<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 1-4694
R. R. DONNELLEY & SONS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-1004130
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
77 WEST WACKER DRIVE,
CHICAGO, ILLINOIS 60601
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER--(312) 326-8000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON
----------------------------- WHICH REGISTERED
COMMON (PAR VALUE $1.25) --------------------------------------------
PREFERRED STOCK PURCHASE RIGHTS NEW YORK, CHICAGO AND PACIFIC STOCK
EXCHANGES
NEW YORK, CHICAGO AND PACIFIC STOCK
EXCHANGES
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO THE
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATE-
MENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT
TO THIS FORM 10-K. [X]
AS OF MARCH 1, 1995, 152,987,160 SHARES OF COMMON STOCK WERE OUTSTANDING, AND
THE AGGREGATE MARKET VALUE OF THE SHARES OF COMMON STOCK (BASED ON THE CLOSING
PRICE OF THESE SHARES ON THE NEW YORK STOCK EXCHANGE--COMPOSITE TRANSACTIONS ON
MARCH 1, 1995) HELD BY NONAFFILIATES WAS APPROXIMATELY $4,980,908,625.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT DATED FEBRUARY
16, 1995 ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-K.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
FORM 10-K
ITEM NO. NAME OF ITEM PAGE
--------- ------------ ----
<C> <S> <C> <C> <C>
Part I
Item 1. Business.......................................... 3
Item 2. Properties........................................ 4
Item 3. Legal Proceedings................................. 7
Item 4. Submission of Matters to a Vote of Security
Holders.......................................... 8
Executive Officers of R. R. Donnelley & Sons
Company.......................................... 8
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.............................. 9
Item 6. Selected Financial Data........................... 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 11
Item 8. Financial Statements and Supplementary Data....... 13
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.............. 13
Part III
Item 10. Directors and Executive Officers of the
Registrant....................................... 13
Item 11. Executive Compensation............................ 13
Item 12. Security Ownership of Certain Beneficial Owners
and Management................................... 13
Item 13. Certain Relationships and Related Transactions.... 13
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.............................. 14
Signatures................................................... 15
Index to Financial Statements and Financial Statement Sched-
ules........................................................ F-1
Index to Exhibits............................................ E-1
</TABLE>
2
<PAGE>
PART I
ITEM 1. BUSINESS
R. R. Donnelley & Sons Company (the company), incorporated in the state of
Delaware in 1956 as the successor to a business founded in 1864, is a major
participant in the information industry, providing a broad range of services in
print and digital media. The company believes it is the largest supplier of
commercial print and print-related services in the United States. It is a major
supplier in the United Kingdom and also provides services in Latin America,
other locations in Europe and in Asia. Services provided to customers include
presswork and binding, including on-demand customized publications;
conventional and digital pre-press operations, including desktop publishing and
filmless color imaging necessary to create a printed image; software
replication, translation and localization; list rental, list enhancement,
database management and mail production services (provided primarily through
Metromail); design and related creative services (provided through Mobium);
electronic communication networks for simultaneous worldwide product releases;
digital services to publishers; and, through the planning for and fulfillment
of truck, rail, mail and air distribution for products of the company and its
customers, as well as third parties. The company's pre-press, presswork and
binding operations have accounted for over 90% of the company's revenues for
each of the last five years.
The company provides these services to more than 5,000 customers, including
publishers of consumer and trade magazines, books and telephone and other
directories; direct mail (catalog) and in-store merchandisers; software
publishers and computer hardware manufacturers; and financial institutions and
other firms requiring substantial amounts of printing and other related
information services. Due to the range of services it provides, the company
believes it is uniquely positioned to meet the information and communication
needs of its customers.
The relative contribution of each of the company's major product areas to its
total sales for the five-year period ended December 31, 1994, is presented in
the table below.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUE BY PRODUCT TYPE
Catalogs, Inserts and Specialty Products............... 31% 32% 35% 39% 37%
Magazines.............................................. 18 18 17 17 18
Global Software Services............................... 14 12 10 8 7
Books.................................................. 13 13 11 11 11
Directories............................................ 12 14 16 16 17
Financial.............................................. 5 6 5 4 4
Other.................................................. 7 5 6 5 6
</TABLE>
For the fiscal year ended December 31, 1994, international operations
represented over 11% of consolidated results and assets. See "Geographic
Segments" in the Notes to Consolidated Financial Statements for further
information.
Most of the company's sales are made pursuant to term contracts with
customers, with the remainder being made on a single-order basis. For some
customers, the company prints and provides related services for several
different publications under different contracts. The company's contracts with
its larger customers normally run for a period of years (usually three to five
years but longer in the case of contracts requiring significant capital
investment) or for an indefinite period subject to termination on specified
notice by either party. Such sales contracts generally provide for timely price
adjustments to reflect price changes for materials, wages and utilities. No
single customer has a relationship with the company that accounted for 3% or
more of the company's sales in 1994. The company's dependence for sales from
its ten largest customers has declined in the past ten years to approximately
21% of sales in 1994, from 30% of sales in 1984.
The various phases of the information industry in which the company is
involved are highly competitive. While the company has contracts with its
customers as discussed above, there are numerous competing
3
<PAGE>
companies and renewal of such contracts is dependent, in part, on the ability
of the company to continue to differentiate itself from the competition.
Differentiation results, in part, from the company's broad range of value-added
services, which include: conventional and digital prepress, computerized
printing, Selectronic(R) imaging and gathering and sophisticated pool shipping
and distribution services for printed products; information content repackaging
into multiple formats, including print, magnetic and optical media; fulfillment
and returned books inventory management; database management and distribution;
list rental, list enhancement and direct mail production services; turnkey
computer documentation services, including translation, printing, binding, CD-
ROM and diskette replication, kitting licensing, republishing and fulfillment;
reprographics and facilities management; and graphic design and editorial
services. Although the company believes it is the largest commercial printer in
the United States, it estimates that its revenues represent approximately 7% of
the total sales in the industry. Although the company's plants are well located
for the global, national or regional distribution of its products, competitors
in some areas of the United States have a competitive advantage in some
instances due to such factors as freight rates, wage scales and customer
preference for local services. In addition to location, other important
competitive factors are price and quality as well as the range of available
services.
Tight market conditions for certain grades of paper are expected to continue
in 1995, but are not expected to have a significant impact on the company due
to guaranteed quantity allocations from suppliers coupled with the company's
production efficiencies and ability to substitute different paper grades. Paper
prices have increased in recent months reflecting the tight supply but are
mitigated by the company's ability to pass the increases to customers. The
company has existing paper supply contracts (at prevailing market prices) to
cover substantially all of the company's requirements through 1995, and
management believes extensions and renewals of these purchase contracts will
provide adequate paper supplies in the future. Ink and ink materials are
currently available in sufficient amounts, and the company believes that it
will have adequate supplies in the future.
The company estimates that its capital expenditures in 1995 and 1996 to
comply with federal, state and local provisions for environmental controls, as
well as expenditures, if any, for the company's share of costs to clean
hazardous waste sites that have received waste from the company, will not have
a material effect upon its earnings or its competitive position.
The company employed an average of approximately 36,500 persons in 1994
(39,000 persons at December 31, 1994), of whom more than 11,000 had been with
the company for more than 10 years and over 2,700 for 25 years or longer.
ITEM 2. PROPERTIES
The company's corporate office is located in leased facilities in Chicago,
Illinois. Production facilities leased by the company and its subsidiaries are
listed in the chart beginning on page 6. Printing and other plants that are
owned and operated by the company (or through subsidiaries) are listed below
and continuing on the next page.
<TABLE>
<CAPTION>
DATE OF
DATE OF ACQUISITION LATEST SQUARE PRINCIPAL PRODUCTS
OWNED LOCATION(S) OR OPERATIONS BEGAN ADDITION FEET OR SERVICES
----------------- ------------------- -------- --------- --------------------
<S> <C> <C> <C> <C>
Chicago, IL 1912 1974 240,000 Financial
Crawfordsville, IN 1923 1992 1,858,000 Books, Global
Software Services
Willard, OH 1956 1992 1,099,000 Books, Directories,
Global Software
Services
Warsaw, IN 1959 1994 1,300,000 Catalogs, Inserts
Old Saybrook, CT 1959 1986 296,000 Magazines, Catalogs
Lancaster, PA 1959 1994 1,437,000 Directories,
Catalogs, Inserts,
Magazines,
Financial
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DATE OF
DATE OF ACQUISITION LATEST SQUARE PRINCIPAL PRODUCTS
OWNED LOCATION(S) OR OPERATIONS BEGAN ADDITION FEET OR SERVICES
----------------- ------------------- -------- --------- --------------------
<S> <C> <C> <C> <C>
Mattoon, IL 1968 1994 861,000 Magazines, Catalogs,
Inserts
Dwight, IL 1968 1994 434,000 Directories,
Catalogs, Inserts,
Magazines
Glasgow, KY 1970 1994 591,000 Magazines
Gallatin, TN 1975 1987 528,000 Catalogs, Inserts,
Magazines
York, England 1978 1985 291,000 Directories,
Magazines, Catalogs
Torrance, CA 1978 1994 252,000 Magazines, Inserts
Harrisonburg, VA 1980 1994 620,000 Books
Spartanburg, SC 1980 1994 545,000 Catalogs, Inserts,
Magazines
Gateshead, England 1983 1989 189,000 Directories
Danville, KY 1985 1993 548,000 Magazines, Catalogs,
Inserts
Portland, OR 1986 1989 250,000 Directories, Global
Software Services
Greeley, CO 1986 -- 165,000 Directories
Reno, NV 1987 1991 502,000 Catalogs, Inserts
Pittsburgh, PA 1987 -- 70,000 Financial
Lincoln, NE 1987 1988 233,000 Mail Production,
Data Center
Rutland, VT 1987 1987 113,000 Mail Production
Mt. Pleasant, IA 1987 -- 211,000 Mail Production
Seward, NE 1987 -- 161,000 Mail Production
Thorp Arch, En- 1989 -- 146,000 Global Software
gland Services
South Daytona, FL 1990 1993 237,000 Magazines, Catalogs,
Inserts
Des Moines, IA 1990 -- 627,000 Magazines, Catalogs,
Inserts
Lynchburg, VA 1990 1993 504,000 Catalogs, Inserts
Newton, NC 1990 -- 455,000 Catalogs, Inserts,
Magazines
Casa Grande, AZ 1990 -- 316,000 Catalogs, Inserts
Reynosa, Mexico 1990 -- 260,000 Books
Singapore 1990 1994 221,000 Global Software
Services
Houston, TX 1991 -- 41,000 Financial
San Juan del Rio, 1992 1993 80,000
Mexico Catalogs
Provo, UT 1992 1993 126,000 Global Software
Services
Mendota, IL 1992 -- 110,000 Magazines
Seymour, IN 1992 1994 45,000 Specialty Products
Allentown, PA 1993 -- 23,000 Books
Bloomsburg, PA 1993 -- 105,000 Books
Pontiac, IL 1993 1994 304,000 Magazines
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
DATE OF
OWNED LOCA- DATE OF ACQUISITION LATEST SQUARE PRINCIPAL PRODUCTS
TION(S) OR OPERATIONS BEGAN ADDITION FEET OR SERVICES
----------- ------------------- -------- --------- --------------------
<S> <C> <C> <C> <C>
Scranton, PA 1993 -- 399,000 Books
Senatobia, MS 1993 -- 137,000 Magazines
Newbern, TN 1993 -- 30,000 Books
Krakow, Poland 1994 -- 115,000 Magazines, Inserts
Shenzhen, China 1994 -- 170,000 Directories, Books,
Magazines
Santiago, Chile 1994 -- 250,000 Magazines, Catalogs,
Books, Directories
</TABLE>
<TABLE>
<CAPTION>
SQUARE
LEASED LOCATIONS FEET
---------------- -------
R. R. DONNELLEY & SONS COMPANY
------------------------------
<S> <C>
Cary, NC................................................................ 108,000
Columbus, OH............................................................ 12,000
Crawfordsville, IN...................................................... 381,000
Elgin, IL............................................................... 77,000
Fremont, CA............................................................. 444,000
Glasgow, KY............................................................. 57,000
Hudson, MA.............................................................. 150,000
Lancaster, PA........................................................... 62,000
Lindon, UT.............................................................. 338,000
New York, NY............................................................ 92,000
Newark, CA.............................................................. 75,000
Orem, UT................................................................ 33,000
Sandy, UT............................................................... 121,000
Shelby, OH.............................................................. 250,000
Torrance, CA............................................................ 45,000
West Valley City, UT.................................................... 30,000
Wheeling, IL............................................................ 110,000
Willowbrook, IL......................................................... 55,000
R. R. DONNELLEY NEDERLAND, B.V.
-------------------------------
Apeldoorn, The Netherlands.............................................. 54,000
Amsterdam, The Netherlands.............................................. 15,000
R. R. DONNELLEY NORWEST INC.
----------------------------
Seattle, WA............................................................. 22,000
Tigard, OR.............................................................. 140,000
Preston, WA............................................................. 66,000
LABORATORIO LITO COLOR, S.A. DE C.V.
------------------------------------
Mexico City, Mexico..................................................... 15,000
R. R. DONNELLEY PRINTING COMPANY
--------------------------------
Lynchburg, VA........................................................... 120,000
METROMAIL CORPORATION
---------------------
Lombard, IL............................................................. 100,000
R. R. DONNELLEY (U.K.) LIMITED
------------------------------
London, England......................................................... 10,000
Cumbernauld, Scotland................................................... 53,000
MOBIUM CORPORATION FOR DESIGN AND COMMUNICATION
-----------------------------------------------
Chicago, IL............................................................. 28,000
IRISH PRINTERS HOLDINGS
-----------------------
Dublin, Ireland......................................................... 103,000
Kildare, Ireland........................................................ 97,000
DONNELLEY CARIBBEAN GRAPHICS, INC.
----------------------------------
Bridgetown, Barbados.................................................... 31,000
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SQUARE
LEASED LOCATIONS FEET
---------------- ------
<S> <C>
DONNELLEY KOREA CO. LTD.
------------------------
Sungnam-si, Kyungki-do Korea............................................. 11,000
R. R. DONNELLEY FRANCE, S.A.
----------------------------
Orleans, France.......................................................... 75,000
Les Aubrais, France...................................................... 22,000
R. R. DONNELLEY PINDAR
----------------------
Middlesex, England....................................................... 35,000
TURNKEY SERVICES JAPAN, K.K.
----------------------------
Chuo, Chiba-City 260..................................................... 3,000
R. R. DONNELLEY AUSTRALIA PTY., LTD.
------------------------------------
New South Wales, Australia............................................... 80,000
R. R. DONNELLEY DEUTSCHLAND
---------------------------
Munich, Germany.......................................................... 65,000
</TABLE>
The company has historically followed the practice of adding capacity to meet
customer requirements, and has retained a substantial portion of its earnings
for reinvestment in plant and equipment for this purpose. Management believes
that growth in 1995 will be financed in large part by internally-generated
funds. The amount of capital expenditures in future years will depend upon the
requirements of the company's existing and future customers.
ITEM 3. LEGAL PROCEEDINGS
On July 13, 1990, the Federal Trade Commission ("FTC") filed a complaint in
the U.S. District Court for the District of Columbia ("District Court") seeking
a preliminary injunction enjoining the company from consummating its
acquisition of the Meredith/Burda companies. The complaint alleged that
consummation of the acquisition might substantially lessen competition in
certain alleged rotogravure printing markets. The District Court denied the
motion of the FTC for an injunction as well as a further motion for injunction
pending appeal. The acquisition was closed on September 4, 1990.
On October 11, 1990, the FTC Staff initiated its administrative action
challenging the acquisition of the Meredith/Burda companies. The complaint
alleged the same issues as did the complaint before the District Court. Trial
before an administrative law judge ("ALJ") of the FTC concluded in June, 1993.
On December 30, 1993, the FTC's ALJ issued his initial decision upholding the
position of the FTC Staff. The ALJ found that the acquisition by the company of
the Meredith/Burda companies created a "dominant firm" and significantly
increased concentration in a "high-volume publication rotogravure market," thus
increasing the likelihood of anti-competitive conduct and actual or tacit
collusion among the firms participating in that market. The ALJ ordered the
divestiture of the Meredith/Burda companies and prohibited the acquisition by
the company of any other firms participating in the U.S. "rotogravure market"
without FTC approval for a period of ten years.
The company appealed the ALJ's decision, asking the FTC Commissioners to
dismiss the FTC complaint and is awaiting a decision. The appeal has the effect
of staying the ALJ's order. If the appeal by the company is not granted, the
company intends to file a further appeal to a U.S. Court of Appeals.
The company continues to believe that the acquisition of the Meredith/Burda
companies was legally proper and will ultimately be upheld.
In January 1995, an administrative complaint by the U.S. Environmental
Protection Agency Region V ("Region V") seeking $304,500 in penalties was filed
against the company's Warsaw, Indiana facility alleging violations of the
Resource Conservation and Recovery Act. The complaint alleges that filtercake
from wastewater treatment operations was mischaracterized by the company as a
non-hazardous waste. The complaint also alleges failure to give certain land
disposal restriction notices. The company has submitted evidence to the Region
V that the proper notifications were given in all but two instances and has
requested that allegations with respect to notifications that were given be
removed from the complaint.
7
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the quarter
ended December 31, 1994.
EXECUTIVE OFFICERS OF R. R. DONNELLEY & SONS COMPANY
<TABLE>
<CAPTION>
NAME, AGE AND OFFICER BUSINESS EXPERIENCE DURING
POSITIONS WITH THE COMPANY SINCE PAST FIVE YEARS(1)
-------------------------- ------- --------------------------
<S> <C> <C>
J. R. Walter 1985 Management responsibilities as Chairman of the
48, Director, Board and Chief Executive Officer. Prior manage-
Chairman of the Board ment responsibilities as Chief Executive Officer
and Chief Executive Offi- and President.
cer(2)
J. R. Donnelley 1983 Management responsibilities as Vice Chairman of
59, Director, Vice Chairman the Board. Prior management responsibility for
of the Board Corporate Development.
R. J. Cowan 1988 Management responsibilities for Information
42, Executive Vice Services, Technology, Database Technology Serv-
President and Sector ices, Information Systems and Metromail. Prior
President, Information management responsibilities for Book, Financial
Resources Sector(2) Services, Global Software Services, Information
Services and Technology; prior sales and manu-
facturing responsibility for Global Software
Services.
F. R. Jarc 1987 Management responsibilities for treasury,
52, Executive Vice accounting, real estate, internal audit, taxes
President and and purchasing.
Chief Financial Officer(2)
W. E. Tyler 1989 Management responsibilities for Financial Serv-
42, Executive Vice Presi- ices, Global Software Services, Book Publishing
dent Services and Europe. Prior sales and manufactur-
and Sector President, ing responsibility for Global Software Services;
Networked Services Sec- prior management responsibility for Technology.
tor(2)
J. P. Ward 1991 Management responsibilities for Retail Services,
40, Executive Vice Presi- Telecommunications, Specialized Publishing Serv-
dent ices, Catalog Services, Consumer Magazines Serv-
and Sector President, ices, Sterling Group and Manufacturing Support.
Commercial Print Sector(2) Prior sales and manufacturing responsibility for
Merchandise Media; prior sales and manufacturing
responsibility for Financial Services.
S. J. Baumgartner 1993 Management responsibilities for Strategy, Human
43, Senior Vice President, Resources, Communications, and Compensation and
Strategy, Human Resources Benefits. Prior experience as a co-owner and
and Communication(1)(2) member of board of directors of FRC Management,
Inc., and as a Senior Vice President, Human Re-
sources and Public Affairs at Rhone-Poulenc
Rorer/Rorer Group, Inc.
T. J. Quarles 1995 Management responsibilities for legal services,
45, Senior Vice President office of the corporate secretary, government
and General Counsel(1)(2) relations, environmental, health and safety
functions. Prior experience as Vice President
and Associate General Counsel at Ameritech and
as Vice President and General Counsel at
Ameritech Publishing, Inc.
B. L. Faber 1989 Sales and manufacturing responsibility for In-
47, President, formation Services. Prior management responsi-
Information Services(2) bility for Corporate Development.
</TABLE>
8
<PAGE>
(1) Each officer named has carried on his principal occupation and employment
in R. R. Donnelley & Sons Company for more than five years with the exception
of S. J. Baumgartner and T. J. Quarles as noted in the above table.
(2) Member of the company's management committee.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock is listed and traded on the New York Stock Exchange, Chicago
Stock Exchange and Pacific Stock Exchange.
As of March 1, 1995 there were approximately 11,000 stockholders of record.
Information about the quarterly prices of the common stock, as reported on the
New York Stock Exchange-Composite Transactions, and dividends paid during the
two years ended December 31, 1994, is contained in the chart below:
<TABLE>
<CAPTION>
COMMON STOCK PRICES
-------------------------------
DIVIDENDS
PAID 1994 1993
------------- --------------- ---------------
1994 1993 HIGH LOW HIGH LOW
------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
First Quarter..................... $0.140 $0.130 $31 3/4 $27 5/8 $32 3/4 $27 1/8
Second Quarter.................... 0.140 0.130 29 7/8 26 7/8 31 3/4 26 1/8
Third Quarter..................... 0.160 0.140 31 1/4 27 1/2 31 3/8 27 3/4
Fourth Quarter.................... 0.160 0.140 32 1/2 27 3/8 31 1/8 27 3/8
Full Year......................... 0.600 0.540 32 1/2 26 7/8 32 3/4 26 1/8
</TABLE>
9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA
(NOT COVERED BY AUDITORS' REPORT)
(THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $4,888,786 $4,387,761 $4,193,072 $3,914,828 $3,497,943
Earnings from
operations*............ 459,431 325,607 405,501 363,128 361,836
Net income from
operations before
cumulative effect of
accounting changes..... 268,603 178,920 234,659 204,919 225,846
Net income**............ 268,603 109,420 234,659 204,919 225,846
PER COMMON SHARE***
Net income from
operations before
cumulative effect of
accounting changes..... 1.75 1.16 1.51 1.32 1.45
Net income**............ 1.75 0.71 1.51 1.32 1.45
Dividends............... 0.60 0.54 0.51 0.50 0.48
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............. $4,452,143 $3,654,026 $3,410,247 $3,206,826 $3,147,486
Noncurrent liabilities... 1,671,924 1,124,594 949,537 940,544 1,064,333
</TABLE>
--------
* 1993 earnings from operations includes the one-time adjustment for a
restructuring charge ($90 million).
** 1993 net income and net income per common share include one-time adjustments
for the restructuring charge ($60.8 million or $0.39 per share); the net
cumulative effect of accounting changes ($69.5 million or $0.45 per share);
and the deferred income tax charge related to the federal income tax rate
increase ($6.2 million or $0.04 per share).
*** Reflects the 2-for-1 stock split effective September 1, 1992.
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
COMPARISON OF 1994 WITH 1993
Net sales increased 11.4% reflecting increased global demand and volume
growth across most product categories, new products and services, new customers
and recent acquisitions. Net sales from foreign operations increased 42% and
represented over 11% of consolidated net sales. The growth in foreign sales,
which is expected to continue in 1995, was the result of volume increases
realized from recent expansions and start-up operations in Europe, Asia and
Latin America, including the acquisition of Chilean-based Cochrane, S.A. (51%
owned by the company), which was consolidated in operating results beginning
July 1, 1994.
Gross profit grew 9.3%, slightly lower than the growth in net sales, as the
volume increase was partially offset by higher paper costs (which are
recovered, but at lower overall margins), depreciation, amortization and start-
up costs. Tight market conditions for certain grades of paper are expected to
continue in 1995, but are not expected to have a significant impact on the
company due to guaranteed quantity allocations from suppliers coupled with the
company's production efficiencies and ability to substitute different paper
grades. Selling and administrative expenses increased 8.1% primarily resulting
from volume related increases. The ratio of selling and administrative expenses
to net sales, at 10% in 1994, was down from 10.3% in 1993.
Interest expense increased $8.1 million, due to higher interest rates and
debt levels to fund acquisitions and expansions. Other expense was $7.3 million
above the prior year reflecting lower investment income and higher minority
interest expense.
The effective income tax rate of 32% in 1994 was lower than the 1993 rate
resulting from tax credits for affordable housing investments and the one-time
impact on the deferred income tax provision in 1993, related to the federal tax
rate increase. Net income, excluding the one-time effect of accounting changes,
a restructuring charge and the deferred income tax charge all reflected in
1993, increased 9.2% reflecting the volume increase and a lower effective
income tax rate. Earnings per share of $1.75 increased 10.1%, excluding the
one-time items, reflecting net income growth and fewer shares outstanding.
COMPARISON OF 1993 WITH 1992
Net sales grew at a rate of 4.6% due to an increased volume of services
provided to customers, including volume added through the company's global
expansion into new areas. Strong demand for global software services, financial
printing services and services for book publishers and volume increases
associated with acquisitions in new product areas were partially offset by the
negative effects of a stronger dollar (lower translation of foreign revenues,
particularly those of the company's U.K. operations) and lower catalog volume
primarily associated with the decision by Sears, Roebuck & Co. to discontinue
its catalog operations.
Gross profit grew at a greater rate than net sales, 6.3%, reflecting better
coverage of fixed costs through higher volume, a more favorable mix of sales
and lower raw material prices. Earnings from operations included a $90 million
restructuring charge recorded during the first quarter (an after-tax charge of
$0.39 per share) related primarily to the closing of the company's Chicago
manufacturing facility following the decision by Sears to discontinue its
catalog operations. Excluding this charge, earnings from operations would have
been $415.6 million, a 2.5% increase over the prior year, reflecting the gross
profit improvement partially offset by higher selling and administrative
expenses (a 10.1% increase) resulting primarily from the additional costs
associated with newly acquired and start-up operations and the expansion of the
company's global sales presence.
11
<PAGE>
The $6.8 million increase in interest expense resulted from higher
outstanding debt balances due to acquisitions, investments in joint ventures
and additional VEBA funding for employee benefits. Other expense decreased $2.2
million reflecting improved earnings on investments partially offset by
expenses associated with company owned life insurance programs.
The 1993 provision for income taxes included the one-time effect of the
higher federal statutory income tax rate on deferred taxes, which reduced net
income by $6.2 million (equivalent to $0.04 per share); excluding this one-time
charge, the 1993 effective income tax rate of 33.1% would have been lower than
the 1992 rate of 35.0%, reflecting the benefits associated with life insurance
programs and credits associated with affordable housing investments. Net income
from operations before cumulative effect of accounting changes reflected the
restructuring charge and increased selling and administrative expenses
partially offset by the favorable factors discussed above with respect to gross
profit. Excluding the restructuring charge and deferred income tax charge, net
income from operations before cumulative effect of accounting changes would
have been $245.9 million (equivalent to $1.59 per share).
During the first quarter of 1993, the company adopted two new accounting
standards for postretirement benefits and income taxes. The one-time charge for
postretirement benefits, net of associated tax benefits of $80.1 million, was
$127.7 million (equivalent to $0.82 per share). The accounting standard for
postretirement benefits resulted in additional expenses which reduced operating
income by $0.05 per share. The accounting standard for income taxes resulted in
a one-time credit of $58.2 million (equivalent to $0.37 per share). As
discussed above, the income tax standard also required the company to increase
its 1993 income tax provision by $6.2 million.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The Consolidated Balance Sheets present the company's financial position at
the end of each of the last two years. The statements list the company's assets
and liabilities, and the equity of its shareholders. Major changes in the
financial position are summarized in the Consolidated Statements of Cash Flows.
The Consolidated Statements of Cash Flows summarize the changes in the
company's cash and equivalents for each of the last three years and help to
show the relationship between operations (presented in the Consolidated
Statements of Income) and liquidity and financial resources (presented in the
Consolidated Balance Sheets).
Management believes the company has the financial strength and flexibility to
fund current operations and growth. In 1994, net income from operations plus
depreciation and amortization was $582.1 million, an increase of $61.3 million,
or 11.8%, from 1993 (excluding the restructuring charge and the deferred income
tax charge relating to the increase in the federal statutory income tax rate
recorded in 1993).
The company's working capital continues to be adequate for the operation and
expansion of the business. Working capital--particularly cash, accounts
receivable and inventories--is closely controlled and continually monitored.
Emphasis continues on overall balance sheet management. Working capital
increased by $127 million from December 31, 1993, primarily from increased
receivables and inventory reflecting recent acquisitions and volume increases
partially offset by higher accounts payable and accrued compensation. The
increase in goodwill and other intangibles reflected recent acquisitions and
costs ($257 million in 1994) associated with acquiring long-term print
contracts and volume guarantees. Proceeds from debt issuances were used to fund
capital expansion, acquisitions and costs associated with long-term print
contracts and volume guarantees.
Capital expenditures during 1994 totaled $425 million ($307 million in 1993)
and an additional $120 million ($178 million in 1993) was invested in
acquisitions and joint venture investments. This capital investment reflects
the company's continued program to expand and upgrade operations, targeting
geographic markets in the United States, Europe, Asia and Latin America. Recent
investments have strategically placed new equipment and operations to meet the
growing global needs of present and new customers. Capital
12
<PAGE>
expenditures for 1995 are estimated at $400 million and will be financed
primarily from operating cash flows. Other expenditures in 1995 are expected to
be commensurate with and to support the growth in sales and earnings.
At December 31, 1994, the company had a revolving credit facility of $550
million with a number of banks (see the Notes to Consolidated Financial
Statements). This credit facility provides support for the issuance of
commercial paper and other credit needs. Under shelf registration statements,
during the fourth quarter of 1994, the company issued $200 million of medium
term notes with interest rates ranging from 7.01% to 7.96% (7.55% weighted
average rate) due between 1997 and 1999. The proceeds from these issues were
used to retire commercial paper debt.
At December 31, 1994, the company had an effective shelf registration
statement permitting the company to issue, from time to time, up to $300
million in debt securities. In February 1995, the company filed a prospectus
supplement to this existing shelf registration permitting the company to issue
these debt securities in the form of medium term notes. The company currently
intends to use the proceeds of the issuance of medium term notes, if any, to
retire commercial paper debt. As of March 23, 1995, the company had issued no
notes under this prospectus supplement.
Subsequent to filing the medium term note prospectus supplement, the company
filed a new shelf registration statement permitting the company to issue, from
time to time, up to an additional $500 million in debt securities. This
registration statement became effective in February, 1995. The company has no
current intention to issue debt securities under this new registration
statement.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial information required by Item 8 is contained in Item 14 of Part
IV and listed on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors and officers of the company is contained
on pages 2-5 and 8 of the company's definitive Proxy Statement dated February
16, 1995 and is incorporated herein by reference. See also the list of the
company's executive officers and related information under "Executive Officers
of R. R. Donnelley & Sons Company" at the end of Part I of this Report.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation for the year ended December 31,
1994, and, with respect to certain of such information, prior years, is
contained on pages 8-12 of the company's definitive Proxy Statement dated
February 16, 1995 and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning the beneficial ownership of the company's common stock
is contained on pages 6 and 7 of the company's definitive Proxy Statement dated
February 16, 1995 and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions for the
year ended December 31, 1994, is contained on pages 5 and 13 of the company's
definitive Proxy Statement dated February 16, 1995 and is incorporated herein
by reference (excluding the information on page 13 under the caption,
"Compensation Committee Report on Executive Compensation").
13
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. Financial Statements
The financial statements listed in the accompanying index (page F-1) to
the financial statements are filed as part of this annual report.
2. Financial Statement Schedule
The financial statement schedule listed in the accompanying index (page
F-1) to the financial statements is filed as part of this annual
report.
3. Exhibits
The exhibits listed on the accompanying index to exhibits (pages E-1
through E-2) are filed as part of this annual report.
(b)Reports on Form 8-K
None
(c)Exhibits
The exhibits listed on the accompanying index (Pages E-1 through E-2)
are filed as part of this annual report.
(d)Financial Statements omitted--
Separate financial statements of the parent company have been omitted
since it is primarily an operating company and the minority interest
and indebtedness to persons other than the parent of the subsidiaries
included in the consolidated financial statements are less than 5% of
total consolidated assets.
Certain schedules have been omitted because the required information is
included in the consolidated financial statements or notes thereto or
because they are not applicable or not required.
14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON THE 23RD DAY OF
MARCH, 1995.
R. R. DONNELLEY & SONS COMPANY
/s/ William L. White
By __________________________________
William L. White,
Vice President, Controller
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES INDICATED, ON THE 23RD DAY OF MARCH, 1995.
SIGNATURE AND TITLE SIGNATURE AND TITLE
/s/ John R. Walter /s/ Richard M. Morrow
------------------------------------- -------------------------------------
John R. Walter Richard M. Morrow
Chairman of the Board, Director
Chief Executive Officer and Director
(Principal Executive Officer) /s/ M. Bernard Puckett
-------------------------------------
/s/ Frank R. Jarc M. Bernard Puckett
------------------------------------- Director
Frank R. Jarc
Executive Vice President and /s/ John M. Richman
Chief Financial Officer -------------------------------------
(Principal Financial Officer) John M. Richman
Director
/s/ William L. White
------------------------------------- /s/ William D. Sanders
William L. White -------------------------------------
Vice President, Controller William D. Sanders
(Principal Accounting Officer) Director
/s/ Martha Layne Collins
------------------------------------- -------------------------------------
Martha Layne Collins Jerre L. Stead
Director Director
/s/ James R. Donnelley /s/ Bide L. Thomas
------------------------------------- -------------------------------------
James R. Donnelley Bide L. Thomas
Director Director
/s/ Charles C. Haffner III /s/ H. Blair White
------------------------------------- -------------------------------------
Charles C. Haffner III H. Blair White
Director Director
/s/ Thomas S. Johnson /s/ Stephen M. Wolf
------------------------------------- -------------------------------------
Thomas S. Johnson Stephen M. Wolf
Director Director
15
<PAGE>
ITEM 14(A). INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Consolidated Statements of Income for each of the three years ended
December 31, 1994..................................................... F-2
Consolidated Balance Sheets at December 31, 1994 and 1993.............. F-3
Consolidated Statements of Cash Flows for each of the three years ended
December 31, 1994..................................................... F-4
Consolidated Statements of Shareholders' Equity for each of the three
years ended December 31, 1994......................................... F-5
Notes to Consolidated Financial Statements............................. F-6
Report of Independent Public Accountants............................... F-16
Interim Financial Information.......................................... F-17
Report of Independent Public Accountants on Financial Statement
Schedule.............................................................. F-18
Financial Statement Schedule
II--Valuation and Qualifying Accounts................................ F-19
</TABLE>
F-1
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
---------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................... $4,888,786 $4,387,761 $4,193,072
Cost of sales................................ 3,938,494 3,518,168 3,375,214
---------- ---------- ----------
Gross profit................................. 950,292 869,593 817,858
Selling and administrative expenses.......... 490,861 453,986 412,357
Restructuring charge......................... -- 90,000 --
---------- ---------- ----------
Earnings from operations..................... 459,431 325,607 405,501
Interest expense............................. 53,493 45,436 38,659
Other expense--net........................... 10,934 3,609 5,828
---------- ---------- ----------
Earnings before income taxes and cumulative
effect of accounting changes................ 395,004 276,562 361,014
Income taxes................................. 126,401 97,642 126,355
---------- ---------- ----------
Net income from operations before cumulative
effect of accounting changes................ 268,603 178,920 234,659
Cumulative effect of change in accounting
for:
Postretirement benefits other than pensions
(net of $80.1 million in tax benefits).... -- (127,700) --
Income taxes............................... -- 58,200 --
---------- ---------- ----------
Net Income............................... $ 268,603 $ 109,420 $ 234,659
========== ========== ==========
Income (charge) per common share:
Operations before cumulative effect of
accounting changes........................ $ 1.75 $ 1.16 $ 1.51
Cumulative effect of change in accounting
for:
Postretirement benefits other than pensions
(net of tax benefits)..................... -- (0.82) --
Income taxes............................... -- 0.37 --
---------- ---------- ----------
Net Income per Share of Common Stock..... $ 1.75 $ 0.71 $ 1.51
========== ========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-2
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1994 1993
---------- ----------
<S> <C> <C>
Assets
Cash and equivalents................................. $ 20,569 $ 10,716
Receivables, less allowances for doubtful accounts of
$19,168 in 1994 and $14,795 in 1993................. 987,520 825,207
Inventories, principally at LIFO cost................ 311,237 243,714
Prepaid expenses..................................... 34,004 30,277
---------- ----------
Total Current Assets............................... 1,353,330 1,109,914
Net property, plant and equipment, at cost, less
accumulated depreciation of $1,852,084 in 1994 and
$1,686,779 in 1993.................................. 1,856,760 1,674,476
Goodwill and other intangibles, net of accumulated
amortization of $114,932 in 1994 and $85,330 in
1993................................................ 887,071 556,681
Other noncurrent assets.............................. 354,982 312,955
---------- ----------
Total Assets....................................... $4,452,143 $3,654,026
========== ==========
Liabilities
Accounts payable..................................... $ 422,703 $ 333,862
Accrued compensation................................. 107,167 78,284
Short-term debt...................................... 32,400 37,428
Current and deferred income taxes.................... 46,912 40,698
Other accrued liabilities............................ 192,668 195,169
---------- ----------
Total Current Liabilities.......................... 801,850 685,441
---------- ----------
Long-term debt....................................... 1,212,332 673,422
Deferred income taxes................................ 286,904 272,959
Other noncurrent liabilities......................... 172,688 178,213
---------- ----------
Total Noncurrent Liabilities....................... 1,671,924 1,124,594
---------- ----------
Shareholders' Equity
Common stock at stated value ($1.25 par value)
Authorized shares: 500,000,000; Issued: 158,608,800
in 1994 and 1993.................................... 330,612 330,612
Retained earnings, net of cumulative translation
adjustments of $18,235 in 1994 and $13,140 in 1993.. 1,802,777 1,629,673
Reacquired common stock, at cost..................... (155,020) (116,294)
---------- ----------
Total Shareholders' Equity......................... 1,978,369 1,843,991
---------- ----------
Total Liabilities and Shareholders' Equity........... $4,452,143 $3,654,026
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Cash flows provided by (used in) operating
activities:
Net income from operations before cumulative
effect of accounting changes............... $ 268,603 $ 178,920 $ 234,659
Depreciation and amortization............... 313,463 274,804 258,169
Net change in assets and liabilities........ (355,934) (4,342) (41,530)
Other....................................... (38,586) 3,241 743
--------- --------- ---------
Net Cash Provided By Operating Activities. 187,546 452,623 452,041
--------- --------- ---------
Cash flows used for investing activities:
Capital expenditures........................ (425,190) (306,512) (228,002)
Other investments including acquisitions,
net of cash acquired....................... (120,461) (177,743) (83,771)
--------- --------- ---------
Net Cash Used For Investing Activities.... (545,651) (484,255) (311,773)
--------- --------- ---------
Cash flows from (used for) financing
activities:
Net increase (decrease) in borrowings....... 500,951 143,286 (56,275)
Disposition of reacquired common stock...... 20,585 19,693 13,068
Acquisition of common stock................. (57,363) (47,513) (28,298)
Cash dividends on common stock.............. (92,352) (83,465) (79,242)
--------- --------- ---------
Net Cash From (Used For) Financing
Activities............................... 371,821 32,001 (150,747)
--------- --------- ---------
Effect of exchange rate changes on cash and
equivalents.................................. (3,863) (2,001) (1,313)
--------- --------- ---------
Net Increase (Decrease) in Cash and
Equivalents.................................. 9,853 (1,632) (11,792)
Cash and Equivalents at Beginning of Year..... 10,716 12,348 24,140
--------- --------- ---------
Cash and Equivalents at End of Year........... $ 20,569 $ 10,716 $ 12,348
========= ========= =========
The changes in assets and liabilities, net of balances assumed through
acquisitions, were as follows:
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Decrease (Increase) in Assets:
Receivables--net............................ $(125,001) $ 5,835 $ (87,970)
Inventories--net............................ (53,214) (32,156) (32,568)
Prepaid expenses............................ (601) (8,463) 80,133
Other assets................................ (275,759) 31,609 (125,065)
Increase (Decrease) in Liabilities:
Accounts payable............................ 97,439 41,988 37,079
Accrued compensation........................ 28,603 (3,146) 22,108
Current and deferred income taxes........... 6,095 4,773 (3,859)
Deferred income taxes....................... 13,574 9,725 18,821
Other accrued liabilities................... (15,448) (1,110) 53,748
Other noncurrent liabilities................ (31,622) (53,397) (3,957)
--------- --------- ---------
Net Change in Assets and Liabilities...... $(355,934) $ (4,342) $ (41,530)
========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
REACQUIRED
COMMON STOCK COMMON STOCK
-------------------- --------------------- RETAINED
SHARES AMOUNT SHARES AMOUNT EARNINGS TOTAL
----------- -------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1991...... 79,304,400 $231,481 (1,629,549) $ (66,515) $1,565,420 $1,730,386
Net income.............. 234,659 234,659
Par value of common
shares issued for stock
split effective
September 1, 1992...... 79,304,400 99,131 (1,629,549) (99,131) --
Treasury stock
purchases.............. (967,370) (28,298) (28,298)
Cash dividends.......... (79,242) (79,242)
Cost of common shares
issued under stock
programs............... 646,486 10,777 2,291 13,068
Translation adjustments. (21,596) (21,596)
----------- -------- ---------- --------- ---------- ----------
Balance at
December 31, 1992...... 158,608,800 330,612 (3,579,982) (84,036) 1,602,401 1,848,977
Net income before
cumulative effect of
accounting changes..... 178,920 178,920
Cumulative effect of
change in accounting
for:
Other postretirement
benefits, net of tax
benefits............. (127,700) (127,700)
Income taxes.......... 58,200 58,200
Treasury stock
purchases.............. (1,601,296) (47,513) (47,513)
Cash dividends.......... (83,465) (83,465)
Cost of common shares
issued under stock
programs............... 730,511 15,255 4,438 19,693
Translation adjustments. (3,121) (3,121)
----------- -------- ---------- --------- ---------- ----------
Balance at
December 31, 1993...... 158,608,800 330,612 (4,450,767) (116,294) 1,629,673 1,843,991
Net income.............. 268,603 268,603
Treasury stock
purchases.............. (1,958,193) (57,363) (57,363)
Cash dividends.......... (92,352) (92,352)
Cost of common shares
issued under stock
programs............... 885,478 18,637 1,948 20,585
Translation adjustments. (5,095) (5,095)
----------- -------- ---------- --------- ---------- ----------
Balance at
December 31, 1994...... 158,608,800 $330,612 (5,523,482) $(155,020) $1,802,777 $1,978,369
=========== ======== ========== ========= ========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation--The consolidated financial statements include the
accounts of the company and its subsidiaries. Intercompany items and
transactions are eliminated in consolidation.
Nature of Operations--The operations of the company are in the information
industry. The company provides a wide variety of print and print-related
products and services for specific customers, virtually always under contract.
Some contracts provide for progress payments from customers as certain phases
of the work are completed; however, revenue is not recognized until the
production process has been completed in accordance with the terms of the
contracts. Some customers furnish paper for their work, while in other cases
the company purchases and sells the paper.
Cash and Equivalents--The company considers all highly liquid debt
instruments purchased with original maturities of three months or less to be
cash equivalents.
Inventories--Inventories include material, labor and factory overhead and are
substantially carried at Last-In, First-Out (LIFO) cost. This method reflects
the effect of inventory replacement costs in earnings; accordingly, charges to
cost of sales reflect recent costs of material, labor and factory overhead.
Foreign Currency Translation--Gains and losses arising from the translation
of the company's international subsidiaries' financial statements are reflected
in Retained Earnings.
Net Income Per Share of Common Stock--Net income per share is computed on the
basis of average shares outstanding during each year. No material dilution
would result if effect were given to the exercise of outstanding stock options
and the vesting of stock units.
Benefit Plans--The company's Retirement Benefit Plan (the Plan) is a non-
contributory defined benefit plan covering substantially all domestic
employees. Normal retirement age is 65 but provision is made for earlier
retirement. As required, the company uses the projected unit credit actuarial
cost method to determine pension cost for financial reporting purposes. In
conjunction with this method, the company amortizes deferred gains and losses
(using the corridor method), prior service costs and the transition credit (the
excess of Plan assets plus balance sheet accruals over the projected
obligation, as of January 1, 1987) over 19 years, representing the average
remaining service life of its active employee population. For tax and funding
purposes, the attained age normal actuarial cost method is used. Compared to
the projected unit credit method, the attained age normal method attributes a
greater proportion of the total retirement obligation to an employee's early
years of service.
Capitalization, Depreciation and Amortization--Property, plant and equipment
are stated at cost. Depreciation is computed principally on the straight-line
method based on useful lives of 15 to 33 years for buildings and 3 to 15 years
for machinery and equipment. Maintenance and repair costs are charged to
expense as incurred. Major overhauls are capitalized as reductions to
accumulated depreciation. When properties are retired or disposed, the costs
and related depreciation reserves are eliminated and the resulting profit or
loss is recognized in income. Goodwill ($558.0 million and $493.7 million, net
of accumulated amortization, at December 31, 1994 and 1993, respectively) is
amortized principally over periods ranging from 10 to 40 years. Other
intangibles represent the cost of acquiring print contracts and volume
guarantees and are amortized over the lives of the related agreements.
RESTRUCTURING CHARGE
On January 25, 1993, Sears, Roebuck and Co., a customer, announced its
decision to discontinue catalog operations during 1993. In response to Sears'
announcement, the company incurred a one-time charge of
F-6
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
$60.8 million (net of the associated tax benefit) in the first quarter of 1993.
The charge primarily covered the costs associated with closing the company's
manufacturing facility in Chicago, Illinois, where the company produced the
Sears catalogs.
INVENTORIES
The components of the company's inventories as of December 31, 1994 and 1993,
were as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
THOUSANDS OF
DOLLARS
<S> <C> <C>
Raw materials......................................... $165,615 $142,739
Work in process....................................... 182,914 154,477
Operating supplies.................................... 51,372 32,192
Progress billings..................................... (45,523) (40,299)
LIFO reserve ......................................... (43,141) (45,395)
-------- --------
Total............................................. $311,237 $243,714
======== ========
</TABLE>
VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATIONS
The company maintains two Voluntary Employees' Beneficiary Associations
(VEBAs), one to fund employee welfare benefits and one to fund postretirement
medical and death benefits. The balances of the VEBAs (net of associated
liabilities) are recorded in the accompanying Consolidated Balance Sheets,
classified as current or noncurrent depending on the ultimate expected payment
date of the underlying liabilities. As of December 31, 1994, a net current
asset of $11.3 million was included in Prepaid Expenses representing the
current position of the company's employee welfare benefit plans funded by one
of the VEBAs ($9.8 million is included in Prepaid Expenses at December 31,
1993). The VEBA established to partially fund the company's liability for
postretirement medical and death benefits ($156 million at December 31, 1994
and $135 million at December 31, 1993) is included in Other Noncurrent
Liabilities as an offset to the related liability. For additional information,
refer to the notes on "Other Retirement Benefits."
PROPERTY, PLANT AND EQUIPMENT
The following table summarizes the components of property, plant and
equipment (at cost):
<TABLE>
<CAPTION>
1994 1993
---------- ----------
THOUSANDS OF DOLLARS
<S> <C> <C>
Land................................................ $ 38,430 $ 39,033
Buildings........................................... 595,460 551,103
Machinery and equipment............................. 3,074,954 2,771,119
---------- ----------
Total........................................... $3,708,844 $3,361,255
========== ==========
</TABLE>
COMMITMENTS AND CONTINGENCIES
As of December 31, 1994, authorized expenditures on incomplete projects for
the purchase of property, plant and equipment totaled $265.6 million. Of this
total, $184.1 million has been contractually committed. The company has a
variety of commitments with suppliers for the purchase of paper, ink and other
materials for delivery in future years at prevailing market prices.
F-7
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The company has operating lease commitments totaling $364.9 million and
extending through various periods to 2009. The lease commitments total $49.2
million for 1995, range from $24.3 million to $44.3 million in each of the
years 1996-1999 and total $177.3 million for years 2000 and thereafter.
The company is not exposed to significant accounts receivable credit risk,
due to the diversity of industry classification, distribution channels and
geographic location of its customers. In addition, the company is a party to
certain litigation (other than the matters described below) arising in the
ordinary course of business which, in the opinion of management, will not have
a material adverse effect on the operations of the company. The company also
has future annual commitments to invest in various affordable housing limited
partnerships which provide annual tax benefits and credits in amounts greater
than the annual investments.
The company has appealed a 1993 decision in the Federal Trade Commission
(FTC) challenge to the company's 1990 acquisition of the Meredith/Burda
companies. A FTC administrative law judge found the acquisition has or may
substantially lessen competition in an alleged "high-volume publication gravure
printing" market and ordered the divestiture of the Meredith/Burda companies.
The company's appeal has the effect of staying the divestiture order. The
ruling is contrary to an earlier ruling by a Federal District Court which
allowed the acquisition to be consummated. Company management continues to
believe this acquisition was legally proper.
On December 17, 1994, a purported class action seeking compensatory and
punitive damages was filed in California state court against Metromail
Corporation, a wholly-owned subsidiary of the company, alleging among other
things, that inclusion of certain information in Metromail databases resulted
in invasions of privacy in violation of laws. The case was removed from state
court to the U.S. District Court for the Central District of California, and in
an order dated March 8, 1995, the U.S. District Court dismissed the lawsuit on
the joint motion of the parties. The U.S. District Court found, among other
things, that the action was not legally maintainable as a class action.
RETIREMENT BENEFIT PLAN
Net pension credits included in operating results for the Retirement Benefit
Plan (the Plan) were:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
Service cost..................................... $ 28,158 $ 25,097 $ 20,455
Interest cost on the projected benefit
obligation...................................... 51,604 47,295 43,252
Actual return on Plan assets..................... 3,858 (106,595) (85,115)
Amortization of excess Plan net assets at
adoption of SFAS No. 87 and deferrals--net...... (97,293) 20,306 5,127
-------- -------- --------
Total........................................ $(13,673) $(13,897) $(16,281)
======== ======== ========
</TABLE>
The actuarial computations that derived the above amounts assumed a discount
rate on projected benefit obligations of 8.5% (7.5% at December 31, 1993 and
7.8% at December 31, 1992), an expected long-term rate of return on Plan assets
of 9.5% and annual salary increases of 5%.
Plan assets include primarily government and corporate debt securities and
marketable equity securities, and, to a lesser extent, commingled funds, real
estate and a group annuity contract purchased from a life
F-8
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
insurance company. The funded status and prepaid pension cost (included in
Other Noncurrent Assets on the accompanying Consolidated Balance Sheets) are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
THOUSANDS OF DOLLARS
<S> <C> <C>
Fair value of Plan assets............................ $ 935,847 $ 962,153
--------- ---------
Actuarial present value of benefit obligations:
Vested............................................. 574,839 590,214
Non-vested......................................... 9,354 10,488
--------- ---------
Total accumulated benefit obligations................ 584,193 600,702
Additional amounts related to projected wage
increases........................................... 80,098 95,155
--------- ---------
Projected benefit obligations for services rendered
to date............................................. 664,291 695,857
--------- ---------
Excess of Plan assets over projected benefit
obligations......................................... 271,556 266,296
Unrecognized net deferrals........................... 4,948 6,385
Unrecognized net excess Plan assets to be amortized
through the year 2005............................... (108,347) (118,197)
--------- ---------
Prepaid Pension Costs................................ $ 168,157 $ 154,484
========= =========
</TABLE>
In the event of Plan termination, the Plan provides that no funds can revert
to the company and any excess assets over Plan liabilities must be used to fund
retirement benefits.
OTHER RETIREMENT BENEFITS
In addition to pension benefits, the company provides certain health care and
life insurance benefits for retired employees. Substantially all of the
company's domestic, full-time employees become eligible for those benefits upon
reaching age 55 while working for the company and having ten years continuous
service at retirement. Beginning in 1992, the company began a program to
partially fund the liabilities associated with these plans through a tax-exempt
trust. The trust is invested in various assets, primarily life insurance
covering some of the company's employees.
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 106 (SFAS 106), "Employers' Accounting for
Postretirement Benefits Other Than Pensions." SFAS 106 requires companies to
charge to expense the expected costs of postretirement health care and life
insurance (and similar benefits) during the years that the employees render
service. Previously, such costs were expensed as actual claims were paid. The
company elected to immediately recognize the transition obligation for future
benefits to be paid related to past employee services, resulting in a noncash
charge of $207.8 million before deferred income tax benefits ($127.7 million
after-tax or $0.82 per share) that represents the cumulative effect of the
change in accounting for the years prior to 1993.
The net accrual-basis expense for postretirement benefits during 1994 and
1993 included the following components:
<TABLE>
<CAPTION>
1994 1993
-------- -------
THOUSANDS OF
DOLLARS
<S> <C> <C>
Service cost........................................... $ 11,807 $11,580
Interest cost on the projected benefit obligations..... 18,532 17,486
Actual return on assets................................ (1,296) (5,545)
Deferrals--net......................................... (11,113) (3,832)
-------- -------
Total.............................................. $ 17,930 $19,689
======== =======
</TABLE>
The above table does not include a $23 million charge for postretirement
medical benefits associated with the closing of the company's Chicago
manufacturing facility; such amount was included in the 1993 restructuring
charge (see separate note above). The expense for postretirement medical and
death benefits for 1992 (recognized on a cash basis) was $12.4 million.
F-9
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The liability (included in Other Noncurrent Liabilities on the accompanying
Consolidated Balance Sheets) for postretirement benefits, net of the partial
funding, is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
THOUSANDS OF DOLLARS
<S> <C> <C>
Actuarial present value of benefit obligations:
Retirees........................................... $ 136,854 $ 152,334
Fully eligible active plan participants............ 7,056 4,413
Other active plan participants..................... 65,595 87,077
--------- ---------
Total accumulated benefit obligations................ 209,505 243,824
Fair value of Plan assets............................ (156,416) (134,731)
Unrecognized net deferrals........................... 37,542 (805)
--------- ---------
Excess of Accumulated Benefit Obligations Over Plan
Assets.............................................. $ 90,631 $ 108,288
========= =========
</TABLE>
The actuarial computations assumed a discount rate of 8.5% (7.5% at December
31, 1993) to determine the accumulated postretirement benefit obligation, an
expected long-term rate of return on plan assets of 9.0% and a health care cost
trend rate of 7.8% initially, declining gradually to 5.4% in 2023 and
thereafter, to measure the accumulated postretirement benefit obligation.
Effective January 1, 1993, certain features of the plan were amended. For
future retirees, the company introduced retiree cost-sharing and implemented
programs intended to stem rising costs. Also, the company has adopted a
provision which limits its future obligation to absorb health care cost
inflation. The features of the new plan provisions have been reflected in the
assumed health care cost trend rate disclosed above. However, a one percentage
point increase in the assumed health care cost trend rate would increase the
1994 postretirement benefit expense (service cost and interest cost) by $2
million and the accumulated postretirement benefit obligation as of December
31, 1994 by $11.6 million.
INCOME TAXES
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." SFAS
109 requires, among other things, the application of current statutory income
tax rates in computing deferred income tax balances. In the first quarter of
1993, the company recognized the cumulative effect, through January 1, 1993, of
the accounting change, reflecting the difference between current statutory tax
rates and the generally higher rates that were used to establish the deferred
income tax balances, resulting in noncash income of $58.2 million (equivalent
to $0.37 per share).
Cash payments for income taxes were $101.6 million, $75.2 million and $105.9
million in 1994, 1993 and 1992, respectively. The components of income tax
expense for the years ending December 31, 1994, 1993 and 1992, were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- --------
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
Federal
Current...................................... $ 79,483 $72,049 $108,494
Deferred*.................................... 23,218 7,339 (5,966)
State.......................................... 23,700 18,254 23,827
-------- ------- --------
Total...................................... $126,401 $97,642 $126,355
======== ======= ========
</TABLE>
--------
*The 1993 deferred income tax expense includes $6.2 million for the one-time
adjustment of previously recorded deferred taxes due to the increase in the
U.S. statutory rate.
F-10
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The significant deferred tax assets and liabilities at December 31, 1994 and
1993, were as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
MILLIONS OF DOLLARS
<S> <C> <C>
Deferred tax liabilities:
Accelerated depreciation........................... $ 206 $ 176
Investments in safe harbor leases.................. 37 46
Pensions........................................... 61 57
Other.............................................. 65 72
--------- ---------
Total deferred tax liabilities................... 369 351
--------- ---------
Deferred tax assets:
Postretirement benefits............................ 36 43
Accrued liabilities................................ 25 34
Other.............................................. 37 15
--------- ---------
Total deferred tax assets........................ 98 92
--------- ---------
Net Deferred Tax Liabilities......................... $ 271 $ 259
========= =========
</TABLE>
The following table outlines the reconciling differences between the U.S.
statutory tax rates and the rates used by the company in the determination of
net income:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate....................................... 35.0% 35.0% 34.0%
State and local income taxes, net of U.S. federal income tax
benefit..................................................... 3.9 4.3 4.4
Differences resulting from purchase accounting............... 1.3 2.0 1.1
Benefits resulting from life insurance programs.............. (4.7) (5.5) (3.2)
Affordable housing investment credits........................ (3.1) (2.5) --
Other........................................................ (0.4) (0.2) (1.3)
---- ---- ----
Subtotal..................................................... 32.0 33.1 35.0
Adjustment of deferred taxes for the increase in the U.S.
federal statutory income tax rate........................... -- 2.2 --
---- ---- ----
Total.................................................... 32.0% 35.3% 35.0%
==== ==== ====
</TABLE>
DEBT FINANCING AND INTEREST EXPENSE
The company's debt at December 31, consisted of the following:
<TABLE>
<CAPTION>
1994 1993
---------- --------
THOUSANDS OF
DOLLARS
<S> <C> <C>
9.125% Debentures due December 1, 2000..................... $ 199,574 $199,502
7.0% Notes due January 1, 2003............................. 109,686 109,647
8.875% Debentures due April 15, 2021....................... 149,652 149,638
Medium term Notes.......................................... 200,000 --
Commercial paper........................................... 484,061 218,664
Other...................................................... 101,759 33,399
---------- --------
Total.................................................. $1,244,732 $710,850
========== ========
</TABLE>
F-11
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Based upon the interest rates currently available to the company for
borrowings with similar terms and maturities, the fair value of the company's
debt approximates its book value at December 31, 1994. The company's notes and
debentures are not actively traded and contain no call provisions.
At December 31, 1994, the company had an available credit facility of $550
million with a group of domestic and foreign banks. The credit arrangement
provides support for the issuance of commercial paper and other credit needs.
Borrowings under the facility (none during the past two years) bear interest at
various rates not exceeding the banks' prime rates. The company pays an annual
fee of 0.07% on the total unused credit facility. At December 31, 1994, the
company had an effective shelf registration statement permitting it to issue,
from time to time, up to $300 million in debt securities. Under shelf
registration statements, the company issued $200 million of medium term notes
during the fourth quarter of 1994. The notes bear interest at rates ranging
between 7.01% and 7.96% (with a weighted average interest rate of 7.55%) with
maturities as follows: 1997--$91 million, 1998--$5 million and 1999--$104
million. The proceeds from these issues were used to retire commercial paper
debt.
At December 31, 1994, the company had $538.6 million of commercial paper and
short-term debt outstanding, of which $32.4 million represents management's
current estimate of the 1995 net repayment. The remaining $506.2 million is
classified as long term since the company has the ability and intent to
maintain such debt on a long-term basis. The weighted average interest rate on
all commercial paper debt outstanding during 1994 was 4.3% (6.0% at December
31, 1994).
The following table summarizes interest expense included in the Consolidated
Statements of Income:
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- -------
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
Interest incurred.................................. $ 63,726 $51,922 $43,882
Amount capitalized as property, plant and
equipment......................................... (10,233) (6,486) (5,223)
-------- ------- -------
Total.......................................... $ 53,493 $45,436 $38,659
======== ======= =======
</TABLE>
Interest paid, net of capitalized interest, was $51.8 million, $42.9 million
and $38.4 million in 1994, 1993 and 1992, respectively.
STOCK AND INCENTIVE PROGRAMS FOR MANAGEMENT EMPLOYEES
Stock Unit Awards and Restricted Stock Awards--At December 31, 1994 and 1993,
the company had outstanding 10,000 and 80,000 stock units, respectively, which
had been granted to officers and selected managers prior to 1990. Certain of
these units are payable upon or subsequent to termination of employment and
others are payable upon vesting, normally five years after the date of grant.
Payment of these awards will be made in shares of common stock equal to the
number of units awarded, in cash equal to the market value at the date of
distribution, or a combination thereof, at the company's option. The expense
for these grants was recognized in the year granted. When an award of stock
units is paid, the recipient will receive an additional amount in cash equal to
dividends paid on an equivalent number of shares of common stock during the
vesting period, plus interest. The values of the dividends and interest
accounts were $46,000 and $232,000 at December 31, 1994 and 1993, respectively.
At December 31, 1994 and 1993, the company had outstanding 328,000 and
275,000, respectively, restricted shares granted to certain officers. These
shares are registered in the names of the recipients, but are subject to
conditions of forfeiture and restrictions on sale or transfer for five years
from the grant date. Dividends on the restricted shares are paid currently to
the recipients and, accordingly, the restricted shares are treated as
outstanding shares. The expense of the grant is recognized evenly over the
vesting period.
F-12
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The value of the stock units and restricted stock awards was $10.0 million
and $11.0 million based upon the closing price of the company's stock at each
year end ($29.50 and $31.13 at December 31, 1994 and 1993, respectively).
Charges to expense for both stock plans were $1.5 million, $1.1 million and
$1.2 million in 1994, 1993 and 1992, respectively.
Stock Purchase Plan--The company has a stock purchase plan for selected
managers and key staff employees. Under the plan, the company is required to
contribute an amount equal to 70% of participants' contributions, of which 50%
is applied to the purchase of stock and 20% is paid in cash. The number of
shares required for the plan for the year 1994 will depend upon the extent to
which eligible participants subscribe during the subscription period in the
first quarter of 1995 and the price of the stock on March 16, 1995. Amounts
charged to expense for this plan were $6.1 million, $6.2 million, and $5.8
million in 1994, 1993 and 1992, respectively.
Incentive Compensation Plans--The company has incentive compensation plans
covering selected officers. Amounts charged to expense for supplementary
compensation ($3.3 million in 1994, $2.6 million in 1993 and $2.7 million in
1992), are determined from the level of achievement of performance measures
related to earnings, margins and returns applied to the participants' base
salaries. Similar incentive and gain sharing compensation plans exist for other
officers, managers, supervisors and production employees.
Stock Options--The company has granted stock options annually from 1983 to
1994. Exercise prices are 100% of the market price of common stock on the date
of grant. The employee options vest over three, four or five years and may be
exercised, once vested, up to ten years from the date of grant. Under the 1991
Stock Incentive Plan, a maximum of 1.2 million shares were available for future
grants of stock options and restricted stock awards as of December 31, 1994.
Information relating to stock options, which includes 2.4 million shares
granted under a broad base stock option program for non-management employees,
for the years ended December 31 is shown below.
<TABLE>
<CAPTION>
1994 1993
--------------------------- --------------------------
NUMBER OF PER SHARE OPTION NUMBER OF PER SHARE OPTION
SHARES ON DATE OF GRANT SHARES ON DATE OF GRANT
---------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Stock options granted... 4,016,500 $28.44 to $30.94 1,399,200 $28.94 to $30.19
Stock options canceled
or expired............. 274,220 $19.63 to $31.38 17,040 $19.63 to $31.38
Stock options exercised. 370,627 $11.44 to $23.94 248,201 $11.00 to $23.94
At end of year:
Stock options
outstanding.......... 11,056,758 $15.66 to $31.38 7,685,105 $11.44 to $31.38
Stock options
exercisable.......... 4,764,756 $15.66 to $31.38 3,850,079 $11.44 to $31.38
</TABLE>
Other Information--Under the stock programs, authorized unissued shares or
treasury shares may be used. If authorized unissued shares are used, not more
than 11.3 million shares may be issued in the aggregate. The company intends to
reacquire shares of its common stock to meet the stock requirements of these
programs in the future.
EMPLOYEE STOCK OWNERSHIP PLAN
Contributions to the company's Employee Stock Ownership Plan were
discontinued in response to the change in tax law that eliminated the
previously available tax credit. Under this plan, 1.2 million shares are held
in trust as of December 31, 1994, for formerly eligible employees. There are no
charges to operations for this plan, except for certain administrative
expenses.
F-13
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
STOCK SPLIT
On July 23, 1992, the Board of Directors declared a 2-for-1 common stock
split. The split was completed on September 1, 1992, by the distribution of one
share of common stock, par value $1.25 per share, for each share held by
stockholders of record on August 7, 1992. Information relating to stock
options, stock units, reacquired common stock, the Shareholders Rights Plan,
and the net income and dividends per share included in the Consolidated
Financial Statements and related notes reflects the stock split.
PREFERRED STOCK
The company has two million shares of $1.00 par value preferred stock
authorized for issuance. The Board of Directors may divide the preferred stock
into one or more series and fix the redemption, dividend, voting, conversion,
sinking fund, liquidation and other rights. The company has no present plans to
issue any preferred stock. One million of the shares are reserved for issuance
under the Shareholder Rights Plan discussed below.
SHAREHOLDER RIGHTS PLAN
The company maintains a Shareholder Rights Plan (the Plan) designed to deter
coercive or unfair takeover tactics, to prevent a person or group from gaining
control of the company without offering fair value to all shareholders and to
deter other abusive takeover tactics which are not in the best interest of
shareholders.
Under the terms of the Plan, each share of common stock is accompanied by
one-quarter of a right; each full right entitles the shareholder to purchase
from the company, one one-hundredth of a newly issued share of Series A Junior
Preferred Stock at an exercise price of $225.
The rights become exercisable ten days after a public announcement that an
acquiring person (as defined in the Plan) has acquired 20% or more of the
outstanding common stock of the company (the Stock Acquisition Date) or ten
days after the commencement of a tender offer which would result in a person
owning 30% or more of such shares. The company can redeem the rights for $.05
per right at any time until twenty days following the Stock Acquisition Date
(the 20-day period can be shortened or lengthened by the company). The rights
will expire on August 8, 1996 unless redeemed earlier by the company.
If, subsequent to the rights becoming exercisable, the company is acquired in
a merger or other business combination at any time when there is a 20% or more
holder, the rights will then entitle a holder to buy shares of the acquiring
company with a market value equal to twice the exercise price of each right.
Alternatively, if a 20% holder acquires the company by means of a merger in
which the company and its stock survives, or if any person acquires 30% or more
of the company's common stock, each right not owned by a 20% or more
shareholder, would become exercisable for common stock of the company (or, in
certain circumstances, other consideration) having a market value equal to
twice the exercise price of the right.
ACQUISITIONS
The company made several acquisitions, joint venture and equity investments
in 1994, 1993 and 1992, none of which, either individually or in the aggregate,
were material to the company's financial statements. The acquisitions were
accounted for using the purchase method; accordingly, the assets and
liabilities of the acquired entities have been recorded at their estimated fair
values at their respective dates of acquisition.
F-14
<PAGE>
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
GEOGRAPHIC SEGMENTS
The following table summarizes the company's results of operations and
identifiable assets, as of and for the years ended December 31, 1994, 1993 and
1992:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
Net sales:
Domestic.................................. $4,343,477 $3,999,367 $3,844,053
Foreign................................... 553,395 390,282 349,941
Less transfers between geographic areas... (8,086) (1,888) (922)
---------- ---------- ----------
Total................................... $4,888,786 $4,387,761 $4,193,072
========== ========== ==========
Earnings from operations:
Domestic*................................. $ 497,120 $ 362,364 $ 436,522
Foreign................................... 4,118 (598) 1,766
Corporate and other expenses--net......... (41,807) (36,159) (32,787)
---------- ---------- ----------
Total................................... $ 459,431 $ 325,607 $ 405,501
========== ========== ==========
Identifiable assets:
Domestic.................................. $3,719,974 $3,186,229 $3,023,177
Foreign................................... 541,614 307,727 264,452
Investment in unconsolidated affiliates... 80,580 74,188 53,646
Corporate and other....................... 109,975 85,882 68,972
---------- ---------- ----------
Total................................... $4,452,143 $3,654,026 $3,410,247
========== ========== ==========
</TABLE>
--------
*1993 domestic earnings from operations includes a $90 million restructuring
charge recorded during the first quarter of 1993 related primarily to the
closing of the company's Chicago manufacturing facility.
Sales to affiliates are at negotiated prices based on specific market
conditions. Earnings from operations is net sales less cost of sales, selling
and administrative expenses, assessments to operating units for various
corporate expenses and goodwill amortization. In computing earnings from
operations, none of the following items has been added or deducted: interest
expense, income taxes and equity in income from unconsolidated investees.
Identifiable assets are those assets of the company that are identified with
the operations in each geographic area. Corporate and other assets are
principally investments.
Since December 31, 1991, foreign identifiable assets have grown 113%, which
is attributable to acquisitions, new locations and expansions of existing
businesses. Significant investments have been made in China, Poland, Ireland,
Singapore, United Kingdom, Japan, Korea, Australia, France, Germany, Mexico and
South America resulting in sales gains from the introduction of the company's
products to international markets and the creation of new products and services
by the foreign segment. Most of these operations remain in their start-up and
expansion phases and accordingly, the growth in foreign net sales (113% since
1991) has outpaced the growth in foreign operating earnings due to normal but
significant start-up costs.
F-15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
R. R. Donnelley & Sons Company:
We have audited the accompanying consolidated balance sheets of R. R.
Donnelley & Sons Company (a Delaware corporation) and Subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years ended December
31, 1994. 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 the financial statements referred to above present fairly, in
all material respects, the financial position of R. R. Donnelley & Sons Company
and Subsidiaries as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the three years ended December 31,
1994, in conformity with generally accepted accounting principles.
As explained in the Notes to Consolidated Financial Statements, effective
January 1, 1993, the company changed its method of accounting for
postretirement benefits other than pensions and its method of accounting for
income taxes.
Arthur Andersen LLP
Chicago, Illinois
January 26, 1995 (except with
respect to the matter
discussed in paragraph 5 in
the Commitments and
Contingencies footnote, as to
which the date is March 8,
1995)
F-16
<PAGE>
UNAUDITED INTERIM FINANCIAL INFORMATION
THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
-------------------------------------------------------
FIRST SECOND THIRD FOURTH FULL
QUARTER QUARTER QUARTER QUARTER YEAR
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1994
Net sales............... $1,070,877 $1,117,338 $1,242,973 $1,457,598 $4,888,786
Gross profit............ 193,853 217,819 255,046 283,574 950,292
Net income.............. 42,796 58,338 80,070 87,399 268,603
Net income per common
share.................. 0.28 0.38 0.52 0.57 1.75
1993
Net sales............... $ 960,341 $ 993,964 $1,123,848 $1,309,608 $4,387,761
Gross profit............ 174,835 195,351 232,022 267,385 869,593
Net income (loss) from
operations before
cumulative effect of
accounting changes..... (22,108) 52,771 69,451 78,806 178,920
Cumulative effect of
accounting changes..... (69,500) -- -- -- (69,500)
Net income (loss)....... (91,608) 52,771 69,451 78,806 109,420
Per common share
Net income (loss) from
operations before
cumulative effect of
accounting changes... (0.14) 0.34 0.45 0.51 1.16
Cumulative effect of
accounting changes... (0.45) -- -- -- (0.45)
Net income (loss)..... (0.59) 0.34 0.45 0.51 0.71
</TABLE>
F-17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Stockholders of R. R. Donnelley & Sons Company:
We have audited, in accordance with generally accepted auditing standards,
the financial statements included in the Company's Annual Report to
Shareholders included in this Form 10-K, and have issued our report thereon
dated January 26, 1995. Our audit was made for the purpose of forming an
opinion on those statements taken as a whole. The schedule listed in the index
to the financial statements and financial statement schedule is the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Arthur Andersen LLP
Chicago, Illinois
January 26, 1995
F-18
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Transactions affecting the allowances for doubtful accounts during the years
ended December 31, 1994, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Allowance for trade receivable losses:
Balance, beginning of year................ $ 14,795 $ 17,745 $ 23,928
Balance, acquired companies at acquisi-
tion..................................... 5,257 312 1,066
Provisions charged to income.............. 14,047 22,658 12,931
-------- -------- --------
34,099 40,715 37,925
Uncollectible accounts written off, net of
recoveries............................... (14,931) (25,920) (20,180)
-------- -------- --------
Balance, end of year...................... $ 19,168 $ 14,795 $ 17,745
======== ======== ========
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS*
DESCRIPTION EXHIBIT NO.
----------- ----------
<S> <C>
Certificate of Incorporation(10)............................... 3(i)(a)
Certificate of Stock Designation filed as Exhibit A to the
Rights Agreement dated July 24, 1986 between R. R. Donnelley
& Sons Company and Morgan Shareholder Services Trust Compa-
ny(2)......................................................... 3(i)(b)
By-Laws........................................................ 3(ii)(a)
Amendment to By-Laws adopted January 26, 1995.................. 3(ii)(b)
Form of Rights Agreement, dated as of July 24, 1986 between
R.R. Donnelley & Sons Company and Morgan Shareholder Services
Trust Company(2).............................................. 4(a)
First Amendment to Rights Agreement, dated as of March 24,
1988 between R. R. Donnelley & Sons Company and Morgan Share-
holder Services Trust Company(4).............................. 4(b)
Instruments Defining the Rights of Security Holders(1)......... 4(c)
Indenture dated as of November 1, 1990 between the Company and
Citibank, N.A. as Trustee(8).................................. 4(d)
Credit Agreement dated December 21, 1994 among R. R. Donnelley
& Sons Company, the Banks named therein and Citibank, N.A.,
as Administrative Agent....................................... 4(e)
Directors' Retirement Benefit Plan, as amended(6)**............ 10(a)
Directors' Deferred Compensation Agreement(12)**............... 10(b)
Donnelley Shares Stock Option Plan, as amended................. 10(c)
1993 Stock Ownership Plan for Non-Employee Directors(9)**...... 10(d)
Senior Management Annual Incentive Plan, as amended(8)**....... 10(e)
Form of Severance Agreement for Senior Officers, as amend-
ed(12)**...................................................... 10(f)
1993 Stock Purchase Plan for Selected Managers and Key Staff
Employees, as amended(13)**................................... 10(g)
1981 Stock Incentive Plan(5)**................................. 10(h)
1986 Stock Incentive Plan(5)**................................. 10(i)
1991 Stock Incentive Plan, as amended(11)**.................... 10(j)
1995 Stock Incentive Plan**.................................... 10(k)
Form of premium priced option agreement with certain executive
officers**..................................................... 10(l)
Unfunded Supplemental Benefit Plan(8)**........................ 10(m)
Amendment to Unfunded Supplemental Benefit Plan adopted on
April 25, 1991(7)**........................................... 10(n)
Agreement with John R. Walter for 1988 award of stock
units(3)**.................................................... 10(o)
Statement of Computation of Ratio of Earnings to Fixed
Charges....................................................... 12
Subsidiaries of R. R. Donnelley & Sons Company................. 21
Consent of Independent Public Accountants dated March 27,
1995.......................................................... 23
Financial Data Schedule........................................ 27
</TABLE>
--------
*Filed with the Securities and Exchange Commission. Each such exhibit
may be obtained by a shareholder of the Company upon payment of $5.00
per exhibit.
**Management contract or compensatory plan or arrangement.
(1) Instruments, other than that described in 4(d) and 4(e), defining
the rights of holders of long-term debt not registered under the
Securities Exchange Act of 1934 of the registrant and of all
subsidiaries for which consolidated or unconsolidated financial
statements are required to be filed are being omitted pursuant to
paragraph (4)(iii)(A) of Item 601 of Regulation S-K. Registrant agrees
to furnish a copy of any such instrument to the Commission upon
request.
E-1
<PAGE>
(2) Filed as Exhibit with Form SE filed on July 31, 1986, and
incorporated herein by reference.
(3) Filed as Exhibit with Form SE filed on March 24, 1988, and
incorporated herein by reference.
(4) Filed as Exhibit with Form SE filed on May 10, 1988, and
incorporated herein by reference.
(5) Filed as Exhibit with Form SE filed on March 23, 1990, and
incorporated herein by reference.
(6) Filed as Exhibit with Form SE filed on March 25, 1991, and
incorporated herein by reference.
(7) Filed as Exhibit with Form SE filed on May 9, 1991 and incorporated
herein by reference.
(8) Filed as Exhibit with Form SE filed on March 26, 1992 and
incorporated herein by reference.
(9) Filed as Exhibit with Form SE filed on March 30, 1993 and
incorporated herein by reference.
(10) Filed on May 14, 1993 as Exhibit to Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1993.
(11) Filed on November 12, 1993 as Exhibit to Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1993.
(12) Filed on March 28, 1994 as Exhibit to Annual Report on Form 10-K
for the year ended December 31, 1993.
(13) Filed on November 14, 1994 as Exhibit to Quarterly Report on Form
10-Q for the quarter ended September 30, 1994.
E-2
<PAGE>
Exhibit 3(ii)(a)
Form 10-K for year ended
12/31/94
As Amended through January 26, 1995
BY-LAWS OF
R. R. DONNELLEY & SONS COMPANY
ARTICLE I
---------
SECTION 1.1. PRINCIPAL OFFICE. The principal office in the State of
Delaware shall be in the City of Wilmington, County of New Castle, State of
Delaware, and the name of the resident agent in charge thereof is The
Corporation Trust Company.
SECTION 1.2. OTHER OFFICES. The corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
----------
Meetings of Stockholders
------------------------
SECTION 2.1. ANNUAL MEETING. The annual meeting of the stockholders shall
be held on the fourth Thursday in March of each year for the purpose of electing
Directors of the class for which the term expires on that date and for the
transaction of such other business as may properly be brought before the
meeting. Such meeting shall be held at eight o'clock in the morning or such
other time during normal business hours as may be fixed by the Board of
Directors and stated in the notice of the meeting. If the day fixed for the
annual meeting shall be a legal holiday, the Board of Directors may, subject to
the provisions of Article X hereof, designate another day on which such meeting
shall be held. If the election of Directors shall not be held on the date
designated for any annual meeting, or any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as conveniently may be.
Except as otherwise provided by statute or the certificate of incorporation,
the only business which properly shall be conducted at any annual meeting of the
stockholders shall (i) have been specified in the written notice of the meeting
(or any supplement thereto) given as provided in Section 2.4, (ii) be brought
before the meeting by or at the direction of the Board of Directors or the
officer of the corporation presiding at the meeting or (iii) have been specified
in a written notice (a "Stockholder Meeting Notice") given to the corporation,
in accordance with all of the following requirements, by or on behalf of any
stockholder who is entitled to vote at such meeting. Each Stockholder Meeting
Notice must be delivered personally to, or
<PAGE>
be mailed to and received by, the Secretary of the corporation at the principal
executive offices of the corporation in the City of Chicago, State of Illinois,
not less than 60 days nor more than 90 days prior to the annual meeting;
provided, however, that in the event that less than 75 days' notice or prior
public disclosure of the date of the annual meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made, whichever first occurs. Each Stockholder Meeting Notice shall set
forth: (i) a description of each item of business proposed to be brought before
the meeting and the reasons for conducting such business at the annual meeting;
(ii) the name and record address of the stockholder proposing to bring such item
of business before the meeting and the reasons for conducting such business at
the annual meeting; (iii) the class and number of shares of stock held of
record, owned beneficially and represented by proxy by such stockholder as of
the record date for the meeting (if such date shall then have been made publicly
available) and as of the date of such Stockholder Meeting Notice and (iv) all
other information which would be required to be included in a proxy statement
filed with the Securities and Exchange Commission if, with respect to any such
item of business, such stockholder were a participant in a solicitation subject
to Section 14 of the Securities Exchange Act of 1934. No business shall be
brought before any annual meeting of stockholders of the corporation otherwise
than as provided in this Section; provided, however, that nothing contained in
this Section shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting. The officer of the
corporation presiding at the annual meeting of stockholders shall, if the facts
so warrant, determine that business was not properly brought before the meeting
in accordance with the provisions of this Section and, if he should so
determine, he should so declare to the meeting and any such business so
determined to be not properly brought before the meeting shall not be
transacted. (Amended 10/27/94)
SECTION 2.2. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the Chief Executive Officer,
President, or the Chairman of the Board, and shall be called by the Secretary
pursuant to a resolution duly adopted by the affirmative vote of a majority of
the whole Board of Directors. Such call shall state the purposes of the proposed
meeting. Business transacted at any special meeting shall be limited to the
general objectives stated in the call. (Amended 12/15/88)
SECTION 2.3. PLACE OF MEETING. All meetings of stockholders for the
election of Directors shall be held in the City of Chicago, County of Cook,
State of Illinois and the Board of Directors is authorized to fix the place
within the City of Chicago for the holding of such meeting. Meetings of
stockholders for any other purpose may be held at such place, within or without
the State of Delaware, and time as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof. (Amended 1/9/57)
2
<PAGE>
SECTION 2.4. NOTICE OF MEETINGS. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the Board of Directors, the
Chief Executive Officer, the Chairman of the Board or the President, 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 in a
sealed envelope addressed to the stockholder at his address as it appears on the
records of the corporation, with postage thereon prepaid. (Amended 12/15/88)
SECTION 2.5. CLOSING TRANSFER BOOKS OR FIXING RECORD DATE. The Board of
Directors may close the stock transfer books of the corporation for a period not
exceeding fifty (50) days preceding the date of any meeting of stockholders, or
the date for payment of any dividend, or the date for the allotment of rights or
the date when any change, or conversion or exchange of capital stock shall go
into effect or for a period of not exceeding fifty (50) days in connection with
obtaining the consent of stockholders for any purpose. In lieu of closing the
stock transfer books as aforesaid, the Board of Directors may fix in advance a
date, not exceeding fifty (50) days preceding the date of any meeting of the
stockholders, or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change, or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent and in such case such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of and to vote at, such
meeting and any adjournment thereof, or to receive payments of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid.
SECTION 2.6. VOTING LIST. At least ten days before every election of
Directors, a complete list of the stockholders entitled to vote at such
election, arranged in alphabetical order with the residence of and the number of
voting shares held by each, shall be prepared by the Secretary. Such list shall
be open at the place where said election is to be held for ten days, to the
examination of any stockholders, and shall be produced and kept at the time and
place of election during the whole time thereof, and subject to the inspection
of any stockholder who may be present.
SECTION 2.7. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at any meeting of stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of
3
<PAGE>
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 2.8. PROXIES. At all meetings of stockholders a stockholder may
vote by proxy executed in writing by the stockholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
SECTION 2.9. VOTING. When a quorum is present at any meeting of
stockholders, the affirmative vote of the holders of a majority of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the subject matter shall decide any question brought before such meeting, unless
the question is one upon which, by express provision of the statutes, the
certificate of incorporation or these by-laws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question. Every stockholder having the right to vote shall be entitled to vote
in person, or by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than eleven months prior to voting,
unless such instrument provides for a longer period. Every such stockholder
shall have one vote for each share of stock having voting power registered in
his name on the books of the corporation. Except where the transfer books of
the corporation shall have been closed or a date shall have been fixed as a
record date for the determination of its stockholders entitled to vote, no share
of stock shall be voted on at any election for Directors which has been
transferred on the books of the corporation within twenty days next preceding
such election of Directors. (Amended 1/28/93)
SECTION 2.10. VOTING OF STOCK OF CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the by-laws of such corporation may prescribe or, in the
absence of such provision, as the Board of Directors of such corporation may
determine. Shares standing in the name of a deceased person may be voted by
executor or administrator of such deceased person, either in person or by proxy.
Shares standing in the name of a guardian, conservator or trustee may be voted
by such fiduciary, either in person or by proxy, but no such fiduciary shall be
entitled to vote shares held in such fiduciary capacity without a transfer of
such shares into the name of such fiduciary. Shares standing in the name of a
receiver may be voted by such receiver. A stockholder whose shares are pledged
shall be entitled to vote such shares, unless in the transfer by the pledger or
on the books of the corporation, he has expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent the stock
and vote thereon.
4
<PAGE>
SECTION 2.11. TREASURY STOCK. The corporation shall not vote shares of its
own stock directly or indirectly; and such shares shall not be counted in
determining the total number of outstanding shares.
SECTION 2.12. ELECTION OF DIRECTORS. When a quorum is present at any
meeting of stockholders, directors shall be elected by a plurality of the votes
of the shares present in person or represented by proxy at such meeting of
stockholders and entitled to vote on the election of directors. (New Section
10/22/92)
ARTICLE III
-----------
Directors
---------
SECTION 3.1. GENERAL POWERS. The property and business of the corporation
shall be managed by its Board of Directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders. (Amended 9/28/90)
Without limiting the generality of the foregoing, it shall be the
responsibility of the Board of Directors to establish broad objectives and the
general course of the business, determine basic policies, appraise the adequacy
of overall results, and generally represent and further the interests of the
Company's stockholders and insure the most effective use of the Company's
assets.
Several examples of the responsibilities of the Board are as follows:
1. Establish broad Company objectives and basic policies and maintain
overall control of the business.
2. Make necessary revisions of the by-laws (in accordance with Article X).
3. Determine dividend action (in accordance with Article VIII).
4. Authorize necessary action with respect to issuance of new securities
and listing securities for trading on exchanges.
5. Fix time and place and take other necessary action with respect to
stockholders meetings (in accordance with Article II).
6. Approve issuance of stock certificates to replace those lost or
destroyed (in accordance with Section 7.2).
7. Fill Vacancies in the Board of Directors (in accordance with Section
3.8).
5
<PAGE>
8. Elect the officers of the corporation (in accordance with Section 4.2.)
and appraise their performance.
9. Determine the basic organization structure of the business.
10. Authorize any necessary action with respect to loans and pledging of
assets (in accordance with Section 6.2.).
11. Designate officers authorized to buy or sell corporate investment
securities.
12. Designate persons authorized to execute contracts and other documents
requiring signatures of officers or specific individuals (in accordance
with Section 6.1).
13. Select, or designate those authorized to select, depositaries for
corporate funds and investment securities and designate check
signatories and persons authorized to have access to safe deposit boxes
(in accordance with Sections 6.3 and 6.4).
14. Approve proposals to convey corporate-owned land or buildings or
designate those authorized to take such action.
15. Designate the person or persons authorized to appoint proxies to vote
stock in subsidiary and other concerns in which the corporation has a
significant interest and the person or persons authorized to determine
who shall serve as Directors in representing the parent corporation in
such concerns.
16. Designate stock transfer agents, registrars, and paying agents with
respect to corporate securities and other special purpose agents.
17. Procure special professional services required by and for the Board.
18. Provide for issuance of an annual report to stockholders and such other
reports and notices as the Board deems advisable.
19. Employ, upon recommendation of the Audit Committee (in accordance with
Section 3.13), public accountants to audit the corporation's financial
statements.
20. Review and approve new employee benefit plans and major revisions of
employee stock incentive plans.
21. Review and approve the actions of the Executive Committee as reported in
the minutes of their meetings.
6
<PAGE>
22. Approve the annual operating budget.
23. Review and approve the annual capital budget.
24. Direct the manner of handling matters outside the ordinary course of
business of the corporation.
SECTION 3.2. NUMBER, ELECTION AND TERM. The number of Directors which
shall constitute the whole Board shall be thirteen (13) of whom five (5) shall
be Directors of the First Class, four (4) shall be Directors of the Second Class
and four (4) shall be Directors of the Third Class. The term of office of each
class shall be three years, with the term of one class expiring in each year,
and the successors to the class of Directors whose terms shall expire shall be
elected at each annual election or adjournment thereof. Each Director shall
hold office until his successor shall be elected and shall qualify or until his
earlier resignation or removal. Directors need not be residents of Delaware or
stockholders. (Amended 1/26/95)
SECTION 3.3. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
such place as may from time to time be determined by the Board. Special
meetings of the Board of Directors may be called by or at the request of the
Chief Executive Officer, the Chairman of the Board, a Vice Chairman, President,
or any two directors. (Amended 12/15/88)
SECTION 3.4. NOTICE. Notice of any special meeting of the Board of
Directors stating the place, date and hour of the special meeting shall be given
in writing to each director, either personally, or by mail, telex, telegram or
cable, addressed to the director's residence or usual place of business, not
less than two days before the date of such meeting, or by such other means,
whether or not in writing, and within such lesser period, as circumstances
require in the reasonable judgment of the person calling the meetings. If
mailed, such notice shall be deemed to be given at the time when it is deposited
in the United States mail with first class postage prepaid. Notice by telegram
or cable shall be deemed given when the notice is delivered to the telegraph or
cable company; notice by telex shall be deemed given when the notice is
transmitted by telex. Any director may waive notice of any meeting. The
attendance of a director at any meeting shall constitute a waiver of notice at
such meeting, except where the director attends the meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting, unless otherwise provided by
statute, the Certificate of Incorporation or these By-Laws. (Amended 6/24/76)
SECTION 3.5. QUORUM. A majority of the Board of Directors shall constitute
a quorum for the transaction of business at any meeting of the Board of
Directors,
7
<PAGE>
provided, that if less than a majority of the Directors are present at said
meeting, a majority of the Directors present may adjourn the meeting from time
to time without further notice. (Renumbered 6/24/76)
SECTION 3.6. MANNER OF ACTING. 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. (Renumbered 6/24/76)
SECTION 3.7. USE OF COMMUNICATIONS EQUIPMENT. Members of the Board of
Directors, or any committee thereof, may participate in a meeting of the Board
of Directors or 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 participation in a meeting pursuant to this
section shall constitute presence in person at such meeting. (New Section
6/24/76)
SECTION 3.8. VACANCIES AND ADDITIONAL DIRECTORS. Any director may resign at
any time upon written notice to the corporation. If any vacancy occurs in the
Board of Directors caused by death, resignation, retirement, disqualification or
removal from office of any Director, or otherwise, or if any new directorship is
created by any increase in the authorized number of Directors, a majority of the
Directors then in office, though less than a quorum may choose a successor or
fill the newly created directorship; and a Director so chosen shall hold office
until the next annual election at which Directors of the class to which he was
chosen are elected and until his successor shall be duly elected and shall
qualify or until his earlier resignation or removal. (Amended 3/26/70)
SECTION 3.9. COMPENSATION. Directors who are not full-time employees of the
Company shall receive a stated salary and may receive options to purchase shares
of the Company's stock as provided under the Company's stock plans, for their
services, and, in addition thereto, shall receive a fixed fee and expenses, if
any, for attendance at each regular or special meeting of the Board of Directors
from time to time. Directors who are full-time employees of the Company shall
not receive any compensation for their services as such; provided that nothing
herein contained shall be construed to preclude any Director from serving the
corporation in any other capacity and receiving compensation thereof. (Amended
3/28/91)
SECTION 3.10. EXECUTIVE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors to constitute an Executive Committee. The Chairman of the Executive
Committee shall be the Chief Executive Officer. The Executive Committee shall
have and exercise all of the authority of the Board of Directors in the
management of the corporation, except that such Committee shall not have the
power to take specific actions which have been delegated to other committees of
the Board and shall not be empowered to take action with respect to: declaring
dividends; issuing bonds, debentures, or the borrowing of moneys except within
limits expressly approved by the Board of Directors; amending by-laws; filling
vacancies and newly created directorships in the
8
<PAGE>
Board of Directors; removing Directors of the corporation; mergers or
consolidations; the sale, lease or exchange of all or substantially all of the
assets of the corporation; dissolution; or any other action requiring the
approval of stockholders. The designation of such Committee and the delegation
thereto of authority shall not operate to relieve the Board of Directors or any
member thereof of any responsibility imposed upon it or him by law. (Amended
9/28/90)
SECTION 3.11. FINANCE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors, a majority of whom shall not be employees of the Company, to
constitute a Finance Committee, which Committee is charged with reviewing the
overall financial policies of the Company and making recommendations to the
Board regarding the Company's financial condition and requirements for and
disposition of funds, including: capital structure, raising long-term capital,
dividend policy, and material changes in the Company's financial position with
respect to cash, investments, debt and accounts receivable. The Committee shall
review the performance and management of the Company's Retirement Benefit Plan
including the investment policy, the performance of the Investment Trustee on a
regular periodic basis, the reasonableness of the actuarial assumptions in
relation to investment performance, the funding status of the Plan and shall
make recommendations with respect to the selection of one or more investment
trustees or other investment agencies, and undertake such other studies and make
such other recommendations to the Board as it may deem desirable with respect to
the Investment Trust of the Retirement Benefit Plan. (Amended and Renamed
9/28/90)
SECTION 3.12. COMPENSATION COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors who are not employees of the Company, to constitute a Compensation
Committee. The Compensation Committee shall determine the annual salary, bonus
and other benefits of selected senior officers and key management employees of
the Company and review, as appropriate, performance standards under compensation
programs for key employees. The Compensation Committee shall also recommend to
the Board candidates for election as corporate officers.
The Compensation Committee shall recommend new employee benefit plans and
changes to stock incentive plans to the Board, approve amendments to the non-
stock employee benefit plans of the Company and oversee the administration of
all of the Company's employee benefit plans. The Compensation Committee may
delegate to one or more officers of the Company the power to approve any
amendment of any non-stock employee benefit plan of the Company or the Donnelley
Tax Credit Stock Ownership Plan which in the reasonable opinion of such officer
will not materially affect the costs to the Company of, or benefits under, such
plans. (Amended 7/22/93)
SECTION 3.13. AUDIT COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors who are not employees of the Company to constitute an Audit Committee,
which
9
<PAGE>
Committee shall review on behalf of the stockholders of the Company: the
qualifications and services of the independent public accountants employed by
the Company from time to time to audit the books of the Company, the scope of
their audits, the adequacy of their audit reports, and recommendations made by
them. The Committee may also make such reviews of internal financial audits and
controls as the Committee considers desirable.
The Audit Committee will recommend to the Board the selection of the
independent public accountants.
The Audit Committee shall review the Company's financial disclosure
documents, management perquisites, significant developments in accounting
principles and significant proposed changes in financial statements. The Audit
Committee shall also review and monitor the Company's codes of conduct to guard
against significant conflicts of interest and dishonest, unethical or illegal
activities. The Audit Committee shall review periodically the performance of
the Company's accounting and financial personnel, and shall review material
litigation and regulatory proceedings and other issues relating to potentially
significant corporate liability. (Amended 9/28/90)
SECTION 3.14. NOMINATING COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors to constitute a Nominating Committee, which Committee shall recommend
to the Board nominees for election to the Board of Directors in connection with
any meeting of stockholders at which directors are to be elected and persons for
appointment to fill any Board vacancy which the Board of Directors is authorized
under the By-Laws to fill. The Committee may also recommend to the Board
policies or guidelines concerning criteria for Board membership, the structure
and composition of Board Committees, the size and composition of the Board and
the selection, tenure and retirement of Directors and matters related thereto.
(Amended 9/28/90)
SECTION 3.15. OTHER COMMITTEES. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate two or more Directors to
constitute committees other than the Executive Committee, Finance Committee,
Compensation Committee, Audit Committee and Nominating Committee, which
committees shall have and exercise such authority as may be provided for in the
resolution creating such committee. (Amended 9/28/90)
SECTION 3.16. HONORARY DIRECTORS. The Board of Directors may select from
time to time, and for such periods of time as it may deem appropriate, one or
more past Chairmen of the Board, Presidents or Chief Executive Officers elected
a Director prior to September 28, 1990, to serve as Honorary Directors.
Honorary Directors shall be entitled to receive notice of and to attend all
meetings of the Board of Directors, to receive copies of all reports or other
communications made to the Board of Directors, to give counsel and advice on any
subject, to receive such fees and expense reimbursements as may be provided from
time to time by the Board of Directors. The Board of Directors, Chief Executive
Officer, Chairman of the Board or
10
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President may invite an Honorary Director to attend meetings of any committee of
the Board of Directors or to undertake temporary assignments, but this shall not
preclude any other arrangements, consulting or otherwise, between the
corporation and an Honorary Director. The presence or absence of an Honorary
Director shall not be counted for purposes or determining the existence of a
quorum. Honorary Directors shall not have the right to vote on any matters
voted on by the Board of Directors or any of the rights, duties, privileges, or
responsibilities of Directors of the corporation. (Amended 9/28/90)
SECTION 3.17. NOMINATION OF DIRECTORS. Except as otherwise fixed pursuant to
the certificate of incorporation relating to the rights of the holders of any
one or more classes or series of Preferred Stock issued by the corporation,
acting separately by class or series, to elect, under specified circumstances,
directors at a meeting of stockholders, nominations for the election of
directors may be made by the Board of Directors or a committee appointed by the
Board of Directors pursuant to Section 3.14 or by any stockholder entitled to
vote in the election of directors generally. However, any stockholder entitled
to vote in the election of directors generally may nominate one or more persons
for election as directors at a meeting at which directors are to be elected only
if written notice of such stockholder's intent to make such nomination or
nominations has been delivered personally to, or been mailed to and received by,
the Secretary of the corporation at the principal executive offices of the
corporation in the City of Chicago, State of Illinois, not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that, in the event
that less than 75 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs. Each such notice shall
set forth: (i) the name and record address of the stockholder who intends to
make the nomination; (ii) the name, age, principal occupation or employment,
business address and residence address of the person or persons to be nominated;
(iii) the class and number of shares of stock held of record, owned beneficially
and represented by proxy by such stockholder and by the person or persons to be
nominated as of the record date for the meeting (if such date shall then have
been made publicly available) and of the date of such notice; (iv) a
representation that the stockholder intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice; (v) a
description of all arrangements or understandings between such stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
stockholder; (vi) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the Securities Exchange Act of 1934 and the proxy rules of the
Securities and Exchange Commission; and (vii) the consent of each nominee to
serve as a director of the corporation if so elected. The corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the corporation to determine the eligibility of such proposed
nominee to serve as a director of the
11
<PAGE>
corporation. The officer of the corporation presiding at the annual meeting of
stockholders shall, if the facts so warrant, determine that a nomination was not
made in accordance with the provisions of this Section, and if he should so
determine, he should so declare to the meeting and the defective nomination
shall be disregarded. No person shall be eligible for election as a director of
the corporation unless nominated in accordance with the procedures set forth
herein. (Added 3/24/88)
ARTICLE IV
----------
Officers of the Corporation
---------------------------
SECTION 4.1. OFFICERS AND NUMBER. The officers of the corporation shall be
a Chief Executive Officer, a Chairman of the Board, one or more Vice Chairmen, a
President, one or more Executive Vice Presidents, one or more Sector Presidents,
one or more Business Unit Presidents, one or more Senior Vice Presidents, one or
more Vice Presidents, a Secretary, a Treasurer, a Controller, a General Counsel,
one or more Assistant Secretaries, one or more Assistant General Counsels, one
or more Assistant Treasurers and one or more Assistant Controllers. Any two or
more offices may be held by the same person except the offices of President and
Secretary. The Chief Executive Officer shall be either the Chairman, a Vice
Chairman or the President, as designated by the Board of Directors. The Board
of Directors may elect one or more Vice Chairmen of the Board and one or more
Executive Vice Presidents. The Board of Directors may elect an Honorary Director
to the office of Honorary Chairman of the Board. (Amended 1/27/94)
SECTION 4.2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at the first 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 conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the Board of Directors. 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 or shall have
been removed in the manner hereinafter provided. (Adopted 10/21/60)
SECTION 4.3. REMOVAL. Any officer elected by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best interests of
the corporation would be served thereby. (Amended 12/15/88)
SECTION 4.4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term. (Adopted 10/21/60)
12
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SECTION 4.5. SALARIES. No officer shall be prevented from receiving a
salary for his services as an officer by reason of the fact that he is also a
Director of the corporation.
SECTION 4.6. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
have overall supervision of, and responsibility for, the business, and shall
direct the affairs and policies of the corporation. (Adopted 12/15/88)
SECTION 4.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside
at all meetings of the stockholders and Board of Directors. The Chairman of the
Board shall perform such other duties and responsibilities as may be assigned to
him by the Board of Directors. (Amended 9/28/90)
SECTION 4.8. VICE CHAIRMEN OF THE BOARD. The Vice Chairmen of the Board
shall, in the absence of the Chairman of the Board (in the order prescribed by
the Board), preside at all meetings of the stockholders and Board of Directors,
and shall perform such other duties as may be assigned to them by the Board of
Directors. (Amended 12/15/88)
SECTION 4.9. HONORARY CHAIRMAN OF THE BOARD. The Honorary Chairman of the
Board shall consult with the Chief Executive Officer and other officers of the
corporation, as he or they shall determine, with respect to the general policies
and affairs of the corporation, and shall have such authority and perform such
duties as from time to time may be prescribed by the Board of Directors or as
may be granted by the Chief Executive Officer. (Renumbered 9/28/90)
SECTION 4.10. PRESIDENT. Subject to the supervision and direction of the
Chief Executive Officer, the President shall have responsibility for such of the
operations and other functions of the corporation as may be assigned to him.
The President shall perform such other duties and responsibilities as may be
assigned to him by the Chief Executive Officer. In the absence of the Chairman
of the Board and Vice Chairmen of the Board, the President shall preside at
meetings of the stockholders and Board of Directors. (Renumbered and Amended
9/28/90)
SECTION 4.11. VICE PRESIDENTS. Each Vice President shall have such
corporate powers, if any, as may be assigned to him from time to time by the
Board of Directors, Chief Executive Officer, Chairman of the Board or the
President. (Renumbered 9/28/90)
SECTION 4.12. SENIOR VICE PRESIDENTS. Each Senior Vice President shall have
such corporate powers, if any, as may be assigned to him by the Board of
Directors, Chief Executive Officer, Chairman of the Board or the President.
(Renumbered 9/28/90)
SECTION 4.13. SECTOR PRESIDENTS. The Board of Directors may from time to
time designate as Sector President one or more of the individuals who occupies
the position
13
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of senior officer heading a Sector consisting of one or more business units and
to whom one or more of the Business Unit Presidents reports. (Amended 1/27/94)
SECTION 4.14. BUSINESS UNIT PRESIDENTS. The Board of Directors may from
time to time designate as Business Unit President one or more of the individuals
who occupies the position of senior officer heading a business unit consisting
of one or more divisions and one or more sales units and who reports to one or
more of the Sector Presidents or other senior officers of the corporation.
(Added 1/27/94)
SECTION 4.15. EXECUTIVE VICE PRESIDENTS. The Board of Directors may
designate as an Executive Vice President the officer to whom one or more other
senior officers of this corporation reports. (Amended and Renumbered 1/27/94)
SECTION 4.16. ORDER OF SUCCESSION. Such of the directors of the corporation
as shall be designated by resolution of the Board of Directors, and in the order
of such designation, shall in the absence of the Chairman of the Board perform
the duties of the Chairman of the Board and shall have all of the powers and
shall be subject to any restrictions imposed upon the Chairman.
Such of the officers of the corporation as may be designated by resolution of
the Board of Directors, and in the order of such designation, shall in the
absence of the Chief Executive Officer, perform the duties of the Chief
Executive Officer and when so acting shall have all the powers of and be subject
to any restrictions imposed upon the Chief Executive Officer.
Such of the officers of the corporation as may be designated by resolution of
the Board of Directors, and in the order of such designation, shall in the
absence of the President perform the duties of the President and when so acting
shall have all the powers of and be subject to any restrictions imposed upon the
President. (Renumbered 1/27/94)
SECTION 4.17. SECRETARY. The Secretary shall keep the minutes of all
meetings of the stockholders and Board of Directors of the corporation, shall
have charge of the corporate records and the corporate seal, and shall have the
power to attach the seal to all instruments which shall require sealing after
the same shall have been signed as authorized by the Board of Directors.
(Renumbered 1/27/94)
SECTION 4.18. TREASURER. The Treasurer shall be responsible for the
receipt, custody and disbursement of all funds of the corporation in the form of
both cash and securities. He may delegate the details of his office to someone
in his stead, but this shall nowise relieve him of the responsibilities and
liability of his office. The Treasurer shall have the power to attach the seal
to all instruments which shall require sealing after the same shall have been
signed as authorized by the Board of Directors. (Renumbered 1/27/94)
SECTION 4.19. CONTROLLER. The Controller reports to the Chief Executive
Officer
14
<PAGE>
directly or through such other management executives as the Chief Executive
Officer may direct. The Controller, however, may directly submit any matter to
the Board of Directors for their consideration. The Controller shall maintain
adequate records of all assets, liabilities, and transactions of the
corporation, and in conjunction with other officers and department heads, shall
initiate and enforce measures and procedures whereby the business of the
corporation shall be conducted with the maximum of safety, efficiency and
economy. He shall attend that part of the meetings of the Board of Directors
which is concerned with the review of the financial and operating reports of the
business, except when, in the discretion of the Board, he shall be asked not to
attend. (Renumbered 1/27/94)
SECTION 4.20. GENERAL COUNSEL. The General Counsel shall be the chief legal
officer of the corporation and have legal responsibility for all aspects of the
business. The General Counsel shall have the power to attach the seal to all
instruments which shall require sealing after the same shall have been signed as
authorized by the Board of Directors. (Renumbered 1/27/94)
SECTION 4.21. ASSISTANT TREASURERS. The Assistant Treasurers shall in the
absence of the Treasurer perform all functions and duties of the Treasurer and
in addition shall perform such functions and duties as the Treasurer may
delegate, but this shall in nowise relieve the Treasurer of the responsibilities
and liability of his office. (Renumbered 1/27/94)
SECTION 4.22. ASSISTANT SECRETARIES. The Assistant Secretaries shall in the
absence of the Secretary perform all functions and duties of the Secretary and
in addition shall assume such functions and duties as the Secretary may
delegate, but this shall in nowise relieve the Secretary of the responsibilities
and liability of his office. (Renumbered 1/27/94)
SECTION 4.23. ASSISTANT GENERAL COUNSELS. The Assistant General Counsels
shall in the absence of the General Counsel perform all functions and duties of
the General Counsel and in addition shall assume such functions and duties as
the General Counsel may delegate, but this shall in nowise relieve the General
Counsel of the responsibilities and liabilities of his office. (Renumbered
1/27/94)
SECTION 4.24. ASSISTANT CONTROLLERS. The Assistant Controllers shall in
the absence of the Controller perform all functions and duties of the Controller
and in addition shall assume such functions and duties as the Controller may
delegate, but this shall in nowise relieve the Controller of the
responsibilities and liabilities of such office. (Renumbered 1/27/94)
15
<PAGE>
ARTICLE V
---------
Appointed Officers
------------------
The Chief Executive Officer may appoint officials assigned to a particular
Sector or other business unit as such officers of such Sector or business unit
and having such titles as he shall deem appropriate. Any such officer appointed
by the Chief Executive Officer may be removed by the Chief Executive Officer
whenever in his judgment the best interests of the corporation would be served
thereby. The term of office, compensation, powers and duties and other terms of
employment of appointed officers shall be such as the Chief Executive Officer
may from time to time deem proper, and the authority of such officers shall be
limited to acts pertaining to the business of such Sector or business unit.
(Amended 1/27/94)
ARTICLE VI
----------
Contracts, Loans, Checks and Deposits
-------------------------------------
SECTION 6.1. CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
SECTION 6.2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors (or a resolution of a
committee of Directors pursuant to authority conferred upon that committee).
Such authority may be general or confined to specific instances.
SECTION 6.3. CHECKS, ETC. All checks, demands, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed by such officer or officers or such
agent or agents of the corporation, and in such manner, as may be designated by
the Board of Directors or by one or more officers of the corporation named by
the Board of Directors for such purpose.
SECTION 6.4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies and other depositaries as the Board of Directors may
select.
(Entire Article Renumbered 6/28/84)
ARTICLE VII
-----------
16
<PAGE>
Certificates of Stock and Their Transfer
----------------------------------------
SECTION 7.1. CERTIFICATES OF STOCK. Certificates of stock of the
corporation shall be in such form as may be determined by the Board of
Directors, shall be numbered and shall be entered in the books of the
corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chief Executive Officer, Chairman of the
Board or President or a Vice President and by the Secretary or Assistant
Secretary or the Treasurer or an Assistant Treasurer. If any stock certificate
is signed manually (a) by a transfer agent other than the corporation or its
employee or (b) by a registrar other than the corporation or its employee, any
other signature on the certificate may be a facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may nevertheless be issued by the corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
All certificates properly surrendered to the corporation for transfer shall be
cancelled and no new certificates shall be issued to evidence transferred shares
until the former certificate for at least a like number of shares shall have
been surrendered and cancelled and the corporation reimbursed for any applicable
taxes on the transfer, except that in the case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms, and with such
indemnification (if any) to the corporation, as the Board of Directors may
prescribe specifically or in general terms or by delegation to a transfer agent
for the corporation. Certificates shall not be issued representing fractional
shares of stock. (Amended 12/15/88)
SECTION 7.2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost or
destroyed upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
SECTION 7.3. TRANSFERS. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made only on the books
of the corporation by the registered holder thereof or by his attorney thereunto
authorized by power of attorney and filed with the Secretary or
17
<PAGE>
transfer agent of the corporation.
SECTION 7.4. REGISTERED STOCKHOLDERS. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
(Entire Article Renumbered 6/28/84)
ARTICLE VIII
------------
Dividends
---------
SECTION 8.1. DECLARATION. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
SECTION 8.2. RESERVE. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the Directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
such other purposes as the Directors shall think conducive to the interest of
the corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
(Entire Article Renumbered 6/28/84)
ARTICLE IX
----------
Miscellaneous
-------------
SECTION 9.1. FISCAL YEAR. Unless otherwise fixed by the resolution of the
Board of Directors, the fiscal year of the corporation shall be the calendar
year.
SECTION 9.2. SEAL. The corporate seal shall have inscribed thereon the name
of the corporation and the words "Corporate Seal, Delaware." The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
otherwise reproduced.
SECTION 9.3. BOOKS. The books of the corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at the
offices of the corporation at Chicago, Illinois, or at such other place or
places as may be designated
18
<PAGE>
from time to time by the Board of Directors.
(Entire Article Renumbered 6/28/84)
ARTICLE X
---------
Amendment
---------
These by-laws may be altered or repealed at any regular meeting of the Board
of Directors or at any special meeting of the Board of Directors if notice of
such alteration or repeal be contained in the notice of such special meeting,
provided that no amendment of these by-laws shall conflict with the provisions
of the Certificate of Incorporation, whether relating to the number of Directors
which shall constitute the whole Board or the number of Directors of any class
or otherwise. (Renumbered 6/28/84)
19
<PAGE>
Exhibit 3(ii)(b)
Form 10-K Year ended
12/31/94
R. R. DONNELLEY & SONS COMPANY
AMENDMENT TO BY-LAWS
ADOPTED JANUARY 26, 1995
RESOLVED, that Section 3.2 of the Company's By-Laws be and hereby is amended,
effective immediately, to delete the first sentence thereof and substitute the
following therefor:
"The number of Directors which shall constitute the whole Board shall be
thirteen (13) of whom five (5) shall be Directors of the First Class, four
(4) shall be Directors of the Second Class and four (4) shall be Directors
of the Third Class."
<PAGE>
EXECUTION COPY
CREDIT AGREEMENT
Dated as of December 21, 1994
Among
R.R. DONNELLEY & SONS COMPANY
as Borrower,
-- --------
THE BANKS NAMED HEREIN
as Banks
-- -----
and
CITIBANK, N.A.
as Administrative Agent
-----------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS...................... 1
SECTION 1.01. Certain Defined Terms................................. 1
SECTION 1.02. Computation of Time Periods........................... 14
SECTION 1.03. Accounting Terms...................................... 14
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES..................... 14
SECTION 2.01. The Committed Advances................................ 14
SECTION 2.02. Making the Committed Advances......................... 14
SECTION 2.03. The Uncommitted Advances.............................. 19
SECTION 2.04. Facility Fee and Utilization Fee...................... 23
SECTION 2.05. Reduction and Termination of the Commitments.......... 23
SECTION 2.06. Payment; Conversion and Continuation.................. 24
SECTION 2.07. Interest on Committed Advances........................ 24
SECTION 2.08. Additional Interest on Eurocurrency Rate Advances..... 25
SECTION 2.09. Interest Rate Determination........................... 26
SECTION 2.10. Prepayments........................................... 26
SECTION 2.11. Funding Indemnification............................... 27
SECTION 2.12. Increased Costs and Reduced Return.................... 27
SECTION 2.13. Illegality............................................ 28
SECTION 2.14. Payments and Computations............................. 29
SECTION 2.15. Sharing of Payments, Etc. ............................ 30
SECTION 2.16. Currency Equivalents.................................. 30
SECTION 2.17. Borrowing Subsidiaries................................ 31
SECTION 2.18. Reserved.............................................. 31
SECTION 2.19. Taxes................................................. 31
SECTION 2.20. Defaulting Banks...................................... 33
SECTION 2.21. Mitigation............................................ 36
ARTICLE III
CONDITIONS PRECEDENT.................................. 36
SECTION 3.01. Conditions Precedent to Effectiveness of Sections
2.01 and 2.03....................................... 36
SECTION 3.02. Conditions Precedent to Initial Advance to Each
Borrowing Subsidiary................................ 38
-i-
<PAGE>
SECTION 3.03. Conditions Precedent to Each Committed Borrowing...... 38
SECTION 3.04. Conditions Precedent to Each Uncommitted Borrowing.... 39
ARTICLE IV
REPRESENTATIONS AND WARRANTIES........................ 40
SECTION 4.01. Representations and Warranties of the Company......... 40
ARTICLE V
COVENANTS OF THE COMPANY.............................. 42
SECTION 5.01. Compliance with Laws, Etc. ........................... 42
SECTION 5.02. Consolidated Debt to Capitalization Ratio............. 42
SECTION 5.03. Reporting Requirements................................ 42
SECTION 5.04. Use of Proceeds....................................... 43
SECTION 5.05. Limitation on Liens, Etc. ............................ 44
SECTION 5.06. Merger; Sale of Assets................................ 45
SECTION 5.07. Books and Records; Inspection......................... 46
SECTION 5.08. Corporate Existence................................... 46
SECTION 5.10. Payment of Taxes...................................... 46
ARTICLE VI
EVENTS OF DEFAULT..................................... 46
SECTION 6.01. Events of Default..................................... 46
ARTICLE VII
GUARANTEE............................................. 49
SECTION 7.01. Unconditional Guarantee............................... 49
SECTION 7.02. Validity.............................................. 49
SECTION 7.03. Waivers............................................... 50
SECTION 7.04. Subrogation........................................... 50
SECTION 7.05. Acceleration.......................................... 50
SECTION 7.06. Reinstatement......................................... 50
SECTION 7.07. Continuing Guaranty; Assignments...................... 50
ARTICLE VIII
THE ADMINISTRATIVE AGENT
-ii-
<PAGE>
...................................................... 50
SECTION 8.01. ...................................................... 50
SECTION 8.02. Authorization and Action.............................. 51
SECTION 8.03. Administrative Agent's Reliance, Etc. ................ 51
SECTION 8.04. The Administrative Agent and Affiliates............... 52
SECTION 8.05. Bank Credit Decision.................................. 52
SECTION 8.06. Indemnification....................................... 52
SECTION 8.07. Successor Administrative Agent........................ 52
ARTICLE IX
MISCELLANEOUS......................................... 53
SECTION 9.01. Amendments, Etc. ..................................... 53
SECTION 9.02. Notices, Etc. ........................................ 53
SECTION 9.03. No Waiver; Remedies................................... 54
SECTION 9.04. Costs and Expenses.................................... 55
SECTION 9.05. Right of Set-off...................................... 55
SECTION 9.06. Binding Effect........................................ 55
SECTION 9.07. Assignments, Designations and Participations.......... 55
SECTION 9.08. Governing Law......................................... 60
SECTION 9.09. Execution in Counterparts............................. 60
SECTION 9.10. Confidentiality....................................... 60
SECTION 9.11. Non-Reliance by the Banks............................. 60
SECTION 9.12. No Indirect Security.................................. 60
SECTION 9.13. Indemnification....................................... 61
SECTION 9.14. Partial Invalidity.................................... 61
SECTION 9.15. WAIVER OF JURY TRIAL.................................. 61
SECTION 9.16. Jurisdiction, Etc. ................................... 62
SECTION 9.17. Termination of Existing Credit Agreements............. 62
-iii-
<PAGE>
EXHIBITS
EXHIBIT A - Form of Assignment and Acceptance
EXHIBIT B - Form of Assumption Letter
EXHIBIT C - Form of Designation Agreement
EXHIBIT D-1 - Form of Committed Note
EXHIBIT D-2 - Form of Uncommitted Note
EXHIBIT E-1 - Form of Notice of Committed Borrowing
EXHIBIT E-2 - Form of Notice of Uncommitted Borrowing
EXHIBIT F - Form of Notice of Continuation/Conversion
EXHIBIT G - Form of Sidley & Austin Opinion
EXHIBIT H - Form of Opinion of Counsel to Borrowing Subsidiary
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<PAGE>
CREDIT AGREEMENT
Dated as of December 21, 1994
R.R. DONNELLEY & SONS COMPANY, a Delaware corporation (the "Company"),
the banks listed on the signature pages hereof and CITIBANK, N.A., as
Administrative Agent (as hereinafter defined), 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):
"Acceptance Deadline" has the meaning specified in Section
2.03(a)(iii).
"Administrative Agent" means Citibank, in its capacity as the
administrative agent for all of the Banks for purposes of this Agreement,
as designated and appointed in accordance with Article VIII, and any
successor thereto as provided herein.
"Advance" mean a Committed Advance or an Uncommitted Advance.
"Affordable Housing Debt" means Debt of the Company or of any of
its Subsidiaries which is associated with the direct or indirect
investment by the Company or such Subsidiary in affordable housing where
the expected tax benefits of such investment exceed the total amount of
the future annual payments required as part of such investment.
"Agreement" shall mean this Credit Agreement, as the same may be
amended, modified, supplemented or restated from time to time.
"Alternative Currency" means Sterling, German Marks, Swiss
Francs, Yen and any other currency (other than Dollars) which is freely
transferable and convertible into Dollars in the London interbank market.
"Applicable Lending Office" means, with respect to each Bank,
such Bank's Domestic Lending Office in the case of a Base Rate Advance,
and such Bank's Eurocurrency Lending Office in the case of a Eurocurrency
Rate Advance and, in the case of an Uncommitted Advance, the office of
such Bank notified by such Bank to the Administrative Agent as its
Applicable Lending Office with respect to such Uncommitted Advance.
"Applicable Margin" means on any day:
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(i) 0.155% if Category 1 Status exists on such day, (ii) 0.17%
if Category 2 Status exists on such day, (iii) 0.20% if Category 3 Status
exists on such day, (iv) 0.25% if Category 4 Status exists on such day,
and (v) 0.40% if Category 5 Status exists on such day.
"Assignment and Acceptance" means an Assignment and Acceptance
executed by a Bank (other than a Designated Bidder) and an Eligible
Assignee and accepted by the Administrative Agent and the Company,
substantially in the form of Exhibit A hereto.
"Assumption Letter" means a letter of a Subsidiary of the
Company addressed to the Banks in substantially the form of Exhibit B
hereto pursuant to which such Subsidiary agrees to become a "Borrowing
Subsidiary" and agrees to be bound by the terms and conditions hereof.
"Available Commitment" has the meaning specified in Section
2.01.
"Banks" means the banks listed on Schedule I hereto and each
Person that becomes a party hereto pursuant to Section 9.07(a), (b) and
(c), and, except when used in reference to a Committed Advance, a
Committed Borrowing, a Committed Note, a Commitment or a related term,
each Designated Bidder.
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal
to the higher of:
(a) the rate of interest announced publicly by Citibank in
New York, New York from time to time as Citibank's base rate; and
(b) 1/2 of 1% per annum above the Federal Funds Rate.
"Base Rate Advance" means a Committed Advance which bears
interest at a rate based upon the Base Rate, as provided in Section
2.07(a).
"Borrower" means the Company or any Borrowing Subsidiary.
"Borrowing" means a Committed Borrowing or an Uncommitted
Borrowing.
"Borrowing Subsidiary" means any Subsidiary of the Company duly
designated by the Company pursuant to Section 2.17 hereof to make
Borrowings hereunder, which Subsidiary shall have delivered to the
Administrative Agent an Assumption Letter in accordance with Section 2.17.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and Chicago and,
if the applicable Business Day relates to any Eurocurrency Rate Advances,
on which dealings are carried on in the London interbank market.
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"Capitalization" means, as of any date, the sum of (a) the (i)
par or stated value of the outstanding shares of all classes of capital
stock of the Company, (ii) paid-in capital and capital surplus of the
Company and (iii) retained earnings of the Company, each as would appear
on a consolidated balance sheet of the Company and its Consolidated
Subsidiaries prepared as of the last day of the most recently completed
fiscal quarter in accordance with GAAP, and (b) Consolidated Debt as of
such date.
"Category Status" means Category 1 Status, Category 2 Status,
Category 3 Status, Category 4 Status or Category 5 Status, as appropriate.
"Category 1 Status" exists at any date if at such date the
Public Debt Rating announced by S&P is AA- (or the equivalent) or better
or the Public Debt Rating announced by Moody's is AA3 (or the equivalent)
or better.
"Category 2 Status" exists at any date if at such date (i) the
Public Debt Rating announced by S&P is A+ (or the equivalent) or better or
the Public Debt Rating announced by Moody's is A1 (or the equivalent) or
better, and (ii) Category 1 Status does not exist.
"Category 3 Status" exists at any date if at such date (i) the
Public Debt Rating announced by S&P is A- (or the equivalent) or better or
the Public Debt Rating announced by Moody's is A3 (or the equivalent) or
better, and (ii) neither Category 1 Status nor Category 2 Status exists.
"Category 4 Status" exists at any date if at such date (i) the
Public Debt Rating announced by S&P is BBB (or the equivalent) or better
or the Public Debt Rating announced by Moody's is Baa2 (or the equivalent)
or better, and (ii) none of Category 1 Status, Category 2 Status or
Category 3 Status exists.
"Category 5 Status" exists at any date if at such date (i) the
Public Debt Rating announced by S&P is lower than BBB (or the equivalent)
and the Public Debt Rating announced by Moody's is lower than Baa2 (or the
equivalent), or (ii) neither S&P nor Moody's shall have a Public Debt
Rating in effect at such date.
"Citibank" means Citibank, N.A., a national banking association,
in its individual capacity, and its successors.
"Commission" means the Securities and Exchange Commission or any
federal body succeeding to its functions.
"Commitment" has the meaning specified in Section 2.01.
"Committed Advance" means an advance by a Bank to a Borrower as
part of a Committed Borrowing and refers to a Base Rate Advance or a
Eurocurrency Rate Advance, each of which shall be a "Type" of Committed
Advance.
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"Committed Borrowing" means a borrowing consisting of
simultaneous Committed Advances of the same Type made by each of the Banks
to a Borrower pursuant to Section 2.01.
"Committed Note" means a promissory note, in substantially the
form of Exhibit D-1 hereto, duly executed by the Company or a Borrowing
Subsidiary and payable to the order of a Bank in the amount of its
Commitment, including any amendment, modification, renewal or replacement
of such promissory note.
"Consolidated Debt" means as of any date the consolidated Debt
of the Company and its Consolidated Subsidiaries as of such date, without
regard to whether such Debt would be characterized as being short-term or
long-term, but excluding all Affordable Housing Debt and Insurance Policy
Debt.
"Consolidated Subsidiary" means at any date any Subsidiary the
accounts of which would be consolidated with those of the Company in its
consolidated financial statements at such date in accordance with GAAP.
"Consolidated Tangible Net Worth" means, as of any date, an
amount equal to the sum of (i) the par or stated value of the outstanding
shares of all classes of capital stock of the Company, (ii) paid-in
capital and capital surplus of the Company and (iii) retained earnings of
the Company, as each of which would appear on a consolidated balance sheet
of the Company and its Consolidated Subsidiaries prepared as of the last
day of the most recently completed fiscal quarter in accordance with GAAP,
less the aggregate net amount of (i) all assets so appearing which in
accordance with GAAP are deemed intangible, such intangible assets to
specifically include, but not be limited to, licenses, copyrights,
trademarks, tradenames, patents and goodwill, and (ii) any write-up in the
book value of assets made after December 31, 1993, other than any such
write-up to an appraised fair market value in accordance with the purchase
accounting requirements of GAAP.
"Debt" means (but without duplication of any item) (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations as
lessee under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases, and
(iv) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (i), (ii) or
(iii) above.
"Defaulted Advance" means, with respect to any Bank at any time,
the amount of any Advance required to be made by such Bank to the Borrower
pursuant to Section 2.01 or Section 2.03(a) at or prior to such time that
has not been so made as of such time; provided, however, that any Advance
made by the Administrative Agent for the account of such Bank pursuant to
Section 2.02(e) shall not be considered a Defaulted Advance even if, at
such time, such Bank shall not have reimbursed the Administrative Agent
therefor as provided in Section
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2.02(e). If part of a Defaulted Advance shall be deemed made pursuant to
Section 2.20(a), the remaining part of such Defaulted Advance shall be
considered a Defaulted Advance originally required to be made pursuant to
Section 2.01 or Section 2.03(a) on the same date as the Defaulted Advance
so deemed made in part.
"Defaulted Amount" means, with respect to any Bank at any time,
any amount required to be paid by such Bank to the Administrative Agent or
any other Bank hereunder at or prior to such time that has not been so
paid as of such time, including, without limitation, any amount required
to be paid by such Bank to (a) the Administrative Agent pursuant to
Section 2.02(e) to reimburse the Administrative Agent for the amount of
any Advance made by the Administrative Agent for the account of such Bank,
(b) any other Bank pursuant to Section 2.15 to purchase any participation
in Advances owing to such other Bank and (c) the Administrative Agent
pursuant to Section 8.06 to reimburse the Administrative Agent for such
Bank's ratable share of any amount required to be paid by the Banks to the
Administrative Agent as provided therein. If part of a Defaulted Amount
shall be deemed paid pursuant to Section 2.20(b), the remaining part of
such Defaulted Amount shall be considered a Defaulted Amount originally
required to be made hereunder on the same date as the Defaulted Amount so
deemed paid in part.
"Defaulting Bank" means, at any time, any Bank that, at such
time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take
or be the subject of any action or proceeding of a type described in
Section 6.01(f).
"Designated Bidder" means (a) an Eligible Assignee or (b) a
special purpose corporation that 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" (or the then equivalent grade) by Moody's or "A-
1" (or the then equivalent grade) by S&P that, in the case of either
clause (a) or clause (b), (i) is organized under the laws of the United
States or any State thereof, (ii) shall have become a party hereto
pursuant to Section 9.07(d), (e) and (f), and (iii) is not otherwise a
Bank.
"Designation Agreement" means a designation agreement entered
into by a Bank (other than a Designated Bidder) and a Designated Bidder,
and accepted by the Administrative Agent and the Company, in substantially
the form of Exhibit C hereto.
"Dollar Amount" means, for any date of determination:
(a) with respect to any amount denominated in Dollars, such
amount; and
(b) with respect to an amount denominated in any Alternative
Currency, the amount of Dollars into which the Administrative Agent could,
in accordance with its practice from time to time in the London interbank
foreign exchange market, convert such amount of Alternative Currency at
its spot rate of exchange
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applicable to the relevant transaction at or about 11:00 a.m., London
time, on the date of such determination, for the delivery of Dollars two
Business Days thereafter. For purposes of this Agreement, the Dollar
Amount of any amount received by a Bank hereunder shall be determined as
of the date of such receipt.
"Dollars" and the sign "$" each means the lawful currency of the
United States.
"Domestic Lending Office" means, with respect to any Bank, the
office of such Bank 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 Bank, as the case may be, or such other office of
such Bank as such Bank may from time to time specify to the Company and
the Administrative Agent.
"Effective Date" has the meaning specified in Section 3.01.
"Eligible Assignee" means (i) a Bank (other than a Designated
Bidder); (ii) an Affiliate of a Bank (other than a Designated Bidder);
(iii) 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
$500,000,000; (iv) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development, has a combined capital and surplus of at least $500,000,000
and is acting through a branch or agency located in the United States, and
(v) any other Person approved by the Company and the Administrative Agent,
such approvals not to be unreasonably withheld or delayed (it being
understood that the Company may reasonably withhold its approval of any
such other Person if at the time it would become a Bank hereunder payments
to it would not be exempt from United States withholding tax).
"Environmental Action" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of
noncompliance or violation, notice of liability or potential liability,
investigation, proceeding, consent order or consent agreement relating in
any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health,
safety or the environment, including, without limitation, (a) by any
governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental
or regulatory authority or any third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, judgment, decree
or judicial interpretation relating to the environment, health, safety or
Hazardous Materials.
"Environmental Permit" means any permit, approval,
indemnification number, license or other authorization required under any
Environmental Law.
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"ERISA" means the Employee Retirement Income Security Act of
1974 as amended from time to time, and the regulations promulgated and the
rulings issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV
of ERISA is a member of the Company's controlled group, or under common
control with the Company, as determined under Section 414 of the Internal
Revenue Code.
"ERISA Event" means (a) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been
waived by the PBGC; (b) the application for a minimum funding waiver with
respect to a Plan; (c) the provision by the administrator of any Plan of a
notice of intent to terminate such 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); (d) the cessation of operations at a
facility of the Company or any of its ERISA Affiliates in the
circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by
the Company or any of its ERISA Affiliates 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; (f) the failure by the Company or any of its
ERISA Affiliates to make a payment to a Plan if the conditions for the
imposition of a lien under Section 302(f)(1) of ERISA are satisfied; (g)
the adoption of an amendment to a Plan requiring the provision of security
to such Plan, pursuant to Section 307 of ERISA; or (h) the institution by
the PBGC of proceedings to terminate a Plan, pursuant to Section 4042 of
ERISA, or the occurrence of any event or condition described in Section
4042 of ERISA that could constitute grounds for the termination of, or the
appointment of trustee to administer, a Plan.
"Eurocurrency Lending Office" means, with respect to any Bank,
the office of such Bank specified as its "Eurocurrency Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Bank (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Bank as such
Bank may from time to time specify to the Company and the Administrative
Agent.
"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.
"Eurocurrency Rate" means, for any Interest Period for all
Eurocurrency Rate Advances comprising part of the same Committed Borrowing
or for the term of any Uncommitted Advance with respect to which interest
is calculated by reference to the Eurocurrency Rate, an interest rate per
annum equal to the average (rounded upward to the nearest whole multiple
of 1/100 of 1% per annum, if such average is not such a multiple) of the
rate per annum at which deposits in the currency in which such Advance is
denominated are offered by the principal office of each of the Reference
Banks in London, England to prime banks
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in the London interbank market at 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period or term in an amount
substantially equal to such Reference Bank's Eurocurrency Rate Advance
comprising part of such Committed Borrowing (in the case of a Committed
Borrowing) or such Reference Bank's share of the aggregate amount of such
Borrowing (in the case of an Uncommitted Borrowing) and for a period equal
to such Interest Period or term. The Eurocurrency Rate for any Interest
Period for each Eurocurrency Rate Advance comprising part of the same
Committed Borrowing, and the Eurocurrency Rate for the term of each
Uncommitted Advance bearing interest at a rate based upon the Eurocurrency
Rate, shall be determined by the Administrative Agent on the basis of the
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 or term, subject, however, to the provisions of Section
2.09.
"Eurocurrency Rate Advance" means a Committed Advance which
bears interest at a rate based upon the Eurocurrency Rate, as provided in
Section 2.07(c).
"Eurocurrency Rate Reserve Percentage" of any Bank (other than a
Designated Bidder) for any Interest Period for a Eurocurrency Rate Advance
means the reserve percentage applicable two Business Days before the first
day of such Interest Period 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 requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for such Bank with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference to
which the interest rate on Eurocurrency Rate Advances of such currency is
determined) having a term equal to such Interest Period.
"Eurocurrency Rate Uncommitted Borrowing" means an Uncommitted
Borrowing comprised of Uncommitted Advances denominated in Dollars,
bearing interest based upon the Eurocurrency Rate.
"Events of Default" has the meaning specified in Section 6.01.
"Facility Fee" has the meaning specified in Section 2.04.
"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
immediately preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions
received by the Administrative Agent from three federal funds brokers of
recognized standing selected by it.
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"Fixed Rate Uncommitted Borrowing" means an Uncommitted
Borrowing consisting of Uncommitted Advances bearing interest at a fixed
percentage rate per annum (expressed in the form of a decimal to no more
than four decimal places) specified by the respective Banks making such
Uncommitted Advances pursuant to the procedure described in Section 2.03.
"GAAP" has the meaning specified in Section 1.03.
"German Marks" means the lawful currency of the Federal Republic
of Germany.
"Hazardous Materials" means petroleum and petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-
containing materials, radon gas and any other chemicals, materials or
substances designated, classified or regulated as being "hazardous" or
"toxic", or words of similar import, under any federal, state, local or
foreign statute, law, ordinance, rule, regulation, code, order, judgment,
decree or judicial interpretation.
"Insurance Policy Debt" means Debt of the Company or any of its
Subsidiaries under policies of life insurance now or hereafter owned by
the Company or any of its Subsidiaries under which policies the sole
recourse for such borrowing is against such policies.
"Interest Period" means, for each Eurocurrency Rate Advance
comprising part of the same Committed Borrowing, the period commencing on
the date of such Eurocurrency Rate Advance or the date of any conversion
or continuation thereof, and ending on the last day of the period selected
by a Borrower pursuant to the provisions below. The duration of each such
Interest Period shall be one, two, three or six months, in each case as a
Borrower may select, upon notice received by the Administrative Agent
pursuant to Section 2.02 or 2.06; provided, however, that
(i) Interest Periods commencing on the same date for
Eurocurrency Rate Advances comprising part of the same Committed
Borrowing shall be of the same duration;
(ii) 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;
(iii) whenever the first day of any Interest Period occurs
on a day in an initial calendar month for which there is no
numerically corresponding day in the calendar month that succeeds
such initial calendar month by the number of months equal to the
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number of months in such Interest Period, such Interest Period shall
end on the last Business Day of such succeeding calendar month; and
(iv) no Interest Period may terminate later than the
Termination Date.
"Lien" means, with respect to any asset, any security interest,
mortgage, pledge, lien, claim, charge or encumbrance of any kind in
respect of such asset.
"Majority Banks" means at any time Banks holding more than 50%
of the then aggregate unpaid principal amount of the Committed Advances
held by the Banks, or, if no such principal amount is then outstanding,
Banks having more than 50% of the Commitments.
"Margin Stock" has the meaning specified in Regulation U issued
by the Board of Governors of the Federal Reserve System.
"Material Adverse Effect" means a material adverse effect on (i)
the business, financial condition, operations, properties or performance
of the Company and its Subsidiaries, taken as a whole, (ii) the legality,
validity or enforceability of this Agreement or the Notes or (iii) the
ability of the Company to perform its obligations under this Agreement and
the Notes.
"Material Subsidiary" means a Subsidiary of the Company which,
at the time of determination, (i) shall own assets comprising in excess of
10% of all of the assets of the Company and its consolidated Subsidiaries
on a consolidated basis, or (ii) has operating income for the four fiscal
quarters most recently ended in excess of 10% of the operating income of
the Company and its consolidated Subsidiaries on a consolidated basis.
"Moody's" means Moody's Investors Services, Inc.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of the Company or any of its ERISA Affiliates and at least one
Person other than the Company and its ERISA Affiliates or (b) was so
maintained and in respect of which the Company or any of its ERISA
Affiliates could have liability under Section 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.
"Note" means a Committed Note or an Uncommitted Note.
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"Notice of Committed Borrowing" has the meaning specified in
Section 2.02(a).
"Notice of Conversion or Continuation" has the meaning specified
in Section 2.06(b).
"Notice of Uncommitted Borrowing" has the meaning specified in
Section 2.03(a).
"PBGC" means the Pension Benefit Guaranty Corporation and its
successors and assigns.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any
political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pro Rata Share" means, at any time with respect to any Bank,
the percentage amount that such Bank's Commitment bears to the aggregate
Commitments of all Banks at such time.
"Public Debt Rating" means, on any date, the rating that has
been most recently announced by S&P or Moody's, as the case may be, for
any class of long-term senior non-credit-enhanced unsecured debt issued by
the Company, changing when and as the applicable rating agency publicly
announces a change in its Public Debt Rating.
"Quote Deadline" has the meaning specified in Section
2.03(a)(ii).
"Reference Banks" means each of the following Banks so long as
they remain Banks under the terms of this Agreement: Citibank, The First
National Bank of Chicago and Royal Bank of Canada, or any other group of
three Banks designated by the Company, and acceptable to the Majority
Banks, as being the "Reference Banks" hereunder.
"Register" has the meaning specified in Section 9.07(g).
"Request Deadline" has the meaning specified in Section 2.03(a)
(i).
"Responsible Officer" means the Executive Vice President and
Chief Financial Officer of the Company, the Senior Vice President and
Treasurer of the Company, or any other officer of the Company or any other
Borrower responsible for overseeing or reviewing compliance with this
Agreement or any Note.
"S&P" means Standard & Poor's Ratings Group.
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"Single Employer Plan" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
the Company or any of its ERISA Affiliates and no Person other than the
Company and its ERISA Affiliates or (b) was so maintained and in respect
of which the Company or any of its ERISA Affiliates could have liability
under Section 4069 of ERISA in the event such plan has been or were to be
terminated.
"Sterling" means the lawful currency of the United Kingdom.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business
entity of which securities or other ownership interests having (a)
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions or (b) having the ability to
direct the management of such corporation, partnership, limited liability
company, association or other business entity, are at the time directly or
indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Swiss Francs" means the lawful currency of Switzerland.
"Termination Date" means the earlier of (i) December 21, 1999 or
(ii) the date the Commitments are terminated in whole pursuant to Section
2.05 or 6.01.
"Uncommitted Advance" means an advance by a Bank to a Borrower
as part of an Uncommitted Borrowing resulting from the auction bidding
procedure described in Section 2.03.
"Uncommitted Borrowing" means a borrowing consisting of
simultaneous Uncommitted Advances from each of the Banks whose offer to
make one or more Uncommitted Advances as part of such borrowing has been
accepted by a Borrower under the auction bidding procedure described in
Section 2.03.
"Uncommitted Borrowing Margin" means, with respect to any
Eurocurrency Rate specified by a Borrower in a Notice of Uncommitted
Borrowing and any offer made by a Bank in response to such Notice of
Uncommitted Borrowing, the margin (expressed as a percentage rate per
annum) to be added to or subtracted from such Eurocurrency Rate in order
to determine the interest rate per annum at which such Bank is willing to,
and offers to, make an Uncommitted Advance to such Borrower as part of a
Eurocurrency Rate Uncommitted Borrowing.
"Uncommitted Note" means a promissory note, in substantially the
form of Exhibit D-2 hereto, duly executed by the Company or a Borrowing
Subsidiary and evidencing an Uncommitted Advance made by such Bank,
including any amendment, modification, renewal or replacement of such
promissory note.
"Utilization Fee" has the meaning specified in Section 2.04.
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"Withdrawal Liability" has the meaning specified in Part 1 of Subtitle
E of Title IV of ERISA.
"Yen" means the lawful currency of Japan.
"1992 Credit Agreements" means that certain Amended and Restated
Credit Agreement and that certain Credit Agreement, each dated as of March
31, 1992, among the Company, the banks listed on the signature pages
thereto, and Morgan Guaranty Trust Company of New York as Administrative
Agent, as the same have been amended, modified, restated or supplemented
from time to time.
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
mean "to but excluding."
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements then most recently delivered by the Company to the Banks in
accordance with Section 5.03 ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
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SECTION 2.01. The Committed Advances. Each Bank severally agrees, on
the terms and conditions hereinafter set forth, to make Committed Advances to
the Borrowers from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate amount with respect to
all Borrowers not to exceed at any time outstanding an amount (such Bank's
"Available Commitment") equal to (i) the amount set forth opposite such Bank's
name on Schedule I hereto or, if such Bank has entered into any Assignment and
Acceptance, set forth for such Bank in the Register, as such amount may be
reduced pursuant to Section 2.05 (such Bank's "Commitment") minus (ii) such
Bank's Pro Rata Share of the aggregate amount of the Uncommitted Advances then
outstanding. Each Committed Borrowing shall be in an aggregate amount of not
less than $20,000,000 or an integral multiple of $1,000,000 in excess thereof
or, if the requested currency for such Committed Advance is not Dollars, an
equivalent amount (determined in accordance with Section 2.16) and multiple in
the requested Alternative Currency, and, subject to Section 2.02, shall consist
of Committed Advances of the same Type made on the same day to the same Borrower
by the Banks ratably according to their respective Commitments in the currency
so requested. Within the limits of each Bank's Available Commitment, a Borrower
may borrow under this Section 2.01, prepay pursuant to Section 2.10, and
reborrow under this Section 2.01.
SECTION 2.02. Making the Committed Advances. (a) Each Committed
Borrowing shall be made on notice by the Company (or, if such Borrower is a
Borrowing Subsidiary, by the Company on behalf of such Borrowing Subsidiary) to
the Administrative Agent (which shall give each Bank prompt notice thereof by
telecopy, telex or cable), given not later than 10:00 A.M. (Chicago time) on (i)
the date of a proposed Committed Borrowing comprised of
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Base Rate Advances, (ii) the third Business Day prior to the date of a proposed
Committed Borrowing comprised of Eurocurrency Rate Advances to be denominated in
Dollars, and (iii) the fourth Business Day prior to the date of a proposed
Committed Borrowing comprised of Eurocurrency Rate Advances to be denominated in
an Alternative Currency. Each such notice of a Committed Borrowing (a "Notice of
Committed Borrowing") shall be by telecopy, telex or cable, confirmed
immediately in writing, in substantially the form of Exhibit E-1 hereto,
specifying therein the requested (i) date of such Committed Borrowing, (ii) Type
of Committed Advances comprising such Committed Borrowing, which, in the case of
a Committed Borrowing denominated in an Alternative Currency, shall be
Eurocurrency Rate Advances, (iii) currency for such Committed Borrowing, which
shall be in Dollars or an Alternative Currency, (iv) aggregate amount of such
Committed Borrowing, (v) in the case of a Committed Borrowing consisting of
Eurocurrency Advances, the initial Interest Period for each Committed Advance
comprising such Committed Borrowing, and (vi) whether such Committed Borrowing
is to be made by the Company or by a specified Borrowing Subsidiary. The
Administrative Agent shall, promptly after such time as the Company or such
Borrower may no longer revoke the Notice of Committed Borrowing without any
liability to the Banks, notify each Bank and the Company or such Borrower of the
applicable interest rate under Section 2.07(a) or (b). Each Bank shall, before
12:00 P.M. (Chicago time) on the date of such Committed Borrowing, make
available for the account of its Applicable Lending Office to the Administrative
Agent at the Domestic Lending Office of the Bank then acting as Administrative
Agent, in federal or otherwise immediately available funds, such Bank's Pro Rata
Share of such Committed Borrowing. After the Administrative Agent receives such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Administrative Agent will make such funds available to the applicable
Borrower at the Administrative Agent's aforesaid address.
(b) Anything in subsection (a) above to the contrary notwithstanding:
(i) If with respect to a request for a Committed Borrowing of an
Alternative Currency other than Sterling, German Marks, Swiss Francs or
Yen, any Bank shall, prior to 10:00 A.M. (Chicago time) on the third
Business Day before the requested date of such Committed Borrowing, notify
the Administrative Agent that the requested Alternative Currency is not
practically available to such Bank in the amount required to make its
Committed Advance in connection therewith; or
(ii) If any Bank shall, prior to the making of any requested Committed
Borrowing consisting of Eurocurrency Rate Advances in an Alternative
Currency, 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 Bank or its Eurocurrency Lending Office or
any other Applicable Lending Office to perform its obligations hereunder to
make Eurocurrency Rate Advances in such currency or to fund or maintain
Eurocurrency Rate Advances in such currency hereunder;
then, upon receipt of such notice, the Administrative Agent shall so notify the
Company and the applicable Borrower (if other than the Company) and the Company
or such Borrower may, without incurring an obligation to indemnify for losses,
costs or expenses under Section 2.02(d), by notice to the Administrative Agent
(which shall promptly notify each Bank), either
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(x) withdraw the applicable Notice of Committed Borrowing, in
which case the Committed Borrowing shall not occur;
(y) request that such Committed Borrowing be made by the Banks in
Dollars as a Committed Borrowing comprised of either Eurocurrency Rate
Advances or Base Rate Advances, in which case the original Notice of
Committed Borrowing shall be deemed to be a Notice of Committed Borrowing
which requests a Committed Borrowing in an aggregate principal amount in
Dollars equivalent, on the date the Company or such Borrower so notifies
the Administrative Agent, to the amount of the originally requested
currency for such Type of Committed Advances (determined in accordance with
Section 2.16); provided that such request may not be made by the Company or
such Borrower if the requested Type of Committed Advances is Eurocurrency
Rate Advances and the request by the Company or such Borrower is not given
to the Administrative Agent prior to 2:00 P.M. (London time) on the second
Business Day before the requested date of such Committed Borrowing; or
(z) only in the case of a Bank giving a notice described in Section
2.02(b)(ii) above, request that such Committed Borrowing be made by the
Banks (other than the notifying Bank) and that no Committed Advance be made
by the notifying Bank in connection with such Committed Borrowing.
In the case of any notice given under clause (y) above, the Company or such
Borrower shall specify in such notice the amount and type of Committed Advance
to be made by each Bank in connection therewith. Any notice under this
subsection (b) shall be given no later than 2:00 P.M. (London time) two Business
Days before the date of the requested Committed Borrowing, may be given by
telephone and, if by telephone, shall be confirmed promptly in writing. If
neither the Company nor the applicable Borrower shall provide a timely notice as
contemplated in clause (x), (y) or (z) above in response to a notice by any Bank
under clause (i) or (ii) above, the applicable Notice of Committed Borrowing
shall be deemed withdrawn.
(c) Anything in subsection (a) above to the contrary notwithstanding,
if:
(i) No Reference Bank shall have furnished timely information to the
Administrative Agent for determining the requested Eurocurrency Rate for
the Dollars or the Alternative Currency requested for a Committed
Borrowing, or a continuation or conversion thereof; or
(ii) The Majority Banks shall, no later than 5:00 P.M. (Chicago
time) three Business Days before the date of any requested Committed
Borrowing, continuation or conversion consisting of Eurocurrency Rate
Advances, or any continuation thereof or conversion thereto, notify the
Administrative Agent that the Eurocurrency Rate for any Interest Period for
such Eurocurrency Rate Advances, plus additional interest, if any, payable
under Section 2.08, will not adequately reflect the cost to such Majority
Banks of making, funding, converting to or continuing their respective
Eurocurrency Rate Advances for such Committed Borrowing for such Interest
Period;
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then, the Administrative Agent shall promptly notify the Company, the applicable
Borrower (if other than the Company) and the Banks of such circumstances and
upon receipt of such notice, the Company or such Borrower may, without incurring
an obligation to indemnify for losses, costs or expenses under Section 2.02(d),
by notice to the Administrative Agent (which shall promptly notify each Bank),
either:
(x) withdraw the applicable Notice of Committed Borrowing, in
which case the Committed Borrowing shall not occur;
(y) withdraw the applicable Notice of Conversion or Continuation, in
which case the conversion or continuation of such Committed Borrowing shall
not occur; or
(z) request that such Committed Borrowing, continuation or conversion
be made by the Banks in Dollars as a Committed Borrowing, continuation or
conversion, in which case the original Notice of Committed Borrowing, or
Notice of Conversion or Continuation shall be deemed to be a Notice of
Committed Borrowing, or Notice of Conversion or Continuation which requests
a Committed Borrowing, continuation or conversion in an aggregate principal
amount in Dollars equivalent, on the date the Company or such Borrower so
notifies the Administrative Agent, to the amount of the originally-
requested currency for such Committed Advances; provided that such request
may not be made by the Company or such Borrower if the request by the
Company or such Borrower is not given to the Administrative Agent prior to
2:00 P.M. (London time) on the second Business Day before the requested
date of such Committed Borrowing, continuation or conversion.
In the case of any notice given under clause (z) above, the Company or such
Borrower shall specify in such notice the amount and Type of Committed Advances
to be made, continued or converted by the Banks in connection therewith. Any
notice under this subsection (c) shall be given no later than 2:00 P.M. (London
time) two Business Days before the date of the requested Committed Borrowing,
may be given by telephone, and, if by telephone, shall be confirmed promptly in
writing. From and after the date the Administrative Agent receives the notice
described in Section 2.02(c)(ii), the Banks' obligation to make Eurocurrency
Advances for any affected Interest Period shall be suspended until the Majority
Banks notify the Administrative Agent that the circumstances giving rise to such
notice no longer exist. If neither the Company nor the applicable Borrower shall
provide a timely notice as contemplated in clauses (x), (y) or (z) above with
respect to a Notice of Committed Borrowing, the applicable Notice of Committed
Borrowing shall be deemed withdrawn. If neither the Company nor the applicable
Borrower shall provide timely a notice as contemplated in clauses (x), (y) or
(z) above with respect to a Notice of Continuation or Conversion, the Company or
such applicable Borrower shall be deemed to have made the request described in
clause (z).
(d) Each Notice of Committed Borrowing and Notice of Conversion or
Continuation may be revoked by the Company or, if other than the Company, the
applicable Borrower, by notice to the Administrative Agent without any liability
on the part of the Company or such Borrower at any time prior to (i) 10:00 A.M.
(Chicago time) on the date of a proposed Committed Borrowing, continuation or
conversion comprised of Base Rate Advances, (ii) 11:00
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A.M. (London time) on the second Business Day prior to the date of a proposed
Committed Borrowing, continuation or conversion comprised of Eurocurrency Rate
Advances to be denominated in Dollars, and (iii) 11:00 A.M. (London time) on the
third Business Day prior to the date of a proposed Committed Borrowing,
continuation or conversion comprised of Eurocurrency Rate Advances to be
denominated in an Alternative Currency. In the case of any Committed Borrowing,
continuation or conversion which the related Notice of Committed Borrowing, or
Notice of Conversion or Continuation, specifies is to be comprised of
Eurocurrency Rate Advances, unless the Company or the applicable Borrower
revokes such Notice of Committed Borrowing, or Notice of Conversion or
Continuation in accordance with the preceding sentence and except as otherwise
provided in Sections 2.02(b) and (c), the Company or such Borrower shall
indemnify each Bank against any loss, cost or expense reasonably incurred by
such Bank as a result of any failure to fulfill on or before the date specified
in such Notice of Borrowing or Notice of Conversion or Continuation for such
Committed Borrowing, conversion or continuation, the applicable conditions set
forth in Article III, including, without limitation, any loss (excluding loss of
anticipated profits), cost or expense reasonably incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Bank to
fund the Committed Advance to be made by such Bank as part of such Committed
Borrowing, conversion or continuation, when such Committed Advance, as a result
of such failure, is not made, continued or converted on such date.
(e) Unless the Administrative Agent shall have received notice from a
Bank prior to the date of any Committed Borrowing that such Bank will not make
available to the Administrative Agent such Bank's Pro Rata Share of such
Committed Borrowing, the Administrative Agent may assume that such Bank has made
such Pro Rata Share 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 a
corresponding amount available to the applicable Borrower on such date. If and
to the extent that such Bank shall not have so made such Pro Rata Share
available to the Administrative Agent, such Bank and such 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 such Borrower until the date such amount is
repaid to the Administrative Agent, at (i) in the case of such Borrower, the
interest rate applicable at the time to Committed Advances comprising such
Committed Borrowing and (ii) in the case of such Bank, the Federal Funds Rate.
If such Bank shall repay such corresponding amount to the Administrative Agent,
such amount so repaid shall constitute such Bank's Committed Advance as part of
such Committed Borrowing for purposes of this Agreement.
(f) A Bank's failure to make the Committed Advance to be made by it
as part of any Committed Borrowing shall not relieve any other Bank of its
obligation, if any, hereunder to make its Committed Advance on the date of such
Committed Borrowing. No Bank shall be responsible for the failure of any other
Bank to make the Committed Advance to be made by such other Bank on the date of
any Committed Borrowing.
SECTION 2.03. The Uncommitted Advances. (a) Each Bank severally
agrees that any Borrower may make Uncommitted Borrowings in Dollars from time to
time on any Business Day during the period from the date hereof until 30 days
before the Termination Date in the manner set forth below; provided that,
following the making of each Uncommitted Borrowing,
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the aggregate amount with respect to all Borrowers of the Advances then
outstanding shall not exceed the aggregate amount of the Commitments of the
Banks.
(i) A Borrower may request, and the Company may request for the
benefit of any Borrowing Subsidiary, an Uncommitted Borrowing to be made
by such Borrower under this Section 2.03 by delivering to the
Administrative Agent, by telecopier, telex or cable, not later than the
applicable Request Deadline a notice of an Uncommitted Borrowing (a
"Notice of Uncommitted Borrowing"), in substantially the form of Exhibit
E-2 hereto, specifying therein (A) the requested date of the proposed
Uncommitted Borrowing, (B) the aggregate amount of the proposed
Uncommitted Borrowing, (C) that each Bank submitting an offer shall quote
an Uncommitted Borrowing Margin, or that each Bank submitting an offer
shall quote a fixed interest rate per annum without reference to the
Eurocurrency Rate, (D) maturity date for repayment of each Uncommitted
Advance to be made as part of such Uncommitted Borrowing (which maturity
date may not be earlier than thirty (30) days after the date of the
proposed Uncommitted Borrowing or later than the Termination Date) and
whether such Uncommitted Advance may be prepaid, and if so, whether with
or without penalty, (E) interest payment date or dates relating thereto,
(F) Borrower and (G) other material terms to be applicable to such
Uncommitted Borrowing. The Administrative Agent shall promptly notify
each Bank of its receipt of each such Notice of Uncommitted Borrowing by
sending each Bank a copy thereof. "Request Deadline" means (x) in the
case of an Uncommitted Borrowing to be a Fixed Rate Uncommitted Borrowing,
5:00 P.M. (New York time) on the Business Day prior to the date of such
proposed Uncommitted Borrowing and (y) in the case of a Eurocurrency Rate
Uncommitted Borrowing, 5:00 P.M. (New York time) four (4) Business Days
prior to the date of such proposed Uncommitted Borrowing.
(ii) Each Bank shall, if, in its sole discretion, it elects to do
so, irrevocably offer to make one or more Uncommitted Advances to such
Borrower as part of such proposed Uncommitted Borrowing at a rate or rates
of interest specified by such Bank, in its sole discretion, by notifying
the Administrative Agent not later than the applicable Quote Deadline of
the minimum amount (if any) and maximum amount of each Uncommitted Advance
which such Bank would be willing to make as part of such proposed
Uncommitted Borrowing (which amounts may, subject to the proviso to the
first sentence of this Section 2.03(a), exceed such Bank's Commitment, if
any), the Uncommitted Borrowing Margin or Margins to be applied in the
determination of the rate or rates of interest therefor (or, if the Notice
of Uncommitted Borrowing shall have requested that fixed rates per annum
be quoted, the fixed rate or rates per annum therefor) and such Bank's
Applicable Lending Office with respect to such Uncommitted Advance. If
any Bank shall elect not to make such an offer, such Bank shall so notify
the Administrative Agent before the applicable Quote Deadline, and such
Bank shall not be obligated to, and shall not, make any Uncommitted
Advance as part of such Uncommitted Borrowing; provided that the failure
by any Bank to give such notice shall not cause such Bank to be obligated
to make any Uncommitted Advance as part of such proposed Uncommitted
Borrowing. The Administrative Agent shall promptly notify the Company
and, if applicable, the Borrowing Subsidiary of each
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Bank's response pursuant to this paragraph (ii); provided, that if
Citibank shall elect to make an offer under this paragraph (ii), such
offer shall be delivered to the Company and, if applicable, the Borrowing
Subsidiary not later than one-half hour prior to the applicable Quote
Deadline. Each Borrower shall be entitled to assume that each quote of an
Uncommitted Borrowing Margin or a fixed rate per annum by a Bank includes,
and such Bank shall not be entitled to claim as additional interest or
costs under Section 2.08 or otherwise, any costs to such Bank in the
nature of a reserve requirement, assessment or other charge in connection
with the Uncommitted Advance to which such quote relates, except that such
Bank shall be entitled to claim increased costs and additional
compensation under Section 2.12(a) and (b) and Section 2.19, but solely
with respect to the changes described in such provisions that occur after
the date such Uncommitted Advance is made. "Quote Deadline" means, (x) in
the case of a Fixed Rate Uncommitted Borrowing, 9:00 A.M. (Chicago time)
on the date of such proposed Uncommitted Borrowing and (y) in the case of
a Eurocurrency Rate Uncommitted Borrowing, 9:00 A.M. (Chicago time) three
Business Days prior to the date of such proposed Uncommitted Borrowing.
(iii) Such Borrower, or the Company on behalf of such Borrower,
shall, in turn, before the applicable Acceptance Deadline, either
(A) cancel, without incurring an obligation on the part of such
Borrower or the Company to indemnify for losses, costs or expenses
under Section 2.02(d), such Uncommitted Borrowing by giving the
Administrative Agent notice to that effect, in which case such
Uncommitted Borrowing shall not be made, or
(B) accept one or more of the offers made by any Bank or Banks
pursuant to paragraph (ii) above, in its sole discretion but in any
event in ascending order of the fixed rates of interest or Uncommitted
Borrowing Margins (as applicable) offered by all of the Banks
responding to such Notice of Uncommitted Borrowing, by giving notice
to the Administrative Agent of the relevant Banks and the respective
amounts of each Uncommitted Advance (each of which amounts shall be
equal to or greater than the minimum amount, and equal to or less than
the maximum amount, offered to be made by the respective Bank for such
Uncommitted Advance pursuant to Section 2.02(a)(ii) above) and reject
any remaining offers made by Banks pursuant to such Section by giving
the Administrative Agent notice to that effect. The Company (either
for itself or on behalf of a Borrowing Subsidiary) may not accept
offers which, in the aggregate, exceed the requested Uncommitted
Borrowing specified in the applicable Notice of Uncommitted Borrowing.
If two or more Banks bid at the same Uncommitted Borrowing Margin or
fixed rate of interest, as the case may be, and the amount of accepted
offers is less than the aggregate amount of such offers, the amount to
be borrowed from such Banks as part of such Uncommitted Borrowing
shall be allocated pro rata on the
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basis of the maximum amount offered by each such Bank at such fixed
rates or Uncommitted Borrowing Margins in connection with such
Uncommitted Borrowing.
The Administrative Agent shall promptly notify the Banks of each notice it
receives pursuant to this paragraph (iii). "Acceptance Deadline" means,
(x) in the case of an Uncommitted Borrowing to be denominated in Dollars,
10:00 A.M. (Chicago time) on the date of such proposed Uncommitted
Borrowing and (y) in the case of an Uncommitted Borrowing to be denominated
in an Alternative Currency, 5:00 P.M. (New York time) three Business Days
prior to the date of such proposed Uncommitted Borrowing.
(iv) If such Borrower accepts, or the Company accepts on such
Borrower's behalf, one or more of the offers made by any Bank or Banks
pursuant to Section 2.03(a)(iii)(B) above, the Administrative Agent shall
in turn promptly notify (A) each Bank that has made an offer pursuant to
Section 2.03(a)(ii) of the date and aggregate amount of such Uncommitted
Borrowing and whether or not any offer or offers so made by such Bank have
been accepted by such Borrower, (B) each Bank that is to make an
Uncommitted Advance as a part of such Uncommitted Borrowing, of the amount
of each Uncommitted Advance to be made by such Bank as part of such
Uncommitted Borrowing, and (C) each Bank that is to make an Uncommitted
Advance as part of such Uncommitted Borrowing, upon receipt, that the
Administrative Agent has received forms of documents appearing to fulfill
the applicable conditions set forth in Article III. Each Bank that is to
make an Uncommitted Advance as part of such Uncommitted Borrowing shall,
before 1:00 P.M. (Chicago time) on the date of such Uncommitted Borrowing
specified in the notice received from the Administrative Agent pursuant to
clause (A) of the preceding sentence or any later time when such Bank shall
have received notice from the Administrative Agent pursuant to subclause
(C) of the preceding sentence, make available to the Administrative Agent
at the Administrative Agent's Domestic Lending Office, in federal or
otherwise immediately available funds, such Bank's portion of such
Uncommitted Borrowing. After the Administrative Agent receives such funds
and when the applicable conditions set forth in Article III have been
fulfilled, the Administrative Agent will make such funds available to the
applicable Borrower at the Administrative Agent's aforesaid address.
Promptly after (x) each Uncommitted Borrowing, the Administrative Agent
will notify each Bank of the amount and date of the Uncommitted Borrowing
and the maturity date thereof and the Available Commitment of each Bank
after giving effect to such Uncommitted Borrowing and (y) the prepayment of
any Uncommitted Borrowing by or on behalf of such Borrower, the
Administrative Agent will notify each Bank of the amount and date of each
such prepayment and the Available Commitment of each Bank after giving
effect thereto.
(b) Each Uncommitted Borrowing shall be in an aggregate amount of not
less than $25,000,000 or an integral multiple of $1,000,000 in excess thereof,
or if the requested currency for such Advance is not Dollars, the equivalent of
such amount (determined in accordance with Section 2.16) or multiple in the
requested Alternative Currency.
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(c) Within the limits and on the conditions set forth in this
Section 2.03, each Borrower may from time to time borrow under this Section
2.03, repay pursuant to subsection (d) below, and reborrow under this Section
2.03; provided that an Uncommitted Borrowing shall not be made within three
Business Days of any other Uncommitted Borrowing.
(d) Each Borrower shall repay to the Administrative Agent, for the
account of each Bank which has made an Uncommitted Advance to such Borrower, on
the maturity date of each such Uncommitted Advance (such maturity date being
that specified for repayment of such Uncommitted Advance in the related Notice
of Uncommitted Borrowing delivered pursuant to Section 2.03(a)(i) above) the
then unpaid principal amount of such Uncommitted Advance. A Borrower shall not
have the right to prepay any principal amount of any Uncommitted Advance without
the consent of the Bank making such Advance.
(e) Each Borrower shall pay interest on the unpaid principal amount
of each Uncommitted Advance made to it, from the date of such Uncommitted
Advance to the date the principal amount of such Uncommitted Advance is repaid
in full, at the rate of interest for such Uncommitted Advance specified by the
Bank making such Uncommitted Advance in its notice with respect thereto
delivered pursuant to Section 2.03(a)(ii) above, payable on the interest payment
date or dates specified for such Uncommitted Advance in the related Notice of
Uncommitted Borrowing delivered pursuant to Section 2.03(a)(i) above.
(f) The Borrower of any Uncommitted Advance shall, promptly upon
request by the Bank making such Uncommitted Advance (either in the quote
delivered by such Bank pursuant to Section 2.03(a)(ii) or by notice to the
Administrative Agent), execute and deliver to the Administrative Agent an
Uncommitted Note payable to the order of such Bank in a principal amount equal
to the principal amount of such Uncommitted Advance and otherwise on such terms
as were agreed to for such Uncommitted Advance in accordance with Section 2.03.
SECTION 2.04. Facility Fee and Utilization Fee. (a) The Company
and each Borrowing Subsidiary jointly and severally agree to pay to the
Administrative Agent, for the account of each Bank other than a Designated
Bidder, a facility fee ("Facility Fee") on the average daily Commitment of such
Bank from the date hereof until the Termination Date, payable in arrears on the
first day of each January, April, July and October during the term of such
Bank's Commitment, commencing April 1, 1995, and on the Termination Date, at a
rate per annum equal to the following percentage in effect from time to time:
(i) 0.07% for each day Category 1 Status exists,
(ii) 0.08% for each day Category 2 Status exists,
(iii) 0.10% for each day Category 3 Status exists,
(iv) 0.15% for each day Category 4 Status exists, and
(v) 0.25% for each day Category 5 Status exists.
(b) To the extent, and for so long as, (i) the average daily
aggregate outstanding principal amount of Advances at any time exceeds one-half
of the aggregate
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Commitments at such time, and (ii) Category 3 Status, Category 4 Status or
Category 5 Status exists, the Company and each Borrowing Subsidiary, jointly and
severally, agree to pay to each Bank other than a Designated Bidder a
utilization fee (the "Utilization Fee") equal to 0.05% per annum of the
aggregate principal amount of such Bank's Advances at such time. The Utilization
Fee shall be payable on each date the Facility Fee is payable.
(c) Notwithstanding the foregoing, (i) any Facility Fee or
Utilization Fee accrued with respect to any Commitment of a Defaulting Bank
during the period prior to the time such Bank became a Defaulting Bank and
unpaid at such time shall not be payable by the Borrowers so long as such Bank
shall be a Defaulting Bank, except to the extent such Facility Fee or
Utilization Fee was due and payable prior to such time, and (ii) no Facility Fee
or Utilization Fee shall accrue on the Commitment of a Defaulting Bank so long
as such Bank is a Defaulting Bank.
SECTION 2.05. Reduction and Termination of the Commitments. (a)
The Company shall have the right, upon at least four (4) days' notice to the
Administrative Agent to terminate in whole or reduce ratably in part the unused
portions of the respective Commitments of the Banks, provided that the aggregate
amount of the Commitments of the Banks shall not be reduced to an amount which
is less than the aggregate principal amount of the Uncommitted Advances then
outstanding and provided, further, that each partial reduction shall be in an
aggregate amount of $10,000,000 or any integral multiple of $1,000,000 in excess
thereof.
(b) Provided that no Event of Default shall have occurred and be
continuing, the Company may at any time replace any Bank, in whole but not in
part, by (i) giving such Bank and the Administrative Agent not less than ten
(10) Business Days' prior notice thereof, which notice shall be irrevocable and
effective only when received by such Bank and the Administrative Agent and shall
specify the effective date of such replacement, and (ii) effecting an assignment
of all of the Bank's Commitment and Advances in accordance with Section 9.07.
SECTION 2.06. Payment; Conversion and Continuation. (a) On the
Termination Date, the Borrowers shall repay, to the Administrative Agent for the
ratable account of the Banks, the entire unpaid principal amount of the Advances
made by each Bank.
(b) Any Borrower may elect (x) to convert Base Rate Advances or any
portion thereof to Eurocurrency Rate Advances, (y) to convert Eurocurrency Rate
Advances or any portion thereof into Base Rate Advances, or (z) to continue any
Eurocurrency Rate Advance or any portion thereof for an additional Interest
Period; provided, however, that the aggregate amount of Base Rate Advances being
converted into Eurocurrency Rate Advances or of Eurocurrency Rate Advances being
continued shall, in the aggregate, equal $20,000,000 or an integral multiple of
$1,000,000 in excess thereof. The applicable Interest Period for the
continuation of any Eurocurrency Rate Advance shall commence on the day on which
the immediately-preceding Interest Period expires. Each conversion or
continuation shall be allocated among the Committed Advances of each Bank in
accordance with its Pro Rata Share of the amount so converted or continued.
Each such election shall be in substantially the form of Exhibit F (a "Notice of
Conversion or Continuation") and shall be made by giving the Administrative
Agent notice by 10:00 a.m. (Chicago time) on the date of such conversion or
continuation, in the case of a conversion to a Base Rate Advance, giving the
Administrative Agent at least three Business Days' prior written notice thereof
in the event of a conversion to or continuation of a Eurocurrency Advance
specifying, in each case (i) whether a conversion or continuation is to take
place, (ii) what
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Advances are to be converted or continued, and if converted, the Type of Advance
to which it is to be converted, (iii) the amount of the conversion or
continuation, (iv) the Interest Period therefor and (v) in the case of a
conversion, the date of conversion (which date shall be a Business Day). The
Administrative Agent shall promptly notify each Bank of its receipt of a Notice
of Conversion or Continuation by sending such Bank a copy thereof. If, within
the time period required under the terms of this Section 2.06(b), the
Administrative Agent does not receive a Notice of Conversion or Continuation
from the applicable Borrower containing an election to continue or convert any
Advances for an additional Interest Period, then, upon the expiration of the
Interest Period therefor, such Advances will be automatically converted to Base
Rate Advances.
SECTION 2.07. Interest on Committed Advances. Each Borrower shall
pay interest on the unpaid principal amount of each Committed Advance made by
each Bank to it from the date of such Committed Advance until such principal
amount shall be paid in full, at the following rates per annum:
(a) Base Rate Advances. During such period as such Committed Advance
is a Base Rate Advance, a rate per annum equal at all times to the Base Rate in
effect from time to time, payable quarterly in arrears on the first day of each
January, April, July and October, commencing April 1, 1995. The Administrative
Agent shall give notice to the Company and the applicable Borrower (if other
than the Company) and each Bank of any change in the Base Rate promptly after
such change occurs, but the Administrative Agent's failure to give such notice
shall not affect the obligation of the Company or such Borrower to pay interest
at such rate when it becomes due and payable.
(b) Eurocurrency Rate Advances. During such period as such Committed
Advance is a Eurocurrency Rate Advance, a rate per annum equal at all times
during each Interest Period for such Committed Advance to the sum of the
Eurocurrency Rate for such Interest Period plus the Applicable Margin, payable
on the last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on each day which occurs during such
Interest Period every three months from the first day of such Interest Period
and on the date such Eurocurrency Rate Advance shall be converted or paid in
full.
(c) Default Interest. Notwithstanding the foregoing provisions of
this Section 2.07, any amount of principal and fees and, to the extent permitted
by law, interest, that 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 in arrears on the date
such amount shall be paid in full and on demand, at a rate per annum equal at
all times to 1% per annum above (i) in the case of principal, the rate of
interest otherwise thereto from time to time in accordance with the terms
hereof, and (ii) in the case of interest and fees, the Base Rate in effect from
time to time.
SECTION 2.08. Additional Interest on Eurocurrency Rate Advances.
Each Borrower shall pay to each Bank other than Designated Bidders, so long as
and to the extent such Bank shall be required under regulations of the Board of
Governors of the Federal Reserve System (or any similar authority outside the
United States, in the case of Committed Advances in Alternative Currencies) to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or any other category of liabilities that
includes deposits by reference to which the interest rate on Eurocurrency Rate
Advances in the applicable Alternative
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Currency is determined) and such Bank's performance under this Agreement (and
other like agreements) shall have given rise to additional reserve requirements
for such Bank thereunder, additional interest on the unpaid principal amount of
each Committed Advance constituting a Eurocurrency Rate Advance of such Bank
made to such Borrower, from the date of such Committed Advance until such
principal amount is paid in full, at an interest rate per annum equal at all
times to the remainder obtained by subtracting (i) the Eurocurrency Rate for the
applicable Interest Period for such Committed Advance from (ii) the rate
obtained by dividing such Eurocurrency Rate by a percentage equal to 100% minus
the Eurocurrency Rate Reserve Percentage of such Bank for such Interest Period,
payable on each date on which interest is payable on such Committed Advance.
Such Bank shall, not later than the last day of the applicable Interest Period,
provide notice to the Administrative Agent, the Company and, if other than the
Company, the applicable Borrower of any such additional interest arising in
connection with such Committed Advance. Such additional interest so notified on
a timely basis by any Bank shall be payable to the Administrative Agent for the
account of such Bank on the dates specified for payment of interest for such
Committed Advance in Section 2.07.
SECTION 2.09. Interest Rate Determination. (a) Each Reference Bank
agrees to furnish to the Administrative Agent timely information for the purpose
of determining each Eurocurrency Rate. If any one or two 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 Bank or Banks.
(b) The Administrative Agent shall give prompt notice to the Company
and the applicable Borrower (if other than the Company) and each of the Banks
(other than the Designated Bidders) of the applicable interest rate determined
by the Administrative Agent for purposes of Section 2.07(a) or (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).
(c) On the date on which the aggregate unpaid principal amount of
Eurocurrency Rate Advances comprising any Committed Borrowing shall be reduced,
by payment, prepayment or otherwise, to less than $20,000,000, such Advances
shall automatically convert into Base Rate Advances and such conversion shall be
subject to Section 2.11.
SECTION 2.10. Prepayments. A Borrower may prepay, upon at least one
Business Day's (in the case of Base Rate Advances) and three Business Days' (in
the case of Eurocurrency Rate Advances) prior notice to the Administrative
Agent, each Committed Borrowing made to such Borrower, in whole or in part.
Such notice shall include the proposed date and aggregate principal amount of
such prepayment, and if such notice is given, such Borrower shall prepay such
principal amount, together with accrued interest to the date of such prepayment
on the principal amount prepaid, and any amounts payable, if any, pursuant to
Section 2.11 hereof in connection therewith shall be paid on the date of such
prepayment; provided, however, that each partial prepayment shall be in an
aggregate principal amount of not less than $10,000,000 or an integral multiple
of $1,000,000 in excess thereof. Subject to Sections 2.12) and 2.13, each
prepayment of a Committed Borrowing shall be made to each Bank in accordance
with such Bank's Pro Rata Share thereof. The Company shall, on the first
Business Day of each January, April, July and October, if the aggregate
outstanding principal Dollar Amount of all Advances, calculated by the
Administrative Agent on the seventh Business Day
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prior to such payment date and reported to the Company by the fifth Business Day
prior to such payment date, exceeds (as the result of fluctuations in applicable
foreign exchange rates or otherwise) 105% of the then aggregate amount of the
Banks' Commitments (calculated as aforesaid), prepay a Committed Borrowing or
Borrowings (in whole or in part, and in any case as selected by the Company) in
an aggregate Dollar Amount (calculated as aforesaid, and rounded upward, if
necessary, to the nearest $1,000,000) equal to the excess of:
(i) the aggregate principal Dollar Amount (calculated as
aforesaid) of Advances outstanding, over
(ii) the then aggregate amount of the Banks' Commitments
(calculated as aforesaid).
Each prepayment of any Committed Borrowing (in whole or in part) made pursuant
to this Section 2.10 shall be without premium or penalty, but shall be subject
to the provisions of Section 2.11. Any mandatory prepayment of a Committed
Borrowing shall be made to the Administrative Agent for the account of each Bank
based on such Bank's Pro Rata Share of such Committed Borrowing and shall
include accrued and unpaid interest on the principal amount prepaid and all
amounts owing under Section 2.11.
SECTION 2.11. Funding Indemnification. If any payment of principal
of any Advance (other than a Base Rate Advance) is made other than on the last
day of an Interest Period for such Advance, as a result of acceleration of the
maturity of the Advances pursuant to Section 6.01 or for any other reason, or if
any Eurocurrency Rate Advance is converted to a Base Rate Advance pursuant to
Section 2.13(b) on any day other than the last day of an Interest Period for
such Eurocurrency Rate Advance, the applicable Borrower shall, upon demand by
any Bank (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Bank any amounts required to
compensate such Bank for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment or conversion, including without
limitation any loss (excluding loss of anticipated profits), cost or expense
reasonably incurred as a result of the liquidation or re-employment of deposits
or other funds acquired by such Bank to fund or maintain such Advance.
SECTION 2.12. Increased Costs and Reduced Return. (a) Subject to
the limitation in Section 2.03(a)(ii), 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 Eurocurrency Rate Advances, included in the
Eurocurrency Rate Reserve Percentage), after the date hereof, 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) issued after the date hereof, there
shall be any increase in the cost to any Bank of agreeing to make, making,
funding or maintaining Eurocurrency Rate Advances, by an amount reasonably
deemed by such Bank to be material, then from time to time, within ten days
after demand by such Bank (with a copy of such demand to the Administrative
Agent), such Borrower shall pay to the Administrative Agent for the account of
such Bank additional amounts sufficient to compensate such Bank for such
increased cost; provided that no Borrower shall be obligated to pay any such
amount to the extent such amount results from a change, guideline or request
which took effect more than 90 days prior to the date of such demand.
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(b) Subject to the limitation in Section 2.03(a)(ii), if any Bank
shall have determined that the adoption, after the date hereof, of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive issued after the date
hereof regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital as a consequence of
its obligations hereunder to a level below that which such Bank could have
achieved but for such adoption, change or compliance by an amount reasonably
deemed by such Bank to be material, then from time to time, within ten days
after demand by such Bank (with a copy of such demand to the Administrative
Agent), the Company shall pay to the Administrative Agent for the account of
such Bank such additional amount or amounts as will compensate such Bank, in
light of such circumstances, to the extent such Bank reasonably determines such
reduction to be allocable to the existence of such Bank's Commitment; provided
that no Borrower shall be obligated to pay any such amount to the extent such
amount results from an adoption, change, request or directive which took effect
or was issued more than 90 days prior to the date of such demand.
(c) Each Bank will promptly notify the Administrative Agent and the
Company of any event of which it has knowledge, occurring after the date hereof,
which would entitle such Bank to compensation pursuant to this Section 2.12. A
certificate of any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall create a
rebuttable presumption as to the correctness of such additional amount or
amounts. Each Bank agrees not to request any payment under this Section 2.12
unless similar requests are then generally being made by such Bank of other
borrowers similarly situated, and to use a reasonable basis for calculating
amounts allocable to its Commitment hereunder.
SECTION 2.13. Illegality. (a) If any Bank shall determine (which
determination shall be rebuttably presumed correct as to all parties) at any
time that the making or continuance of its Eurocurrency Rate Advances has become
unlawful because of the introduction of or any change in or in the
interpretation of any law or regulation or because of the assertion of
unlawfulness by any central bank or other governmental authority, then, in any
such event, such Bank shall give prompt notice (by telephone confirmed in
writing) to the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each Borrower and the other
Banks).
(b) Upon the giving of the notice to the Company referred to in
subsection (a) above, if the affected Advances are then outstanding, each
Borrower shall, upon at least one Business Day's written notice to the
Administrative Agent and the affected Bank, or if permitted by applicable law no
later than the date permitted thereby, in such Borrower's sole discretion,
either (i) prepay the principal amount of all outstanding Advances of such Bank
to which such notice relates, together with accrued interest thereon to the date
of payment, or (ii) convert each such Advance into a Base Rate Advance
denominated in Dollars and, in each case, be obligated to reimburse the Banks in
respect thereof pursuant to Section 2.11 hereof. If more than one Bank gives
notice pursuant to Section 2.13(a) at any time, then all outstanding Advances of
the affected Type or currency of such Banks must be treated in the same manner
by the Borrowers pursuant to this subsection 2.13(b) and the Banks' obligations
to make, convert or continue Eurocurrency Rate
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Advances shall be suspended until the Administrative Agent notifies the
Borrowers that the circumstances causing such suspension no longer exist.
SECTION 2.14. Payments and Computations. (a) The Company and each
Borrowing Subsidiary shall make each payment hereunder and under the Notes by
causing a wire transfer of immediately-available funds to be initiated to the
Administrative Agent in an amount equal to such payment not later than 12:00
noon (Chicago time) on the day when due from the Company or such Borrowing
Subsidiary. The Administrative Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or fees
ratably (other than amounts payable pursuant to Sections 2.03, 2.05(b), 2.08,
2.11, 2.12, 2.15, 2.19 or 2.20) to the Banks for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Bank to such Bank for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. All such payments shall be made in Dollars, except that payments of
principal of and interest on Borrowings in an Alternative Currency shall be made
in such Alternative Currency; provided that if the applicable Borrower fails to
make any payment of principal or interest with respect to any Borrowing in an
Alternative Currency on the due date thereof because such Alternative Currency
has ceased to be freely transferable and convertible into Dollars in the London
interbank market, such failure shall not constitute an Event of Default or an
event which would constitute an Event of Default but for the requirement that
notice be given or time elapse or both, if such Borrower pays the equivalent in
Dollars of such payment on the due date thereof. In addition to any such Dollar
payment, such Borrower agrees to pay to each affected Bank an indemnity payment
within five Business Days after such Borrower shall have received a certificate
from such Bank setting forth in reasonable detail the amount of any loss, cost,
damage or expense suffered by such Bank as a consequence of such inability to
make any such payment in such Alternative Currency on the due date thereof.
Each Bank agrees to use reasonable efforts to avoid or minimize all such loss,
cost, damage or expense.
(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 Eurocurrency Rate or
the Federal Funds Rate, all computations of interest pursuant to Section 2.08
and all computations of the Facility Fee and the Utilization Fee 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 fees are payable. Each
determination by the Administrative Agent (or, in the case of Section 2.08, by a
Bank) of an interest rate or fee owing hereunder shall create a rebuttable
presumption as to the correctness of such determination.
(c) Whenever any payment hereunder or under the Notes 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 fee, as the case may be;
provided, however, if such extension would cause payment of interest on or
principal of Eurocurrency 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 applicable Borrower prior to the date on which any payment is due to the
Banks hereunder that such
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Borrower will not make such payment in full, the Administrative Agent may assume
that such 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 Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent such Borrower shall not have so
made such payment in full to the Administrative Agent, each Bank shall repay to
the Administrative Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate.
SECTION 2.15. Sharing of Payments, Etc. If any Bank shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Committed Advances made by it (other
than pursuant to Sections 2.08, 2.11, 2.12, 2.13(b), 2.19 or 2.20) in excess of
its ratable share of payments on account of the Committed Advances obtained by
all the Banks, such Bank shall forthwith purchase from the other Banks such
participations in the Committed Advances made by them as shall be necessary to
cause such purchasing Bank 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 Bank, such purchase from each Bank
shall be rescinded and such Bank shall repay to the purchasing Bank the purchase
price to the extent of such recovery together with an amount equal to such
Bank's ratable share (according to the proportion of (i) the amount of such
Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. Each Borrower
agrees that any Bank so purchasing a participation from another Bank with
respect to Advances made to such Borrower pursuant to this Section 2.15 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 Bank were the direct creditor of such Borrower in the amount of such
participation.
SECTION 2.16. Currency Equivalents. (a) For purposes of this
Article II, (i) the equivalent in Dollars of any Alternative Currency shall be
determined by using the spot rate at which Citibank's principal office in London
offers to exchange Dollars for such Alternative Currency in the interbank market
in London at 11:00 A.M. (London time) two Business Days prior to the date on
which such equivalent is to be determined, (ii) the equivalent in any
Alternative Currency of any other Alternative Currency shall be determined by
using the spot rate at which Citibank's principal office in London offers to
exchange such Alternative Currency for the equivalent in such other Alternative
Currency in London at 11:00 A.M. (London time) two Business Days prior to the
date on which such equivalent is to be determined, and (iii) the equivalent in
any Alternative Currency of Dollars shall be determined by using the spot rate
at which Citibank's principal office in London offers to exchange such
Alternative Currency for Dollars in London at 11:00 A.M. (London time) two
Business Days prior to the date on which such equivalent is to be determined.
The equivalent in Dollars of each Eurocurrency Rate Advance made in an
Alternative Currency shall be recalculated hereunder on each day that it is
necessary to determine the unused portion of each Bank's Commitment, or any or
all of the Advances on such date.
(b) If for the purpose of obtaining a judgment in any court with
respect to any obligation of a Borrower hereunder, it shall become necessary for
the Administrative Agent or any Bank entitled to receive payments hereunder to
convert any amount into a currency other than the
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currency denominated hereunder for such obligation, then such conversion shall
be made on the basis of rates (the "Exchange Rates") determined in the manner
described in subsection (a) above (or, if the applicable currency to be
converted is not at the time of conversion available in the interbank market in
London, then in such other interbank market as the Administrative Agent shall
determine to have adequate availability of such currency) and the date with
respect to which such an equivalent is to be determined shall be the first
Business Day preceding the date on which final judgment is entered. If pursuant
to any such judgment conversion is to be made with respect to a date other than
the date referred to above, and there shall occur a change between the Exchange
Rates in effect on such date and the Exchange Rates in effect on the date of
payment, (i) the applicable Borrower agrees to pay such additional amounts (if
any) as may be necessary to ensure that the amount paid is the amount in such
other currency which, when converted at the Exchange Rates as in effect on the
date of payment or distribution, is the amount then due hereunder in the
relevant currency and (ii) such Borrower shall not be required to pay any amount
in excess of the amount determined to be payable in connection with such
obligation, calculated on the basis of the Exchange Rates in effect on the first
Business Day preceding the date on which final judgment is entered. Any amount
due from a Borrower under this subsection (b) shall be due as a separate debt
and is not to be affected by or merged into any judgment being obtained for any
other sums due hereunder.
SECTION 2.17. Borrowing Subsidiaries. The Company may at any time
or from time to time add as a party to this Agreement any Subsidiary of the
Company to be a "Borrowing Subsidiary" hereunder by causing such Subsidiary to
execute and deliver a duly completed Assumption Letter to the Administrative
Agent, with the written consent of the Company at the foot thereof. Upon such
execution, delivery and consent such Subsidiary shall for all purposes be a
party hereto as a Borrowing Subsidiary as fully as if it had executed and
delivered this Agreement. So long as the principal of and interest on all
Advances made to any Borrowing Subsidiary under this Agreement shall have been
paid in full and all other obligations of such Borrowing Subsidiary shall have
been fully performed, such Borrowing Subsidiary may, by not less than five
Business Days' prior notice to the Administrative Agent (which shall promptly
notify the Banks thereof), terminate its status as a "Borrowing Subsidiary."
SECTION 2.18. Reserved.
SECTION 2.19. Taxes . (a) Any and all payments by a Borrower
hereunder or under the Notes shall be made in accordance with Section 2.14, 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, in the case of each Bank and the Administrative
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Bank or the Administrative Agent is
organized or any political subdivision thereof and taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If any Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Bank or the Administrative 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
2.19) such Bank or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no deductions been made, (ii)
such Borrower shall
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make such deductions and (iii) such Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, each 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 any payment made hereunder or under the Notes or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as "Other Taxes").
(c) Each Borrower will indemnify each Bank and the Administrative
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 2.19) paid by such Bank or the Administrative Agent
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; provided, that the Borrowers shall have no obligation under
this subsection (c) to indemnify any Bank or the Administrative Agent if a
Borrower shall have performed its obligations under subsection (a) and (b),
thereby providing such Bank or the Administrative Agent (as the case may be) the
wherewithal to make payment, or demonstrate that payment has been made, of any
such Taxes or Other Taxes, and such Bank or the Administrative Agent (as the
case may be) shall not have effected such payment or made such demonstration of
payment on a timely basis to the relevant taxing authorities. This
indemnification shall be made to the Administrative Agent for the account of
such Bank or the Administrative Agent (as the case may be) within 30 days from
the date such Bank or the Administrative Agent makes written demand therefor
(with a copy, in the case of a demand by a Bank, of such demand to the
Administrative Agent).
(d) Notwithstanding the foregoing, unless, prior to the date of the
initial Committed Borrowing (in the case of a Bank listed on Schedule I hereto),
and prior to the effective date of the Assignment and Acceptance by which it
became a Bank (in the case of bank that became a Bank pursuant to such
Assignment and Acceptance), and in each case from time to time thereafter, if
requested by any Borrower,
(i) each Bank organized under the laws of a jurisdiction outside
the United States shall have provided the Company with the forms
prescribed by the Internal Revenue Service of the United States certifying
as to such Bank's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to such
Bank hereunder or other documents satisfactory to the Company which shall
indicate that all payments to be made to such Bank hereunder are not
subject to United States withholding tax or are subject to such taxes at a
rate reduced to zero by an applicable tax treaty, neither the Company nor
any other Borrower shall have any obligation under the last sentence of
Section 2.19(a) to make any payments to or for the benefit of such Bank in
excess of the amounts otherwise payable under this Agreement, and
(ii) each Bank organized under the laws of a jurisdiction
outside the jurisdiction where any Borrowing Subsidiary is incorporated
shall have taken all steps prescribed by the applicable governmental
authority in the jurisdiction where such Borrowing Subsidiary is located
so that such Bank is exempt from applicable withholding taxes with respect
to all payments to be made to such Bank hereunder or so that all payments
to be made to such Bank hereunder are not subject to
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applicable withholding taxes or are subject to such taxes at a rate
reduced to zero by an applicable tax treaty, neither the Company nor any
other Borrower shall have any obligation under the last sentence of
Section 2.19(a) to make any payments to or for the benefit of such Bank in
excess of the amounts otherwise payable under this Agreement; provided,
however, that the applicable Borrower shall make the payments required by
the last sentence of Section 2.19(a) if the obligation to withhold arises
from a change in applicable law after the date hereof (or, with respect to
payments to a new Applicable Lending Office designated pursuant to Section
2.21, after the date such Bank designates such new Applicable Lending
Office).
Unless the applicable Borrower has received forms or other documents, including
Form 1001, Form 4224 or any other applicable tax forms from the United States or
any other applicable jurisdiction, such forms to be satisfactory to the Company,
indicating that payments hereunder are not subject to any withholding tax or are
subject to such tax at a rate reduced to zero by an applicable tax treaty, the
applicable Borrower shall withhold taxes from such payments at the applicable
statutory rate in the case of payments to or for any Bank organized under the
laws of a jurisdiction outside the United States (or in the case of a Borrowing
Subsidiary incorporated outside the United States, any Bank organized under the
laws outside of the jurisdiction where such Borrowing Subsidiary is
incorporated). Should a Bank become subject to Taxes because of its failure or
inability to deliver a form required hereunder, the Company shall take such
steps not requiring the expenditure of money as the Bank shall reasonably
request to assist the Bank to recover such Taxes.
SECTION 2.20. Defaulting Banks. (a) If at any time (i) any Bank
shall be a Defaulting Bank, (ii) such Defaulting Bank shall owe a Defaulted
Advance to the Borrower and (iii) the Borrower shall be required to make any
payment hereunder or under any Note to or for the account of such Defaulting
Bank, then the Borrower may, so long as no Event of Default shall have occurred
and be continuing at such time and to the fullest extent permitted by applicable
law, set off and otherwise apply the amount owed by the Borrower to or for the
account of such Defaulting Bank against the obligation of such Defaulting Bank
to make such Defaulted Advance. If the Borrower shall so set off and otherwise
apply the amount owed by the Borrower to or for the account of such Defaulting
Bank against the obligation of such Defaulting Bank to make any such Defaulted
Advance on any date, the amount so set off and otherwise applied by the Borrower
shall constitute for all purposes of this Agreement and the Notes an Advance by
such Defaulting Bank made on the date of such setoff. Such Advance shall be a
Base Rate Advance and shall be considered, for all purposes of this Agreement,
to comprise part of the Borrowing in connection with which such Defaulted
Advance was originally required to have been made pursuant to Section 2.01 or
Section 2.03(a), as the case may be, even if the other Advances comprising such
Borrowing shall be Eurocurrency Rate Advances on the date such Advance is deemed
to be made pursuant to this Section 2.20(a). The Borrower shall notify the
Administrative Agent at any time the Borrower makes a setoff under this Section
2.20(a) and shall specify in such notice (A) the name of the Defaulting Bank and
the Defaulted Advance required to be made by such Defaulting Bank and (B) the
amount set off and otherwise applied in respect of such Defaulted Advance
pursuant to this Section 2.20(a). Any part of such payment otherwise required
to be made by the Borrower to or for the account of such Defaulting Bank that is
paid by the Borrower, after giving effect to the amount set off and otherwise
applied by the Borrower pursuant to this Section 2.20(a), shall be applied by
the Administrative Agent as specified in Section 2.20(b) or 2.20(c).
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(b) If at any time (i) any Bank shall be a Defaulting Bank, (ii) such
Defaulting Bank shall owe a Defaulted Amount to the Administrative Agent or any
of the other Banks and (iii) the Borrower shall make any payment hereunder or
under any Note to the Administrative Agent for the account of such Defaulting
Bank, then the Administrative Agent may, on its behalf or on behalf of such
other Banks and to the fullest extent permitted by applicable law, apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Bank to the payment of each such Defaulted Amount to the extent required to pay
such Defaulted Amount. If the Administrative Agent shall so apply any such
amount to the payment of any such Defaulted Amount on any date, the amount so
applied by the Administrative Agent shall constitute for all purposes of this
Agreement and the Notes payment to such extent of such Defaulted Amount on such
date. Any such amount so applied by the Administrative Agent shall be retained
by the Administrative Agent or distributed by the Administrative Agent to such
other Banks, ratably in accordance with their respective portions of such
Defaulted Amounts payable at such time to the Administrative Agent and such
other Banks and, if the amount of such payment made by the Borrower shall at any
time be insufficient to pay all Defaulted Amounts owing at such time to the
Administrative Agent and the other Banks, in the following order of priority:
(A) first, to the Administrative Agent for any Defaulted Amounts owing
to the Administrative Agent (solely in its capacity as Administrative
Agent) at such time; and
(B) second, to the other Banks for any Defaulted Amounts owing to the
other Banks (solely in their capacity as Banks) at such time, ratably in
accordance with such respective Defaulted Amounts owing to each other Bank
(solely in its capacity as a Bank) at such time.
Any part of such payment made by the Borrower for the account of such Defaulting
Bank remaining, after giving effect to the amount applied by the Administrative
Agent pursuant to this Section 2.20(b), shall be applied by the Administrative
Agent as specified in Section 2.20(c).
(c) If at any time, (i) any Bank shall be a Defaulting Bank, (ii) such
Defaulting Bank shall not owe a Defaulted Advance or a Defaulted Amount and
(iii) the Borrower, the Administrative Agent or any other Bank shall be required
to pay or to distribute any amount hereunder or under any Note to or for the
account of such Defaulting Bank, then the Borrower or such other Bank shall pay
such amount to the Administrative Agent to be held by the Administrative Agent,
to the fullest extent permitted by applicable law, in escrow or the
Administrative Agent shall, to the fullest extent permitted by applicable law,
hold in escrow such amount otherwise held by it. Any funds held by the
Administrative Agent in escrow under this Section 2.20(c) shall be deposited by
the Administrative Agent in an account with Citibank, in the name and under the
control of the Administrative Agent, but subject to the provisions of this
Section 2.20(c). The terms applicable to such account, including the rate of
interest payable with respect to the credit balance of such account from time to
time, shall be Citibank's standard terms applicable to escrow accounts
maintained with it. Any interest credited to such account from time to time
shall be held by the Administrative Agent in escrow under, and applied by the
Administrative Agent from time to time in accordance with the provisions of,
this Section 2.20(c). The Administrative Agent shall, to the fullest extent
permitted by applicable law, apply all funds so held in escrow from time to time
to the extent necessary to make any Advances required to be made by such
Defaulting Bank and to pay any amount payable by such Defaulting Bank hereunder
to the Administrative Agent or any
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other Bank, as and when such Advances or such amounts are required to be made or
paid and, if the amount so held in escrow shall any time be insufficient to make
and pay all such Advances and all such amounts required to be made or paid at
such time, in the following order of priority:
(A) first, to the Administrative Agent for any amounts due and
payable by such Defaulting Bank to the Administrative Agent hereunder
(solely in its capacity as Administrative Agent) at such time;
(B) second, to the other Banks for any amounts due and payable
by such Defaulting Bank to the other Banks hereunder (solely in their
capacity as Banks) at such time, ratably in accordance with such
respective amounts due and payable to each other Bank (solely in its
capacity as Bank) at such time; and
(C) third, to the Borrower for any Advances required to be made
by such Defaulting Bank pursuant to the Commitment of such Defaulting Bank
at such time.
If such Defaulting Bank shall, at any time, cease to be a Defaulting
Bank, any funds held by the Administrative Agent in escrow at such time with
respect to such Defaulting Bank shall be distributed by the Administrative Agent
to such Defaulting Bank and applied by such Defaulting Bank to the amounts owing
to such Defaulting Bank at such time under this Agreement in accordance with the
terms of this Agreement.
(d) The rights and remedies against a Defaulting Bank under this
Section 2.20 are in addition to other rights and remedies that the Borrower may
have against such Defaulting Bank with respect to any Defaulted Advance and that
the Administrative Agent or any other Bank may have against such Defaulting Bank
with respect to any Defaulted Amount.
SECTION 2.21. Mitigation. Any Bank claiming any additional amounts
payable pursuant to Sections 2.12 or 2.19 or subject to Section 2.13 shall use
its reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to change the jurisdiction of its Applicable Lending
Office if the making of such a change would avoid the need for, or reduce the
amount of, any such additional amounts which may thereafter accrue under
Sections 2.12 or 2.19 or would avoid the unavailability of Eurocurrency Rate
Advances under Section 2.13 and would not, in any such case, in the judgment of
such Bank, be otherwise disadvantageous to such Bank.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01
and 2.03. Sections 2.01 and 2.03 shall become effective on the first day (the
"Effective Date") on which all of the following conditions precedent have been
satisfied:
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(a) The Administrative Agent shall have received the following,
in form and substance reasonably satisfactory to the Administrative Agent
and (except for the Committed Notes) in sufficient copies for the Banks:
(i) This Agreement, executed by the Company, the
Administrative Agent and each of the Banks;
(ii) A Committed Note executed by the Company, payable to
each Bank;
(iii) A certificate of the Secretary of the Company
certifying (A) copies attached thereto of the resolutions of the
Board of Directors of the Company authorizing and empowering certain
officers of the Company to effect such borrowings as such officers
may deem necessary or desirable for proper corporate purposes,
subject to the limitations set forth in such resolutions, (B) copies
attached thereto of the Certificate of Incorporation and by-laws of
the Company, and (C) the names and true signatures of the officers of
the Company authorized to sign this Agreement and the Notes and other
documents to be executed and delivered by the Company hereunder;
(iv) A certificate of a duly authorized officer of the
Company, dated the Effective Date, certifying that as of such date,
(A) the representations and warranties contained in Section 4.01 are
correct on and as of the Effective Date and (B) no event shall have
occurred and be continuing that constitutes an Event of Default or
which would constitute an Event of Default but for the requirement
that notice be given or time elapse or both;
(v) A favorable opinion of Sidley & Austin, counsel for
the Company, substantially in the form of Exhibit G hereto; and
(vi) A favorable opinion of Shearman & Sterling, counsel
for the Administrative Agent; and
(vii) Evidence that all amounts owing under the 1992 Credit
Agreements are being paid in full, and that the 1992 Credit
Agreements are being terminated, no later than the Effective Date;
(b) The Company shall have paid all accrued fees and expenses
of the Administrative Agent and the Banks which are due and payable on the
Effective Date (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent);
(c) There shall have occurred no material adverse change in the
business, financial condition, operations, properties or performance of
the Company and its Subsidiaries, taken as a whole, since December 31,
1993;
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(d) There shall exist no action, suit or proceeding
(investigative, judicial or otherwise) against the Company or any of its
Subsidiaries pending before any court or arbitrator or any governmental
body, agency or official, or to the knowledge of any Responsible Officer
of the Company, threatened, that could reasonably be expected (i) to have
a Material Adverse Effect or (ii) to materially and adversely affect the
legality, validity or enforceability of this Agreement or any Note;
(e) The representations and warranties contained in Section 4.01
shall be correct on and as of the Effective Date, as though made on and as
of such date; and
(f) No event shall have occurred and be continuing which
constitutes an Event of Default or which would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both.
For purposes of determining compliance with the conditions specified
above, each Bank shall be deemed to have consented to, approved and accepted,
and to be satisfied with, each document or other matter required thereunder to
be consented to or approved by or acceptable or satisfactory to the Banks unless
the officer of the Administrative Agent responsible for the transactions
contemplated by this Agreement shall have received notice from such Bank prior
to the proposed Effective Date, as notified by the Administrative Agent to the
Banks, specifying its objection thereto. The Administrative Agent shall
promptly notify the Banks of the occurrence of the Effective Date.
SECTION 3.02. Conditions Precedent to Initial Advance to Each
Borrowing Subsidiary. The obligation of each Bank to make its initial Advance
hereunder to any Borrowing Subsidiary is subject to the conditions precedent
that the Effective Date shall have occurred and the Administrative Agent shall
have received on or before the day of the initial Borrowing by such Borrowing
Subsidiary the following, each in form and substance reasonably satisfactory to
the Administrative Agent and in sufficient copies for the Banks:
(a) The Assumption Letter executed and delivered by such
Borrowing Subsidiary and containing the written consent of the Company at
the foot thereof, as contemplated by Section 2.17 hereof;
(b) A Committed Note executed by such Borrowing Subsidiary,
payable to each Bank;
(c) Certified copies of the resolutions of the Board of
Directors of such Borrowing Subsidiary approving the Assumption Letter and
all other documents evidencing corporate action and governmental
approvals, if any, required with respect to the Assumption Letter;
(d) A certificate of the Secretary or an Assistant Secretary of
such Borrowing Subsidiary certifying the names and true signatures of the
officers of such Borrowing Subsidiary authorized to sign the Assumption
Letter and the other
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documents to be executed and delivered by such
Borrowing Subsidiary hereunder; and
(d) An opinion of counsel to such Borrowing Subsidiary,
substantially in the form of Exhibit H hereto and as to such other matters
as the Administrative Agent shall reasonably request.
SECTION 3.03. Conditions Precedent to Each Committed Borrowing. The
obligation of each Bank to make a Committed Advance on the occasion of each
Committed Borrowing (including the initial Committed Borrowing) shall be subject
to the further conditions precedent that the Effective Date shall have occurred
and on the date of such Committed Borrowing the following statements shall be
true (and each of the giving of the applicable Notice of Committed Borrowing and
the acceptance by the applicable Borrower of the proceeds of such Committed
Borrowing shall constitute a representation and warranty by such Borrower that
on the date of such Committed Borrowing such statements are true):
(i) The representations and warranties contained in subsections
(a), (b), (c), (d), (f)(ii) and (h) through (p) of Section 4.01 are
correct on and as of the date of such Committed Borrowing, before and
after giving effect to such Committed Borrowing and to the application of
the proceeds therefrom, as though made on and as of such date;
(ii) No event has occurred and is continuing, or would result
from such Committed Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or which would constitute
an Event of Default but for the requirement that notice be given or time
elapse or both; and
(iii) The aggregate principal amount (or, in the case of
securities issued at a discount from the principal amount at maturity, the
accreted amount) of indebtedness for borrowed money (after giving effect
to such Committed Borrowing and the application of the proceeds thereof)
of the Company and its Subsidiaries does not exceed the maximum amount
then authorized by the Company's Board of Directors.
SECTION 3.04. Conditions Precedent to Each Uncommitted Borrowing.
Each bidding Bank's obligation to make an Uncommitted Advance as part of an
Uncommitted Borrowing (including the initial Uncommitted Borrowing) is subject
to the conditions precedent that on the date of such Uncommitted Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of Uncommitted Borrowing and the acceptance by such Borrower of the
proceeds of such Uncommitted Borrowing shall constitute a representation and
warranty by such Borrower that on the date of such Uncommitted Borrowing such
statements are true):
(a) The representations and warranties contained in subsections
(a), (b), (c), (d), f(ii) and (h) through (p) of Section 4.01 are correct
on and as of the date of such Uncommitted Borrowing, before and after
giving effect to such Uncommitted Borrowing and to the application of the
proceeds therefrom, as though made on and as of such date,
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(b) No event has occurred and is continuing, or would result
from such Uncommitted Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or which would constitute
an Event of Default but for the requirement that notice be given or time
elapse or both, and
(c) The aggregate principal amount (or, in the case of
securities issued at a discount from the principal amount at maturity, the
accreted amount) of indebtedness for borrowed money (after giving effect
to the application of the proceeds of such Uncommitted Borrowing) of the
Company and its Subsidiaries does not exceed the maximum amount thereof
then authorized by the Company's Board of Directors.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 4.01. Representations and Warranties of the Company. The
Company represents and warrants to the Banks as follows:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction indicated
at the beginning of this Agreement.
(b) The execution, delivery and performance by the Company of
this Agreement and the Notes are within the Company's corporate powers,
have been duly authorized by all necessary corporate action, and do not
contravene (i) the Company's certificate of incorporation, as amended, or
by-laws or (ii) law or any contractual restriction binding on or affecting
the Company.
(c) 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 Company of
this Agreement.
(d) This Agreement has been, and each of the Notes when
delivered hereunder will have been, duly executed and delivered by the
applicable Borrower. This Agreement is, and each of the Notes when
delivered hereunder will be, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with their
respective terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and to general principles of equity.
(e) The consolidated balance sheets of the Company and its
Consolidated Subsidiaries as of December 31, 1993, and the related
consolidated statements of income, cash flow and shareholders' equity of
the Company and its Consolidated Subsidiaries for the fiscal year then
ended, copies of which have been furnished to each Bank, fairly present
the financial condition of the Company and its Consolidated Subsidiaries
as at such date and the consolidated results of the operations of the
Company and its Consolidated Subsidiaries for the period ended
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on such date, all in accordance with generally accepted accounting
principles, and since December 31, 1993, there has been no material
adverse change in the business, financial condition, operations,
properties or performance of the Company and its Subsidiaries, taken as a
whole.
(f) There are no actions, suits or proceedings (investigative,
judicial or otherwise) against the Company or any of its Subsidiaries
pending before any court or arbitrator or any governmental body, agency or
official, or, to the knowledge of any Responsible Officer of the Company,
threatened, that could reasonably be expected (i) to have a Material
Adverse Effect or (ii) to materially and adversely affect the legality,
validity or enforceability of this Agreement or any Note.
(g) Reserved.
(h) Following application of the proceeds of each Advance to
the Company, not more than 25% of the value of the assets (either of the
Company only or of the Company and its Consolidated Subsidiaries) will be
Margin Stock subject to any restriction contained in any agreement or
instrument between the Company and any Bank or any affiliate of any Bank
relating to Debt within the scope of Section 6.01(e).
(i) The Company is not principally engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.
(j) The Advances to each Borrower, and all related obligations
of such Borrower under this Agreement, rank pari passu with all other
unsecured indebtedness for money borrowed or raised by such Borrower that
is not, by its terms, expressly subordinated to other such indebtedness of
such Borrower.
(k) No Borrower is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(l) (i) All necessary Environmental Permits have been obtained
and are in effect for the operations and properties of the Company and its
Subsidiaries, and the Company and its Subsidiaries are in compliance with
all such Environmental Permits, except to the extent that the failure to
so obtain or comply could not reasonably be expected to have a Material
Adverse Effect; and (ii) no circumstances exist that could reasonably be
expected to (A) form the basis of an Environmental Action against the
Company or any of its Subsidiaries or any of their properties that could
reasonably be expected to have a Material Adverse Effect or (B) cause any
such property to be subject to any restrictions on ownership, occupancy,
use or transferability under any Environmental Law that could reasonably
be expected to have a Material Adverse Effect.
(m) None of the properties owned or leased (i) by the Company
or any of its Consolidated Subsidiaries is listed or proposed for listing
on the National Priorities List under CERCLA or (ii) by the Company or any
of its Subsidiaries is
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the subject of any investigation or cleanup, whether voluntary or required
pursuant to any Environmental Law or ordered by any governmental
authority, that could reasonably be expected to have a Material Adverse
Effect.
(n) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan.
(o) Neither the Company nor any of its ERISA Affiliates (i) has
incurred or is reasonably expected to incur any Withdrawal Liability with
respect to any Multiemployer Plan or (ii) 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 no
such Multiemployer Plan is reasonably expected to be in reorganization or
to be terminated, within the meaning of Title IV of ERISA.
(p) As of the last annual actuarial valuation date, the
aggregate current liability (as defined in Section 412 of the Internal
Revenue Code) under the Plans does not exceed the aggregate fair market
value of the assets of such Plans by more than $50,000,000.
ARTICLE V
COVENANTS OF THE COMPANY
------------------------
So long as any Advance shall remain unpaid or any Bank shall have any
Commitment hereunder, unless the Majority Banks shall otherwise consent in
writing:
SECTION 5.01. Compliance with Laws, Etc. The Company will comply,
and cause each of its Subsidiaries to comply, in all material respects with all
applicable laws, rules, regulations and orders, except for laws, rules,
regulations and orders the violation of which, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
SECTION 5.02. Consolidated Debt to Capitalization Ratio. The
Company will at all times maintain a ratio of Consolidated Debt to
Capitalization, expressed as a percentage, of not more than 55%.
SECTION 5.03. Reporting Requirements. The Company will furnish to
the Banks:
(a) within 60 days after the end of each of the first three
quarters of each fiscal year of the Company, but in no case earlier than
when such report shall be required to be filed with the Commission, a copy
of the Company's Form 10-Q filed with the Commission for such quarter, or
any similar quarterly report required to be filed by the Company with the
Commission; provided that if the Company shall no longer be required to so
file with the Commission, the Company will nonetheless thereafter continue
to furnish to the Banks such financial statements and related materials as
would have comprised such filings, at such
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times as the Company would have otherwise delivered the same to the
Commission;
(b) within 120 days after the end of each fiscal year of the
Company, but in no case earlier than when such report shall be required to
be filed with the Commission, a copy of the Company's Form 10-K filed with
the Commission for such year, or any similar annual report required to be
filed by the Company with the Commission; provided that if the Company
shall no longer be required to so file with the Commission, the Company
will nonetheless thereafter continue to furnish to the Banks such
financial statements and related materials as would have comprised such
filings, at such times as the Company would have otherwise delivered the
same to the Commission;
(c) simultaneously with the delivery of the reports referred to
in clauses (a) and (b) above, a certificate of a designated financial
officer of the Company (A) setting forth in reasonable detail the
calculations required to establish whether the Company was in compliance
with the requirements of Section 5.02 on the date of such financial
statements and (B) stating whether there exists on the date of such
certificate any Event of Default or condition or event which with notice
or lapse of time or both would become an Event of Default and, if any
Event of Default or any such condition or event then exists, setting forth
the details thereof and the action which the Company is taking with
respect thereto;
(d) promptly after the sending or filing thereof, copies of all
reports which the Company sends to any of its security holders, and copies
of all reports and registration statements (other than Form S-8 or any
similar form) which the Company or any Borrowing Subsidiary files with the
Commission or any national securities exchange;
(e) promptly following any Responsible Officer's knowledge
thereof, notice in writing of (i) the occurrence of any Event of Default
or condition or event which with notice or lapse of time or both would
become an Event of Default and, if any Event of Default or any such
condition or event then exists, setting forth the details thereof and the
action which the Company is taking with respect thereto, or (ii) the
institution of, or any adverse final judgment in, any litigation,
arbitration proceeding or governmental proceeding which, in the Company's
judgment, if adversely determined, could reasonably be expected to have a
Material Adverse Effect; and
(f) such other pertinent information as any Bank may reasonably
request.
SECTION 5.04. Use of Proceeds. The Borrowers will use the proceeds
of the Advances made under this Agreement only for general corporate purposes
otherwise permitted under this Agreement, including, without limitation, mergers
and acquisitions, the purchase of stock of other Persons, the repurchase of
shares of capital stock of the Company, the repayment of indebtedness, the
funding of employee benefit plans of the Company or its Subsidiaries and for
other lawful purposes; provided that, no Borrower shall use the proceeds of any
Advances made hereunder to acquire 20% or more of the outstanding shares of the
capital stock of any Person unless (a) at the time of such acquisition, such
Person shall have consented to such acquisition
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either by having entered into an agreement with the Company or a subsidiary of
the Company contemplating a merger of such Person with or into the Company or
such subsidiary or by its Board of Directors having authorized, approved or
consented to such acquisition or (b) such Borrower shall have obtained the prior
written consent with respect thereto of (i) in the case of any Committed
Borrowing the proceeds of which shall be used to facilitate such acquisition,
the Banks and (ii) in the case of any Uncommitted Borrowing the proceeds of
which shall be used to facilitate such acquisition, the Banks extending
Uncommitted Advances in connection therewith; provided further that if the
applicable Borrower shall have specified the intended use of proceeds of an
Uncommitted Borrowing in the Notice of Uncommitted Borrowing with respect
thereto, each Bank electing to offer to make one or more Uncommitted Advances in
response thereto shall be deemed to have provided the written consent required
under this Section 5.04 for such use of the proceeds of such Uncommitted
Advances.
SECTION 5.05. Limitation on Liens, Etc. The Company will not create
or suffer to exist, or permit any of its Consolidated Subsidiaries to create or
suffer to exist, any Lien, upon or with respect to any of its properties (other
than Margin Stock), whether now owned or hereafter acquired, or assign, or
permit any of its Consolidated Subsidiaries to assign, any right to receive
income, in each case to secure any Debt of any Person or entity, other than:
(a) Liens arising in connection with the obligations of the
Company or any Subsidiary under industrial revenue bonds;
(b) Liens on assets of a Subsidiary of a Borrower to secure
Debt of such Subsidiary to any Borrower;
(c) Purchase money Liens claimed by sellers of goods on
ordinary trade terms provided that no financing statement has been filed
to perfect such Liens, and provided that no such Lien shall extend to
assets of any character other than the goods being acquired;
(d) Liens securing Debt existing as of December 31, 1993;
(e) Liens securing Debt on property of a corporation or firm
(or division thereof) that becomes a Subsidiary of the Company or of any
of its Subsidiaries after the date hereof in accordance with Section 5.06
and existing at the time such corporation is merged or consolidated with
the Company or any Subsidiary, at the time such corporation or firm (or
division thereof) becomes a Subsidiary of the Company or any of its
Subsidiaries, or at the time of a sale, lease or other disposition of the
properties of a corporation or a firm (or division thereof) as an entirety
or substantially as an entirety to the Company or a Subsidiary, provided
that such Liens were not created in contemplation of such merger,
consolidation, acquisition, sale, lease or disposition and do not extend
to assets other than those of the Person merged into or consolidated with
the Company or such Subsidiary or acquired by the Company or such
Subsidiary;
(f) Liens on life insurance policies owned by the Company or
any Subsidiary, securing Insurance Policy Debt;
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(g) Purchase money Liens constituting the interest of a lessor
under a lease that would be capitalized on the lessee's balance sheet in
accordance with GAAP, or under a sale-leaseback transaction, in each case
relating to equipment, provided that after giving effect thereto, no Event
of Default under Section 5.02 shall exist;
(h) Any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any Liens
referred to in the foregoing subsections (a) through (g); provided that,
in the case of Liens referred to in the foregoing subsections (c), (d),
(e), (f) and (g), the principal amount of Debt secured thereby shall not
exceed the principal amount of Debt so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement Lien shall be limited to all or a part of the property which
is subject to the Lien so extended, renewed or replaced (plus improvements
on such property); and
(i) Additional Liens securing Debt other than as may be
included in the foregoing subsections (a) through (h), provided, that the
aggregate outstanding principal amount of such Debt shall not at any time
exceed 10% of Consolidated Tangible Net Worth at such time.
SECTION 5.06. Merger; Sale of Assets. The Company will not, and
will not permit its Material Subsidiaries to, merge or consolidate with or into
any other Person, or sell, transfer, lease or otherwise dispose of all or
substantially all of its assets (whether now owned or hereafter required),
except that:
(i) the Company or a Material Subsidiary may acquire another
corporation by merger, provided that, if the Company is a party to such
merger, the Company is the surviving corporation, and provided further
that after giving effect to such merger, no Event of Default (or event
which, with the giving of notice or the passing of time or both would
constitute an Event of Default) shall exist; and
(ii) any Material Subsidiary may merge or consolidate with or
into, or sell or otherwise dispose of any or all of its assets to, the
Company or another Subsidiary, and any Material Subsidiary that is not a
Borrowing Subsidiary may sell all or substantially all of its assets;
provided that (a) after giving effect to such merger, consolidation, sale
or other disposition, no Event of Default (or any event which, with the
giving of notice or the passing of time or both would constitute an Event
of Default) shall exist, and (b) in the case of an asset sale by such a
Material Subsidiary, the assets to be sold do not constitute all or
substantially all of the assets of the Company and its Subsidiaries, taken
as a whole.
SECTION 5.07. Books and Records; Inspection. The Company will, and
will cause each of its Subsidiaries to, (a) maintain complete and accurate books
and records, in which full and correct entries shall be made of all financial
transactions of the Company and each such Subsidiary in accordance with
generally accepted accounting principles, and (b) permit any Bank, the
Administrative Agent and their respective employees and agents, at such
reasonable times during normal business hours and as often as may be reasonably
requested, to inspect any of the
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properties of the Company or any of its Subsidiaries and to inspect and make
copies of the material books and records of the Company and its Subsidiaries and
to discuss the affairs and finances of the Company and its Subsidiaries with
their officers; provided that such Bank or the Administrative Agent shall have
delivered a written request for such inspection to the Company prior to the date
of any such inspection.
SECTION 5.08. Corporate Existence. Subject to the Company's rights
under Section 5.06, the Company will, and will cause each of its Material
Subsidiaries to, at all times maintain its corporate existence and preserve and
keep, or cause to be preserved and kept, in full force and effect its rights and
franchises material to its businesses.
SECTION 5.09. Conduct of Business. The Company shall not, and shall
not permit any Material Subsidiary to, engage in any line of business other than
(A) the businesses engaged in by the Company and its Subsidiaries on the date
hereof and (B) any business or activities substantially similar or related
thereto (which shall include, without limitation, other businesses related to
the handling and/or distribution of data used or processed in the businesses
engaged in by the Company and its Subsidiaries on the date hereof).
SECTION 5.10. Payment of Taxes. The Company will pay and discharge,
and cause each of its Material Subsidiaries to pay and discharge, before the
same shall become delinquent, all material taxes, assessments and governmental
charges or levies imposed upon it or its property; provided, however, that
neither the Company nor any of its Material Subsidiaries shall be required to
pay or discharge any such tax, assessment, charge or levy that is being
contested in good faith and by proper proceedings and as to which appropriate
reserves are being maintained in accordance with GAAP, as long as no action has
been commenced to enforce any Lien securing any such tax, assessment, charge or
levy.
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) A Borrower shall fail to pay when due any installment of
principal of any Advance; or
(b) A Borrower shall fail to pay any fee under this Agreement,
or any installment of interest on any Advance, within ten (10) days after
the due date thereof; or
(c) Any written representation or warranty made by a Borrower
herein or in connection with this Agreement shall prove to have been
incorrect in any material respect when made; or
(d) The Company shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 5.02, 5.03(a), (b) or (e),
5.04, 5.05, 5.06, 5.07,
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5.08, 5.09 or 5.10, or (ii) any other term, covenant or agreement
contained in this Agreement, other than in (a) or (b) above, on its part
to be performed or observed if such failure shall remain unremedied for 30
days after written notice thereof shall have been given to the Company by
the Majority Banks through the Administrative Agent; or
(e) The Company or any Material Subsidiary shall fail to pay
any principal of or premium or interest on any Debt, or any obligations in
respect of acceptances, letters of credit or other similar instruments, of
the Company or such Material Subsidiary which is outstanding in a
principal amount of at least $50,000,000 in the aggregate (but excluding
Debt arising under this Agreement), 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 other obligation; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt or
other obligation and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such
event or condition is to accelerate, or permit the acceleration of, the
maturity of such Debt or other obligation; or any Debt or other such
obligation in which the outstanding principal exceeds $50,000,000 shall be
otherwise declared to be due and payable (by acceleration or otherwise) or
required to be prepaid, redeemed, defeased or otherwise repurchased by the
Company or any Material Subsidiary (other than by a regularly-scheduled
required prepayment), or any offer to prepay, redeem, defease or purchase
such Debt shall be required to be made, prior to the stated maturity
thereof; or
(f) The Company or any Material Subsidiary 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 Company or any Material Subsidiary 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 of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property, and in the event of any such
proceeding instituted against the Company or any Material Subsidiary (but
not instituted by it), such proceeding shall remain undismissed or
unstayed for a period of 60 days or shall result in the entry of an order
for relief, the appointment of a trustee or receiver, or other action in
such proceeding or result adverse to the Company or such Material
Subsidiary, as applicable, or the Company or any Material Subsidiary shall
take any corporate action to authorize any of the actions set forth above
in this subsection (f); or
(g) Any Person, or a group of Persons acting in concert, shall
at any time acquire, directly or indirectly, in excess of 51% of the
securities having ordinary voting power to elect members of the board of
directors of the Company; or
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(h) The Company shall incur liability in excess of $50,000,000
in the aggregate as a result of one or more of the following: (i) the
occurrence of any ERISA Event; (ii) the partial or complete withdrawal of
the Company or any of its ERISA Affiliates from a Multiemployer Plan; or
(iii) the reorganization or termination of a Multiemployer Plan; or
(i) One or more final judgments or orders for the payment of
money, in an aggregate amount exceeding $50,000,000 at any one time
outstanding (exclusive of judgment amounts fully covered by insurance, to
the extent the insurer has admitted liability in respect thereof), shall
be rendered against the Company or any Material Subsidiary and either (i)
enforcement proceedings shall have been commenced by any creditor upon
such judgment or order, or (ii) such judgments or orders shall not be
discharged (or provision shall not have been made for such discharge), a
stay of execution thereof shall not be obtained, or such judgments or
orders shall not be paid or bonded, within 60 days from the date of entry
thereof, and the Company or such Material Subsidiary, as the case may be,
shall not, within such 60-day period, appeal therefrom and cause the
execution thereof to be stayed pending such appeal;
then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Majority Banks, by notice to the Company, (i)
declare the obligation of each Bank to make Advances to any Borrower to be
terminated, whereupon the same shall forthwith terminate, and (ii) declare the
Notes, all interest thereon and all other amounts payable under this Agreement
to be forthwith due and payable, whereupon the Notes, 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 Company; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Company under the
Federal Bankruptcy Code, (A) the obligation of each Bank to make Advances to any
Borrower shall automatically be terminated and (B) the Notes, 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 Company.
ARTICLE VII
GUARANTEE
---------
SECTION 7.01. Unconditional Guarantee. For valuable consideration,
receipt whereof is hereby acknowledged, and to induce the Banks to make Advances
to each Borrowing Subsidiary, the Company hereby unconditionally guarantees to
the Banks and the Administrative Agent that the principal of and interest on
each Advance and all other amounts payable by each Borrowing Subsidiary
hereunder shall be promptly paid in full when due (whether at stated maturity,
by acceleration or otherwise) in accordance with the terms hereof and thereof,
and, in the case of any extension of time of payment, in whole or in part, that
all such amounts shall be promptly paid when due (whether at stated maturity, by
acceleration or otherwise) in accordance with the terms of such extension. In
addition, the Company hereby unconditionally agrees that upon default in the
payment when due (whether at stated maturity, by acceleration or otherwise) of
any of such principal, interest or other amounts, the Company shall forthwith
pay the same.
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Without limiting the generality of the foregoing, the Company's liability shall
extend to all amounts that constitute part of the obligations of any Borrowing
Subsidiary guaranteed by the Company under this Article VII and would be owed by
any such Borrowing Subsidiary to any Bank or the Administrative Agent under this
Agreement or the Notes but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such Borrowing Subsidiary.
SECTION 7.02. Validity. The obligations of the Company under this
Article VII are independent of the obligations of the Borrowing Subsidiaries
guaranteed hereunder, and a separate action or actions may be brought and
prosecuted against the Company to enforce its obligations under this Article
VII, irrespective of whether any action is brought against any Borrowing
Subsidiary or whether any Borrowing Subsidiary is joined in any such action or
actions. The obligations of the Company under this Article VII shall be
unconditional irrespective of (i) the genuineness, validity, regularity or
enforceability of the obligations of the Borrowing Subsidiaries under this
Agreement, any Note or any Assumption Letter, (ii) any law, regulation or order
of any jurisdiction affecting any term of any obligation of any Borrowing
Subsidiary under this Agreement or the rights of any Bank or the Administrative
Agent with respect thereto, (iii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the obligations of any
Borrowing Subsidiary guaranteed by the Company under this Article VII, or any
other amendment or waiver of or any consent to departure from this Agreement or
the Notes, (iv) any change, restructuring or termination of the corporate
structure or existence of any Borrowing Subsidiary or any of its Subsidiaries,
or (v) to the fullest extent permitted by applicable law, any other circumstance
which might otherwise constitute a legal or equitable discharge of a surety or
guarantor.
SECTION 7.03. Waivers. The Company hereby expressly waives
promptness, diligence, presentment, protest and any other notice with respect to
the obligations of the Company under this Article VII and any requirement that
any right or power be exhausted or any action be taken against any Borrowing
Subsidiary and all notices and demands whatsoever.
SECTION 7.04. Subrogation. The Company shall be subrogated to the
rights of the Banks or the Administrative Agent against any Borrowing Subsidiary
hereunder only after the Banks and the Administrative Agent shall have been paid
in full all such amounts, with interest thereon, for which such Borrowing
Subsidiary shall have become indebted hereunder.
SECTION 7.05. Acceleration. The Company agrees that, as between the
Company on the one hand, and the Banks and the Administrative Agent, on the
other hand, the obligations of each Borrowing Subsidiary guaranteed under this
Article VII may be declared to be forthwith due and payable, or may be deemed
automatically to have been accelerated, as provided in Section 6.01 hereof for
purposes of this Article VII, notwithstanding any stay, injunction or other
prohibition (whether in a bankruptcy proceeding affecting such Borrowing
Subsidiary or otherwise) preventing such declaration as against such Borrowing
Subsidiary and that, in the event of such declaration or automatic acceleration,
such obligations (whether or not due and payable by such Borrowing Subsidiary)
shall forthwith become due and payable by the Company for purposes of this
Article VII.
SECTION 7.06. Reinstatement. The Company's obligations under this
Article VII shall be reinstated if at any time any payment received by any Bank
or the Administrative Agent
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from any Borrowing Subsidiary hereunder is required to be repaid or returned by
such Bank or the Administrative Agent, all as though such payment had not been
made.
SECTION 7.07. Continuing Guaranty; Assignments. This guarantee of
the Company shall (a) remain in full force and effect until the later of (i) the
cash payment in full of the obligation of any Borrowing Subsidiary guaranteed by
the Company under this Article VII and (ii) the Termination Date, (b) be binding
upon the Company, its successors and assigns and (c) inure to the benefit of,
and be enforceable by, the Banks and the Administrative Agent and their
successors, transferees and assigns (provided that the applicable transfers and
assignments are made in accordance with the terms of this Agreement).
ARTICLE VIII
The Administrative Agent
------------------------
SECTION 8.01. Reserved.
SECTION 8.02. Authorization and Action. Each Bank appoints and
authorizes Citibank to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement or collection of the Notes), the
Administrative Agent shall not 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 Majority Banks, and such instructions shall be binding upon all Banks and
all holders of the Notes; provided, however, that the Administrative Agent shall
not be required to take any action which exposes the Administrative Agent to
personal liability or which is contrary to this Agreement or applicable law.
The Administrative Agent agrees to give to each Bank prompt notice of each
notice given to it by any Borrower pursuant to the terms of this Agreement. The
Administrative Agent may execute any of its duties as Administrative Agent
hereunder and under any other instrument, document or agreement executed in
connection herewith by or through employees, agents, and attorney-in-fact and
shall not be answerable to the Banks, except as to money or securities received
by it or its authorized agents, for the default or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care. Without limiting the
foregoing, the Administrative Agent may appoint Citibank International plc as
its agent for all matters relating to Advances made in Alternative Currencies.
Each such agent (including, without limitation, Citibank International plc),
shall be entitled to all of the rights and benefits granted to the
Administrative Agent hereunder, and each Bank shall treat any notice given by
any such agent as if it had been given directly by the Administrative Agent.
SECTION 8.03. Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its 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 this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (i) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Bank that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided
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in Section 9.07; (ii) may consult with legal counsel (including counsel for any
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)
makes no warranty or representation to any Bank and shall not be responsible to
any Bank for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement; (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 this Agreement on the part of any Borrower or
to inspect the property (including the books and records) of any Borrower; (v)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
SECTION 8.04. The Administrative Agent and Affiliates. With respect
to any financial institution which shall become the Administrative Agent
hereunder, and with respect to such financial institution's Commitment and the
Advances made by it, such financial institution shall have the same rights and
powers under this Agreement as any other Bank and may exercise the same as
though it were not the Administrative Agent; and the term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include such financial institution
in its individual capacity, if applicable. Each such financial institution and
its affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, any Borrower,
any of their respective Subsidiaries and any Person who may do business with or
own securities of any Borrower or any such Subsidiary, all as if such financial
institution were not the Administrative Agent and without any duty to account
therefor to the Banks.
SECTION 8.05. Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Bank 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 Bank also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
SECTION 8.06. Indemnification. The Banks (other than the Designated
Bidders) agree to indemnify the Administrative Agent (to the extent not
reimbursed by the Borrowers), ratably according to the respective principal
amounts of the Notes held by each of them (or, if no Notes are outstanding at
the time or if any Notes are held by Persons that are not Banks, 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 the
Administrative Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by the Administrative Agent under this Agreement;
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. Without limiting the foregoing, each Bank
(other than the Designated Bidders)
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agrees to reimburse the Administrative Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred by
the Administrative Agent in connection with the administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, to the extent that the Administrative Agent is not reimbursed
for such expenses by the Borrowers.
SECTION 8.07. Successor Administrative Agent. The Administrative
Agent may resign at any time by giving written notice thereof to the Banks and
the Company and may be removed at any time with or without cause by the Majority
Banks. Upon any such resignation or removal, the Majority Banks shall have the
right to appoint another Bank as successor Administrative Agent or, if
acceptable to the Company, any other commercial bank organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000. If no successor Administrative
Agent shall have been so appointed by the Majority Banks, and shall have
accepted such appointment, within 30 days after the retiring Administrative
Agent gives notice of resignation or the Majority Banks remove the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $500,000,000 and
otherwise acceptable to the Company. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Article VIII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent.
ARTICLE IX
MISCELLANEOUS
-------------
SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor any consent to any departure by
any Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Majority Banks, 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 Banks (other than the Designated
Bidders), directly do any of the following: (i) waive any of the conditions
specified in Section 3.01 or 5.04, (ii) increase the Commitments of the Banks or
subject the Banks to any additional obligations, (iii) reduce the principal of,
or the stated rate at which interest accrues on, the Notes or reduce the stated
rate at which the Facility Fee and the Utilization Fee are calculated, (iv)
postpone any date fixed for any payment of principal of, or interest on, the
Committed Advances or any fees or other amounts payable hereunder, (v) change
the percentage of the Commitments, or of the aggregate unpaid principal amount
of the Notes, or the number of Banks which shall be required for the Banks or
any of them to take any action hereunder or (vi) amend this Section 9.01;
provided, further, that no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in
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addition to the Banks required above to take such action, affect the rights
or duties of the Administrative Agent under this Agreement or any Note.
SECTION 9.02. Notices, Etc. (a) All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy, telex or cable communication) and mailed, telegraphed,
telecopied, telexed, cabled or delivered,
(i) if to the Company, at its address at 77 West Wacker Drive,
Chicago, Illinois 60601 Attention: Treasurer, telecopy number (312) 326-
7156;
(ii) if to any Borrowing Subsidiary, at the address specified in
the Assumption Letter pursuant to which it became a Borrowing Subsidiary,
with a copy to the Company at the address specified herein; provided that
any such notice may be given solely to the Company, at the option of the
party giving such notice;
(iii) if to any bank listed on the signature pages hereof, at
its Domestic Lending Office specified opposite its name on Schedule I
hereto;
(iv) if to any other Bank, at its Domestic Lending Office
specified in the Assignment and Acceptance or Designation Agreement
pursuant to which it became a Bank;
(v) if to the Administrative Agent, at the Domestic Lending
Office specified opposite its name on Schedule I hereto;
or as to the Borrowers and the Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties, and
as to each such other party, at such other address as shall be designated by
such party in a written notice to the Company and the Administrative Agent. All
such notices and communications shall, when sent by overnight courier, mailed,
telecopied, telexed or cabled, be effective when delivered to such courier,
deposited in the mails, telecopied and confirmed by return telecopy, telex
answerback or delivered to the cable company, respectively, except that notices
and communications to the Administrative Agent pursuant to Articles II, III and
VIII shall not be effective until received by the Administrative Agent.
(b) If any notice required under this Agreement is permitted to be
made, and is made, by telephone, actions taken or omitted to be taken in
reliance thereon by the Administrative Agent or by any Bank shall be binding
upon the Company and each other Borrower notwithstanding any inconsistency
between the notice provided by telephone and any subsequent writing in
confirmation thereof provided to the Administrative Agent or such Bank; provided
that any such action taken or omitted to be taken by the Administrative Agent or
such Bank shall have been in good faith and in accordance with the terms of this
Agreement.
SECTION 9.03. No Waiver; Remedies. No failure on the part of any
Bank or the Administrative Agent to exercise, and no delay in exercising, any
right hereunder or under any Note 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.
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SECTION 9.04. Costs and Expenses. (a) The Company agrees to pay on
demand all reasonable out-of-pocket costs and expenses of the Administrative
Agent (including, without limitation, reasonable fees and expenses of counsel),
in connection with any amendments, modifications or waivers of the provisions
hereof, or in determining the rights and obligations of the parties hereto under
this Agreement and the Notes, or the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement and the other documents to be
delivered hereunder; provided that if, in the event of any enforcement
undertaken by the Banks hereunder, it shall be determined that sufficient
conflicts exist such that a single law firm engaged by the Administrative Agent
or the Majority Banks is precluded by law or by standards of conduct from
representing the Banks as a group, and such conflicts would exist with respect
to any other law firm representing the Banks as a group, the Company agrees to
pay on demand all reasonable out-of-pocket costs and expenses of each Bank, if
any (including, without limitation, reasonable fees and expenses of counsel), in
connection with such enforcement undertaking.
(b) The Company agrees to pay to the Administrative Agent such fees
as shall have been agreed to by the Administrative Agent and the Company in a
separate agreement regarding the provision by the Administrative Agent of
services as Administrative Agent under this Agreement.
SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the declaration that the
Advances are due and payable pursuant to the provisions of Section 6.01, each
Bank 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 (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of any Borrower against any and all of the obligations of such Borrower now or
hereafter existing under this Agreement and the Notes held by such Bank,
irrespective of whether or not such Bank shall have made any demand under this
Agreement or such Notes and although such obligations may be unmatured. Each
Bank shall promptly notify the Company after any such set-off and application
made by such Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Bank
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Bank may have.
SECTION 9.06. Binding Effect. This Agreement (other than Sections
2.01 and 2.03, which shall only become effective upon satisfaction of the
conditions set forth in Section 3.01) shall become effective when it shall have
been executed by the Company and the Administrative Agent and when the
Administrative Agent shall have been notified by each bank listed on the
signature pages hereof that it has executed this Agreement and thereafter shall
be binding upon and inure to the benefit of the Company, the Administrative
Agent and each Bank and their respective successors and assigns, except that
neither the Company nor any Borrowing Subsidiary shall have the right to assign
its rights hereunder or any interest herein without the prior written consent of
the Banks.
SECTION 9.07. Assignments, Designations and Participations. (a)
Each Bank (other than the Designated Bidders) MAY, upon obtaining the prior
written consent of the Company and the Administrative Agent (which consents
shall not be unreasonably withheld or delayed), and each Bank (including,
without limitation, the Designated Bidders) SHALL, if demanded by the Company in
accordance with Section 2.05(b), assign to one or more Eligible Assignees all or
a
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portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the Committed Advances owing
to it and the Committed Notes held by it); provided, however, that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Agreement
(other than any right to make Uncommitted Advances, Uncommitted Advances
owing to it and Uncommitted Notes owing to it);
(ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Bank or an assignment of all
of a Bank's rights and obligations under this Agreement, the amount of the
Commitment of the assigning Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall in no event be less than
$20,000,000 (or an integral multiple of $1,000,000 in excess thereof);
(iii) each such assignment made as a result of a demand by the
Company pursuant to Section 2.05(b) and this Section 9.07(a) shall be
arranged by the Company with the approval of the Administrative Agent,
which approval shall not be unreasonably withheld or delayed, and shall be
either an assignment of all of the rights and obligations of the assigning
Bank under this Agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other such
assignments that, in the aggregate, cover all of the rights and
obligations of the assigning Bank under this Agreement;
(iv) no Bank shall be obligated to make any such assignment as
a result of a demand by the Company pursuant to this Section 9.07(a)
unless and until such Bank shall have received one or more payments from
one or more Eligible Assignees in an aggregate amount equal to the
aggregate outstanding principal amount of the Advances owing to such Bank,
together with accrued interest thereon to the date of payment of such
principal amount and from the Company or one or more Eligible Assignees in
an aggregate amount equal to all other amounts payable to such Bank under
this Agreement and the Notes (including, without limitation, any amounts
owing under Sections 2.12, 2.13 or 2.19); and
(v) 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, together with any Note subject
to such assignment and a processing and recordation fee of $3,000.
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 Bank hereunder and (y) the Bank
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
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<PAGE>
or the remaining portion of an assigning Bank's rights and obligations under
this Agreement, such Bank shall cease to be a party hereto). Notwithstanding the
foregoing, each Bank may, without the Company's or the Administrative Agent's
consent, assign 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) to an affiliate of such Bank or to another Bank.
(b) By executing and delivering an Assignment and Acceptance, the Bank
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 Bank 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 assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Company or any
Borrowing Subsidiary or the performance or observance by the Company or any
Borrowing Subsidiary of any of their respective obligations under this Agreement
or any other instrument or document furnished pursuant hereto; (iii) such
assignee 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 such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Administrative Agent,
such assigning Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee representing that it is an Eligible Assignee, and
consented to by the Company, together with any Note or Notes subject to such
assignment, the Administrative Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit A hereto, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Company.
Within ten Business Days after its receipt of such notice, the Company shall
execute and deliver to the Administrative Agent in exchange for the surrendered
Note a new Note to the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it (in the case of a Committed Note) or the Uncommitted
Advance or part thereof purchased by it (in the case of an Uncommitted Note)
pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained a Commitment or a part of such Uncommitted Advance hereunder, a new
Note to the order of the assigning Bank in an amount equal to the Commitment or
of such Uncommitted Advance retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit D-1 or Exhibit D-2 hereto (as the case may be).
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(d) Each Bank (other than the Designated Bidders) may, upon obtaining
the prior written consent of the Company and the Administrative Agent (which
consents shall not be unreasonably withheld or delayed), designate one or more
banks or other entities to have a right to make Uncommitted Advances as a Bank
pursuant to Section 2.03; provided, however, that (i) no such Bank shall be
entitled to make more than one such designation, (ii) each such Bank making such
a designation shall retain the right to make Uncommitted Advances as a Bank
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 a
Designation Agreement to the Administrative Agent, for its acceptance and
recording in the Register, together with the consent thereto executed by the
Company. 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 Uncommitted Advances as
a Bank pursuant to Section 2.03 and the obligations related thereto.
(e) By executing and delivering a Designation Agreement, the Bank
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Bank 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 Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Company or any Borrowing Subsidiary or the performance or observance by the
Company or any Borrowing Subsidiary of any of their respective 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 such Designation Agreement; (iv)
such designee will, independently and without reliance upon the Administrative
Agent, such designating Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
designee confirms that it is a Designated Bidder; (vi) such designee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers and discretion 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 Bank.
(f) Upon its receipt of a Designation Agreement executed by a
designating Bank and a designee representing that it is a Designated Bidder, and
consented to by the Company, the Administrative Agent shall, if such Designation
Agreement has been completed and is substantially in the form of Exhibit C
hereto, (i) accept such Designation Agreement, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Company.
(g) The Administrative Agent shall maintain at its address referred
to in Section 9.02 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
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Banks and, with respect to Banks other than Designated Bidders, the Commitment
of, and principal amount of the Advances owing to, each Bank from time to time
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Company, the Administrative
Agent and the Banks may treat each Person whose name is recorded in the Register
as a Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Company or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(h) Each Bank (other than a Designated Bidder) 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, the Advances owing to it and the
Note or Notes held by it); provided, however, that (i) such Bank's obligations
under this Agreement (including, without limitation, its Commitment hereunder)
shall remain unchanged, (ii) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Bank
shall remain the holder of any such Note for all purposes of this Agreement,
(iv) the Company, the Administrative Agent and the other Banks shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement and (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of this Agreement or any Note, or any consent to any departure by the
Company or any Borrowing Subsidiary therefrom, except to the extent that such
amendment, waiver or consent would reduce the principal of the Notes or the
stated rate at which interest, the Facility Fee or the Utilization Fee is
calculated, in each case to the extent subject to such participation, or
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation.
(i) Any Bank may, in connection with any assignment, designation or
participation or proposed assignment, designation or participation pursuant to
this Section 9.07, disclose to the assignee, designee or participant or proposed
assignee, designee or participant, any information relating to the Company or
any other Borrower furnished to such Bank by or on behalf of the Company or such
other Borrower; provided that, prior to any such disclosure of non-public
information, such Bank shall have obtained the Company's consent and the
assignee or participant or proposed assignee or participant shall agree in a
manner satisfactory to the Company to preserve the confidentiality of any
confidential information relating to the Company received by it from such Bank.
(j) Notwithstanding any other provision set forth in this Agreement,
any Bank may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
SECTION 9.08. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 9.09. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which
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<PAGE>
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 9.10. Confidentiality. Each Bank hereby agrees that it will
use reasonable efforts to keep confidential any information from time to time
supplied to it by the Company which the Company designates in writing at the
time of its delivery to the Bank is to be treated confidentially; provided,
however, that nothing herein shall affect the disclosure of any such information
to: (i) the extent required by statute, rule, regulation or judicial process;
(ii) counsel for any Bank or to their respective accountants; (iii) bank
examiners and auditors; (iv) any other Bank, or, subject to Section 9.07(c), any
transferee or prospective transferee of any Advance, any Note or any Commitment;
or (v) any other Person in connection with any litigation to which any one or
more of the Banks is a party; provided further, however, that each Bank hereby
agrees that it will use reasonable efforts to promptly notify the Company of any
request for information under this clause (v) or with respect to any request for
information not enumerated in this Section 9.10, if not otherwise prohibited
from doing so.
SECTION 9.11. Non-Reliance by the Banks. Each Bank by its signature
to this Agreement represents and warrants that (i) it has not relied in the
extension of the credit contemplated by this Agreement, nor will it rely in the
maintenance thereof, upon any assets of the Company or its Subsidiaries
consisting of Margin Stock as collateral and (ii) after reviewing the financial
statements of the Company and its Consolidated Subsidiaries referred to in
Section 4.01(e), such Bank has concluded therefrom that the consolidated cash
flow of the Company and its Consolidated Subsidiaries is sufficient to support
the credit extended to the Company pursuant to this Agreement.
SECTION 9.12. No Indirect Security. Notwithstanding any Section or
provision of this Agreement to the contrary, nothing in this Agreement shall (i)
restrict or limit the right or ability of the Company or any of its Subsidiaries
to pledge, mortgage, sell, assign, or otherwise encumber or dispose of any
Margin Stock, or (ii) create an Event of Default arising out of or relating to
any such pledge, mortgage, sale, assignment or other encumbrance or disposition.
SECTION 9.13. Indemnification. The Company agrees to indemnify and
hold harmless the Administrative Agent, each Bank, and their respective
officers, directors, employees, and agents (any one of the foregoing being an
"Indemnified Party" and any two or more of the foregoing being "Indemnified
Parties") from and against, and pay the Indemnified Parties the amount of, any
and all claims, damages, liabilities, costs, and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against an Indemnified Party relating in whole or in part to
this Agreement, the Notes, any documents delivered in connection herewith and
the transactions contemplated hereby, and in connection with or arising out of
or by reason of, or in connection with the preparation of a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) this Agreement, the Notes, any of the transactions
contemplated herein or the use or proposed use of the proceeds of any Advances,
(ii) any acquisition or proposed acquisition by the Company or any of its
Subsidiaries of all or any portion of the stock or all or substantially all of
the assets of any Person, or (iii) the actual or alleged presence of Hazardous
Materials on any property of the Company or any of its Subsidiaries or any
Environmental Action relating to any of them, in each case whether or not such
investigation, litigation or proceeding is brought by the Company, any other
Borrower, their respective shareholders or creditors, an Indemnified Party or
any other
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Person, and whether or not an Indemnified Party is otherwise a party
thereto, provided, however, that this indemnification shall not apply to any
claim, damage, liability, cost or expense (i) arising from a dispute among Banks
or a dispute between any Bank and the Administrative Agent, or (ii) that is
found in a final, nonappealable judgment by a court of competent jurisdiction to
have resulted from an Indemnified Party's gross negligence or willful
misconduct. The covenants of the Company contained in this Section 9.13 and in
Sections 9.04, 2.12 and 2.19 shall survive the repayment of all amounts due and
payable under this Agreement and the termination of this Agreement.
SECTION 9.14. Partial Invalidity. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
SECTION 9.15. WAIVER OF JURY TRIAL. Each of the parties hereto
irrevocably waives any right to have a jury participate in resolving any
dispute, whether sounding in contract, tort or otherwise, arising out of,
connected with, related to or incidental to the relationship established among
them in connection with this Agreement or the transactions contemplated hereby
or the actions of the Company, any Borrowing Subsidiary, the Administrative
Agent or any Bank in the negotiation, administration, performance or enforcement
thereof. Each of the parties hereto agrees that any such claim, demand, action
or cause of action shall be decided by bench trial without a jury and that any
party hereto may file an original counterpart or a copy of this Agreement with
any court as written evidence of the consent of the parties hereto to the waiver
of their right to trial by jury.
SECTION 9.16. Jurisdiction, Etc. (a) Each of the parties hereto
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes, or for recognition or enforcement of any judgment, and
each of the parties hereto irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in any such New York State court or, to the extent permitted by law, in such
federal court. Each of the parties hereto 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 Agreement shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Agreement or the Notes
in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the Notes
in any New York State or federal court. Each of the parties hereto irrevocably
waives, to
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the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 9.17. Termination of Existing Credit Agreements. The
Company and each of the Banks hereunder that is a party to either or both of the
1992 Credit Agreements consents to the termination of the "Commitments"
thereunder, effective on the Effective Date, notwithstanding the notice
requirements for such termination set forth in Section 2.05 of each of the 1992
Credit Agreements. Because such Banks hereunder constitute the "Majority Banks"
(as defined in each of the 1992 Credit Agreements) under each of the 1992 Credit
Agreements, the 1992 Credit Agreements shall terminate and all amounts payable
thereunder shall be due and payable on the Effective Date.
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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.
R.R. DONNELLEY & SONS COMPANY
By:__________________________________
Title:
CITIBANK, N.A.,
as Administrative Agent and as a Bank
By:__________________________________
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:__________________________________
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED, CHICAGO BRANCH
By:__________________________________
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:__________________________________
Title:
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ROYAL BANK OF CANADA
By:__________________________________
Title:
ABN AMRO BANK N.V.
By:__________________________________
Title:
BANK OF MONTREAL, CHICAGO BRANCH
By:__________________________________
Title:
COMMERZBANK AKTIENGESELLSCHAFT, GRAND CAYMAN BRANCH
By:__________________________________
Title:
THE DAI-ICHI KANGYO BANK, LTD., CHICAGO BRANCH
By:__________________________________
Title:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:__________________________________
Title:
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THE NORTHERN TRUST COMPANY
By:__________________________________
Title:
THE SANWA BANK, LIMITED, CHICAGO BRANCH
By:__________________________________
Title:
CREDIT LYONNAIS CHICAGO BRANCH
By:__________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:__________________________________
Title:
CREDIT SUISSE
By:__________________________________
Title:
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<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Domestic Eurocurrency
Name of Bank Commitment Lending Office Lending Office
------------ ---------- -------------- --------------
<S> <C> <C> <C>
Citibank, N.A. $54,000,000 c/o Citicorp North America One Court Square
200 South Wacker Drive Long Island City,
Chicago, Illinois 60606 New York 11120
Attn: John Coons Attn: Sean Bernard
Phone: (312) 993-3184 Phone: (718) 248-4483
Fax: (312) 993-6840 Fax: (718) 248-4844
The First National $45,000,000 One First National Plaza One First National Plaza
Bank of Chicago Suite 0634 Suite 0634
Chicago, IL 60670 Chicago, IL 60670
Attn: Carlene Hicks, Attn: Carlene Hicks,
Customer Service Officer Customer Service Officer
Phone: (312) 732-6294 Phone: (312) 732-6294
Fax: (312) 732-4840 Fax: (312) 732-4840
The Industrial Bank of $45,000,000 227 West Monroe Street 227 West Monroe Street
Japan, Limited, Chicago Suite 2600 Suite 2600
Branch Chicago, IL 60606 Chicago, IL 60606
Attn: Susanne Stafford, Attn: Susanne Stafford,
Loan Administrator Loan Administrator
Phone: (312) 855-8447 Phone: (312) 855-8447
Fax: (312) 855-8200 Fax: (312) 855-8200
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
Morgan Guaranty $45,000,000 Multi-Option Unit - Loan Department Multi-Option Unit - Loan Department
Trust Company of New York Morgan Guaranty Trust Company of New York Morgan Guaranty Trust Company of New York
c/o J.P. Morgan Services, Inc. c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road 500 Stanton Christiana Road
P.O. Box 6070 P.O. Box 6070
Newark, DE 19713-2107 Newark, DE 19713-2107
Phone: (302) 634-1800 Phone: (302) 634-1800
Fax: (302) 634-1094 Fax: (302) 634-1094
Royal Bank of Canada $45,000,000 Royal Bank of Canada Royal Bank of Canada
New York Branch New York Branch
One Financial Square One Financial Square
New York, NY 10005 New York, NY 10005
Attn: Manager Loan Admin Attn: Manager Loan Admin
Phone: (212) 428-6314 Phone: (212) 428-6314
Fax: (212) 428-2372 Fax: (212) 428-2372
ABN-AMRO Bank N.V. $38,000,000 Loan Operations Loan Operations
ABN AMRO Bank N.V. ABN AMRO Bank N.V.
135 S. LaSalle Street 135 S. LaSalle Street
Suite 425 Suite 425
Chicago, IL 60674-9135 Chicago, IL 60674-9135
Phone: (312) 904-2961 Phone: (312) 904-2961
Fax: (312) 606-8435 Fax: (312) 606-8435
Bank of Montreal, $38,000,000 115 S. LaSalle Street 115 S. LaSalle Street
Chicago Branch Chicago, IL 60603 Chicago, IL 60603
Attn: Josie M. Nichols Attn: Josie M. Nichols
Intermediate Officer Intermediate Officer
Phone: (312) 750-3748 Phone: (312) 750-3748
Fax: (312) 750-3798 Fax: (312) 750-3798
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Commerzbank $38,000,000 311 S. Wacker Drive 311 S. Wacker Drive
Aktiengesellschaft, Grand Suite 5800 Suite 5800
Cayman Branch Chicago, IL 60606 Chicago, IL 60606
Attn: Elke Gunn Attn: Elke Gunn
Assistant Treasurer Assistant Treasurer
Phone: (312) 408-4586 Phone: (312) 408-4586
Fax: (312) 435-1485 Fax: (312) 435-1485
The Dai-Ichi Kangyo Bank, $38,000,000 10 S. Wacker Drive 10 S. Wacker Drive
Ltd., Chicago Branch 26th Floor 26th Floor
Chicago, IL 60606 Chicago, IL 60606
Attn: G. Marthaler, Attn: G. Marthaler,
Officer Officer
Phone: (312) 715-6451 Phone: (312) 715-6451
Fax: (312) 876-2011 Fax: (312) 876-2001
First Union National Bank $38,000,000 One First Union Center One First Union Center
TW-10 TW-10
Charlotte, NC 28288-0745 Charlotte, NC 28288-0745
Attn: Lisa Dellinger Attn: Lisa Dellinger
Phone: (704) 374-4425 Phone: (704) 374-4425
Fax: (704) 374-2802 Fax: (704) 374-2802
The Northern Trust Company $38,000,000 50 S. LaSalle Street 50 S. LaSalle Street
Chicago, IL 60675 Chicago, IL 60675
Attn: Laura Watson Attn: Laura Watson
Relationship Associate Relationship Associate
Phone: (312) 444-3586 Phone: (312) 444-3586
Fax: (312) 630-1566 Fax: (312) 630-1566
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
The Sanwa Bank, Limited, $38,000,000 10 South Wacker Drive 10 South Wacker Drive
Chicago Branch 31st Floor 31st Floor
Chicago, IL 60606 Chicago, IL 60606
Attn: Beverly Wyckoff Attn: Beverly Wyckoff
Vice President and Manager Vice President and Manager
Phone: (312) 368-3016 Phone: (312) 368-3016
Fax: (312) 346-6677 Fax: (312) 346-6677
Credit Lyonnais $30,000,000 Suite 3800 Suite 3800
Chicago, IL 60606 Chicago, IL 60606
Attn: Rosette Lintak Attn: Rosette Lintak
227 W. Monroe Street 227 W. Monroe Street
Phone: (312) 220-7319 Phone: (312) 220-7319
Fax: (312) 641-5834 Fax: (312) 641-5834
Credit Suisse $20,000,000 Credit Suisse Credit Suisse
12 East 49th Street 12 East 49th Street
41st Floor 41st Floor
New York, NY 10017 New York, NY 10017
Attn: Hazel Leslie Attn: Hazel Leslie
Phone: (212) 238-5218 Phone: (212) 238-5218
Fax: (212) 238-5246 Fax: (212) 238-5246
cc: Credit Suisse
227 West Monroe Street
Suite 4000
Chicago, IL 60606
Attn: Anne F. Heekin/Jackie Bragen
Phone: (312) 630-0086
Fax: (312) 630-0359
</TABLE>
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of December 21,
1994 (as amended or modified from time to time, the "Credit Agreement") among
R.R. Donnelley & Sons Company, a Delaware corporation (the "Company"), the Banks
(as defined in the Credit Agreement) parties thereto and Citibank, N.A., as
agent for the Banks (the "Administrative Agent"). Terms defined in the Credit
Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule I hereto
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof (other than in respect of Uncommitted Advances and Uncommitted Notes)
equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement (other than in
respect of Uncommitted Advances and Uncommitted Notes). After giving effect to
such sale and assignment, the Assignee's Commitment and the amount of the
Committed Advances owing to the Assignee will be as set forth on Schedule 1
hereto.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or any
Borrowing Subsidiary or the performance or observance by the Company or any
Borrowing Subsidiary of any of their respective obligations under the Credit
Agreement or any other instrument or document furnished pursuant thereto; and
(iv) attaches the Committed Note held by the Assignor and requests that the
Administrative Agent exchange such Committed Note for a new Committed Note
payable to the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto or new Committed Notes payable to the
order of the Assignee in an amount equal to the Commitment assumed by the
Assignee pursuant hereto and the Assignor in an amount equal to the Commitment
retained by the Assignor under the Credit Agreement, respectively, as specified
on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor or any other Bank
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Administrative Agent to
<PAGE>
take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement as are delegated to the Administrative
Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Bank; and (vi) attaches any
U.S. Internal Revenue Service forms required under Section 2.19 of the Credit
Agreement.
4. Following the execution of this Assignment and Acceptance, it will
be delivered to the Company for acceptance and then to the Administrative Agent
for acceptance and recording. The effective date for this Assignment and
Acceptance (the "Effective Date") shall be the date of acceptance hereof by the
Administrative Agent, unless otherwise specified on Schedule 1 hereto.
5. Upon such acceptance and recording by the Administrative Agent, as
of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Administrative Agent,
from and after the Effective Date, the Administrative Agent shall make all
payments under the Credit Agreement and the Notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and facility fees with respect thereto) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under the Credit
Agreement and the Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York.
8. This Assignment and Acceptance 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. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
1 to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
-2-
<PAGE>
SCHEDULE I
to
Assignment and Acceptance
dated _______________
Percentage interest assigned: ___%
Assignee's Commitment: $_____________
Aggregate outstanding principal
amount of Committed Advances
assigned: $_____________
Principal amount of Committed Note
payable to Assignee: $_____________
Principal amount of Committed Note
payable to Assignor: $_____________
Effective Date: _____________, 19__
[NAME OF ASSIGNOR],
as Assignor
By:___________________
Title:
Dated:
[NAME OF ASSIGNEE], as
Assignee
By:___________________
Title:
Dated:
Applicable Lending Offices:
Domestic: [address]
Eurocurrency: [address]
Uncommitted
Advances: [address]
Accepted and approved,
-3-
<PAGE>
_____________, 19__
CITIBANK, N.A.,
as Administrative Agent
By:_____________________
Title:
Accepted and approved,
______________, 19__
R.R. DONNELLEY & SONS
COMPANY
By:_____________________
Title:
-4-
<PAGE>
EXHIBIT B
[Form of Assumption Letter]
_____________________, 199_
To the Banks parties to the
Credit Agreement referred
to below
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of December 21,
1994 among R.R. Donnelley & Sons Company, the Banks named therein and Citibank,
N.A. as Administrative Agent for such Banks (as amended and in effect from time
to time, the "Credit Agreement"). Terms defined in the Credit Agreement and
capitalized herein are used herein as defined therein.
The undersigned, ___________ (the "Subsidiary"), a _________________
corporation, proposes to become a "Borrowing Subsidiary" under the Credit
Agreement, and accordingly hereby agrees that from the date hereof it shall
become a "Borrowing Subsidiary" under the Credit Agreement and agrees that from
the date hereof and until the payment in full of the principal of and interest
on all Advances made to it under the Credit Agreement and performance of all of
its other obligations thereunder, and termination hereunder of its status as a
"Borrowing Subsidiary" as provided below, it shall perform, comply with and be
bound by each of the provisions of the Credit Agreement which are stated to
apply to the "Company", a "Borrowing Subsidiary" or a "Borrower". Without
limiting the generality of the foregoing, that Subsidiary hereby represents and
warrants that: (i) each of the representations and warranties set forth in
Sections 4(a), (b), (c) and (d) of the Credit Agreement is hereby made by such
Subsidiary on and as of the date hereof as if made on and as of the date hereof
and as if such Subsidiary is the "Company", this Assumption Letter is the
"Agreement" referenced therein and each Note issued by such Borrowing Subsidiary
is the "Note" referenced therein, and (ii) it has heretofore received a true and
correct copy of the Credit Agreement (including any modifications thereof or
supplements or waivers thereto) as in effect on the date hereof.
So long as the principal of and interest on all Advances made to the
Subsidiary under the Credit Agreement shall have been paid in full and all other
obligations of the Subsidiary shall have been fully performed, the Subsidiary
may by not less than five Business Days' prior notice to the Banks terminate its
status as a "Borrowing Subsidiary."
The Subsidiary irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or
-1-
<PAGE>
proceeding arising out of or relating to this Assumption Letter, the Credit
Agreement or the Notes, or for recognition or enforcement of any judgment, and
the Subsidiary irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in any such New
York State court or, to the extent permitted by law, in such federal court. The
Subsidiary 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 Assumption Letter shall
affect any right that any Bank or the Administrative Agent may otherwise have to
bring any action or proceeding relating to this Assumption Letter, the Credit
Agreement or the Notes in the courts of any jurisdiction.
The Subsidiary irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Assumption Letter, the Credit Agreement or the Notes
in any New York State or federal court. The Subsidiary irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
This Assumption Letter shall be governed by, and construed in
accordance with, the laws of the State of New York, United States of America.
IN WITNESS WHEREOF, the Subsidiary has duly executed and delivered
this Assumption Letter as of the date and year first above written.
[NAME OF BORROWING SUBSIDIARY]
By _______________________________
Title:
Address for Notices under
the Credit Agreement:
Consented to:
R.R. DONNELLEY & SONS
COMPANY
By:_______________________
Title:
-2-
<PAGE>
EXHIBIT C
FORM OF DESIGNATION AGREEMENT
Dated _______________, 199_
Reference is made to the Credit Agreement dated as of December 21,
1994 (as amended or modified from time to time, the "Credit Agreement") among
R.R. Donnelley & Sons Company, a Delaware corporation (the "Company"), the Banks
(as defined in the Credit Agreement) parties thereto and Citibank, N.A., as
agent for the Banks (the "Administrative Agent"). Terms defined in the Credit
Agreement are used herein with the same meaning.
__________________ (the "Designor") and_________________ (the
"Designee") agree as follows:
1. The Designor hereby designates the Designee, and the Designee
hereby accepts such designation, to have a right to make Competitive Bid
Advances pursuant to Section 2.03 of the Credit Agreement.
2. The Designor makes no representation or warranty and assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of, the Credit
Agreement or any other instrument or document furnished pursuant thereto; and
(ii) the financial condition of the Company or any Borrowing Subsidiary or the
performance or observance by the Company or any Borrowing Subsidiary of any of
their respective obligations under the Credit Agreement or any other instrument
or document furnished pursuant thereto.
3. The Designee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Designation Agreement; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Designor or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it is a Designated Bidder; (iv)
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Credit Agreement
as are delegated to the Administrative Agent by the terms thereof, together with
such powers and discretion as are reasonably incidental thereto; and (v) agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of the Credit Agreement are required to be performed by it as a
Bank.
4. Following the execution of this Designation Agreement by the
Designor and its Designee, it will be delivered to the Company for acceptance
and then to the Administrative Agent for acceptance and recording. The
effective date for this Designation Agreement (the
<PAGE>
"Effective Date") shall be the date of acceptance hereof by the Administrative
Agent, unless otherwise specified on the signature page hereto.
5. Upon such acceptance and recording by the Administrative Agent, as
of the Effective Date, the Designee shall be a party to the Credit Agreement
with a right to make Competitive Bid Advances as a Bank pursuant to Section 2.03
of the Credit Agreement and the rights and obligations of a Bank related
thereto.
6. This Designation Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
7. This Designation 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. Delivery of an executed
counterpart of a signature page to this Designation Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Designation Agreement.
IN WITNESS WHEREOF, the Designor and Designee have caused this
Designation Agreement to be executed by their officers thereunto duly authorized
as of the date specified thereon.
Effective Date: ____________________, 19__
[NAME OF DESIGNOR],
as Designor
By:_______________________________
Title:
[NAME OF DESIGNEE],
as Designee
By:_______________________________
Title:
Applicable Lending Office (and
address for notices):
-2-
<PAGE>
ACCEPTED AND APPROVED,
_____________, 19__
CITIBANK, N.A.,
as Administrative Agent
By:_____________________
Title:
Accepted and approved,
______________, 19__
R.R. DONNELLEY & SONS
COMPANY
By:_____________________
Title:
-3-
<PAGE>
EXHIBIT D-1
FORM OF COMMITTED NOTE
U.S. ___________________$ Dated: _______________, 19__
FOR VALUE RECEIVED, the undersigned, [R.R. DONNELLEY & SONS COMPANY, a
Delaware corporation] [NAME OF APPLICABLE BORROWING SUBSIDIARY, a
__________________ corporation] (the "Company"), HEREBY PROMISES TO PAY to the
order of ________________________ (the "Bank") for the account of its Applicable
Lending Office on the Termination Date (each as defined in the Credit Agreement
referred to below) the principal sum of U.S. $[AMOUNT OF THE BANK'S COMMITMENT
IN FIGURES] or, if less, the aggregate principal amount of the Committed
Advances made by the Bank to the Company pursuant to the Credit Agreement dated
as of December 21, 1994 among [the Company] [R.R. Donnelley & Sons Company], the
Bank and certain other banks parties thereto, and Citibank, N.A., as
Administrative Agent for the Bank and such other banks (as amended or modified
from time to time, the "Credit Agreement"); the terms defined therein being used
herein as therein defined) outstanding on the Termination Date.
The Company promises to pay interest on the unpaid principal amount of
each Committed Advance made to it from the date of such Committed Advance until
such principal amount is paid in full, at such interest rates, and payable at
such times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Citibank, N.A., as Agent, at 399 Park Avenue, New York, New
York 10043, in same day funds. Each Committed Advance owing to the Bank by the
Company pursuant to the Credit Agreement, and all payments made on account of
principal thereof, shall be recorded by the Bank and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Promissory
Note.
This Promissory Note is one of the Committed Notes referred to in, and
is entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of Committed Advances by the
Bank to the Company from time to time in an aggregate amount not to exceed at
any time outstanding the U.S. dollar amount first above mentioned, the
indebtedness of the Company resulting from each such Committed Advance being
evidenced by this Promissory Note, and (ii) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
[R.R. DONNELLEY & SONS COMPANY]
[NAME OF APPLICABLE BORROWING
SUBSIDIARY]
By:____________________________
Title:
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
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AMOUNT OF
AMOUNT OF PRINCIPAL PAID OR UNPAID NOTATION
DATE ADVANCE PREPAID PRINCIPAL BALANCE MADE BY
<S> <C> <C> <C> <C>
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</TABLE>
-5-
<PAGE>
EXHIBIT D-2
FORM OF UNCOMMITTED NOTE
U.S. ___________________$ Dated: _______________, 19__
FOR VALUE RECEIVED, the undersigned, [R.R. DONNELLEY & SONS COMPANY, a
Delaware corporation] [NAME OF APPLICABLE BORROWING SUBSIDIARY, a
__________________ corporation] (the "Company"), HEREBY PROMISES TO PAY to the
order of ________________________ (the "Bank") for the account of its Applicable
Lending Office (as defined in the Credit Agreement dated as of December 21, 1994
among [the Company] [R.R. Donnelley & Sons Company], the Bank and certain other
banks parties thereto, and Citibank, N.A., as Administrative Agent for the Bank
and such other banks (as amended or modified from time to time, the "Credit
Agreement"; the terms defined therein being used herein as therein defined) on
_______________, 19__, the principal amount of U.S.$______________.
The Company promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:
Interest Rate: ____% per annum (calculated on the basis of a year of
_____ days for the actual number of days elapsed).
Interest Payment Date(s):
Both principal and interest are payable in lawful money of the United
States of America to Citibank, N.A., for the account of the Bank, at 399 Park
Avenue, New York, New York 10043, in same day funds.
This Promissory Note is one of the Uncommitted Notes referred to in,
and is entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, contains provisions for acceleration of the maturity
hereupon upon the happening of certain stated events.
The Company hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
[R.R. DONNELLEY & SONS COMPANY]
[NAME OF APPLICABLE BORROWING
SUBSIDIARY]
By:____________________________
Title:
<PAGE>
EXHIBIT E-1
NOTICE OF COMMITTED BORROWING
[Administrative Agent's
name and address]
[Date]
Ladies and Gentlemen:
The undersigned, ________________, refers to the Credit Agreement
dated as of December 21, 1994 (as amended, modified or supplemented from time to
time, the "Credit Agreement", the terms defined therein being used herein as
therein defined), among [the undersigned,] [R.R. Donnelley & Sons Company (the
"Company"], certain Banks parties thereto and Citibank, N.A., as Administrative
Agent for such Banks, and hereby gives you notice, pursuant to Section 2.02 of
the Credit Agreement, that the undersigned hereby requests a Committed Borrowing
under the Credit Agreement, and in that connection sets forth below the
information relating to such Committed Borrowing (the "Proposed Committed
Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Committed Borrowing is
__________, 19__.
(ii) The Type of Committed Advances comprising the Proposed
Committed Borrowing is [Base Rate Advances] [Eurocurrency Rate Advances].
(iii) The currency for the Proposed Committed Borrowing is
[Dollars] [type of Alternative Currency].
(iv) The aggregate amount of the Proposed Committed Borrowing is
$__________.
(v) The Interest Period for each Eurocurrency Rate Advance made
as part of the Proposed Committed Borrowing is ______ month[s].
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Committed
Borrowing:
(a) the representations and warranties contained in subsections
(a), (b), (c), (d), (f)(ii) and (h) through (p) of Section 4.01 of the
Credit Agreement are correct, before and after giving effect to the Proposed
Committed Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date;
(b) no event has occurred and is continuing, or would result from
the Proposed Committed Borrowing or from the application of the proceeds
therefrom, that constitutes an Event of Default or that would constitute an
Event of Default but for the requirement that notice be given or time elapse
or both; and
(c) the aggregate principal amount (or, in the case of securities
issued at a discount from the principal amount at maturity, the accreted
amount) of indebtedness for borrowed money (after giving effect to the
Proposed Committed Borrowing and the application of the
<PAGE>
proceeds thereof) of [the undersigned] [the Company] and its Subsidiaries
does not exceed the maximum amount thereof presently authorized by [the
undersigned's] [the Company's] Board of Directors.
Very truly yours,
[NAME OF BORROWER]
By: __________________________
Title:
-8-
<PAGE>
EXHIBIT E-2
NOTICE OF UNCOMMITTED BORROWING
_________________________
_________________________
_________________________
[Date]
Attention: ____________________
Ladies and Gentlemen:
The undersigned, _____________, refers to the Credit Agreement, dated
as of December 21, 1994 ( as amended, modified or supplemented from time to
time, the "Credit Agreement", the terms defined therein being used herein as
therein defined), among [the undersigned] [R.R. Donnelley & Sons Company (the
"Company")], certain Banks parties thereto and Citibank, N.A., as Administrative
Agent for such Banks, and hereby gives you notice pursuant to Section 2.03 of
the Credit Agreement that the undersigned requests an Uncommitted Borrowing
under the Credit Agreement, and in that connection sets forth the terms on which
such Uncommitted Borrowing (the "Proposed Uncommitted Borrowing") is requested
to be made:
<TABLE>
<CAPTION>
<S> <C> <C>
(A) Date: ___________________
(B) Amount: $__________________
(C) Type of Quote Requested:/1/
Uncommitted Borrowing Margin ___ Fixed Rate ___
(D) Maturity Date: ___________________
Prepayment terms: May [not] be prepaid,
[with] [without] penalty
Prepayment penalty:/2/ ___________________
(E) Interest Payment Date(s): ___________________
(F) Borrower: ___________________
</TABLE>
----------------------------
/1/Select one.
/2/Include if applicable.
<PAGE>
(G) Other terms:
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed
Uncommitted Borrowing:
(a) the representations and warranties contained in subsections
(a), (b), (c), (d), (f)(ii) and (h) through (p) of Section 4.01 are correct,
before and after giving effect to the Proposed Uncommitted Borrowing and to
the application of the proceeds therefrom, as though made on and as of such
date;
(b) no event has occurred and is continuing, or would result from
the Proposed Uncommitted Borrowing or from the application of the proceeds
therefrom, that constitutes an Event of Default or that would constitute an
Event of Default but for the requirement that notice be given or time elapse
or both;
(c) the aggregate principal amount (or, in the case of securities
issued at a discount from the principal amount at maturity, the accreted
amount) of indebtedness for borrowed money (after giving effect to the
Proposed Uncommitted Borrowing and to the application of proceeds therefrom)
of [the undersigned] [the Company] and its Subsidiaries does not exceed the
maximum amount thereof presently authorized by the Board of Directors of
[the undersigned] [the Company];
The undersigned confirms that the Proposed Uncommitted Borrowing
is to be made available to it in accordance with Section 2.03(a)(iv) of the
Credit Agreement.
[NAME OF BORROWER]
By: __________________________
Title:
-10-
<PAGE>
EXHIBIT F
FORM OF NOTICE OF CONVERSION OR CONTINUATION
TO: Citibank, N.A., as agent (the "Administrative Agent") under that
certain Credit Agreement dated as of December 21, 1994 (the "Credit
Agreement") by and among R.R. Donnelley & Sons Company (the "Company"),
the Administrative Agent and the Banks parties thereto.
Pursuant to the terms and conditions of the Credit Agreement, this
Notice of Conversion or Continuation ("Notice") represents the election of the
Company to [insert one of the following]:
/1/convert $__________ in aggregate principal amount of Base Rate Advances to
Eurocurrency Rate Advances on __________, 19___. The initial Interest Period
for such Eurocurrency Rate Advances is requested to be a __________ (_____)
month period. [and]/2/
/3/convert $__________ in aggregate principal amount of Eurocurrency Rate
Advances with a current Interest Period ending _____________ to Base Rate
Advances on __________, 19___.
/4/continue as Eurocurrency Rate Advances $__________ in aggregate principal
amount of presently outstanding Eurocurrency Rate Advances with a current
Interest Period ending __________, for a _____ month period commencing on
__________, 19___.
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Notice.
Dated: __________, 19___.
[NAME OF BORROWER]
By____________________________
Title:________________________
------------------------
/1/Use if converting Base Rate Advances to Eurocurrency Rate Advances.
/2/Use if converting only a portion of Eurocurrency Rate Advances and continuing
the balance as Eurocurrency Rate Advances.
/3/Use if converting Eurocurrency Rate Advances to Base Rate Advances.
/4/Use if continuing Eurocurrency Rate Advances.
<PAGE>
EXHIBIT G
Opinion of Counsel to the Company
December 21, 1994
To each of the Banks parties to
the "Credit Agreement" (as defined below),
and to Citibank, N.A., as Administrative Agent
Re: R.R. Donnelley & Sons Company
-----------------------------
Ladies and Gentlemen:
We have acted as counsel to R.R. Donnelley & Sons Company, a Delaware
corporation (the "Company"), in connection with the Credit Agreement of even
date herewith (the "Credit Agreement") among the Company, the financial
institutions parties thereto (the "Banks") and Citibank, N.A., as Administrative
Agent, and the transactions contemplated thereby.
This opinion is furnished to you at the request of the Company pursuant
to Section 3.01(a)(v) of the Credit Agreement. Capitalized terms used herein
and not otherwise defined are used as defined in the Credit Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Credit Agreement
and the promissory notes delivered on the date hereof to the Banks signatory to
the Credit Agreement (the "Notes").
In rendering the opinions set forth herein, we have also examined
originals or copies, certified to our satisfaction, of such (i) certificates of
public officials, (ii) certificates of officers and representatives of the
Company, and (iii) other documents and records, and we have made such inquiries
of officers and representatives of the Company, as we have deemed relevant or
necessary as the basis for such opinions. We have relied as to factual matters
upon, and assumed the accuracy of, such certificates, the representations and
warranties of the Company made in the Credit Agreement, and other statements,
documents and records supplied to us by the Company, and we have assumed the
genuineness of all signatures (other than signatures of officers of the Company)
and the authenticity of all documents submitted to us as originals and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies.
In rendering the opinions set forth herein, we have assumed that:
(i) all the parties to the Credit Agreement, other than the Company,
are duly organized, validly existing, and in good standing under the laws
of their respective jurisdictions of organization and have the requisite
corporate power to enter into the Credit Agreement; and
<PAGE>
December 21, 1994
Page 2
(ii) the execution and delivery of the Credit Agreement have been duly
authorized by all necessary corporate action and proceedings on the part of
all parties thereto other than the Company; the Credit Agreement has been
duly executed and delivered by all parties thereto and constitutes the
valid and binding obligation of all parties thereto other than the Company,
enforceable against such parties in accordance with its terms.
Based upon the foregoing and subject to the qualifications stated
herein, we are of the opinion that, as of the date hereof:
1. The Company has been duly organized and is validly existing and in
good standing under the laws of the State of Delaware. The Company has the
requisite corporate power and authority to conduct its business as currently
conducted.
2. The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Credit Agreement and the
Notes. Such execution, delivery and performance:
(a) have been duly authorized by all necessary and proper corporate
action of the Company,
(b) do not violate any provision of the certificate of incorporation
or by-laws of the Company or require any approval of the Company's
stockholders,
(c) do not violate the General Corporation Law of the State of
Delaware, any law or regulation of the State of New York (including,
without limitation, any usury laws) or of the United States of America
applicable to the Company,
(d) do not contravene that certain Indenture dated as of November
1,1990, between the Company and Citibank, N.A., as Trustee, or, to our
knowledge, any other material agreement or instrument binding on the
Company.
3. The Credit Agreement constitutes, and from and after the initial
Committed Borrowing the Committed Notes will constitute, the valid and binding
obligations of the Company, enforceable in accordance with their respective
terms.
4. No approval, consent or authorization of, or filing or registration
with, any governmental department, agency or instrumentality is necessary for
the Company's execution or delivery of the Credit Agreement or the Notes, or for
the Company's performance of any of the terms thereof.
-2-
<PAGE>
December 21, 1994
Page 3
Our opinions above are subject to the following qualifications:
(a) Our opinions relating to validity, binding effect and
enforceability in Paragraph 3 above are subject to limitations imposed by
any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and similar laws affecting creditors' rights
generally. In addition, our opinions relating to enforceability in
paragraph 3 above are subject to (i) the effect of general principles of
equity (regardless of whether considered in a proceeding in equity or at
law) and (ii) limitations imposed by public policy under certain
circumstances on the enforceability of provisions indemnifying a party
against liability for its own wrongful or negligent acts. In applying
principles of equity referred to in clause (i) above, a court, among other
things, might not allow a creditor to accelerate maturity of a debt upon
the occurrence of a default deemed immaterial. Such principles applied by
a court might include a requirement that a creditor act reasonably and in
good faith.
(b) Certain remedial and waiver provisions of the Credit Agreement may
be unenforceable in whole or in part, but the inclusion of such provisions
does not affect the validity of the Credit Agreement; however, the
unenforceability of such provisions may result in delays in the enforcement
of the Administrative Agent's and the Banks' rights and remedies under the
Credit Agreement (and we express no opinion as to the economic
consequences, if any, of such delays).
(c) We express no opinion as to the effect of the compliance or
noncompliance of the Administrative Agent or any of the Banks with any
state or federal laws or regulations applicable to the Administrative Agent
or any of the Banks because of the Administrative Agent's or any of the
Banks' legal or regulatory status, the nature of the business of the
Administrative Agent or any of the Banks or the qualification of any such
party to conduct business in any jurisdiction.
The foregoing opinions are limited to the laws of the United States,
the State of New York and the General Corporation Law of the State of Delaware,
and we express no opinion with respect to the laws of any other state or
jurisdiction.
Whenever in this opinion reference is made to our knowledge, such
reference is to the conscious awareness of Dennis V. Osimitz and Jeffrey S.
Rothstein of information regarding factual matters. With respect to such
matters, such persons have not, with your express permission and consent,
undertaken any investigation or inquiry either of other lawyers, files
maintained by the firm, or officers or employees of the Company or any of its
Subsidiaries. The reference to "conscious awareness" as used in this paragraph
has the meaning given that phrase in the Third-Party Legal Opinion Report,
Including the Legal Opinion Accord, of the Section of Business Law, American Bar
Association, 47 Bus. Law. 167, 192 (1991).
The opinions expressed herein are being delivered to you as of the date
hereof and are solely for your benefit in connection with the transactions
contemplated in the Credit Agreement and may not be relied on in any manner or
for any purpose by any other person, nor any copies published, communicated or
otherwise made available in whole or in part to any other person or entity
without our express prior written
-3-
<PAGE>
consent, except that you may furnish copies thereof to each party that becomes a
Bank after the date hereof pursuant to the Credit Agreement, and such parties
may rely on this opinion as if it had been originally addressed to them. In
addition, Shearman & Sterling is authorized to rely on paragraphs 1, 2 and 4
hereof in rendering an opinion to you in connection with the Credit Agreement.
We do not express any opinion, either implicitly or otherwise, on any
issue not expressly addressed in numbered Paragraphs 1 through 4. The opinions
expressed above are based solely on facts, laws and regulations existing and in
effect on the date hereof, and we assume no obligation to revise or supplement
this opinion should such facts change or should such laws or regulations be
changed by legislative or regulatory action, judicial decision or otherwise,
notwithstanding that such changes may affect the legal analysis or conclusions
contained in this opinion.
Very truly yours,
<PAGE>
CERTIFICATE
I, ___________________, am the _____________ ___________________ of
R.R. Donnelley & Sons Company, a Delaware corporation (the "Company"). The
Company is entering into a Credit Agreement dated as of December 21, 1994, with
the banks party thereto ("Banks") and Citibank, N.A., as agent ("Administrative
Agent") for such Banks (the "Credit Agreement").
The Credit Agreement requires that Sidley & Austin issue a legal
opinion to the Administrative Agent and the Banks. In connection with such
legal opinion, the Company certifies to Sidley & Austin that:
1. Not more than twenty-five percent (25%) of the value of the assets
subject to any "arrangement" (as such term is used in Section 221.2(g)(1)
of Regulation U of the Board of Governors of the Federal Reserve System)
under the Credit Agreement is represented by "margin stock" (as such term
is defined in Regulation U of the Board of Governors of the Federal Reserve
System).
2. The Company has not granted to the Administrative Agent or the
Banks any direct security for the Company's obligations to the
Administrative Agent and the Banks under the Credit Agreement.
R.R. DONNELLEY & SONS COMPANY
By:_______________________
Title:
Dated: December 21, 1994
<PAGE>
EXHIBIT H
Opinion of Counsel to a Borrowing Subsidiary
[Date]
To each of the Banks parties to
the "Credit Agreement" (as defined below),
and to Citibank, N.A., as Administrative Agent
Re: [Borrowing Subsidiary]
----------------------
Ladies and Gentlemen:
We have acted as counsel to R.R. Donnelley & Sons Company, a Delaware
corporation (the "Company") and __________________, a ___________ corporation
and Subsidiary of the Company (the "Borrowing Subsidiary"), in connection with
the Credit Agreement dated as of December 21, 1994 (as the same has been or may
be amended, modified or supplemented, the "Credit Agreement") among the Company,
the financial institutions parties thereto (the "Banks") and Citibank, N.A., as
Administrative Agent, and the transactions contemplated thereby.
This opinion is furnished to you at the request of the Company pursuant
to Section 3.02(d) of the Credit Agreement. Capitalized terms used herein and
not otherwise defined are used as defined in the Credit Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Credit Agreement,
the Assumption Letter of even date herewith executed by the Borrowing Subsidiary
and delivered to the Banks (the "Assumption Letter") and the promissory notes
executed by the Borrowing Subsidiary on the date hereof and delivered to the
Banks (the "Notes").
In rendering the opinions set forth herein, we have also examined
originals or copies, certified to our satisfaction, of such (i) certificates of
public officials, (ii) certificates of officers and representatives of the
Company and the Borrowing Subsidiary (including the certificate attached hereto
(the "Certificate")), and (iii) other documents and records, and we have made
such inquiries of officers and representatives of the Company and the Borrowing
Subsidiary, as we have deemed relevant or necessary as the basis for such
opinions. We have relied as to factual matters upon, and assumed the accuracy
of, such certificates, the representations and warranties of the Company and the
Borrowing Subsidiary made (or deemed made) in the Credit Agreement and the
Assumption Letter, and other statements, documents and records supplied to us by
the Company and the Borrowing Subsidiary, and we have assumed the genuineness of
all signatures (other than signatures of officers of the Borrowing Subsidiary)
and the authenticity of all documents submitted to us as originals and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies.
In rendering the opinions set forth herein, we have assumed that:
<PAGE>
(i) all the parties to the Credit Agreement and the Assumption Letter,
other than the Borrowing Subsidiary, are duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
organization and have the requisite corporate power to enter into the
Credit Agreement and the Assumption Letter; and
(ii) the execution and delivery of the Credit Agreement have been duly
authorized by all necessary corporate action and proceedings on the part of
all parties thereto; the Credit Agreement has been duly executed and
delivered by all parties thereto and constitutes the valid and binding
obligation of all parties thereto, other than the Borrowing Subsidiary,
enforceable against such parties in accordance with its terms.
Based upon the foregoing and subject to the qualifications stated
herein, we are of the opinion that, as of the date hereof:
1. The Borrowing Subsidiary has been duly organized and is validly
existing and in good standing under the laws of _____________. The Borrowing
Subsidiary has the requisite corporate power and authority to conduct its
business as currently conducted.
2. The Borrowing Subsidiary has the requisite corporate power and
authority to execute, deliver and perform its obligations under the Assumption
Letter, the Credit Agreement and the Notes. Such execution, delivery and
performance:
(a) have been duly authorized by all necessary and proper corporate
action of the Borrowing Subsidiary,
(b) do not violate any provision of the certificate of incorporation or
by-laws of the Borrowing Subsidiary or require any approval of the
Borrowing Subsidiary's stockholders,
(c) will not violate any law or regulation of ____________, the State
of New York (including, without limitation, any usury laws) or of the
United States of America applicable to the Borrowing Subsidiary,/5/ and
(d) do not contravene any agreement set forth on the Certificate, or,
to our knowledge, any other material agreement or instrument binding on the
Borrowing Subsidiary.
3. The Assumption Letter constitutes, and from and after the initial
Committed Borrowing to the Borrowing Subsidiary, the Notes will constitute, the
valid and binding obligations of the Borrowing Subsidiary, enforceable in
accordance with their respective terms.
4. No approval, consent or authorization of, or filing or registration
with, any governmental department, agency or instrumentality is necessary for
the Borrowing Subsidiary's execution or delivery of the Assumption Letter or the
Notes, or for the Borrowing Subsidiary's performance of any of the terms
thereof.
--------------------
/5/To be revised if the Borrowing Subsidiary is not a domestic corporation.
<PAGE>
[Date]
Page 3
Our opinions above are subject to the following qualifications:
(a) Our opinions relating to validity, binding effect and
enforceability in Paragraph 3 above are subject to limitations imposed by
any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and similar laws affecting creditors' rights
generally. In addition, our opinions relating to enforceability in
paragraph 3 above are subject to (i) the effect of general principles of
equity (regardless of whether considered in a proceeding in equity or at
law) and (ii) limitations imposed by public policy under certain
circumstances on the enforceability of provisions indemnifying a party
against liability for its own wrongful or negligent acts. In applying
principles of equity referred to in clause (i) above, a court, among other
things, might not allow a creditor to accelerate maturity of a debt upon
the occurrence of a default deemed immaterial. Such principles applied by
a court might include a requirement that a creditor act reasonably and in
good faith.
(b) Certain remedial and waiver provisions of the Credit Agreement
applicable to the Borrowing Subsidiary pursuant to the Assumption Letter
may be unenforceable in whole or in part, but the inclusion of such
provisions does not affect the validity of the Assumption Letter; however,
the unenforceability of such provisions may result in delays in the
enforcement of the Administrative Agent's and the Banks' rights and
remedies under the Assumption Letter (and we express no opinion as to the
economic consequences, if any, of such delays).
(c) We express no opinion as to the effect of the compliance or
noncompliance of the Administrative Agent or any of the Banks with any
state or federal laws or regulations applicable to the Administrative Agent
or any of the Banks because of the Administrative Agent's or any of the
Banks' legal or regulatory status, the nature of the business of the
Administrative Agent or any of the Banks or the qualification of any such
party to conduct business in any jurisdiction.
The foregoing opinions are limited to the laws of the United States,
the State of New York and the corporate law of [jurisdiction where the Borrowing
Subsidiary is incorporated] and we express no opinion with respect to the laws
of any other state or jurisdiction.
[Whenever in this opinion reference is made to our knowledge, such
reference is to the conscious awareness of [insert appropriate names] of
information regarding factual matters. With respect to such matters, such
persons have not, with your express permission and consent, undertaken any
investigation or inquiry either of other lawyers, files maintained by the firm,
or officers or employees of the Company or any of its Subsidiaries (including
without limitation the Borrowing Subsidiary). The reference to "conscious
awareness" as used in this paragraph has the meaning given that phrase in the
Third-Party Legal Opinion Report, Including the Legal Opinion Accord, of the
Section of Business Law, American Bar Association, 47 Bus. Law. 167, 192
(1991).]
The opinions expressed herein are being delivered to you as of the date
hereof and are solely for your benefit in connection with the transactions
contemplated in the Credit Agreement and may not be
-3-
<PAGE>
[Date]
Page 4
relied on in any manner or for any purpose by any other person, nor any copies
published, communicated or otherwise made available in whole or in part to any
other person or entity without our express prior written consent, except that
you may furnish copies thereof to each party that becomes a Bank after the date
hereof pursuant to the Credit Agreement, and such parties may rely on this
opinion as if it had been originally addressed to them.
We do not express any opinion, either implicitly or otherwise, on any
issue not expressly addressed in numbered Paragraphs 1 through 4. The opinions
expressed above are based solely on facts, laws and regulations existing and in
effect on the date hereof, and we assume no obligation to revise or supplement
this opinion should such facts change or should such laws or regulations be
changed by legislative or regulatory action, judicial decision or otherwise,
notwithstanding that such changes may affect the legal analysis or conclusions
contained in this opinion.
Very truly yours,
-4-
<PAGE>
CERTIFICATE
I, ___________________, am the _____________ ___________________ of
[Borrowing Subsidiary], a __________ corporation (the "Borrowing Subsidiary").
The Borrowing Subsidiary is entering into an Assumption Letter dated as of
_____________, 19__, pursuant to which it will become a party to the Credit
Agreement dated as of December 21, 1994 among R.R. Donnelley & Sons Company (the
"Company"), the banks party thereto ("Banks") and Citibank, N.A., as agent
("Administrative Agent") for such Banks (the "Credit Agreement").
The Credit Agreement requires that [name of law firm] issue a legal
opinion to the Administrative Agent and the Banks. In connection with such
legal opinion, the Company certifies to [name of law firm] that:
1. Not more than twenty-five percent (25%) of the value of the assets
subject to any "arrangement" (as such term is used in Section 221.2(g)(1)
of Regulation U of the Board of Governors of the Federal Reserve System)
under the Credit Agreement is represented by "margin stock" (as such term
is defined in Regulation U of the Board of Governors of the Federal Reserve
System).
2. The Borrowing Subsidiary has not granted to the Administrative
Agent or the Banks any direct security for the Company's or the Borrowing
Subsidiary's obligations to the Administrative Agent and the Banks under
the Credit Agreement.
3. There is no material agreement or instrument binding on the
Borrowing Subsidiary that governs or evidences indebtedness for borrowed
money or would affect the Borrowing Subsidiary's ability to perform its
obligations under the Assumption Letter, the Credit Agreement or the Notes,
except:
a. _______________________
b. _______________________
c. _______________________
[BORROWING SUBSIDIARY]
By:_______________________
Title:
Dated: _____________________
<PAGE>
Exhibit 10(c)
Form 10-K Year ended
12/31/94
Approved by Board of
Directors on January 27, 1994
Amended July 18, 1994
DONNELLEY SHARES STOCK OPTION PLAN
1. Plan. The purpose of this Donnelley Shares Stock Option Plan (the "Plan")
is to provide incentives to employees through rewards based upon the ownership
and performance of the common stock of R. R. Donnelley & Sons Company (the
"Company"). The Committee hereinafter designated shall grant options to
purchase shares of common stock, par value $1.25 per share, of the Company (the
"Common Stock") to eligible employees on the terms and subject to the conditions
stated in the Plan.
2. Eligibility. All employees (other than officers) of the Company and all of
its direct or indirect wholly-owned subsidiaries (the "Employers") who have
completed at least two (2) years of continuous service with any one or more of
the Employers shall be eligible, upon selection by the Committee, to receive
options under the Plan; provided, however, that an otherwise eligible employee
whose terms and conditions of employment are covered by a collective bargaining
agreement shall be eligible to receive options under the Plan only if expressly
provided for in a collective bargaining agreement or supplemental letter of
understanding signed by such employee's Employer and the recognized
representative of the collective bargaining unit in which the employee is a
member; provided further, that the preceding proviso shall not apply to
employees who are not subject to the United States labor laws. An employee
granted an option pursuant to the Plan shall be referred to herein from time to
time as an "Optionee".
3. Limitation on Shares Available. Subject to adjustment as provided in
Section 5 of the Plan, the maximum number of shares of Common Stock available
for all grants made under the Plan shall be 6,000,000. Shares of Common Stock
subject to grants made hereunder which, by reason of the expiration,
cancellation, forfeiture or other termination of such grants prior to purchase,
are not purchased shall again be available for future grants.
Shares of Common Stock to be delivered may be authorized and unissued
shares of stock, treasury stock or a combination thereof. The Company reserves
the right to purchase shares of Common Stock for the Plan in the open market.
4. Administration of the Plan. The Plan shall be administered by a committee
(the "Committee") designated by the Board of Directors of the Company (the
"Board"). Except as otherwise set forth in the Plan, the Committee shall,
subject to the terms of the Plan, select groups of eligible employees for
participation in the Plan and, with respect to such groups of eligible
employees, shall determine the number of shares of Common Stock subject to each
option granted hereunder, the terms and conditions of exercise of such option
and all other terms and conditions of such option. The Committee shall, subject
to the terms of the Plan, have the authority to interpret the
<PAGE>
Plan, establish rules and regulations for the administration of the Plan and
impose, incidental to the grant of an option, conditions with respect to the
grant. All such rules, regulations and interpretations adopted by the Committee
shall be conclusive and binding on all parties. The Committee may delegate its
authority to interpret all or part of the Plan to designated officers of the
Company.
5. Adjustments for Changes in Capitalization. The Committee shall make
appropriate adjustments to the number of shares available under the Plan, the
option exercise price and the number of shares subject to any option granted
hereunder in order to give effect to any stock split, stock dividend, merger,
consolidation, reorganization, spin-off, liquidation or other similar change in
capitalization or event that occurs after the effective date of the Plan, such
adjustments to be made in the case of outstanding options without a change in
the aggregate purchase price. If any adjustment would result in a fractional
security being available under the Plan or subject to a grant under the Plan,
such fractional security shall be disregarded.
6. Effective Date and Term of Plan. The Plan shall become effective on January
27, 1994 (the "Effective Date"). The Plan shall terminate five (5) years after
the Effective Date unless terminated prior thereto by action of the Board. No
further grants shall be made under the Plan after termination, but termination
shall not affect the rights of any Optionee under any grants made prior to
termination.
7. Amendments. The Plan may be amended or terminated by the Board in any
respect and at any time, provided that such action shall not adversely affect
any rights or obligations with respect to any outstanding grants under the Plan.
8. Grants. (a) Options to purchase 100 shares of Common Stock shall be
granted on March 24, 1994 to eligible employees employed on such date who had
completed at least two (2) years of continuous service with any one or more of
the Employers as of December 31, 1993; provided, however, that employees who, as
of March 24, 1994, are members of a collective bargaining unit shall be deemed
eligible employees for purposes of this paragraph 8(a) only if a collective
bargaining agreement or supplemental letter of understanding providing for the
receipt of such options by such employees was fully executed by such employee's
Employer and the recognized representative of the collective bargaining unit
prior to March 1, 1994; and provided further, that eligible employees who are
not employed in the United States of America as of March 24, 1994 shall not
receive such options. All options granted on March 24, 1994 shall become
exercisable in full on December 31, 1996.
(b) Additional options may be granted, in the sole and absolute
discretion of the Committee, to groups of eligible employees at any time.
(c) The option price per share of Common Stock purchasable upon the
exercise of any option granted pursuant to the Plan shall be the fair market
value of a share of Common Stock on the date of grant of such option. For
purposes of the Plan, the fair market value shall be determined by reference to
the average of the high and low transaction prices in trading of the Common
Stock as reported in the New York Stock Exchange-Composite Transactions on the
date of grant.
-2-
<PAGE>
(d) All options granted hereunder shall be evidenced by a certificate
substantially in the form of Exhibit A hereto. Each certificate shall be dated
and signed by an officer of the Company as of the date of the grant.
9. Terms of Options. (a) No option shall be exercisable earlier than one (1)
year, nor more than ten (10) years, after the date of grant. Each option
granted hereunder shall become exercisable in full on the third anniversary of
the date of the grant, unless otherwise determined by the Committee and except
as otherwise set forth in Section 8(a). Notwithstanding the foregoing, if an
Optionee is no longer employed by at least one of the Employers for any reason
(including due to death or long-term disability but excluding due to termination
of employment upon retirement at normal retirement age or early retirement at or
after age 55 with the consent of the Company), each option held by such Optionee
which is not exercisable on the date of termination of employment shall
terminate automatically on such date. Options held by an Optionee who retires
at normal retirement age or who takes early retirement at or after age 55 with
the consent of the Company, regardless of whether or not such options are
exercisable at the date of retirement, shall not terminate as a result of such
retirement but shall continue to remain outstanding and subject to the terms and
conditions of the Plan; provided, however, that in the event that such an
Optionee dies, each option held by such Optionee which is not exercisable on the
date of death of such Optionee shall terminate automatically upon the death of
such Optionee. Additionally, after an option held by an Optionee has become
exercisable, if such Optionee is no longer employed by at least one of the
Employers for any reason (other than retirement at normal retirement age or
early retirement at or after age 55 with the consent of the Company or for any
of the reasons specified in Section 9(c)) and/or such Optionee dies, then such
Optionee (or in the case of death, such Optionee's executor, administrator,
personal representative, beneficiary or similar person) may exercise such
exercisable option until ninety (90) days from the date of such termination of
employment and/or the date of death, as the case may be, or until the expiration
of the term of such option, whichever is earlier.
(b) No option hereunder shall be transferable other than by will, the
laws of descent and distribution or pursuant to the beneficiary designation
procedures approved by the Committee. Each option shall be exercisable during
the Optionee's lifetime only by the Optionee or the Optionee's guardian, legal
representative or similar person, provided that evidence of such person's
identity and rights with respect to such exercise are acceptable to the
Committee. Except as permitted by the first sentence of Section 9(b) of the
Plan, no option hereunder shall be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Any
such attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any option hereunder shall be null and void and no person
shall be entitled to any rights hereunder by virtue of any attempted execution,
attachment or similar process. In the event of the death of an Optionee, any
unexercised portion of an option that, but for the death of the Optionee, would
have been exercisable on the date of such Optionee's death by such Optionee may
be exercised by the executor, administrator, personal representative,
beneficiary or similar person of such deceased Optionee within ninety (90) days
of the death of such Optionee, but not after the expiration of the term of the
option; provided that evidence of such person's identity and rights with respect
to such exercise are acceptable to the Committee.
-3-
<PAGE>
(c) Notwithstanding anything contained herein to the contrary, in the
event the Committee shall determine that an Optionee's employment was terminated
by the Optionee's Employer on account of (i) an unauthorized disclosure of
confidential information or trade secrets of any Employer, (ii) unlawful trading
in the securities of the Company or any customers of any of the Employers, or
(iii) fraud, theft or embezzlement with respect to any of the Employers or any
breach of the Optionee's duties to the Optionee's Employer or any of the other
Employers, then such Optionee shall forfeit all rights to the unexercised
portion of any option held by the Optionee under the Plan, and all such options
shall automatically terminate.
(d) Options must be exercised in full. No partial exercise is
permitted. No shares of Common Stock may be purchased under any option granted
under the Plan unless prior to or simultaneously with the purchase, the Optionee
shall have delivered by such means as have been identified by the Committee
notice to the Company, accompanied by payment therefor in full of the option
price, any brokerage fees associated with the exercise of the options (the
"Brokerage Fees"), and any local, state, federal or other taxes required to be
withheld and paid over to governmental taxing authorities by the Company due to
such exercise ("Taxes") (or arrangement made for such payment to the
satisfaction of the Company). Upon exercise, the option price, the Brokerage
Fees and the Taxes may be paid according to procedures established by the
Committee as follows: (i) in cash or (ii) by electing to sell, through an agent
or broker designated by the Company, whole shares of Common Stock issuable upon
exercise of the option having a fair market value determined on the date of
exercise as close as is practicable to the sum of (A) the option price for
shares of Common Stock subject to such exercise, (B) the Brokerage Fees
associated with such exercise and (C) the Taxes associated with such exercise,
provided that the number of whole shares sold shall be sufficient to pay in full
the option price, the Brokerage Fees and the Taxes. No option may be exercised
by an Optionee through any agent or broker other than an agent or broker
designated by the Company. Notwithstanding the foregoing, in the event that an
Optionee has notified the Company through the Company's electronic system that
such Optionee is exercising an option and is paying cash for the option price
and the Taxes and such cash is not received within 30 calendar days following
such notice, then the Company may automatically order the sale, through the
designated agent or broker, of whole shares of Common Stock to pay in full the
option price, the Brokerage Fees and the Taxes and deliver any whole shares of
Common Stock not so applied to the Optionee, plus any cash owed in lieu of
fractional shares. The Committee shall have sole discretion to disapprove of an
election pursuant to clause (ii). No shares of Common Stock shall be delivered
to the Optionee until the full option price, the Brokerage Fees and the Taxes
have been paid. Optionees shall be required to receive all shares acquired
under an option in the form of stock certificates; cash shall not be paid to an
Optionee in lieu of the delivery of stock certificates upon the exercise of any
option, except to the extent necessary to compensate for fractional shares.
(e) Optionees shall be entitled to the privilege of ownership with
respect to shares of Common Stock subject to options granted hereunder only as
to shares of Common Stock purchased and delivered to an Optionee upon exercise
of an option.
-4-
<PAGE>
10. Miscellaneous.
(a) Effect of Leaves of Absence. Leaves of absence for periods and
purposes conforming to the personnel policies of the Company and approved by the
Employer shall not be deemed terminations of employment or interruptions of
continuous service.
(b) Restrictions on Shares. Notwithstanding any provision of the Plan to
the contrary, unless a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), is in effect as to the shares purchasable
under any option granted under the Plan, no shares of Common Stock may be
purchased under such option. In addition, notwithstanding any provision of this
Plan to the contrary, any option granted under the Plan is subject to the
condition that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
option upon any securities exchange or under any law, the consent or approval of
any regulatory body, or the taking of any other action is necessary or desirable
as a condition of, or in connection with, the delivery of the shares thereunder,
such shares shall not be delivered unless such listing, registration,
qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company.
(c) No Right to Employment. Neither the Plan nor the grant of options
hereunder shall be construed as giving any employee any right to be retained in
the employ of any Employer.
(d) Governing Law. The Plan shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
(e) Nature of Option. The options granted under the Plan shall not be
treated as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
11. Acceleration of Options Upon a Change in Control. If while any option
remains unexercised and outstanding under the Plan:
(a) any "person", as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
modified and used in Section 13(d) and 14(d) thereof (but not including (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company)
(hereinafter a "Person") is or becomes the beneficial owner, as defined in
Rule 13d-3 of the Exchange Act, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its affiliates)
representing 50% or more of the combined voting power of the Company's then
outstanding securities; or
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(b) during any period of two (2) consecutive years, individuals who
at the beginning of such period constitute the Board and any new director
(other than a director designated by a Person who has entered into any
agreement with the Company to effect a transaction described in clause (a),
(c) or (d) of this Section) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
a majority thereof; or
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company's assets;
(any of such events being hereinafter referred to as a "Change in Control"),
then from and after the date on which public announcement of the acquisition of
such percentage shall have been made, or the date on which the change in
composition of the Board set forth above shall have occurred, or the date of any
such stockholder approval of a merger, consolidation, plan of complete
liquidation or an agreement for the sale of the Company's assets as described
above occurs (the applicable date being hereinafter referred to as the
"Acceleration Date"), all such outstanding and unexercised options, whether or
not then exercisable, shall be fully and immediately exercisable.
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Exhibit A
DONNELLEY SHARES
STOCK OPTION PLAN
This is to certify that
(OPTIONEE NAME)
was granted on (DATE), an option to purchase
(NUMBER)
SHARES
of R. R. Donnelley & Sons Company common stock at a fixed
option price of (PRICE) per share. This option is subject to the
terms and conditions of the Donnelley Shares
Stock Option Plan.
[logo] RR Donnelley This certificate has been
& Sons Company executed as of (DATE),
on behalf of R. R. Donnelley
& Sons Company by
(FACSIMILE SIGNATURE)
John R. Walter
Chairman and
Chief Executive Officer
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DONNELLEY SHARES STOCK OPTION PLAN
----------------------------------
FOR UK EMPLOYEES
----------------
1. Introduction. R. R. Donnelley & Sons Company ("the Company") has
established its Donnelley Shares Stock Option Plan ("the US Plan") for the
benefit of employees of it and its subsidiaries under which it may grant stock
options to such employees. The Company intends to grant Options to employees in
the United Kingdom under a UK sub-plan of the US Plan to be known as the
Donnelley Shares Stock Option Plan for UK Employees ("the UK Plan"). The UK
Plan shall be governed by these Rules ("the Rules"). The UK Plan is intended to
qualify as an approved share option plan under Schedule 9 to the Income and
Corporation Taxes Act 1988.
2. The Appendix. The US Plan attached as an Appendix to these Rules shall
apply to the UK Plan subject to the additional restrictions and amendments
specified below. References to Schedule 9 are to Schedule 9 to the Income and
Corporation Taxes Act 1988.
3. Exclusion. Section 8(a) of the US Plan relating to Option Grants on 24
March 1994 will not apply to the UK Plan.
4. Subsidiaries. The direct and indirect wholly-owned subsidiaries of the
Company referred to in Section 2 of the US Plan shall include, for purposes of
the UK Plan, only those companies of which the Company has control within the
meaning of Section 840 of the Income and Corporation Taxes Act 1988.
5. Shares. The shares of common stock of the Company in respect of which
Options may be granted under the UK Plan must satisfy the conditions specified
in paragraphs 10 to 14 inclusive of Schedule 9.
6. Eligibility.
6.1. For the avoidance of doubt, it is hereby clarified that directors of the
Company and its subsidiaries are not eligible to receive Options under the UK or
US Plans. The description of eligible employees in Section 2 of the US Plan
shall also be subject to the additional requirement that an employee must, in
order to be eligible to receive Options, be an employee of the Company or a
subsidiary of the Company who is required to devote to his duties not less than
20 hours per week excluding meal breaks and who is not precluded by paragraph 8
of Schedule 9 from participating in the UK Plan.
6.2. The proviso in Section 2 of the US Plan relating to eligible employees
covered by collective bargaining agreements will not apply to the UK Plan.
6.3. Persons who are not eligible employees, as described in Section 2 of the
US Plan and qualified by Rules 6.1 and 6.2 above, shall not be eligible to
receive Options under the UK Plan.
6.4. Any Option granted to an eligible employee shall be limited and take
effect so that the aggregate Fair Market Value of Common Stock subject to that
Option, when aggregated with the
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Fair Market Value of Common Stock subject to subsisting Options, shall not
exceed the greater of:
6.4.1. (Pounds)100,000; and
6.4.2. four times the amount of the individual's Relevant Emoluments for the
current or preceding Year of Assessment (whichever of those years gives the
greater amount) or, if there were no Relevant Emoluments for the preceding Year
of Assessment, four times the amount of the Relevant Emoluments for the period
of twelve months beginning with the first day during the current Year of
Assessment in respect of which there are Relevant Emoluments.
For the purposes of this restriction:
(i) "Options" includes all Options granted under the UK Plan and all
options granted under any other plan approved under Schedule 9 (not being a
savings-related share option scheme) and established by the Company or any
associated company thereof (within the meaning of Section 416 of the Income
and Corporation Taxes Act 1988);
(ii) "Relevant Emoluments" means such of the emoluments of the office or
employment by virtue of which an individual is eligible to receive Options
under the UK Plan as are liable to be paid in that year under deduction of
tax pursuant to Section 203 of the Income and Corporation Taxes Act 1988
("Pay As You Earn") after deducting therefrom amounts included by virtue of
Chapter II of Part V of the Income and Corporation Taxes Act 1988 (benefits
derived by directors and others from their employment);
(iii) "Year of Assessment" means a year beginning on any 6 April and
ending on the following 5 April; and (iv) The "Fair Market Value" of Common
Stock shall be calculated in accordance with Section 8(c) of the US Plan as
at the dates when the Options in relation to the Common Stock were granted
or such earlier time as may have been agreed in writing with the Board of
Inland Revenue.
7. Exercise of Options.
7.1. The provisions of Section 9(a) to (d) of the US Plan relating to the
exercise of Options shall be subject to the additional restriction that no
Option may be exercised by an Optionee at any time when he is precluded by
paragraph 8 of Schedule 9 from participating in the UK Plan.
7.2. No cash payments may be made to Optionees pursuant to the final sentence
of Section 9(d) of the US Plan.
7.3. Shares must be allotted within 30 days after the date of exercise.
8. Conditions. No conditions may be imposed by the Committee pursuant to the
third sentence in Section 4 of the US Plan to the extent that they affect the UK
Plan without the prior approval of the Board of Inland Revenue. If such
conditions involve the satisfaction of performance criteria, those criteria must
be of an objective nature.
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9. Adjustments Upon Changes in Capitalisation. The provisions of Section 5 of
the US Plan concerning the adjustment of Options shall be subject to the
requirement that all such adjustments must be certified in writing by the
Auditors as being fair and reasonable and that no adjustment in respect of
subsisting Options and of Options to be granted under the UK Plan shall take
effect without the prior approval of the Board of Inland Revenue. Also, no
adjustment may be made under the UK Plan in relation to a spin-off.
For the purposes of this restriction, "Auditors" means the auditors for the time
being of the Company (acting as experts and not as arbitrators).
10. Amendment of the Plan. Any amendment of the US or UK Plans which is made
under the provisions of Section 7 of the US Plan and which affects the UK Plan
shall only take effect in respect of the UK Plan with the prior approval of the
Board of Inland Revenue.
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Exhibit 10(k)
Form 10-k for year ended
12/31/94
(AS APPROVED BY STOCKHOLDERS
ON 3/23/95)
R.R. DONNELLEY & SONS COMPANY
1995 STOCK INCENTIVE PLAN
I. GENERAL
1. Plan. To provide incentives to management through rewards based upon the
ownership or performance of the common stock of R.R. Donnelley & Sons Company
(the "Company"), the Committee hereinafter designated, may grant cash or bonus
awards, stock options, stock appreciation rights ("SARs"), or combinations
thereof, to eligible officers and other key management employees, on the terms
and subject to the conditions stated in the Plan. In addition, to provide
incentives to members of the Board of Directors ("Board") who are not employees
of the Company ("non-employee directors"), such non-employee directors are
hereby granted options on the terms and subject to the conditions set forth in
the Plan. For purposes of the Plan, references to employment by the Company
also mean employment by a majority-owned subsidiary of the Company.
2. Eligibility. Officers and other key management employees of the Company and
its subsidiaries shall be eligible, upon selection by the Committee, to receive
cash or bonus awards, stock options or SARs, either singly or in combination, as
the Committee, in its discretion, shall determine. Non-employee directors shall
receive stock options on the terms and subject to the conditions stated in the
Plan.
3. Limitation on Shares to be Issued. Subject to adjustment as provided in
Section 5 of this Article I, 7,500,000 shares of common stock, par value $1.25
per share ("common stock"), shall be available under the Plan, reduced by the
aggregate number of shares of common stock which become subject to outstanding
bonus awards, stock options and SARs which are not granted in tandem with or by
reference to a stock option ("free-standing SARs"). Shares subject to a grant
or award which for any reason are not issued or delivered, including by reason
of the expiration, termination, cancellation or forfeiture of all or a portion
of the grant or award or by reason of the delivery or withholding of shares to
pay all or a portion of the exercise price or to satisfy tax withholding
obligations, shall again be available for future grants and awards; provided,
however, that for purposes of this sentence, stock options and SARs granted in
tandem with or by reference to a stock option granted prior to the grant of such
SARs ("tandem SARs") shall be treated as one
<PAGE>
grant. For the purpose of complying with Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the rules and regulations thereunder,
the maximum number of shares of common stock with respect to which options or
SARs or a combination thereof may be granted during any three-year period to any
person shall be 1,000,000, subject to adjustment as provided in Section 5 of
this Article I. The maximum number of shares of common stock with respect to
which fixed awards in the form of restricted stock may be granted hereunder is
500,000 in the aggregate, subject to adjustment as provided in Section 5 of this
Article I.
Shares of common stock to be issued may be authorized and unissued shares
of common stock, treasury stock or a combination thereof.
4. Administration of the Plan. The Plan shall be administered by a Committee
designated by the Board of Directors (the "Committee"). Each member of the
Committee shall be (i) an "outside director" within the meaning of Section
162(m) of the Code, subject to any transitional rules applicable to the
definition of outside director, and (ii) a "disinterested person" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Committee shall, subject to the terms of the Plan, select
eligible officers and key management employees for participation; determine the
form of each grant and award, either as cash, a bonus award, stock options or
SARs or a combination thereof; and determine the number of shares or units
subject to the grant or award, the fair market value of the common stock or
units when necessary, the time and conditions of vesting, exercise or
settlement, and all other terms and conditions of each grant and award,
including, without limitation, the form of instrument evidencing the grant or
award. The Committee may establish rules and regulations for the administration
of the Plan, interpret the Plan, and impose, incidental to a grant or award,
conditions with respect to competitive employment or other activities not
inconsistent with the Plan. All such rules, regulations, interpretations and
conditions shall be conclusive and binding on all parties. Each grant and award
shall be evidenced by a written instrument and no grant or award shall be valid
until an agreement is executed by the Company and the recipient thereof and,
upon execution by each party and delivery of the agreement to the Company, such
grant or award shall be effective as of the effective date set forth in the
agreement.
The Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or other executive officer of the Company as the
Committee deems 8appropriate; provided, however, that the Committee may not
delegate its power and authority with regard to (i) the selection for
participation in the Plan of (A) an employee who is a "covered employee" within
the meaning of Section 162(m) of the Code or who, in the Committee's judgment,
is likely to be a covered employee at any time during the period a grant or
award hereunder to such employee would be outstanding or (B) an officer or other
person subject to Section 16 of the Exchange Act or (ii) decisions concerning
the timing, pricing or amount of a grant or award to such an employee, officer
or other person.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by a majority of the members of the Committee without a meeting.
5. Adjustments. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar
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change in capitalization or event, or any distribution to holders of common
stock other than a regular cash dividend, the number and class of securities
available under the Plan, the number and class of securities subject to each
outstanding bonus award, the number and class of securities subject to each
outstanding stock option and the purchase price per security, the number of
securities subject to each stock option to be granted to non-employee directors
pursuant to Article III and the terms of each outstanding SAR shall be
appropriately adjusted by the Committee, such adjustments to be made in the case
of outstanding stock options and SARs without a change in the aggregate purchase
price or base price. If any such adjustment would result in a fractional
security being (i) available under the Plan, such fractional security shall be
disregarded, or (ii) subject to an outstanding grant or award under the Plan,
the Company shall pay the holder thereof, in connection with the first vesting,
exercise or settlement of such grant or award, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the fair market value on the vesting, exercise or settlement date
over (B) the exercise or base price, if any, of such grant or award.
6. Effective Date and Term of Plan. The Plan shall be submitted to the
stockholders of the Company for approval at the 1995 annual meeting of
stockholders and, if approved, shall become effective on January 1, 1995. The
Plan shall terminate on December 31, 1999 unless terminated prior thereto by
action of the Board. No further grants or awards shall be made under the Plan
after termination, but termination shall not affect the rights of any
participant under any grants or awards made prior to termination.
7. Amendments. The Plan may be amended or terminated by the Board in any
respect except that no amendment may be made without stockholder approval if
stockholder approval is required by applicable law, rule or regulation,
including Rule 16b-3 under the Exchange Act and Section 162(m) of the Code, or
such amendment would increase (subject to Section 5 of this Article I) the
maximum number of shares available under the Plan; provided, however, that
subject to Section 5 of this Article I, the number of shares subject to stock
options granted to non-employee directors, the purchase price therefor, the date
of grant of any such option, the termination provisions relating to such options
and the category of persons eligible to be granted such options shall not be
amended more than once every six months, other than to comply with changes in
the Code or the Employee Retirement Income Security Act of 1974, as amended, or
the rules and regulations thereunder. No amendment may impair the rights of a
holder of an outstanding grant or award without the consent of such holder.
8. Prior Plans. Upon approval of the Plan by the stockholders of the Company,
no further grants or awards shall be made under the Company's 1981 Stock
Incentive Plan, as amended (the "1981 Plan"), the 1986 Stock Incentive Plan, as
amended (the "1986 Plan"), or the 1991 Stock Incentive Plan, as amended (the
"1991 Plan"), except that SARs may be granted with respect to options previously
granted and outstanding under such Plans. Grants and awards made under the 1981
Plan, the 1986 Plan and the 1991 Plan prior to approval of the Plan by the
stockholders of the Company shall continue in effect in accordance with their
terms.
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II. BONUS AWARDS
1. Form of Award. Bonus awards, whether performance awards or fixed awards,
may be made to eligible officers and other key management employees in the form
of (i) cash, whether in an absolute amount or as a percentage of compensation,
(ii) stock units, each of which is substantially the equivalent of a share of
common stock but for the power to vote and, subject to the Committee's
discretion, the entitlement to an amount equal to dividends or other
distributions otherwise payable on a like number of shares of common stock,
(iii) shares of common stock issued to the employee but forfeitable and with
restrictions on transfer in any form as hereinafter provided or (iv) any
combination of the foregoing.
2. Performance Awards. Awards may be made in terms of a stated potential
maximum dollar amount, percentage of compensation or number of units or shares,
with the actual such amount, percentage or number to be determined by reference
to the level of achievement of corporate, sector, business unit, division,
individual or other specific objectives over a performance period of not less
than one nor more than ten years, as determined by the Committee. No rights or
interests of any kind shall be vested in an individual receiving a performance
award until the conclusion of the performance period and the determination of
the level of achievement specified in the award, and the time of vesting, if
any, thereafter shall be as specified in the award.
3. Fixed Awards. Awards may be made which are not contingent on the
achievement of specific objectives, but are contingent on the participant's
continuing in the Company's employ for a period specified in the award.
4. Rights with Respect to Restricted Shares. If shares of restricted common
stock are subject to an award, the participant shall have the right, unless and
until such award is forfeited or unless otherwise determined by the Committee at
the time of grant, to vote the shares and to receive dividends thereon from the
date of grant and the right to participate in any capital adjustment applicable
to all holders of common stock; provided, however, that a distribution with
respect to shares of common stock, other than a regular quarterly cash dividend,
shall be deposited with the Company and shall be subject to the same
restrictions as the shares of common stock with respect to which such
distribution was made.
During the restriction period, a certificate or certificates representing
restricted shares shall be registered in the holder's name and may bear a
legend, in addition to any legend which may be required under applicable laws,
rules or regulations, indicating that the ownership of the shares of common
stock represented by such certificate is subject to the restrictions, terms and
conditions of the Plan and the agreement relating to the restricted shares. All
such certificates shall be deposited with the Company, together with stock
powers or other instruments of assignment (including a power of attorney), each
endorsed in blank with a guarantee of signature if deemed necessary or
appropriate, which would permit transfer to the Company of all or a portion of
the shares of common stock subject to the award in the event such award is
forfeited in whole or in part. Upon termination of any applicable restriction
period, including, if applicable, the satisfaction or achievement of applicable
objectives, and subject to the Company's right to require payment of any taxes,
a certificate or certificates evidencing ownership of the requisite number of
shares of common stock shall be delivered to the holder of such award.
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5. Rights with Respect to Stock Units. If stock units are credited to a
participant pursuant to an award, then, subject to the Committee's discretion,
amounts equal to dividends and other distributions otherwise payable on a like
number of shares of common stock after the crediting of the units (unless the
record date for such dividends or other distributions precedes the date of grant
of such award) shall be credited to an account for the participant and held
until the award is forfeited or paid out. Interest shall be credited on the
account annually at a rate equal to the return on five year U.S. Treasury
obligations.
6. Vesting and Resultant Events. The Committee may, in its discretion, provide
for early vesting of an award in the event of the participant's death, permanent
and total disability or retirement. At the time of vesting, (i) the award, if
in units, shall be paid to the participant either in shares of common stock
equal to the number of units, in cash equal to the fair market value of such
shares, or in such combination thereof as the Committee shall determine, and the
participant's account to which dividend equivalents, other distributions and
interest have been credited shall be paid in cash, (ii) the award, if a cash
bonus award, shall be paid to the participant either in cash, or in shares of
common stock with a then fair market value equal to the amount of such award, or
in such combination thereof as the Committee shall determine and (iii) shares of
restricted common stock issued pursuant to an award shall be released from the
restrictions.
III. STOCK OPTIONS
1. Grants. (a) Options for Officers and Key Management Employees. Options to
purchase shares of common stock of the Company may be granted to such eligible
officers and key management employees as may be selected by the Committee.
These options may, but need not, constitute "incentive stock options" under
Section 422 of the Code or any other form of option under the Code. To the
extent that the aggregate fair market value (determined as of the date of grant)
of shares of common stock with respect to which options designated as incentive
stock options are exercisable for the first time by a participant during any
calendar year (under the Plan or any other plan of the Company, or any parent or
subsidiary) exceeds the amount (currently $100,000) established by the Code,
such options shall not constitute incentive stock options.
(b) Options for Non-Employee Directors. An option to purchase 4,000
shares of common stock of the Company shall be granted on the date of the 1995
annual meeting of stockholders and, thereafter, annually on the date of the
Company's annual meeting of stockholders to each individual who immediately
following such meeting on such date is a non-employee director. An option
granted to a non-employee director pursuant to this Section 1(b) (a "Director
Option") shall become exercisable in whole or in part on the earlier to occur of
(i) the date which is the first anniversary of the date the Director Option is
granted (the date of grant being hereafter referred to as the "Option Date") or
(ii) the day immediately preceding the date of the first annual meeting of
stockholders of the Company next following the Option Date; provided, however,
that the date of such annual meeting is at least three hundred fifty-five (355)
days after the Option Date, and Director Options shall not be exercisable more
than ten years after the Option Date.
2. Number of Shares and Purchase Price. The number of shares of common stock
subject to an option and the purchase price per share of common stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of common stock shall not
be less than 100% of the fair market value of a share of common stock on
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the date of grant of the option; provided further, that if an incentive stock
option shall be granted to any person who, on the date of grant of such option,
owns capital stock possessing more than ten percent of the total combined voting
power of all classes of capital stock of the Company (or of any parent or
subsidiary) (a "Ten Percent Holder"), the purchase price per share of common
stock shall be the price (currently 110% of fair market value) required by the
Code in order to constitute an incentive stock option; and provided further,
that the purchase price per share of common stock subject to a Director Option
shall be 100% of the fair market value of a share of common stock on the date of
grant of such option.
3. Exercise of Options. The period during which options granted hereunder
(other than options granted to non-employee directors) may be exercised shall be
determined by the Committee; provided, however, that no incentive stock option
shall be exercised later than ten years after its date of grant; provided
further, that if an incentive stock option shall be granted to a Ten Percent
Holder, such option shall not be exercisable more than five years after its date
of grant. The Committee may, in its discretion, establish performance measures
which shall be satisfied or met as a condition to the grant of an option or to
the exercisability of all or a portion of an option. The Committee shall
determine whether an option shall become exercisable in cumulative or non-
cumulative installments and in part or in full at any time. An exercisable
option, or portion thereof, may be exercised only with respect to whole shares
of common stock.
An option may be exercised (i) by giving written notice to the Company
specifying the number of whole shares of common stock to be purchased and
accompanied by payment therefor in full (or arrangement made for such payment to
the Company's satisfaction) either (A) in cash, (B) in previously owned whole
shares of common stock (which the optionee has held for at least six months
prior to delivery of such shares or which the optionee purchased on the open
market and for which the optionee has good title free and clear of all liens and
encumbrances) having a fair market value, determined as of the date of exercise,
equal to the aggregate purchase price payable by reason of such exercise, (C) in
cash by a broker-dealer acceptable to the Company to whom the optionee has
submitted an irrevocable notice of exercise or (D) a combination of (A) and (B),
(ii) if applicable, by surrendering to the Company any SARs which are cancelled
by reason of the exercise of the option and (iii) by executing such documents as
the Company may reasonably request. The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (B)-(D) and, in the case of
an optionee who is subject to Section 16 of the Exchange Act, the Company may
require that the method of making such payment be in compliance with Section 16
and the rules and regulations thereunder. Any fraction of a share of common
stock which would be required to pay such purchase price shall be disregarded
and the remaining amount due shall be paid in cash by the optionee. No
certificate representing common stock shall be delivered until the full purchase
price therefor has been paid.
4. Termination of Employment or Service. An option may be exercised during the
optionee's continued employment with the Company or service on the Board, as the
case may be, and, unless otherwise determined by the Committee as set forth in
the agreement relating to the option, for a period not in excess of ninety days
following termination of employment or service on the Board and only within the
original term of the option; provided, however, that if employment of the
optionee by the Company or service on the Board, as the case may be, shall have
terminated by reason of retirement or total and permanent disability, then the
option may be exercised to the extent set forth in the agreement relating to the
option for a period not in excess of five years following termination of
employment or service on the Board, but not after the expiration of the
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term of the option. In the event of the death of an optionee (i) during
employment or service on the Board, as the case may be, (ii) within a period not
in excess of five years after termination of employment or service on the Board,
as the case may be, by reason of retirement or total and permanent disability or
(iii) within ninety days after termination of employment or service on the
Board, as the case may be, for any other reason, outstanding options held by
such optionee at the time of death may be exercised to the extent set forth in
the agreement relating to the option by the executor, administrator, personal
representative, beneficiary or similar persons of such deceased optionee within
ninety days of the date of death.
IV. UK STOCK OPTION SUB-PLAN
1. GENERAL
(a) Sub-Plan. The UK Stock Option Sub-Plan ("the Sub-Plan") has been
established in order to vary the terms on which options may be given to officers
and other key management employees who are employed in the United Kingdom by the
Company or any of its subsidiaries. Stock options granted under the Sub-Plan
shall be deemed granted under the Plan and shall, unless otherwise stated or
implied in this Article IV, comply in all respects with the terms and conditions
applicable to options granted under Article III of the Plan. Articles II and V
and Clause 2 of Article VI shall not apply to options granted under the Sub-
Plan.
(b) Definitions. In the Sub-Plan the following terms shall have the following
meanings:
"the Subsidiaries" shall mean all companies which are controlled by the
Company (as defined in Section 840 of the Income and
Corporation Taxes Act 1988) and which are affiliates
controlled by the Company directly or indirectly
through one or more intermediaries for the purposes of
Rule 12b-2 of the Exchange Act;
"the Group" shall mean the Company and the Subsidiaries;
"Associated Company" shall have the meaning attributed to it in Section
416(1) of the Income and Corporation Taxes Act 1988;
"the Committee" shall mean the committee designated to administer the
Plan;
"Full Time Employee" shall mean any director or employee who is employed by
the Group in the United Kingdom and who is required to
devote to his duties not less than 25 hours (or in the
case of an employee who is not a director of any
company in the Group, 20 hours) per week (excluding
meal breaks) and is not precluded by paragraph 8 of
Schedule 9 from participating in the Sub-Plan;
"Relevant Emoluments" shall have the meaning which the term bears in sub-
paragraph (2) of paragraph 28 of Schedule 9 by virtue
of sub-paragraph (4) of that paragraph;
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<PAGE>
"Year of Assessment" shall mean a year beginning on any 6 April and ending
on the following 5 April;
"Market Value" shall mean on any day the average of high and low
transaction prices in trading in the common stock of
the Company as reported on the New York Stock Exchange
--Composite Transactions compiled by Associated Press
or if no trading occurred on such date then on the next
preceding date on which such trading occurred;
"Schedule 9" shall mean Schedule 9 of the United Kingdom Income and
Corporation Taxes Act 1988;
"Share" or "Shares" shall mean a share or shares of common stock of par
value $1.25 which satisfy the conditions specified in
Paragraphs 10 to 14 inclusive of Schedule 9.
(c) Sub-Plan. The Committee may grant stock options to officers and other key
management employees eligible to participate in the Sub-Plan on the terms and
subject to the conditions stated in the Sub-Plan.
(d) Eligibility. Full Time Employees who are officers or other key management
employees employed by the Group in the United Kingdom under selection guidelines
to be established by the Committee, shall be eligible, upon selection by the
Committee, to receive stock options.
(e) Shares to be Issued. Shares to be issued shall be authorized and unissued
shares of common stock, treasury stock or a combination thereof. The issue of
shares of common stock shall be subject to the maximum specified in the Plan.
(f) Administration. The Sub-Plan shall be administered by the Committee in
accordance with the provisions set out in the Plan and varied by the terms of
the Sub-Plan.
(g) Effective Date and Term of the Sub-Plan. The Sub-Plan shall be submitted
to the stockholders of the Company for approval at the 1995 annual meeting of
stockholders and, if approved, shall become effective on January 1, 1995.
Options shall not be granted until the Sub-Plan has been approved by the Board
of UK Inland Revenue under the provisions of paragraph 1 of Schedule 9. Any
change required to be made to the Plan by the Board of UK Inland Revenue in
order to obtain its approval may be made without stockholder approval, except as
otherwise provided in Clause 7 of Article I. The Sub-Plan shall terminate on
December 31, 1999 unless terminated prior thereto by action of the Board. No
further grants shall be made under the Sub-Plan after termination, but
termination shall not affect the rights of any participant under the grants made
prior to termination.
(h) Amendments. The Sub-Plan may be amended or terminated by the Board subject
to the conditions specified in the Plan. No amendment may be made which will
put the Sub-Plan in breach of conditions for approval set out in Schedule 9 and
no amendment to the Sub-Plan or any provision in the Plan which applies to
options granted under the Sub-Plan shall be made without prior approval of the
Board of UK Inland Revenue.
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<PAGE>
2. STOCK OPTIONS
(a) Grants. Options to purchase shares of common stock may be granted to such
eligible Full-Time Employees as may be selected by the Committee. No variation
shall be made in relation to a spin-off nor to any class of securities available
under the Sub-Plan.
(b) Variations in Options. Variations may not be made to options granted under
the Sub-Plan pursuant to Article I clause 5 of the Plan without prior consent of
the Board of UK Inland Revenue.
(c) Terms of Options. Terms attaching to options shall be contained in a stock
option agreement, the form of which must be approved in advance by the Board of
UK Inland Revenue. If any performance targets are attached to the
exercisability of an option, these shall be objectively determined and subject
to the prior approval of the Board of UK Inland Revenue. No option shall be
exercisable more than ten years after its date of grant. The per share option
price shall be stated at the time the option is granted and shall be not less
than 100% of the Market Value of the share on the date on which the optionee is
offered options under the Sub-Plan. Upon exercise, the option price shall be
paid in cash. The provisions in Clause 3 of Article III for the exercise of
options by payment in whole shares of common stock or in cash by a broker-dealer
to whom the optionee has submitted an irrevocable notice of exercise will not
apply for the purposes of the Sub-Plan unless, in the case of the latter,
approved by the Board of UK Inland Revenue. Options shall not be transferable
except that such options may be exercised by the personal representative of a
deceased optionee or a beneficiary of such deceased optionee who has been
designated pursuant to beneficiary designation procedures approved by the
Company, in each case within ninety days of the death of the optionee. Options
may be exercised during the individual's continued employment with the Group and
for a period not in excess of ninety days following termination of employment
and only within the original term of the option. No option may be exercised by
an individual at any time when he is precluded by Paragraph 8 of Schedule 9 from
participating in the Sub-Plan.
(d) Exercise of Option. An option may be exercised by delivery of written
notice to the Company specifying the number of shares to be purchased and
accompanied by payment in full of the option price for the number of shares so
purchased. The Company shall within thirty days post to the optionee
certificates representing the number of shares specified, and shall pay all
original issue or transfer taxes and all other fees and expenses incidental to
such delivery.
(e) Limits on Options. No person shall be granted options under the Sub-Plan
which would, at the time that they are obtained, cause the aggregate Market
Value of the shares which such person may acquire in pursuance of rights
obtained under the Sub-Plan or under any other scheme established by the Group
or by any Associated Company of the Company and approved by the Board of UK
Inland Revenue under Schedule 9 (and not exercised) to exceed or further exceed
the greater of:
(1) 100,000 British Pounds Sterling or
(2) Four times the Relevant Emoluments of the optionee for the
current or preceding Year of Assessment (whichever of those years gives the
greater amount) or if
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<PAGE>
there were no Relevant Emoluments for the preceding Year of Assessment four
times the amount of the Relevant Emoluments for the period of twelve months
beginning with the first day during the current Year of Assessment in
respect of which there are Relevant Emoluments. For the purposes of this
clause the Market Value of the shares shall be converted from US Dollars to
sterling at the middle rate for the buying and selling of that amount of
sterling for US Dollars as quoted by the Barclays Bank PLC at the opening
of business on the day on which the optionee is offered options under the
Sub-Plan.
V. STOCK APPRECIATION RIGHTS
1. Grants. Free-standing SARs entitling the grantee to receive cash or shares
of common stock having a fair market value equal to the appreciation in market
value of a stated number of shares of common stock from the date of grant to the
date of exercise of such SARs, or in the case of tandem SARs, from the date of
grant of the related stock option to the date of exercise of such tandem SARs,
may be granted to such eligible officers and other key management employees as
may be selected by the Committee. The holder of a tandem SAR may elect to
exercise either the option or the SAR, but not both.
2. Number of SARs and Base Price. The number of SARs subject to a grant shall
be determined by the Committee. Any tandem SAR related to an incentive stock
option shall be granted at the same time that such incentive stock option is
granted. The base price of a tandem SAR shall be the purchase price per share
of common stock of the related option. The base price of a free-standing SAR
shall be determined by the Committee; provided, however, that such base price
shall not be less than 100% of the fair market value of a share of common stock
on the date of grant of such SAR.
3. Exercise of SARs. The agreement relating to a grant of SARs may specify
whether such grant shall be settled in shares of common stock (including
restricted shares of common stock) or cash or a combination thereof. Upon
exercise of an SAR, the grantee shall be paid the excess of the then fair market
value of the number of shares of common stock to which the SAR relates over the
fair market value of such number of shares at the date of grant of the SAR or of
the related stock option, as the case may be. Such excess shall be paid in cash
or in shares of common stock having a fair market value equal to such excess or
in such combination thereof as the Committee shall determine. The period during
which SARs granted hereunder may be exercised shall be determined by the
Committee; provided, however, that no tandem SAR shall be exercised if the
related option has expired or has been cancelled or forfeited or has otherwise
terminated. The Committee may, in its discretion, establish performance measures
which shall be satisfied or met as a condition to the grant of an SAR or to the
exercisability of all or a portion of an SAR. The Committee shall determine
whether an SAR may be exercised in cumulative or non-cumulative installments and
in part or in full at any time. An exercisable SAR, or portion thereof, may be
exercised, in the case of a tandem SAR, only with respect to whole shares of
common stock and, in the case of a free-standing SAR, only with respect to a
whole number of SARs. If an SAR is exercised for restricted shares of common
stock, a certificate or certificates representing such restricted shares shall
be issued in accordance with Section 4 of Article II and the holder of such
restricted shares shall have such rights of a stockholder of the Company as
determined pursuant to such Section. Prior to the exercise of an SAR for shares
of common stock, including restricted
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<PAGE>
shares, the holder of such SAR shall have no rights as a stockholder of the
Company with respect to the shares of common stock subject to such SAR.
A tandem SAR may be exercised (i) by giving written notice to the Company
specifying the number of whole SARs which are being exercised, (ii) by
surrendering to the Company any options which are cancelled by reason of the
exercise of such SAR and (iii) by executing such documents as the Company may
reasonably request. A free-standing SAR may be exercised (i) by giving written
notice to the Company specifying the whole number of SARs which are being
exercised and (ii) by executing such documents as the Company may reasonably
request. In the case of the holder of an SAR who is subject to Section 16 of
the Exchange Act, the Company may require that the exercise of an SAR be in
compliance with Section 16 and the rules and regulations thereunder.
4. Termination of Employment. An SAR may be exercised during the grantee's
continued employment with the Company and, unless otherwise determined by the
Committee as set forth in the agreement relating to the SAR, for a period not in
excess of ninety days following termination of employment and only within the
original term of the SAR; provided, however, that if employment of the grantee
by the Company shall have terminated by reason of retirement or total and
permanent disability, then the SAR may be exercised to the extent set forth in
the agreement relating to the SAR for a period not in excess of five years
following termination of employment but not after the expiration of the term of
the SAR. In the event of the death of a holder of an SAR (i) during employment,
(ii) within a period not in excess of five years after termination of employment
by reason of retirement or total and permanent disability or (iii) within ninety
days after termination of employment for any other reason, outstanding SARs held
by such holder at the time of death may be exercised to the extent set forth in
the agreement relating to the SAR by the executor, administrator, personal
representative, beneficiary or similar persons of such deceased holder within
ninety days of the date of death.
VI. OTHER
1. Non-Transferability of Options and Stock Appreciation Rights. No option or
SAR shall be transferable other than (i) by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company or (ii) as otherwise permitted under Rule 16b-3 under the Exchange Act
as determined by the Committee and set forth in the agreement relating to such
option or SAR. Each option or SAR may be exercised during the participant's
lifetime only by the participant or the participant's guardian, legal
representative or similar person. Except as permitted by the second preceding
sentence, no option or SAR may be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any option or SAR, such award and all rights thereunder
shall immediately become null and void.
2. Tax Withholding. The Company shall have the right to require, prior to the
issuance or delivery of any shares of common stock or the payment of any cash
pursuant to a grant or award hereunder, payment by the holder thereof of any
Federal, state, local or other taxes which may be required to be withheld or
paid in connection therewith. An agreement may provide that (i) the Company
shall withhold whole shares of common stock which would otherwise be delivered
to a
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<PAGE>
holder, having an aggregate fair market value determined as of the date the
obligation to withhold or pay taxes arises in connection therewith (the "Tax
Date"), or withhold an amount of cash which would otherwise be payable to a
holder, in the amount necessary to satisfy any such obligation or (ii) the
holder may satisfy any such obligation by any of the following means: (A) a
cash payment to the Company, (B) delivery to the Company of previously owned
whole shares of common stock (which the holder has held for at least six months
prior to the delivery of such shares or which the holder purchased on the open
market and for which the holder has good title, free and clear of all liens and
encumbrances) having an aggregate fair market value determined as of the Tax
Date, (C) authorizing the Company to withhold whole shares of common stock which
would otherwise be delivered having an aggregate fair market value determined as
of the Tax Date or withhold an amount of cash which would otherwise be payable
to a holder, (D) in the case of the exercise of an option, a cash payment by a
broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (E) any combination of (A), (B) and (C);
provided, however, that the Committee shall have sole discretion to disapprove
of an election pursuant to any of clauses (B)-(E) and that in the case of a
holder who is subject to Section 16 of the Exchange Act, the Company may require
that the method of satisfying such an obligation be in compliance with Section
16 and the rules and regulations thereunder. An agreement relating to a grant
or award hereunder may provide for shares of common stock to be delivered or
withheld having an aggregate fair market value in excess of the minimum amount
required to be withheld, but not in excess of the amount determined by applying
the holder's maximum marginal tax rates. Any fraction of a share of common
stock which would be required to satisfy such an obligation shall be disregarded
and the remaining amount due shall be paid in cash by the holder.
3. Acceleration Upon Change in Control. If while (i) any performance award or
fixed award granted under Article II is outstanding or (ii) any stock option
granted under Article III or IV of the Plan or SAR granted under Article V of
the Plan is outstanding --
(a) any "person," as such term is defined in Section 3(a)(9) of the
Exchange Act, as modified and used in Section 13(d) and 14(d) thereof (but
not including (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company) (hereinafter a "Person") is or becomes the beneficial
owner, as defined in Rule 13d-3 of the Exchange Act, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates, excluding an acquisition resulting from the
exercise of a conversion or exchange privilege in respect of outstanding
convertible or exchangeable securities) representing 50% or more of the
combined voting power of the Company's then outstanding securities; or
(b) during any period of two (2) consecutive years (not including any
period prior to the effective date of the Plan), individuals who at the
beginning of such period constitute the Board and any new director (other
than a director designated by a Person who has entered into any agreement
with the Company to effect a transaction described in Clause (a), (c) or
(d) of this Section) whose election by the Board or nomination for
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<PAGE>
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
a majority thereof; or
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company's assets,
(any of such events being hereinafter referred to as a "Change in Control"),
then from and after the date on which public announcement of the acquisition of
such percentage shall have been made, or the date on which the change in the
composition of the Board set forth above shall have occurred, or the date of any
such stockholder approval of a merger, consolidation, plan of complete
liquidation or an agreement for the sale of the Company's assets as described
above occurs (the applicable date being hereinafter referred to as the
"Acceleration Date"), (i) with respect to such performance awards, the highest
level of achievement specified in the award shall be deemed met and the award
shall be immediately and fully vested, (ii) with respect to such fixed awards,
the period of continued employment specified in the award upon which the award
is contingent shall be deemed completed and the award shall be immediately and
fully vested and (iii) with respect to such options and SARs, all such options
and SARs, whether or not then exercisable in whole or in part, shall be fully
and immediately exercisable.
4. Restrictions on Shares. Each grant and award made hereunder shall be
subject to the requirement that if at any time the Company determines that the
listing, registration or qualification of the shares of common stock subject
thereto upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the delivery of
shares thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of common stock
delivered pursuant to any grant or award made hereunder bear a legend indicating
that the sale, transfer or other disposition thereof by the holder is prohibited
except in compliance with the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
5. No Right of Participation or Employment. No person (other than non-employee
directors to the extent provided in Article III) shall have any right to
participate in the Plan. Neither the Plan
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<PAGE>
nor any grant or award made hereunder shall confer upon any person any right to
continued employment by the Company, any subsidiary or any affiliate of the
Company or affect in any manner the right of the Company, any subsidiary or any
affiliate of the Company to terminate the employment of any person at any time
without liability hereunder.
6. Rights as Stockholder. No person shall have any right as a stockholder of
the Company with respect to any shares of common stock or other equity security
of the Company which is subject to a grant or award hereunder unless and until
such person becomes a stockholder of record with respect to such shares of
common stock or equity security.
7. Governing Law. The Plan, each grant and award hereunder and the related
agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.
8. Approval of Plan. The Plan and all grants and awards made hereunder shall
be null and void if the adoption of the Plan is not approved by the affirmative
vote of a majority of the shares of common stock present in person or
represented by proxy at the 1995 annual meeting of stockholders.
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<PAGE>
Exhibit 10(l)
Form 10-K Year ended
12/31/94
R. R. DONNELLEY & SONS COMPANY
STOCK OPTION AGREEMENT
----------------------
Options were granted to the executive officers listed below for the number of
shares and the exercise prices shown below:
PREMIUM-PRICED OPTIONS
GRANT DATE - 1/1/95
<TABLE>
<CAPTION>
# of Options # of Options # of Options
Exercisable @ Exercisable @ Exercisable @
Name $43.275 $50.4875 $57.70
------ ------------- ------------- -------------
<S> <C> <C> <C>
(1) John R. Walter 166,667 166,667 166,666
(2) Jonathan P. Ward 58,334 58,333 58,333
(3) William E. Tyler 58,334 58,333 58,333
(4) Frank R. Jarc 40,000 40,000 40,000
(5) Steven J. Baumgartner 40,000 40,000 40,000
</TABLE>
<PAGE>
R. R. DONNELLEY & SONS COMPANY
STOCK OPTION AGREEMENT
----------------------
R. R. DONNELLEY & SONS COMPANY, a Delaware corporation (herein called the
"Company"), acting pursuant to the provisions of its 1991 Stock Incentive Plan,
which was approved by stockholders on March 28, 1991 (herein called the "Plan"),
hereby grants to _______ (herein called "Optionee"), as of January 1, 1995
(herein called the "option date"), an option to purchase from the Company (i)
______ shares of common stock of the Company, par value $1.25 per share (herein
called "common stock"), at a price of ______ per share (herein called the "First
Premium Option"), (ii) ____ shares of common stock at a price of $_____ per
share (herein called the "Second Premium Option") and (iii) _____ shares of
common stock at a price of $______ per share (herein called the "Third Premium
Option" and the First Premium Option, the Second Premium Option and the Third
Premium Option are collectively referred to herein as the "option") to be
exercisable during the term commencing on January 1, 1995 and ending on December
31, 2004 (herein called the "option term"), but only upon the following terms
and conditions:
1. The option may be exercised by Optionee, in whole or in part, from time
to time, during the option term only in accordance with the following conditions
and limitations:
(a) Except as provided in Sections 5 and 7 hereof, Optionee must, at any time
the option becomes exercisable and at any time the option is exercised,
have been continuously in the employment of the Company since the date
hereof. Leave of absence for periods and purposes conforming to the
personnel policies of the Company and approved by the Committee
administering the Plan shall not be deemed terminations of employment or
interruptions of continuous service.
(b) Unless a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), is in effect as to the shares purchasable
under the option, no shares of common stock may be purchased under the
option unless, prior to the purchase thereof, the Company shall
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<PAGE>
have received an opinion of counsel to the effect that the sale of such
shares by the Company to Optionee will not constitute a violation of the
Securities Act. Optionee hereby agrees that as a condition of exercise,
Optionee will, if requested by the Company, submit a written statement, in
form satisfactory to counsel for the Company, to the effect that any shares
of common stock purchased upon exercise of the option will be purchased for
investment and not with a view to the distribution thereof within the
meaning of the Securities Act, and the Company shall have the right, in its
discretion, to cause the certificates representing shares of common stock
purchased under the option to be appropriately legended to refer to such
undertaking or to any legal restrictions imposed upon the transferability
thereof by reason of such undertaking.
(c) Subject to Sections 5 and 7 hereof, the option shall become exercisable as
follows:
(1) In the event Total Stockholder Return (as hereinafter defined) for the
four-year period commencing January 1, 1995 and ending on December 31, 1998
(the "First Performance Period") exceeds the S&P Industrial Index Total
Return (as hereinafter defined) for the First Performance Period, the
option shall become exercisable on December 31, 1998 with respect to all of
the shares of common stock subject to the option and the following
subsections (2)-(8) shall not apply. In the event Total Stockholder Return
for the First Performance Period equals or is less than the S&P Industrial
Index Total Return for the First Performance Period, the option may become
exercisable as set forth below.
(2) In the event Total Stockholder Return for the four-year period
commencing January 1, 1996 and ending on December 31, 1999 (the "Second
Performance Period") exceeds the S&P Industrial Index Total Return for the
Second Performance Period, the option shall become exercisable on December
31, 1999 with respect to all of the shares of common stock subject to the
option and the following subsections (3)-(8) shall not apply. In the event
Total Stockholder Return for the Second Performance Period equals or is
less than the S&P Industrial Index Total Return for the Second Performance
Period, the option may become exercisable as set forth below.
(3) In the event Total Stockholder Return for the four-year period
commencing January 1, 1997 and ending on December 31, 2000 (the "Third
Performance Period") exceeds the S&P Industrial Index Total Return for the
Third Performance Period, the option shall become exercisable on December
31, 2000 with respect to all of the shares of common stock subject to the
option and the following subsections (4)-(8) shall not apply. In the event
Total Stockholder Return for the Third Performance Period equals or is less
than the S&P Industrial Index Total Return for the Third Performance
Period, the option may become exercisable as set forth below.
(4) In the event Total Stockholder Return for the four-year period
commencing January 1, 1998 and ending on December 31, 2001 (the "Fourth
Performance Period") exceeds the S&P Industrial Index Total Return for the
Fourth Performance Period, the option shall become exercisable on December
31, 2001 with respect to all of the shares of common stock subject to the
option and the following subsections (5)-(8) shall not apply. In the event
Total
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<PAGE>
Stockholder Return for the Fourth Performance Period equals or is less than
the S&P Industrial Index Total Return for the Fourth Performance Period,
the option may become exercisable as set forth below.
(5) In the event Total Stockholder Return for the four-year period
commencing January 1, 1999 and ending on December 31, 2002 (the "Fifth
Performance Period") exceeds the S&P Industrial Index Total Return for the
Fifth Performance Period, the option shall become exercisable on December
31, 2002 with respect to all of the shares of common stock subject to the
option and the following subsections (6)-(8) shall not apply. In the event
Total Stockholder Return for the Fifth Performance Period equals or is less
than the S&P Industrial Index Total Return for the Fifth Performance
Period, the option may become exercisable as set forth below.
(6) In the event Total Stockholder Return for the four-year period
commencing January 1, 2000 and ending on December 31, 2003 (the "Sixth
Performance Period") exceeds the S&P Industrial Index Total Return for the
Sixth Performance Period, the option shall become exercisable on December
31, 2003 with respect to all of the shares of common stock subject to the
option and the following subsection (7) shall not apply. In the event
Total Stockholder Return for the Sixth Performance Period equals or is less
than the S&P Industrial Index Total Return for the Sixth Performance
Period, the option shall become exercisable as set forth below.
(7) Notwithstanding the foregoing subsections (1)-(6), but subject to
Sections 5 and 7 hereof, the option shall become exercisable on June 30,
2004 with respect to all of the shares of common stock subject to the
option and the following subsection (8) shall not apply.
(8) If while any portion of the option is outstanding and unexercisable, a
Change in Control (as defined in the Plan) occurs, then from and after the
Acceleration Date (as defined in the Plan), the option shall be exercisable
with respect to all of the shares of common stock subject to such portion
of the option.
No fractional shares may be purchased at any time.
"Total Stockholder Return" means, with respect to any four-year Performance
Period, the fair market value (as defined in Section 2) on the last day of such
Performance Period of the number of shares of common stock (rounded to the
nearest thousandth) which is deemed to be purchased by investing $100 as of the
day immediately preceding the first day of such Performance Period. All
dividends on common stock shall be assumed to be reinvested in common stock as
of each "ex dividend" trading date of the common stock occurring during such
Performance Period.
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<PAGE>
For purposes of calculating the number of shares of common stock which are
purchased on the day immediately preceding the first day of a Performance
Period, the purchase price per share of common stock shall be the fair market
value of the common stock on such day.
"S&P Industrial Index Total Return" means, with respect to any four-year
Performance Period, the cumulative total return during such Performance Period
of the Standard & Poor's Industrial Index stock index, computed on the same
basis as Total Stockholder Return. If the Standard & Poor's Industrial Index is
not published or otherwise available for the duration of a Performance Period,
"S&P Industrial Index Return" shall mean, with respect to such Performance
Period, the cumulative total return during such Performance Period of any stock
index determined by the Committee, computed on the same basis as Total
Stockholder Return.
2. Subject to the limitations herein set forth, the option may be
exercised by delivery of written notice to the Company specifying the number of
shares of common stock to be purchased and accompanied by payment in full of the
option price (or arrangement made for such payment to the Company's
satisfaction) for the number of shares so purchased. No shares of common stock
may be purchased under the option unless Optionee, or in the event of Optionee's
death the executor, administrator, or personal representative of such deceased
Optionee, shall pay to the Company such amount as the Company is advised it is
required under applicable local, state and federal tax laws to withhold and pay
over to governmental taxing authorities by reason of the purchase of shares of
common stock pursuant to the option.
-5-
<PAGE>
The option price and any federal, state and local income tax required to be
withheld in connection with such exercise may be paid in cash or in previously
owned whole shares of common stock (which Optionee has held for at least six
months prior to the delivery of such shares or which Optionee purchased on the
open market and for which Optionee has good title free and clear of all liens
and encumbrances) having a fair market value equal to the option price and such
amount of tax, or in a combination thereof. Payment of the option price and
such tax, or any part of it, in shares of common stock shall not be effective
unless Optionee delivers one or more stock certificates representing shares
having a fair market value on the date of exercise equal to or in excess of the
option price and such tax, or applicable portion thereof, accompanied by such
endorsements, signature guarantees or other documents or assurances as may
reasonably be required to effect the transfer to the Company of such number of
shares. If Optionee delivers a certificate or certificates representing shares
in excess of the number required to cover the option price and such tax, a
certificate representing such excess number of shares will be issued and
redelivered to Optionee. For purposes of this Agreement, the fair market value
of the common stock on a specified date shall be determined by reference to the
average of the high and low transaction prices in trading of the common stock on
such date as reported in the New York Stock Exchange-Composite Transactions, or,
if no such trading in the common stock occurred on such date, then on the next
preceding date when such trading occurred; provided, that if the Committee
administering the Plan shall determine that such New York Stock Exchange-
Composite Transactions prices are not representative of the fair market value,
such Committee shall determine such fair market value by such other appropriate
means as it shall determine.
-6-
<PAGE>
3. Upon exercise of the option in whole or in part pursuant to Section 2
hereof, the Company shall deliver certificates representing the number of shares
specified against payment therefor and shall pay all original issue or transfer
taxes and all other fees and expenses incident to such delivery.
4. Optionee shall be entitled to the privileges of ownership with respect
to shares subject to the option only as to shares purchased and delivered to
Optionee upon exercise of all or part of the option.
5. (a) If Optionee ceases to be employed by the Company by reason of death
prior to June 30, 2004, then the option shall be exercisable by the executor,
administrator, personal representative or beneficiary of Optionee during the 90-
day period commencing on the date of Optionee's death, but only during the
option term, with respect to all of the shares of common stock subject to the
option if, on or prior to the date of Optionee's death, the option had become
exercisable with respect to all of the shares of common stock subject to the
option pursuant to any of subsections 1(c)(1)-(6) or (8). If Optionee ceases to
be employed by the Company by reason of death prior to June 30, 2004 and the
option had not become exercisable on or prior to the date of Optionee's death
pursuant to any of subsections 1(c)(1)-(6) or (8), then the option shall become
exercisable as of the time of such death by the executor, administrator,
personal representative or beneficiary of Optionee for the 90-day period
commencing on the date of Optionee's death, but only during the option term, as
to the number of shares of common stock determined by multiplying the number of
shares of common stock subject to the First Premium Option, the Second Premium
Option and the Third Premium Option, respectively, by a fraction, the numerator
of which is the
-7-
<PAGE>
number of calendar months which have elapsed since and including January, 1995
through the date of such death (rounded up to the nearest whole number) and the
denominator of which is 114. The portion of the option which does not become
exercisable pursuant to the preceding sentence shall be cancelled as of the date
of Optionee's death. If Optionee ceases to be employed by the Company by reason
of death on or after June 30, 2004, then the option shall be exercisable by the
executor, administrator, personal representative or beneficiary of Optionee
during the 90-day period commencing on the date of Optionee's death, but only
during the option term, with respect to all of the shares of common stock
subject to the option.
(b) If Optionee ceases to be employed by the Company prior to December 31,
1998 for any reason other than death, the option shall be cancelled as of the
effective date of such cessation of employment. If Optionee ceases to be
employed by the Company on or after December 31, 1998 by reason of retirement on
or after age 65, retirement on or after age 55 with the consent of the Company
or total and permanent disability, then the option shall be exercisable by
Optionee during the five-year period commencing on the effective date of such
cessation of employment, but only during the option term, with respect to all of
the shares of common stock subject to the option if, on or prior to the
effective date of such cessation of employment, the option had become
exercisable with respect to all of the shares of common stock subject to the
option pursuant to any of subsections 1(c)(1)-(8). If Optionee ceases to be
employed by the Company on or after December 31, 1998 by reason of retirement on
or after age 65, retirement on or after 55 with the consent of the Company or
total and permanent disability and the option had not become exercisable on or
prior to the effective date of such cessation of employment pursuant to any of
subsections 1(c)(1)-(8), then the option shall become exercisable by Optionee,
during the five-year period commencing on the
-8-
<PAGE>
effective date of such cessation of employment, but only during the option term,
and only in accordance with subsections 1(c)(2)-(8); provided, however, that the
option may (in the case of subsections
1(c)(2)-(6)) or shall (in the case of subsections 1(c)(7)-(8)) become
exercisable during such five-year period only as to the number of shares of
common stock determined by multiplying the number of shares of common stock
subject to the First Premium Option, the Second Premium Option and the Third
Premium Option, respectively, by a fraction, the numerator of which is the
number of calendar months which have elapsed since and including January, 1995
through the effective date of such cessation of employment (rounded up to the
nearest whole number) and the denominator of which is 114. The portion of the
option which may not become exercisable pursuant to the preceding sentence shall
be cancelled as of the effective date of such cessation of employment.
(c) If Optionee ceases to be employed by the Company for any reason other
than death, retirement on or after age 65, retirement on or after age 55 with
the consent of the Company or total and permanent disability, then the option
shall be exercisable by Optionee during the 90-day period commencing on the
effective date of such cessation of employment, but only during the option term,
to the extent Optionee was entitled under Section 1(c) hereof to exercise the
option on the effective date of such cessation of employment. The portion of
the option which may not become exercisable pursuant to the preceding sentence
shall be cancelled as of the effective date of Optionee's cessation of
employment.
6. Neither the option nor any rights hereunder may be transferred other
than by will or the laws of descent and distribution. During Optionee's
lifetime the option is exercisable only by
-9-
<PAGE>
Optionee or Optionee's guardian, personal representative or similar person. Any
other transfer or any attempted assignment, pledge or hypothecation, whether by
operation of law or otherwise, shall be void. The option is not subject to
execution, attachment or other process and no person shall be entitled to any
rights hereunder by virtue of any attempted execution, attachment or other
process.
7. In the event of the death of Optionee (a) during the five-year period
commencing on the effective date of Optionee's cessation of employment by reason
of retirement on or after age 65, retirement on or after age 55 with the consent
of the Company or total and permanent disability or (b) during the 90-day period
commencing on the effective date of Optionee's cessation of employment for any
other reason, the option may be exercised by the executor, administrator,
personal representative or beneficiary of Optionee during the 90-day period
commencing on the date of Optionee's death, but only during the option term, to
the extent Optionee was entitled to exercise the option on the date of
Optionee's death.
8. Upon the occurrence of any of the following events subsequent to the
option date, the option shall be adjusted as follows:
(a) Appropriate adjustments shall be made by the Committee administering
the Plan in the number of shares purchasable under the option to give
effect to any stock splits, stock dividends and other relevant changes
in capitalization.
(b) In case the Company shall effect a merger, consolidation or other
reorganization pursuant to which the outstanding shares of common
stock of the Company shall be exchanged for other shares, securities
or consideration of the Company or of another corporation or entity a
party to such merger, consolidation or other reorganization, Optionee
shall have the right to purchase, at the aggregate option price
provided for in this Agreement and on the same terms and conditions,
the kind and number of other shares, securities or consideration of
the Company or such other corporation or entity which would have been
issuable or payable to Optionee in respect of the number of
-10-
<PAGE>
shares of common stock of the Company which were subject to the option
immediately prior to the effective date of such merger, consolidation
or other reorganization had such shares then been owned by Optionee.
The Company agrees that it will make appropriate provisions for the
preservation of Optionee's option rights in any agreement or plan
which it enters into or adopts to effect any such merger,
consolidation or other reorganization.
Any adjustment required as a result of the foregoing provisions of this
Section 8 shall be effected in such manner that the difference between the
aggregate fair market value of the other shares, securities or consideration
subject to the option immediately after giving effect to such adjustment and the
aggregate option price of such other shares, securities or consideration shall
be substantially equal to (but shall not be more than) the difference between
the aggregate fair market value of the shares subject to the option immediately
prior to such adjustment and the aggregate option price of such shares. Any
adjustments made under this Section shall be determined by the Committee
administering the Plan.
9. For purposes of this Agreement, employment by the Company shall be
deemed to include employment by a corporation which is a "parent corporation" or
a "subsidiary corporation" of the Company (as defined in Section 425 of the
Internal Revenue Code of 1986 (hereinafter called the "Code")), employment by
any corporation which succeeds to the obligations of the Company hereunder
pursuant to Section 8(b) hereof, and employment by a corporation which is a
"parent corporation" or a "subsidiary corporation" of any such corporation (as
defined in the above-mentioned section of the Code).
10. The option is subject to the condition that if the listing,
registration or qualification of the shares subject to the option on any
securities exchange or under any state or
-11-
<PAGE>
federal law, or if the assent or approval of any regulatory body shall be
necessary as a condition of, or in connection with, the granting of the option
or the delivery or purchase of shares thereunder, the option may not be
exercised in whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained. The
Company agrees to use its best efforts to obtain any such requisite listing,
registration, qualification, consent or approval.
11. The Committee administering the Plan, as from time to time
constituted, shall have the right to determine any questions which arise in
connection with this Agreement or the option. This Agreement and the option are
subject to the provisions of the Plan and shall be interpreted in accordance
therewith.
12. This Agreement shall not be construed as an employment contract and
does not give the Optionee any right to continued employment by the Company, and
the fact that the termination of Optionee's employment occurs during the option
term shall in no way be construed as giving the Optionee the right to continue
in the Company's employ.
13. The option shall not be treated as an incentive stock option within
the meaning of Section 422 of the Code.
14. This Agreement shall be binding upon and shall inure to the benefit of
any successor or successors of the Company and any person or persons who shall,
upon the death of the Optionee, acquire any rights in the option.
-12-
<PAGE>
15. Any notice, including a notice of exercise of the option, required to
be given hereunder to the Company shall be addressed to the Company at its
office at 77 West Wacker Drive, Chicago, Illinois 60601-1696, attention of the
Vice President, Compensation and Benefits, and any notice required to be given
hereunder to Optionee shall be addressed to Optionee at Optionee's residence
address as shown in the Company's records, subject to the right of either party
hereafter to designate in writing to the other some other address. Any such
notice shall be deemed to have been duly given on the day that such notice is
received by the Vice President, Compensation and Benefits. Any such notice shall
be (i) delivered to the Vice President, Compensation and Benefits by personal
delivery, facsimile, United States mail or by express courier service and (ii)
deemed to be received upon personal delivery, upon confirmation of receipt of
facsimile transmission or upon receipt by the Vice President, Compensation and
Benefits if by United States mail or express courier service; provided, however,
that if any notice is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
-13-
<PAGE>
IN WITNESS WHEREOF, R. R. DONNELLEY & SONS COMPANY has caused this
instrument to be executed as of the day and year first above written.
R. R. DONNELLEY & SONS COMPANY
By____________________________
Name:
Title:
The terms and conditions of the
foregoing Stock Option Agreement
are hereby accepted by the
undersigned this _____ day of
__________________, 199_
_________________________________
Optionee
-14-
<PAGE>
EXHIBIT 12
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31, 1994
-------------------
<S> <C>
Earnings
Earnings before income taxes............................. $395,004
Interest expense......................................... 53,493
One-third of the company's operating leases (see note
below).................................................. 20,267
Amortization of capitalized interest..................... 6,129
--------
Earnings available for fixed charges..................... $474,893
========
Fixed Charges
Interest expense......................................... $ 53,493
Capitalized interest..................................... 10,233
--------
Interest incurred........................................ 63,726
One-third of the company's operating leases (see note
below).................................................. 20,267
--------
Fixed charges............................................ $ 83,993
========
Ratio of Earnings to Fixed Charges......................... 5.7
========
</TABLE>
--------
Note: Management estimates one-third of current year's operating lease payments
to be the interest factor of such rentals.
<PAGE>
Form 10-K
Year-Ended 12/31/94
Exhibit 21
<TABLE>
<CAPTION>
SUBSIDIARIES OF R. R. DONNELLEY & SONS COMPANY
(As of March 24, 1995)
Subsidiaries of Place of
R. R. Donnelley & Sons Company Incorporation
------------------------------ -------------
<S> <C>
77 Capital Corporation Delaware
77 Capital Partners L.P. Delaware
Air Operations Company Delaware
Allentown S.H. Leasing Company Delaware
Aviation Transportation, Inc. Delaware
C & E Transport, Inc. Delaware
CWH Supply Company Delaware
Caslon Incorporated Delaware
Chemical Equipment S.H. Leasing Company Delaware
Customer Insight Company Delaware
DPA Printing Company, SP. Zo.o. Poland
Donnelley Caribbean Graphics, Inc. Delaware
Donnelley Comco, Inc. Delaware
Donnelley Documentation Services (Ireland),
Limited Delaware
Donnelley Holdings, Limited Delaware
Donnelley International, Inc. Delaware
Donnelley Korea Co., Ltd. Korea
Donnelley Language Solutions Republic of
Ireland
Donnelley Satellite Services, Limited Delaware
Donnelley Satellite Graphics, Limited Delaware
Editorial Lord Cochrane, S.A. Chile
European-American Ink Sales Corp. Iowa
FFH Corporation Delaware
Fulfill: Plus Pte Ltd. Singapore
GeoSystems Global Corporation Delaware
HCI Holdings Delaware
Haddon Craftsmen, Inc. Delaware
Impresora Donneco Internacional, S.A. de C.V. Mexico
Information Investment Partners L.P. Delaware
Ink International, B.V. Dutch
</TABLE>
<PAGE>
Page 2
Form 10-K
Year-Ended 12/31/94
Exhibit 21
<TABLE>
<CAPTION>
SUBSIDIARIES OF R. R. DONNELLEY & SONS COMPANY
(As of March 24, 1995)
Subsidiaries of Place of
R. R. Donnelley & Sons Company Incorporation
------------------------------ -------------
<S> <C>
Intervisual Communications, Inc. Delaware
Kittyhawk S.H. Leasing Company Delaware
Laboratorio Lito Color S.A. de C.V. Mexico
M/B Companies, Inc. Iowa
Metromail Corporation Delaware
Mailing List Research of Canada, Limited Canada
Mobium Corporation for Design & Communication Delaware
Pan Associates L.P. Delaware
R. R. Donnelley Far East, Limited Delaware
R. R. Donnelley Australia PTY Ltd Australia
R. R. Donnelley France, S.A. France
R. R. Donnelley Global Software Services Corp. Delaware
R. R. Donnelley International, Inc. Delaware
R R Donnelley Ireland (Holdings) Republic of
Ireland
R R Donnelley Ireland Documentation Services Republic of
Ireland
R R Donnelley Ireland Turnkey Services Kildare Republic of
Ireland
R. R. Donnelley Japan K. K. Japan
R. R. Donnelley/Leefung-Asco Holdings, Inc. British Virgin
Islands
R. R. Donnelley Limited United Kingdom
R. R. Donnelley Mendota, Inc. Delaware
R. R. Donnelley Nederland B.V. The Netherlands
R. R. Donnelley Norwest Inc. Oregon
R. R. Donnelley Printing Company Delaware
R. R. Donnelley Printing Company L.P. Delaware
R. R. Donnelley Receivables, Inc. Nevada
R. R. Donnelley Seymour, Inc. New Jersey
R. R. Donnelley U.K. Marketing Services Limited Republic of
Ireland
R. R. Donnelley (Canada) Limited Ontario
R. R. Donnelley (Chile) Holdings, Inc. Delaware
R. R. Donnelley (Europe) Limited Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page 3
Form 10-K
Year-Ended 12/31/94
Exhibit 21
SUBSIDIARIES OF R. R. DONNELLEY & SONS COMPANY
(As of March 24, 1995)
Subsidiaries of Place of
R. R. Donnelley & Sons Company Incorporation
------------------------------ -------------
<S> <C>
R. R. Donnelley (Ireland) Limited Delaware
R. R. Donnelley (Santiago), Inc. Delaware
R. R. Donnelley (Singapore) Pte Ltd Singapore
R. R. Donnelley (U.K.) Limited United Kingdom
Reynosa Holding Company Delaware
Shenzhen Donnelley Bright Sun Printing Co. Republic of China
Siegwerk Sales & Services L.P. Delaware
Turnkey Service Japan Co., Ltd. Japan
Wyoming Avenue Holdings, Inc. Delaware
Winfield Avenue Holdings, Inc. Delaware
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports dated January 26, 1995 (except with respect to the
matter discussed in paragraph 5 in the Commitments and Contingencies Footnote,
as to which the date is March 8, 1995) included in this Annual Report of R. R.
Donnelley & Sons Company on Form 10-K for the year ended December 31, 1994, into
mpany's previously filed Registration Statements on Form S-8 (File Nos.
33-19803, 33-43632, 33-49431, 33-49809 and 33-52805), Forms S-3 (33-49539 and
33-57807) and previously filed post-effective amendments thereto.
Arthur Andersen LLP
Chicago, Illinois,
March 27, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 20,569
<SECURITIES> 0
<RECEIVABLES> 1,006,688
<ALLOWANCES> 19,168
<INVENTORY> 311,237
<CURRENT-ASSETS> 1,353,330
<PP&E> 3,708,844
<DEPRECIATION> 1,852,084
<TOTAL-ASSETS> 4,452,143
<CURRENT-LIABILITIES> 801,850
<BONDS> 1,212,332
<COMMON> 330,612
0
0
<OTHER-SE> 1,647,757
<TOTAL-LIABILITY-AND-EQUITY> 4,452,143
<SALES> 4,888,786
<TOTAL-REVENUES> 4,888,786
<CGS> 3,938,494
<TOTAL-COSTS> 4,429,355
<OTHER-EXPENSES> 10,934
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,493
<INCOME-PRETAX> 395,004
<INCOME-TAX> 126,401
<INCOME-CONTINUING> 268,603
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 268,603
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 0
</TABLE>
