expire shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders after their election, with each
director to hold office until his or her successor shall have been duly elected
and qualified, and (ii) only if authorized by a resolution of the Board of
Directors, directors may be elected to fill any vacancy on the Board of
Directors, regardless of how such vacancy shall have been created.
Notwithstanding the foregoing, no outside director shall be nominated by
the Board of Directors for election as a director for another term of office
unless such term of office shall begin before he attains age 70 and no inside
director's term of office shall continue after he attains age 65 or after the
termination of his
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services as an officer or employee of the Corporation, unless such continuance
is approved by a majority of the outside directors on the Board of Directors at
the time the disqualifying event occurs and each time thereafter that such
inside director is nominated for reelection. The term "outside director" means
any person who has never served as an officer or employee of the Corporation or
an affiliate and the term "inside director" means any director who is not an
"outside director." Any person who is ineligible for reelection as a director
under this paragraph may, by a majority vote of the Board of Directors, be
designated as a "Director Emeritus" and as such shall be entitled to receive
notice of, and to attend meetings of, the Board of Directors, but shall not vote
at such meetings.
SECTION 3.3. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at the
same place as, each annual meeting of stockholders. The Board of Directors may,
by resolution, provide the time and place for the holding of additional regular
meetings without other notice than such resolution.
SECTION 3.4. Special Meetings. Special meetings of the Board of Directors
shall be called at the request of the Chairman of the Board, the President or a
majority of the Board of Directors. The person or persons authorized to call
special meetings of the Board of Directors may fix the place and time of the
meetings.
SECTION 3.5. Notice. Notice of any special meeting shall be given to each
director at his business or residence in writing or by telegram or by telephone
communication. If mailed, such notice shall be deemed adequately delivered when
deposited in the United States mails so addressed, with postage thereon prepaid,
at least five days before such meeting. If by telegram, such notice shall be
deemed adequately delivered when the telegram is delivered to the telegraph
company at least twenty-four hours before such meeting. If by facsimile
transmission, such notice shall be transmitted at least twenty-four hours before
such meeting. If by telephone, the notice shall be given at least twelve hours
prior to the time set for the meeting. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Board of Directors
need be specified in the notice of such meeting, except for amendments to these
Bylaws as provided under Section 8.1 of Article VIII hereof. A meeting may be
held at any time without notice if all the directors are present (except as
otherwise provided by law) or if those not present waive notice of the meeting
in accordance with Section 6.4 hereof, either before or after such meeting.
SECTION 3.6. Conference Telephone Meetings. Members of the Board of
Directors, or any committee thereof, may participate in a meeting of the Board
of Directors or such 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 3.7. Quorum. A whole number of directors equal to at least a
majority of the Whole Board shall constitute a quorum for the transaction of
business, but if at any meeting of the Board of Directors there shall be less
than a quorum present, a majority of the directors present may adjourn the
meeting from time to time without further notice. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. If permitted by applicable law, the directors present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
SECTION 3.8. Vacancies. Subject to the rights of the holders of any series
of Preferred Stock, or any other series or class of stock as set forth in the
Certificate of Incorporation, to elect additional directors under specified
circumstances, and unless the Board of Directors otherwise determines, vacancies
resulting from death, resignation, retirement, disqualification, removal from
office or other cause, and newly created directorships resulting from any
increase in the authorized number of directors, may be filled only by the
affirmative vote of a majority of the remaining directors, though less than a
quorum of the Board of Directors and not by stockholders. Directors so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of office of the class to which they have been elected expires
and until such director's successor shall have been duly elected and qualified.
No decrease in the number of authorized directors constituting the Whole Board
shall shorten the term of any incumbent director.
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SECTION 3.9. Executive and Other Committees. The Board of Directors may
designate an Executive Committee to exercise, subject to applicable provisions
of law, all the powers of the Board in the management of the business and
affairs of the Corporation when the Board is not in session, including the power
to adopt a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law of the State of Delaware, provided that, the Executive
Committee shall not have the power to declare dividends or to authorize the
issuance of the Corporation's capital stock. The Board of Directors may also, by
resolution similarly adopted, designate one or more other committees. The
Executive Committee and each such other committee shall consist of two or more
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. Any such committee, other than the
Executive Committee (the powers of which are expressly provided for herein), may
to the extent permitted by law exercise such powers and shall have such
responsibilities as shall be specified in the designating resolution. In the
absence or disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not constituting a quorum, may unanimously appoint another
member of the Board to act at the meeting in the place of any such absent or
disqualified member. Each committee shall keep written minutes of its
proceedings and shall report such proceedings to the Board when required.
A majority of any committee may determine its action and fix the time and
place of its meetings, unless the Board shall otherwise provide. Notice of such
meetings shall be given to each member of the committee in the manner provided
for in Section 3.5 of these Bylaws. The Board shall have power at any time to
fill vacancies in, to change the membership of, or to dissolve any such
committee. Nothing herein shall be deemed to prevent the Board from appointing
one or more committees consisting in whole or in part of persons who are not
directors of the Corporation; provided, however, that no such committee shall
have or may exercise any authority of the Board.
SECTION 3.10. Removal. Subject to the rights of the holders of any series
of Preferred Stock, or any other series or class of stock as set forth in the
Certificate of Incorporation, to elect additional directors under specified
circumstances, any director, or the entire Board of Directors, may be removed
from office at any time, but only for cause and only by the affirmative vote of
the holders of at least 80 percent of the voting power of the then outstanding
Voting Stock, voting together as a single class.
ARTICLE IV
OFFICERS
SECTION 4.1. Elected Officers. The elected officers of the Corporation
shall be a Chairman of the Board, a President, a Secretary, a Treasurer, and
such other officers (including, without limitation, a Chief Financial Officer)
as the Board of Directors from time to time may deem proper. The Chairman of the
Board shall be chosen from the directors. All officers chosen by the Board of
Directors shall each have such powers and duties as generally pertain to their
respective offices, subject to the specific provisions of this Article IV. Such
officers shall also have powers and duties as from time to time may be conferred
by the Board of Directors or by any committee thereof.
SECTION 4.2. Election and Term of Office. The elected officers of the
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Subject to Section
4.7 of these Bylaws, each officer shall hold office until his successor shall
have been duly elected and shall have qualified or until his death or until he
shall resign.
SECTION 4.3. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors. The
Chairman of the Board shall be responsible for the general management of the
affairs of the Corporation and shall perform all duties incidental to his office
which may be required by law and all such other duties as are properly required
of him by the Board of Directors. Except where by law the signature of the
President is required, the Chairman of the Board shall possess the same power as
the President to sign all certificates, contracts, and other instruments of the
Corporation which may
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be authorized by the Board of Directors. He shall make reports to the Board of
Directors and the stockholders, and shall perform all such other duties as are
properly required of him by the Board of Directors. He shall see that all orders
and resolutions of the Board of Directors and of any committee thereof are
carried into effect.
SECTION 4.4. President. The President shall act in a general executive
capacity and shall assist the Chairman of the Board in the administration and
operation of the Corporation's business and general supervision of its policies
and affairs. The President shall, in the absence of or because of the inability
to act of the Chairman of the Board, perform all duties of the Chairman of the
Board and preside at all meetings of stockholders and of the Board of Directors.
The President may sign, alone or with the Secretary, or an Assistant Secretary,
or any other proper officer of the Corporation authorized by the Board of
Directors, certificates, contracts, and other instruments of the Corporation as
authorized by the Board of Directors.
SECTION 4.5. Secretary. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and Directors and all other notices
required by law or by these Bylaws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the Chairman of the Board or the President, or by the Board of Directors,
upon whose request the meeting is called as provided in these Bylaws. He shall
record all the proceedings of the meetings of the Board of Directors, any
committees thereof and the stockholders of the Corporation in a book to be kept
for that purpose, and shall perform such other duties as may be assigned to him
by the Board of Directors, the Chairman of the Board or the President. He shall
have the custody of the seal of the Corporation and may affix the same to all
instruments requiring it and attest to the same.
SECTION 4.6. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. The Treasurer
shall deposit all moneys and other valuables 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, the Chairman of the Board, or the President,
taking proper vouchers for such disbursements. The Treasurer shall render to the
Chairman of the Board, the President and the Board of Directors, whenever
requested, 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 for the faithful discharge of his
duties in such amount and with such surety as the Board of Directors shall
prescribe.
SECTION 4.7. Removal. Any officer elected by the Board of Directors may be
removed by a majority of the members of the Whole Board whenever, in their
judgment, the best interests of the Corporation would be served thereby. No
elected officer shall have any contractual rights against the Corporation for
compensation by virtue of such election beyond the date of the election of his
successor, his death, his resignation or his removal, whichever event shall
first occur, except as otherwise provided in an employment contract or an
employee plan.
SECTION 4.8. Vacancies. A newly created office and a vacancy in any office
because of death, resignation, or removal may be filled by the Board of
Directors for the unexpired portion of the term at any meeting of the Board of
Directors.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
SECTION 5.1. Stock Certificates and Transfers.
(A) The interest of each stockholder of the Corporation shall be evidenced
by certificates for shares of stock in such form as the appropriate officers of
the Corporation may from time to time prescribe, provided, that the Board of
Directors may provide by resolution or resolutions that some or all of any or
all classes or series of the stock of the Corporation shall be uncertificated
shares. Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the
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Corporation by the Chairman or Vice-Chairman of the Board of Directors, or the
President or Vice-President, and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation representing the
number of shares registered in certificate form. Except as otherwise expressly
provided by law, the rights and obligations of the holders of uncertificated
stock and the rights and obligations of the holders of certificates representing
stock of the same class and series shall be identical.
(B) The certificates of stock shall be signed, countersigned and registered
in such manner as the Board of Directors may by resolution prescribe, which
resolution may permit all or any of the signatures on such certificates to be in
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has 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.
(C) The shares of the stock of the Corporation represented by certificates
shall be transferred on the books of the Corporation by the holder thereof in
person or by his attorney, upon surrender for cancellation of certificates for
the same number of shares, with an assignment and power of transfer endorsed
thereon or attached thereto, duly executed, with such proof of the authenticity
of the signature as the Corporation or its agents may reasonably require. Upon
receipt of proper transfer instructions from the registered owner of
uncertificated shares such uncertificated shares shall be cancelled and issuance
of new equivalent uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the Corporation. Within a reasonable time after the issuance or transfer of
uncertificated stock, the Corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to the Delaware General Corporation Law or, unless
otherwise provided by the Delaware General Corporation Law, 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 5.2. Lost, Stolen or Destroyed Certificates. No certificate for
shares or uncertificated shares of stock in the Corporation shall be issued in
place of any certificate alleged to have been lost, destroyed or stolen, except
on production of such evidence of such loss, destruction or theft and on
delivery to the Corporation of a bond of indemnity in such amount, upon such
terms and secured by such surety, as the Board of Directors or any financial
officer may in its or his discretion require.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. Fiscal Year. The fiscal year of the Corporation shall consist
of a year of from fifty-two to fifty-three weeks ending on the last Saturday in
December of each year.
SECTION 6.2. Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and its Certificate of
Incorporation.
SECTION 6.3. Seal. The corporate seal shall be in circular form and shall
have inscribed thereon the name of the Corporation and the words "Corporate
Seal -- Delaware 1996."
SECTION 6.4. Waiver of Notice. Whenever any notice is required to be given
to any stockholder or director of the Corporation under the provisions of the
General Corporation Law of the State of Delaware, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice. Neither the business to be transacted at, nor the purpose of, any annual
or special meeting of the stockholders or any meeting of the Board of Directors
or committee thereof need be specified in any waiver of notice of such meeting.
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SECTION 6.5. Audits. The accounts, books and records of the Corporation
shall be audited upon the conclusion of each fiscal year by an independent
certified public accountant selected by the Board of Directors, and it shall be
the duty of the Board of Directors to cause such audit to be made annually.
SECTION 6.6. Resignations. Any director or any officer, whether elected or
appointed, may resign at any time by serving written notice of such resignation
on the Chairman of the Board, the President or the Secretary, and such
resignation shall be deemed to be effective as of the close of business on the
date said notice is received by the Chairman of the Board, the President, or the
Secretary or at such later date as is stated therein. No formal action shall be
required of the Board of Directors or the stockholders to make any such
resignation effective.
SECTION 6.7. Indemnification and Insurance. (A) Each person who was or is
made a party or is threatened to be made a party to or is involved in any
action, suit, or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
or a person of whom he or she is the legal representative is or was a director
or officer of the Corporation or is or was serving at the request of the
Corporation as a director or officer of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans maintained or sponsored by the Corporation, whether the
basis of such proceeding is alleged action in an official capacity as a director
or officer or in any other capacity while serving as a director or officer,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended (but, if permitted by applicable law, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that except as provided in paragraph (C) of
this Bylaw, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors. The right to indemnification conferred in this Bylaw shall
be a contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition, such advances to be paid by the Corporation within 20 days after
the receipt by the Corporation of a statement or statements from the claimant
requesting such advance or advances from time to time; provided, however, that
if the General Corporation Law of the State of Delaware requires, the payment of
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Bylaw or otherwise.
(B) To obtain indemnification under this Bylaw, a claimant shall submit to
the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to the claimant and is
reasonably necessary to determine whether and to what extent the claimant is
entitled to indemnification. Upon written request by a claimant for
indemnification pursuant to the first sentence of this paragraph (B), a
determination, if required by applicable law, with respect to the claimant's
entitlement thereto shall be made as follows: (1) if requested by the claimant,
by Independent Counsel (as hereinafter defined), or (2) if no request is made by
the claimant for a determination by Independent Counsel, (i) by a majority vote
of the Disinterested Directors (as hereinafter defined), even though less than a
quorum, or (ii) if there are no Disinterested Directors or, if the Disinterested
Directors so direct, by Independent Counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to the claimant, or (iii) if the
Disinterested Directors so direct, by the stockholders of the Corporation. In
the event the determination of entitlement to indemnification is to be made by
Independent Counsel at the request of the claimant, the
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Independent Counsel shall be selected by the Board of Directors unless there
shall have occurred within two years prior to the date of the commencement of
the action, suit or proceeding for which indemnification is claimed a "Change of
Control" as defined in The Dial Corporation 1996 Stock Incentive Plan, in which
case the Independent Counsel shall be selected by the claimant unless the
claimant shall request that such selection be made by the Board of Directors. If
it is so determined that the claimant is entitled to indemnification, payment to
the claimant shall be made within 10 days after such determination.
(C) If a claim under paragraph (A) of this Bylaw is not paid in full by the
Corporation within 30 days after a written claim pursuant to paragraph (B) of
this Bylaw has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standard of conduct which makes
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including without limitation, the Disinterested Directors,
Independent Counsel or stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including, without limitation, the
Disinterested Directors, Independent Counsel or stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(D) If a determination shall have been made pursuant to paragraph (B) of
this Bylaw that the claimant is entitled to indemnification, the Corporation
shall be bound by such determination in any judicial proceeding commenced
pursuant to paragraph (C) of this Bylaw.
(E) The Corporation shall be precluded from asserting in any judicial
proceeding commenced pursuant to paragraph (C) of this Bylaw that the procedures
and presumptions of this Bylaw are not valid, binding and enforceable and shall
stipulate in such proceeding that the Corporation is bound by all the provisions
of this Bylaw.
(F) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Bylaw shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or Disinterested
Directors or otherwise. No repeal or modification of this Bylaw shall in any way
diminish or adversely affect the rights of any director, officer, employee or
agent of the Corporation hereunder in respect of any occurrence or matter
arising prior to any such repeal or modification.
(G) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the General Corporation Law of the State of Delaware. To the extent that
the Corporation maintains any policy or policies providing such insurance, each
such director or officer, and each such agent or employee to which rights to
indemnification have been granted as provided in paragraph (H) of this Bylaw,
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage thereunder for any such director,
officer, employee or agent.
(H) The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification, and rights to be paid by
the Corporation the expenses incurred in defending any proceeding in advance of
its final disposition, to any employee or agent of the Corporation, and to
persons serving as employees or agents of another corporation, partnership,
joint venture, trust or other enterprise, at
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the request of the Corporation, to the fullest extent of the provisions of this
Bylaw with respect to the indemnification and advancement of expenses of
directors and officers of the Corporation.
(I) If any provision or provisions of this Bylaw shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (1) the validity,
legality and enforceability of the remaining provisions of this Bylaw
(including, without limitation, each portion of any paragraph of this Bylaw
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself held to be invalid, illegal or unenforceable) shall not in any way
be affected or impaired thereby; and (2) to the fullest extent possible, the
provisions of this Bylaw (including, without limitation, each such portion of
any paragraph of this Bylaw containing any such provision held to be invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
(J) For purposes of this Bylaw:
(1) "Disinterested Director" means a director of the Corporation who
is not and was not a party to the proceeding or matter in respect of which
indemnification is sought by the claimant.
(2) "Independent Counsel" means a law firm, a member of a law firm, or
an independent practitioner, that is experienced in matters of corporation
law and shall include any person who, under the applicable standards of
professional conduct then prevailing, would not have a conflict of interest
in representing either the Corporation or the claimant in an action to
determine the claimant's rights under this Bylaw.
(K) Any notice, request or other communication required or permitted to be
given to the Corporation under this Bylaw shall be in writing and either
delivered in person or sent by telecopy, telex, telegram, overnight mail or
courier service, or certified or registered mail, postage prepaid, return
receipt requested, to the Secretary of the Corporation and shall be effective
only upon receipt by the Secretary.
ARTICLE VII
CONTRACTS, PROXIES, ETC.
SECTION 7.1. Contracts. Except as otherwise required by law, the
Certificate of Incorporation or these Bylaws, any contracts or other instruments
may be executed and delivered in the name and on the behalf of the Corporation
by such officer or officers of the Corporation as the Board of Directors may
from time to time direct. Such authority may be general or confined to specific
instances as the Board may determine. The Chairman of the Board, the President
or any Vice President may execute bonds, contracts, deeds, leases and other
instruments to be made or executed for or on behalf of the Corporation. Subject
to any restrictions imposed by the Board of Directors or the Chairman of the
Board, the President or any Vice President of the Corporation may delegate
contractual powers to others under his jurisdiction, it being understood,
however, that any such delegation of power shall not relieve such officer of
responsibility with respect to the exercise of such delegated power.
SECTION 7.2. Proxies. Unless otherwise provided by resolution adopted by
the Board of Directors, the Chairman of the Board, the President or any Vice
President may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation, to cast
the votes which the Corporation may be entitled to cast as the holder of stock
or other securities in any other corporation or entity, any of whose stock or
other securities may be held by the Corporation, at meetings of the holders of
the stock or other securities of such other corporation or entity, or to consent
in writing, in the name of the Corporation as such holder, to any action by such
other corporation or entity, and may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent, and may execute
or cause to be executed in the name and on behalf of the Corporation and under
its corporate seal or otherwise, all such written proxies or other instruments
as he may deem necessary or proper in the premises.
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<PAGE> 152
ARTICLE VIII
AMENDMENTS
SECTION 8.1. Amendments. These Bylaws may be altered, amended, or repealed
at any meeting of the Board of Directors or of the stockholders, provided notice
of the proposed change was given in the notice of the meeting and, in the case
of a meeting of the Board of Directors, in a notice given no less than twenty-
four hours prior to the meeting; provided, however, that, in the case of
amendments by stockholders, notwithstanding any other provisions of these Bylaws
or any provision of law which might otherwise permit a lesser vote or no vote,
but in addition to any affirmative vote of the holders of any particular class
or series of the stock required by law, the Certificate of Incorporation or
these Bylaws, the affirmative vote of the holders of at least 80 percent of the
voting power of the then outstanding Voting Stock, voting together as a single
class, shall be required in order for the stockholders to alter, amend or repeal
any provision of these Bylaws or to adopt any additional Bylaws.
C-12
<PAGE> 153
Index of Exhibits
2 Form of Distribution Agreement (attached to Information Statement as
Annex A)
3(a) Form of Restated Certificate of Incorporation of The Dial Corporation
(attached to Information Statement as Annex B)
3(b) Form of Bylaws of The Dial Corporation (attached to Information
Statement as Annex C)
4 Form of Rights Agreement
10(a) Form of Interim Services Agreement
10(b) Form of Tax Sharing Agreement
10(c) Form of Letter of Understanding on Trademarks
10(d) Form of The Dial Corporation 1996 Stock Incentive Plan
10(e) Form of Deferred Compensation Plan for the Directors of The Dial
Corporation
10(f) Form of The Dial Corporation Director's Charitable Award Program
10(g) Form of The Dial Corporation Deferred Compensation Plan
10(h) Form of Employment Agreements with certain executive officers of The
Dial Corporation
10(i) Employment Agreement between The Dial Corp and Malcolm Jozoff
10(j) Form of Credit Agreement
10(k) Form of The Dial Corporation Employee Equity Trust
21 Subsidiaries of The Dial Corporation
27 Financial Data Schedule*
- ----------------
* Previously filed by The Dial Corporation.
<PAGE> 1
EXHIBIT 4
FORM OF
RIGHTS AGREEMENT
between
THE DIAL CORPORATION
and
WELLS FARGO BANK OF ARIZONA, N.A.,
Rights Agent
Dated as of August 15, 1996
-----------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Certain Definitions.......................................... 1
Section 2. Appointment of Rights Agent.................................. 7
Section 3. Issue of Right Certificates.................................. 7
Section 4. Form of Right Certificates................................... 11
Section 5. Countersignature and Registration............................ 11
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates.................................. 13
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.................................. 14
Section 8. Cancellation and Destruction of
Right Certificates......................................... 16
Section 9. Availability of Preferred Shares............................. 17
Section 10. Preferred Shares Record Date................................. 18
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights................................. 19
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares........................................ 34
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power................................. 34
Section 14. Fractional Rights and Fractional Shares...................... 37
Section 15. Rights of Action............................................. 39
Section 16. Agreement of Right Holders................................... 40
Section 17. Right Certificate Holder Not Deemed a
Stockholder................................................ 41
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 18. Concerning the Rights Agent................................... 42
Section 19. Merger or Consolidation or Change of
Name of Rights Agent........................................ 43
Section 20. Duties of Rights Agent........................................ 44
Section 21. Change of Rights Agent........................................ 48
Section 22. Issuance of New Right Certificates............................ 50
Section 23. Redemption.................................................... 50
Section 24. Exchange...................................................... 52
Section 25. Notice of Certain Events...................................... 55
Section 26. Notices....................................................... 56
Section 27. Supplements and Amendments.................................... 58
Section 28. Successors.................................................... 58
Section 29. Benefits of this Agreement.................................... 59
Section 30. Severability.................................................. 59
Section 31. Governing Law................................................. 59
Section 32. Counterparts.................................................. 60
Section 33. Descriptive Headings.......................................... 60
Signatures................................................................ 60
</TABLE>
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred
Shares
-ii-
<PAGE> 4
Agreement, dated as of August 15, 1996, between The Dial
Corporation, a Delaware corporation (the "Company"), and Wells Fargo Bank of
Arizona, N.A.(the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding as of the close
of business on August 15, 1996 (the "Record Date"), each Right representing the
right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with
<PAGE> 5
all Affiliates and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is hereinafter defined) of
20% or more of the Common Shares of the Company then outstanding, but shall not
include the Company, any Subsidiary (as such term is hereinafter defined) of the
Company, any employee benefit plan of the Company or any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the terms of any
such plan. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares by the Company which,
by reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to 20% or more of the Common Shares
of the Company then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 20% or more of the Common Shares of the Company
then outstanding by reason of share purchases by the Company and shall, after
such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be deemed to be
an "Acquiring Person". Notwithstanding the foregoing, if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person", as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a
-2-
<PAGE> 6
sufficient number of Common Shares so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an "Acquiring Person"
for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Af
filiates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion
-3-
<PAGE> 7
rights, exchange rights, rights (other than these Rights), warrants or options,
or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling
group members with respect to a bona fide public
-4-
<PAGE> 8
offering of securities) for the purpose of acquiring, holding, voting (except to
the extent contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of
any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in Arizona are authorized or
obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00
P.M., Phoenix, Arizona time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Phoenix, Arizona time, on the
next succeeding Business Day.
(f) "Common Shares" when used with reference to the
Company shall mean the shares of common stock, par value $0.01 per
share, of the Company. "Common Shares" when used
-5-
<PAGE> 9
with reference to any Person other than the Company shall mean the capital stock
(or equity interest) with the greatest voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set
forth in Section 3 hereof.
(h) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(i) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(j) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company having
the rights and preferences set forth in the Form of Certificate of Designations
attached to this Agreement as Exhibit A.
(k) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(l) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
-6-
<PAGE> 10
(m) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier
of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth
business day (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary of the Company,
any employee benefit
-7-
<PAGE> 11
plan of the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan) to commence, a
tender or exchange offer the consummation of which would result in any Person
becoming the Beneficial Owner of Common Shares aggregating 20% or more of the
then outstanding Common Shares (including any such date which is after the date
of this Agreement and prior to the issuance of the Rights; the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares. As
soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested, send) by first-class,
insured, postage-prepaid mail, to each record holder of Common Shares as of the
close of business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right for each
-8-
<PAGE> 12
Common Share so held. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
outstanding on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) on or after the Record Date but prior to the
earliest of
-9-
<PAGE> 13
the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between The Dial
Corporation and Wells Fargo Bank of Arizona, N.A., dated as of August
15, 1996 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of The Dial Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Dial Corporation will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as
set forth in the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person (as defined in the Rights Agreement) may
become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
-10-
<PAGE> 14
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Right Certificates
shall entitle the holders thereof to purchase such number of one one-hundredths
of a Preferred Share as shall be set forth therein at the price per one
one-hundredth of a Preferred Share set forth therein (the "Purchase Price"), but
the number of such one one-hundredths of a Preferred Share and the Purchase
Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, any of its Vice Presidents,
or its Treasurer, either manually or by facsimile signature, shall have affixed
-11-
<PAGE> 15
thereto the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the
-12-
<PAGE> 16
Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or other Right Certificates,
entitling the registered holder to purchase a like number of one one- hundredths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The
-13-
<PAGE> 17
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
-14-
<PAGE> 18
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on August 15, 2006 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right shall initially
be $75.00, and shall be subject to adjustment from time to time as provided in
Section 11 or 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the depositary agent
-15-
<PAGE> 19
depositary receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after
receipt, deliver such cash to or upon the order of the registered holder of such
Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the
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<PAGE> 20
purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be cancelled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the
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<PAGE> 21
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose
name any certificate for Preferred Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred
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<PAGE> 22
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Preferred Shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend
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on the Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into
a smaller number of Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Shares transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person, each holder
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of a Right shall thereafter have a right to receive, upon exercise thereof at a
price equal to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of the Company as shall equal the result obtained
by (x) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share market price of
the Company's Common Shares (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of such event. In the event that any Person shall become
an Acquiring Person and the Rights shall then be outstanding, the Company shall
not take any action which would eliminate or diminish the benefits intended to
be afforded by the Rights.
From and after the occurrence of such event, any Rights that
are or were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any holder of
such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate
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or Affiliate thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence shall be
cancelled.
(iii) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exercise
of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction thereof.
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<PAGE> 26
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as defined in
Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be
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<PAGE> 27
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred
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Shares) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price of the Preferred Shares on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section
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<PAGE> 29
11(d)(i)) on any date shall be deemed to be the average of the daily closing
prices per share of such Security for the 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; provided, however,
that in the event that the current per share market price of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national
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<PAGE> 30
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board of Directors of the Company. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or
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<PAGE> 31
similar transaction occurring after the date hereof), multiplied by one hundred.
If neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one one-millionth
of a Preferred Share or one ten-thousandth of any other share or security as
the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of
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<PAGE> 32
capital stock of the Company other than Preferred Shares, thereafter the number
of such other shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares contained in
Section 11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10
and 13 with respect to the Preferred Shares shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one
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<PAGE> 33
one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been
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<PAGE> 34
issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
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(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
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<PAGE> 36
reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any consolidation or subdivision
of the Preferred Shares, issuance wholly for cash of any Preferred Shares at
less than the current market price, issuance wholly for cash of Preferred Shares
or securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding
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<PAGE> 37
immediately before such event and the denominator of which is the number of
Common Shares outstanding immediately after such event, and (B) each Common
Share outstanding immediately after such event shall have issued with respect to
it that number of Rights which each Common Share outstanding immediately prior
to such event had issued with respect to it. The adjustments provided for in
this Section 11(n) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event, directly or indirectly, at any time after
a Person has become an Acquiring Person, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall
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<PAGE> 38
consolidate with the Company, or merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person (or the
Company) or cash or any other property, or (c) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person other than the Company or one or more of
its wholly-owned Subsidiaries, then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price
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of the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights. The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such issuer shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing. The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall
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<PAGE> 40
similarly apply to successive mergers or consolidations or sales or other
transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted
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to trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the
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Preferred Shares represented by such depositary receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one one-hundredth of a
Preferred Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one Preferred
Share. For the purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate
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(or, prior to the Distribution Date, of the Common Shares), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of
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<PAGE> 44
the Rights Agent, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
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stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or
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transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement 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 Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been
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countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights 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 of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the
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opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the 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 to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same,
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but all such statements and recitals are and shall be deemed to have been made
by the Company only.
(e) The Rights 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 Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
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(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or 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 otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
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(i) The Rights 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 the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a
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period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of Arizona (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
State of Arizona), in good standing, having an office in the State of Arizona,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or
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deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company
may, at its option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then outstanding Rights
at a redemption price of $.01 per Right, appropriately adjusted to
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reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board of Directors may
be made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights, the Company shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method
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by which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof, and other than in connection
with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may,
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.
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<PAGE> 56
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or
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authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as may
be necessary to authorize additional Common Shares for issuance upon exchange of
the Rights. In the event the Company shall, after good faith effort, be unable
to take all such action as may be necessary to authorize such additional Common
Shares, the Company shall substitute, for each Common Share that would otherwise
be issuable upon exchange of a Right, a number of Preferred Shares or fraction
thereof such that the current per share market price of one Preferred Share
multiplied by such number or fraction is equal to the current per share market
price of one Common Share as of the date of issuance of such Preferred Shares or
fraction thereof.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common
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Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give
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to each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the
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Rights Agent or by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
The Dial Corporation
Dial Tower
1850 North Central Avenue
Phoenix, Arizona 85077
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Wells Fargo Bank of Arizona, N.A.
100 West Washington
MAC #4101-082
Phoenix, Arizona 85003
Attention: Brenda D. Black
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
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Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Right Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights. Without limiting the
foregoing, the Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Agreement to lower the thresholds set forth in
Sections 1(a) and 3(a) to not less than the greater of (i) the sum of .001% and
the largest percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Shares for or pursuant
to the terms of any such plan) and (ii) 10%.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the
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Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares) 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 Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
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Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and 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 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.
THE DIAL CORPORATION
Attest:
By _______________________ By _________________________
Name: Name:
Title: Title:
Attest: WELLS FARGO BANK OF ARIZONA, N.A.
By _______________________ By _________________________
Name: Name:
Title: Title:
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Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
THE DIAL CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
---------------------
The Dial Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on , 1996:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $0.01 per share (the "Preferred Stock"), of the Corporation and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 1,500,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of
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<PAGE> 65
shares reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of Common
Stock, par value $0.01 per share (the "Common Stock"), of the Corporation,
and of any other junior stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of
March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of
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<PAGE> 66
Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $1 per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of
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<PAGE> 67
the Corporation. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends
or upon liquidation,
A-4
<PAGE> 68
dissolution or winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding
up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
A-5
<PAGE> 69
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the
A-6
<PAGE> 70
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chairman of the Board and attested by its
Secretary this _____ day of ________ , 1996.
________________________________
Chairman of the Board
Attest:
_______________________
Secretary
A-7
<PAGE> 71
EXHIBIT B
Form of Right Certificate
Certificate No. R- ____ Rights
NOT EXERCISABLE AFTER AUGUST 15, 2006 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
Right Certificate
THE DIAL CORPORATION
This certifies that ____________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of August 15, 1996 (the "Rights Agreement"), between The
Dial Corporation, a Delaware corporation (the "Company"), and Wells Fargo Bank
of Arizona, N.A., (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., Phoenix, Arizona time, on August 15, 2006 at the
principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, par value $0.01 per share (the "Preferred
Shares"), of the Company, at a purchase price of $75.00 per one one-hundredth of
a Preferred Share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of August 15, 1996, based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of one one-hundredths of a Preferred Share which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.
B-1
<PAGE> 72
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right or (ii) may be exchanged in whole or in part for
Preferred Shares or shares of the Company's Common Stock, par value $0.01 per
share.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
B-2
<PAGE> 73
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ________, 199_.
ATTEST: THE DIAL CORPORATION
___________________________ By _______________________________
Countersigned:
WELLS FARGO BANK OF ARIZONA, N.A.
By ________________________________
Authorized Signature
B-3
<PAGE> 74
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________ hereby sells,
assigns and transfers unto _____________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _____________________
________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
________________________________
Signature
B-4
<PAGE> 75
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: The Dial Corporation
The undersigned hereby irrevocably elects to exercise
________________________________ Rights represented by this Right Certificate to
purchase the Preferred Shares issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares be issued in the name of:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _______________________
________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
B-5
<PAGE> 76
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
________________________________
Signature
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
<PAGE> 77
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On __________, 1996, the Board of Directors of The Dial Corporation
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $0.01 per share
(the "Common Shares"), of the Company. The dividend is payable on August 15,
1996 (the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of Series A Junior Participating Preferred Stock, par value $0.01 per
share (the "Preferred Shares"), of the Company at a price of $75.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Wells Fargo Bank of
Arizona, N.A., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 20% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or
<PAGE> 78
new issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on August 15, 2006 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Shares or
a stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend
C-2
<PAGE> 79
of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. In the event that any person or
group of affiliated or associated persons becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-hundredth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price.
C-3
<PAGE> 80
No fractional Preferred Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 20% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time on such
basis with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially owned by any person
or group of affiliated or associated persons and (ii) 10%, except that from and
after such time as any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely affect the interests
of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 10
dated July 26, 1996. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
C-4
<PAGE> 1
EXHIBIT 10(a)
FORM OF
INTERIM SERVICES AGREEMENT
This Interim Services Agreement is made as of the ____ day of August,
1996, between The Dial Corp, a Delaware corporation ("Dial") and The Dial
Corporation, a Delaware corporation ("Dial Consumer Products"), wherein it is
agreed:
1. PURPOSES.
1.1 Pursuant to various agreements to be executed among Dial, Dial
Consumer Products and others, Dial will transfer its consumer products business
to Dial Consumer Products, and thereafter, pursuant to a Distribution Agreement
to be executed by the parties hereto and others ("Distribution Agreement"), Dial
will distribute to Dial shareholders on the Distribution Date (defined in the
Distribution Agreement), on a one-for-one basis, all of the issued and
outstanding shares of capital stock of Dial Consumer Products so that after such
transfer and distribution, Dial Consumer Products will be a corporation
independent of Dial ("Distribution").
1.2 Prior to the Distribution Date, Dial provided certain services to
its consumer products business unit, and also received certain services from its
consumer product business unit.
1.3 After the Distribution Date, Dial Consumer Products will require
for a limited term that Dial continue providing certain administrative and
support services to Dial Consumer Products and its subsidiaries until Dial
Consumer Products and
<PAGE> 2
its subsidiaries are able to otherwise contract or arrange for such services.
1.4 After the Distribution Date, Dial will require for a limited term
that Dial Consumer Products continue providing certain administrative and
support services to Dial and its subsidiaries until Dial and its subsidiaries
are able to otherwise contract or arrange for such services.
2. TERM. Subject to the provisions of Section 5 hereof, this Agreement
shall be effective on the Distribution Date and shall continue until the earlier
of (i) three years following the Distribution Date, and (ii) termination of all
Services (as herein defined) pursuant to Section 5 of this Agreement ("Term").
3. AGREEMENT TO PERFORM SELECTED SERVICES.
3.1 Subject to all of the terms and conditions hereof, Dial and Dial
Consumer Products hereby agree that Dial shall offer and provide to Dial
Consumer Products and its subsidiaries during the Term those services described
on Schedule "A-1" hereto, and Dial Consumer Products shall offer and provide to
Dial and its subsidiaries during the Term the services described on Schedule
"A-2" hereto (collectively, the "Services"). Services heretofore provided to the
other by Dial or Dial Consumer Products, as the case may be, will be provided on
a basis consistent with prior practice. Services to be provided hereunder that
were not heretofore provided by Dial or Dial Consumer Products, as the case may
be, shall be provided on a reasonably timely basis. Charges for Services shall
be as set forth in Section 4 hereof.
<PAGE> 3
3.2 The Services to be available hereunder shall include all Services
provided by Dial to Dial Consumer Products and its subsidiaries, or provided by
Dial Consumer Products to Dial and its subsidiaries, on the Distribution Date or
at any time during the calendar year immediately preceding the Distribution
Date. If Dial or Dial Consumer Products, as the case may be, elects to utilize
any available Services not previously utilized prior to the Distribution Date,
it shall notify the other in writing of those Services it elects to use. If no
such notice is given by the Distribution Date, Dial or Dial Consumer Products,
as the case may be, shall have no further obligation to furnish such new
Services.
4. CHARGES FOR SERVICES; PAYMENT.
4.1 It is the intention of the parties hereto that the charges for
Services requested and provided hereunder shall be determined and allocated
hereunder according to methods consistent with past practices and procedures
observed by Dial and its subsidiaries concerning intercompany services and
accounts, with a view in every case toward providing Dial or Dial Consumer
Products, as the case may be, with a reimbursement of fully allocated direct and
indirect costs of providing Services but without any profit to Dial or Dial
Consumer Products, as the case may be.
4.2 Dial and Dial Consumer Products shall bill each other monthly for
all charges for Services provided hereunder to the other, which bill shall be
accompanied by reasonable documentation or explanation supporting such charges,
and Dial, or Dial Consumer Products, as the case may be, shall pay the
<PAGE> 4
other in full for all charges for Services within 30 days after receipt of such
bill and other documentation or explanation.
5. REDUCTIONS IN SERVICES; TERMINATION. The parties recognize that during
the Term hereof the requirements of each party for certain Services will
decrease and that each party intends to reduce or completely phase out any
Services no longer required. Accordingly, at any time after the Distribution
Date, except as otherwise provided on Schedule "B" hereto, either party hereto
may request termination of all or any part of the Services provided to or
received by such party (including termination of any part of any individual
Service) by giving the other party not less than 90 days' advance notice in
writing of any anticipated termination of any Services or part thereof and, to
the extent practicable, the parties will agree to an orderly reduction or
phase-out of such Services. Once a Service is discontinued, Dial or Dial
Consumer Products, as the case may be, shall not again be obligated to later
reinstate such Service.
Following the termination or discontinuance of any Service as provided
herein, to the extent either party is thereafter requested to provide any
terminated or discontinued Service, including any transition-related assistance
necessary for any other organization to perform the terminated or discontinued
Service, and the applicable party to this Agreement consents to perform such
Service, the party performing such Service shall be entitled to compensation
reflecting incurred costs.
6. MUTUAL COVENANT. Except to the extent otherwise provided herein, Dial
and Dial Consumer Products covenant and warrant that
<PAGE> 5
the charges for Services hereunder are and shall be determined in a fair and
equitable manner consistent with past practices and procedures of Dial in
determining charges for similar services prior to the Distribution Date hereof.
7. FORCE MAJEURE. If either party is unable to perform any of its duties
or fulfill any of its covenants or obligations under this Agreement as a result
of causes beyond its control and without its fault or negligence, including but
not limited to acts of God or government, fire, flood, war, governmental
controls, and labor strife, then such party shall not be deemed to be in default
of this Agreement during the continuance of such events which rendered it unable
to perform; such party shall have such additional time thereafter as is
reasonably necessary to enable it to resume performance of its duties and
obligations under this Agreement; and the party entitled to such Service shall
not be required to pay the other party for any Service to the extent that such
other party is unable to perform. Notwithstanding the foregoing, if the
suspension of a party's obligation to perform under this Agreement is of such a
nature or duration as to substantially frustrate the purpose of this Agreement,
then Dial or Dial Consumer Products, as the case may be, shall have the right to
terminate this Agreement by giving to the other 30 days' prior written notice of
termination, in which case termination shall be effective upon the expiration of
such 30-day period unless performance is resumed prior to such expiration.
8. SEVERABILITY. The invalidity of any provision of this Agreement as
determined by a court of competent jurisdiction in
<PAGE> 6
no way shall affect the validity of any other provision hereof. If a provision
is determined to be invalid, the parties shall negotiate in good faith in an
effort to agree upon a suitable and equitable alternative provision to effect
the original intent of the parties.
9. TIME OF THE ESSENCE. The parties hereto agree that with respect to the
performance of all terms, conditions and covenants of this Agreement, time is
of the essence.
10. CAPTIONS. Section captions are not a part hereof and are merely for
the convenience of the parties.
11. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof, this
Agreement shall bind the parties, their successors and assigns. This Agreement
shall be governed by the laws of the State of Delaware without reference to the
conflict or choice of law provisions thereof.
12. ASSIGNMENT. Neither party shall assign or sublease this Agreement or
any Services to be provided hereunder without the prior written consent of the
other, which consent shall not be withheld unreasonably; provided, however, that
in the event that a party does not consent for any reason to the assignment or
sublease of a Service to a third party, then the other party shall not assign or
sublease such Service to such third party for a period of 90 days from the date
of such requested consent, but after the expiration of such 90-day period, Dial
or Dial Consumer Products, as the case may be, may assign or sublease such
Service to such party. Notwithstanding the foregoing, consent shall not
<PAGE> 7
be required for an assignment or sublease of this Agreement or any Service
provided hereunder by either party to a corporate affiliate of such party or to
any third party vendor or third party recordkeeper who had been providing all or
a material portion of the Services to or on behalf of Dial or Dial Consumer
Products, as the case may be, prior to the Distribution Date.
13. AMENDMENT. This Agreement may not be amended without the express
written agreement of all parties hereto.
14. NOTICES. All notices under this Agreement must be in writing and
delivered personally or sent by United States mail, postage prepaid, addressed
as follows, except that any party by written notice given as aforesaid, may
change its address for subsequent notices to be given hereunder.
If to Dial:
The Dial Corp
Dial Tower
Phoenix, Arizona 85077
Attention: Vice President and General Counsel
If to Dial Consumer Products:
The Dial Corporation
Dial Tower
Phoenix, Arizona 85077
Attention: General Counsel
Notice sent by U.S. mail will be deemed given when deposited with the U.S.
postal service.
<PAGE> 8
15. LIABILITY FOR NONPERFORMANCE. None of the parties hereto nor any
subsidiaries of such parties shall have any liability to each other for failure
to perform its obligations hereunder unless such failure arises out of, directly
or indirectly, the misconduct or gross negligence on the part of the
nonperforming party. Neither party shall be required to perform any Service (or
any part of any Service) to the extent that performance of such Service (or such
part of such Service) would violate any law, rule or regulation.
16. INDEPENDENT ENTITIES. In carrying out the provisions of this Agreement,
Dial Consumer Products and Dial are and shall be deemed to be for all purposes,
separate and independent entities. Dial Consumer Products and Dial shall select
their employees and agents, and such employees and agents shall be under the
exclusive and complete supervision and control of Dial Consumer Products or
Dial, as the case may be. Dial Consumer Products and Dial hereby acknowledge
responsibility for full payment of wages and other compensation to all employees
and agents engaged by either in the performance of their respective Services
under this Agreement. It is the express intent of this Agreement that the
relationship of Dial Consumer Products to Dial and Dial to Dial Consumer
Products shall be solely that of separate and independent companies and not that
of a joint venture, partnership or any other joint relationship.
17. NONFIDUCIARY STATUS. In carrying out the provisions of this Agreement,
neither party shall be a fiduciary (as defined in Section 3(21) of ERISA) with
respect to any employee benefit plan, program or arrangement maintained by or on
behalf of the
<PAGE> 9
other party. Each party will provide Services pursuant to the terms and
conditions of this Agreement in accordance with the directions, guidelines
and/or procedures established by Dial or Dial Consumer Products, as the case may
be, or the plan administrator (as defined in Section 3(16) of ERISA) of each
party's employee benefit plans or arrangements.
18. THIRD PARTY BENEFICIARIES. The provisions of this Agreement are solely
for the benefit of the parties and are not intended to confer upon any person
except the parties any rights or remedies hereunder. There are no third party
beneficiaries of this Agreement, and this Agreement shall not provide any third
person with any remedy, claim, liability, reimbursement, action or other right
in excess of those existing without reference to this Agreement.
19. CONSTRUCTION. For purposes of this Agreement, references to Dial
Consumer Products, with respect to events or periods prior to the Distribution
Date, shall mean and include, where appropriate, Dial's consumer products
business unit as it existed prior to such date.
IN WITNESS WHEREOF, this Agreement has been executed in multiple
counterparts on the date set forth above, each of which shall, for all purposes,
be deemed an original and all of which shall evidence but one agreement between
the parties hereto.
THE DIAL CORP, THE DIAL CORPORATION,
a Delaware corporation a
Delaware corporation
<PAGE> 10
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
<PAGE> 11
SCHEDULE "A-1"
TO
INTERIM SERVICES AGREEMENT
I. Office and administrative support at Dial Tower, 1850 North Central
Avenue, Phoenix, Arizona (the "Premises"), and elsewhere in Phoenix,
Arizona, as follows:
A. Services to be charged on a cost proration basis:
1. Mail services (excluding postage, package and express
shipping), including pick up and delivery facilities, and use
of Translogic Vertical Conveyor System;
2. Telephone, telecommunication and other communications services
(excluding long distance charges); and
3. Any other service offered by Dial in the past to Dial
Subsidiaries which may be reasonable and necessary for the
operation of Dial Consumer Products's offices from the
Premises.
4. Lobby reception office and receptionist.
5. Building security.
B. Services to be charged for only when used on a per use or per unit
basis:
1. Postage, package and express shipping;
2. Copy machine services/facilities;
3. Print shop services;
4. Media services, including use of conference rooms;
5. Long distance telephone charges;
6. Records retention and storage services and facilities;
7. Video teleconferencing;
8. Special janitorial and cleaning and any other special
maintenance service not provided by Sublessor's landlord under
the Prime Lease;
9. Key and lock services; and
10. Box and special package pickup and delivery services.
11. Limousine and chauffeur services.
II. Services in connection with all income and other taxation, including use
of all tax and law libraries and all services in connection with tax
reporting, compliance and audit reviews for periods prior to the Closing
Date and all services required for performance under the Tax Sharing
Agreement to be executed between the parties hereto.
Counsel and advice (other than legal advice) on the tax implications of
(a) proposed acquisitions, divestitures, and corporate structure matters,
(b) cross-border tax issues, and (c) employment contracts for senior level
management, fringe benefits, stock-based benefits.
<PAGE> 12
III. Public relations services, including assistance with press releases and
media contacts.
IV. Investor relations services, including advice and contact with analysts
and portfolio managers.
V. Corporate Secretarial.
A. Advice and consultation respecting all Corporate Secretarial
functions.
B. Advice and consultation in connection with shareholder relations,
including any dividend reinvestment plan.
C. Support for board and committee meetings, director compensation and
similar matters.
VI. Consultation and interim support respecting and necessary assistance with
the following Controller's functions:
A. Audit, tax and accounting, including consolidated and public
reporting requirements.
B. Accounting overview of pension accounting.
C. Goals and achievement under short-term and long-term incentive
plans.
VII. Cash management services including concentration, disbursement, balance
reporting, bank account analysis, intercompany balance reporting and
intercompany charge allocation and other cash management services as Dial
currently performs on behalf of Dial Consumer Products and its
subsidiaries.
VIII. Advice and consultation respecting environmental matters, such
consultation to be by telephone or in person at Dial headquarters.
IX. Dial will provide the general computing services necessary to support the
delivery of the Services provided herein. This will include the following:
A. Maintain connection to Dial Consumer Products Local Area Network.
B. Maintain e-mail connection to Dial Consumer Products.
C. Provide Dial Consumer Products personnel with access to Dial
applications or data as needed to fulfill the services agreement.
Access will be reviewed and approved by the Dial security
administrator.
D. Maintain and support Dial computer applications needed to fulfill
services agreement.
The supporting computing services will be reviewed and adjusted by Dial
and Dial Consumer Products as needed as changes are made to the core
services provided.
X. The following Human Resources services and assistance:
A. Executive Compensation Programs--Dial to provide advice, training
and interim support for each of the following executive compensation
programs:
1. PUP/MIP--including participant management.
2. Stock options/repricing of stock options/restricted
stock/performance based stock.
3. Deferred compensation.
<PAGE> 13
4. Executive increases over [$100,000.00].
5. Other services Dial will provide:
--Transfer of Executive files.
--Duplicate existing ECIS Executive
Compensation system (includes support of the system).
6. Executive Stock Ownership.
7. Board presentation materials.
8. Executive compensation materials.
B. Access to HR Market Data Library.
C. Pension Administration--Dial to provide advice and training and
interim support in the following areas:
1. PBGC premium payments.
2. Filings with the IRS--favorable determination letters.
3. Summary Annual Reports.
4. ERISA requirements.
5. Cafeteria Plans.
6. 5500 Filings and Administration.
7. Draft and/or review plan amendments and restatements and
distribute "Notice to Interested Parties" as required.
XI. Insurance advice and consultation.
Insurance Accounting Department is to supply data input and the account
information required to make monthly journal entries. Reports and fiche
generated by the current system will be provided.
Furnish current and historical claim data as currently supplied by the
Dial Consumer Products segment of the Insurance Common Database and the
Insurance Claim System.
Use of Corporate Insurance Department reference and library materials.
Access to Insurance Claim System input forms.
Claims payment service with respect to Company obligations during
transition period.
Use of Dial data entry.
Access to Liberty Link and/or Risktrac.
XII. Washington office and government relation services (federal and state)
consistent with past practices.
XIII. Fleet Leasing Services (until a separate agreement is negotiated).
XIV. Advice and consultation respecting possible utilization of Hyperion
Enterprise consolidation and reporting application.
<PAGE> 14
XV. Fitness Center services.
<PAGE> 15
EXHIBIT "A-2"
to
INTERIM SERVICES AGREEMENT
Dial Consumer Products shall provide the following services to Dial
and its subsidiaries. The services provided hereunder shall be provided directly
by Dial Consumer Products or by a third party vendor or recordkeeper retained by
Dial but subject to the directive of Dial Consumer Products.
I. BENEFITS ACCOUNTING.
- Accumulate and summarize benefit disbursements for each Dial
operating company which participates in a benefit program or
plan. Claim expenses for "pay-as-you-go" plans are to be
billed back to Dial and its operating companies as in prior
periods.
- Establish Employee Benefit Administration and Premium charges
by plan. Bill to operating companies and Dial based on number
of participants in each plan.
- Review, approve and submit to Dial for payment vendor invoices
received from benefit providers and administrators for both
administrative costs and claims paid.
- Prepare quarterly reports--Employee Benefits Plans and Trusts
and distribute to appropriate Dial management.
- Prepare audit workpapers and assist in annual audit of
employee benefit plans and trusts.
II. TRAVEL ACCOUNTING.
- Serve as liaison between GELCO Electronic Traveletter Expense
Reporting System/staff and the First Bank VISA Corporate
Credit Card operations.
- Review employee travel reimbursements processed through the
GELCO and VISA systems and provide monthly summary reports of
activity in several required formats with an appropriate
invoice to Dial.
III. EMPLOYEE BENEFITS.
A. Pension Administration.
- Provide advice and training and interim services and
support in the following areas:
-- Plan design.
-- Pension calculations.
-- Maintenance of files.
- 401(k) Administration.
B. General Employee Benefit Plan Services--All Programs and
Plans.
- Draft and/or review plan amendments and restatements.
<PAGE> 16
- Analyze plan costs and expenses.
- Analysis of anticipated costs in connection with any
contemplated changes to any Dial plan.
- Review summary plan description and summary of material
modifications.
- Assist with plan design and strategic benefit planning.
- Prepare employee communications, enrollment forms,
distribution forms, beneficiary designation forms, etc.
- Provide general benefit consulting services and training
to assist in transition.
- Maintain retiree and benefit files.
C. Defined Benefit Plan Services.
- Perform pension calculations for all terminated, active
and retired employees.
- Prepare employee communications including enrollment
forms, distribution forms, beneficiary designation
forms, etc.
- Perform actuarial data collection for valuation. Resolve
issues with actuary.
- Provide assistance to auditors during annual audit.
- Maintain and perform monthly update to Pension
Administrator.
- Serve as liaison to plan related vendors and trustees.
D. Defined Contribution Plans Services.
- Perform compliance testing (quarterly) under Section
401(m), 401(k) and 415 of the Internal Revenue Code.
Analyze results and make recommendations.
- Serve as liaison to plan related vendors and trustees
(e.g., T.R. Price).
- Provide assistance to auditors during annual audit.
- Provide subsidiary administrators with interpretation of
plan provisions, policies and procedures.
- Develop communications to plan participants regarding
plan changes, new investments, Confederation Life
updates, etc.
- Review and process QDRO's.
- Provide day-to-day administrative oversight.
- Review and process all hardship withdrawals, rollovers,
loans, etc.
- Prepare enrollment forms, distribution forms,
beneficiary designation forms, etc.
E. Health and Welfare Benefit Plans.
<PAGE> 17
- Negotiate, draft and/or review contract and amendments
with health care vendors.
- Analyze costs and develop budget projections, claims
reserves and expense calculations.
- Audit health care vendors for compliance with
performance standards and risk sharing arrangement.
- Provide administrative support and assistance including
maintenance of account structures, eligibility
reporting, etc.
- Determine employee-paid portion of health and dental
premiums and HMO contributions for active and retired
employees.
- Perform all rate negotiations.
- Provide analysis and management of claims and
demographic data.
- Provide support in satisfying governmental reporting
requirements.
- Management retiree medical benefits including
calculation of FAS 106 Expense, design changes, retiree
contributions, and plan design.
- Provide support in satisfying governmental reporting
requirements.
- Serve as vendor manager for all vendors and trustees.
- Provide fitness center "welfare" program funding.
F. Other.
- Such other employee benefit services as may be requested
consistent with services provided prior to the
Distribution.
IV. AIRLINE, HOTEL AND CAR RENTAL SERVICES.
V. TAXES.
A. Services in connection with all income and other taxation,
including use of all tax and law libraries and all services in
connection with tax reporting, compliance and audit reviews
for periods prior to the Closing Date and all services
required for performance under the Tax Sharing Agreement to be
executed between the parties hereto.
B. Counsel and advice (other than legal advice) on the tax
implications of (a) proposed acquisitions, divestitures, and
corporate structure matters; (b) cross-border tax issues; and
(c) employment contracts for senior level management, fringe
benefits, stock-based benefits.
VI. Dial Consumer Products will provide the general computing services
necessary to support the delivery of the Services provided herein.
This will include the following:
A. Maintain connection to Dial Local Area Network.
B. Maintain e-mail connection to Dial.
C. Provide Dial Consumer Products personnel with access to Dial
Consumer Products applications or data as needed to fulfill
services agreement.
<PAGE> 18
Access will be reviewed and approved by the Dial Consumer
Products security administrator.
D. Maintain and support Dial Consumer Products computer
applications needed to fulfill the services agreement.
The supporting computing services will be reviewed and adjusted by
Dial and Dial Consumer Products as needed as changes are made to the
core services provided.
VII. Fleet Leasing Services (until a separate agreement is negotiated)
<PAGE> 19
EXHIBIT "B"
EXCEPTIONS TO TERMINATION OF SERVICES
Notwithstanding anything to the contrary in the Interim Services
Agreement, it is understood and agreed that:
A. Fleet management and law library services shall be provided at
the request of the receiving party for a term of up to three
years.
B. Services related to income and other taxation shall be
provided at the request of the receiving party through
December 31, 1999.
C. Benefits accounting and employee benefit services described in
Exhibit "A-2" shall be provided to the requesting party
through August 14, 1997, with a right to earlier termination
of such services, or any part thereof, by the party receiving
such services.
D. Insurance services shall be provided to the requesting party
for a period of up to one year with a right to earlier
termination by the party receiving such services, or any part
thereof.
E. Washington office and government relations services shall
terminate October 15, 1996.
<PAGE> 1
EXHIBIT 10(b)
FORM OF
TAX SHARING AGREEMENT
This Tax Sharing Agreement (the "Agreement") dated as of
___________, 1996 by and between The Dial Corp, a Delaware corporation ("Dial")
and The Dial Corporation, a Delaware corporation ("Newco").
WHEREAS, Dial and Newco have entered into a Distribution
Agreement dated the date hereof (the "Distribution Agreement"); and
WHEREAS, pursuant to the Distribution Agreement all the issued
and outstanding common stock of Newco will be distributed by Dial (pro rata) to
the holders of its common stock (the "Distribution"); and
WHEREAS, the parties hereto desire to provide for the payment
of tax liabilities and entitlement to tax refunds for the taxable periods ending
before, on or after the date of the Distribution, to allocate responsibility and
provide for cooperation in the preparation and filing of tax returns with
respect to such taxable periods, and to provide for certain other related
matters:
NOW, THEREFORE, Dial, on behalf of itself and the Dial Group
(as hereinafter defined) and Newco, on behalf of itself and the Newco Group (as
hereinafter defined) in consideration of the mutual covenants contained herein,
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and the plural forms of the terms defined):
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto and the regulations promulgated thereunder.
"Distribution Date" means the date of the Distribution. For
all purposes of this Agreement, the Distribution shall be deemed effective as of
the close of business on the Distribution Date.
<PAGE> 2
"Dial Businesses" means the present, former and future
subsidiaries, divisions and businesses of any member of the Dial Group, other
than the Newco Businesses.
"Dial Group" means Dial and its present and future
subsidiaries, other than members of the Newco Group.
"Estimated Tax or Taxes" means the periodic (quarterly or
monthly) payment of income or franchise taxes (federal state or local) required
to be made for 1996 including any payment required to be made with an extension
to file any Tax Return.
"Final Determination" shall mean the final resolution of
liability for any Tax for a taxable period, (i) by IRS Form 870-AD (or any
successor forms thereto), on the date of acceptance by or on behalf of the IRS,
or by a comparable form under the laws of other jurisdictions; except that a
Form 870-AD or comparable form that reserves (whether by its terms or by
operation of law) the right of the taxpayer to file a claim for refund and/or
the right of the taxing authority to assert a further deficiency shall not
constitute a Final Determination with respect to the subject matter reserved;
(ii) by a decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable; (iii) by closing
agreement or accepted offer in compromise under Section 7121 or 7122 of the
Code, or comparable agreements under the laws of other jurisdictions; (iv) by
any allowance of a refund or credit in respect of an overpayment of Tax, but
only after the expiration of all periods during which such refund may be
recovered (including by way of offset) by the Tax-imposing jurisdiction; or (v)
by any other final disposition, including by reason of the expiration of the
applicable statute of limitations or by mutual agreement of the parties.
"IRS" means the Internal Revenue Service.
"Newco Businesses" means the present, former and future
subsidiaries, divisions and businesses of any member of the Newco Group which
are not, or are not contemplated by the Distribution Agreement to be, part of
the Dial Group immediately after the Distribution.
"Newco Group" means Newco and all former, present and future
subsidiaries of Newco and shall include any business, division or subsidiary
which carried on a Newco Business on or before the Distribution Date.
"Restructuring Taxes" means any Taxes resulting from or
related to the Distribution, including, without limitation,
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<PAGE> 3
any Taxes imposed pursuant to or as a result of Code Section 311.
"Tax" means any of the Taxes.
"Taxes" means all forms of taxation, whenever created or
imposed, and whether of the United States of America or elsewhere, and whether
imposed by a local, municipal, governmental, state, federation or other body,
and without limiting the generality of the foregoing, shall include income,
alternative minimum, superfund, sales, use, ad valorem, gross receipts, value
added, franchise, transfer, recording, withholding, payroll, employment, excise,
occupation, premium or property taxes, together with any related interest,
penalties and additions to tax, or additional amounts imposed by any taxing or
other governmental authority (domestic or foreign) upon the Newco Group, the
Dial Group or any of their respective members or subsidiaries or divisions or
branches or any combination thereof.
"Tax Attribute" shall mean any net operating loss, capital
loss, or tax credit allowed by the Internal Revenue Code or equivalent state
statute or local ordinance; including without limitation, alternative minimum
tax credits, foreign tax credits and general business tax credits.
"Tax Benefit" means the amount of the decrease in the
liability for Taxes resulting from any increase or decrease in any item,
including, but not limited to, any item of income or deduction, gain or loss or
tax credit.
"Tax Detriment" means the amount of the increase in the
liability for Taxes resulting from any increase or decrease in any item,
including, but not limited to, any item of income or deduction, gain or loss, or
tax credit.
"Tax Return" means any return, filing, questionnaire or other
document filed or required to be filed, including amended returns that may be
filed, for any period with any taxing or governmental authority (whether
domestic or foreign) in connection with any Tax or Taxes (whether or not a
payment is required to be made with respect to such filing).
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
Section 2.01. Manner of Preparation; Elections. All Tax
Returns filed after the Distribution Date shall be prepared
-3-
<PAGE> 4
on a basis which does not have an adverse effect on the elections, accounting
methods, conventions, closing agreements and principles of taxation used in any
Tax Return filed for any taxable period ending on or before the Distribution
Date, and shall be filed on a timely basis by the party responsible for such
filing under this Agreement. Subject to the provisions of this Agreement, all
decisions relating to the preparation and filing of Tax Returns and any audit or
other review of such Tax Returns shall be made in the sole discretion of the
party responsible under this Agreement for such filing. Anything herein to the
contrary notwithstanding, without the prior written consent of Dial, which
consent shall not be unreasonably withheld, no member of the Newco Group shall
carry back to any taxable period beginning before the Distribution Date any Tax
Attribute arising in any taxable period beginning on or after the Distribution
Date. To the extent any such carryback is not so consented to by Dial, then Dial
shall be entitled to retain for itself any refund or other benefit obtained from
such carryback filed by Newco. Newco shall promptly reimburse Dial for the
amount, if any, by which any Tax Detriment incurred by the Dial Group or any
member thereof as a result of such carryback exceeds the Tax Benefit(s) to the
Dial Group or any member thereof as a result of such carryback, upon receipt of
documentation detailing such Tax Detriment(s) within fifteen (15) days of
receipt of documentation, after which any unpaid amount will accrue interest at
the rate for income tax deficiencies specified in Section 3.01.
Section 2.02. Preparation and Filing of and Elections with
respect to Pre-Distribution Tax Returns. (a) Consolidated Federal Income Tax
Returns. All consolidated federal income Tax Returns which include a member of
the Dial Group and the Newco Group that are required to be filed for periods
beginning before the Distribution Date shall be prepared and filed by Dial.
Newco shall, for each of such aforesaid taxable periods for which it or any
member of the Newco Group is includible in the consolidated federal income Tax
Return of the Dial Group, provide Dial with a true, complete, and correct (i)
pro forma consolidated federal income Tax Return for those members of the Newco
Group includible in Dial's consolidated federal income Tax Return for such
taxable period, treating Newco as the common parent of such deemed consolidated
group, together with an accompanying computation of the pro forma consolidated
federal income Tax liability of such deemed consolidated group, (ii) separate
federal income Tax Returns for Newco and each member of the Newco Group together
with accompanying computations of the separate federal income Tax liabilities of
Newco and each member of the Newco Group and (iii) a reconciliation of book
income to federal taxable income for Newco and
-4-
<PAGE> 5
each member of the Newco Group. Newco shall use its best efforts to provide Dial
with such Returns and computations on or before the first day of the sixth month
following the end of the period to which such Returns and computations relate,
but in any event Newco shall provide such Returns and computations no later than
the fifteenth day of the sixth month following the end of the period to which
such Returns and computations relate. Dial shall notify Newco of the intended
filing date of its then due consolidated federal income Tax Return and Newco
shall pay Dial at least seven (7) days prior to such filing date the amount of
total federal income Tax liability, including without limitation, any
alternative minimum tax liability, shown on the above-referenced deemed
consolidated federal income Tax Returns for the members of the Newco Group
includible in Dial's consolidated federal income Tax Return, reduced by all
Estimated Tax payments theretofore made by Newco or any Newco Group member to
Dial on account of such Tax liability, or if such Estimated Tax payments in the
aggregate exceed the federal income Tax liability of Newco and each member of
the Newco Group, Dial shall pay such excess to Newco within thirty (30) days of
the filing by Dial of the consolidated federal income Tax Return with respect to
which such overpayment relates. Anything herein to the contrary notwithstanding,
Newco for itself and each member of the Newco Group shall calculate and shall
remit to Dial at least seven (7) days prior to the due date of each Dial
Estimated Tax payment for 1996 the Estimated Tax liability, attributable to
Newco and each member of the Newco Group on a consolidated basis for the short
period beginning on January 1, 1996 and ending on the Distribution Date.
(b) Combined or consolidated state or local income or
franchise Tax. The provisions of Section 2.02(a) shall apply to the applicable
filings of all combined or consolidated state or local income or franchise Tax
Returns which include a member of the Dial Group and a member of the Newco Group
that are required to be filed for periods beginning before the Distribution
Date. The Tax savings, if any, resulting from filing combined or consolidated
returns for 1995 will be allocated to Newco in a manner consistent with the most
recent period. If there should be adjustments to any combined or consolidated
returns, or to prior years federal returns as a result of an audit, any tax
savings that were previously credited for the period will be recalculated and
the difference between the tax savings that were previously credited and the
recomputed tax savings will be charged back to Newco on the same basis as the
savings have been allocated. No tax savings will be allocated to Newco for the
year 1996 or thereafter.
-5-
<PAGE> 6
(c) Other Tax Returns. All Tax Returns (other than Tax Returns
described in Sections 2.02(a) and (b)) which include or are filed with respect
to a member of the Dial Group or the Newco Group that are required to be filed
for periods beginning before the Distribution Date shall be filed by the member
of the Dial Group or the Newco Group, as the case may be, which filed the
corresponding Tax Return for the most recent period for which such Tax Return
has been filed, or, if no such corresponding Tax Return has been filed, by the
appropriate member in accordance with applicable law or custom. In the case of
such Tax Returns filed by a member of the Dial Group, Newco shall be liable for
and pay to Dial the portion of the Tax liability on such Tax Returns
attributable to Newco Group members, at the time and in the amount determined in
accordance with past practice. In the case of such Returns filed by a member of
the Newco Group, Dial shall be liable for and pay to Newco the portion of the
Tax liability on such Returns attributable to Dial Group members, at the time
and in the amount determined in accordance with past practice.
(d) Apportionment of Tax Attributes. If all or a portion of
any Tax Attribute arising in any taxable period beginning before the
Distribution Date, is apportioned to a separate return year of Newco pursuant to
any Code section (or equivalent state or local law or regulations), then Newco
shall pay to Dial the Tax Benefit related to the Tax Attribute so apportioned.
Section 2.03. Filing of Post-Distribution Tax Returns. All Tax
Returns and Taxes for periods beginning on or after the Distribution Date shall
be the responsibility of the Dial Group if such Tax Returns or Taxes relate to
Dial Businesses, and shall be the responsibility of the Newco Group if such Tax
Returns or Taxes relate to Newco Businesses.
Section 2.04. Certification. Each Tax Return and computation
of tax liability required to be provided to Dial by Newco and each member of the
Newco Group pursuant to Section 2.02 hereof shall be accompanied by a statement
signed by the Vice President - Controller of Newco to the effect that such
officer has reviewed for completeness and accuracy the Tax Return and
computation of the Tax liability and the documentation in support thereof and
has determined that such Tax Return and computation properly reflect the taxable
income (or loss), Tax liability and credits of the entity or entities, as the
case may be, to which such Tax Return and computation relate for the period
covered thereby.
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<PAGE> 7
ARTICLE III
DEFICIENCIES AND REFUNDS OF TAXES
Section 3.01. Payment of Deficiencies by Newco. If any
adjustments are made by any taxing authority with respect to any Tax Return of
Dial (or any member of the Dial Group) in which any member of the Newco Group is
included for taxable periods beginning before the Distribution Date, then to the
extent that such adjustments either increase the net taxable income, reduce the
net taxable loss or decrease the tax credits of any member of the Newco Group
and result in a greater Tax for such Newco Group member or any Dial Group member
(in either case without regard to any offsetting adjustments to other members of
the Dial Group, other than a member of the Newco Group), Newco and each other
member of the Newco Group shall be liable for such increases in Taxes. If any
member of the Newco Group shall have any liability as a result of this Section
3.01, Newco shall pay to Dial, hold Dial harmless and indemnify Dial for any
such Tax liability, costs and attorneys fees, and the amount thereof shall be
paid by Newco to Dial within ten (10) days of the receipt by Newco of written
notice of such liability, together with a computation of the amount due and
supporting documentation in such detail as Newco may reasonably request to
verify the computation of the amount due. Any such required payment not made
within such ten (10) day period shall thereafter bear interest until paid at the
then most recently published rate of interest charged by the IRS on income tax
deficiencies of large corporations pursuant to Code sections 6621(a)(2) and
(c)(1).
Section 3.02. Payment of Refunds to Newco. If any adjustments
are made by any taxing authority with respect to any Tax Return of Dial (or any
member of the Dial Group) in which any member of the Newco Group is included for
any taxable period beginning before the Distribution Date, then to the extent
that such adjustments either (a) decrease the Tax liability attributable to any
member of the Newco Group and result in a Tax Benefit to Dial or any member of
the Dial Group, or (b) are attributable to a member of the Newco Group and
result in a reduced Tax liability for Dial or any member of the Dial Group (in
either case without regard to any offsetting adjustments to other members of the
Dial Group, other than a member of the Newco Group), then Dial shall remit to
Newco any refunds of Taxes received by or credited to it as a result of the
adjustments attributable to a member of the Newco Group. Dial shall pay any
amounts due from it to Newco as a result of this Section 3.02 within ten (10)
days of its receipt of the relevant refund or credit with respect thereto from
the IRS or any state or other governmental unit, as the case may be. Any
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<PAGE> 8
such required payment not made within such ten (10) day period shall thereafter
bear interest until paid at the then most recently published rate at which the
IRS pays interest on tax refunds of large corporations pursuant to Code section
6621(a)(1). Such payments shall be accompanied by a computation of the amount
due and supporting documentation in such detail as Newco may reasonably request
to verify the computation of the amount due. Anything herein to the contrary
notwithstanding, except as provided in this Section 3.02, no member of the Newco
Group shall be entitled to any payment or benefit as a result of the receipt of
any Tax refund received by any member of the Dial Group except to the extent
such refund is attributable to the overpayment of Estimated Taxes by the Newco
Group or any member thereof.
Section 3.03. Restructuring Taxes. If as a result of any
transaction, act or omission occurring after the Distribution Date and involving
the Newco Businesses, or the stock, assets or liabilities (or any combination
thereof) of any member of the Newco Group, including, without limitation, a
breach by any member of the Newco Group of any representation made to the IRS in
any request for rulings or act or omission of any member of the Newco Group that
causes any condition or assumption upon which such a ruling is based to fail to
be met or be correct, as the case may be, either (a) the Distribution does
not qualify as a reorganization pursuant to Code section 368(a)(1)(D) or a tax
free distribution pursuant to Code section 355 or (b) any Restructuring Taxes
are imposed upon or paid by Dial or any other member of the Dial Group, then
Newco shall pay to Dial and shall indemnify and hold harmless each member of the
Dial Group from and against all Restructuring Taxes. Such payment and
indemnification shall be made by Newco promptly, but in any event within fifteen
(15) days after written notice from Dial, which notice shall be accompanied by a
computation of the amounts due. Any such required payment not made within such
fifteen (15) day period shall thereafter bear interest until paid at the then
most recently published rate at which the IRS charges interest on income tax
deficiencies of large corporations pursuant to Code sections 6621(a)(2) and
(c)(1).
ARTICLE IV
TAX AUDITS, TRANSACTIONS AND OTHER MATTERS
Section 4.01. Tax Audits and Controversies. (a) Federal,
State, or Local Income or Franchise Taxes. Except as otherwise provided in this
Section 4.01, Dial shall have the exclusive authority and obligation to
represent each member of
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<PAGE> 9
the Newco Group before the IRS or any other governmental agency or authority or
before any court with respect to any matter affecting the federal, state or
local income or franchise Tax liability of any member of either the Dial Group
or the Newco Group for any Tax period beginning before the Distribution Date, in
each such case (i) allowing representatives of the Newco Group, including,
without limitation, outside counsel and consultants, to participate in good
faith in all respects in all such Tax proceedings affecting any member of the
Newco Group, and (ii) acting in the best interests of both the Dial Group and
the Newco Group. Such representation shall include, but shall not be limited to
exclusive control over (i) any response to any examination of federal, state or
local income or franchise Tax Returns and (ii) any contest or litigation through
a Final Determination of any issue included in any Tax Return that includes a
member of the Dial Group, including, but not limited to (A) whether and in what
forum to conduct such contest, and (B) whether and on what basis to settle such
contest; except that Dial shall not settle any claim, suit, action or proceeding
in respect of which any member of the Newco Group may incur any then known (by
Dial) future Tax liability, or in respect of which indemnity for federal, state
or local income or franchise Taxes may be sought hereunder against Newco or any
member of the Newco Group without Newco's consent, which consent shall not be
unreasonably withheld. Dial shall give timely notice to Newco of any inquiry,
the assertion of any claim or the commencement of any suit, action or proceeding
in respect of which any member of the Newco Group may incur any then known (by
Dial) future Tax liability or in respect of which indemnity for federal, state
or local income or franchise Taxes may be sought under this Agreement against
Newco or any member of the Newco Group and will give Newco such information with
respect thereto as Newco may reasonably request.
Anything in this Section 4.01 or elsewhere in this Agreement
to the contrary notwithstanding, if Newco contests or litigates any federal,
state or local income or franchise tax issue in any forum, Newco shall pay and
shall indemnify and hold harmless each member of the Dial Group from any and all
costs, expenses and/or liabilities of any type or nature, including, without
limitation, any federal income tax liability (including interest and penalties
thereon), that are incurred by or imposed upon Dial or any member of the Dial
Group which Dial or such Dial Group member would not otherwise have incurred.
(b) Other Taxes. Except as otherwise provided in this Section
4.01, the party responsible for filing any Tax Return (other than federal, state
or local income or franchise Tax Returns) pursuant to Section 2.02(c) hereof
shall, at its
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<PAGE> 10
own expense, have the exclusive authority to represent each member of the Dial
Group and of the Newco Group before any governmental agency or authority or
before any court with respect to any matter affecting the Tax liability of any
member of either the Dial Group or the Newco Group for any Tax period beginning
before the Distribution Date in each case (i) allowing representatives of the
other group to participate in good faith in all respects in all such Tax
proceedings affecting any member of the other group, and (ii) acting in the best
interests of both the Dial Group and the Newco Group. Such representation shall
include, but shall not be limited to exclusive control over (i) any response to
any examination by the governmental authority of such Tax Returns and (ii) any
contest through a Final Determination of any issue included in any Tax Return
that includes a member of the Newco Group or the Dial Group, including, but not
limited to (A) whether and in what forum to conduct such contest, and (B)
whether and on what basis to settle such contest; except that Dial or any member
of the Dial Group shall not settle any claim, suit, action or proceeding in
respect of which indemnity for such Taxes may be sought hereunder against Newco
or any member of the Newco Group without Newco's consent, which consent shall
not be unreasonably withheld; and except that Newco or any member of the Newco
Group shall not settle any claim, suit, action or proceeding in respect of which
indemnity for such Taxes may be sought hereunder against Dial or any member of
the Dial Group without Dial's consent, which consent shall not be unreasonably
withheld.
Section 4.02. Retention of Books and Records. Newco and Dial
each agrees to retain and preserve in accessible and reproducible form all Tax
Returns, related schedules and workpapers, and all accounting and computer
records (in whatever media) and other documents relating thereto (collectively,
the "Tax Documents") existing on the date hereof or created through or with
respect to taxable periods ending on or before the Distribution Date, until the
later of (a) the expiration of the statute of limitations (including extensions)
of the taxable years to which such Tax Returns and Tax documents relate, or (b)
December 31, 2005. No Tax Documents shall be destroyed or otherwise disposed of
by either Dial or Newco (or any member of their respective Groups) until the
party intending to make such disposition has given the other party at least
thirty (30) days advance notice thereof, whereupon the party receiving such
notice shall have the right, at its own expense, to take possession of such Tax
Documents.
Section 4.03. Cooperation regarding Return Filings,
Examinations and Controversies. (a) Newco's Obligations. In addition to any
obligations imposed pursuant to the Distribution Agreement, Newco and each other
member of the Newco Group
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<PAGE> 11
shall fully cooperate with Dial and its representatives, in a prompt and timely
manner, in connection with the preparation and filing of, and any inquiry,
audit, examination, investigation, dispute, or litigation involving, any Tax
Return filed or required to be filed by or for any member of the Dial Group for
any taxable period beginning before the Distribution Date and relating to Taxes.
Such cooperation shall include, but not be limited to, making available to Dial,
during normal business hours, and within thirty (30) days of any request
therefor, all Tax Documents, books, records and information, and the assistance
of all officers and employees, necessary or useful in connection with any Tax
inquiry, audit, examination, investigation, dispute, litigation or any other
matter.
Newco agrees on behalf of itself and each member of the Newco
Group to execute and deliver to Dial, when so requested by Dial, any power of
attorney required to allow Dial and its counsel to represent Newco or such other
Newco Group member in any controversy which Dial shall have the right to control
pursuant to the terms of Section 4.01 of this Agreement.
Dial agrees on behalf of itself and each member of the Dial
Group to execute and deliver to Newco, when so requested by Newco, any power of
attorney required to allow Newco and its counsel to represent Dial or such other
Dial Group member in any controversy which Newco shall have the right to control
pursuant to the terms of Section 4.01(b) of this Agreement.
(b) Dial's Obligation. Except as otherwise provided in this
Article IV, Dial shall fully cooperate with Newco and its representatives, in a
prompt and timely manner, in connection with (i) the preparation and filing of
and (ii) any inquiry, audit, examination, investigation, dispute, or litigation
involving, any Tax Return filed or required to be filed pursuant to Section
2.02(c) by or for any member of the Newco Group and relating to Taxes. Such
cooperation shall include, but not be limited to, making available to Newco,
during normal business hours, and within thirty (30) days of any request
therefor, all books, records and information, and the assistance of all officers
and employees, necessary or useful in connection with any tax inquiry, audit,
examination, investigation, dispute, litigation or any other matter.
(c) Remedy for Failure to Comply. If Dial reasonably
determines that Newco is not for any reason fulfilling its obligations under
Section 4.03(a), or if Newco reasonably determines that Dial is not for any
reason fulfilling its obligations under Section 4.03(b), then Dial or Newco, as
the case
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<PAGE> 12
may be, shall have the right to appoint, at the expense of the other, an
independent entity such as a nationally recognized public accounting firm to
assist the other in meeting its obligations under this Section 4.03. Such entity
shall have complete access to all books, records and information, and the
complete cooperation of all officers and employees, of Newco or Dial, as the
case may be.
Section 4.04. Certain Post-Distribution Transactions. Newco
agrees that during the two-year period following the Distribution Date it shall
not (i) cease to engage in an active trade or business within the meaning of
Code section 355(b)(2), (ii) redeem any shares of Newco stock, or (iii)
liquidate or merge with any other corporation, unless in the unqualified opinion
of nationally recognized counsel to Newco, which counsel shall be satisfactory
to Dial, such act or omission would not cause the Distribution to fail to
qualify as a reorganization pursuant to Code Section 368(a)(1)(D) or a tax free
distribution pursuant to Code section 355 of the Code.
Section 4.05. Survival of Agreement. This Agreement and all
covenants contained herein shall survive for the applicable statute of
limitations and any extensions thereof and any Final Determination applicable to
periods beginning before the Distribution Date.
ARTICLE V
MISCELLANEOUS
Section 5.01. Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable, the enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
Section 5.02. Modification of Agreement. No modification,
amendment or waiver of any provision of this Agreement shall be effective unless
the same shall be in writing and signed by each of the parties hereto and then
such modification, amendment or waiver shall be effective only in the specific
instance and for the purpose for which given.
Section 5.03. Conflict with the Distribution Agreement.
Anything in this Agreement or the Distribution Agreement to the contrary
notwithstanding, in the event and to the extent that there shall be a conflict
between the provisions of this Agreement and the Distribution Agreement, the
provisions of this Agreement shall control.
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<PAGE> 13
Section 5.04. Notices. All notices or other communications
required or permitted under this Agreement shall be delivered by hand, mailed by
certified or registered mail, postage prepaid and return receipt requested, or
sent by cable, telegram, telex or telecopy (confirmed by regular, first-class
mail), to the parties at the following addresses (or at such other addresses for
a party as shall be specified by like notice) and shall be deemed given on the
date on which such notice is received:
(a) In the case of Dial, to
The Dial Corp
Dial Tower
Phoenix, Arizona 85077
Attention: Vice President - Taxes
With a copy to:
The Dial Corp
Dial Tower
Phoenix, Arizona 85077
Attention: Vice President and General Counsel
(b) In the case of Newco, to
With a copy to:
Section 5.05. Application to Present and Future Subsidiaries.
This Agreement is being entered into by Dial and Newco on behalf of themselves
and each member of the Dial Group and the Newco Group, respectively. This
Agreement shall constitute a direct obligation of each such member and shall be
deemed to have been readopted and affirmed on behalf of any corporation which
becomes a member of the Dial Group or the Newco Group in the future. Dial and
Newco hereby guarantee the performance of all actions, agreements and
obligations provided for under this Agreement of each member of the Dial Group
and the Newco Group, respectively. Dial and Newco shall, upon the
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written request of the other, cause any of their respective group members
formally to execute this Agreement. This Agreement shall be binding upon, and
shall inure to the benefit of, the successors, assigns and persons controlling
any of the corporations bound hereby.
Section 5.06. Term. This Agreement shall commence on the date
of execution indicated above and shall continue in effect until otherwise agreed
to in writing by Dial and Newco, or their successors.
Section 5.07. Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part or to affect the meaning or interpretation of this
Agreement.
Section 5.08. Singular and Plural. As used herein, the
singular shall include the plural and vice versa.
Section 5.09. Governing Law. This Agreement shall be governed
by the laws of the State of Delaware.
Section 5.10. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become a binding agreement when one or more counterparts
have been signed by each party and delivered to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
THE DIAL CORP,
a Delaware corporation
By:/s/
---------------------------------
Title:
---------------------------------
THE DIAL CORPORATION
By:/s/
---------------------------------
Title:
---------------------------------
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<PAGE> 1
EXHIBIT 10(c)
Viad Corp
Dial Tower
Phoenix, Arizona 85077
FORM OF
LETTER OF UNDERSTANDING ON TRADEMARKS
Re: Use of DIAL name
Gentlemen:
This will set forth the understanding between The Dial Corporation ("Dial")
and Viad Corp ("Viad") regarding Dial's consent to allow Viad to continue
certain permitted uses of the name "Dial" following completion of the spin-off
of Dial as a stand-alone corporation independent of Viad.
The parties understand and agree as follows:
1. The existing inventory of business materials used by Viad or its
subsidiaries that contain reference to "The Dial Corp" as a parent company,
or otherwise use the "Dial" name as a corporate affiliation identifier
(e.g. without limitation, stationery, business cards, sales brochures,
promotional materials, signage) may be used following the spin-off. As
existing inventories are exhausted and replaced with new materials, all
such new materials will have eliminated any use of the "Dial" name except
as otherwise permitted in this letter agreement.
2. Viad operating divisions, corporate staff departments or offices
which, as of the date of the spin-off, use the "Dial" or a Dial-derivative
name in a trade name manner (e.g. Dialcor Realty) may, following the
spin-off, continue to use such name in the same manner as used prior to the
spin-off (e.g. without limitation, stationery, business cards, signage).
3. Viad is permitted to use the "Dial" name as appropriate in connection
with the performance of services rendered for Dial pursuant to written
interim services agreements between Viad and Dial. In such instances,
Viad's use of the Dial name shall be in a professional, business-like
manner consistent with Viad's use of its own name under similar
circumstances.
<PAGE> 2
Viad Corp
Page 2
4. Viad will not use the "Dial" name in connection with any consumer
products business following the spin-off.
The parties understand and agree that this consent given by Dial to Viad is
given in connection with, and as part of, the spin-off transaction. Unless
otherwise agreed, each party is solely responsible for its actions and
operations and indemnifies the other for any claims, losses, causes of action,
costs or expenses (including reasonable attorneys fees) that may arise from its
actions, operations or failures to act, including any such claims, losses,
causes of action, costs or expenses that may arise under, in connection with,
or by virtue of, the consent granted herein. Viad acquires no equities, rights,
title or interests in and to the "Dial" name by virtue of this consent, except
the limited use rights granted in this letter.
This consent is effective concurrently with completion of the spin-off, and
shall remain in effect so long as Viad's permitted uses of the "Dial" name do
not create confusion, mistake or deception, or cause undue administrative
burden, annoyance or inconvenience to either party, in the sole discretion of
each inconvenience to either party, in the sole discretion of each such party.
In the event Dial determines it has cause (as set forth in this paragraph) to
terminate its consent of any permitted uses of the "Dial" name by Viad, it may
do so, at any time, upon three (3) months prior written notice to Viad, and
upon payment of a sum to compensate Viad for its reasonable out-of-pocket costs
in transitioning from and ceasing use of the Dial name for any such particular
use(s). Upon Dial's termination of consent for any permitted use(s), Viad
agrees that it will cease such permitted use(s) and further agrees that it
will cooperate with Dial to assign to Dial any rights, title or interests in
and to the "DIAL" name, including any such goodwill, that may have accrued to
Viad as a result of any such permitted uses.
Signed in duplicate on the dates below.
THE DIAL CORPORATION VIAD CORP
- ---------------------------- ----------------------------
By By
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Title Title
- --------------------------- ----------------------------
Date Date
<PAGE> 1
EXHIBIT 10(d)
FORM OF
THE DIAL CORPORATION
1996 STOCK INCENTIVE PLAN
<PAGE> 2
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Plan is to give the Company a significant advantage
in attracting, retaining and motivating officers, employees and directors and to
provide the Company and its subsidiaries with the ability to provide incentives
more directly linked to the profitability of the Company's businesses and
increases in stockholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
(a) "Affiliate" means a corporation or other entity controlled by the
Company and designated by the Committee as such.
(b) "Award" means Stock Appreciation Right, Stock Option or Restricted
Stock.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means (1) the conviction of a participant for committing a
felony under federal law or the law of the state in which such action occurred,
(2) dishonesty in the course of fulfilling a participant's employment duties or
(3) willful and deliberate failure on the part of a participant to perform his
employment duties in any material respect, or such other events as shall be
determined by the Committee. The Committee will have the sole discretion to
determine whether "Cause" exists, and its determination will be final.
(e) "Change in Control" and "Change in Control Price" have the meanings
set forth in Sections 8(b) and (c), respectively.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(g) "Commission" means the Securities and Exchange Commission or any
successor agency.
(h) "Committee" means the Committee referred to in Section 2.
(i) "Common Stock" means common stock, par value $0.01 per share, of
the Company.
(j) "Company" means The Dial Corporation, a Delaware corporation.
<PAGE> 3
(k) "Disability" means permanent and total disability as determined
under procedures established by the Committee for purposes of the Plan.
(l) "Distribution" means the distribution of shares of Company Common
Stock by The Dial Corp (which, in connection with such distribution, will be
renamed "Viad Corp," herein referred to as "Old Dial") to the holders of common
stock of Old Dial, par value $1.50 per share.
(m) "Distribution Agreement" means the Distribution Agreement, dated as
of July 25, 1996, by and among Old Dial, the Company and Exhibitgroup Inc.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
(o) "Fair Market Value" means, as of any given date, the mean between
the highest and lowest reported sales prices of the Stock on the New York Stock
Exchange Composite Tape or, if not listed on such exchange, on any other
national exchange on which the Stock is listed or on the NASDAQ National Market
System or on NASDAQ. If there is no regular public trading market for such
Stock, the Fair Market Value of the Stock will be determined by the Committee in
good faith.
(p) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(q) "Non-Employee Director" means a member of the Board who qualifies
as a "Non-Employee Director" as defined in Rule 16b-3(b)(3), as promulgated by
the Commission under the Exchange Act, or any successor definition adopted by
the Commission.
(r) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(s) "Performance Goals" means the performance goals established by the
Committee prior to the grant of Restricted Stock. In the case of Qualified
Performance-Based Awards, such goals (1) will be based on the attainment of
specified levels of one or more of the following measures: earnings per share,
sales, net profit after tax, gross profit, operating profit, cash generation,
unit volume, return on equity, change in working capital, return on capital,
stockholder return or such other performance measures as the Committee selects
and discloses to stockholders in connection with stockholder approval
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<PAGE> 4
for purposes of Section 162(m) of the Code and related regulations and (2) will
be set by the Committee within the time period prescribed by Section 162(m) of
the Code and related regulations.
(t) "Plan" means The Dial Corporation 1996 Stock Incentive Plan, as set
forth herein and as hereinafter amended from time to time.
(u) "Preferred Stock" means preferred stock, par value $0.01, of the
Company.
(v) "Qualified Performance-Based Awards" means an Award of Restricted
Stock designated as such by the Committee at the time of grant, based upon a
determination that (1) the recipient is or may be a "covered employee" within
the meaning of Section 162(m)(3) of the Code in the year in which the Company
would expect to be able to claim a tax deduction with respect to such Restricted
Stock and (2) the Committee wishes such Award to qualify for the exemption from
the limitation on deductibility imposed by Section 162(m) of the Code that is
set forth in Section 162(m)(4)(C).
(w) "Replacement Awards" means Stock Options granted to replace
outstanding options to purchase Old Dial common stock pursuant to the
Distribution Agreement.
(x) "Restricted Stock" means an award granted under Section 7.
(y) "Retirement" means retirement from active employment under a
pension plan of the Company, any subsidiary or Affiliate, or under an employment
contract with any of them, or termination of employment at or after age 55 under
circumstances which the Committee, in it sole discretion, deems equivalent to
retirement.
(z) "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as amended from time to time.
(aa) "Stock" means the Common Stock or Preferred Stock.
(bb) "Stock Appreciation Right" means a right granted under Section 6.
(cc) "Stock Option" means an option granted under Section 5.
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<PAGE> 5
(dd) "Termination of Employment" means the termination of the
participant's employment with the Company and any subsidiary or Affiliate. A
participant employed by a subsidiary or an Affiliate shall also be deemed to
incur a Termination of Employment if the subsidiary or Affiliate ceases to be
such a subsidiary or Affiliate, as the case may be, and the participant does not
immediately thereafter become an employee of the Company or another subsidiary
or Affiliate. Transfers among the Company and its subsidiaries and Affiliates,
as well as temporary absences from employment because of illness, vacation or
leave of absence, will not be considered a Termination of Employment.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
SECTION 2. ADMINISTRATION.
The Plan will be administered by the Executive Compensation Committee
of the Board pursuant to authority delegated by the Board in accordance with the
Company's By-Laws. If at any time there is no such Executive Compensation
Committee or such Executive Compensation Committee shall fail to be composed of
at least two directors each of whom (1) is a Non-Employee Director and (2) is an
"outside director" under Section 162(m)(4) of the Code, the Plan will be
administered by a Committee selected by the Board and composed of not less than
two individuals, each of whom is such a Non-Employee Director and such an
"outside director".
The Committee will have plenary authority to grant Awards pursuant to
the terms of the Plan to officers, employees and directors of the Company and
its subsidiaries and Affiliates.
Among other things, the Committee will have the authority, subject to
the terms of the Plan:
(a) to select the officers, employees and directors to whom Awards may
from time to time be granted;
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights and Restricted Stock or
any combination thereof are to be granted hereunder;
(c) to determine the number of shares of Stock to be covered by each
Award granted hereunder;
(d) to determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the option
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<PAGE> 6
price (subject to Section 5(a)), any vesting condition, restriction or
limitation (which may be related to the performance of the participant, the
Company or any subsidiary or Affiliate) and any vesting acceleration or waiver
of forfeiture regarding any Award and the shares of Stock relating thereto,
based on such factors as the Committee shall determine; provided, however, that
the Committee will have no power to accelerate the vesting, or waive the
forfeiture, of any Qualified Performance-Based Awards;
(e) to modify, amend or adjust the terms and conditions, at any time or
from time to time, of any Award, including but not limited to Performance Goals;
provided, however, that the Committee may not adjust upwards the amount payable
with respect to any Qualified Performance-Based Award or waive or alter the
Performance Goals associated therewith; and
(f) to determine to what extent and under what circumstances Stock and
other amounts payable with respect to an Award will be deferred.
The Committee will have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it from
time to time deems advisable, to interpret the terms and provisions of the Plan
and any Award issued under the Plan (and any agreement relating thereto) and to
otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may (1) delegate to designated officers or
employees of the Company such of its powers and authorities under the Plan as it
deems appropriate (provided that no such delegation may be made that would cause
Awards or other transactions under the Plan to fail to be exempt from Section
16(b) of the Exchange Act) and (2) authorize any one or more members of the
Committee or any designated officer or employee of the Company to execute and
deliver documents on behalf of the Committee.
Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Award will
be made in the sole discretion of the Committee or such delegate(s) at the time
of the grant of the Award or, unless in contravention of any express term of the
Plan, at any time thereafter. All decisions made by the Committee or any
appropriately delegated officer(s) or employee(s) pursuant to the provisions of
the Plan will be final and binding on all persons, including the Company and
Plan participants.
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SECTION 3. STOCK SUBJECT TO PLAN.
The aggregate number of shares of Stock covered by Awards granted to
any one participant will not exceed 1,000,000 shares for any consecutive three
year period plus the number of shares necessary to provide new Awards to replace
outstanding awards of Old Dial pursuant to the Distribution Agreement
("Replacement Awards"). No more than 9,600,000 shares of Common Stock will be
cumulatively available for the grant of Incentive Stock Options under the Plan.
Shares subject to an Award under the Plan may be authorized and unissued shares
or may be "treasury shares."
In the event of any merger, reorganization, consolidation,
recapitalization, spin-off, stock dividend, stock split, extraordinary
distribution with respect to the Stock or other change in corporate structure
affecting the Stock, such substitution or adjustments shall be made in the
aggregate number of shares reserved for issuance under the Plan, in the number,
or kind, and option price of shares subject to outstanding Stock Options and
Stock Appreciation Rights, and in the number, or kind, of shares subject to
other outstanding Awards granted under the Plan as may be determined to be
appropriate by the Committee or the Board in its sole discretion; provided,
however, that the number of shares subject to any Award shall always be a whole
number.
SECTION 4. ELIGIBILITY.
Officers, employees and directors of the Company, its subsidiaries, and
Affiliates who are responsible for or contribute to the management, growth and
profitability of the business of the Company, its subsidiaries and Affiliates
are eligible to be granted Awards under the Plan.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other Awards
granted under the Plan and may be of two types: Incentive Stock Options and
Non-Qualified Stock Options. Any Stock Option granted under the Plan will be in
such form as the Committee may from time to time approve.
The Committee will have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights). Incentive Stock Options
may be granted only to employees of the Company and its subsidiaries (within the
meaning of Section 424(f) of the Code). To the extent that any Stock Option is
not designated as an Incentive Stock Option
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or even if so designated does not qualify as an Incentive Stock Option, it will
be deemed to be a Non-Qualified Stock Option.
Stock Options will be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement will indicate on its face
whether it is an agreement for an Incentive Stock Option or a Non-Qualified
Stock Option. The grant of a Stock Option will occur on the date the Committee
by resolution selects an individual to be a participant in any grant of a Stock
Option, determines the number of shares of Stock to be subject to such Stock
Option to be granted to such individual and specifies the terms and provisions
of the Stock Option. The Company will notify a participant of any grant of a
Stock Option, and a written option agreement or agreements shall be duly
executed and delivered by the Company to the participant.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options will be interpreted, amended or altered
nor shall any discretion or authority granted under the Plan be exercised so as
to disqualify the Plan under Section 422 of the Code or, without the consent of
the optionee affected, to disqualify any Incentive Stock Option under such
Section 422.
Stock Options granted under the Plan will be subject to the following
terms and conditions and will contain such additional terms and conditions as
the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee and set forth in the option
agreement. It is the intention under the Plan that such option price will not be
less than the Fair Market Value of the Stock subject to the Stock Option on the
date of grant; provided, however, that (1) the Committee may, from time to time,
grant Awards of Stock Options with an exercise price of less than Fair Market
Value and (2) the option prices for Replacement Awards will be determined in
accordance with the Distribution Agreement.
(b) Option Term. The term of each Stock Option will be fixed by the
Committee, but no Incentive Stock Option may be exercisable more than 10 years
after the date the Stock Option is granted.
(c) Exercisability. Except as otherwise provided herein, Stock Options
will be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option
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<PAGE> 9
is exercisable only in installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part, based on such factors as
the Committee may determine. In addition, the Committee may at any time
accelerate the exercisability of any Stock Option.
(d) Method of Exercise. Subject to the provisions of this Section 5,
Stock Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying the
number of shares of Stock subject to the Stock Option to be purchased.
Such notice must be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Company may
accept. An option agreement may provide that, if approved by the Committee,
payment in full or in part may also be made in the form of unrestricted Stock
already owned by the optionee of the same class as the Stock subject to the
Stock Option and, in the case of the exercise of a Non-Qualified Stock Option,
Restricted Stock subject to an Award hereunder which is of the same class as the
Stock subject to the Stock Option, in both cases based on the Fair Market Value
of the Stock on the date the Stock Option is exercised; provided, however, that,
in the case of an Incentive Stock Option, the right to make a payment in the
form of already owned shares of Stock of the same class as the Stock subject to
the Stock Option may be authorized only at the time the Stock Option is granted.
In addition, an option agreement may provide that in the discretion of the
Committee, payment for any shares subject to a Stock Option may also be made by
instruction to the Committee to withhold a number of such shares having a Fair
Market Value on the date of exercise equal to the aggregate exercise price of
such Stock Option.
If payment of the option exercise price of a Non-Qualified Stock Option
is made in whole or in part in the form of Restricted Stock, the number of
shares of Stock to be received upon such exercise equal to the number of shares
of Restricted Stock used for payment of the option exercise price will be
subject to the same forfeiture restrictions to which such Restricted Stock was
subject, unless otherwise determined by the Committee.
No shares of Stock will be issued until full payment therefor has been
made. Subject to any forfeiture restrictions that may apply if a Stock Option is
exercised using Restricted Stock, an optionee will have all of the rights of a
stockholder of the Company holding the class or series of Stock that is subject
to such Stock Option (including, if applicable, the right to vote the shares and
the right to receive dividends),
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when the optionee has given written notice of exercise, has paid in full for
such shares and, if requested, has given the representation described in Section
11(a).
(e) Nontransferability of Stock Options. (1) No Stock Option will be
transferable by the optionee other than (A) by will or by the laws of descent
and distribution or (B) in the case of a Non-Qualified Stock Option, pursuant to
a qualified domestic relations order (as defined in the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder). All Stock Options will be exercisable, during the optionee's
lifetime, only by the optionee or by the guardian or legal representative of the
optionee, it being understood that the terms "holder" and "optionee" include the
guardian and legal representative of the optionee named in the option agreement
and any person to whom an option is transferred by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order.
(2) Notwithstanding Section 5(e)(1) above, the Committee may grant
Stock Options that are transferable, or amend outstanding Stock Options to make
them transferable, by the optionee (any such Stock Option so granted or amended
a "Transferable Option") to one or more members of the optionee's immediate
family, to partnerships of which the only partners are members of the optionee's
immediate family, or to trusts established by the optionee for the benefit of
one or more members of the optionee's immediate family. For this purpose the
term "immediate family" means the optionee's spouse, children or grandchildren.
Consideration may not be paid for the transfer of a Transferable Option. A
transferee described in this Section 5(e)(2) will be subject to all terms and
conditions applicable to the Transferable Option prior to its transfer. The
option agreement with respect to a Transferable Option will set forth its
transfer restrictions, such option agreement shall be approved by the Committee,
and only Stock Options granted pursuant to a stock option agreement expressly
permitting transfer pursuant to this Section 5(e)(2) will be so transferable.
(f) Termination by Death. If an optionee's employment terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent then exercisable, or on such accelerated basis as the
Committee may determine, for a period of one year (or such other period as the
Committee may specify in the option agreement) from the date of such death or
until the expiration of the stated term of such Stock Option, whichever period
is the shorter.
(g) Termination by Reason of Disability or Retirement. If an optionee's
employment terminates by reason of Disability
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or Retirement, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time of
termination, or on such accelerated basis as the Committee may determine, for a
period of three years (or such shorter period as the Committee may specify in
the option agreement) from the date of such termination of employment or until
the expiration of the stated term of such Stock Option, whichever period is the
shorter; provided, however, that if the optionee dies within such three-year
period (or such shorter period), any unexercised Stock Option held by such
optionee shall, notwithstanding the expiration of such three-year (or such
shorter) period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from the date of such
death or until the expiration of the stated term of such Stock Option, whichever
period is the shorter. In the event of termination of employment by reason of
Disability or Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a Non-Qualified Stock
Option.
(h) Other Termination. Unless otherwise determined by the Committee,
(1) if an optionee incurs a Termination of Employment for Cause, all Stock
Options held by such optionee will thereupon terminate and (2) if an optionee
incurs a Termination of Employment for any reason other than death, Disability,
Retirement, or Cause, any Stock Option held by such optionee shall thereupon
terminate, except that such Stock Option, to the extent then exercisable, or on
such accelerated basis as the Committee may determine, may be exercised for the
lesser of three months from the date of such Termination of Employment or the
balance of such Stock Option's term; provided, however, that if the optionee
dies within such three-month period, any unexercised Stock Option held by such
optionee shall, notwithstanding the expiration of such three-month period,
continue to be exercisable to the extent to which it was exercisable at the time
of death for a period of 12 months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of Termination of Employment, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(i) Cashing Out of Stock Option. On receipt of written notice of
exercise, the Committee may elect to cash out all or part of the portion of the
shares of Stock for which a Stock Option is being exercised by paying the
optionee an amount, in
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cash or Stock, equal to the excess of the Fair Market Value of the Stock over
the option price times the number of shares of Stock for which the Option is
being exercised on the effective date of such cash out.
(j) Change in Control Cash-Out. Notwithstanding any other provision of
the Plan, during the 60-day period from and after a Change in Control (the
"Exercise Period"), unless the Committee shall determine otherwise at the time
of grant, an optionee shall have the right, whether or not the Stock Option is
fully exercisable and in lieu of the payment of the exercise price for the
shares of Stock being purchased under the Stock Option and by giving notice to
the Company, to elect (within the Exercise Period) to surrender all or part of
the Stock Option to the Company and to receive cash, within 30 days of such
notice, in an amount equal to the amount by which the Change in Control Price
per share of Stock on the date of such election shall exceed the exercise price
per share of Stock under the Stock Option (the "Spread") multiplied by the
number of shares of Stock granted under the Stock Option as to which the right
granted under this Section 5(j) shall have been exercised.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right will terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 6(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the optionee will be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options which
have been so surrendered will no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights will be subject to
such terms and conditions as shall be determined by the Committee, including the
following:
(1) Stock Appreciation Rights will be exercisable only at such time
or times and to the extent that the
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Stock Options to which they relate are exercisable in accordance with
the provisions of Section 5 and this Section 6.
(2) Upon the exercise of a Stock Appreciation Right, an optionee
will be entitled to receive an amount in cash, shares of Stock or both
equal in value to the excess of the Fair Market Value of one share of
Stock as of the date of exercise over the option price per share
specified in the related Stock Option multiplied by the number of
shares in respect of which the Stock Appreciation Right shall has been
exercised, with the Committee having the right to determine the form of
payment.
(3) Stock Appreciation Rights will be transferable only to
permitted transferees of the underlying Stock Option in accordance with
Section 5(e).
SECTION 7. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be awarded either
alone or in addition to other Awards granted under the Plan. The Committee will
determine the individuals to whom and the time or times at which grants of
Restricted Stock will be awarded, the number of shares to be awarded to any
participant, the conditions for vesting, the time or times within which such
Awards may be subject to forfeiture and any other terms and conditions of the
Awards, in addition to those contained in Section 7(c).
(b) Awards and Certificates. Shares of Restricted Stock will be
evidenced in such manner as the Committee may deem appropriate, including
book-entry registration or issuance of one or more stock certificates. Except as
otherwise set forth in a Restricted Stock Agreement, any certificate issued in
respect of shares of Restricted Stock will be registered in the name of such
participant and will bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the 1996 Stock Incentive Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at the office
of The Dial Corporation, Dial Tower, Phoenix, Arizona."
The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon have lapsed and that,
as a condition of any Award of
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Restricted Stock, the participant have delivered a stock power, endorsed in
blank, relating to the Stock covered by such Award.
(c) Terms and Conditions. Shares of Restricted Stock will be subject to
the following terms and conditions:
(1) The Committee may, prior to or at the time of grant, designate
an Award of Restricted Stock as a Qualified Performance-Based Award, in
which event it will condition the grant or vesting, as applicable, of
such Restricted Stock upon the attainment of Performance Goals. If the
Committee does not designate an Award of Restricted Stock as a
Qualified Performance-Based Award, it may also condition the grant or
vesting thereof upon the attainment of Performance Goals. Regardless of
whether an Award of Restricted Stock is a Qualified Performance-Based
Award, the Committee may also condition the grant or vesting upon the
continued service of the participant. The provisions of Restricted
Stock Awards (including the conditions for grant or vesting and any
applicable Performance Goals) need not be the same with respect to each
recipient. The Committee may at any time, in its sole discretion,
accelerate or waive, in whole or in part, any of the foregoing
restrictions; provided, however, that in the case of Restricted Stock
that is a Qualified Performance-Based Award, the applicable Performance
Goals have been satisfied.
(2) Subject to the provisions of the Plan (including Section 5(d))
and the Restricted Stock Agreement referred to in Section 7(c)(7),
during a period set by the Committee, commencing with the date of such
Award for which such participant's continued service is required (the
"Restriction Period") and until the later of (A) the expiration of the
Restriction Period and (B) the date the applicable Performance Goals
(if any) are satisfied, the participant will not be permitted to sell,
assign, transfer, pledge or otherwise encumber shares of Restricted
Stock.
(3) Except as provided in this paragraph (3) and Sections 7(c)(1)
and (2) and the Restricted Stock Agreement, the participant will have,
with respect to the shares of Restricted Stock, all of the rights of a
stockholder of the Company holding the class or series of Stock that is
the subject of the Restricted Stock, including, if applicable, the
right to vote the shares and the right to receive any dividends. If so
determined by the Committee in the applicable Restricted Stock
Agreement and subject to Section 11(f) of the Plan, (A) dividends
consisting of
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cash, stock or other property (other than Stock) on the class or series
of Stock that is the subject of the Restricted Stock shall be
automatically deferred and reinvested in additional Restricted Stock
(in the case of stock or other property, based on the fair market value
thereof, and the Fair Market Value of the stock, in each case as of the
record date for the dividend) held subject to the vesting of the
underlying Restricted Stock, or held subject to meeting Performance
Goals applicable to the underlying Restricted Stock, and (B) dividends
payable in Stock shall be paid in the form of Restricted Stock of the
same class as the Stock with which such dividend was paid and shall be
held subject to the vesting of the underlying Restricted Stock, or held
subject to meeting Performance Goals applicable to the underlying
Restricted Stock.
(4) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and Sections 7(c)(1), 7(c)(2), 7(c)(5) and
8(a)(2), upon a participant's Termination of Employment for any reason
during the Restriction Period or before any applicable Performance
Goals are met, all shares still subject to restriction shall be
forfeited by the participant.
(5) Except to the extent otherwise provided in Section 8(a)(2), in
the event that a participant retires or such participant's employment
is involuntarily terminated (other than for Cause), the Committee will
have the discretion to waive in whole or in part any or all remaining
restrictions (other than, in the case of Restricted Stock which is a
Qualified Performance-Based Award, satisfaction of the applicable
Performance Goals unless the participant's employment is terminated by
reason of death or Disability) with respect to any or all of such
participant's shares of Restricted Stock.
(6) Except as otherwise provided herein or as required by law, if
and when applicable Performance Goals are satisfied and the Restriction
Period expires without a prior forfeiture of the Restricted Stock,
unlegended certificates for such shares will be delivered to the
participant upon surrender of legended certificates.
(7) Each Award will be confirmed by, and be subject to the terms
of, a Restricted Stock Agreement.
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SECTION 8. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control:
(1) Any Stock Options and Stock Appreciation Right outstanding as
of the date such Change in Control is determined to have occurred and
not then exercisable and vested will become fully exercisable and
vested to the full extent of the original grant.
(2) The restrictions and conditions to vesting applicable to any
Restricted Stock shall lapse, and such Restricted Stock shall become
free of all restrictions and become fully vested and transferable to
the full extent of the original grant.
(b) Definition of Change in Control. For purposes of the Plan, a
"Change in Control" shall mean the happening of any of the following events:
(1) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (i) any acquisition
directly from the Company, other than an acquisition by virtue of the
exercise of a conversion privilege unless the security being so
converted was itself acquired directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a transaction which complies with clauses
(A), (B) and (C) of subsection (3) of this Section 8(b); or
(2) A change in the composition of the Board such that the
individuals who, as of the date that the Distribution is effective,
constitute the Board (such Board shall be hereinafter referred to as
the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, for purposes of this Section
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8(b), that any individual who becomes a member of the Board subsequent
to the date that the Distribution is effective, whose election, or
nomination for election by the Company's stockholders, was approved by
vote of at least a majority of those individuals who are members of the
Board and who were also members of the Incumbent Board (or deemed to be
such pursuant to this proviso) will be considered as though such
individual were a member of the Incumbent Board; but, provided,
further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest
(as such terms as used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board
will not be considered as a member of the Incumbent Board; or
(3) The approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company ("Corporate
Transaction") (or, if consummation of such Corporate Transaction is
subject, at the time of such approval by stockholders, to the consent
of any government or governmental agency, the earlier of the obtaining
of such consent or the consummation of the Corporate Transaction);
excluding, however, such a Corporate Transaction pursuant to which (A)
all or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the outstanding shares of
common stock, and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
Corporate Transaction (including, without limitation, a corporation
which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Corporate Transaction, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (other than the Company,
any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 20% or more of, respectively,
the outstanding shares of common stock of the corporation resulting
from such Corporate Transaction
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or the combined voting power of the outstanding voting securities of
such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed prior to the
Corporate Transaction and (C) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of
the board of directors of the corporation resulting from such Corporate
Transaction; or
(4) The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(c) Change in Control Price. For purposes of the Plan, "Change in
Control Price" means the higher of (1) the highest reported sales price, regular
way, of a share of Stock in any transaction reported on the New York Stock
Exchange Composite Tape or other national exchange on which such shares are
listed or on the NASDAQ National Market System or on NASDAQ during the 60-day
period prior to and including the date of a Change in Control or (2) if the
Change in Control is the result of a tender or exchange offer or a Corporate
Transaction, the highest price per share of Stock paid in such tender or
exchange offer or Corporate Transaction; provided, however, that in the case of
Incentive Stock Options and Stock Appreciation Rights relating to Incentive
Stock Options, the Change in Control Price will be in all cases the Fair Market
Value of the Stock on the date such Incentive Stock Option or Stock Appreciation
Right is exercised. To the extent that the consideration paid in any such
transaction described above consists all or in part of securities or other
non-cash consideration, the value of such securities or other non-cash
consideration will be determined in the sole discretion of the Board.
SECTION 9. TERM, AMENDMENT AND TERMINATION.
The Plan will have no fixed termination date, but may be terminated at
any time by the Board. Awards outstanding as of the date of any such termination
will not be affected or impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would (a) impair the rights of
an optionee under a Stock Option or a recipient of a Stock Appreciation Right or
Restricted Stock Award theretofore granted without the optionee's or recipient's
consent, except such an amendment which is necessary to cause any Award or
transaction under the Plan to qualify, or to continue to qualify, for the
exemption provided by Rule 16b-3, or (b) disqualify any Award or transaction
under the Plan from the exemption provided by Rule 16b-3. In addition, no such
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amendment may be made without the approval of the Company's stockholders to the
extent such approval is required by law or agreement.
The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment will
(1) impair the rights of any holder without the holder's consent except such an
amendment which is necessary to cause any Award or transaction under the Plan to
qualify, or to continue to qualify, for the exemption provided by Rule 16b-3 or
(2) amend any Qualified Performance-Based Award in such a way as to cause it to
cease to qualify for the exemption set forth in Section 162(m)(4)(C). The
Committee may also substitute new Stock Options for previously granted Stock
Options, including previously granted Stock Options having higher option prices.
Subject to the above provisions, the Board will have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.
SECTION 10. UNFUNDED STATUS OF PLAN.
It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or make payments; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 11. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan will be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Commission, any stock exchange upon which the
Stock is then listed and any applicable Federal or state securities law, and
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the Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
(b) Nothing contained in the Plan will prevent the Company or any
subsidiary or Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) The adoption of the Plan will not confer upon any employee any
right to continued employment nor will it interfere in any way with the right of
the Company or any subsidiary or Affiliate to terminate the employment of any
employee at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any Award under the Plan, the participant will pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Stock, including Stock
that is part of the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan will be conditional on such payment or
arrangements, and the Company and its Affiliates will, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise due
to the participant. The Committee may establish such procedures as it deems
appropriate, including the making of irrevocable elections, for the settlement
of withholding obligations with Stock.
(e) At the time of grant, the Committee may provide in connection with
any grant made under the Plan that the shares of Stock received as a result of
such grant will be subject to a right of first refusal pursuant to which the
participant will be required to offer to the Company any shares that the
participant wishes to sell at the then Fair Market Value of the Stock, subject
to such other terms and conditions as the Committee may specify at the time of
grant.
(f) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if sufficient shares of
Stock are available under Section 3 for such reinvestment (taking into account
then outstanding Stock Options and other Awards).
(g) The Committee will establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's
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<PAGE> 21
death are to be paid or by whom any rights of the participant, after the
participant's death, may be exercised.
(h) Notwithstanding any other provision of the Plan or any agreement
relating to any Award hereunder, if any right granted pursuant to this Plan
would make a Change in Control transaction ineligible for
pooling-of-interests-accounting under APB No. 16 that, but for the nature of
such grant, would otherwise be eligible for such accounting treatment, the
Committee will have the ability, in its sole discretion, to substitute for the
cash payable pursuant to such grant Common Stock with a Fair Market Value equal
to the cash that would otherwise be payable hereunder.
(i) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.
SECTION 12. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on August 15, 1996.
SECTION 13. DIRECTOR STOCK OPTIONS.
(a) Each director of the Company who is not otherwise an employee of
the Company or any of its subsidiaries or Affiliates, will (1) on the date of
his or her first election as a director of the Company, which election will be
deemed to occur on August 15, 1996 for individuals who become directors of the
Company in connection with the Distribution (any such initial grant, an "Initial
Grant"), and (2) on August 15, 1996 and thereafter annually, on the third
Thursday in August, during such director's term (the "Annual Grant"),
automatically be granted Non-Qualified Stock Options to purchase Common Stock
having an exercise price per share of Common Stock equal to 100% of Fair Market
Value per share of Common Stock at the date of grant of such Non-Qualified Stock
Option. The number of shares subject to each such Initial Grant, and each such
Annual Grant, will be equal to the annual retainer fee in effect at the date of
grant for nonemployee directors of the Company divided by an amount equal to
one-third (1/3) of the Fair Market Value of the Common Stock at the date of
grant, rounded to the nearest 100 shares. A nonemployee director elected during
the course of a year (i.e., on a date other than the date of the Annual Grant)
will, in addition to the Initial Grant, receive upon election a grant of
Non-Qualified Stock Options prorated for the year in which the election occurs,
with the number of shares of Common Stock subject to such Stock Options being
equal to (1) the number of shares subject to the Initial Grant
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<PAGE> 22
multiplied by (2) a fraction the numerator of which is the number of full
calendar months from the date of such election through the date of the next
Annual Grant and the denominator of which is twelve.
(b) An automatic director Stock Option will be granted hereunder only
if as of each date of grant the director (1) is not otherwise an employee of the
Company or any of its subsidiaries or Affiliates, (2) has not been an employee
of the Company or any of its subsidiaries or Affiliates for any part of the
preceding fiscal year, and (3) has served on the Board continuously since the
commencement of his term.
(c) Except as expressly provided in this Section 13, any Stock Option
granted hereunder will be subject to the terms and conditions of the Plan as if
the grant were made pursuant to Section 5 hereof including, without limitation,
the rights set forth in Section 5(j) hereof.
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<PAGE> 1
EXHIBIT 10(e)
FORM OF
DEFERRED COMPENSATION PLAN
FOR DIRECTORS OF
THE DIAL CORPORATION
1. Establishment of Plan
The Directors Deferred Compensation Plan (Plan), an unfunded plan of
voluntary deferred compensation is established for the benefit of the
individuals who serve as members of the Board of Directors of The Dial
Corporation (Corporation). All Directors, except Directors receiving a
regular salary as an employee of the Corporation or one of its
subsidiaries, will be eligible to participate in this Plan. A Director may
elect to defer under this Plan any retainer or meeting attendance fee
otherwise payable to him or her (Compensation) by the Corporation or by
domestic subsidiaries of this Corporation (subsidiaries). The Plan is also
a continuation of a portion of the similar plan (Predecessor Plan)
maintained by The Dial Corp, a Delaware corporation (Parent), prior to the
distribution (the Spin-Off) by Parent to its stockholders of shares of the
Corporation's common stock (Common Stock). The Corporation has assumed,
and indemnified Parent with respect to, all obligations of Parent relating
to Directors who were directors of Parent and participants in the
Predecessor Plan, and become Directors of the Corporation in connection
with the Spin-Off.
2. Effective Date
The Plan will become effective on August 15, 1996.
3. Election to Participate in the Plan
(a) An eligible Director of the Corporation may elect to defer the
receipt of all or a specified part of the Compensation otherwise payable
to him or her during a calendar year. Any person who becomes a Director
during any calendar year, and who was not a Director of the Corporation or
its subsidiaries on the preceding December 31, may elect before the
Director's term begins to defer such Compensation. Such election must
specify whether the deferred compensation account will be treated as a
cash account under Section 4(a) or a stock unit account under Section
4(b); provided that an election to defer Compensation into a stock unit
account must be specifically approved by the Board of Directors of the
Corporation. If
<PAGE> 2
the account is to be a stock unit account, the Compensation will be
converted into stock units by dividing the amount of such Compensation by
the closing price of the Corporation's Common Stock, as reported for New
York Stock Exchange-Composite Transactions for the day such Compensation
is payable.
(b) Any election under the Plan, unless otherwise provided therein,
must be made by delivering a signed request to the Secretary of the
Corporation on or before December 31 with respect to the following
calendar year, or, for a new Director, on or before his or her term
begins. An election will continue from year to year, unless specifically
limited, until terminated by a signed request in the same manner in which
an election is made. However, any such termination will not become
effective until the end of the calendar year in which notice of
termination is given.
(c) Each Director may, by notice delivered to the Secretary of the
Corporation convert: (i) the aggregate balance in the stock unit portion
of his or her deferred compensation account (either before or after
payments from the account may have commenced) from an account in the form
of stock units to an account in the form of cash in an amount equal to
such stock units balance multiplied by the closing price of the Common
Stock of the Corporation, as reported for New York Stock
Exchange-Composite Transactions, on the last trading day of the month in
which such notice is given, said account to accrue interest thereafter as
set forth in Section 4 below or (ii) the aggregate balance in the cash
portion of his or her deferred compensation account (either before or
after installment payments from the account may have commenced) from an
account in the form of cash to an account in the form of stock units
representing shares of Corporation Common Stock in an amount equal to the
cash balance divided by the closing price of the Common Stock of the
Corporation, as reported for New York Stock Exchange-Composite
Transactions, on the last trading day of the month in which such notice is
given, said account to accrue dividend equivalents thereafter as set forth
in Section 4; provided, however, that no such notice of conversion
("Conversion Notice") (A) may be given within six months following the
date of an election by such Director, with respect to any plan of the
Corporation, that effected a Discretionary Transaction (as defined in Rule
16b-3(f) under the Securities Exchange Act of 1934) that was an
acquisition (if the Conversion Notice
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<PAGE> 3
is pursuant to clause (i)) or a disposition (if the Conversion Notice is
pursuant to clause (ii)) or (B) may be given after an individual ceases to
be a Director.
4. Accrual of Interest or Dividend Equivalents
(a) If a Director has elected to defer Compensation in the form of
cash, then interest on the unpaid balance of the cash portion of such
Director's deferred compensation account, consisting of both accumulated
Compensation and interest, if any, will be credited on the last day of
each quarter based upon the yield on Merrill Lynch Taxable Bond Index-Long
Term Medium Quality (A3) Industrial Bonds in effect at the beginning of
such quarter, said interest to commence with the date such Compensation
was otherwise payable. After payment of deferred Compensation commences,
interest will accrue on the unpaid balance of the cash portion of such
account in the same manner until all such deferred Compensation has been
paid.
(b) If a Director has elected to defer Compensation in the form of
stock units relating to Corporation Common Stock, then, in the event of a
dividend paid with respect to Common Stock in cash, Common Stock, other
stock or property of the Corporation, additional credits (dividend
equivalents) will be made to the stock unit portion of the Director's
deferred compensation account as follows:
(i) in the case of a cash dividend, or a dividend of Corporation
stock (other than Corporation Common Stock) or property, additional
credits will be made to the stock unit portion of the Director's
account consisting of a number of stock units equal to the amount of
such dividend per share (or the fair market value, on the date of
payment, of dividends paid in stock or property), multiplied by the
aggregate number of stock units credited to each Director's deferred
compensation account on the record date for the payment of such
dividend, divided by the last closing price of the Corporation's
Common Stock, as reported for the New York State Exchange-Composite
Transactions, prior to the date such dividend is payable to holders;
(ii) in the case of a dividend consisting of Common Stock, the
stock unit portion of the Director's deferred compensation account
will be credited with a number of units equal to the number of stock
units in such account immediately prior to such dividend multiplied
by the number of shares of Common
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<PAGE> 4
Stock paid per outstanding share in such dividend; and
(iii) in the case of a dividend consisting of shares of stock of
any of the Corporation's subsidiaries, a new stock unit portion of
the deferred incentive compensation account will be established and
credited with a number of shares of stock of such subsidiary equal
to the number of stock units in the Director's account immediately
prior to such dividend multiplied by the number of shares of
subsidiary stock issued per outstanding share in such dividend (with
dividends thereafter accruing on such new stock unit portion of the
account solely in the form of cash in an amount equal to the value
of dividends paid by the issuer of the stock to which such stock
units relate).
After payment of deferred compensation commences, dividend equivalents
will accrue on the unpaid balance of the stock unit portion of the account
in the same manner until all such deferred Compensation has been paid.
(c) (i) In connection with the Spin-Off, the Dial Director's
Retirement Plan (the "Retirement Plan") will be terminated. As of
the Distribution Date, the Corporation will credit, to an existing,
or newly-established, stock unit account for each Director eligible
to participate in this Plan who was a participant under the
Retirement Plan (and who does not elect to continue to receive cash
payments under the Retirement Plan) a number of stock units equal to
(A) the present value of such Director's vested accrued benefits
under the Retirement Plan divided by (B) the closing price of the
Corporation's Common Stock (as reported for the New York Stock
Exchange - Composite Transactions) as of the first trading day
following the Distribution Date. Such stock unit account shall
thereafter be maintained in accordance with Section 4(b), and the
other provisions, of this Plan.
(ii) In connection with the Spin-Off, the Corporation assumed
the obligations of Parent under the Predecessor Plan with respect to
Directors who were Directors of Parent, and has credited each such
Director's deferred compensation account with (A) cash and/or stock
units representing shares of Parent Common Stock, in amount(s) equal
to the amount(s) credited to such Director's deferred compensation
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<PAGE> 5
account, in such form, under the Predecessor Plan immediately prior
to the Spin-Off and (B) stock units representing a number of shares
of Corporation Common Stock equal to the number of stock units (if
any) in such Director's account under the Predecessor Plan
immediately prior to the Spin-Off. The portion (if any) of any such
Director's deferred compensation account credited with stock units
representing shares of Parent Common Stock is referred to herein as
the "Special Account." From and after the Spin-Off, the Corporation
will credit the Special Account with amount(s) denominated in cash,
representing all dividends paid by Parent on the Parent Common
Stock, whether paid in cash, Parent Common Stock, other stock or
property, in an amount equal to the amount of such dividend(s) per
share of Parent Common Stock (or the fair market value on the date
of payment, of dividends paid in Parent Common Stock, other stock or
property) multiplied by the aggregate number of stock units credited
to such Director's Special Account on the record date for payment of
such dividend. The amount credited as cash will thereafter accrue
interest in accordance with Section 4(a). A Director may convert the
stock unit portion of the Special Account into a cash account by
using the procedures in Section 3(c) without regard to the six
months restriction set forth in the proviso thereto (it being
understood that the closing price of Parent Common Stock, instead of
Corporation Common Stock, will be used for such conversion). Section
3(c) may not, however, be used to convert a cash account into
additional units of Parent Common Stock in the Special Account.
5. Accounting
No fund or escrow deposit will be established with respect to any deferred
Compensation payable pursuant to this Plan, nor will any shares of
Corporation Common Stock or Parent Common Stock be issued or held with
respect to any stock units. The obligation to pay deferred Compensation
hereunder will be an unfunded, general unsecured obligation of the
Corporation, payable out of its general account, and deferred Compensation
shall accrue to the general account of the Corporation. However, the
Controller of the Corporation will maintain bookkeeping "accounts" and
properly credit Compensation to each such account, and keep a record of
all sums which each participating Director has elected to have paid as
deferred Compensation and of interest or dividend equivalents accrued
thereon.
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<PAGE> 6
Within sixty (60) days after the close of each calendar year the
Controller shall furnish each Director who has participated in the Plan a
statement of all sums and stock units, including interest and dividend
equivalents, which have accrued to the deferred compensation account of
such Director as of the end of such calendar year.
6. Payment from Directors' Accounts
(a) After a Director ceases to be a director of the Corporation, the
aggregate amount credited to the deferred compensation account of a
Director, in the form of cash and/or stock units, together with interest
or dividend equivalents, as the case may be, accrued thereon, will be paid
in a lump sum or, if the Director elects, in substantially equal
quarterly, semi-annual, or annual installments over a period of years, not
greater than ten (10), specified by the Director. Such election must be
made by written notice delivered to the Secretary of the Corporation prior
to December 31 of the year preceding the year in which, and at least six
months prior to the date on which, the Director ceases being a director.
The first installment (or the lump sum payment) will be made promptly
following the date on which the Director ceases to be a Director of the
Corporation, and any subsequent installments will be paid promptly at the
beginning of each succeeding specified period until the entire amount
credited to the Director's account has been paid. To the extent
installment payments are elected, and the Director's account consists of
cash as well as stock units, a pro rata portion of the cash, and the cash
equivalent of a pro rata portion of the stock units, will be paid with
each installment. If the participating Director dies before receiving the
balance of his or her deferred compensation account, then payment will be
made in a lump sum to any beneficiary or beneficiaries which may be
designated, as provided in paragraph (b) of this Section 6, or (i) in the
absence of such designation, or (ii) in the event that the beneficiary
designated by such Director shall have predeceased such Director, to such
Director's estate.
(b) Each Director who elects to participate in the Plan may file
with the Secretary of the Corporation a notice in writing designating one
or more beneficiaries to whom payment will be made in the event of such
Director's death prior to receiving payment of any or all of the deferred
Compensation hereunder.
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<PAGE> 7
(c) If the Director has elected to defer Compensation in the form of
cash, the Corporation will distribute a sum in cash to such Director,
pursuant to his or her election, as provided in paragraph (a) of this
Section 6. If the Director has elected to defer Compensation in the form
of stock units, the Corporation will distribute to such Director, pursuant
to paragraph (a) of this Section 6, the cash equivalent of the portion of
the stock units being distributed in such installment, which will be
calculated by multiplying (i) the average of the month-end closing prices
of the common stock to which such stock units relate for the last 12
months preceding the date of such distribution as reported for New York
Stock Exchange-Composite Transactions, by (ii) the number of stock units
being distributed in such installment.
7. Change of Control or Change in Capitalization
(a) If a tender offer or exchange offer for shares of Common Stock
(other than such an offer by the Corporation) is commenced, or if the
stockholders of the Corporation approve an agreement providing either for
a transaction in which the Corporation will cease to be an independent,
publicly-owned corporation, or for a sale or other disposition of all or
substantially all the assets of the Corporation (Change of Control), a
lump sum cash payment will be made to each Director participating in the
Plan of the aggregate balance of his or her deferred compensation account
as of the date of the Change of Control, notwithstanding any other
provision herein. If the Director has elected to defer Compensation in the
form of stock units, the Corporation will distribute to such Director the
sum in cash equal to the closing price of the common stock to which the
stock units relate on the day preceding the date of the Change of Control,
as reported for New York Stock Exchange-Composite Transactions, multiplied
by the applicable number of stock units. Any notice by a Director to
change or terminate his or her election to defer Compensation or before
the date of the Change of Control will be effective as of the date of the
Change of Control, notwithstanding any other provision herein.
(b) Any recapitalization, reclassification, split-up, sale of
assets, combination or merger not otherwise provided for in Section 4 or
7(a) hereof which affects outstanding shares of common stock to which
stock units relate, or any other relevant change in the capitalization
having such effect, will be appropriately adjusted for by the Board of
Directors of the Corporation, and any such adjustments will be final,
conclusive and binding.
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<PAGE> 8
8. Nonalienation of Benefits
No right or benefit under this Plan will be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge, and any
attempt to alienate, sell, assign, pledge, encumber or charge the same
will be void. To the extent permitted by law, no right or benefit
hereunder will in any manner be attachable for, or otherwise available to
satisfy, the debts, contracts, liabilities or torts of the person entitled
to such right or benefit.
9. Applicable Law
The Plan will be construed and enforced according to the laws of the State
of Delaware; provided that the obligations of the Corporation will be
subject to any applicable law relating to the property interests of the
survivors of a deceased person and to any limitations on the power of the
person to dispose of his or her interest in the deferred Compensation.
10. Amendment or Termination of Plan
The Board of Directors of the Corporation may amend or terminate this Plan
at any time, provided, however, any amendment or termination of this Plan
will not affect the rights of participating Directors or beneficiaries to
payments, in accordance with Section 6 or 7, of amounts accrued to the
credit of such Directors or beneficiaries at the time of such amendment or
termination.
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<PAGE> 1
EXHIBIT 10(f)
FORM OF
THE DIAL CORPORATION
DIRECTOR'S CHARITABLE AWARD PROGRAM
1. PURPOSE OF THE PROGRAM.
The Dial Corporation Director's Charitable Award Program (the
"Program") allows each eligible Director of The Dial Corporation (the
"Corporation") to recommend that the Corporation make a donation of $1,000,000
to the eligible tax-exempt organization(s) (the "Donee(s)") selected by the
Director, with the donation to be made, in the Director's name, in ten equal
annual installments, with the first installment to be made as soon as is
practicable after the Director's death. The purpose of the Program is to
recognize the interest of the Corporation and its Directors in supporting worthy
educational institutions and other charitable organizations. The Program is a
continuation of a portion of the similar program (the "Predecessor Program")
maintained by The Dial Corp, a Delaware corporation ("Parent"), prior to the
distribution by Parent to its stockholders of shares of the Corporation's common
stock (the "Spin-Off"). The Corporation has assumed, and indemnified Parent with
respect to, all obligations of Parent relating to individuals who were Directors
of Parent and became Directors of the Corporation which arose prior to the
Spin-Off under the Predecessor Program.
2. ELIGIBILITY.
All persons serving as Directors of the Corporation who were eligible
to participate in the Predecessor Program are eligible for continued
participation in the Program. Unless specifically approved by the Board, no
other member of the Corporation's Board of Directors will be eligible to
participate in the Program.
3. RECOMMENDATION OF DONATION.
When a Director became eligible to participate in the Predecessor
Program, he or she made a written recommendation to Parent, on a form approved
by Parent for this purpose, designating the Donee(s) which he or she intended to
be the recipient(s) of the donation to be made on his or her behalf. Such
recommendation will continue to apply from and after the Spin-Off to the
Corporation. Unless a Director elected to make the recommendation irrevocable, a
Director may revise or revoke any such recommendation prior to his or her death
by signing a new recommendation form and submitting it to the Corporation.
<PAGE> 2
4. AMOUNT AND TIMING OF DONATION.
Each eligible Director may choose one organization to receive a
corporate donation of $1,000,000, or two or more organizations to receive
donations aggregating $1,000,000. Each recommended organization must be
recommended to receive a donation of at least $100,000. The donation will be
made by the Corporation in ten equal annual installments, with the first
installment to be made as soon as is practicable after the Director's death. If
a Director recommends more than one organization to receive a donation, each
will receive a prorated portion of each annual installment. Each annual
installment payment will be divided among the recommended organizations in the
same proportions as the total donation amount has been allocated among the
organizations by the Director.
5. DONEES.
In order to be eligible to receive a donation, a recommended
organization must initially, and at the time a donation is to be made, qualify
to receive tax-deductible donations under the Internal Revenue Code, and be
reviewed and approved by the committee responsible for administering the Program
under Section 9. A recommendation will be approved, and all recommendations
approved by Parent under the Predecessor Program will be deemed to have been so
approved, unless it is determined, in the exercise of good faith judgment, that
a donation to the organization would be detrimental to the best interests of the
Corporation. A Director's private foundation or a donor advised fund in a
community fund (or a similar entity) is not eligible to receive donations under
the Program. If an organization recommended by a Director ceases to qualify as a
Donee, and if the Director does not submit a form to change the recommendation
before his or her death, the amount recommended to be donated to the
organization will instead be donated to the Director's remaining recommended
qualified Donee(s) on a prorated basis. If none of the recommended organizations
qualify, the donation will be made to the organization(s) selected by the
Corporation.
6. VESTING.
A Director will be vested in the Program when he or she completes five
years of Board service, or in the event (a) he or she dies or becomes disabled
while serving as a Director, (b) if not an employee of the Corporation, he or
she retires at the mandatory retirement age for non-employee directors, (c) if
an employee of the Corporation, he or she retires on or after his or her normal
retirement date, or (d) there is a Change of Control of the Corporation. Board
service with Parent prior to the Spin-Off will count as vesting service. If a
Director terminates Board service (other than due to death, disability or
mandatory retirement) before becoming vested, no donation will be made on his or
her behalf.
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<PAGE> 3
7. FUNDING AND PROGRAM ASSETS.
The Corporation may fund the Program or it may choose not to fund the
Program. If the Corporation elects to fund the Program in any manner, neither
the Directors nor their recommended Donee(s) will have any rights or interests
in any assets of the Corporation identified for such purpose. Nothing contained
in the Program will create, or be deemed to create, a trust, actual or
constructive, for the benefit of a Director or any Donee recommended by a
Director to receive a donation, or will give, or be deemed to give, any Director
or recommended Donee any interest in any assets of the Program or the
Corporation. If the Corporation elects to fund the Program through life
insurance policies, a participating Director agrees to cooperate and fulfill the
enrollment requirements necessary to obtain insurance on his or her life.
8. AMENDMENT OR TERMINATION.
The Board of Directors of the Corporation may, at any time, without the
consent of the Directors participating in the Program, amend, suspend, or
terminate the Program. However, once a Director becomes vested in the Program,
the Program may not be amended, suspended or terminated with respect to such
Director without his or her consent; provided, the Board can elect, unless a
change of control of the Corporation has occurred, to terminate the Program with
respect to any Director whose Board service is terminated as a result of a
felony conviction, or a conviction of a crime involving moral turpitude, fraud
or dishonesty, whether or not he or she is vested.
9. ADMINISTRATION.
The Program will be administered by the Executive Compensation
Committee of the Board of Directors of the Corporation. The Committee will have
plenary authority in its discretion, but subject to the provisions of the
Program, to prescribe, amend, and rescind rules, regulations and procedures
relating to the Program. The determinations of the Committee on the foregoing
matters will be conclusive and binding on all interested parties.
10. CHANGE OF CONTROL.
If there is a Change of Control of the Corporation, all participants
serving as Directors at the time of the Change of Control will become
immediately vested in the Program, and, notwithstanding the provisions of
Section 8, the Program may not thereafter be amended or terminated with respect
to any person participating in the Program at the time of the Change of Control.
For the purpose of the Program, the term "Change of Control" shall have the same
meaning as is defined for that term in The Dial Corporation 1996 Stock Incentive
Plan.
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<PAGE> 4
11. GOVERNING LAW.
The Program will be construed and enforced according to the laws of the
State of Delaware, and all provisions thereof shall be administered according to
the laws of said state.
12. EFFECTIVE DATE.
The Program effective date is August 15, 1996. The recommendation of a
Director will not be effective until he or she completes the Program enrollment
requirements.
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<PAGE> 1
EXHIBIT 10(g)
FORM OF
THE DIAL CORPORATION
DEFERRED COMPENSATION PLAN
1. Purpose of the Plan
The purpose of the Deferred Compensation Plan (Plan) is to provide a
select group of management or highly compensated employees of The Dial
Corporation (Corporation) and its subsidiaries with an opportunity to defer the
receipt of incentive compensation awarded to them under annual and long term
incentive plans of the Corporation and its subsidiaries (Incentive Plans) and
thereby enhance the long-range benefits and purposes of the incentive awards.
Each plan year will extend from January 1 through December 31 of each calendar
year. The Plan also is a continuation of a portion of the similar plan
(Predecessor Plan) maintained by The Dial Corp, a Delaware corporation (Parent),
prior to the distribution (the Spin-Off) by Parent to its stockholders of shares
of the Corporation's common stock (Common Stock). The Corporation has assumed,
and indemnified Parent with respect to all obligations of Parent relating to
individuals who were employees of The Dial Corp and participants in the
Predecessor Plan, and become employees of the Corporation in connection with the
Spin-Off.
2. Administration of the Plan
The Plan will be administered by the Executive Compensation Committee
(Committee). If at any time there is no such Executive Compensation Committee or
such Executive Compensation Committee shall fail to be composed of at least two
directors each of whom is a "Non-Employee Director" as defined in Rule
16b-3(b)(3) under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Plan will be administered by a Committee selected by the Board and composed of
not less than two individuals each of whom is such a Non-Employee Director.
Subject to the express provisions of the Plan, and the Incentive Plans, the
Committee will have the authority to adopt, amend and rescind such rules and
regulations, and to make such determinations and interpretations relating to the
Plan, which it deems necessary or advisable for the administration of the Plan,
but it will not have the power to amend, suspend or terminate the Plan. All such
rules, regulations, determinations and interpretations will be conclusive and
binding on all parties.
<PAGE> 2
3. Participation in the Plan
(a) Participation in the Plan will be restricted to a select group of
management or highly compensated employees of the Corporation or one of its
subsidiaries who are participants in the Incentive Plans, whose timely written
requests to defer the receipt of all or a portion of any incentive compensation
which may be awarded to them are honored in whole or in part by the Committee.
Any individual whose request for deferral is not accepted or honored by the
Committee, whether for failure of timely submission or for any other reason,
will not become a participant in the Plan (with respect to such request), and
the Committee's determination in this regard will be conclusive and binding. In
addition, any person who becomes an employee of the Corporation and was a
participant in the Predecessor Plan will be deemed to be a participant in the
Plan (if not otherwise a participant), to the extent of the amounts credited to
such person's deferred incentive compensation account by Parent prior to the
Spin-Off.
(b) If a participant in the Plan (i) severs his or her employment with
the Corporation or one of its subsidiaries, (ii) engages in any activity in
competition with the Corporation or any of its subsidiaries during or following
such employment, or (iii) remains in the employ of a corporation which for any
reason ceases to be a subsidiary of the Corporation, the Committee may at any
time thereafter direct, in its sole and exclusive discretion, that his or her
participation in the Plan will terminate, and that he or she be paid in a lump
sum the aggregate amount credited to his or her deferred incentive compensation
account as of the date such participation is terminated.
(c) The Corporation and each participating subsidiary will be solely
liable for maintenance of deferred incentive compensation accounts pursuant to
paragraph 6 and payment of any benefits with respect to its own employees who
participate in the Plan. In the event a participant leaves the employ of the
Corporation, or a participating subsidiary ("former employer") and is
subsequently employed by another employer, the Corporation or another subsidiary
of the Corporation ("new employer"), the former employer may agree to transfer
and the new employer may agree to assume the benefit liability reflected in such
participant's deferred incentive compensation account, without the consent of
such participant and subject to the approval of the Committee, in its sole
discretion. In the event of such a transfer and assumption of liability, the
former employer will have no further liability for any benefit under the Plan to
its former employee or otherwise with respect to such transferred account.
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4. Requests for Deferral
(a) All requests for deferral of incentive awards must be made in
writing on or before December 31 with respect to the following calendar year and
must be in such form and contain such terms and conditions as the Committee may
determine. Each such request must specify the dollar amount or the percentage to
be deferred of the incentive award which would otherwise be received in the
following calendar year, but in no event may the amount to be deferred be less
than $1,000. Each such request must also specify whether the deferral will be
into a cash account under Section 6(b) or a stock unit account under Section
6(c); provided, however, that an election to defer incentive awards into a stock
unit account must be specifically approved by the Committee. If the deferral is
to be into a stock unit account, the Compensation will be converted into stock
units by dividing the amount of incentive compensation subject to such election
by the closing price of the Corporation's Common Stock, as reported for New York
Exchange-Composite Transactions, for the day such compensation is payable.
Finally, each such request must also specify (i) the date (no later than the
employee's actual retirement date) when payment of the aggregate amount credited
to the deferred incentive account is to commence, (ii) whether such payment is
then to be made in a lump sum or in quarterly or annual installments, and (iii)
if payment is to be made in installments, the period of time (not in excess of
ten years) over which the installments are to be paid. The Committee will not,
under any circumstances, accept any request for deferral of less than $1,000 of
an incentive award or any request which is not in writing or which is not timely
submitted.
(b) Each participant may, by notice delivered to the Secretary of the
Corporation convert (i) the aggregate balance in the stock unit portion of his
or her deferred incentive compensation account (either before or after payments
from the account may have commenced) from an account in the form of stock units
to an account in the form of cash in an amount equal to such stock units balance
multiplied by the closing price of the Common Stock of the Corporation, as
reported for New York Stock Exchange-Composite Transactions, on the last trading
day of the month in which such notice is given, said account to accrue interest
thereafter as set forth in Section 6(b) or (ii) the aggregate balance in the
cash portion of his or her deferred compensation account (either before or after
installment payments from the account may have commenced) from an account in the
form of cash to an account in the form of stock units in an amount equal to the
cash balance divided by the closing price of the Common Stock of the
Corporation, as reported for New York Stock Exchange-Composite Transactions, on
the last trading
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<PAGE> 4
day of the month in which such notice is given, said account to accrue dividend
equivalents thereafter as set forth in Section 6(c); provided, however, that no
such notice of conversion ("Conversion Notice") (A) may be given within six
months following the date of an election by such participant, with respect to
any plan of the Corporation, that effected a Discretionary Transaction (as
defined in Rule 16b-3(f) under the Exchange Act) that was an acquisition (if the
Conversion Notice is pursuant to clause (i)) or a disposition (if the Conversion
Notice is pursuant to clause (ii)) or (B) may be given after an individual
ceases to be an employee.
5. Deferral of Incentive Compensation Awards
The Committee will, prior to December 15 of the year in which the bonus
is being earned, notify each individual who has submitted a request for deferral
of an incentive compensation award whether or not such request has been accepted
and honored. If the request has been honored in whole or in part, the Committee
will advise the participant of the dollar amount or percentage of his incentive
compensation which the Committee has determined to be deferred, as well as the
form (cash or stock units) that such deferral will take. The Committee will
further advise the participant of its determination as to the date when payment
of the aggregate amount credited to the participant's deferred incentive
compensation account is to commence, whether payment of the amount so credited
as of that date will then be made in a lump sum or in quarterly or annual
installments, and if payment is to be made in installments, the period of time
over which the installments will be paid. Upon subsequently being advised of the
existence of special circumstances which are beyond the participant's control
and which impose an unforeseen severe financial hardship on the participant or
his beneficiary, the Committee may, in its sole and exclusive discretion, modify
the deferral arrangement established for that participant to the extent
necessary to remedy such financial hardship.
6. Deferred Incentive Compensation Account
(a) A deferred incentive compensation account consisting of cash and/or
a stock unit deferrals will be maintained by his or her employer for each
participant in the Plan, and there will be credited to each participant's
account: (i) as an initial credit, to the cash portion of the deferred incentive
compensation account, an amount equal to the amount credited by Parent to the
participant's deferred incentive compensation account under the Predecessor Plan
immediately prior to the
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<PAGE> 5
Spin-Off, if any, and (ii) on the date incentive compensation is paid, the
amount of the incentive award, or portion thereof, which would have been paid to
such participant on said date if the receipt thereof had not been deferred, with
such amount being credited to the cash portion of the deferred incentive
compensation account or the stock unit portion of the deferred incentive
compensation account, as the case may be, in accordance with Section 5 hereof.
(b) There will be credited on the last day of the quarter to the cash
portion of each participant's deferred incentive compensation account, an
interest credit at the interest rates determined by the Committee to be payable
during each calendar year, or portion thereof, prior to the termination of such
participant's deferral period or, if the amount then credited to the cash
portion of his or her deferred incentive compensation account is to be paid in
installments, prior to the termination of such installment period. Interest will
be paid on a prorated basis for amounts withdrawn from the cash portion of the
deferred compensation account during the quarter, with the remaining balance
accruing interest for the duration of the quarter. The interest credit will be a
rate equal to the yield as of January 1, April 1, July 1 and October 1 on
Merrill Lynch Taxable Bond Index - Long Term Medium Quality (A3) Industrial
Bonds, unless and until otherwise determined.
(c) If a participant has elected to defer incentive compensation in the
form of stock units, then, in the event of a dividend paid with respect to
Common Stock in cash, Common Stock, other stock or property of the Corporation,
credits (dividend equivalents) will be made to the stock unit portion of the
participant's deferred incentive compensation account as follows:
(i) in the case of a cash dividend, or a dividend of stock of
the Corporation (other than Common Stock) or property, additional
credits will be made to the stock unit portion of the participant's
deferred incentive compensation account consisting of a number of stock
units equal to the amount of such dividend per share (or the fair
market value, on the date of payment, of dividends paid in stock or
property), multiplied by the aggregate number of stock units credited
to such participant's deferred incentive compensation account on the
record date for the payment of such dividend, divided by the last
closing price of the Corporation's Common Stock, as reported for New
York Stock Exchange-Composite Transactions, prior to the date such
dividend is payable to holders;
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<PAGE> 6
(ii) in the case of a dividend consisting of Common Stock, the
stock unit portion of the participant's deferred incentive compensation
account will be credited with a number of units equal to the number of
stock units in such account immediately prior to such dividend
multiplied by the number of shares of Common Stock paid per outstanding
share in such dividend; and
(iii) in the case of a dividend consisting of shares of stock
of any of the Corporation's subsidiaries, a new stock unit portion of
the account will be established and credited with a number of shares of
stock of such subsidiary equal to the number of stock units in the
participant's stock unit deferral account immediately prior to such
dividend multiplied by the number of shares of subsidiary stock issued
per outstanding share in such dividend (with dividends thereafter
accruing on such new stock unit portion of the account solely in the
form of cash in an amount equal to the value of dividends paid by the
issuer of the stock to which the stock units relate).
After payment of deferred compensation commences, dividend equivalents
will accrue on the unpaid balance of the stock unit portion of the account in
the same manner until all such deferred compensation has been paid.
(d) The Plan will at all times be unfunded. The Corporation will not be
required to segregate physically any amounts of money, or issue or hold any
shares of stock with respect to any stock units, or otherwise provide funding or
security for any amounts credited to the deferred incentive compensation
accounts of participants in the Plan.
7. Designation of Beneficiary
Each participant in the Plan will deliver to the Committee a written
instrument, in the form provided by the Committee, designating one or more
beneficiaries to whom payment of the amount credited to his deferred incentive
compensation account shall be made in the event of his death. Unless the
Committee otherwise determines, such payments shall be made in such amounts and
at such times as they would otherwise have been paid to the participant if he
had survived.
8. Nonassignability of Participation Rights
No right, interest or benefit under the Plan shall be assignable or
transferable under any circumstances other than to
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<PAGE> 7
a participant's designated beneficiary in the event of his death, nor will any
such right, interest or benefit be subject to, or liable for, any debt,
obligation, liability or default of any participant. The payments, benefits or
rights arising by reason of this Plan will not in any way be subject to a
participant's debts, contracts or engagements, and will not be subject to
attachment, garnishment, levy, execution or other legal or equitable process.
9. Rights of Participants
A participant in the Plan will have only those rights, interests or
benefits as are expressly provided in the Plan and in the Incentive Plans. The
Plan will be deemed to be ancillary to the Incentive Plans and the rights of
participants in the Plan shall be limited as provided in the Incentive Plans.
10. Payment from Accounts
(a) The aggregate amount credited to the deferred incentive
compensation account of any participant, in the form of cash and/or stock units,
together with interest or dividend equivalents, as the case may be, accrued
thereon, will be paid in a lump sum or, in accordance with the Committee's
determination under Section 5, in substantially equal quarterly or annual
installments over a period of years, not greater than ten (10). The first
installment (or the lump sum payment) will be made promptly following the date
specified pursuant to Section 4(a)(i) and Section 5 and any subsequent
installments will be paid promptly at the beginning of each succeeding specified
period until the entire amount credited to the participant's account has been
paid. To the extent installment payments were elected, and the participant's
account consists of cash as well as stock units, a pro rata portion of the cash,
and the cash equivalent of a pro rata portion of the stock units, will be paid
with each installment. If the participant dies before receiving the balance of
his or her deferred compensation account, then payment will be made in a lump
sum to any beneficiary or beneficiaries which may be designated, as provided in
Section 7, or (i) in the absence of such designation, or (ii) in the event that
the beneficiary designated by such participant shall have predeceased such
participant, to such participant's estate.
(b) If a participant has elected to defer incentive compensation in the
form of cash, the Corporation will distribute a sum in cash to such Participant,
pursuant to his or her election, as provided in paragraph (a) of Section 4 and
Section 5.
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<PAGE> 8
If a participant has elected to defer incentive compensation in the form of
stock units, the Corporation will distribute to such participant, pursuant to
his or her election provided for in paragraph (a) of Section 4 and Section 5,
the cash equivalent of the portion of the stock units being distributed in such
installment which will be calculated by multiplying (i) the average of the
month-end closing prices of the common stock to which such stock units relate
for the last 12 months preceding the date of such distribution, as reported for
New York Stock Exchange-Composite Transactions, by the number of stock units
being distributed in such installment.
(c) If a tender offer or exchange offer for shares of Common Stock
(other than such an offer by the Corporation) is commenced, or if the
stockholders of the Corporation approve an agreement providing either for a
transaction in which the Corporation will cease to be an independent,
publicly-owned corporation, or for a sale or other disposition of all or
substantially all the assets of the Corporation (Change of Control), a lump sum
cash payment will be made to each participant in the Plan of the aggregate
balance of his or her deferred incentive compensation account as of the date of
the Change of Control, notwithstanding any other provision herein. If the
participant has elected to defer incentive compensation in the form of stock
units, the Corporation will distribute to such participant the sum in cash equal
to the closing price of the stock to which such units relate on the day
preceding the date of the Change of Control, as reported for New York Stock
Exchange-Composite Transactions, multiplied by the applicable number of stock
units. Any notice by the participant to change or terminate his or her election
to defer incentive compensation on or before the date of the Change of Control
will be effective as of the date of the Change of Control, notwithstanding any
other provision herein.
(d) Any recapitalization, reclassification, split-up, sale of assets,
combination or merger not otherwise provided for in Section 6 or 10(c) hereof,
which affects outstanding shares of common stock to which stock units relate, or
any other relevant change in the capitalization having such effect, will be
appropriately adjusted for by the Board of Directors of the Corporation, and any
such adjustments will be final, conclusive and binding.
11. Claims for Benefits
Claims for benefits under the Plan must be filed with the Committee.
Written notice of the disposition of a claim will
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<PAGE> 9
be furnished to the claimant within 60 days after the application therefor is
filed. In the event the claim is denied, the reasons for the denial will be
specifically set forth. Pertinent provisions of this Plan will be cited. In
addition, the written notice will describe any additional material or
information necessary for the claimant to perfect the claim (along with an
explanation of why such material or information is needed), and the written
notice will fully describe the claim review procedures of Section 12.
12. Claim Review
Any claimant who has been denied a benefit will be entitled, upon
request to the Committee, to receive a written notice of such action, together
with a full and clear statement of the reasons for the action. The claimant may
also review the Plan if he or she chooses. If the claimant wishes further
consideration of his position, he or she may request a hearing. The request,
together with a written statement of the claimant's position, must be filed with
a Committee member no later than 60 days after receipt of the written
notification provided for above. The Committee will schedule an opportunity for
a full and fair hearing of the issue within the next 60 days. The decision
following the hearing will be made within 60 days and shall be communicated in
writing to the claimant. If the claimant requests, the hearing may be waived, in
which case the Committee's decision will be made within 60 days from the date on
which the hearing is waived and will be communicated in writing to the claimant.
13. Amendment, Suspension or Termination of the Plan
The Board of Directors of the Corporation (the Board) may from time to
time amend, suspend or terminate the Plan, in whole or in part, and if the Plan
is suspended or terminated, the Board may reinstate any or all provisions of the
Plan, except that no amendment, suspension or termination of the Plan will,
without the consent of a participant, adversely affect such participant's right
to receive payment of the entire amount credited to his deferred incentive
compensation account on the date of such Board action. In the event the Plan is
suspended or terminated, the Board may, in its discretion, direct the Committee
to pay to each participant the amount credited to his account either in a lump
sum or in accordance with the Committee's prior determination regarding the
method of payment.
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14. Effective Date
The Plan will become effective on the date of its approval by the Board
of Directors of the Corporation or on such other date as the Committee may
direct, but the Plan will become operative with respect to a select group of
management or highly compensated employees of each subsidiary only upon the
adoption of the Plan by that subsidiary's Board of Directors.
15. Governing Law
The Plan will be governed by, and construed in accordance with, the
laws of the State of Delaware.
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EXHIBIT 10(h)
FORM OF
EMPLOYMENT AGREEMENT
AGREEMENT by and between The Dial Corporation, a Delaware
corporation (the "Company") and _________ _________ (the "Executive"), dated as
of the 15th day of August, 1996.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean the
first date during the Change of Control Period (as defined in Section 1(b)) on
which a Change of Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing
on the date hereof and ending on the second anniversary of the date hereof;
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change
<PAGE> 2
of Control Period shall be automatically extended so as to terminate two years
from such Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change of Control Period
shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change
of Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
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<PAGE> 3
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second anniversary of
such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
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<PAGE> 4
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive prior to the Effective Date and thereafter at
least annually. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control with the
Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
Executive's highest bonus under the Company's Management Incentive Plan, or any
comparable bonus under any predecessor or successor annual incentive plan, for
the last three full fiscal years
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<PAGE> 5
prior to the Effective Date (annualized in the event that the Executive was not
employed by the Company for the whole of such fiscal year) (the "Recent Annual
Bonus"). Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the receipt of such
Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period immediately preceding the Effective Date or if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(v) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
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<PAGE> 6
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and, if applicable,
use of an automobile and payment of related expenses, in accordance with the
most favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate
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effective on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability" shall mean the
absence of the Executive from the Executive's duties with the Company on a
full-time basis for 180 consecutive business days as a result of incapacity due
to mental or physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of
its affiliates (other than any such failure resulting from incapacity
due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board or
the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the
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good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or
any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof
or the Company's requiring the Executive to travel on Company business
to a substantially greater extent than required immediately prior to
the Effective Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason during
the 30-day period immediately following the first anniversary of the Effective
Date shall be deemed to be a termination for Good Reason for all purposes of
this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party
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hereto given in accordance with Section 12(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6. Obligations of the Company upon Termination. (a) Good Reason;
Other Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the
following amounts:
(A) the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (I) the Recent Annual Bonus and (II)
the Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for any
fiscal year consisting of less than twelve full months or during
which the Executive was employed for less than twelve full months),
for the most recently completed fiscal year
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<PAGE> 10
during the Employment Period, if any (such higher amount being
referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365
and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2), and (3)
shall be hereinafter referred to as the "Accrued Obligations"); and
(B) the amount equal to the product of (1) three and (2) the sum
of (x) the Executive's Annual Base Salary and (y) the Highest Annual
Bonus.
(ii) for three years after the Executive's Date of Termination, or
such longer period as may be provided by the terms of the appropriate
plan, program, practice or policy, the Company shall continue benefits
to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this
Agreement if the Executive's employment had not been terminated or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer
provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have
remained employed until three years after the Date of Termination and
to have retired on the last day of such period;
(iii) the Company shall, at its sole expense as incurred, provide
the Executive with outplacement services the scope and provider of
which shall be selected by the Executive in his sole discretion; and
(iv) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is
eligible to
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receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid
to the Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate and/or the
Executive's beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its affiliated
companies and their beneficiaries.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in this Section 6(c)
shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive and/or the Executive's family, as in effect at
any time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
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(d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (i) his Annual Base Salary through
the Date of Termination, (ii) the amount of any compensation previously deferred
by the Executive, and (iii) Other Benefits, in each case to the extent
theretofore unpaid. If the Executive voluntarily terminates employment during
the Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than for
Accrued Obligations and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case
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interest on any delayed payment at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 9) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Deloitte & Touche LLP or such other certified public accounting firm as may
be designated by the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 9, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the
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application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in
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connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 9(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by
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the Company or any of its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 10 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.
11. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
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If to the Executive:
If to the Company:
The Dial Corporation
Dial Tower
1850 North Central Avenue
Phoenix, Arizona 85077
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is "at
will" and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
----------------------------------------
[Executive]
THE DIAL CORPORATION
By
--------------------------------------
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EXHIBIT 10(i)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), dated May 13, 1996, between The
Dial Corp, a Delaware corporation (the "Company"), and Malcolm Jozoff (the
"Executive").
WHEREAS, the Company desires to employ the Executive to serve as its
President and Chief Executive Officer of its Consumer Products Division; and
WHEREAS, the Company is in the process of making a distribution
("Spin-off") to its shareholders of all of the assets and liabilities of its
Consumer Products Division by way of dividend of new shares of a new common
stock ("New Company"); and
WHEREAS, at the time of the Spin-off, the Company desires to transfer
and assign this Employment Agreement to the New Company, wherein Executive would
be named Chairman, President and Chief Executive Officer of the New Company.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to serve the Company or its assignee New Company, on
the terms and conditions set forth herein.
2. TERM. The term of employment of the Executive by the Company or the
New Company hereunder shall be for a period commencing on the day this Agreement
is signed by the Executive and the Company and ending three years thereafter.
3. NATURE OF DUTIES. The Executive shall initially serve as President
and Chief Executive Officer of the Consumer Products Division of the Company
and, subject to the direction of the Board of Directors of the Company (the
"Board"), shall have full authority for management of the Consumer Products
Division and all its operations. After completion of the Spin-off, the Executive
shall serve as Chairman, President and Chief Executive
<PAGE> 2
Officer of the New Company and, subject to the direction of the New Company's
Board of Directors ("New Board"), shall have full authority for management of
the New Company and all of its operations, financial affairs, facilities and
investments. The Executive shall serve as a member of the New Board, shall act
as the duly authorized representative of the New Board and shall be an ex
officio member of all committees of the New Board. The Executive shall devote
substantially all of his working time and efforts to the business and affairs of
the Company and the New Company after the Spin-off; provided, that the Executive
shall be free to serve as a director or officer or both of such not-for-profit
corporations as he may desire, to join and participate in such committees for
community or national affairs as he may select and to join and serve on business
corporation boards of directors, so long as such activities do not significantly
interfere with the performance of the Executive's duties hereunder and, in the
case of public business corporation boards of which the Executive was not a
member when he executed this Agreement, only with the prior approval of the
Board or the New Board, as appropriate.
4. PLACE OF PERFORMANCE. The Executive shall be based at the principal
executive offices of the Company and the New Company in the city of Phoenix,
Arizona, except for required business travel.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. During the Executive's employment hereunder, the
Company shall pay to the Executive an annual base salary of $600,000, effective
on the signing of this Agreement, such salary to be paid in conformity with the
Company's policies relating to salaried employees. After Spin-off, the New
Company shall pay to the Executive an annual base salary of $650,000, payable
with the New Company's policies. The Board or New Board, as applicable, will
annually review the Executive's base salary and, increase his base salary by the
amount, if any, the Board determines to be appropriate.
(b) BONUS. The Executive shall be eligible for the following
incentive bonuses:
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(1) From date of hire until Spin-off, the Executive shall be
eligible for a discretionary bonus up to 100% of salary received during this
period by Executive on the basis of criteria approved by the Board.
(2) A bonus of $150,000 after and when the Spin-off is
completed based on the Executive's cooperation in accomplishing the Spin-off.
(3) After the date of Spin-off, the New Company shall
establish bonus programs available to senior executives of the New Company and
Executive shall be eligible for a grant up to 100% of his base salary, but his
entitlement to any bonus shall be determined on the basis of criteria approved
by the New Board.
(4) A one-time bonus of $150,000, payable within 30 days
after the signing of this Agreement.
(c) PERFORMANCE BONUS. After the date of the Spin-off, the New
Company shall establish a long-term performance bonus for the remaining term of
this Agreement under which the Executive shall be eligible to receive a bonus of
up to 100% of Executive's base salary during such remaining term, upon such
reasonable criteria as approved by the New Board. Following the expiration of
such period, the New Board shall consider the establishment of a continuing
performance bonus or alternative long-term bonus plan.
(d) STOCK OPTIONS. The Executive shall be eligible and shall
receive an immediate vested stock option after signing this Employment Agreement
of 50,000 shares of Company stock ("Shares") with an exercise price established
by the market price as of the close of business on May 15, 1996. All Shares are
to be vested and non-forfeitable immediately but the Shares may not be sold,
assigned, transferred, pledged or otherwise encumbered for a period of one year
from the date hereof. Thereafter, 50% of the Shares may be sold, assigned,
transferred, pledged or otherwise encumbered and two years from the date hereof,
100% of the Shares may be sold, assigned, transferred, pledged or otherwise
encumbered. All other terms and conditions of the stock option shall be in
accordance with Company's approved stock option plan.
3
<PAGE> 4
After the Spin-off, the Executive shall be eligible to participate
in all stock option plans adopted by the New Company's Board, with Executive
receiving a grant of not less than 100,000 shares annually when such new plan
and option dates are adopted by the New Board.
(e) OTHER BENEFITS. During the Executive's employment hereunder,
the Executive (1) shall be entitled to participate in all employee benefit
plans, which are generally available to the Company's or New Company's senior
executive employees (subject to, and on a basis consistent with, the terms,
conditions and overall administration of such plans, programs and
arrangements); and (2) shall receive pension benefits, supplemental executive
retirement benefits, health insurance programs, executive medical benefits,
fitness programs, life insurance, accidental death and dismemberment benefits,
vacation time, reimbursement of club membership expenses, perquisites and other
fringe benefits no less favorable in the aggregate to the Executive than other
executives of the Company or the New Company. However, if Executive is still
employed by the Company or the New Company at the end of the term of this
Agreement, Executive shall receive, retroactive to his employment date and until
termination of Executive's employment, two year's employment credit toward
retirement for each one year employed.
(f) INSURANCE; INDEMNIFICATION. During the Executive's employment
hereunder, the Company or the New Company shall maintain appropriate liability
insurance, including director and officer liability coverage, under which the
Executive shall be an insured party. In addition, the Company or the New
Company, as applicable, shall, as set forth in its respective charter and/or
By-laws, or in a separate indemnification agreement, indemnify the Executive to
the fullest extent permitted under Delaware law. The Company or the New Company
shall also indemnify the Executive, to the extent permitted by law, with respect
to public service activities and not-for-profit board membership he undertakes
in accordance with Section 3.
(g) EXPENSES. The Executive shall be entitled to receive prompt
reimbursement for all reasonable and customary travel and business expenses he
incurs (including, when the Executive deems necessary, expenses incurred with
respect to his
4
<PAGE> 5
spouse) in connection with the Executive's employment hereunder; provided, that
such expenses are accounted for in accordance with the policies and procedures
established by the Company or New Company.
(h) RELOCATION EXPENSES. The Company and/or the New Company, as
applicable, shall provide the following assistance in connection with
Executive's relocation-related expenses: (i) until relocation of his permanent
residence to Phoenix, Arizona, reimbursement of Executive for all reasonable and
necessary out-of-pocket temporary living expenses in the Phoenix, Arizona, area
not to exceed one year from the date of this Agreement; (ii) reimbursement for
all moving and related costs of relocation and attorneys' fees incurred in
negotiating this Agreement; and (iii) in the event Executive is unable to
satisfactorily sell his residence in New Hope Pennsylvania, within one year from
the date of this Agreement, the Company or the New Company shall purchase the
residence if requested by the Executive for a price that equals the average of
two professional real estate appraisals ordered by the Company or the New
Company.
Any taxable amounts to the Executive for temporary living
expenses, moving expenses or attorneys' fees will be net of any federal or state
income tax liability and, accordingly, such amounts shall be "grossed up" to
take into account such taxes so that all amounts received are net of taxes.
(i) CHANGE OF CONTROL. The Company and/or New Company, as
applicable, shall contemporaneously with this Agreement execute and enter into
an executive severance agreement with the Executive providing for severance
compensation upon a "change of control" of the Company or the New Company, as
applicable, in form and substance comparable to existing executive severance
agreements with other executive officers of the Company.
6. ASSISTANCE AND COOPERATION. The Executive shall work with, assist
and cooperate with the Chairman of the Board of the Company in preparing plans,
programs and presentations to accomplish the planned Spin-off. The Executive
shall report to the Chairman of the Board of the Company on matters regarding
the Spin-off and will report to the Board on all other matters as provided in
Section 3.
5
<PAGE> 6
7. CONTINUED EMPLOYMENT. In the event the Spin-off is not accomplished
for whatever reason including a decision by the Board not to go forward with a
Spin-off on or before December 31, 1996, the Executive may continue as President
and Chief Executive Officer of the Consumer Products Division under the terms
provided in this Agreement and reporting to the Chairman of the Board of the
Company.
In the event the Executive wishes to terminate this Agreement as a
result of a decision to not Spin-off the New Company or if the Spin-off does not
occur on or prior to December 31, 1996, Executive may provide written notice of
termination to the Board at any time prior to February 28, 1997 and Executive
shall receive a payment of $900,000 payable within 30 days, but all other
salaries, bonuses, options and benefits granted herein, excluding those accrued
to the date of termination, shall terminate and be null and void.
8. TERMINATION. The Company or the New Company may terminate this
Agreement at any time if:
(a) Executive, by reason of physical or mental illness, shall have
been unable to perform satisfactorily the services to be rendered by him
hereunder for a consecutive period of one hundred eighty (180) days.
(b) Executive should be convicted of a felony or a crime involving
moral turpitude, fraud, or dishonesty, or commit an act which, in the judgment
of a majority of Company's Board or the New Company's Board, as evidenced by
action recorded in the official minutes of a meeting of such Board, subjects,
the Company, the New Company or Subsidiaries to public disrespect, scandal or
ridicule or materially adversely affects the utility of the Executive's services
to the Company or the New Company.
(c) The Company's Board or the New Company's Board by a unanimous
vote, excluding Executive, as evidenced by action recorded in the official
minutes of a meeting of such Board. The Executive, if so terminated, shall be
entitled to payment of all base salary remaining for the term of this Agreement
(including health insurance programs, executive medical benefits, fitness
programs, life insurance, accidental death and dismemberment expenses, vacation
time, reimbursement of club membership expenses,
6
<PAGE> 7
perquisites and other fringe benefits for the remaining term of this Agreement)
and all other bonuses, options and benefits accrued to the date of termination.
9. NOTICE. For purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be given in writing
and shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company or the New Company:
Peter J. Novak
Vice President & General Counsel
The Dial Corp
1850 N. Central Avenue
Phoenix, Arizona 85004-2212
If to the Executive:
Malcolm Jozoff
6064 Stoney Hill Road
New Hope, Pennsylvania 18938
cc: Reuven J. Katz
255 East Fifth Street
2400 Chemed Center
Cincinnati, Ohio 45202
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
10. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company or the New
Company as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
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<PAGE> 8
compliance with, any conditions or provisions of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Arizona without regard to its conflicts of law principles. This Agreement shall
be binding upon and shall inure to the benefit of the Executive and his estate
and the Company and any successor thereto, but neither this Agreement nor any
rights arising hereunder may be assigned or pledged by the Executive, except to
the extent permitted under the terms of the benefit plans in which the Executive
participates.
11. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability or
any other provision of this Agreement, which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding with respect to the employment of the Executive by the Company
or the New Company.
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<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written,
The Dial Corp
By /s/ John W. Teets
-------------------------------------------
John W. Teets
Chairman of the Board
/s/ Peter J. Novak
-------------------------------------------
Peter J. Novak
Vice President & General Counsel
Malcolm Jozoff
/s/ Malcolm Jozoff
-------------------------------------------
9
<PAGE> 1
EXHIBIT 10(j)
U.S. $350,000,000
FORM OF
CREDIT AGREEMENT
Dated as of July 24, 1996
Among
THE DIAL CORP
(to be known as VIAD CORP upon the effectiveness
of this Agreement and to be replaced as Borrower hereunder by
THE DIAL CORPORATION at such time)
as Borrower
and
THE BANKS NAMED HEREIN
as Lenders
and
CITICORP USA, INC.
as Administrative Agent
and
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION
as Documentation Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS .............. 2
SECTION 1.01. Certain Defined Terms .................................. 2
SECTION 1.02. Computation of Time Periods ............................ 17
SECTION 1.03. Accounting Terms ....................................... 18
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES ............. 18
SECTION 2.01. The Committed Advances ................................. 18
SECTION 2.02. Making the Committed Advances .......................... 19
SECTION 2.03. Making the Bid Advances ................................ 21
SECTION 2.04. Fees ................................................... 25
SECTION 2.05. Termination and Reduction of the Commitments ........... 26
SECTION 2.06. Repayment and Prepayment of Advances ................... 27
SECTION 2.07. Interest on Committed Advances ......................... 28
SECTION 2.08. Interest Rate Determination ............................ 29
SECTION 2.09. Voluntary Conversion or Continuation of Committed
Advances ............................................... 29
SECTION 2.10. Increased Costs ........................................ 30
SECTION 2.11. Payments and Computations .............................. 31
SECTION 2.12. Taxes .................................................. 32
SECTION 2.13. Sharing of Payments, Etc ............................... 34
SECTION 2.14. Evidence of Debt ....................................... 34
SECTION 2.15. Use of Proceeds ........................................ 35
SECTION 2.16. Extension of the Commitment Termination Date ........... 35
SECTION 2.17. Substitution of Lenders ................................ 36
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING .......... 37
SECTION 3.01. Documents to be Delivered on the Closing Date .......... 37
SECTION 3.02. Conditions Precedent to Effective Time ................. 38
SECTION 3.03. Conditions Precedent to Each Committed Borrowing ....... 40
SECTION 3.04. Conditions Precedent to Each Bid Borrowing ............. 41
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ............... 41
SECTION 4.01. Representations and Warranties of the Borrower ......... 41
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V
COVENANTS OF THE BORROWER ................. 45
SECTION 5.01. Affirmative Covenants .................................. 45
SECTION 5.02. Negative Covenants ..................................... 49
ARTICLE VI
EVENTS OF DEFAULT ..................... 52
SECTION 6.01. Events of Default ...................................... 52
ARTICLE VII
THE AGENTS ......................... 55
SECTION 7.01. Authorization and Action ............................... 55
SECTION 7.02. Agents' Reliance, Etc .................................. 55
SECTION 7.03. CUSA, B of A and Affiliates ............................ 56
SECTION 7.04. Lender Credit Decision ................................. 56
SECTION 7.05. Indemnification ........................................ 56
SECTION 7.06. Successor Agent ........................................ 57
ARTICLE VIII
MISCELLANEOUS ....................... 57
SECTION 8.01. Amendments, Etc ........................................ 57
SECTION 8.02. Notices, Etc ........................................... 58
SECTION 8.03. No Waiver; Remedies .................................... 58
SECTION 8.04. Costs, Expenses and Indemnification .................... 58
SECTION 8.05. Right of Set-off ....................................... 59
SECTION 8.06. Binding Effect; Effectiveness; Entire Agreement ........ 60
SECTION 8.07. Assignments and Participations ......................... 60
SECTION 8.08. Confidentiality ........................................ 64
SECTION 8.09. Governing Law .......................................... 65
SECTION 8.10. Execution in Counterparts .............................. 65
SECTION 8.11. Consent to Jurisdiction; Waiver of Immunities .......... 65
SECTION 8.12. Waiver of Trial by Jury ................................ 65
</TABLE>
ii
<PAGE> 4
SCHEDULES
Schedule I List of Applicable Lending Offices
iii
<PAGE> 5
EXHIBITS
Exhibit A-1 Notice of Committed Borrowing
Exhibit A-2 Notice of Bid Borrowing
Exhibit B Assignment and Acceptance
Exhibit C-1 Form of Opinion of Counsel for Parentco as of the Closing Date
Exhibit C-2 Form of Opinion of Counsel for Parentco as of the Effective Date
Exhibit C-3 Form of Opinion of Counsel for Newco as of the Effective Date
Exhibit D-1 Form of Opinion of Counsel to the Agents as of the Closing Date
Exhibit D-2 Form of Opinion of Counsel to the Agents as of the Effective Date
Exhibit E Form of Extension Request
Exhibit F Form of Compliance Certificate
Exhibit G-1 Form of Committed Note
Exhibit G-2 Form of Bid Note
Exhibit H Form of Designation Agreement
Exhibit I Form of Assignment and Assumption Agreement
iv
<PAGE> 6
U.S. $350,000,000
CREDIT AGREEMENT
Dated as of July 24, 1996
This CREDIT AGREEMENT (this "AGREEMENT") is among THE DIAL
CORP, a Delaware corporation, to be known as VIAD CORP on and after the
Effective Date (as defined below)("PARENTCO"), and to be replaced as Borrower by
THE DIAL CORPORATION, a Delaware corporation ("NEWCO"), at and after the
Distribution Time (as defined below) on the Effective Date pursuant to the
assignment and assumption agreement described below (Parentco being the
"BORROWER" prior to the Distribution Time, and Newco being the "BORROWER" at and
after the Distribution Time), the banks (the "BANKS") listed on the signature
pages hereof, CITICORP USA, INC. ("CUSA"), as administrative agent for the
Lenders hereunder (in such capacity, the "ADMINISTRATIVE AGENT"), and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("B OF A"), as documentation
agent for the Lenders hereunder (in such capacity, the "DOCUMENTATION AGENT";
the Administrative Agent and the Documentation Agent being referred to together
as the "AGENTS"). Certain capitalized terms have the meanings given to them in
Section 1.01 hereof.
PRELIMINARY STATEMENTS
WHEREAS, Parentco desires to effect the spin-off to Parentco's
stockholders of the Consumer Products Business currently being conducted by
Parentco directly and through certain of its subsidiaries;
WHEREAS, pursuant to the Distribution Agreement, on the
Effective Date at the Distribution Time Parentco shall (i) contribute all of the
assets and liabilities of the Consumer Products Business, including the stock of
certain subsidiaries, to Newco, a wholly-owned subsidiary of Parentco, and (ii)
distribute to the holders of Parentco Common Stock approximately 94.8 million
shares of Newco Common Stock, constituting all outstanding shares of Newco
Common Stock;
WHEREAS, pursuant to the Distribution Agreement and in
conjunction with the Distribution, immediately prior to the Effective Date,
Exhibitgroup shall be merged with and into Parentco, with Parentco as the
surviving corporation;
WHEREAS, Parentco, certain of the Banks, and Citibank and B of
A, as Agents, are parties to that certain amended and restated credit agreement
dated as of December 15, 1993, as such agreement has been and may be amended
from time to time (as so amended, the "EXISTING CREDIT AGREEMENT");
WHEREAS, Parentco, the Banks, and the Agents desire to amend
and restate the Existing Credit Agreement in its entirety (as so amended and
restated, the
<PAGE> 7
"AMENDED AND RESTATED CREDIT AGREEMENT") in order to reflect the Distribution,
but have agreed that the Amended and Restated Credit Agreement shall not become
effective (except to the extent set forth in Section 8.06 therein) and the
Existing Credit Agreement shall remain in place until the Effective Date (which
shall be the date of the Distribution) and the satisfaction of the terms and
conditions set forth in the Amended and Restated Credit Agreement; and
WHEREAS, Parentco, certain financial institutions, and the
Agents further desire to enter into this Agreement, concurrently with the
Amended and Restated Credit Agreement and this Agreement shall not become
effective until (i) the time immediately prior to the Distribution Time on the
Effective Date upon the satisfaction of the terms and conditions set forth
herein, at which time Parentco shall borrow the Parentco Borrowing; immediately
after the making of the Parentco Borrowing and at the Distribution Time,
Parentco shall assign and Newco shall assume all rights and obligations under
this Agreement (including its obligations in respect of the Parentco Borrowing)
pursuant to the Assignment and Assumption Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Additions to Capital" means the sum of (i) the aggregate net
proceeds, including cash and the fair market value of property other
than cash (as determined in good faith by the Board of Directors of the
Borrower as evidenced by a Board resolution), received by the Borrower
from the issue or sale (other than to a Subsidiary) of capital stock of
the Borrower and (ii) the aggregate of 25% of the after tax gain
realized from unusual, extraordinary, and major nonrecurring items
including, but not limited to, the sale, transfer, or other disposition
of (x) any of the stock of any of the Borrower's Subsidiaries or (y)
substantially all of the assets of any geographic or other division or
line of business of the Borrower or any of its Subsidiaries (but
excluding any after tax loss realized on any such unusual,
extraordinary, and major nonrecurring items to the extent they exceed
any after tax gains on such items).
"Adjusted Eurodollar Rate" means, for any Interest Period for
each Eurodollar Rate Advance comprising part of the same Borrowing, an
interest rate per annum equal to the rate per annum obtained by
dividing (a) the average
2
<PAGE> 8
(rounded upward to the nearest whole multiple of 1/16 of 1% per annum,
if such average is not such a multiple) of the rate per annum at which
deposits in U.S. dollars are offered by the principal office of each of
the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before
the first day of such Interest Period in an amount substantially equal
to the respective Reference Bank's Eurodollar Rate Advance comprising
part of such Borrowing and for a period equal to such Interest Period
by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage. The Adjusted Eurodollar Rate for any Interest Period for
each Eurodollar Rate Advance comprising part of the same Borrowing
shall be determined by the Administrative Agent on the basis of
applicable rates furnished to and received by the Administrative Agent
from the Reference Banks two Business Days before the first day of such
Interest Period, subject, however, to the provisions of Section 2.08.
"Administrative Agent" means CUSA, or any Person serving as
its successor agent.
"Advance" means a Committed Advance or a Bid Advance.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person.
"Agent" or "Agents" has the meaning specified in the
introductory paragraph of this Agreement; provided, that, for purposes
of Sections 7.02, 7.04, 7.05, 8.04, 8.07(b)(iv) and 8.12 of this
Agreement the term "Agent" or "Agents", as the case may be, shall
include Arrangers.
"Agreement" means this Credit Agreement as it may be amended,
supplemented or otherwise modified from time to time.
"Amended and Restated Credit Agreement" means the Existing
Credit Agreement as amended and restated by Parentco, the Banks, and
the Agents on the Closing Date, and which shall not become effective
until the Effective Time upon the satisfaction or waiver of the terms
and conditions contained therein.
"Applicable Lending Office" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of a Base
Rate Advance, and such Lender's Eurodollar Lending Office in the case
of a Eurodollar Rate Advance.
"Applicable Margin" means, for any period for which any
interest payment is to be made with respect to any Advance, the
interest rate per annum
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<PAGE> 9
derived by dividing (i) the sum of the Daily Margins for each of the
days included in such period by (ii) the number of days included in
such period.
"Arrangers" means Citicorp Securities, Inc. and BA Securities,
Inc., collectively, and each individually is an "Arranger."
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of Exhibit B hereto.
"Assignment and Assumption Agreement" means that certain
assignment and assumption agreement, to be dated the Effective Date, by
and between Parentco and Newco, and to be accepted by the
Administrative Agent on behalf of the Lenders, in substantially the
form of Exhibit I hereto, whereby Parentco assigns and Newco assumes
all rights and obligations under this Agreement, including the Parentco
Borrowing.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy" as now and hereafter in effect, or any successor
statute.
"Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum
shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by
Citibank in New York, New York, from time to time, as
Citibank's base rate (which is a rate set by Citibank based
upon various factors including Citibank's costs and desired
return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate);
(b) the sum of (A) 1/2 of one percent per annum, plus
(B) the rate obtained by dividing (x) the latest three-week
moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of
major United States money market banks (such three-week moving
average being determined weekly by Citibank on the basis of
such rates reported by certificate of deposit dealers to and
published by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank, in either case
adjusted to the nearest 1/4 of one percent or, if there is no
nearest 1/4 of one percent, to the next higher 1/4 of one
percent), by (y) a percentage equal to 100% minus the average
of the daily percentages specified during such three-week
period by the Board of Governors of the Federal Reserve System
for determining
4
<PAGE> 10
the maximum reserve requirement (including, but not limited
to, any marginal reserve requirements for Citibank in respect
of liabilities consisting of or including (among other
liabilities) three-month nonpersonal time deposits of at least
$100,000), plus (C) the average during such three-week period
of the daily net annual assessment rates estimated by Citibank
for determining the current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation for
insuring three-month deposits in the United States; or
(c) 1/2 of one percent per annum above the Federal
Funds Rate.
"Base Rate Advance" means a Committed Advance which bears
interest at a rate per annum determined on the basis of the Base Rate,
as provided in Section 2.07(a).
"Bid Advance" means an advance by a Lender to the Borrower as
part of a Bid Borrowing resulting from the auction bidding procedure
described in Section 2.03(a).
"Bid Borrowing" means a borrowing consisting of simultaneous
Bid Advances of the same Type from each of the Lenders whose offer to
make one or more Bid Advances as part of such borrowing has been
accepted by the Borrower under the auction bidding procedure described
in Section 2.03(a).
"Bid Reduction" has the meaning specified in Section 2.01(a).
"Borrower" means (i) prior to the Distribution Time, Parentco,
and (ii) at and after the Distribution Time, Newco.
"Borrowing" means a Committed Borrowing or a Bid Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City or Los Angeles and, if
the applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings are carried on in the London interbank market.
"Capital Lease" means, with respect to any Person, any lease
of any property by that Person as lessee which would, in conformity
with GAAP, be required to be accounted for as a capital lease on the
balance sheet of that Person.
"Cash" means money, currency or a credit balance in a deposit
account.
5
<PAGE> 11
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States government or
issued by any agency thereof and backed by the full faith and credit of
the United States, in each case maturing within one year from the date
of acquisition thereof, (b) marketable direct obligations issued by any
state of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing within
one year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating generally obtainable from either
S&P or Moody's, (c) commercial paper maturing no more than one year
from the date of creation thereof and, at the time of acquisition,
having a rating of A-1 or higher from S&P or P-1 or higher from
Moody's, and (d) certificates of deposit or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by
any lender.
"Citibank" means Citibank, N.A.
"Closing Date" means the date this Agreement is executed and
the documents referred to in Section 3.01 are delivered to the Agents,
which shall be July 24, 1996 or such other date as may be agreed upon
by the Borrower and the Agents.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" has the meaning specified in Section 2.01.
"Commitment Termination Date" means, with respect to any
Lender, the fifth anniversary of the Effective Date, or such later date
to which the Commitment Termination Date of such Lender may be extended
from time to time pursuant to Section 2.16 (or if any such date is not
a Business Day, the next preceding Business Day).
"Committed Advance" means an advance by a Lender to the
Borrower as part of a borrowing consisting of simultaneous Advances
from each of the Lenders pursuant to Section 2.01 and refers to a Base
Rate Advance or a Eurodollar Rate Advance, each of which shall be a
"Type" of Advance.
"Committed Borrowing" means a borrowing consisting of
simultaneous Committed Advances of the same Type made on the same day
pursuant to the same Notice of Borrowing by each of the Lenders
pursuant to Section 2.01(b).
"Compliance Certificate" means a certificate substantially in
the form of Exhibit F hereto, delivered to the Lenders by the Borrower
pursuant to Section 5.10(b)(iii).
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<PAGE> 12
"Convert," "Conversion" and "Converted" each refers to a
conversion of Advances of one Type into Advances of another Type
pursuant to Section 2.09.
"Consumer Products Business" means the consumer products
business, including certain assets and liabilities thereof, currently
being conducted by the Borrower directly and through certain of its
subsidiaries, to be contributed to Newco pursuant to the Distribution
Agreement.
"Daily Margin" means, for any date of determination, for the
designated Level, Utilization Ratio applicable to such date of
determination and Type of Advance, the following interest rates per
annum:
<TABLE>
<CAPTION>
Daily Margin when Daily Margin when
Utilization Ratio Utilization Ratio
is equal to or is greater than
less than 0.50:1.00 0.50:1.00
------------------- ---------
TYPE OF ADVANCE TYPE OF ADVANCE
--------------- ---------------
Base Rate Eurodollar Base Rate Eurodollar
Advance Rate Advance Advance Rate Advance
<S> <C> <C> <C> <C>
Level 1 0% 0.2000% 0% 0.2500%
Level 2 0% 0.2400% 0% 0.2900%
Level 3 0% 0.2750% 0% 0.3250%
Level 4 0% 0.4375% 0% 0.4375%
Level 5 0% 0.5000% 0% 0.5000%
</TABLE>
For purposes of this definition, (a) "Utilization Ratio" means, as of
any date of determination, the ratio of (1) the aggregate outstanding
principal amount of all Advances as of such date to (2) the aggregate
amount of all Commitments in effect as of such date (whether used or
unused), provided that from the Effective Date through December 31,
1996 the Utilization Ratio shall be deemed to be 0.00:1.00, (b) if any
change in the rating established by S&P, Moody's or Duff & Phelps with
respect to Long-Term Debt shall result in a change in the Level, the
change in the Daily Margin shall be effective as of the date on which
such rating change is publicly announced, and (c) if the ratings
established by any two of S&P, Moody's or Duff & Phelps with respect to
Long-Term Debt are unavailable for any reason for any day, then the
applicable level for such day shall be deemed to be Level 5 (or, if the
Requisite Lenders consent in writing, such other Level as may be
reasonably determined by the Requisite Lenders from a rating with
respect to Long-Term Debt for such day established by another rating
agency reasonably acceptable to the Requisite Lenders).
"Debt" means (i) indebtedness for borrowed money or for the
deferred purchase price of property or services, (ii) obligations as
lessee under Capital Leases, (iii) obligations under guarantees in
respect of indebtedness or in respect
7
<PAGE> 13
of obligations of others of the kinds referred to in clause (i) or (ii)
above, (iv) liabilities in respect of unfunded vested benefits under
Single Employer Plans, and (v) Withdrawal Liability incurred under
ERISA by the Borrower or any of its ERISA Affiliates to any
Multi-employer Plans.
"Designated Bidder" means (i) an Eligible Assignee or (ii) a
special purpose corporation which is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its
business and that issues (or the parent of which issues) commercial
paper rated at least "Prime-1" by Moody's or "A-1" by S&P or a
comparable rating from the successor or either of them, that, in either
case, (w) is organized under the laws of the United States or any State
thereof, (x) shall have become a party hereto pursuant to Section
8.07(d), (e) and (f), (y) is not otherwise a Lender and (z) shall have
been consented to by the Borrower, which consent shall not be
unreasonably withheld.
"Designation Agreement" means a designation agreement entered
into by a Lender (other than a Designated Bidder) and a Designated
Bidder, and accepted by the Administrative Agent, in substantially the
form of Exhibit H hereto.
"Distribution" means the distribution of approximately 94.8
million shares of Newco Common Stock, constituting 100% of the
outstanding Newco Common Stock, to the holders of Parentco Common Stock
pursuant to the Distribution Agreement together with the consummation
of the other transactions to occur in connection with such
distribution, as set forth in the Distribution Agreement.
"Distribution Agreement" means that certain Distribution
Agreement dated as of [July ___], 1996, by and among Parentco, Newco,
and Exhibitgroup, in the form of Exhibit A attached to the Form 10,
with such changes as may be approved by the Requisite Lenders.
"Distribution Time" means the time of the Distribution on the
Effective Date, at which time Parentco shall assign and Newco shall
assume this Agreement and all rights and obligations hereunder,
including the Parentco Borrowing, pursuant to the Assignment and
Assumption Agreement.
"Documentation Agent" means B of A, or any Person serving as
its successor agent.
"Dollars" and the sign "$" each means lawful money of the
United States of America.
8
<PAGE> 14
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender, or such other office
of such Lender as such Lender may from time to time specify to the
Borrower and the Agents.
"Duff & Phelps" means Duff & Phelps Inc.
"EBITDA" means, for any period, consolidated net income plus
provision for taxes of the Borrower and its Subsidiaries (excluding
extraordinary, unusual, or nonrecurring gains or losses), plus interest
expense of the Borrower and its Subsidiaries, plus depreciation expense
of the Borrower and its Subsidiaries, plus amortization of intangibles
of the Borrower and its Subsidiaries, as determined on a consolidated
basis in conformity with GAAP; provided that to the extent that during
such period the Borrower or any of its Subsidiaries has acquired or
disposed of a business or businesses in an amount for any transaction
or series of related transactions exceeding $15,000,000, such
calculations shall be made as if such acquisition or disposition took
place on the first day of such period (on a pro forma basis for the
portion of such period prior to the date of such acquisition (or after
the date of such disposition) and on an actual basis for the portion of
such period after the date of such acquisition (or before the date of
such disposition)).
"Effective Date" means the date on which the Distribution
occurs, as provided for in the Distribution Agreement, and the
conditions set forth in Section 3.02 are satisfied.
"Effective Time" means the time, immediately prior to the
Distribution Time, at which this Agreement shall become fully effective
upon satisfaction of the conditions precedent set forth in Section 3.02
hereof and at which Parentco shall borrow the Parentco Borrowing.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (ii) a
commercial bank organized under the laws of any other country which is
a member of the Organization for Economical Cooperation and Development
(the "OECD"), or a political subdivision of any such country and having
a combined capital and surplus of at least $100,000,000, provided that
such bank is acting through a branch or agency located in the country
in which it is organized or another country which is also a member of
the OECD; and (iii) any Person engaged in the business of lending and
that is an Affiliate of a Lender or of a Person of which a Lender is a
Subsidiary.
9
<PAGE> 15
"Environmental Law" means any and all statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other
governmental restrictions of any federal, state or local governmental
authority within the United States or any State or territory thereof
and which relate to the environment or the release of any materials
into the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Person who for purposes of Title
IV of ERISA is a member of the Borrower's controlled group, or under
common control with the Borrower, within the meaning of Section 414 of
the Code and the regulations promulgated and rulings issued thereunder.
"ERISA Event" means (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA (other than an event
arising out of the transactions contemplated by the Distribution
Agreement), unless the 30-day notice requirement with respect thereto
has been waived by the PBGC; (ii) the provision by the administrator of
any Pension Plan of a notice of intent to terminate such Pension Plan
pursuant to Section 4041(a)(2) of ERISA (including any such notice with
respect to a plan amendment referred to in Section 4041(e) of ERISA);
(iii) the cessation of operations at a facility in the circumstances
described in Section 4062(e) of ERISA; (iv) the withdrawal by the
Borrower or an ERISA Affiliate from a Multiple Employer Plan during a
plan year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (v) the failure by the Borrower or any
ERISA Affiliate to make a payment to a Pension Plan required under
Section 302(f)(1) of ERISA, which Section imposes a lien for failure to
make required payments; (vi) the adoption of an amendment to a Pension
Plan requiring the provision of security to such Pension Plan, pursuant
to Section 307 of ERISA; or (vii) the institution by the PBGC of
proceedings to terminate a Pension Plan, pursuant to Section 4042 of
ERISA, or the occurrence of any event or condition which, in the
reasonable judgment of the Borrower, might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, a Pension Plan.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it
10
<PAGE> 16
became a Lender (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Administrative Agent.
"Eurodollar Rate Advance" means a Committed Advance which
bears interest as provided in Section 2.07(b) and/or a Bid Advance
which bears interest based on the Adjusted Eurodollar Rate as provided
in Section 2.03(a).
"Eurodollar Rate Reserve Percentage" for any Interest Period
for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or if more than one such percentage shall
be so applicable, the daily average of such percentages for those days
in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirements (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for member banks in the Federal Reserve System with
respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Exhibitgroup" means Exhibitgroup Inc., a Delaware corporation
and wholly-owned subsidiary of the Borrower which operates part of the
Borrower's convention services business, and which shall be merged into
the Borrower pursuant to the Merger.
"Existing Credit Agreement" means that certain amended and
restated credit agreement, dated as of December 15, 1993, by and among
the Borrower, certain of the Lenders, certain of the Exiting Banks, and
Citibank and B of A, as Agents, as such agreement has been and may be
amended from time to time.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
11
<PAGE> 17
"Fixed Rate" means, for the period for each Fixed Rate Advance
comprising part of the same Bid Borrowing, the fixed interest rate per
annum determined for such Advance, as provided in Section 2.03(a).
"Fixed Rate Advance" means a Bid Advance which bears interest
at a fixed rate per annum determined as provided in Section 2.03(a).
"Form 8-K" means that certain Current Report on Form 8-K filed
by Parentco with the SEC on June 13, 1996.
"Form 10" means that certain Registration Statement on Form 10
originally filed by Newco with the SEC on June 5, 1996, as amended on
July 18, 1996.
"Funded Debt" means outstanding Debt of the Borrower and its
Subsidiaries of the kind described in clauses (i), (ii) and (iii) of
the definition of Debt.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.
"Hostile Acquisition" means the acquisition of the capital
stock or other equity interests of a Person (the "Target") through a
tender offer or similar solicitation of the owners of such capital
stock or other equity interests which has not been approved (prior to
such acquisition) by resolutions of the Board of Directors of the
Target or by similar action if the Target is not a corporation and as
to which such approval has not been withdrawn.
"Insufficiency" means, with respect to any Pension Plan, the
amount, if any, of its unfunded benefit liabilities, as defined in
Section 4001(a)(18) of ERISA.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on the
date of such Eurodollar Rate Advance, or on the date of continuation of
such Advance as a Eurodollar Rate Advance upon expiration of successive
Interest Periods applicable thereto, or on the date of Conversion of a
Base Rate Advance into a Eurodollar Rate Advance, and ending on the
last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each such
12
<PAGE> 18
Interest Period shall be one, two, three or six months, as the Borrower
may select in the Notice of Borrowing or the Notice of
Conversion/Continuation for such Advance; provided, however, that:
(i) the Borrower may not select any Interest Period
which ends after the earliest Commitment Termination Date of
any Lender then in effect;
(ii) Interest Periods commencing on the same date for
Advances comprising part of the same Borrowing shall be of the
same duration; and
(iii) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day, provided, that if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of
such Interest Period shall occur on the next preceding
Business Day.
"Lenders" means the Banks listed on the signature pages hereof
and each Eligible Assignee that shall become a party hereto pursuant to
Section 8.07 and, except when used in reference to a Committed Advance,
a Committed Borrowing, a Commitment or a related term, each Designated
Bidder.
"Level" means Level 1, Level 2, Level 3, Level 4 or Level 5,
as the case may be.
"Level 1" means that, as of any date of determination, the
Borrower's Long-Term Debt rating is equal to or higher than at least
two of the following: BBB+ from S&P, Baa1 from Moody's and/or BBB+ from
Duff & Phelps.
"Level 2" means that, as of any date of determination, the
Borrower's Long-Term Debt rating is equal to at least two of the
following: BBB from S&P, Baa2 from Moody's and/or BBB from Duff &
Phelps.
"Level 3" means that, as of any date of determination, the
Borrower's Long-Term Debt rating is equal to at least two of the
following: BBB- from S&P, Baa3 from Moody's and/or BBB- from Duff &
Phelps.
"Level 4" means that, as of any date of determination, the
Borrower's Long-Term Debt rating is equal to at least two of the
following: BB+ from S&P, Ba1 from Moody's and/or BB+ from Duff &
Phelps.
13
<PAGE> 19
"Level 5" means that, as of any date of determination, the
Borrower's Long-Term Debt rating is lower than at least two of the
following: BB+ from S&P, Ba1 from Moody's and/or BB+ from Duff &
Phelps.
"Lien" means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or
other title retention agreement and any lease in the nature thereof).
"Loan Documents" means this Agreement and the related
documents.
"Long-Term Debt" means senior, unsecured, long term debt
securities of the Borrower.
"Margin Stock" has the meaning assigned to that term in
Regulation U promulgated by the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Material Subsidiary" means any Subsidiary of the Borrower
having total assets in excess of $10,000,000.
"Merger" means the merger, pursuant to the Distribution
Agreement, of the Borrower and Exhibitgroup, with the Borrower as the
surviving corporation.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate of the Borrower is making, or is obligated to make,
contributions or has within any of the preceding six plan years been
obligated to make or accrue contributions.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, which (i) is maintained for
employees of the Borrower or an ERISA Affiliate and at least one Person
other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate
could have liability under Section 4063, 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.
"Net Income" means net income in accordance with GAAP.
"Net Worth" means minority interests, preferred stock and
common stock and other equity, as shown on the consolidated balance
sheet of the Borrower and its Subsidiaries; provided that there shall
be excluded from the calculation of Net Worth any unrealized gains or
losses (net of taxes) on securities available for sale.
14
<PAGE> 20
"Newco" means The Dial Corporation, a Delaware corporation,
which immediately prior to the Distribution shall be capitalized by the
Borrower with the assets and liabilities of the Consumer Products
Business pursuant to the Distribution Agreement.
"Newco Common Stock" means the approximately 94.8 million
shares of common stock, par value of $0.01 per share, of Newco to be
issued pursuant to the Distribution.
"Notice of Bid Borrowing" has the meaning specified in Section
2.03(a).
"Notice of Borrowing" means a Notice of Committed Borrowing or
a Notice of Bid Borrowing, as the case may be.
"Notice of Committed Borrowing" has the meaning specified in
Section 2.02(a).
"Notice of Conversion/Continuation" has the meaning specified
in Section 2.09.
"Parentco" means The Dial Corp, a Delaware corporation, to be
known as Viad Corp on and after the Effective Date.
"Parentco Borrowing" means the Committed Borrowing to be made
by Parentco at the Effective Time in the maximum principal amount of
$300,000,000.
"Parentco Common Stock" means the approximately 94.8 million
shares of common stock, par value of $1.50 per share, of Parentco
currently outstanding.
"Payment Office" means the principal office of CUSA, located
on the date hereof at 1 Court Square, 7th Floor Zone 1, Long Island
City, N.Y. 11120 (or such other place as the Administrative Agent may
designate by notice to the Borrower and the Lenders from time to time).
"PBGC" means the U.S. Pension Benefit Guaranty Corporation.
"Pension Plan" means a Single Employer Plan or a Multiple
Employer Plan or both.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political
subdivision or agency thereof.
15
<PAGE> 21
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within any
applicable grace or cure period.
"Reference Banks" means, B of A, Citibank, and ___________.
"Register" has the meaning specified in Section 8.07(c).
"Requisite Lenders" means at any time Lenders holding at least
66-2/3% of the then aggregate unpaid principal amount of the Committed
Advances held by Lenders, or, if no such principal amount is then
outstanding, Lenders having at least 66-2/3% of the Commitments
(provided that, for purposes hereof, neither the Borrower, nor any of
its Affiliates, if a Lender, shall be included in (i) the Lenders
holding such amount of the Committed Advances or having such amount of
the Commitments or (ii) determining the aggregate unpaid principal
amount of the Committed Advances or the total Commitments).
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies.
"SEC" means the Securities and Exchange Commission and any
successor agency.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, which (i) is maintained for
employees of the Borrower or any ERISA Affiliate and no Person other
than the Borrower and its ERISA Affiliates or (ii) was so maintained
and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4062 or 4069 of ERISA in the event such plan
has been or were to be terminated.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which at least 50% of the total
voting power of shares of stock or other securities entitled to vote in
the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person or a combination thereof.
"Swaps" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar
obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency.
16
<PAGE> 22
"Termination Date" means, with respect to any Lender, the
earlier of (i) the Commitment Termination Date of such Lender and (ii)
the date of termination in whole of the Commitments of all Lenders
pursuant to Section 2.05 or 6.01.
"Total Utilization of Commitments" means at any date of
determination the sum of (i) the aggregate principal amount of all
Committed Advances outstanding at such date plus (ii) the aggregate
principal amount of all Bid Advances outstanding at such date.
"Type" means, with reference to an Advance, a Base Rate
Advance, a Eurodollar Rate Advance, or a Fixed Rate Advance.
"Withdrawal Liability" has the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. All
computations determining compliance with financial covenants or terms, including
definitions used therein, shall be prepared in accordance with generally
accepted accounting principles in effect at the time of the preparation of, and
in conformity with those used to prepare, the historical financial statements
delivered to the Lenders pursuant to Section 4.01(e). If at any time the
computations for determining compliance with financial covenants or provisions
relating thereto utilize generally accepted accounting principles different than
those then being utilized in the financial statements being delivered to the
Lenders, such financial statements shall be accompanied by a reconciliation
statement.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE COMMITTED ADVANCES.
(a) Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Committed Advances to the Borrower from time to
time on any Business Day during the period from the Effective Date until the
Termination Date of such Lender in an aggregate amount not to exceed at any time
outstanding the amount
17
<PAGE> 23
set opposite such Lender's name on the signature pages hereof or, if such Lender
has entered into any Assignment and Acceptance, set forth for such Lender in the
Register maintained by the Administrative Agent pursuant to Section 8.07(c), as
such amount may be reduced pursuant to Section 2.04 (such Lender's
"Commitment"); provided that the aggregate amount of the Commitments of the
Lenders shall be deemed used from time to time to the extent of the aggregate
amount of the Bid Advances and such deemed use of the aggregate amount of the
Commitments shall be applied to the Lenders ratably according to their
respective Commitments (such deemed use of the aggregate amount of the
Commitments resulting from the Bid Advances being the "Bid Reduction"); provided
further that (i) in no event shall the aggregate principal amount of Committed
Advances from any Lender outstanding at any time exceed its Commitment then in
effect and (ii) the Total Utilization of Commitments shall not exceed the
aggregate Commitments then in effect.
(b) Each Committed Borrowing shall be in an aggregate amount
not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof
and shall consist of Committed Advances of the same Type made on the same day by
the Lenders ratably according to their respective Commitments. Within the limits
of each Lender's Commitment, the Borrower may from time to time borrow, prepay
pursuant to Section 2.06(c) and reborrow under this Section 2.01.
SECTION 2.02. MAKING THE COMMITTED ADVANCES.
(a) Each Committed Borrowing shall be made on notice, given
not later than (x) 11:00 A.M. (New York City time) on the date of a proposed
Committed Borrowing consisting of Base Rate Advances and (y) 11:00 A.M. (New
York City time) on the third Business Day prior to the date of a proposed
Committed Borrowing consisting of Eurodollar Rate Advances, by the Borrower to
the Administrative Agent, which shall give to each Lender prompt notice thereof
by telecopier, telex or cable. Each such notice of a Committed Borrowing (a
"Notice of Committed Borrowing") shall be by telecopier, telex or cable,
confirmed immediately in writing, in substantially the form of Exhibit A-1
hereto, specifying therein the requested (i) date of such Committed Borrowing,
(ii) Type of Committed Advances comprising such Committed Borrowing, (iii)
aggregate amount of such Committed Borrowing, and (iv) in the case of a
Committed Borrowing comprised of Eurodollar Rate Advances, the initial Interest
Period for each such Committed Advance. The Borrower may, subject to the
conditions herein provided, borrow more than one Committed Borrowing on any
Business Day. Each Lender shall, before 2:00 P.M. (New York City time) in the
case of a Committed Borrowing consisting of Base Rate Advances and before 11:00
A.M. (New York City time) in the case of a Committed Borrowing consisting of
Eurodollar Rate Advances, in each case on the date of such Committed Borrowing,
make available for the account of its Applicable Lending Office to the
Administrative Agent at its address referred to in Section 8.02, in same day
funds, such Lender's ratable portion of such Committed Borrowing. After the
Administrative Agent's receipt of such funds and upon fulfillment
18
<PAGE> 24
of the applicable conditions set forth in Article III, the Administrative Agent
will make such funds available to the Borrower at the Administrative Agent's
aforesaid address.
(b) Anything in subsection (a) above to the contrary
notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances for
any Committed Borrowing or with respect to the Conversion or
continuance of any Committed Borrowing if the aggregate amount of such
Committed Borrowing or such Conversion or continuance is less than
$5,000,000;
(ii) there shall be no more than five Interest Periods
relating to Committed Borrowings consisting of Eurodollar Rate Advances
outstanding at any time;
(iii) if any Lender shall, at least one Business Day before
the date of any requested Committed Borrowing, notify the
Administrative Agent that the introduction of or any change in or in
the interpretation of any law or regulation makes it unlawful, or that
any central bank or other governmental authority asserts that it is
unlawful, for such Lender or its Eurodollar Lending Office to perform
its obligations hereunder to make Eurodollar Rate Advances or to fund
or maintain Eurodollar Rate Advances hereunder, the Commitment of such
Lender to make Eurodollar Rate Advances or to Convert all or any
portion of Base Rate Advances shall forthwith be suspended until the
Administrative Agent shall notify the Borrower that such Lender has
determined that the circumstances causing such suspension no longer
exist and such Lender's then outstanding Eurodollar Rate Advances, if
any, shall be Base Rate Advances; to the extent that such affected
Eurodollar Rate Advances become Base Rate Advances, all payments of
principal that would have been otherwise applied to such Eurodollar
Rate Advances shall be applied instead to such Lender's Base Rate
Advances; provided that if Requisite Lenders are subject to the same
illegality or assertion of illegality, then the right of the Borrower
to select Eurodollar Rate Advances for such Committed Borrowing or any
subsequent Committed Borrowing or to Convert all or any portion of Base
Rate Advances shall forthwith be suspended until the Administrative
Agent shall notify the Borrower that the circumstances causing such
suspension no longer exist, and each Committed Advance comprising such
Committed Borrowing shall be a Base Rate Advance;
(iv) if fewer than two Reference Banks furnish timely
information to the Administrative Agent for determining the Adjusted
Eurodollar Rate for any Eurodollar Rate Advances comprising any
requested Committed Borrowing, the right of the Borrower to select
Eurodollar Rate Advances for such Committed Borrowing or any subsequent
Committed Borrowing shall be suspended until the Administrative Agent
shall notify the Borrower and the Lenders that the circumstances
causing such suspension no longer exist, and each Advance
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comprising such Committed Borrowing shall be made as a Base Rate
Advance; and
(v) if the Requisite Lenders shall, at least one Business Day
before the date of any requested Committed Borrowing, notify the
Administrative Agent that the Adjusted Eurodollar Rate for Eurodollar
Rate Advances comprising such Committed Borrowing will not adequately
reflect the cost to such Requisite Lenders of making, funding or
maintaining their respective Eurodollar Rate Advances for such
Committed Borrowing, the right of the Borrower to select Eurodollar
Rate Advances for such Committed Borrowing or any subsequent Committed
Borrowing shall be suspended until the Administrative Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist, and each Committed Advance comprising such
Committed Borrowing shall be made as a Base Rate Advance.
(c) Each Notice of Committed Borrowing shall be irrevocable
and binding on the Borrower. In the case of any Committed Borrowing which the
related Notice of Committed Borrowing specifies is to be comprised of Eurodollar
Rate Advances, the Borrower shall indemnify each Lender against any loss, cost
or expense incurred by such Lender by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund the Advance to be
made by such Lender as part of such Committed Borrowing or by reason of the
termination of hedging or other similar arrangements, in each case when such
Advance is not made on such date (other than by reason of (i) a breach of a
Lender's obligations hereunder or (ii) a suspension of Eurodollar Rate Advances
under clauses (iii), (iv) or (v) of paragraph (b) of this Section 2.02),
including without limitation, as a result of any failure to fulfill on or before
the date specified in such Notice of Committed Borrowing for such Committed
Borrowing the applicable conditions set forth in Article III.
(d) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Committed Borrowing that such Lender will
not make available to the Administrative Agent such Lender's ratable portion of
such Committed Borrowing, the Administrative Agent may assume that such Lender
has made such portion available to the Administrative Agent on the date of such
Committed Borrowing in accordance with subsection (a) of this Section 2.02 and
the Administrative Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Advances comprising such Committed Borrowing and (ii) in the case of
such Lender, the Federal Funds Rate. If such Lender shall repay to the
Administrative
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Agent such corresponding amount, such amount so repaid shall constitute such
Lender's Advance as part of such Committed Borrowing for purposes of this
Agreement.
(e) The failure of any Lender to make the Advance to be made
by it as part of any Committed Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Advance on the date of such
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on the date of any
Committed Borrowing.
SECTION 2.03. MAKING THE BID ADVANCES.
(a) Each Lender severally agrees that the Borrower may make
Bid Borrowings in Dollars under this Section 2.03 from time to time on any
Business Day during the period from the Effective Date until the date occurring
one month prior to the Termination Date, in the manner set forth below; provided
that, after giving effect to the making of each Bid Borrowing, the Total
Utilization of Commitments shall not exceed the aggregate Commitments then in
effect and the aggregate amount of the Bid Advances of all Lenders then
outstanding shall not exceed the aggregate Commitments then in effect.
(i) The Borrower may request a Bid Borrowing under this
Section 2.03 by delivering to the Administrative Agent, by telecopier,
telex or cable, confirmed immediately in writing, a notice of a Bid
Borrowing (a "Notice of Bid Borrowing"), in substantially the form of
Exhibit A-2 hereto, specifying the date and aggregate amount of the
proposed Bid Borrowing, the maturity date for repayment of each Bid
Advance to be made as part of such Bid Borrowing (which maturity date
may not be earlier than the date occurring thirty (30) days (in the
case of Fixed Rate Advances) or one (1) month (in the case of
Eurodollar Rate Advances) after the date of such Bid Borrowing, or in
any case later than the Termination Date), whether the Lenders should
offer to make Fixed Rate Advances or Eurodollar Rate Advances, the
interest payment date or dates relating thereto, and any other terms to
be applicable to such Bid Borrowing, not later than 10:00 A.M. (New
York City time) (A) at least one (1) Business Day prior to the date of
a proposed Bid Borrowing consisting of Fixed Rate Advances and (B) at
least four (4) Business Days prior to the date of a proposed Bid
Borrowing consisting of Eurodollar Rate Advances. The Administrative
Agent shall in turn promptly notify each Lender of each request for a
Bid Borrowing received by it from the Borrower by sending such Lender a
copy of the related Notice of Bid Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to
do so, irrevocably offer to make one or more Bid Advances to the
Borrower as part of such proposed Bid Borrowing at a Fixed Rate or
Rates or a margin or margins relative to the Adjusted Eurodollar Rate,
as requested by the Borrower. Each
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<PAGE> 27
Lender electing to make such an offer shall do so by notifying the
Administrative Agent (which shall give prompt notice thereof to the
Borrower), before 10:00 A.M. (New York City time) (A) the date of such
proposed Bid Borrowing, in the case of a Notice of Bid Borrowing
delivered pursuant to clause (A) of paragraph (i) above and (B) three
(3) Business Days before the date of such proposed Bid Borrowing, in
the case of a Notice of Bid Borrowing delivered pursuant to clause (B)
of paragraph (i) above, of the amount of each Bid Advance which such
Lender would be willing to make as part of such proposed Bid Borrowing
(which amount may, subject to the proviso to the first sentence of this
Section 2.03(a), exceed such Lender's Commitment, if any), the Fixed
Rate or Rates or margin or margins relative to the Adjusted Eurodollar
Rate, as requested by the Borrower, which such Lender would be willing
to accept for such Bid Advance and such Lender's Applicable Lending
Office with respect to such Bid Advance; provided that if the
Administrative Agent in its capacity as a Lender, or any affiliate of
the Administrative Agent in its capacity as a Lender, shall, in its
sole discretion, elect to make any such offer, it shall notify the
Borrower of such offer before 9:00 A.M. (New York City time) on the
date on which notice of such election is to be given to the Agent by
the other Lenders.
(iii) The Borrower, in turn, (A) before 12:00 P.M. (New York
City time) the date of such proposed Bid Borrowing, in the case of a
Notice of Bid Borrowing delivered pursuant to clause (A) of paragraph
(i) above and (B) before 12:00 Noon (New York City time) three (3)
Business Days before the date of such proposed Bid Borrowing, in the
case of a Notice of Bid Borrowing delivered pursuant to clause (B) of
paragraph (i) above, either
(x) cancel such Bid Borrowing by giving the
Administrative Agent notice to that effect, or
(y) accept one or more of the offers made by any
Lender or Lenders pursuant to paragraph (ii) above, in its
sole discretion, by giving notice to the Administrative Agent
of the amount of each Bid Advance to be made by each Lender as
part of such Bid Borrowing, and reject any remaining offers
made by Lenders pursuant to paragraph (ii) above by giving the
Administrative Agent notice to that effect; provided that
acceptance of offers may only be made on the basis of
ascending rates for Bid Borrowings of the same Type and
duration; and provided further that the Borrower may not
accept offers in excess of the aggregate amount requested in
the Notice of Bid Borrowing; and provided further still if
offers are made by two or more Lenders for the same Type of
Bid Borrowing for the same duration and with the same rate of
interest, in an aggregate amount which is greater than the
amount requested, such offers
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<PAGE> 28
shall be accepted on a pro rata basis in proportion to the
amount of the offer made by each such Lender.
(iv) If the Borrower notifies the Administrative Agent that
such Bid Borrowing is cancelled pursuant to paragraph (iii)(x) above,
the Administrative Agent shall give prompt notice thereof to the
Lenders and such Bid Borrowing shall not be made.
(v) If the Borrower accepts (which acceptance may not be
revoked) one or more of the offers made by any Lender or Lenders
pursuant to paragraph (iii)(y) above, the Administrative Agent shall in
turn promptly notify (A) each Lender that has made an offer as
described in paragraph (ii) above, of the date and aggregate amount of
such Bid Borrowing and whether or not any offer or offers made by such
Lender pursuant to paragraph (ii) above have been accepted by the
Borrower, (B) each Lender that is to make a Bid Advance as part of such
Bid Borrowing, of the amount of each Bid Advance to be made by such
Lender as part of such Bid Borrowing, and (C) each Lender that is to
make a Bid Advance as part of such Bid Borrowing, upon receipt, that
the Administrative Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article III.
(b) Each Lender that is to make a Bid Advance as part of a Bid
Borrowing shall, before 1:00 P.M. (New York City time) on the date of such Bid
Borrowing specified in the Notice of Bid Borrowing relating thereto, make
available for the account of its Applicable Lending Office to the Administrative
Agent at such account maintained at the Payment Office for Dollars as shall have
been notified by the Administrative Agent to the Lenders prior thereto and in
same day funds, such Lender's portion of such Bid Borrowing. Upon fulfillment of
the applicable conditions set forth in Article III and after receipt by the
Administrative Agent of such funds, the Administrative Agent will make such
funds available to the Borrower requesting a Bid Advance at the aforesaid
applicable Payment Office. Promptly after each Bid Borrowing the Administrative
Agent will notify each Lender of the amount of the Bid Borrowing, the consequent
Bid Reduction and the dates upon which such Bid Reduction commenced and will
terminate. The Borrower shall indemnify each Lender which is to make a Bid
Advance (as a result of the acceptance by the Borrower of one or more offers by
such Lender) as part of a Bid Borrowing against any loss, cost or expense
incurred by such Lender by reason of the liquidation or reemployment of deposits
or other funds acquired by such Lender to fund the Bid Advance to be made by
such Lender as part of such Bid Borrowing or by reason of the termination of
hedging or other similar arrangements, in each case when such Bid Advance is not
made on such date (other than by reason of a breach of a Lender's obligations
hereunder), including without limitation, as a result of any failure to fulfill
on or before the date specified in such notice of Bid Borrowing for such Bid
Borrowing the applicable conditions set forth in Article III.
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(c) Each Bid Borrowing shall be in an aggregate principal
amount of not less than $5,000,000 with increments of $1,000,000 and, following
the making of each Bid Borrowing, the Borrower and each Lender shall be in
compliance with the limitations set forth in the proviso to the first sentence
of subsection (a) above.
(d) Within the limits and on the conditions set forth in this
Section 2.03, the Borrower may from time to time borrow under this Section 2.03,
repay or prepay pursuant to subsection (e) below, and reborrow under this
Section 2.03; provided that a Notice of Bid Borrowing shall not be given within
seven (7) Business Days of the date of any other Notice of Bid Borrowing.
(e) The Borrower shall repay to the Administrative Agent for
the account of each Lender which has made, or holds the right to repayment of, a
Bid Advance to such Borrower on the maturity date of each Bid Advance (such
maturity date being that specified by the Borrower for repayment of such Bid
Advance in the related Notice of Bid Borrowing delivered pursuant to subsection
(a)(i) above) the then unpaid principal amount of such Bid Advance. The Borrower
shall not have the right to prepay any principal amount of any Bid Advance
unless, and then only on the terms, specified by the Borrower for such Bid
Advance in the related Notice of Bid Borrowing delivered pursuant to subsection
(a)(i) above.
(f) The Borrower shall pay interest on the unpaid principal
amount of each Bid Advance from the date of such Bid Advance to the date the
principal amount of such Bid Advance is repaid in full, at the rate of interest
for such Bid Advance specified by the Lender making such Bid Advance in its
notice with respect thereto delivered pursuant to subsection (a)(ii) above,
payable on the interest payment date or dates specified by the Borrower for such
Bid Advance in the related Notice of Bid Borrowing delivered pursuant to
subsection (a)(i) above; provided that any principal amount of any Bid Rate
Advance which is not paid when due (whether at stated maturity, by acceleration
or otherwise) shall bear interest from the date on which such amount is due
until such amount is paid in full, payable on demand, at a rate per annum equal
at all times to (A) until the scheduled maturity date of such Bid Advance, the
greater of (x) 2% per annum above the Base Rate in effect from time to time and
(y) 2% per annum above the rate per annum required to be paid on such amount
immediately prior to the date on which such amount became due, and (B) from and
until the scheduled maturity date of such Bid Advance, 2% per annum above the
Base Rate in effect from time to time.
SECTION 2.04. FEES.
(a) Facility Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender (other than the Designated
Bidders) a facility fee on such Lender's daily average Commitment, whether used
or unused and without giving effect to any Bid Reduction, from the Effective
Date in the case of each Lender
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and from the effective date specified in the Assignment and Acceptance pursuant
to which it became a Lender in the case of each other Lender until the
Termination Date of such Lender, payable quarterly in arrears on the last day of
each March, June, September and December during the term of such Lender's
Commitment, commencing September 30, 1996, and on the Termination Date of such
Lender, in an amount equal to the product of (i) such Lender's daily average
Commitment, whether used or unused and without giving effect to any Bid
Reduction, in effect during the period for which such payment that is to be made
times (ii) the weighted average rate per annum that is derived from the
following rates: (a) a rate of 0.10% per annum with respect to each day during
such period that the ratings with respect to Long-Term Debt were at Level 1, (b)
a rate of 0.110% per annum with respect to each day during such period that such
ratings were at Level 2, (c) a rate of 0.125% per annum with respect to each day
during such period that such ratings were at Level 3, (d) a rate of 0.1875% per
annum with respect to each day during such period that such ratings were at
Level 4, and (e) at the rate of 0.2500% per annum with respect to each day
during such period that such ratings were at Level 5. If any change in the
rating established by S&P, Moody's or Duff & Phelps with respect to Long-Term
Debt shall result in a change in the Level, the change in the commitment fee
shall be effective as of the date on which such rating change is publicly
announced. If the ratings established by any two of S&P, Moody's or Duff &
Phelps with respect to Long-Term Debt are unavailable for any reason for any
day, then the applicable level for purposes of calculating the commitment fee
for such day shall be deemed to be Level 5 (or, if the Requisite Lenders consent
in writing, such other Level as may be reasonably determined by the Requisite
Lenders from a rating with respect to Long-Term Debt for such day established by
another rating agency reasonably acceptable to the Requisite Lenders).
(b) Bid Advance Administration Fee. The Borrower agrees to pay
the Administrative Agent for its own account a handling fee as set forth in that
certain fee letter dated July ___, 1996 between the Administrative Agent and the
Borrower in connection with each request for a Bid Advance pursuant to Section
2.03.
(c) Agents' Fees. The Borrower agrees to pay to each of the
Agents the fees payable to each such Agent pursuant to the fee letter dated as
of July ___, 1996 between the Borrower and CUSA and the fee letter dated as of
July 9, 1996 between the Borrower and B of A in the amounts and at the times
specified in each of such letters.
(d) Additional Fees. In the event the Effective Date has not
occurred on or before September 30, 1996, the Borrower agrees to pay to the
Administrative Agent for account of each Lender the fees payable to such Lenders
pursuant to that certain fee letter dated as of July 24, 1996 between the
Borrower and the Administrative Agent.
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SECTION 2.05. TERMINATION AND REDUCTION OF THE COMMITMENTS.
(a) Mandatory Termination. In the event that a mandatory
prepayment in full of the Advances is required by the Requisite Lenders pursuant
to Section 2.06(b) (whether or not there are Advances outstanding), the
Commitments of the Lenders shall immediately terminate.
(b) Optional Reductions. The Borrower shall have the right,
upon at least three (3) Business Days' notice to the Administrative Agent, to
terminate in whole or reduce ratably in part the unused portions of the
respective Commitments of the Lenders; provided that (i) each partial reduction
shall be in the aggregate amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, and (ii) the aggregate of the Commitments of the
Lenders shall not be reduced to an amount which is less than the Total
Utilization of Commitments.
(c) No Reinstatement. Once so reduced to terminated pursuant
to this Section 2.05, Commitments of the Lenders shall not be reinstated.
SECTION 2.06. REPAYMENT AND PREPAYMENT OF ADVANCES.
(a) Mandatory Repayment on Certain Date. The Borrower shall
repay the outstanding principal amount of (i) each Committed Advance made by
each Lender on the Termination Date of such Lender, and (ii) each Bid Advance at
the maturity date specified in the Notice of Bid Borrowing.
(b) Mandatory Prepayment in Certain Events. If any one of the
following events shall occur from and after the Effective Date:
(i) any Person or Persons acting in concert shall
acquire beneficial ownership of more than 40% of the Borrower's voting
stock; or
(ii) during any period of up to 12 months,
individuals who at the beginning of such period were directors of the
Borrower shall cease to constitute a majority of the Borrower's board
of directors; or
(iii) any Debt which is outstanding in a principal
amount of at least $15,000,000 in the aggregate (but excluding Debt
arising under this Agreement) of the Borrower or any of its
Subsidiaries (as the case may be) shall be required to be prepaid
(other than by a regularly scheduled required prepayment or by a
required prepayment of insurance proceeds or by a required prepayment
as a result of formulas based on asset sales or excess cash flow),
redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof (other than as set forth in
Section 6.01(d));
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then, and in any such event, if the Administrative Agent shall have received
notice from the Requisite Lenders that they elect to have the Advances prepaid
in full and the Administrative Agent shall have provided notice to the Borrower
that the Advances are to be prepaid in full, the Borrower shall immediately
prepay in full the Advances, together with interest accrued to the date of
prepayment and will reimburse the Lenders in respect thereof pursuant to Section
8.04(b).
(c) Voluntary Prepayments of Committed Borrowings.
(i) The Borrower shall have no right to prepay any principal
amount of any Advances other than as provided in this subsection (c).
(ii) The Borrower may, upon notice to the Administrative Agent
no later than 11:00 A.M. (New York time) (i) on the date the Borrower
proposes to prepay Committed Advances in the case of Base Rate Advances
and (ii) at least two (2) Business Days' notice to the Administrative
Agent in the case of Eurodollar Rate Advances, stating the proposed
date and aggregate principal amount of the prepayment, and if such
notice is given the Borrower shall, prepay the outstanding principal
amounts of the Advances comprising part of the same Committed Borrowing
in whole or ratably in part; provided, however, that (x) each partial
prepayment shall be in an aggregate principal amount not less than
$5,000,000 and integral multiples of $1,000,000 in excess thereof, and
(y) in the case of any such prepayment of any Eurodollar Rate Advance,
the Borrower shall pay all accrued interest to the date of such
prepayment on the portion of such Eurodollar Rate Advance being prepaid
and shall be obligated to reimburse the Lenders in respect thereof
pursuant to Section 8.04(b).
(d) No Prepayment of Bid Borrowings. The Borrower shall have
no right to prepay any principal amount of any Bid Advances.
SECTION 2.07. INTEREST ON COMMITTED ADVANCES. The Borrower
shall pay to each Lender interest accrued on the principal amount of each
Committed Advance outstanding from time to time from the date of such Advance
until such principal amount shall be paid in full, at the following rates per
annum:
(a) Base Rate Advances. If such Committed Advance is a Base
Rate Advance, a rate per annum equal at all times to (i) the Base Rate in effect
from time to time plus (ii) the Applicable Margin, if any, payable quarterly in
arrears on the last day of each March, June, September and December during the
term of this Agreement, commencing September 30, 1996, and on the Termination
Date of the applicable Lender; provided that any amount of principal, interest,
fees and other amounts payable under this Agreement (including, without
limitation, the principal amount of Base Rate Advances, but excluding the
principal amount of Eurodollar Rate Advances) which is not paid when due
(whether at stated maturity, by acceleration or otherwise) shall bear
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interest from the date on which such amount is due until such amount is paid in
full, payable on demand, at a rate per annum equal at all times to 2% per annum
above the Base Rate in effect from time to time.
(b) Eurodollar Rate Advances. If such Committed Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during the Interest
Period for such Advance to the sum of (i) the Adjusted Eurodollar Rate for such
Interest Period plus (ii) the Applicable Margin, payable in arrears on the last
day of such Interest Period and, if such Interest Period has a duration of more
than three months, on the day which occurs during such Interest Period three
months from the first day of such Interest Period; provided that any principal
amount of any Eurodollar Rate Advance which is not paid when due (whether at
stated maturity, by acceleration or otherwise) shall bear interest from the date
on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to (A) during the Interest Period
applicable to such Eurodollar Rate Advance, the greater of (x) 2% per annum
above the Base Rate in effect from time to time and (y) 2% per annum above the
rate per annum required to be paid on such amount immediately prior to the date
on which such amount became due and (B) after the expiration of such Interest
Period, 2% per annum above the Base Rate in effect from time to time.
SECTION 2.08. INTEREST RATE DETERMINATION. (a) Each Reference Bank
agrees to furnish to the Administrative Agent timely information for the purpose
of determining each Adjusted Eurodollar Rate. If any one or more of the
Reference Banks shall not furnish such timely information to the Administrative
Agent for the purpose of determining any such interest rate, the Administrative
Agent shall determine such interest rate on the basis of timely information
furnished by the remaining Reference Banks, subject to Section 2.02(b)(iv).
(b) The Administrative Agent shall give prompt notice to the Borrower
and the Lenders of the applicable interest rate determined by the Administrative
Agent for purposes of Section 2.07(a) or 2.07(b), and the applicable rate, if
any, furnished by each Reference Bank for the purpose of determining the
applicable interest rate under Section 2.07(b).
SECTION 2.09. VOLUNTARY CONVERSION OR CONTINUATION OF COMMITTED
ADVANCES.
(a) The Borrower may on any Business Day, upon notice given to the
Administrative Agent not later than 12:00 noon (New York City time) on the third
Business Day prior to the date of the proposed Conversion or continuance (a
"Notice of Conversion/Continuation") and subject to the provisions of Section
2.02(b), (1) Convert all Committed Advances of one Type comprising the same
Committed Borrowing into Advances of another Type and (2) upon the expiration of
any Interest Period applicable to Committed Advances which are Eurodollar Rate
Advances, continue all (or, subject to
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Section 2.02(b), any portion of) such Advances as Eurodollar Rate Advances and
the succeeding Interest Period(s) of such continued Advances shall commence on
the last day of the Interest Period of the Advances to be continued; provided,
however, that any Conversion of any Eurodollar Rate Advances into Base Rate
Advances shall be made on, and only on, the last day of an Interest Period for
such Eurodollar Rate Advances. Each such Notice of Conversion/Continuation
shall, within the restrictions specified above, specify (i) the date of such
continuation or Conversion, (ii) the Committed Advances (or, subject to Section
2.02(b), any portion thereof) to be continued or Converted, (iii) if such
continuation is of, or such Conversion is into, Eurodollar Rate Advances, the
duration of the Interest Period for each such Committed Advance, and (iv) in the
case of a continuation of or a Conversion into a Eurodollar Rate Advance, that
no Potential Event of Default or Event of Default has occurred and is
continuing.
(b) If upon the expiration of the then existing Interest Period
applicable to any Committed Advance which is a Eurodollar Rate Advance, the
Borrower shall not have delivered a Notice of Conversion/Continuation in
accordance with this Section 2.09, then such Advance shall upon such expiration
automatically be Converted to a Base Rate Advance.
(c) After the occurrence of and during the continuance of a Potential
Event of Default or an Event of Default, the Borrower may not elect to have an
Advance be made or continued as, or Converted into, a Eurodollar Rate Advance
after the expiration of any Interest Period then in effect for that Advance.
SECTION 2.10. INCREASED COSTS.
(a) If, due to either (i) the introduction of or any change (other
than any change by way of imposition or increase of reserve requirements in the
case of Eurodollar Rate Advances included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances, then the Borrower shall from time to time,
upon demand by such Lender (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost.
A reasonably detailed certificate as to the amount and manner of calculation of
such increased cost, submitted to the Borrower and the Administrative Agent by
such Lender, shall be conclusive and binding for all purposes, absent manifest
error.
(b) If any Lender (other than Designated Bidders) determines that
compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) affects or
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would affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type, then, upon demand by such
Lender (with a copy of such demand to the Administrative Agent), the Borrower
shall immediately pay to the Administrative Agent for the account of such
Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder. A reasonably detailed certificate as to such amounts and the
manner of calculation thereof submitted to the Borrower and the Administrative
Agent by such Lender shall be conclusive and binding for all purposes, absent
manifest error.
(c) If a Lender shall change its Applicable Lending Office, such
Lender shall not be entitled to receive any greater payment under Sections 2.10
and 2.12 than the amount such Lender would have been entitled to receive if it
had not changed its Applicable Lending Office, unless such change was made at
the request of the Borrower or at a time when the circumstances giving rise to
such greater payment did not exist.
SECTION 2.11. PAYMENTS AND COMPUTATIONS.
(a) The Borrower shall make each payment hereunder not later than 1:00
P.M. (New York City time) on the day when due in Dollars to the Administrative
Agent at its address referred to in Section 8.02 in same day funds. Subject to
the immediately succeeding sentence, the Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or commitment fees ratably (other than amounts payable
pursuant to Section 2.10 or 2.12 or, to the extent the Termination Date is not
the same for all Lenders, pursuant to Section 2.06(a)) to the Lenders for the
account of their respective Applicable Lending Offices, and like funds relating
to the payment of any other amount payable to any Lender to such Lender for the
account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon receipt of principal or
interest paid after an Event of Default and an acceleration or a deemed
acceleration of amounts due hereunder, the Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest ratably in accordance with each Lender's outstanding
Advances (other than amounts payable pursuant to Section 2.10 or 2.12) to the
Lenders for the account of their respective Applicable Lending Offices. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 8.07(c), from and after
the effective date specified in such Assignment and Acceptance, the
Administrative Agent shall make all payments hereunder in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all
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appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) All computations of interest based on the Base Rate shall be made
by the Administrative Agent on the basis of a year of 365 or 366 days, as the
case may be, and all computations of interest based on the Adjusted Eurodollar
Rate, the Federal Funds Rate or the Fixed Rate and of commitment fees shall be
made by the Administrative Agent on the basis of a year of 360 days, in each
case for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest or such fees are
payable. Each determination by the Administrative Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(c) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest or commitment fee, as the case may be;
provided, however, if such extension would cause payment of interest on or
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.
SECTION 2.12. TAXES.
(a) Any and all payments by the Borrower hereunder shall be made, in
accordance with Section 2.11, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i) in the
case of each Lender and each Agent, taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Lender or
such Agent (as the case may be) is organized or any political subdivision
thereof or in which its principal office is located, (ii) in the case of each
Lender taxes imposed on its net income, and franchise taxes imposed on it, by
the
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jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof and (iii) in the case of each Lender and each Agent, taxes
imposed by the United States by means of withholding at the source if and to the
extent that such taxes shall be in effect and shall be applicable on the date
hereof in the case of each Bank and on the effective date of the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other
Lender, on payments to be made to the Agents or such Lender's Applicable Lending
Office (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender or either Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) such Lender or such Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from the execution, delivery or registration of, or
otherwise with respect to, this Agreement (hereinafter referred to as "Other
Taxes").
(c) The Borrower will indemnify each Lender and each Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.12) paid by such Lender or such Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the date such
Lender or such Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent, at its address referred to in
Section 8.02, the original or a certified copy of a receipt evidencing payment
thereof.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Lender is entitled to benefits under an income tax treaty to which the
United States is a party which reduces the rate of
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withholding tax on payments of interest or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States. If the form provided by a Lender at the time
such Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from "Taxes" as defined in Section 2.12(a).
(f) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form described in Section 2.12(e)
(other than if such failure is due to a change in law occurring subsequent to
the date on which a form originally was required to be provided, or if such form
otherwise is not required under the first sentence of subsection (e) above),
such Lender shall not be entitled to indemnification under Section 2.12(a) with
respect to Taxes imposed by the United States; provided, however, that should a
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall, at the expense of such Lender, take such steps as
the Lender shall reasonably request to assist the Lender to recover such Taxes.
(g) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.12 shall survive the payment in full of principal and interest
hereunder.
SECTION 2.13. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Advances made by it (other than
pursuant to Section 2.10 or 2.12 or, to the extent the Termination Date is not
the same for all Lenders, pursuant to Section 2.06(a)) in excess of its ratable
share of payments on account of the Committed Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Committed Advances made by them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.13 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
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SECTION 2.14. EVIDENCE OF DEBT.
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Advance owing to such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
(b) The Register maintained by the Administrative Agent pursuant to
Section 8.07(c) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date,
amount and tenor, as applicable, of each Borrowing, the Type of Advances
comprising such Borrowing and the Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder, and (iv) the amount of any
sum received by the Administrative Agent from the Borrower hereunder and each
Lender's share thereof.
(c) The entries made in the Register shall be conclusive and binding
for all purposes, absent manifest error.
(d) If, in the opinion of any Lender, a promissory note or other
evidence of debt is required, appropriate or desirable to reflect or enforce the
indebtedness of the Borrower resulting from the Committed Advances or Bid
Advances made, or to be made, by such Lender to the Borrower, then, upon request
of such Lender, the Borrower shall promptly execute and deliver to such Lender a
promissory note substantially in the form of Exhibit G-1 in the case of
Committed Advances and Exhibit G-2 in the case of Bid Advances, payable to the
order of such Lender in an amount up to the maximum amount of Committed Advances
or Bid Advances, as the case may be, payable or to be payable by such Borrower
to the Lender from time to time hereunder.
SECTION 2.15. USE OF PROCEEDS.
(a) Advances shall be used by the Borrower for commercial paper backup
and for general corporate purposes; provided that proceeds of Advances and
proceeds of commercial paper as to which this Agreement provides backup shall
not be used for any Hostile Acquisition.
(b) No portion of the proceeds of any Advances under this Agreement
shall be used by the Borrower or any of its Subsidiaries in any manner which
might cause the Advances or the application of such proceeds to violate, or
require any Lender to make any filing or take any other action under, Regulation
G, Regulation U, Regulation T, or Regulation X of the Board of Governors of the
Federal Reserve System
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or any other regulation of such Board or to violate the Securities Exchange Act
of 1934, in each case as in effect on the date or dates of such Advances and
such use of proceeds.
SECTION 2.16. EXTENSION OF THE COMMITMENT TERMINATION DATE. The
Borrower may not more than once in any calendar year and not later than 45 days
prior to an anniversary of the Effective Date, request that the Commitment
Termination Date of all Eligible Lenders be extended for a period of one year by
delivering to the Administrative Agent a signed copy of an extension request (an
"Extension Request") in substantially the form of Exhibit E hereto. The
Administrative Agent shall promptly notify each Eligible Lender of its receipt
of such Extension Request. On or prior to ten days prior to the applicable
anniversary of the Effective Date in each calendar year in which there has been
an Extension Request (the "Determination Date"), each Eligible Lender shall
notify the Administrative Agent and the Borrower of its willingness or
unwillingness to extend its Commitment Termination Date hereunder. Any Eligible
Lender that shall fail to so notify the Administrative Agent and the Borrower on
or prior to the Determination Date shall be deemed to have declined to so
extend. In the event that, on or prior to the Determination Date, Eligible
Lenders representing 66-2/3% or more of the aggregate amount of the Commitments
of all Eligible Lenders then in effect shall consent to such extension, upon
confirmation by the Administrative Agent of such consent, the Administrative
Agent shall so advise the Lenders and the Borrower, and, subject to execution of
documentation evidencing such extension and consents, the Commitment Termination
Date of each Eligible Lender (each a "Consenting Lender") that has consented on
or prior to the Determination Date to so extend shall be extended to the date
one year after the Commitment Termination Date of such Eligible Lender in
existence on the date of the related Extension Request. Thereafter, (i) for each
Consenting Lender, the term "Commitment Termination Date" shall at all times
refer to such date, unless it is later extended pursuant to this Section 2.16,
and (ii) for each Lender that is not an Eligible Lender and for each Eligible
Lender that either has declined on or prior to the Determination Date to so
extend or is deemed to have so declined, the term "Commitment Termination Date"
shall at all times refer to the date which was the Commitment Termination Date
of such Lender immediately prior to the delivery to the Administrative Agent of
such Extension Request. In the event that, as of the Determination Date, the
Consenting Lenders represent less than 66-2/3% of the aggregate amount of the
Commitments of all Eligible Lenders then in effect, and the Agents confirm the
same, the Administrative Agent shall so advise the Lenders and the Borrower, and
none of the Lenders' Commitment Termination Dates shall be extended to the date
indicated in the Extension Request and each Lender's Commitment Termination Date
shall continue to be the date which was the Commitment Termination Date of such
Lender immediately prior to the delivery to the Agents of such Extension
Request. For purposes of this Section 2.16, the term "Eligible Lenders" means,
with respect to any Extension Request, (i) all Lenders if no Lender's Commitment
Termination Date had been extended pursuant to this Section 2.16 prior to the
delivery to the Agents of such Extension Request, and (ii) in all other cases,
those Lenders which
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had extended their Commitment Termination Date in the most recent extension of
any Commitment Termination Date effected pursuant to this Section 2.16.
SECTION 2.17. SUBSTITUTION OF LENDERS. If any Lender requests
compensation from the Borrower under Section 2.10(a) or (b) or Section 2.12 or
if any Lender declines to extend its Commitment Termination Date pursuant to
Section 2.16, the Borrower shall have the right, with the assistance of the
Agents, to seek one or more Eligible Assignees (which may be one or more of the
Lenders) reasonably satisfactory to the Agents and the Borrower to purchase the
Advances and assume the Commitments of such Lender, and the Borrower, the
Agents, such Lender, and such Eligible Assignees shall execute and deliver an
appropriately completed Assignment and Acceptance pursuant to Section 8.07(a)
hereof to effect the assignment of rights to and the assumption of obligations
by such Eligible Assignees; provided that (i) such requesting Lender shall be
entitled to compensation under Section 2.10 and 2.12 for any costs incurred by
it prior to its replacement, (ii) no Event of Default, or event which with the
giving of notice or lapse of time or both would be an Event of Default, has
occurred and is continuing, (iii) the Borrower has satisfied all of its
obligations under the Loan Documents relating to such Lender, including without
limitation obligations, if any, under Section 8.04(b), and (iv) the Borrower
shall have paid the Administrative Agent a $3,000 administrative fee if such
replacement Lender is not an existing Lender.
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.01. DOCUMENTS TO BE DELIVERED ON THE CLOSING DATE. The
Closing Date shall be deemed to have occurred when this Agreement shall have
been executed and delivered by the parties hereto and (a) the Agents shall have
received the following, each dated the Closing Date or within two days prior to
the Closing Date unless otherwise indicated, and each in form and substance
satisfactory to the Agents unless otherwise indicated and in sufficient copies
for each Lender:
(i) Copies of resolutions of the Board of Directors of Parentco (or
its Executive Committee, together with evidence of the authority of the
Executive Committee) approving this Agreement, and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to this Agreement, certified as of a recent date prior
to the Closing Date.
(ii) A certificate of the Secretary or an Assistant Secretary of
Parentco certifying the names and true signatures of the officers of
Parentco authorized to sign this Agreement and the other documents to be
delivered by Parentco hereunder.
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(iii) Certified copies of Parentco's Certificate of Incorporation,
together with good standing certificates from the state of Delaware and
the jurisdiction of Parentco's principal place of business, each to be
dated a recent date prior to the Closing Date;
(iv) Copies of the Parentco's Bylaws, certified as of the Closing Date
by its Secretary or an Assistant Secretary;
(v) Executed originals of this Agreement and the other documents to be
delivered by Parentco hereunder;
(vi) A favorable opinion of the General Counsel of Parentco,
substantially in the form of Exhibit C-1 hereto;
(vii) A favorable opinion of O'Melveny & Myers LLP, counsel for the
Agents, substantially in the form of Exhibit D-1 hereto;
(viii) The Form 10, in the form filed with the SEC;
(ix) The Form 8-K, in the form filed with the SEC;
(x) A certificate of an authorized officer of Parentco to the effect
that since December 30, 1995, there has been no material adverse change in
the operations, business or financial or other condition or properties of
(A) Parentco and its Subsidiaries, taken as a whole or (B) the Consumer
Products Business; and
(xi) Evidence that the Amended and Restated Credit Agreement has been
duly executed and delivered and the Closing Date thereunder has occurred;
and
(b) the Agents shall have received such other approvals, opinions or
documents as the Requisite Lenders through the Agents may reasonably request.
SECTION 3.02. CONDITIONS PRECEDENT TO EFFECTIVE TIME. This Agreement
shall become fully effective pursuant to Section 8.06(b) at the Effective Time
on the Effective Date upon the satisfaction of, and the obligation of each
Lender to make its initial Advance is subject to, the conditions precedent that:
(a) the Agents shall have received on or before the Effective Date the
following, each dated the Effective Date unless otherwise indicated, and each in
form and substance satisfactory to the Requisite Lenders and in sufficient
copies for each Lender:
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(i) Copies of resolutions of the Board of Directors of Newco (or its
Executive Committee, together with evidence of the authority of the
Executive Committee) approving this Agreement, the Assignment and
Assumption Agreement, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to this
Agreement, certified as of a recent date prior to the Effective Date.
(ii) A certificate of the Secretary or an Assistant Secretary of Newco
certifying the names and true signatures of the officers of Newco
authorized to sign the Assignment and Assumption Agreement and the other
documents to be delivered by Newco hereunder.
(iii) Certified copies of Newco's Certificate of Incorporation,
together with good standing certificates from the state of Delaware and
the jurisdiction of Newco's principal place of business, each to be dated
a recent date prior to the Effective Date;
(iv) Copies of Newco's Bylaws, certified as of the Closing Date by its
Secretary or an Assistant Secretary;
(v) Executed originals of the Assignment and Assumption Agreement and
the other documents to be delivered by Parentco and Newco hereunder;
(vi) A favorable opinion of the General Counsel of Parentco,
substantially in the form of Exhibit C-2 hereto and a favorable opinion of
counsel for Newco substantially in the form of Exhibit C-3 hereto;
(vii) A favorable opinion of O'Melveny & Myers LLP, counsel for the
Agents, substantially in the form of Exhibit D-2 hereto;
(viii) A certificate of an authorized officer of Newco to the effect
that since December 30, 1995, there has been no material adverse change in
the operations, business or financial condition or properties of (1) the
Consumer Products Business or (2) Newco and its Subsidiaries taken as a
whole;
(ix) Evidence reasonably satisfactory to the Requisite Lenders that
the Distribution Agreement is in full force and effect and has not been
amended, supplemented, waived or otherwise modified without the consent of
Requisite Lenders, and executed and conformed copies thereof (including
all exhibits and schedules thereto) and any amendments thereto and all
documents executed in connection therewith shall have been delivered to
Agents;
(x) Evidence reasonably satisfactory to the Requisite Lenders that the
Merger has become effective and that the Distribution will become
effective
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immediately after the Effective Time at the Distribution Time, in
accordance with the terms and conditions of the Distribution Agreement;
(xi) Evidence reasonably satisfactory to the Requisite Lenders that
the Assignment and Assumption Agreement will become effective immediately
after the Effective Time at the Distribution Time in accordance with the
terms and conditions set forth therein;
(xii) A Notice of Committed Borrowing duly executed by Parentco with
respect to the Parentco Borrowing, which shall be a Committed Borrowing
consisting of Base Rate Advances made at the Effective Time.
(xiii) Evidence that the SEC has declared the Form 10 effective;
(xiv) Evidence reasonably satisfactory to the Requisite Lenders that
all approvals, permits, licenses, authorizations and consents, if any,
from any governmental or regulatory authority necessary to effectuate the
Distribution have been duly obtained and are in full force and effect as
of the Effective Date; and
(xv) Evidence that the Amended and Restated Credit Agreement has
become effective in accordance with the terms and conditions set forth
therein; and
(b) the Agents shall have received the fees set forth in Section
2.04(c) if such fees are payable to the Agents and the Banks on or prior to the
Effective Date; and
(c) the Agents shall have received such other approvals, opinions or
documents as the Requisite Lenders through the Agents may reasonably request.
SECTION 3.03. CONDITIONS PRECEDENT TO EACH COMMITTED BORROWING. The
obligation of each Lender to make a Committed Advance on the occasion of a
Committed Borrowing (including the initial Committed Borrowing) shall be subject
to the further conditions precedent that (x) the Administrative Agent shall have
received a Notice of Committed Borrowing with respect thereto in accordance with
Section 2.02 and (y) on the date of such Borrowing (a) the following statements
shall be true (and each of the giving of the applicable Notice of Borrowing and
the acceptance by the Borrower of the proceeds of such Borrowing shall
constitute a representation and warranty by the Borrower that on the date of
such Borrowing such statements are true):
(i) The representations and warranties of the Borrower contained in
Section 4.01 are correct on and as of the date of such Borrowing, before
and after giving effect to such Borrowing and to the application of the
proceeds
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therefrom, as though made on and as of such date, except to the extent
that any such representation or warranty expressly relates only to an
earlier date, in which case they were correct as of such earlier date; and
(ii) No event has occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default, or a Potential Event of Default;
and (b) the Agents shall have received such other approvals, opinions or
documents as the Requisite Lenders through the Agents may reasonably request.
SECTION 3.04. CONDITIONS PRECEDENT TO EACH BID BORROWING. The
obligation of each Lender to make a Bid Advance on the occasion of a Bid
Borrowing (including the initial Bid Borrowing) shall be subject to the further
conditions precedent that (x) the Administrative Agent shall have received a
Notice of Bid Borrowing with respect thereto in accordance with Section 2.03 and
(y) on the date of such Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Bid Borrowing and the acceptance
by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
such statements are true):
(i) The representations and warranties of the Borrower contained in
Section 4.01 are correct on and as of the date of such Borrowing, before
and after giving effect to such Borrowing and to the application of the
proceeds therefrom, as though made on and as of such date, except to the
extent that any such representation or warranty expressly relates only to
an earlier date, in which case they were correct as of such earlier date;
and
(ii) No event has occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default, or a Potential Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
The Borrower represents and warrants as follows:
(a) Due Organization, etc. The Borrower and each Material Subsidiary
is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. The Borrower and
each of its Material Subsidiaries are qualified to do business in and are
in good standing
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under the laws of each jurisdiction in which failure to be so qualified
would have a material adverse effect on the Borrower and its Subsidiaries,
taken as a whole.
(b) Due Authorization, etc. The execution, delivery and performance by
the Borrower of this Agreement and the other Loan Documents are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Borrower's Certificate of
Incorporation or (ii) applicable law or any material contractual
restriction binding on or affecting the Borrower.
(c) Governmental Consent. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Borrower of this Agreement and the other Loan
Documents.
(d) Validity. This Agreement is the legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance
with its terms subject to the effect of applicable bankruptcy, insolvency,
arrangement, moratorium and other similar laws affecting creditors' rights
generally and to the application of general principles of equity.
(e) Condition of the Borrower. The pro forma consolidated balance
sheet of Newco and its Subsidiaries as at December 30, 1995, and the
related pro forma consolidated statements of income and retained earnings
of Newco and its Subsidiaries for the fiscal year then ended, copies of
which are contained in the Form 10 furnished to each Bank pursuant to
Section 3.01(a)(viii), fairly present the financial condition of Newco and
its Subsidiaries on a pro forma basis as at such date and the results of
the operations of Newco and its Subsidiaries on a pro forma basis for the
period ended on such date, all in accordance with GAAP consistently
applied, and as of the Effective Date, there has been no material adverse
change in the business, condition (financial or otherwise), operations or
properties of the Newco and its Subsidiaries, taken as a whole, since
December 30, 1995.
(f) Litigation. (i) There is no pending action or proceeding against
the Borrower or any of its Subsidiaries before any court, governmental
agency or arbitrator, and (ii) to the knowledge of the Borrower, there is
no pending or threatened action or proceeding affecting the Borrower or
any of its Subsidiaries before any court, governmental agency or
arbitrator, which in either case, in the reasonable judgement of the
Borrower could reasonably be expected to materially adversely affect the
financial condition or operations of the Borrower and its Subsidiaries,
taken as a whole, or with respect to actions of third parties which
purports to affect the legality, validity or enforceability of this
Agreement.
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(g) Margin Regulations. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Advance will be used
to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock in any manner that
violates, or would cause a violation of, Regulation G, Regulation T,
Regulation U or Regulation X. Less than 25 percent of the fair market
value of the assets of (i) the Borrower or (ii) the Borrower and its
Subsidiaries consists of Margin Stock.
(h) Payment of Taxes. The Borrower and each of its Subsidiaries have
filed or caused to be filed all material tax returns (federal, state,
local and foreign) required to be filed and paid all material amounts of
taxes shown thereon to be due, including interest and penalties, except
for such taxes as are being contested in good faith and by proper
proceedings and with respect to which appropriate reserves are being
maintained by the Borrower or any such Subsidiary, as the case may be.
(i) Governmental Regulation. The Borrower is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power
Act, the Interstate Commerce Act or the Investment Company Act of 1940,
each as amended, or to any Federal or state statute or regulation limiting
its ability to incur indebtedness for money borrowed. No Subsidiary of the
Borrower is subject to any regulation that would limit the ability of the
Borrower to enter into or perform its obligations under this Agreement.
(j) ERISA.
(i) No ERISA Event which might result in liability of the Borrower
or any of its ERISA Affiliates in excess of $10,000,000 (or, in the
case of an event described in clause (v) of the definition of ERISA
Event, $750,000) (other than for premiums payable under Title IV of
ERISA) has occurred or is reasonably expected to occur with respect to
any Pension Plan.
(ii) Schedule B (Actuarial Information) to the most recently
completed annual report prior to the Effective Date (Form 5500 Series)
for each Pension Plan, copies of which have been filed with the
Internal Revenue Service and furnished to the Agents, is complete and,
to the best knowledge of the Borrower, accurate, and since the date of
such Schedule B there has been no material adverse change in the
funding status of any such Pension Plan.
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(iii) Neither the Borrower nor any ERISA Affiliate has incurred,
or, to the best knowledge of the Borrower, is reasonably expected to
incur, any Withdrawal Liability to any Multiemployer Plan which has
not been satisfied or which is or might be in excess of $10,000,000.
(iv) Neither the Borrower nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and, to the best knowledge of the
Borrower, no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated within the meaning of Title IV of
ERISA.
(k) Environmental Matters. (i) The Borrower and each of its
Subsidiaries is in compliance in all material respects with all
Environmental Laws the non-compliance with which could reasonably be
expected to have a material adverse effect on the financial condition or
operations of the Borrower and its Subsidiaries, taken as a whole, and
(ii) there has been no "release or threatened release of a hazardous
substance" (as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601
et seq.) or any other release, emission or discharge into the environment
of any hazardous or toxic substance, pollutant or other materials from the
Borrower's or its Subsidiaries' property other than as permitted under
applicable Environmental Law and other than those which would not have a
material adverse effect on the financial condition or operations of the
Borrower and its Subsidiaries, taken as a whole. Other than disposals (A)
for which the Borrower has been indemnified in full or (B) which would not
have a material adverse effect on the financial condition or operations of
the Borrower and its Subsidiaries, taken as a whole, all "hazardous waste"
(as defined by the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq. (1976) and the regulations thereunder, 40 CFR Part
261 ("RCRA")) generated at the Borrower's or any Subsidiaries' properties
have in the past been and shall continue to be disposed of at sites which
maintain valid permits under RCRA and any applicable state or local
Environmental Law.
(l) Disclosure. As of the Closing Date and as of the Effective Date,
to the best of the Borrower's knowledge, no representation or warranty of
the Borrower or any of its Subsidiaries contained in this Agreement or any
other Loan Document or statement made in the Form 10 (including all
Exhibits thereto filed with the Securities and Exchange Commission) or the
Form 8-K or in any other document, certificate or written statement
furnished to the Banks by or on behalf of the Borrower or any of its
Subsidiaries contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
in such agreements, documents, certificates and statements not misleading
in light of the circumstances in which the same were made.
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ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will, unless the Requisite Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, (i) complying with
all Environmental Laws and (ii) paying before the same become delinquent
all taxes, assessments and governmental charges imposed upon it or upon
its property except to the extent contested in good faith, except where
failure to so comply would not have a material adverse effect on the
business, condition (financial or otherwise), operations or properties of
the Borrower and its Subsidiaries, taken as a whole.
(b) Reporting Requirements. Furnish to the Administrative Agent (in
sufficient quantity for delivery to each Lender) for prompt distribution
by the Administrative Agent to the Lenders and furnish to the
Documentation Agent:
(i) as soon as available and in any event within 60 days after the
end of each of the first three quarters of each fiscal year of the
Borrower, consolidated balance sheets as of the end of such quarter
and consolidated statements of source and application of funds of the
Borrower and its Subsidiaries and consolidated statements of income
and retained earnings of the Borrower and its Subsidiaries for such
quarter and the period commencing at the end of the previous fiscal
year and ending with the end of such quarter and certified by the
chief financial officer or chief accounting officer of the Borrower;
(ii) as soon as available and in any event within 120 days after
the end of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries,
containing financial statements (including a consolidated balance
sheet and consolidated statement of income and cash flows of the
Borrower and its Subsidiaries) for such year, certified by and
accompanied by an opinion of Deloitte & Touche or other nationally
recognized independent public accountants. The opinion shall be
unqualified (as to going concern, scope of audit and disagreements
over the accounting or other treatment of offsets) and shall state
that such consolidated financial statements present fairly in all
material respects the financial position of the Borrower and
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its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in conformity with
GAAP and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance
with generally accepted auditing standards;
(iii) together with each delivery of the report of the Borrower
and its Subsidiaries pursuant to subsections (i) and (ii) above, a
Compliance Certificate for the year executed by the chief financial
officer or treasurer of the Borrower demonstrating in reasonable
detail compliance during and at the end of such accounting periods
with the restrictions contained in Section 5.02(e) and (f) (and
setting forth the arithmetical computation required to show such
compliance) and stating that the signer has reviewed the terms of this
Agreement and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the transactions and
condition of the Borrower and its Subsidiaries during the accounting
period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting
period, and that the signer does not have knowledge of the existence
as at the date of the compliance certificate, of any condition or
event that constitutes an Event of Default or Potential Event of
Default or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
the Borrower has taken, is taking and proposes to take with respect
thereto;
(iv) as soon as possible and in any event within five days after
the occurrence of each Event of Default and each Potential Event of
Default, continuing on the date of such statement, a statement of an
authorized financial officer of the Borrower setting forth details of
such Event of Default or event and the action which the Borrower has
taken and proposes to take with respect thereto;
(v) promptly after any material change in accounting policies or
reporting practices, notice and a description in reasonable detail of
such change;
(vi) promptly and in any event within 30 days after the Borrower
or any ERISA Affiliate knows or has reason to know that any ERISA
Event referred to in clause (i) of the definition of ERISA Event with
respect to any Pension Plan has occurred which might result in
liability to the PBGC a statement of the chief accounting officer of
the Borrower describing such ERISA Event and the action, if any, that
the Borrower or such ERISA Affiliate has taken or proposes to take
with respect thereto;
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(vii) promptly and in any event within 15 days after the Borrower
or any ERISA Affiliate knows or has reason to know that any ERISA
Event (other than an ERISA Event referred to in (vi) above) with
respect to any Pension Plan has occurred which might result in
liability to the PBGC in excess of $100,000, a statement of the chief
accounting officer of the Borrower describing such ERISA Event and the
action, if any, that the Borrower or such ERISA Affiliate has taken or
proposes to take with respect thereto;
(viii) promptly and in any event within five Business Days after
receipt thereof by the Borrower or any ERISA Affiliate from the PBGC,
copies of each notice from the PBGC of its intention to terminate any
Pension Plan or to have a trustee appointed to administer any Pension
Plan;
(ix) promptly and in any event within 15 days after receipt
thereof by the Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Borrower or
any ERISA Affiliate concerning (w) the imposition of Withdrawal
Liability by a Multiemployer Plan in excess of $100,000, (x) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (y) the
termination of a Multiemployer Plan within the meaning of Title IV of
ERISA or (z) the amount of liability incurred, or expected to be
incurred, by the Borrower or any ERISA Affiliate in connection with
any event described in clause (w), (x) or (y) above;
(x) promptly after the commencement thereof, notice of all
material actions, suits and proceedings before any court or government
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Borrower or any of its
Subsidiaries, of the type described in Section 4.01(f);
(xi) promptly after the occurrence thereof, notice of (A) any
event which makes any of the representations contained in Section
4.01(k) inaccurate in any material respect or (B) the receipt by the
Borrower of any notice, order, directive or other communication from a
governmental authority alleging violations of or noncompliance with
any Environmental Law which could reasonably be expected to have a
material adverse effect on the financial condition of the Borrowers
and its Subsidiaries, taken as a whole;
(xii) promptly after any change in the rating established by S&P,
Moody's or Duff & Phelps, as applicable, with respect to Long-Term
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Debt, a notice of such change, which notice shall specify the new
rating, the date on which such change was publicly announced, and such
other information with respect to such change as any Lender through
either Agent may reasonably request;
(xiii) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its public security
holders, and copies of all reports and registration statements which
the Borrower files with the SEC or any national security exchange;
(xiv) promptly after the Borrower or any ERISA Affiliate creates
any employee benefit plan to provide health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or
former employee of the Borrower or any of its ERISA Affiliates (except
as provided in Section 4980B of the Code and except as provided under
the terms of any employee welfare benefit plans provided pursuant to
the terms of collective bargaining agreements) under the terms of
which the Borrower and/or any of its ERISA Affiliates are not
permitted to terminate such benefits, a notice detailing such plan;
and
(xv) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender through either Agent may from time to time
reasonably request.
(c) Corporate Existence, Etc. The Borrower will, and will cause each
of its Subsidiaries to, at all times preserve and maintain its fundamental
business and preserve and keep in full force and effect its corporate
existence (except as permitted under Section 5.02(b) hereof) and all
rights, franchises and licenses necessary or desirable in the normal
conduct of its business; provided, however, that this paragraph (c) shall
not apply in any case when, in the good faith business judgment of the
Borrower, such preservation or maintenance is neither necessary nor
appropriate for the prudent management of the business of the Borrower.
(d) Inspection. The Borrower will permit and will cause each of its
Subsidiaries to permit any authorized representative designated by either
Agent or any Lender at the expense of such Agent or such Lender, to visit
and inspect any of the properties of the Borrower or any of its
Subsidiaries, including its and their financial and accounting records,
and to take copies and to take extracts therefrom, and discuss its and
their affairs, finances and accounts with its and their officers and
independent public accountants, all during normal hours, upon reasonable
notice and as often as may be reasonably requested.
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(e) Insurance. The Borrower will maintain and will cause each of its
Subsidiaries to maintain insurance to such extent and covering such risks
as is usual for companies engaged in the same or similar business and on
request will advise the Lenders of all insurance so carried.
(f) Taxes. The Borrower will and will cause each of its Subsidiaries
to pay and discharge, before the same shall become delinquent, (x) all
taxes, assessments and governmental charges or levies imposed upon it or
upon its property and (y) all lawful claims that, if unpaid, might by law
become a lien upon their property; provided, however, that neither the
Borrower nor any such Subsidiary shall be required to pay or discharge any
such tax, assessment, charge or levy (A) that is being contested in good
faith and by proper proceedings and for which appropriate reserves are
being maintained, or (B) the failure to pay or discharge which would not
have a material adverse effect on the financial condition or operations of
the Borrower and its Subsidiaries taken as a whole.
(g) Maintenance of Books, Etc. The Borrower will, and will cause each
of its Subsidiaries to, keep proper books of records and accounts, in which full
and correct entries shall be made of all financial transactions and the assets
and business of the Borrower and each of its domestic Subsidiaries in accordance
with GAAP and with respect to foreign Subsidiaries in accordance with customary
accounting standards in the applicable jurisdiction, in each case consistently
applied and consistent with prudent business practices.
SECTION 5.02. NEGATIVE COVENANTS. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, without the
written consent of the Requisite Lenders:
(a) Liens, Etc. The Borrower will not create or suffer to exist, or
permit any of its Subsidiaries to create or suffer to exist, any Lien,
upon or with respect to any of its properties, whether now owned or
hereafter acquired, or assign, or permit any of its Subsidiaries to
assign, any right to receive income, in each case to secure or provide for
the payment of any Debt of any Person, unless the Borrower's obligations
hereunder shall be secured equally and ratably with, or prior to, any such
Debt; provided however that the foregoing restriction shall not apply to
the following Liens which are permitted:
(i) Liens on assets of any Subsidiary of the Borrower existing at
the time such Person becomes a Subsidiary (other than any such Lien
created in contemplation of becoming a Subsidiary);
(ii) Liens on accounts receivable resulting from the sale of such
accounts receivable by the Borrower or a Subsidiary of the Borrower,
so long as, at any time, the aggregate outstanding amount of cash
advanced
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to the Borrower or such Subsidiary, as the case may be, and
attributable to the sale of such accounts receivable does not exceed
$300,000,000;
(iii) purchase money Liens upon or in any property acquired or
held by the Borrower or any Subsidiary in the ordinary course of
business to secure the purchase price of such property or to secure
Debt incurred solely for the purpose of financing the acquisition of
such property (provided that the amount of Debt secured by such Lien
does not exceed 100% of the purchase price of such property and
transaction costs relating to such acquisition) and Liens existing on
such property at the time of its acquisition (other than any such Lien
created in contemplation of such acquisition); and the interest of the
lessor thereof in any property that is subject to a Capital Lease;
(iv) any Lien securing Debt that was incurred prior to or during
construction or improvement of property for the purpose of financing
all or part of the cost of such construction or improvement, provided
that the amount of Debt secured by such Lien does not exceed 100% of
the fair market value of such property after giving effect to such
construction or improvement;
(v) any Lien securing Debt of a Subsidiary owing to the Borrower;
(vi) Liens resulting from any extension, renewal or replacement
(or successive extensions, renewals or replacements), in whole or in
part, of any Debt secured by any Lien referred to in clauses (i),
(iii) and (iv) above so long as (x) the aggregate principal amount of
such Debt shall not increase as a result of such extension, renewal or
replacement and (y) Liens resulting from any such extension, renewal
or replacement shall cover only such property which secured the Debt
that is being extended, renewed or replaced; and
(vii) Liens other than Liens described in clauses (i) through (vi)
hereof, whether now existing or hereafter arising, securing Debt in an
aggregate amount not exceeding $50,000,000.
(b) Restrictions on Fundamental Changes. The Borrower will not, and
will not permit any of its Material Subsidiaries to, merge or consolidate
with or into, or convey, transfer, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) all or a substantial
portion of its assets (whether now owned or hereafter acquired) to any
Person, or enter into any partnership, joint venture, syndicate, pool or
other combination, unless no Event of Default or Potential Event of
Default has occurred and is continuing or would
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result therefrom and, in the case of a merger or consolidation of the
Borrower, (i) the Borrower is the surviving entity or (ii) the surviving
entity assumes all of the Borrower's obligations under this Agreement in a
manner satisfactory to the Requisite Lenders.
(c) Plan Terminations. The Borrower will not, and will not permit any
ERISA Affiliate to, terminate any Pension Plan so as to result in
liability of the Borrower or any ERISA Affiliate to the PBGC in excess of
$15,000,000, or permit to exist any occurrence of an event or condition
which reasonably presents a material risk of a termination by the PBGC of
any Pension Plan with respect to which the Borrower or any ERISA Affiliate
would, in the event of such termination, incur liability to the PBGC in
excess of $15,000,000.
(d) Margin Stock. The Borrower will not permit 25% or more of the fair
market value of the assets of (i) the Borrower or (ii) the Borrower and
its Subsidiaries to consist of Margin Stock.
(e) Minimum Net Worth. The Borrower will not permit at any time Net
Worth to be less than the sum of (i) 80% of Net Worth as of the
Distribution Time (after giving effect to the Distribution and the
Assignment and Assumption Agreement), plus (ii) 25% of Net Income (if a
positive number) from the Effective Date to the then most recent
twenty-six (26) week period or fiscal year end, plus (iii) all Additions
to Capital from the Effective Date to the then most recent twenty-six (26)
week period or fiscal year end.
(f) Maximum Funded Debt Ratio. The Borrower will not permit at any
time the ratio of (i) Funded Debt to (ii) EBITDA, for each period
consisting of the most recently ended four consecutive fiscal quarters of
the Borrower, to exceed 3.00 to 1.00.
(g) Swaps. The Borrower will not and will not permit any of its
Subsidiaries to create or suffer to exist any Lien, upon or in respect to
any of its properties, whether now owned or hereafter acquired, or assign
any right to receive income, in each case to provide for the payment of
any Swaps.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Advance when
the same becomes due and payable or the Borrower shall fail to pay any
interest
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on any Advance or any fees or other amounts payable hereunder within five
days of the date due; or
(b) Any representation or warranty made or deemed made by the Borrower
herein or by the Borrower pursuant to this Agreement (including any
notice, certificate or other document delivered hereunder) shall prove to
have been incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe (i) any term,
covenant or agreement contained in this Agreement (other than any term,
covenant or agreement contained in Section 5.01(b)(iv), 5.01(c) or 5.02)
on its part to be performed or observed and the failure to perform or
observe such other term, covenant or agreement shall remain unremedied for
30 days after the Borrower obtains knowledge of such breach or (ii) any
term, covenant or agreement contained in Section 5.02 and either of the
Agents or the Requisite Lenders shall have notified the Borrower that an
Event of Default has occurred, or (iii) any term, covenant or agreement
contained in Section 5.01(b)(iv) or 5.01(c); or
(d) The Borrower or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Debt which is outstanding in a
principal amount of at least $15,000,000 in the aggregate (but excluding
Debt arising under this Agreement) of the Borrower or such Subsidiary (as
the case may be), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt; or the Borrower or any of its Subsidiaries shall fail to perform or
observe any other agreement, term or condition contained in any agreement
or instrument relating to any such Debt (or if any other event or
condition of default under any such agreement or instrument shall exist)
and such failure, event or condition shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the
effect of such failure, event or condition is to accelerate, or to permit
the acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable as a result of such failure, event or
condition; or
(e) The Borrower or any of its Material Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against the Borrower or any of its Material Subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry
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of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for a substantial part of
its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain
undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an
order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of
its property) shall occur; or the Borrower or any of its Material
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against the Borrower or any of its Material
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon a final or nonappealable judgment or order
or (ii) there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect;
(g)
(i) Any ERISA Event with respect to a Pension Plan shall have
occurred and, 30 days after notice thereof shall have been given to
the Borrower by either of the Agents, (x) such ERISA Event shall still
exist and (y) the sum (determined as of the date of occurrence of such
ERISA Event) of the Insufficiency of such Pension Plan and the
Insufficiency of any and all other Pension Plans with respect to which
an ERISA Event shall have occurred and then exist (or in the case of a
Pension Plan with respect to which an ERISA Event described in clause
(iii) through (vi) of the definition of ERISA Event shall have
occurred and then exist, the liability related thereto) is equal to or
greater than $25,000,000; or
(ii) The Borrower or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred an
aggregate Withdrawal Liability for all years to such Multiemployer
Plan in an amount that, when aggregated with all other amounts then
required to be paid to Multiemployer Plans by the Borrower and its
ERISA Affiliates as Withdrawal Liability (determined as of the date of
such notification), exceeds $25,000,000 and it is reasonably likely
that all amounts then required to be paid to Multiemployer Plans by
the Borrower and its ERISA Affiliates as Withdrawal Liability will
exceed $25,000,000; or
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(iii) The Borrower or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title
IV or ERISA, and it is reasonably likely that as a result of such
reorganization or termination the aggregate annual contributions of
the Borrower and its ERISA Affiliates to all Multiemployer Plans that
are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for
the plan year of such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs by an
amount exceeding $25,000,000;
then, and in any such event, either of the Agents (i) shall at the request, or
may with the consent, of the Requisite Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Requisite Lenders, by notice to the Borrower,
declare the Advances, all interest thereon and all other amounts payable under
this Agreement to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to the
Borrower or any of its Subsidiaries under the Bankruptcy Code, (A) the
obligation of each Lender to make Advances shall automatically be terminated and
(B) the Advances, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower.
ARTICLE VII
THE AGENTS
SECTION 7.01. AUTHORIZATION AND ACTION. Each Lender hereby appoints
and authorizes CUSA to act as Administrative Agent under this Agreement and B of
A to act as Documentation Agent under this Agreement and authorizes each Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to each Agent by the terms hereof, together with
such powers as are reasonably incidental thereto. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Advances and other amounts owing hereunder), no
Agent shall be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Requisite
Lenders, and such instructions shall be binding upon all
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Lenders; provided, however, that no Agent shall be required to take any action
which exposes such Agent to personal liability or which is contrary to any of
the Loan Documents or applicable law. Each Agent agrees to give to each Lender
prompt notice of each notice given to it by the Borrower pursuant to the terms
of the Loan Documents.
SECTION 7.02. AGENTS' RELIANCE, ETC. Neither the Agents nor any of
their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with any of the Loan Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing, the
Agents: (i) may treat the payee of any Advance as the holder thereof until the
Administrative Agent receives and accepts an Assignment and Acceptance entered
into by the Lender which is the payee of such Advance, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult
with legal counsel (including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) make no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with any of the Loan Documents; (iv) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of any of the Loan Documents on the part of the Borrower
or to inspect the property (including the books and records) of the Borrower;
(v) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any of the Loan
Documents or any other instrument or document furnished pursuant hereto; and
(vi) shall incur no liability under or in respect of any of the Loan Documents
by acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopier, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 7.03. CUSA, B OF A AND AFFILIATES. With respect to its
respective Commitment and the respective Advances made by it, CUSA and B of A
shall each have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not an Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include B of
A and CUSA respectively in its individual capacity. B of A or CUSA and their
respective affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business (including
without limitation the investment banking business) with, the Borrower, any of
its subsidiaries and any Person who may do business with or own securities of
the Borrower or any such subsidiary, all as if B of A or CUSA, as the case may
be was not Agent and without any duty to account therefor to the Lenders.
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SECTION 7.04. LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon either the Agents or any other
Lender and based on the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agents or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. INDEMNIFICATION. The Lenders (other than the Designated
Bidders) agree to indemnify each Agent (to the extent not reimbursed by the
Borrower), ratably according to the respective principal amounts of the
Committed Advances then held by each of them (or if no such Advances are at the
time outstanding or if any such Advances are held by Persons which are not
Lenders, ratably according to the respective amounts of their Commitments), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against such
Agent in any way relating to or arising out of any of the Loan Documents or any
action taken or omitted by such Agent under any of the Loan Documents, provided
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from any Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender (other than the Designated
Bidders) agrees to reimburse each Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by such
Agent in connection with the preparation, execution, delivery, administration,
syndication, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, the Loan Documents, to the extent that such
Agent is not reimbursed for such expenses by the Borrower.
SECTION 7.06. SUCCESSOR AGENT. Each Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Requisite Lenders. Upon any such
resignation or removal, the Requisite Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation or the Requisite
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
or any Bank and, in each case having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as an Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring
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Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under the Loan Documents.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Requisite Lenders, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, do any of the following: (a) waive any of the
conditions specified in Section 3.01, (b) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations, (c) reduce the
principal of, or interest on, the Advances or any fees or other amounts payable
hereunder, (d) postpone any date fixed for any payment of principal of, or
interest on, the Advances or any fees or other amounts payable hereunder, (e)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Advances, or the number of Lenders, which shall be required for
the Lenders or any of them to take any action hereunder or (f) amend Section
2.15 or this Section 8.01; and provided, further, that no amendment, waiver or
consent shall, unless in writing and signed by an Agent in addition to the
Lenders required above to take such action, affect the rights or duties of such
Agent under this Agreement.
SECTION 8.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Borrower, at its address at Dial Tower, Phoenix,
Arizona 85077-2343, Attn: Treasurer; if to any Bank, at its Domestic Lending
Office specified opposite its name on Schedule I hereto; if to any other Lender,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; if to the Administrative Agent at its
address at Citicorp USA, Inc., Loan Syndications Operations, 1 Court Square, 7th
Floor Zone 1, Long Island City, New York 11120 (with a copy of notices, other
than those given pursuant to Sections 2.01 through 2.14 hereof, to Citicorp USA,
Inc., c/o Citicorp North America, Inc., One Sansome Street, San Francisco,
California 94104, Attn: Rosanna Bartolazo) and if to the Documentation Agent at
its address at 1455 Market Street, San Francisco, California 94103, Agency
Management Services No. 5596; or, as to the Borrower or either Agent, at such
other address as shall be designated by such party in a written notice to the
other parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to
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the Borrower and the Agents. All such notices and communications shall, when
personally delivered, mailed, telecopied, telegraphed, telexed or cabled, be
effective when personally delivered, after five (5) days after being deposited
in the mails, when confirmed by telecopy response, when delivered to the
telegraph company, when confirmed by telex answerback or when delivered to the
cable company, respectively, except that notices and communications to any Agent
pursuant to Article II or VII shall not be effective until received by such
Agent.
SECTION 8.03. NO WAIVER; REMEDIES. No failure on the part of any
Lender or either Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.04. COSTS, EXPENSES AND INDEMNIFICATION.
(a) The Borrower agrees to pay promptly on demand all reasonable costs
and out-of-pocket expenses of the Agents in connection with the preparation,
execution, delivery, administration, syndication, modification and amendment of
this Agreement, and the other documents to be delivered hereunder or thereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Agents (including the allocated time charges of each Agent's
legal departments, as their respective internal counsel) with respect thereto
and with respect to advising the Agents as to their rights and responsibilities
under this Agreement. The Borrower further agrees to pay promptly on demand all
costs and expenses of the Agents and of each Lender, if any (including, without
limitation, reasonable counsel fees and out-of-pocket expenses), in connection
with the enforcement (whether through negotiations, legal proceedings or
otherwise) of this Agreement and the other documents to be delivered hereunder
or thereunder, including, without limitation, reasonable counsel fees and
out-of-pocket expenses in connection with the enforcement of rights under this
Section 8.04(a). Such expenses shall be reimbursed by the Borrower upon a
presentation of statement of account, regardless of whether the Closing Date,
the Effective Date or the Distribution occurs.
(b) If any payment of principal of any Eurodollar Rate Advance is made
other than on the last day of the interest period for such Advance, as a result
of a payment pursuant to Section 2.06 or acceleration of the maturity of the
Advances pursuant to Section 6.01 or for any other reason, the Borrower shall,
upon demand by any Lender (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Lender any
amounts required to compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment, including,
without limitation, any loss, cost
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or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such Advance.
(c) The Borrower agrees to indemnify and hold harmless each Agent,
each Lender and each director, officer, employee, agent, attorney and affiliate
of each Agent and each Lender (each an "indemnified person") in connection with
any expenses, losses, claims, damages or liabilities to which an Agent, a Lender
or such indemnified persons may become subject, insofar as such expenses,
losses, claims, damages or liabilities (or actions or other proceedings
commenced or threatened in respect thereof) arise out of the transactions
referred to in this Agreement or arise from any use or intended use of the
proceeds of the Advances, or in any way arise out of activities of the Borrower
that violate Environmental Laws, and to reimburse each Agent, each Lender and
each indemnified person, upon their demand, for any reasonable legal or other
out-of-pocket expenses incurred in connection with investigating, defending or
participating in any such loss, claim, damage, liability, or action or other
proceeding, whether commenced or threatened (whether or not such Agent, such
Lender or any such person is a party to any action or proceeding out of which
any such expense arises). Notwithstanding the foregoing, the Borrower shall have
no obligation hereunder to an indemnified person with respect to indemnified
liabilities which have resulted from the gross negligence, bad faith or willful
misconduct of such indemnified person.
SECTION 8.05. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agents to
declare the Advances due and payable pursuant to the provisions of Section 6.01,
each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits (time
or demand, provisional or final, or general, but not special) at any time held
and other indebtedness at any time owing by such Lender to or for the credit or
the account of the Borrower against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement that are then due and
payable, whether or not such Lender shall have made any demand under this
Agreement. Each Lender agrees promptly to notify the Borrower after any such
set-off and application made by such Lender; provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
Lender may have.
SECTION 8.06. BINDING EFFECT; EFFECTIVENESS; ENTIRE AGREEMENT.
(a) This Agreement shall be deemed to have been executed and delivered
when it shall have been executed by Parentco and the Agents and when the Agents
shall have been notified by each Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of Parentco, each
Agent and each Lender and their respective successors and permitted assigns,
except that Parentco shall not have the right
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to assign its rights hereunder or any interest herein without the prior written
consent of all Lenders; provided, however, that Parentco may assign its rights
and obligations under this Agreement to Newco pursuant to the Assignment and
Assumption Agreement.
(b) This Agreement (except for the provisions of Section 2.04(d),
Articles VII and VIII hereof and related definitions) shall not become effective
until the time at which the conditions set forth in Section 3.02 have been
satisfied or otherwise waived at the Effective Time, at which time this
Agreement shall become fully effective. At such time this Agreement (including
the Schedules and Exhibits attached hereto) shall constitute the entire
agreement among Parentco (until the Distribution Time), Newco (at and after the
Distribution Time), the Lenders and Agents with respect to the subject matter
hereof and supersede all prior agreements, understandings and negotiations, both
written and oral, among such parties with respect to such subject matter. If the
Effective Date has not occurred by December 31, 1996, then this Agreement shall
terminate on such date.
SECTION 8.07. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender (other than the Designated Bidders) may assign to one
or more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and the Advances owing to it); provided, however, that (i) each such
assignment shall be of a constant, and not a varying, percentage of all of the
assigning Lender's rights and obligations under this Agreement (other than any
right to make Bid Advances or Bid Advances held by it), (ii) after giving effect
to any such assignment, (1) the assigning Lender shall no longer have any
Commitment or (2) the amount of the Commitment of both the assigning Lender and
the Eligible Assignee party to such assignment (in each case determined as of
the date of the Assignment and Acceptance with respect to such assignment) shall
not be less than $10,000,000, (iii) each such assignment shall be to an Eligible
Assignee, (iv) the parties to each such assignment shall execute and deliver to
the Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, and a processing and recordation fee of $3,000 to the
Administrative Agent, and (v) the Borrower and the Agents shall have consented
to such assignment, which consent shall not be unreasonably withheld. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto). Any Lender may at any time pledge or assign all or any
portion
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of its rights hereunder to a Federal Reserve Bank; provided, that no such pledge
or assignment shall release such Lender from any of its obligations hereunder.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with any of the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any of the Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under any of the Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (iii) such assignee
confirms that it has received a copy of the Loan Documents, together with copies
of the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agents, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents; (v) such assignee confirms that it
is an Eligible Assignee; (vi) such assignee appoints and authorizes each Agent
to take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to such Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender.
(c) Within five (5) days of its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee representing that it
is an Eligible Assignee (together with a processing and recordation fee of
$3,000 with respect thereto) and upon evidence of consent of the Borrower and
the Agents thereto, which consent shall not be unreasonably withheld, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit B hereto, (1) accept such Assignment
and Acceptance and (2) record the information contained therein in the Register.
All communications with the Borrower with respect to such consent of the
Borrower shall be sent pursuant to Section 8.02.
(d) Each Lender (other than the Designated Bidders) may designate one
or more banks or other entities to have a right to make Bid Advances as a Lender
pursuant to Section 2.03; provided, however, that (i) no such Lender shall be
entitled to make more than two such designations, (ii) each such Lender making
one or more of
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such designations shall retain the right to make Bid Advances as a Lender
pursuant to Section 2.03, (iii) each such designation shall be to a Designated
Bidder and (iv) the parties to each such designation shall execute and deliver
to the Agent, for its acceptance and recording in the Register, a Designation
Agreement. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Designation Agreement, the designee
thereunder shall be a party hereto with a right to make Bid Advances as a Lender
pursuant to Section 2.03 and the obligations related thereto.
(e) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such designee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into the
Designation Agreement; (iv) such designee will, independently and without
reliance upon the Agent, such designating Lender or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such designee confirms that it is a Designated Bidder; (vi)
such designee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such designee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(f) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Agent shall, if such Designation Agreement has been completed and is
substantially in the form of Exhibit H hereto, (i) accept such Designation
Agreement, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower.
(g) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance and each Designation
Agreement delivered to and accepted by it and a register for the recordation of
the names and addresses of the Lenders and, with respect to Lenders other than
Designated
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Bidders, the Commitment of, the Commitment Termination Date of, and principal
amount of the Advances owing to, each such Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agents and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of the Loan Documents. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(h) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Advances owing to it; provided, however, that (i) such Lender's obligations
under this Agreement (including, without limitation, its Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Advance for all purposes
of this Agreement, (iv) the Borrower, the Agents and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents, (v) no Lender shall
grant any participation under which the participant shall have rights to require
such Lender to take or omit to take any action hereunder or under the other Loan
Documents or approve any amendment to or waiver of this Agreement or the other
Loan Documents, except to the extent such amendment or waiver would: (A) extend
the Termination Date of such Lender; or (B) reduce the interest rate or the
amount of principal or fees applicable to Advances or the Commitment in which
such participant is participating or change the date on which interest,
principal or fees applicable to Advances or the Commitment in which such
participant is participating are payable, (vi) such Lender shall notify the
Borrower of the sale of the participation, and (vii) the Person purchasing such
participation shall agree to customary provisions relating to the
confidentiality of non-public information received by such Person in connection
with its purchase of the participation.
(i) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 8.07, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrower furnished to such Lender by or on behalf of
the Borrower; provided that, prior to any such disclosure, the assignee or
Participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential information relating to the Borrower
received by it from such Lender.
SECTION 8.08. CONFIDENTIALITY. Each Lender agrees, insofar as is
legally possible, to use its best efforts to keep in confidence all financial
data and other information relative to the affairs of the Borrower heretofore
furnished or which may hereafter be furnished to it pursuant to the provisions
of this Agreement; provided, however, that this Section 8.08 shall not be
applicable to information otherwise
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disseminated to the public by the Borrower; and provided further that such
obligation of each Bank shall be subject to each Bank's (a) obligation to
disclose such information pursuant to a request or order under applicable laws
and regulations or pursuant to a subpoena or other legal process, (b) right to
disclose any such information to bank examiners, its affiliates (including,
without limitation, in the case of B of A, BA Securities, Inc. and in the case
of CUSA, Citicorp Securities, Inc.), bank, auditors, accountants and its counsel
and other Banks, and (c) right to disclose any such information, (i) in
connection with the transactions set forth herein including assignments and
sales of participation interests pursuant to Section 8.07 hereof or (ii) in or
in connection with any litigation or dispute involving the Banks and the
Borrower or any transfer or other disposition by such Bank of any of its
Advances or other extensions of credit by such Bank to the Borrower or any of
its Subsidiaries, provided that information disclosed pursuant to this proviso
shall be so disclosed subject to such procedures as are reasonably calculated to
maintain the confidentiality thereof.
SECTION 8.09. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
SECTION 8.10. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 8.11. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. The
Borrower hereby irrevocably submits to the jurisdiction of any New York state or
Federal court sitting in New York, New York in any action or proceeding arising
out of or relating to this Agreement, and the Borrower hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such New York state or Federal court. The Borrower hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding. The
Borrower agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Section 8.11 shall affect
the right of any Lender or Agent to serve legal process in any other manner
permitted by law or affect the right of any Lender or Agent to bring any action
or proceeding against the Borrower or its property in the courts of any other
jurisdiction.
SECTION 8.12. WAIVER OF TRIAL BY JURY. THE BORROWER, THE BANKS, THE
AGENTS AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, OTHER LENDERS EACH HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
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without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. The Borrower, the Banks, the Agents and,
by its acceptance of the benefits hereof, other Lenders each (i) acknowledges
that this waiver is a material inducement for the Borrower, the Lenders and the
Agents to enter into a business relationship, that the Borrower, the Lenders and
the Agents have already relied on this waiver in entering into this Agreement or
accepting the benefits thereof, as the case may be, and that each will continue
to rely on this waiver in their related future dealings and (ii) further
warrants and represents that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
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64
<PAGE> 70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE DIAL CORP, a Delaware
corporation (to be known as VIAD
CORP upon the on and after the
Effective Date)
By__________________________
Title:
CITICORP USA, INC., as Administrative
Agent
By__________________________
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Documentation Agent
By__________________________
Title:
S-1
<PAGE> 71
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$35,000,000 CITICORP USA, INC.
By__________________________
Title:
</TABLE>
S-2
<PAGE> 72
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$35,000,000 BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By__________________________
Title:
</TABLE>
S-3
<PAGE> 73
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$30,000,000 THE CHASE MANHATTAN BANK, N.A.
By__________________________
Title:
</TABLE>
S-4
<PAGE> 74
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$30,000,000 CIBC INC.
By__________________________
Title:
</TABLE>
S-5
<PAGE> 75
<TABLE>
<CAPTION>
Commitment Lender
- ---------- -------
<S> <C>
$30,000,000 NATIONSBANK OF TEXAS, N.A.
By__________________________
Title:
</TABLE>
S-6
<PAGE> 76
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$25,000,000 BANK OF MONTREAL
By__________________________
Title:
</TABLE>
S-7
<PAGE> 77
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$25,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By__________________________
Title:
</TABLE>
S-8
<PAGE> 78
<TABLE>
<CAPTION>
Commitment Lender
- --------- ------
<S> <C>
$25,000,000 NBD BANK, N.A.
By__________________________
Title:
</TABLE>
S-9
<PAGE> 79
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$25,000,000 ROYAL BANK OF CANADA
By__________________________
Title:
</TABLE>
S-10
<PAGE> 80
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$20,000,000 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK
BRANCH
By__________________________
Title:
By__________________________
Title:
</TABLE>
S-11
<PAGE> 81
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$15,000,000 THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By__________________________
Title:
</TABLE>
S-12
<PAGE> 82
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$15,000,000 MELLON BANK, N.A.
By__________________________
</TABLE>
Title:
S-13
<PAGE> 83
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$10,000,000 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY
By__________________________
Title:
By__________________________
Title:
</TABLE>
S-14
<PAGE> 84
<TABLE>
<CAPTION>
Commitment Lender
- ---------- -------
<S> <C>
$10,000,000 THE NORTHERN TRUST COMPANY
By__________________________
Title:
</TABLE>
S-15
<PAGE> 85
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$10,000,000 UNION BANK OF CALIFORNIA
By__________________________
Title:
</TABLE>
S-16
<PAGE> 86
<TABLE>
<CAPTION>
Commitment Lender
- ---------- ------
<S> <C>
$10,000,000 WELLS FARGO BANK OF ARIZONA,
NATIONAL ASSOCIATION
By__________________________
Title:
</TABLE>
S-17
<PAGE> 1
EXHIBIT 10(k)
FORM OF
THE DIAL CORPORATION
EMPLOYEE EQUITY TRUST
Effective as of August 15, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1.
Trust, Trustee and Trust Fund............................................ 2
1.1. Trust................................................ 2
1.2. Trustee.............................................. 2
1.3. Trust Fund........................................... 2
1.4. Trust Fund Subject to Claims......................... 3
1.5. Definitions.......................................... 3
ARTICLE 2.
Contribution and Dividends............................................... 7
2.1. Contributions........................................ 7
2.2. Dividends............................................ 7
ARTICLE 3.
Release and Allocation of Company Stock.................................. 8
3.1. Release of Shares.................................... 8
3.2. Allocations.......................................... 8
3.3. Excess Shares........................................ 9
ARTICLE 4.
Compensation, Expenses and Tax Withholding............................... 10
4.1. Compensation and Expenses............................ 10
4.2. Withholding of Taxes................................. 10
ARTICLE 5.
Administration of Trust Fund............................................. 10
5.1. Management and Control of Trust Fund................. 10
5.2. Investment of Funds.................................. 11
5.3. Trustee's Administrative Powers...................... 11
5.4. Voting and Tendering of Company Stock................ 13
5.5. Indemnification...................................... 15
5.6. General Duty to Communicate to Committee............. 16
ARTICLE 6.
Accounts and Reports of Trustee.......................................... 16
6.1. Records and Accounts of Trustee...................... 16
6.2. Fiscal Year.......................................... 16
6.3. Reports of Trustee................................... 16
6.4. Final Report......................................... 16
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 7.
Succession of Trustee.................................................... 17
7.1. Resignation of Trustee............................... 17
7.2. Removal of Trustee................................... 17
7.3. Appointment of Successor Trustee..................... 17
7.4. Succession to Trust Fund Assets...................... 17
7.5. Continuation of Trust................................ 18
7.6. Changes in Organization of Trustee................... 18
7.7. Continuance of Trustee's Powers in Event of
Termination of the Trust............................. 18
ARTICLE 8.
Amendment or Termination................................................. 18
8.1. Amendments........................................... 18
8.2. Termination.......................................... 19
8.3. Form of Amendment or Termination..................... 19
ARTICLE 9.
Miscellaneous............................................................ 19
9.1. Controlling Law...................................... 19
9.2. Committee Action..................................... 20
9.3. Notices.............................................. 20
9.4. Severability......................................... 20
9.5. Protection of Persons Dealing with
the Trust............................................ 20
9.6. Tax Status of Trust.................................. 21
9.7. Participants to Have No Interest in the
Company by Reason of the Trust....................... 21
9.8. Nonassignability..................................... 21
9.9. Gender and Plurals................................... 21
9.10. Counterparts......................................... 21
</TABLE>
-ii-
<PAGE> 4
THE DIAL CORPORATION
EMPLOYEE EQUITY TRUST
THIS TRUST AGREEMENT (the "Agreement") made effective as of
August 15, 1996, between The Dial Corporation, a Delaware corporation, and Wells
Fargo Bank of Arizona, N.A., a national banking association, as trustee.
W I T N E S S E T H :
WHEREAS, the Company (as defined below) desires to establish a
trust (the "Trust") in accordance with the laws of the State of Delaware and for
the purposes stated in this Agreement;
WHEREAS, in connection with the proposed dividend distribution
by The Dial Corp, a Delaware corporation (which in connection with such
distribution, will be renamed Viad Corp, "Old Dial") to its stockholders (the
"Distribution") of all of the outstanding shares of common stock, par value
$0.01 per share ("Company Stock"), of the Company, which, until the
Distribution, will be a wholly-owned subsidiary of Old Dial: (1) the trustee of
the Viad Corp Employee Equity Trust (the "Viad Equity Trust") will transfer to
the Trustee of the Trust all of the shares of Company Stock distributed in the
Distribution to the trustee of the Viad Equity Trust, (2) Old Dial will assign
to Dial a portion of the principal amount of the Promissory Note dated September
9, 1992 issued by the trustee of the Viad Equity Trust to Old Dial (the
"Original Note") and (3) the Trustee of the Trust will assume, and Old Dial will
release the Viad Equity Trust from, such portion of the Original Note;
WHEREAS, the Trustee (as defined below) desires to act as
trustee of the Trust, and to hold legal title to the assets of the Trust, in
trust, for the purposes hereinafter stated and in accordance with the terms
hereof;
WHEREAS, the Company or its subsidiaries have previously
adopted the Plans (as defined below);
WHEREAS, the Company desires to provide assurance of the
availability of the shares of its common stock necessary to satisfy certain of
its obligations or those of its subsidiaries under the Plans (as defined below);
<PAGE> 5
WHEREAS, the Company desires that the assets to be held in the
Trust Fund (as defined below) should be principally or exclusively securities of
the Company and, therefore, expressly waives any diversification of investments
that might otherwise be necessary, appropriate, or required pursuant to
applicable provisions of law; and
WHEREAS, Wells Fargo Bank of Arizona, N.A. has been appointed
as trustee and has accepted such appointment as of the date set forth first
above;
NOW, THEREFORE, the parties hereto hereby establish the Trust
and agree that the Trust will be comprised, held and disposed of as follows:
ARTICLE 1.
Trust, Trustee and Trust Fund
1.1. Trust. This Agreement and the Trust shall be known as The
Dial Corporation Employee Equity Trust. The parties intend that the Trust will
be an independent legal entity with title to and power to convey all of its
assets. The parties hereto further intend that the Trust not be subject to the
Employee Retirement Income Security Act of 1974, as amended. The Trust is not a
part of any of the Plans (as herein defined) and does not provide retirement or
other benefits to any Plan Participant (as herein defined). The assets of the
Trust will be held, invested and disposed of by the Trustee, in accordance with
the terms of the Trust.
1.2. Trustee. The trustee named above, and its successor or
successors, is hereby designated as the trustee hereunder, to receive, hold,
invest, administer and distribute the Trust Fund in accordance with this
Agreement, the provisions of which shall govern the power, duties and
responsibilities of the Trustee.
1.3. Trust Fund. The assets held at any time and from time to
time under the Trust collectively are herein referred to as the "Trust Fund" and
shall consist of contributions received by the Trustee, proceeds of any loans,
investments and reinvestment thereof, the earnings and income thereon, less
disbursements therefrom. Except as herein otherwise provided, title to the
assets of the Trust Fund shall at all times be vested in the Trustee and
securities that are part of the Trust Fund shall be held in such manner that the
Trustee's name and the fiduciary capacity in which the securities are held are
fully disclosed, subject to the right of
- 2 -
<PAGE> 6
the Trustee to hold title in bearer form or in the name of a nominee, and the
interests of others in the Trust Fund shall be only the right to have such
assets received, held, invested, administered and distributed in accordance with
the provisions of the Trust.
1.4. Trust Fund Subject to Claims. Notwithstanding any
provision of this Agreement to the contrary, the Trust Fund shall at all times
remain subject to the claims of the Company's general creditors under federal
and state law.
In addition, the Board of Directors and Chief Executive
Officer of the Company shall have the duty to inform the Trustee in writing of
the Company's Insolvency. If a person claiming to be a creditor of the Company
alleges in writing to the Trustee that the Company has become Insolvent, the
Trustee shall determine whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue allocations pursuant to Article 3.
Unless the Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a person claiming to be a
creditor alleging that the Company is Insolvent, the Trustee shall have no duty
to inquire whether the Company is Insolvent. The Trustee may in all events rely
on such evidence concerning the Company's solvency as may be furnished to the
Trustee and that provides the Trustee with a reasonable basis for making a
determination concerning the Company's Insolvency.
If at any time the Trustee has determined that the Company is
Insolvent, the Trustee shall discontinue allocations pursuant to Article 3 and
shall hold the Trust Fund for the benefit of the Company's general creditors.
Nothing in this Trust Agreement shall in any way diminish any rights of
employees as general creditors of the Company with respect to benefits due under
the Plan(s) or otherwise.
The Trustee shall resume allocations pursuant to Article 3
only after the Trustee has determined that the Company is not Insolvent (or is
no longer Insolvent).
1.5. Definitions. In addition to the terms defined in the
preceding portions of the Trust, certain capitalized terms have the meanings set
forth below:
Basket Value. "Basket Value" means with respect to each Trust
Year, the product of (a) the Available Shares for such Trust Year, (b) the
product of four and the Company's most recent reported quarterly earnings per
share, and (c)
- 3 -
<PAGE> 7
the equal weighted average price earnings ratio of the following companies (or
any successor of such companies) as reported in the Wall Street Journal on the
last business day of such Trust Year: Church & Dwight Co., Inc., The Clorox
Company, Colgate-Palmolive Company and Procter & Gamble Company.
Board of Directors. "Board of Directors" means the board of
directors of the Company.
Calculation Period. "Calculation Period" means a period
consisting of calendar years 1997-2002, 2003-2007, or 2008-2012.
Change of Control. "Change of Control" means any of the
following events:
(a) an acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the
combined voting power of the then outstanding voting securities of the Company;
provided, however, that the following acquisitions shall not constitute a Change
of Control: (i) an acquisition by or directly from the Company, (ii) an
acquisition by any employee benefit plan or trust sponsored or maintained by the
Company; and (iii) any acquisition described in subclauses (A) or (B) of
subsection (b) below; or
(b) approval by the stockholders of the Company of (i) a
complete dissolution or liquidation of the Company, (ii) a sale or other
disposition of all or substantially all of the Company's assets or (iii) a
reorganization, merger, or consolidation ("Business Combination") unless either
(A) all or substantially all of the stockholders of the Company immediately
prior to the Business Combination own more than 50% of the voting securities of
the entity surviving the Business Combination, or the entity which directly or
indirectly controls such surviving entity, in substantially the same proportion
as they owned the voting securities of the Company immediately prior thereto, or
(B) the consideration (other than cash paid in lieu of fractional shares or
payment upon perfection of appraisal rights) issued to stockholders of the
Company in the Business Combination is solely common stock which is publicly
traded on an established securities exchange in the United States.
Code. "Code" means the Internal Revenue Code of 1986, as
amended.
- 4 -
<PAGE> 8
Committee. "Committee" means a committee of officers,
directors and/or employees of the Company which is charged by the Board of
Directors with administration of the Trust.
Company. "Company" means The Dial Corporation, a Delaware
corporation, or any successor thereto. References to the Company shall include
its subsidiaries where appropriate.
Company Stock. "Company Stock" means shares of common stock,
par value $0.01 per share, issued by the Company or any successor securities.
DC Participant. "DC Participant" means as of any date any
individual who is employed by the Company or any subsidiary of the Company as of
such date and is a participant in a DC Plan.
DC Plan. "DC Plan" shall mean The Dial Corporation Capital
Accumulation Plan (TDC TRIM) including any successor thereto.
DC Plans Trustee Certification. "DC Plans Trustee
Certification" means a certification to be delivered by the trustee of the DC
Plan to the Trustee pursuant to Section 5.4, which sets forth the directions
made by each DC Participant as to voting or tendering of Company Stock allocated
to his account in the respective DC Plan with respect to the voting or tendering
decision at issue.
Distribution Fraction. "Distribution Fraction" means a
fraction, the numerator of which is the average Fair Market Value of the Company
Stock in the when-issued market for the five trading days prior to the date of
the Distribution and the denominator of which is the average Fair Market Value
of the common stock, par value $1.50 per share, of Old Dial over such period on
a basis that includes the value of the Distribution.
Extraordinary Dividend. "Extraordinary Dividend" means any
dividend or other distribution of cash or other property (other than Company
Stock) made with respect to Company Stock, which the Board of Directors declares
generally to be other than an ordinary dividend.
Fair Market Value. "Fair Market Value" means as of any date
the average of the highest and lowest reported sales price regular way on such
date (or if such date is not a trading day, then on the most recent prior date
which is a
- 5 -
<PAGE> 9
trading day) of a share of Company Stock as reported on the composite tape, or
similar reporting system, for issues listed on the New York Stock Exchange (or,
if the Company Stock is no longer traded on the New York Stock Exchange, on such
other national securities exchange on which the Company Stock is listed or
national securities or central market system upon which transactions in Company
Stock are reported, as either shall be designated by the Committee for the
purposes hereof) or if sales of Common Stock are not reported in any manner
specified above, the average of the high bid and low asked quotations on such
date (or if such date is not a trading day, then on the most recent prior date
which is a trading day) in the over-the-counter market as reported by the
National Association of Securities Dealers' Automated Quotation System or, if
not so reported, by National Quotation Bureau, Incorporated or similar
organization selected by the Committee.
Final Target Value. "Final Target Value" means with respect to
each Trust Year the greater of (a) the Target Value and (b) the Basket Value.
Insolvency. "Insolvency" means (a) the inability of the
Company to pay its debts as they become due, or (b) the Company being subject to
a pending proceeding as a debtor under the provisions of Title 11 of the United
States Code (Bankruptcy Code).
Loan. "Loan" means the loan and extension of credit to the
Trust evidenced by the promissory note in the form attached hereto made by the
Trustee dated August 15, 1996, and delivered to the Company in connection with
the transfer of shares of Company Stock by The Viad Equity Trust to the Trust.
Plans. "Plans" mean the DC Plan, the employee benefit plans
listed on Schedule A hereto and any other employee benefit plan of the Company
or its subsidiaries designated as such by the Board of Directors.
Plan Participant. "Plan Participant" means a participant in
any of the Plans.
Suspense Account. "Suspense Account" means a separate account
to be maintained by the Trustee to hold Excess Shares pursuant to the terms of
Article 3 hereof.
Target Value. "Target Value" for a given Trust Year means the
amount set forth on Schedule B hereto.
- 6 -
<PAGE> 10
Trustee. "Trustee" means Wells Fargo Bank of Arizona, N.A., a
national banking association (not in its corporate capacity but as trustee of
the Trust), or any successor trustee.
Trust Year. "Trust Year" means the period beginning on August
15, 1996 and ending on December 31, 1996 and each 12-month period beginning on
January 1 and ending on December 31 thereafter.
ARTICLE 2.
Contributions and Dividends
2.1. Contributions. For each Trust Year other than the year
ending December 31, 1996, the Company shall contribute to the Trust in cash such
amount, which together with dividends, as provided in Section 2.2, and any other
earnings of the Trust, shall enable the Trustee to make all payments of
principal and interest due under the Loan on a timely basis. Unless otherwise
expressly provided herein, the Trustee shall apply all such contributions,
dividends and earnings to the payment of principal and interest due under the
Loan. If, at the end of any Trust Year, no such contribution has been made in
cash, such contribution shall be deemed to have been made in the form of
forgiveness of principal and interest on the Loan to the extent of the Company's
failure to make contributions as required by this Section 2.1. All contributions
made under the Trust shall be delivered to the Trustee. The Trustee shall be
accountable for all contributions received by it, but shall have no duty to
require any contributions to be made to it.
2.2. Dividends. Except as otherwise provided herein, dividends
paid in cash on Company Stock held by the Trust, including Company Stock held in
the Suspense Account, shall be applied to pay interest and repay scheduled
principal due under the Loan. In the event that dividends paid on Company Stock
held in the Trust, other than Extraordinary Dividends, exceed the amount of
scheduled principal and interest due in any Trust Year other than the year
ending December 31, 1996, such excess shall be distributed to the Plans and/or
to any other broad cross-section of individuals employed by the Company, as
determined in good faith by the Committee; provided, however, that in the event
that in any Trust Year (other than the year ending December 31, 1996) cash
dividends on Company Stock held by the Trust exceed the amount indicated on
Schedule C hereto, other than by reason of an Extraordinary Dividend, such
excess shall be applied to
- 7 -
<PAGE> 11
prepay principal of the Loan. Extraordinary Dividends, as well as dividends
which are not in cash or in Company Stock, shall not be used to pay interest on
or principal of the Loan, but shall be reduced to cash by the Trustee and
reinvested in Company Stock as soon as practicable. Company Stock purchased with
the proceeds of an Extraordinary Dividend or with the proceeds of a non-cash
dividend shall, for purposes of this Agreement (including without limitation
Section 3.1 hereof), be deemed to have been acquired with the proceeds of the
Loan. In the Trustee's discretion, investments in Company Stock may be made
through open-market purchases, private transactions or (with the Company's
consent) purchases from the Company.
ARTICLE 3.
Release and Allocation of Company Stock
3.1. Release of Shares. Subject to the other provisions of
this Article 3, upon the payment or forgiveness in any Trust Year of any
principal on the Loan (a "Principal Payment"), the following number of shares of
Company Stock acquired with the proceeds of the Loan shall be available for
allocation ("Available Shares") as provided in this Article 3: the number of
shares so acquired and held in the Trust immediately before such payment or
forgiveness, multiplied by a fraction the numerator of which is the amount of
the Principal Payment and the denominator of which is the sum of such Principal
Payment and the remaining principal of the Loan outstanding after such Principal
Payment.
3.2. Allocations. Subject to the provisions of Section 3.3,
Available Shares shall be allocated as directed by the Committee to the Plans on
a quarterly basis or at such other times during the Trust Year as may be
required to provide shares in accordance with the respective regular payment
schedules for benefits under such Plans. The Committee's discretion shall be
limited to the number of shares of Company Stock allocated among Plans, with the
allocation itself being mandatory. Subject to Section 3.3, in the event that as
of December 31 of any given Trust Year, any unallocated Available Shares remain
after satisfaction of all benefit obligations under each of the Plans for a
given Trust Year, and/or after determination of the amount, if any, of Excess
Shares, under Section 3.3, all remaining Available Shares shall be contributed
by the Trustee to the Plans or such other plans of the Company or its
subsidiaries covering a broad cross-section of individuals employed by the
Company as the Committee shall direct.
- 8 -
<PAGE> 12
3.3. Excess Shares. (a) Notwithstanding the provisions of
Section 3.2, Available Shares shall not be released from the Trust and allocated
during a given Trust Year pursuant to Section 3.2 to the extent that the Fair
Market Value of the Available Shares theretofore allocated during such Trust
Year, as of the date(s) of allocation, together with the Fair Market Value of
the Available Shares proposed to be allocated, as of the date(s) of proposed
allocation, exceeds the Target Value. If, as of December 31 of such Trust Year,
the Fair Market Value of the Available Shares theretofore allocated during such
Trust Year, as of the date(s) of allocation, together with the Available Shares
for such Trust Year not yet allocated, exceeds the Final Target Value, the
Available Shares with a Fair Market Value as of December 31 in an amount equal
to such excess shall not be released and allocated pursuant to this Section 3.2
but rather, such Available Shares ("Excess Shares") shall be held by the Trustee
in the Suspense Account and allocated in accordance with the provisions of this
Section 3.3.
(b) In the event that there are any Excess Shares created in
any Trust Year within a Calculation Period, such Excess Shares shall be released
from the Suspense Account pursuant to Section 3.2 to the extent that but for
such release the Fair Market Value of the Available Shares in a subsequent Trust
Year within the same Calculation Period would be less than the Final Target
Value. In the event that in any Trust Year the value of the Available Shares was
less than the Final Target Value for such Trust Year (such amount being referred
to as the "Shortfall") and Excess Shares are created in subsequent Trust Year
within the same Calculation Period, Excess Shares with a value equal to the
Shortfall shall be transferred by the Trustee to such Plans as directed by the
Committee; it being understood, that such shares may not, in any event, be
transferred to the Company.
(c) In the event that at the end of any Calculation Period
there are Excess Shares that have not been allocated pursuant to Section 3.3(b),
such Excess Shares shall, subject to the provisions of this subsection (c), be
distributed in equal amounts of shares in each Trust Year in the next
Calculation Period to individuals employed by the Company or plans in which they
participate, as directed by the Committee taking into account the best interest
of the individuals employed by the Company and its subsidiaries. However, Excess
Shares which would have been allocated in a Trust Year pursuant to the preceding
sentence shall instead be allocated pursuant to Section 3.2 to the extent that
there is a Shortfall with respect to such Trust Year. Any Excess Shares
remaining in the Trust at the beginning of the final
- 9 -
<PAGE> 13
Calculation Period of the Trust shall be contributed in equal amounts of shares
in each Trust Year during such Calculation Period to individuals employed by the
Company or plans in which they participate, as directed by the Committee taking
into account the best interest of the individuals employed by the Company and
its subsidiaries, and the Trust shall not terminate until such Excess Shares
have been so contributed.
ARTICLE 4.
Compensation, Expenses and Tax Withholding
4.1. Compensation and Expenses. The Trustee shall be entitled
to such reasonable compensation for its services as may be agreed upon from time
to time by the Company and the Trustee and to be reimbursed for its reasonable
legal, accounting and appraisal fees, expenses and other charges reasonably
incurred in connection with the administration, management, investment and
distribution of the Trust Fund. Such compensation shall be paid, and such
reimbursement shall be made out of the Trust Fund. The Company agrees to make
sufficient contributions to the Trust to pay such amounts owing the Trustee in
addition to those contributions required by Section 2.1 and, in the event the
Company fails to make the contributions necessary to pay amounts owing to the
Trustee, the Trustee shall be entitled to seek payment directly from the
Company.
4.2. Withholding of Taxes. The Trustee may withhold, require
withholding, or otherwise satisfy its withholding obligation, on any
distribution which it is directed to make, such amount as it may reasonably
estimate to be necessary to comply with applicable federal, state and local
withholding requirements. Upon settlement of such tax liability, the Trustee
shall distribute the balance of such amount. Prior to making any distribution
hereunder, the Trustee may require such release or documents from any taxing
authority, or may require such indemnity, as the Trustee shall reasonably deem
necessary for its protection.
ARTICLE 5.
Administration of Trust Fund
5.1. Management and Control of Trust Fund. Subject to the
terms of this Agreement, the Trustee shall have exclusive authority, discretion
and responsibility to manage and control the assets of the Trust Fund.
- 10 -
<PAGE> 14
5.2. Investment of Funds.
Except as otherwise provided in Section 2.2 and in this
Section 5.2, the Trustee shall invest and reinvest the Trust Fund exclusively in
Company Stock, including any accretions thereto resulting from the proceeds of a
tender offer, recapitalization or similar transaction which, if not in Company
Stock, shall be reduced to cash as soon as practicable. The Trustee may invest
any portion of the Trust Fund temporarily pending investment in Company Stock,
distribution or payment of expenses in (a) investments in United States
Government obligations with maturities of less than one year, (b)
interest-bearing accounts including but not limited to certificates of deposit,
time deposits, saving accounts and money market accounts with maturities of less
than one year in any bank, including the Trustee's, with aggregate capital in
excess of $1,000,000,000 and a Moody's Investor Services rating of at least P1,
or an equivalent rating from a nationally recognized ratings agency, which
accounts are insured by the Federal Deposit Insurance Corporation or other
similar federal agency, (c) obligations issued or guaranteed by any agency or
instrumentality of the United States of America with maturities of less than one
year or (d) short-term discount obligations of the Federal National Mortgage
Association.
5.3. Trustee's Administrative Powers.
Except as otherwise provided herein, and subject to the
Trustee's duties hereunder, the Trustee shall have the following powers and
rights, in addition to those provided elsewhere in this Agreement or by law:
(a) to retain any asset of the Trust Fund;
(b) subject to Section 5.4 and Article 3, to sell, transfer,
mortgage, pledge, lease or otherwise dispose of, or grant options with
respect to any Trust Fund assets at public or private sale;
(c) upon direction from the Company, to borrow from any lender
(including the Company pursuant to the Loan), to acquire Company Stock
as authorized by this Agreement, to enter into lending agreements upon
such terms (including reasonable interest and security for the loan and
rights to renegotiate and prepay such loan) as may be determined by the
Committee; provided, however, that any collateral given by the Trustee
for the Loan shall be limited to cash and property contributed
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<PAGE> 15
by the Company to the Trust and dividends paid on Company Stock held in
the Trust Fund and shall not include Company Stock acquired with the
proceeds of Loan;
(d) with the consent of the Committee, to settle, submit to
arbitration, compromise, contest, prosecute or abandon claims and
demands in favor of or against the Trust Fund;
(e) to vote or to give any consent with respect to any
securities, including any Company Stock, held by the Trust either in
person or by proxy for any purpose, provided that the Trustee shall
vote, tender or exchange all shares of Company Stock as provided in
Section 5.4;
(f) to exercise any of the powers and rights of an individual
owner with respect to any asset of the Trust Fund and to perform any
and all other acts that in its judgment are necessary or appropriate
for the proper administration of the Trust Fund, even though such
powers, rights and acts are not specifically enumerated in this
Agreement;
(g) to employ such accountants, actuaries, investment bankers,
appraisers, other advisors and agents as may be reasonably necessary in
collecting, managing, administering, investing, valuing, distributing
and protecting the Trust Fund or the assets thereof or any borrowings
of the Trustee made in accordance with Section 5.3(c); and to pay their
reasonable fees and expenses, which shall be deemed to be expenses of
the Trust and for which the Trustee shall be reimbursed in accordance
with Section 4.1;
(h) to cause any asset of the Trust Fund to be issued, held or
registered in the Trustee's name or in the name of its nominee, or in
such form that title will pass by delivery, provided that the records
of the Trustee shall indicate the true ownership of such asset;
(i) to utilize another entity as custodian to hold, but not
invest or otherwise manage or control, some or all of the assets of the
Trust Fund; and
(j) to consult with legal counsel (who may also be counsel for
the Trustee generally) with respect to any of its duties or obligations
hereunder; and to pay the reasonable fees and expenses of such counsel,
which shall be deemed to be expenses of the Trust and for
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<PAGE> 16
which the Trustee shall be reimbursed in accordance with Section 4.1.
Notwithstanding the foregoing, neither the Trust nor the Trustee shall
have any power to, and shall not, engage in any trade or business.
5.4. Voting and Tendering of Company Stock.
(a) Voting of Company Stock. The Trustee shall follow the
directions of the trustee of any trust established under a DC Plan as to the
manner in which shares of Company Stock held by the Trust are to be voted on
each matter brought before an annual or special stockholders' meeting of the
Company or the manner in which any consent is to be executed, in each case as
provided below. Before each such meeting of stockholders, the Trustee shall
cause to be furnished to the trustee of each trust established under a DC Plan a
copy of the proxy solicitation material received by the Trustee, together with a
form requesting confidential instructions as to how to vote the shares of
Company Stock held by the Trustee. Upon timely receipt of the DC Plans Trustee
Certification, the Trustee shall on each such matter vote the number of shares
(including fractional shares) of Company Stock held by the Trust as follows:
The Trustee shall, with respect to each DC Plan, assign to
each DC Participant, a number of shares (the "DC Participant Directed Amount")
equal to the product of (i) the total number of shares of Common Stock held in
the Trust Fund, and (ii) a fraction, the numerator of which is the number of
shares of Company Stock allocated from the Trust Fund to such DC Participant's
account in the DC Plan for the most recent preceding Trust Year and the
denominator of which is the total number of shares of Company Stock contributed
by the Trustee to the trustees of the trusts established under all the DC Plans
with respect to such Trust Year, in each case, as reflected in the DC Plans
Trustee Certification (provided, however, that during the year ending December
31, 1996, the numerator shall be the number of shares of Company Stock in such
DC Participant's account in the DC Plan as of the record date for such vote and
the denominator shall be the total number of shares of Company Stock allocated
to participants' accounts in the DC Plan as of such date). Each share assigned
to each DC Participant in accordance with the previous sentence shall be voted
in accordance with such participant's direction to the trustee of the DC Plan in
which he participates with respect to shares of Company Stock allocated to his
account in such DC Plan, as reflected in the DC Plans Trustee Certification. Any
shares of Company Stock
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<PAGE> 17
which remain undirected pursuant to the foregoing provisions shall be voted for,
against or to abstain in the same proportions as the shares of Company Stock for
which the Trustee is directed as provided above. Similar provisions shall apply
in the case of any action by stockholder consent without a meeting.
(b) Tender or Exchange of Company Stock. The Trustee shall use
its best efforts timely to distribute or cause to be distributed to the trustee
of any trust established under any DC Plan any written materials distributed to
stockholders of the Company generally in connection with any tender offer or
exchange offer, together with a form requesting confidential instructions on
whether or not to tender or exchange shares of Company Stock held in the Trust.
Upon timely receipt of the DC Plans Trustee Certification, the Trustee shall
tender or not tender the DC Participant Directed Amount for each DC Participant
in accordance with such participant's direction to the trustee of the DC Plan in
which he participates with respect to shares of Company Stock allocated to his
account in such DC Plan, as set forth in the DC Plans Trustee Certification. The
trustee of any DC Plan shall not be limited in the number of instructions to
tender or withdraw from tender which it may give but shall not have the right to
give instructions to tender or withdraw from tender after a reasonable time
established by the Trustee. If the Trustee shall not receive timely instruction
by means of the DC Plans Trustee Certification as to the manner in which to
respond to such a tender or exchange offer, the Trustee shall not tender or
exchange any shares of Company Stock with respect to which the trustee of any DC
Plan has the right of direction, and the Trustee shall have no discretion in
such matter.
(c) The Company shall maintain appropriate procedures to
ensure that all instructions by DC Participants are collected, tabulated, and
transmitted to the trustees under the DC Plans and to the Trustee without being
divulged or released to any person affiliated with the Company or its
affiliates. All actions taken by DC Participants and the contents of the DC
Plans Trustee Certification shall be held confidential by the Trustee and shall
not be divulged or released to any person, other than (i) agents of the Trustee
who are not affiliated with the Company or its affiliates or (ii) by virtue of
the execution by the Trustee of any proxy, consent or letter of transmittal for
the shares of Company Stock held in the Trust.
- 14 -
<PAGE> 18
5.5. Indemnification.
(a) The Company shall and hereby does indemnify and hold
harmless the Trustee from and against any claims, demands, actions,
administrative or other proceedings, causes of action, liability, loss, cost,
damage or expense (including reasonable attorneys' fees), which may be asserted
against it, in any way arising out of or incurred as a result of its action or
failure to act in connection with the operation and administration of the Trust;
provided that such indemnification shall not apply to the extent that the
Trustee has acted in willful or negligent violation of applicable law or its
duties under this Trust or in bad faith. The Trustee shall be under no liability
to any person for any loss of any kind which may result (i) by reason of any
action taken by it in accordance with any direction of the Committee or any DC
Participant acting pursuant to Section 5.4 (hereinafter collectively referred to
as the "directing participants"), (ii) by reason of its failure to exercise any
power or authority or to take any action hereunder because of the failure of any
such directing participant to give directions to the Trustee, as provided for in
this Agreement, or (iii) by reason of any act or omission of any of the
directing participants with respect to its duties under this Trust. The Trustee
shall be fully protected in acting upon any instrument, certificate, or paper
delivered by the Committee or any DC Participant or beneficiary and believed in
good faith by the Trustee to be genuine and to be signed or presented by the
proper person or persons, and the Trustee shall be under no duty to make any
investigation or inquiry as to any statement contained in any such writing, but
may accept the same as conclusive evidence of the truth and accuracy of the
statements therein contained.
(b) The Company may, but shall not be required to, maintain
liability insurance to insure its obligations hereunder. If any payments made by
the Company or the Trust pursuant to this indemnity are covered by insurance,
the Company or the Trust (as applicable) shall be subrogated to the rights of
the indemnified party against the insurance company.
(c) Without limiting the generality of the foregoing, the
Company may, at the request of the Trustee, advance to the Trustee reasonable
amounts of expenses, including reasonable attorneys' fees and expenses, which
the Trustee advises have been incurred in connection with its investigation or
defense of any claim, demand, action, cause of action, administrative or other
proceeding arising out of
- 15 -
<PAGE> 19
or in connection with the Trustee's performance of its duties under this
Agreement.
5.6. General Duty to Communicate to Committee. The Trustee
shall promptly notify the Committee of all communications with or from any
government agency or with respect to any legal proceeding with regard to the
Trust and with or from any Plan Participants concerning their entitlements under
the Plans or the Trust.
ARTICLE 6.
Accounts and Reports of Trustee
6.1. Records and Accounts of Trustee. The Trustee shall
maintain accurate and detailed records and accounts of all transactions of the
Trust, which shall be available at all reasonable times for inspection or audit
by any person designated by the Company and which shall be retained as required
by applicable law.
6.2. Fiscal Year. The fiscal year of the Trust shall be the
twelve month period beginning on January 1 and ending on December 31.
6.3. Reports of Trustee. The Trustee shall prepare and present
to the Committee a report for the period ending on the last day of each fiscal
year, and for such shorter periods as the Committee may reasonably request,
listing all securities and other property acquired and disposed of and all
receipts, disbursements and other transactions effected by the Trust after the
date of the Trustee's last account, and further listing all cash, securities,
and other property held by the Trust, together with the fair market value
thereof, as of the end of such period. In addition to the foregoing, the report
shall contain such information regarding the Trust Fund's assets and
transactions as the Committee in its discretion may reasonably request.
6.4. Final Report. In the event of the resignation or removal
of a Trustee hereunder, the Committee may request and the Trustee shall then
with reasonable promptness submit, for the period ending on the effective date
of such resignation or removal, a report similar in form and purpose to that
described in Section 6.3.
- 16 -
<PAGE> 20
ARTICLE 7.
Succession of Trustee
7.1. Resignation of Trustee. The Trustee or any successor
thereto may resign as Trustee hereunder at any time upon delivering a written
notice of such resignation, to take effect sixty (60) days after the delivery
thereof to the Committee, unless the Committee accepts shorter notice; provided,
however, that no such resignation shall be effective until a successor Trustee
has assumed the office of Trustee hereunder.
7.2. Removal of Trustee. The Trustee or any successor thereto
may be removed by the Company by delivering to the Trustee so removed an
instrument executed by the Committee. Such removal shall take effect at the date
specified in such instrument, which shall not be less than sixty (60) days after
delivery of the instrument, unless the Trustee accepts shorter notice; provided,
however, that no such removal shall be effective until a successor Trustee has
assumed the office of Trustee hereunder.
7.3. Appointment of Successor Trustee. Whenever the Trustee or
any successor thereto shall resign or be removed or a vacancy in the position
shall otherwise occur, the Board of Directors shall use its best efforts to
appoint a successor Trustee as soon as practicable after receipt by the
Committee of a notice described in Section 7.1, or the delivery to the Trustee
of a notice described in Section 7.2, as the case may be, but in no event more
than seventy-five (75) days after receipt or delivery, as the case may be, of
such notice. A successor Trustee's appointment shall not become effective until
such successor shall accept such appointment by delivering its acceptance in
writing to the Company. If a successor is not appointed within such 75 day
period, the Trustee, at the Company's expense, may petition a court of competent
jurisdiction for appointment of a successor.
7.4. Succession to Trust Fund Assets. The title to all
property held hereunder shall vest in any successor Trustee acting pursuant to
the provisions hereof without the execution or filing of any further instrument,
but a resigning or removed Trustee shall execute all instruments and do all acts
necessary to vest title in the successor Trustee. Each successor Trustee shall
have, exercise and enjoy all of the powers, both discretionary and ministerial,
herein conferred upon its predecessors. A successor Trustee shall not be obliged
to examine or review the accounts, records, or acts of, or property delivered
by, any previous Trustee and
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<PAGE> 21
shall not be responsible for any action or any failure to act on the part of any
previous Trustee.
7.5. Continuation of Trust. In no event shall the legal
disability, resignation or removal of a Trustee terminate the Trust, but the
Board of Directors shall forthwith appoint a successor Trustee in accordance
with Section 7.3 to carry out the terms of the Trust.
7.6. Changes in Organization of Trustee. In the event that any
corporate Trustee hereunder shall be converted into, shall merge or consolidate
with, or shall sell or transfer substantially all of its assets and business to,
another corporation, state or federal, the corporation resulting from such
conversion, merger or consolidation, or the corporation to which such sale or
transfer shall be made, shall thereunder become and be the Trustee under the
Trust with the same effect as though originally so named.
7.7. Continuance of Trustee's Powers in Event of Termination
of the Trust. In the event of the termination of the Trust, as provided herein,
the Trustee shall dispose of the Trust Fund in accordance with the provisions
hereof. Until the final distribution of the Trust Fund, the Trustee shall
continue to have all powers provided hereunder as necessary or expedient for the
orderly liquidation and distribution of the Trust Fund.
ARTICLE 8.
Amendment or Termination
8.1. Amendments. Except as otherwise provided herein, the
Company may amend the Trust at any time and from time to time in any manner
which it deems desirable, provided that no amendment which would adversely
affect the contingent rights of Plan Participants may change (a) the allocation
formula contained in Section 3.1 or Section 3.2 so as to change the Fair Market
Value in any Trust Year of the Available Shares or the Excess Shares, (b) the
terms of Section 3.3, (c) the Target Value reflected on Schedule B with respect
to any Trust Year, (d) the provisions of Section 2.2 as to the use of dividends
in excess of the amounts reflected on Schedule C, (e) the provisions of Section
5.4, (f) the provisions of Section 8.2, (g) the provisions of this Section 8.1,
or (h) change the duties of the Trustee without the Trustee's consent, which
consent shall not be unreasonably withheld. Notwithstanding the foregoing, the
Company shall retain the power under all circumstances to amend the Trust to
correct
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<PAGE> 22
any errors or clarify any ambiguities or similar issues of interpretation in
this Agreement.
8.2. Termination. Subject to the terms of Section 3.3(c) and
this Section 8.2, the Trust shall terminate on August 14, 2012 or any earlier
date on which the Loan is paid in full (the "Termination Date"). The Board of
Directors may terminate the Trust at any time prior to the Termination Date. The
Trust shall also terminate automatically upon the Company giving the Trustee
notice of a Change of Control. Immediately upon a termination of the Trust, the
Company shall be deemed to have forgiven all amounts then outstanding under the
Loan. As soon as practicable after receiving notice from the Company of a Change
of Control or upon any other termination of the Trust, the Trustee shall sell
all of the Company Stock and other non-cash assets (if any) then held in the
Trust Fund as directed by the Committee in good faith taking into account the
interests of a broad cross-section of individuals employed by the Company. The
proceeds of such sale shall first be returned to the Company up to an amount
equal to the principal amount, plus any accrued interest, of the Loan that was
forgiven upon such termination. Subject to the provisions of Section 3.3(c), any
funds remaining in the Trust after such payment to the Company shall be
distributed with reasonable promptness to a broad cross-section of Plan
Participants or to individuals employed by the Company generally or to any
benefit plan or trust in which a broad cross-section of individuals employed by
the Company participate, as the Committee may in good faith determine taking
into account the best interests of the individuals employed by the Company.
8.3. Form of Amendment or Termination. Any amendment or
termination of the Trust shall be evidenced by an instrument in writing signed
by an authorized officer of the Company, certifying that said amendment or
termination has been authorized and directed by the Company or the Board of
Directors, as applicable, and, in the case of any amendment, shall be consented
to by signature of an authorized officer of the Trustee, if required by Section
8.1.
ARTICLE 9.
Miscellaneous
9.1. Controlling Law. The laws of the State of Delaware shall
be the controlling law in all matters relating to the Trust, without regard to
conflicts of law.
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<PAGE> 23
9.2. Committee Action. Any action required or permitted to be
taken by the Committee may be taken on behalf of the Committee by any individual
so authorized. The Company shall furnish to the Trustee the name and specimen
signature of each member of the Committee upon whose statement of a decision or
direction the Trustee is authorized to rely. Until notified of a change in the
identity of such person or persons, the Trustee shall act upon the assumption
that there has been no change.
9.3. Notices. All notices, requests, or other communications
required or permitted to be delivered hereunder shall be in writing, delivered
by registered or certified mail, return receipt requested as follows:
To the Company:
The Dial Corporation
1850 North Central Avenue
Phoenix, Arizona 85077
Attention: General Counsel
To the Trustee:
Wells Fargo Bank of Arizona, N.A.
100 West Washington
MAC #4101-086
Phoenix, Arizona 85003
Attention: Patricia A. Cross
Any party hereto may from time to time, by written notice given as aforesaid,
designate any other address to which notices, requests or other communications
addressed to it shall be sent.
9.4. Severability. If any provision of the Trust shall be held
illegal, invalid or unenforceable for any reason, such provision shall not
affect the remaining parts hereof, but the Trust shall be construed and enforced
as if said provision had never been inserted herein.
9.5. Protection of Persons Dealing with the Trust. No person
dealing with the Trustee shall be required or entitled to monitor the
application of any money paid or property delivered to the Trustee, or determine
whether or not the Trustee is acting pursuant to authorities granted to it
hereunder or to authorizations or directions herein required.
- 20 -
<PAGE> 24
9.6. Tax Status of Trust. It is intended that the Company, as
grantor hereunder, be treated as the owner of the entire Trust and the trust
assets under Section 671, et seq. of the Code. Until advised otherwise, the
Trustee may presume that the Trust is so characterized for federal income tax
purposes and shall make all filings of tax returns on that presumption.
9.7. Participants to Have No Interest in the Company by Reason
of the Trust. Neither the creation of the Trust nor anything contained in the
Trust shall be construed as giving any person, including any individual employed
by the Company or any subsidiary of the Company, any equity or interest in the
assets, business, or affairs of the Company except to the extent that any such
individuals are entitled to exercise stockholder rights with respect to Company
Stock pursuant to Section 5.4.
9.8. Nonassignability. No right or interest of any person to
receive distributions from the Trust 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, but excluding death or mental incompetency,
and no right or interest of any person to receive distributions from the Trust
shall be subject to any obligation or liability of any such person, including
claims for alimony or the support of any spouse or child.
9.9. Gender and Plurals. Whenever the context requires or
permits, the masculine gender shall include the feminine gender and the singular
form shall include the plural form and shall be interchangeable.
9.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be considered an original.
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<PAGE> 25
IN WITNESS WHEREOF, the Company and the Trustee have caused
this Agreement to be signed, and their seals affixed hereto, by their authorized
officers all as of the day, month and year first above written.
THE DIAL CORPORATION
By
-------------------------------------
[Name]
[Title]
WELLS FARGO BANK OF ARIZONA, N.A.
By
-------------------------------------
[Name]
[Title]
- 22 -
<PAGE> 26
SCHEDULE A
1. The Dial Corporation Supplemental Pension Plan
2. The Dial Corporation Medical Plans
3. Armour Medical Benefits Program
4. Armour Medical Benefits Plan
5. The Dial Corporation Health Care Plan
6. The Dial Corporation 1996 Stock Incentive Plan
7. The Dial Corporation Management Incentive Plan (including underlying Lines
of Business Plans)
8. The Dial Corporation Performance Unit Incentive Plan
<PAGE> 27
SCHEDULE B
<TABLE>
<CAPTION>
Trust Year Target Value ($)*
---------- -----------------
<S> <C>
1997 27,000,000
1998 30,500,000
1999 34,400,000
2000 39,000,000
2001 44,200,000
2002 50,200,000
2003 57,200,000
2004 65,300,000
2005 74,700,000
2006 85,500,000
2007 98,100,000
</TABLE>
* The Target Value for whole or partial years after the date of the Distribution
shall be (x times y), where x is the amount set forth under Target Value and y
is the Distribution Fraction.
<PAGE> 28
SCHEDULE C
<TABLE>
<CAPTION>
Trust Year Dividends ($)
---------- -------------
<S> <C>
1996 $1,275,000
1997 2,650,000
1998 2,700,000
1999 2,750,000
2000 2,750,000
2001 2,700,000
2002 2,600,000
2003 2,450,000
2004 2,150,000
2005 1,750,000
2006 1,250,000
2007 500,000
</TABLE>
<PAGE> 1
Exhibit 21
THE DIAL CORPORATION SUBSIDIARIES*
Dial Consumer Products (UK) Limited (United Kingdom)
Armour International Limited (United Kingdom)
Andora, S.A. (Mexico)
Ardison Properties, Inc. (Delaware)
ARMOUR INTERNATIONAL COMPANY (Arizona)
AIC Foreign Sales Corporation (Virgin Islands)
Armour Foods (Deutschland) GmbH (Germany)
The Dial Corp. (Deutschland) mbH (Germany)
The Dial Corporation (Panama), S.A. (Panama)
The Dial Corporation Mexico, S.A. de C.V. (Mexico)
The Dial Corporation (Puerto Rico), Inc. (Arizona)
Ft. Madison Dial, Inc. (Iowa)
ISC Incodisa Soap & Cosmetics (U.K.) Limited (United Kingdom)
ISC International Ltd. (British Virgin Islands)
Industrias Corporativas Diversificadas, S.A.
(Guatemala)
ISC Incodisa Soap & Cosmetics - Nyon (Switzerland)
I.S.C. Internacional, S.A. (Guatemala)
ISC International (U.S.A.), Inc. (Florida)
Purex de Panama, S.A. (Panama)
- -------------------
* As of the Distribution Date Parent-subsidiary or affiliate relationships
are shown by marginal indentation. State, province or country of incorporation
are show in parenthesis following name.
