SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 27, 1997
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 1-9256
PREMARK INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3461320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1717 Deerfield Road, Deerfield, Illinois 60015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 405-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
on Which
Registered
Common Stock, $1.00 par value New York Stock Exchange
Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of the Registrant's voting and non-voting common
equity held by non-affiliates, based upon the closing price of Registrant's
Common Stock on the New York Stock Exchange-Composite Transaction Listing on
March 4, 1998 ($30.5625 per share): $1,884,641,055.
As of March 4, 1998, 61,971,700 shares of the Common Stock, $1.00 par value,
of the Registrant were outstanding.
Documents Incorporated by Reference: Portions of the Proxy Statement relating
to the Annual Meeting of Shareholders to be held May 6, 1998, are
incorporated by reference into Part III of this Report.
<PAGE>
PART I
Item 1. Business
(a) General Development of Business
Premark International, Inc. (the "Registrant") is a multinational commercial
and consumer products company. The Registrant is a Delaware corporation that
was organized on August 29, 1986, in connection with the corporate
reorganization of Kraft, Inc. ("Kraft"). On October 31, 1986, the Registrant
became a publicly held company through the pro-rata distribution by Kraft to
its shareholders of all the outstanding shares of common stock of the
Registrant. On May 31, 1996, the Registrant distributed on a pro-rata basis
to its shareholders all the stock of Tupperware Corporation ("Tupperware"), a
direct seller of consumer products. On June 28, 1996, the Registrant sold all
its stock in Hartco Flooring Company to Triangle Pacific Corp. The
Registrant's principal operating subsidiaries are Hobart Corporation
("Hobart"); Wilsonart International, Inc. ("Wilsonart"); The West Bend
Company ("West Bend"); Florida Tile Industries, Inc. ("Florida Tile"); and
Precor Incorporated ("Precor"). Hobart, organized in Delaware in 1989, is a
successor to a business originally incorporated in 1897. Hobart's predecessor
was acquired in 1981 by a predecessor of the Registrant. Wilsonart and West
Bend were organized in Delaware in 1988 as separate corporations owned
directly by the Registrant, having been acquired as operating divisions by a
predecessor of the Registrant in 1966 and 1968, respectively. Wilsonart
changed its name from Ralph Wilson Plastics Company in 1995. Florida Tile, a
Florida corporation organized in 1954, was acquired in 1990. Precor, a
Delaware corporation, was organized as a Washington corporation in 1981, and
was acquired in 1984 by a predecessor of the Registrant.
(b) Financial Information About Industry Segments
For certain financial information concerning the Registrant's business
segments, see Note 11 ("Segments of the Business") of the Notes to the
Consolidated Financial Statements of this Report.
(c) Narrative Description of Business
The Registrant conducts its business through its three business segments: the
Food Equipment Group, the Decorative Products Group and the Consumer Products
Group. All year-to-year comparisons have been restated to exclude Tupperware.
A discussion of the three business segments follows.
FOOD EQUIPMENT GROUP
Principal Products, Markets and Distribution
The Food Equipment Group (the "Group") is composed primarily of Hobart
Corporation and other subsidiaries of the Registrant engaged in the design,
manufacture, distribution and service of commercial equipment for food
preparation, cooking, baking, warewashing, weighing, wrapping and
refrigeration. For the fiscal years 1997, 1996 and 1995, sales by the Group
contributed approximately 53%, 55% and 56%, respectively, of the sales of the
Registrant's businesses. Revenues from foreign operations constituted
approximately 42% of the Group's 1997 sales.
The Group's core products include warewashing equipment; food
preparation machines, such as mixers, slicers, cutters, meat saws and
grinders; weighing and wrapping equipment and related systems; baking and
cooking equipment, such as ovens, ranges, fryers, griddles and broilers; and
refrigeration equipment. Products are marketed under the trademarks Hobart,
Stero, Vulcan-Hart, Wolf, Tasselli, Adamatic, Still, Foster, Inoxyform,
Ungermann, Baxter, Somat, Wittco, Elettrobar, GBG, Sencotel, Colged and
Promag. The Hobart brand represents about 72% of the Group's sales.
Food equipment products are sold to the retail food industry, including
supermarket chains, independent grocers, delicatessens, convenience and other
food stores, and to the foodservice industry, including independent
restaurants, restaurant chains, hospitals, healthcare facilities,
correctional facilities, schools, bakeries, hotels, resorts and airlines.
Food equipment products are distributed in more than 100 countries,
either through company-owned operations or through dealers, agents and
distributors. The Group is the only major food equipment manufacturer in the
United States with its own nationwide service network for the markets in
which it sells, providing not only an important source of income but also an
important source for developing new sales. The Group also has a substantial
company-owned service network outside the United States. The Group directly
services its food machines, warewashers, weigh/wrap equipment and some
cooking equipment, while authorized independent agents service refrigeration
units and some cooking equipment. For financial information regarding service
revenues, see Note 11 ("Segments of the Business") of this Report.
Major new products introduced by the Group in the United States in 1997
included a mixer/grinder, the Hobart TurboWash washer, the Hobart FT-900
warewasher, the FlashBake oven and the Wolf A-30 gourmet range. New products
through acquisitions include the Baxter line of commercial baking equipment
in the United States, and Eurotec's line of warewashing equipment in Europe.
Raw Materials and Facilities
The Group uses stainless and carbon steel, aluminum and plastics in the
manufacture of its products. These materials are readily available from
several sources, and no difficulties have been experienced with respect to
their availability. Overall, costs have decreased somewhat, as a result of a
decrease in prices for stainless steel. In addition to manufacturing certain
component parts, the Group also purchases many component parts, such as
electrical and electronic components, castings, hardware, fasteners and
bearings. Certain manufacturers use tooling provided by the Group for such
components.
The Group owns its headquarters building and a manufacturing complex
consisting of two plants in Troy, Ohio. The Group operates 10 additional
manufacturing plants in the United States, in California, Georgia, Kansas,
Kentucky, Maryland, New Jersey, Ohio, Virginia and Washington; and a total of
16 manufacturing plants outside the United States, in Brazil, Canada, China,
France, Germany, Italy, Spain and the United Kingdom. Most of these plants
are owned. In 1997, two manufacturing plants in Troy, Ohio, and a plant in
Australia were closed, and plants in Kentucky and China began operations. In
1997, the Group acquired certain assets and liabilities of Eurocatering SpA,
a European manufacturer of warewash equipment, including plants in Italy and
Spain. In 1997, the Group also acquired The Baxter Mfg. Co. Inc., a U.S.
manufacturer of commercial baking equipment, with a plant in Washington. In
early 1998, the Group acquired the assets of Somat Corporation, a
manufacturer of commercial waste systems for the foodservice channel, and the
stock of Wittco Foodservice Equipment, Inc., a manufacturer of food warming,
holding and display cabinets.
Competition
The Group competes in a growing worldwide market that is highly fragmented.
No single manufacturer competes with respect to all of the Group's products,
and the degree of competition varies among different customer segments and
products. In some instances the company faces strong competition from
manufacturers that specialize in particular products. Because of the
longevity of the company's products and the premium prices they frequently
command, the company faces competition from used equipment and lower-priced
products, especially during periods of weak economic conditions.
The commercial food equipment industry is mature, with growth primarily
a function of new construction and replacement sales to existing locations,
as well as menu and format changes. The extensiveness of the Group's brand
acceptance across a broad range of products is deemed by the Registrant to be
an important competitive advantage. Another important competitive advantage
is the Group's extensive service network throughout North America and Europe,
as well as in major markets in the Far East and Latin America. Competition is
also based on numerous other factors, including product quality, performance
and reliability, price, labor savings and energy conservation.
Miscellaneous
The Group had approximately $121 million of backlog orders at the end of 1997
and $128 million at the end of 1996, after restatement of 1996 for foreign
exchange rate effects. The Group considers such orders to be firm, though
changes or cancellations of insignificant amounts may occur, and expects that
the 1997 backlog orders will be filled in 1998.
DECORATIVE PRODUCTS GROUP
Principal Products, Markets and Distribution
Wilsonart and Florida Tile make up the Decorative Products Group. The
Decorative Products Group contributed 33%, 32% and 31% of the sales of the
Registrant's businesses for the fiscal years 1997, 1996 and 1995,
respectively.
Wilsonart designs, manufactures and distributes decorative surfacing
products. Its primary surfacing product is high pressure decorative laminate,
which is produced using heated high pressure presses. Decorative laminate
products, sold principally under the Wilsonart trademark in more than 1,000
colors, designs and finishes, are used for numerous interior surfacing
applications, including cabinetry, countertops, vanities, store fixtures,
flooring and furniture. Approximately 50% of the Wilsonart decorative
laminate sold is used in residential applications, primarily for surfacing
kitchen and bathroom countertops and cabinetry. Decorative laminate
applications in the commercial market include office furniture, retail store
fixtures, restaurant and hotel furniture, and doors. Wilsonart also
manufactures specialty-grade laminates, including chemical-resistant,
wear-resistant and fire-retardant types. Among the specialized applications
for Wilsonart laminate are those in laboratory work surfaces, jetways and
naval vessels. In 1997, Wilsonart continued its practice of introducing a
variety of new laminate designs. For financial information regarding
decorative laminate revenues, see Note 11 ("Segments of the Business") of this
Report.
In addition to laminate products, Wilsonart sells 1/2 inch thick and 1/8
inch thick solid surfacing products, panels and sinks. Solid surfacing
products are used for residential and commercial surfacing applications such
as tabletops and countertops. The company also sells contact adhesives,
decorative metal surfacing products, wood and laminate-clad decorative edge
moldings for countertops and furniture, and threshold transitions for use
with its flooring products. Virtually all products are sold under the
Wilsonart trademark. Some products also employ various other trademarks, such
as Lokweld for adhesives.
Wilsonart decorative products are sold throughout the United States
through wholesale building material distributors and directly to original
equipment manufacturers. Laminate flooring is sold through approximately
10,000 independent floor covering distributors and dealers. The company sells
products outside the United States through independent distributorships and
foreign subsidiaries. Products are sold in over 80 countries, in North
America, most of Europe, Central and South America, much of East Asia, and in
Mexico, Australia and New Zealand.
Florida Tile manufactures glazed ceramic wall and floor tile products in
a wide variety of sizes, shapes, colors and finishes that are suitable for
residential and commercial uses. Florida Tile also manufactures unglazed
porcelain mosaic tile, which is used primarily for commercial applications.
Tile products are marketed under the Florida Tile trademark through
company-owned and independent distributors. Florida Tile also manufactures
private label products for others. Exports comprise a small portion of
Florida Tile's sales. Florida Tile also imports tile products to supplement
its line of manufactured products.
Raw Materials and Facilities
The manufacture of decorative laminates requires various raw materials,
including kraft and decorative papers, overlays, and melamine and phenolic
resins. Each of these items is available from a limited number of
manufacturers, but Wilsonart has not experienced difficulties in obtaining
sufficient quantities. Overall costs of raw materials were generally the same
as in the prior year. Costs of some paper decreased, and costs of some resins
increased, reflecting market conditions. The principal raw materials used in
Florida Tile products are clay, talc, stains and frit (ground glass), all of
which are available to Florida Tile in sufficient quantities. Costs of
Florida Tile's raw materials have been relatively stable.
Wilsonart owns and operates three laminate manufacturing facilities in
Texas and North Carolina, and recently completed a finishing plant in China.
At the end of the 1997 calendar year, the Registrant acquired the Resopal and
Arborite decorative laminate businesses from Forbo Holding AG, including
plants in Germany and Canada.
Wilsonart has the largest decorative laminate production capacity in
North America and one of the largest capacities in the world. Adhesives are
produced at two plants located in Texas and Louisiana. The high pressure
laminate flooring product and the company's solid surfacing sinks are
manufactured in facilities in Texas. Other solid surfacing products are
purchased under a supply agreement. The company believes the source of supply
is reliable. Wilsonart has 16 regional distribution centers that are
geographically dispersed throughout North America. These facilities can
deliver stock items within 24 hours. Non-stock items can be produced and
delivered within seven working days. Wilsonart also has six warehouses in
Europe and Asia.
Florida Tile manufactures products in three owned manufacturing plants
located in Florida, Georgia and Kentucky. In 1997, Florida Tile installed a
manufacturing line for unglazed porcelain mosaic tile in its Florida plant.
Most of Florida Tile's products are distributed through a single facility in
Kentucky to company-owned and independent distribution outlets.
Competition
Wilsonart products are sold in highly competitive markets throughout the
world. The company's laminate and solid surfacing products compete with a
broad variety of surfacing and flooring materials. Wilsonart estimates that
it has over 50% of U.S. sales of high pressure decorative laminates and about
20% of U.S. sales of laminate flooring. Laminate flooring has been a growing
market segment, although it still represents a small proportion of all
laminate applications and of flooring products. While Wilsonart's sales of
solid surfacing products have increased, Wilsonart estimates that its major
competitor still accounts for about 75% of total sales of solid surfacing
products. Wilsonart has a relatively small portion of U.S. adhesives sales.
Wilsonart successfully competes with other companies by providing fast
product delivery; offering a broad choice of colors, designs and finishes;
and emphasizing design, quality, customer service and product development.
Florida Tile competes with a number of other domestic and foreign tile
manufacturers, as well as sellers of marble, stone, cast products, carpeting,
resilient flooring and other types of wall and floor covering materials, in a
highly fragmented market. The Registrant believes Florida Tile is the second
largest U.S. ceramic tile manufacturer, with sales substantially lower than
the largest U.S. tile manufacturer. Foreign-manufactured products account for
approximately 55% of ceramic tile sales in the United States. The United
States represents only about 6% of the worldwide market for ceramic tile.
Important competitive factors in Florida Tile's business include price,
style, quality, breadth of product line and service.
Miscellaneous
The Decorative Products Group maintains a continuing program of product
development. Its efforts focus on product design, quality, performance and
durability, product enhancement, and product applications, as well as on
manufacturing processes. Development of component materials for laminate,
solid surfacing and ceramic tile products is generally performed by the
companies providing those materials.
The Group's products are sold for new construction and remodeling, in
both the residential and commercial markets. As a consequence, the Group's
sales are affected by the seasonality of the new construction and remodeling
industries and prevailing interest rates.
CONSUMER PRODUCTS GROUP
Principal Products, Markets and Distribution
The Consumer Products Group consists of West Bend and Precor. It contributed
14%, 13% and 13% of the sales of the Registrant's business for the fiscal
years 1997, 1996 and 1995, respectively.
West Bend designs, manufactures and sells small electric appliances,
such as bread makers, electric skillets, slow cookers, woks, corn poppers,
beverage makers, mixers and electronic timers, under the West Bend trademark.
West Bend also manufactures and sells high-quality stainless steel cookware,
and a line of household water distillers. During 1997, West Bend continued to
expand its product lines and introduced a countertop water distiller, a line
of Crockery slow cookers, and product extensions of its principal lines.
Precor manufactures aerobic physical fitness equipment, such as treadmills,
elliptical crosstrainers, low-impact climbers and exercise cycles, all of
which are marketed under the Precor trademark. In 1997, Precor introduced a
stretch training device and a home version of its commercial elliptical
crosstrainer.
West Bend small appliances are sold primarily in the United States and
Canada, directly to mass merchandisers, department stores, hardware stores,
warehouse clubs and catalog showrooms. West Bend's stainless steel cookware
and household water distillers are sold to consumers by independent
distributors through dinner parties and by other direct sales methods.
Cookware is sold in about 20 countries, under 34 brand names. Precor
equipment for home use is sold primarily through specialty fitness equipment
retail stores. Precor commercial equipment is sold through specialty fitness
dealers and directly to major fitness clubs. A portion of Precor products is
sold outside the United States, in Asia, Europe, Latin America and the Middle
East. Those products are sold primarily through independent distributors.
Precor's revenue is split approximately equally between sales of products for
club use and those for home use.
Raw Materials and Facilities
West Bend uses aluminum, stainless steel, plastic resins and other materials
in the manufacture of its products. Precor uses carbon steel, stainless
steel, aluminum, electronic components and other materials in the manufacture
of its products. Generally, neither West Bend nor Precor has experienced any
significant difficulties in obtaining any of these raw materials or products.
The cost of aluminum has declined somewhat, while other raw material costs
have remained flat. West Bend owns and operates two manufacturing plants in
Wisconsin and Mexico. Precor maintains three leased plants in the state of
Washington.
Competition
Products sold by West Bend and Precor compete with products sold by numerous
other companies of varying sizes in highly competitive markets. The small
appliance business is a mature industry, with growth dependent in large
measure on developing new products, entering new product categories and
satisfying the needs of large mass merchandisers. Low-priced imports remain a
factor in the business. Many product life cycles in the household fitness
business are relatively short, creating a continuing need for product
development. Important competitive factors in this segment include price,
customer service, development of new products and product features, quality,
name recognition, innovative design, product performance, just-in-time
delivery and warranties.
Miscellaneous
The small appliance industry is dependent on gift-giving for a substantial
portion of its sales. West Bend's housewares sales in the fourth quarter
typically are significantly higher due to the gift-giving season. Precor's
business for home products is significantly higher in the first and fourth
quarters, when winter weather forces more people to exercise indoors. The
Consumer Products Group is dependent on two customers for approximately
one-third of its revenues.
OTHER INFORMATION RELATING TO THE BUSINESS
Trademarks and Patents
The Registrant considers trademarks and patents to be of importance to its
businesses. The Registrant's trademarks are among the leading brand names for
many of its product lines. Its businesses have followed the practice of
applying for patents with respect to most of the significant patentable
developments, and now own a number of patents relating to their products. In
certain cases the Registrant has elected common law trade secret protection in
lieu of obtaining patent protection. In addition, the Registrant's businesses
have licenses under patents owned by others. No business is dependent to any
material extent upon any single patent or trade secret or group of patents or
trade secrets.
Research and Development
For fiscal years ended 1997, 1996 and 1995, the Registrant spent approximately
$46 million, $39 million and $38 million, respectively, on research and
development activities.
Environmental Laws
Compliance by the Registrant's businesses with federal, state and local
environmental protection laws has not in the past had, and is not expected to
have in the future, a material effect upon its capital expenditures,
liquidity, earnings or competitive position. The Registrant expects to expend
less than $400,000 through 1999 on capital expenditures related to
environmental facilities. In 1997, the Registrant had approximately
$200,000 of capital expenditures for environmental facilities, and
approximately $900,000 of remedial expenditures for environmental sites. See
Item 3 for a further discussion of environmental matters.
Employees
The Registrant and its subsidiaries employ approximately 17,200 people.
Approximately 23% of the Registrant's employees are affiliated with
one of the several unions with which the Registrant's subsidiaries have
collective bargaining agreements. In 1997, about 120 employees at one of
Florida Tile's three manufacturing plants joined a union. In recent years
there has been no major effort to organize additional persons working for the
Registrant's businesses, and there have been no significant work stoppages.
The Registrant considers its relations with its employees to be good.
Properties
The principal executive offices of the Registrant are located in Illinois and
are leased. Most of the principal properties of the Registrant and its
subsidiaries are owned, and none of the owned principal properties is
subject to any encumbrance material to the consolidated operations of the
Registrant. The Registrant considers the condition and extent of utilization
of the plants, warehouses and other properties in its respective businesses
to be generally good, and the capacity of its plants and warehouses generally
to be adequate for the needs of its businesses.
Miscellaneous
Except as disclosed above in the narrative descriptions of the Registrant's
business segments, none of the Registrant's businesses is seasonal, has
working capital practices or backlog conditions material to an understanding
of its businesses, is dependent on a small number of customers, or is subject
to renegotiation of profits or termination of contracts or subcontracts at the
election of the federal government. Since the Registrant has substantial sales
outside the United States, changes in currency exchange rates can affect the
business.
(d) Financial Information about Foreign and Domestic Operations and Export
Sales
For information concerning foreign and domestic operations and export sales,
see Note 8 ("Income Taxes") and Note 11 ("Segments of the Business") of this
Report. For information concerning Registrant's discontinued Tupperware
operation, see Note 2 ("Distribution of Tupperware to Shareholders") of this
Report.
Executive Officers of the Registrant
Following is a list of the names and ages of all the Executive Officers of
the Registrant, indicating all positions and offices with the Registrant held
by each such person, and each such person's principal occupations or
employment during the past five years. Each such person has been elected to
serve until the next annual election of officers of the Registrant, which is
expected to occur on May 6, 1998.
Name and Age Positions and Offices Held and Principal
Occupations or Employment During
Past Five Years
James M. Ringler (52) Chairman of the Board, Chief Executive Officer
and President since October 1997,
after having served as Chief Executive Officer
and President since May 1996. Prior thereto,
Mr. Ringler was President and Chief Operating
Officer.
Joseph W. Deering (57) Group Vice President of Premark and President of
Premark's Food Equipment Group.
Thomas W. Kieckhafer (59) Corporate Vice President and President of The
West Bend Company.
William R. Reeb (50) Corporate Vice President since November 1994,
and President and Chief Operating Officer of
Wilsonart since August 1993. Prior thereto,
Mr. Reeb served as Vice President, Marketing,
for the Decorative Products Group and Executive
Vice President for Wilsonart.
John M. Costigan (55) Senior Vice President, General Counsel and
Secretary.
Lawrence B. Skatoff (58) Senior Vice President and Chief Financial
Officer.
Raymond Barbosa (43) Vice President, Taxes and Tax Counsel since May
1996, prior to which Mr. Barbosa was Tax
Counsel.
L. John Fletcher (54) Vice President, Assistant General Counsel
and Assistant Secretary since May 1996, prior to
which Mr. Fletcher was Vice President and
Assistant General Counsel.
Isabelle C. Goossen (46) Vice President and Treasurer since August 1996,
after having served as Vice President, Financial
Relations since January 1996, Vice President,
Planning since June 1994, and Director of
Financial Relations prior thereto.
Robert W. Hoaglund (59) Vice President and Controller since January
1996. Prior thereto, Mr. Hoaglund was
Vice President, Control & Information Systems.
Anthony C. Scolaro (49) Vice President, Planning and Business
Development since January 1996. Mr. Scolaro
was Corporate Development Vice President at
Ecolab, Inc., from 1994 to 1996 and was
Assistant to the President at Rykoff-Sexton,
Inc., prior thereto.
Item 2. Properties
For information concerning material properties of the Registrant and its
subsidiaries, see the information in Section (c) ("Narrative Description of
Business") of Item 1 above, particularly the information in the paragraph
titled "Properties" under the caption "Other Information Relating To The
Business."
Item 3. Legal Proceedings
The Registrant and its subsidiaries have pending against them a number of
legal and administrative proceedings. Among such proceedings are those
involving the discharge of materials into or otherwise relating to the
protection of the environment. Certain of such proceedings involve federal
environmental laws such as the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as well as state and local laws. The
Registrant establishes reserves with respect to certain of such matters.
Because of the involvement of other parties and the uncertainty of potential
environmental impacts, the eventual outcomes of such actions and the cost and
timing of expenditures cannot be estimated with certainty. It is not expected
that the outcome of such proceedings, either individually or in the
aggregate, will have a materially adverse effect upon the Registrant's
consolidated financial position or operations.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Stock price information is set forth in Note 13 ("Quarterly Summary
(unaudited)") of this Report. Other matters are set forth in Note 14
("Shareholders' Rights Plan") of this Report. As of March 4, 1998, the
Registrant had 19,408 shareholders of record.
Item 6. Selected Financial Data
The information under the caption "Selected Financial Data" appears on pages
36 to 39 of this Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
In November 1995, the company's Board of Directors authorized management to
proceed with a plan to establish Tupperware Corporation ("Tupperware") as an
independent company through a stock distribution ("Distribution") to
Premark's shareholders. The Distribution was effected on May 31, 1996.
Tupperware has been reported as a discontinued operation in these financial
statements. The information contained in this financial review should be read
in conjunction with the consolidated financial information on pages 41 to 58
of this Report.
RESULTS OF OPERATIONS
Net Sales and Income from Continuing Operations
Sales increased by 6% to a record $2.4 billion in 1997, from $2.3 billion in
1996, reflecting increases at Wilsonart, the Food Equipment Group, Precor and
West Bend. These increases were partially offset by a decline at Florida Tile
and the absence of sales at Hartco Flooring, which was sold in the second
quarter of 1996. In 1996, sales increased by 2% over 1995, reflecting
improvements at Wilsonart, Precor, the non-European operations of the Food
Equipment Group and Florida Tile. The growth in 1996 was somewhat offset by
declines at West Bend and the Food Equipment Group's European sector and the
absence of sales in the second half of 1996 at Hartco Flooring. Income from
continuing operations rose 83% to $103.8 million in 1997, from $56.7 million
in 1996, due in part to the loss on the sale of Hartco. Excluding that loss,
income from operations would have increased nearly 9% from $95.4 million, as a
result of a significant improvement at Wilsonart and Precor, coupled with
lower net interest and corporate staff expenses. Partially offsetting these
improvements were a provision for global restructuring at the Food Equipment
Group, a loss at Florida Tile and a significant decline in profitability at
West Bend. In 1996, income from continuing operations declined 28% from $78.9
million in 1995, due to the loss on the sale of Hartco. Excluding that loss,
income from operations would have increased 21% over 1995, as a result of a
significant improvement at Wilsonart and Precor, coupled with lower net
interest and corporate staff expenses. For both 1997 and 1996, 24% of net
sales was foreign based, while 2% and 9% of segment profit, respectively, were
generated by the foreign operations.
Costs and Expenses
The cost of products sold in relation to sales was 63.4%, 63.7% and 64.2% in
1997, 1996 and 1995, respectively. The improved ratio in 1997 compared with
1996 was the result of lower manufacturing costs at Wilsonart and a favorable
product mix at Precor. These factors were somewhat offset by manufacturing
inefficiencies at the Food Equipment Group's domestic operations as production
was being shifted between plants, as well as a provision to realign operations
in Europe and close a plant in Australia. In addition, lower production levels
at Florida Tile and lower pricing at West Bend hurt the comparison. Delivery,
sales and administrative expenses as a percentage of sales were 29.3%, 29.1%
and 29.3% in 1997, 1996 and 1995, respectively.
Tax Rate
The effective tax rates for 1997, 1996 and 1995 were 40.6%, 49.8% and 34.4%,
respectively. The 1996 rate reflects the company's potential inability to
realize the full tax benefit associated with the loss on the sale of Hartco.
Excluding the Hartco loss, the 1996 effective rate was 38.9%. The increase in
the 1997 rate from 38.9% represents the inability to realize fully the tax
benefit of the charge associated with the global restructuring of the Food
Equipment Group. The increase in 1996 over 1995 reflects the inability to
realize the tax benefit of losses in certain foreign countries.
Net deferred tax assets, net of valuation allowances, were $95.1 million at
December 27, 1997, an increase of $5.0 million from net deferred tax assets of
$90.1 million in 1996. The valuation allowance is recorded primarily as
reserves for foreign operating losses and domestic capital loss carryforwards.
Net Interest Expense
Interest expense, net of interest income, was $4.9 million in 1997, $9.3
million in 1996 and $24.6 million in 1995. For part of 1996 and all of 1995,
net interest expense reflects interest accrued and earned on all of Premark's
borrowings and invested cash, excluding amounts that were owed or held by
Tupperware. In 1996, debt levels fell significantly as a result of the special
dividend paid to Premark by Tupperware on May 24, 1996, as well as cash
received from the sale of Hartco. The decline in net interest expense in 1997
over 1996 represents a full year of lower debt levels. Similarly, the decline
in 1996 from 1995 reflects these lower debt levels in the latter half of the
year.
SEGMENTS
FOOD EQUIPMENT GROUP
Sales and Segment Profit 1997 versus 1996
The Food Equipment Group's 1997 sales of $1.286 billion rose nearly 4% from
1996 sales of $1.238 billion. Growth occurred in all sectors, aided by the
acquisitions of certain assets and liabilities in Europe of Eurocatering SpA,
now being operated under the name Eurotec, and The Baxter Mfg. Co. Inc., in
the United States. The increase was partially offset by the unfavorable impact
of foreign exchange. Segment profit, however, fell 8% to $71.9 million in 1997
from $77.9 million in 1996, as a result of a $14.5 million charge in the
fourth quarter related to restructuring of the international operations. For
1997 and 1996, respectively, the Food Equipment Group accounted for 53% and
55% of sales, and 38% and 56% of segment profit.
Regional Results
Sales in the United States rose by 3% in 1997 to $748 million, reflecting the
acquisition of Baxter in the fourth quarter, as well as increased foodservice
and service revenues. Segment profit increased 4% to $66.1 million in 1997
from $63.8 million in 1996, as higher sales were somewhat offset by
manufacturing inefficiencies, lower production volume and spending on future
products and technologies. Included in last year's results was a $3.3 million
provision to close two operating plants.
European sales rose by $15.8 million in 1997 to $430.1 million, a 4%
improvement from 1996. Excluding the impact of foreign exchange, sales rose
13%, reflecting the acquisition of Eurotec, as well as improvements in most
countries. Segment profit decreased by 57% to $2.7 million from $6.2 million
in 1996, reflecting a $13.7 million provision for restructuring in the fourth
quarter. Absent that provision, segment profit rose $10.2 million on
improvements in most countries.
Sales by the group's other international operations were $107.9 million, an
increase of 12% from $96.0 million in 1996. Higher volumes in Hong Kong,
Mexico and Brazil, coupled with expansion into new markets, more than offset
unfavorable foreign exchange rates. Segment profit declined, however, by 62%
to $3.0 million from $7.9 million in 1996, due to a $2.0 million provision to
close the Australian plant, inventory adjustments in Australia and Brazil, and
a $0.8 million provision for restructuring in South America.
1996 versus 1995
Sales by the Food Equipment Group of $1.2 billion were even with 1995 sales.
Growth in international operations other than Europe and slightly higher
domestic sales were offset by declines in most European countries, as well as
by the unfavorable impact of foreign exchange. Segment profit fell 15% to
$77.9 million from $91.9 million in 1995 as a result of higher domestic
operating costs and lower European results.
DECORATIVE PRODUCTS GROUP
Sales and Segment Profit 1997 versus 1996
The Decorative Products Group's 1997 sales of $790.2 million were 8% above
1996 sales of $730.4 million. Excluding Hartco, which was sold in mid-year
1996, sales of the continuing businesses grew 15%. Segment profit of $82.4
million in 1997 increased substantially from $28.5 million in 1996, as a
result of the $43.1 million pretax loss in 1996 on the sale of Hartco.
Excluding that loss, segment profit would have increased 15% from $71.6
million. For 1997 and 1996, respectively, the Decorative Products Group
accounted for 33% and 32% of sales and 43% and 21% of segment profit.
Wilsonart's sales in 1997 rose 20% over 1996, reflecting higher volume in its
domestic and international laminate, flooring and solid surfacing product
lines, as well as improved pricing. Wilsonart had a significant increase in
segment profit on higher volume and favorable margins, despite marketing and
distribution expenses associated with the higher volume as well as expansion
overseas.
Florida Tile's sales declined 4% from 1996. Overcapacity issues in the
industry, the impact of imports due to the continuing strength of the dollar
and competitive pricing pressures all contributed to the decline. The decline
in sales, as well as lower production levels, resulted in a segment loss,
versus a segment profit in 1996.
1996 versus 1995
The Decorative Products Group had 1996 sales of $730.4 million, 6% above 1995
sales of $686.6 million. Excluding Hartco, sales of the continuing businesses
grew 12%, with growth at both Wilsonart and Florida Tile. Segment profit
declined 43% to $28.5 million in 1996 from $50.4 million in 1995, as a result
of the pretax loss on the sale of Hartco. Excluding that loss, segment profit
would have been $71.6 million, an increase of 42%, with significant increases
at both Wilsonart and Florida Tile.
CONSUMER PRODUCTS GROUP
Sales and Segment Profit 1997 versus 1996
Sales of the Consumer Products Group in 1997 were $330.6 million compared with
$298.8 million in 1996, primarily reflecting a significant increase in volume
at Precor. Segment profit in 1997 increased by 11% to $36.3 million from $32.6
million in 1996, due to the higher sales volume at Precor, which more than
offset lower results at West Bend. For 1997 and 1996, respectively, the
Consumer Products Group accounted for 14% and 13% of sales, and 19% and 23% of
segment profit.
West Bend sales grew 1% from 1996 as higher volume at its housewares division
was offset by competitive pricing on bread makers, as well as a significant
decrease in direct-to-the-home cookware volume. Segment profit fell
substantially from 1996 reflecting lower pricing.
Precor sales for 1997 rose 39% over last year. Increases in both the
commercial and retail markets in the United States, driven by the success of
the elliptical crosstrainer product, as well as stronger international
results, led the growth. The higher sales volume and improved margins led to a
record segment profit.
1996 versus 1995
Consumer Products Group sales of $298.8 million in 1996 rose 3% from 1995
sales of $289.0 million. West Bend's sales fell 5% from 1995 as a substantial
increase in direct-to-the-home cookware was offset by a soft retail
environment and competitive pricing on bread makers. Precor sales rose 37%
over 1995 with increases in both the home and club segments, as well as the
introduction of a new product. Segment profit increased by 29% to $32.6
million in 1996 from $25.3 million in 1995 due to the absence of 1995's $8
million charge for a bread maker recall by West Bend and higher sales volume
at Precor.
FINANCIAL CONDITION
Liquidity and Capital Resources
In April 1997, the company acquired certain assets and liabilities of Eurotec
for approximately $20 million in cash and the assumption of $17 million of
debt. As of the end of 1997, this debt had been repaid. In September 1997, the
company acquired the stock of Baxter for $50.3 million in cash. Subsequent to
fiscal year end, the company completed the acquisition of the stock of the
Resopal and Arborite decorative laminate businesses from Forbo Holdings AG for
approximately $13 million, subject to final balance sheet adjustments. In
addition, the company purchased the assets of Somat Corporation for $3.4
million and the stock of Wittco Foodservice Equipment, Inc., for $5.7 million.
Funds used to purchase these companies came from available cash.
In 1996, under the Distribution Agreement, Premark received a special dividend
of $284.9 million, which was used to reduce substantially the company's
outstanding debt. In addition, in June the company completed the sale of its
Hartco subsidiary for $35.8 million cash and assumption of debt.
The total debt-to-capital ratio at the end of 1997 was 12.3%, compared with
12.0% at the end of 1996. The slightly higher ratio compared with last year
reflects an increase in foreign short-term debt. As of December 27, 1997,
unused lines of credit were approximately $438.2 million, including $250
million under a revolving credit agreement that expires in October 2002.
Future cash flows, lines of credit and other short-term financing are expected
to be adequate to fund operating and investing activities.
Working capital was $532.1 million at the end of 1997, compared with $594.4
million and $276.6 million at the end of 1996 and 1995, respectively. The
current ratio was 2.0-to-1 at the end of 1997, compared with 2.3-to-1 and
1.5-to-1 at the end of 1996 and 1995, respectively. The major differences in
the components of working capital in 1997 versus 1996 were lower cash and cash
equivalents, as well as short-term investments, reflecting funds used to
purchase Eurotec and Baxter. In addition, accounts receivable, inventories and
accounts payable increased over 1996, reflecting higher sales, inclusion of
recent acquisitions and further international expansion by the Food Equipment
Group and Wilsonart. The primary components of the increase in working capital
in 1996 compared with 1995 were higher cash and cash equivalents, as well as
short-term investments, along with significantly lower short-term borrowings,
both as a result of the cash received in connection with the spin-off of
Tupperware and the sale of Hartco.
Operating Activities
Cash provided by operating activities was $165.9 million in 1997, compared
with $162.4 million in 1996 and $53.4 million in 1995. The 1997 increase was
due to higher net income and higher accounts payable, as well as the use of
cash in 1996 for payment of expenses related to the spin-off of Tupperware.
Mostly offsetting this increase were higher uses of cash for accounts
receivable and inventory, mainly reflecting the growth of the businesses. The
1996 increase versus 1995 was the result of the timing of payments for raw
material and sourced product, along with a much smaller increase in deferred
income taxes.
Investing Activities
For 1997, 1996 and 1995, respectively, capital expenditures amounted to $81.4
million, $84.1 million and $85.7 million. The slight decrease in 1997 compared
with 1996 reflects lower spending at the Food Equipment Group and Florida Tile
partially offset by an increase in spending at Wilsonart. The most important
factor in the 1996 decrease from 1995 was lower spending at Wilsonart for
laminate flooring plant equipment, partially offset by additions at Florida
Tile and West Bend. Capital expenditures are expected to be in the $85 million
range in 1998.
Dividends
Dividends declared per common share were 35 cents in 1997, 73 cents in 1996
and $1.01 in 1995. Quarterly dividends increased to 9 cents and 30 cents in
the second quarters of 1997 and 1996, respectively. The quarterly dividend was
adjusted to 8 cents in the third quarter of 1996 as a result of the spin-off
of Tupperware.
Share Repurchases
In August 1996, the company announced the authorization by its Board of
Directors for the repurchase of 6 million of its shares of common stock, with
volume and timing to depend on market conditions. Purchases will be made in
the open market or through other transactions and will be financed through
available cash, cash flow from operations or issuance of additional debt.
Under this plan, through December 27, 1997, and March 4, 1998, respectively,
the company has repurchased 2,130,000 shares and 2,235,000 shares at an
average price of $26 and $27, respectively. The company's previous stock
repurchase plan, announced in August 1995, was terminated prior to June 1996.
Under that plan, the company had repurchased 588,000 shares before the
Distribution at an average cost of $51 per share.
The company's other previous stock repurchase plan was announced in May 1993
and was completed in March 1995. Under that plan, the company repurchased a
total of 6 million of its shares of common stock at an average cost of $41 per
share.
New Accounting Standards
In 1997, the company adopted Statement of Financial Accounting Standards No.
128, "Earnings per Share." This statement requires companies to present two
earnings per share ("EPS") amounts. Basic EPS is calculated based upon income
available to common shareholders and the weighted average number of shares
outstanding during the reported period. Diluted EPS includes the additional
dilution from common stock equivalents such as stock options outstanding. The
company also adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," in 1997. This statement requires companies
to include a statement of comprehensive income in their full set of financial
reports. The company also adopted Statement of Financial Accounting Standards
No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits," in 1997. This statement standardizes the disclosure requirements
for pensions and other postretirement benefits. Prior year information has
been restated to conform with the requirements of these new standards.
The company will be required to adopt Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information," at the end of 1998. This statement requires that companies
report certain information about operating segments on a basis that is
consistent with the organizational units the company has established for
internal performance evaluation purposes. It also requires that companies
report certain information about their products and services, the geographic
areas in which they operate and their major customers. The company is
currently assessing the impact of this statement on the information it
discloses.
Year 2000
The company is preparing for the ramifications that the "Year 2000" issue
could have on its computer systems and applications. The Year 2000 problem is
being confronted by companies worldwide. It is the result of computer programs
being written using two digits to define the applicable year rather than three
or four digits. Any programs that have time-sensitive software may interpret a
date designated as "00" as the year 1900 rather than the year 2000. This could
result in miscalculations, disruptions of operations or a major system
failure. The problem can affect a wide range of automated information systems,
such as mainframe applications, personal computers and communication systems.
The company has determined it will need to modify or replace certain existing
software or convert to new software in order to achieve Year 2000 compliance.
The company presently believes that, as a result of such actions, the Year
2000 problem will not pose significant operational problems for its computer
systems. If such modifications and conversions are not made, however, or are
not completed in a timely fashion, the Year 2000 problem could have a material
impact on the company's operation.
As part of its compliance efforts, the company has begun to initiate formal
communications with significant suppliers and customers to determine the
extent to which the company's systems and operations are vulnerable to those
third parties' failure to remediate their Year 2000 problems. There can be no
guarantee, however, that the systems of these other companies will be
converted in a timely fashion and would not have an adverse effect on the
company.
The company is using both internal and external resources to identify and test
the systems for Year 2000 compliance, and to reprogram or replace them where
necessary. It is presently anticipated that such efforts will be completed by
mid-1999. The company expects to spend approximately $14.5 million in 1998 and
1999 to modify its systems. These costs will be expensed as incurred. The
amount expensed in 1997 was immaterial.
The costs of the compliance effort and the date by which the company believes
it will complete the Year 2000 modifications are based upon management's best
estimates. There can be no guarantee that these estimates will be achieved,
however, and actual results could differ materially from those anticipated.
Impact of Inflation
Inflation as measured by the Consumer Price Index has continued at a low level
in the United States. The company did not experience any significant cost
increases during 1997 or 1996.
Item 8. Financial Statements and Supplementary Data
(a) The required information is included in Item 14(a)(1) and (2) of
this Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Item 10. Directors and Executive Officers of the Registrant
Information regarding the Directors of the Registrant is set forth under the
sub-caption "Board of Directors" appearing under the caption "Election of
Directors" in the Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 6, 1998, and is incorporated by reference into
this Report. Information regarding the Executive Officers of the Registrant is
included in Part I hereof under the caption "Executive Officers of the
Registrant," in reliance upon General Instruction G to Form 10-K and
Instruction 3 to Item 401(b) of Regulation S-K.
Item 11. Executive Compensation
Information regarding this item is set forth under the caption "Compensation
of Directors" in the Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 6, 1998, and is incorporated by reference into
this Report. The information relating to executive officers' compensation
under the headings "Summary Compensation Table," "Stock Options," "Aggregated
Option Exercises in Last Fiscal Year and FY-End Option Values," "Long-Term
Incentive Plan Awards" and "Pension Plans" of such Proxy Statement is
incorporated by reference into this Report.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding this item is set forth under the captions "Security
Ownership of Certain Beneficial Owners" and "Security Ownership of Management"
in the Proxy Statement relating to the Annual Meeting of Shareholders to be
held on May 6, 1998, and is incorporated by reference into this Report.
Item 13. Certain Relationships and Related Transactions
None.
Item 14. Exhibits, Financial Statement Schedules and Reports
On Form 8-K
(a)(1) and (a)(2)
Information regarding this requirement is set forth in the Financial Table of
Contents on page 35 of this Report under the heading "Financial Statements"
and in Exhibit 99.1.
(a)(3) List of Exhibits: (numbered in accordance with Item 601
of Regulation S-K)
Exhibit
Number Description
3.1 Restated Certificate of Incorporation, as restated effective
October 31, 1986
*3.2 Amended By-Laws (Exhibit 3.2 to the Registrant's Annual Report
on Form 10-K for the year ended December 28, 1996)
*4.1 Rights Agreement and Exhibits dated November 6, 1996 (Exhibit 1
to the Registrant's Current Report on Form 8-K dated November 22,
1996)
*4.2 Form of Indenture (Revised) in connection with the Registrant's
Form S-3 Registration Statement No. 33-35137 (Exhibit 4.2 to the
Registrant's Annual Report on Form 10-K for the year ended
December 28, 1996)
10.1 $250,000,000 Credit Agreement amended as of October 3, 1997
Compensatory Plans or Arrangements [10.2-10.6]
*10.2 Premark International, Inc. 1994 Incentive Plan (Exhibit 4.1 to
the Registrant's Form S-8 Registration Statement No. 33-53561
dated May 4, 1994)
10.3 Premark International, Inc. Supplemental Plan (as amended and
restated effective April 1, 1997)
*10.4 Premark International, Inc. Change of Control Policy, as amended
in 1996 (Exhibit 10.7 to the Registrant's Annual Report on Form
10-K for the year ended December 28, 1996)
*10.5 Form of Employment Agreement entered into between the Registrant
and certain executive officers (Exhibit 5 to the Registrant's
Current Report on Form 8-K dated November 22, 1996)
*10.6 Premark International, Inc. Director Stock Plan, as amended in
1993 (Exhibit 10O to the Registrant's Annual Report on Form 10-K
for the year ended December 25, 1993)
21 Subsidiaries of the Registrant as of March 4, 1998
23 Manually signed Consents of Independent Auditors to the
incorporation of their reports by reference into the prospectuses
contained in specified registration statements on Form S-8 and
Form S-3
24 Powers of Attorney
27 Financial Data Schedule
99.1 Report of Predecessor Auditors
*Document has heretofore been filed with the Commission and is incorporated
by reference and made a part of this Report.
The Registrant agrees to furnish, upon request of the Commission, a copy of
all constituent instruments defining the rights of holders of long-term debt
of the Registrant and its consolidated subsidiaries.
(b) Reports on Form 8-K
During the quarter ended December 27, 1997, the Registrant filed no Current
Report on Form 8-K.
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.
Premark International, Inc.
(Registrant)
By /s/ JAMES M. RINGLER
James M. Ringler
Chairman of the Board, Chief Executive Officer and President
March 4, 1998
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 and on the date indicated.
Signature Title
JAMES M. RINGLER Chairman of the Board, Chief Executive Officer and
James M. Ringler President (Principal Executive Officer)
LAWRENCE B. SKATOFF Senior Vice President and Chief Financial
Lawrence B. Skatoff Officer (Principal Financial Officer)
ROBERT W. HOAGLUND Vice President and Controller (Principal Accounting
Robert W. Hoaglund Officer)
Harry W. Bowman* Director
Dr. Ruth M. Davis* Director
Lloyd C. Elam, M.D.* Director
W. James Farrell* Director
Richard S. Friedland* Director
John B. McKinnon* Director
David R. Parker* Director
Janice D. Stoney* Director
*By /s/ JOHN M. COSTIGAN
John M. Costigan
Attorney-in-fact
March 4, 1998
EXHIBIT INDEX
Exhibit
Number Description
3.1 Restated Certificate of Incorporation, as restated effective
October 31, 1986
10.1 $250,000,000 Credit Agreement amended as of October 3, 1997
10.3 Premark International, Inc. Supplemental Plan (as amended and
restated effective April 1, 1997)
21 Subsidiaries of the Registrant as of March 4, 1998
23 Manually signed Consents of Independent Auditors to the
incorporation of their report by reference into the prospectuses
contained in specified registration statements on Form S-8 and
Form S-3
24 Powers of Attorney
27 Financial Data Schedule
99.1 Report of Predecessor Auditors
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
(Dollars in millions,
except per share 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
amounts) --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating results
Net sales:
Food Equipment Group:
United States $ 748.0 $ 728.1 $ 710.8 $ 687.8 $ 610.3 $ 586.5 $ 568.3 $ 581.7 $ 567.4 $ 554.3 $ 541.5
Europe 430.1 414.3 442.2 369.2 344.0 412.9 384.2 359.7 304.1 264.7 216.4
Other
International 107.9 96.0 84.8 78.5 55.6 54.9 57.9 57.6 60.3 55.0 51.0
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total 1,286.0 1,238.4 1,237.8 1,135.5 1,009.9 1,054.3 1,010.4 999.0 931.8 874.0 808.9
Decorative Products
Group 790.2 730.4 686.6 690.0 618.3 573.1 522.6 499.6 430.1 352.8 309.7
Consumer Products
Group 330.6 298.8 289.0 292.8 239.4 206.3 206.4 203.6 204.8 203.0 179.6
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total net sales $2,406.8 $2,267.6 $2,213.4 $2,118.3 $1,867.6 $1,833.7 $1,739.4 $1,702.2 $1,566.7 $1,429.8 $1,298.2
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Segment profit:
Food Equipment Group:
United States $ 66.1 $ 63.8 $ 71.1 $ 61.8 $ 40.7 $ 32.5 $ 12.0 $ (4.2) $ (13.0) $ 22.3 27.5
Europe 2.7 6.2 15.5 15.8 7.6 15.7 23.8 26.6 28.4 27.3 18.9
Other
International 3.1 7.9 5.3 3.0 3.0 1.4 5.3 4.5 6.4 8.2 6.9
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total 71.9 77.9 91.9 80.6 51.3 49.6 41.1 26.9 21.8 57.8 53.3
Decorative Products
Group 82.4 28.5<F1> 50.4 36.5 33.4 35.0 38.3 46.9 42.1 42.3 37.1
Consumer Products
Group 36.3 32.6 25.3 39.4 22.8 20.9 22.6 19.2 17.3 15.8 13.6
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total segment
profit $ 190.6 $ 139.0 $ 167.6 $ 156.5 $ 107.5 $ 105.5 $ 102.0 $ 93.0 $ 81.2 $ 115.9 $ 104.0
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Income from
continuing
operations $ 103.8 $ 56.7<F2>$ 78.9 $ 70.8 $ 50.5 $ 44.6 $ 38.1 $ 19.4 $ 31.5 $ 47.8 $ 50.0
Income (loss) from
discontinued
operations - 62.2 158.7 154.7 122.0 (40.0) 64.2 32.6 46.9 73.4 21.5
Cumulative effect of
accounting changes - - - - - (83.9) - - - (15.9) -
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ 103.8 $ 118.9 $ 237.6 $ 225.5 $ 172.5 $ (79.3) $ 102.3 $ 52.0 $ 78.4 $ 105.3 $ 71.5
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Per common share:
Income from
continuing
operations $ 1.67 $ 1.54 $ 1.29 $ 1.11 $ 0.79 $ 0.70 $ 0.62 $ 0.31 $ 0.46 $ 0.71 $ 0.74
Loss on sale of
Hartco - (0.62) - - - - - - - - -
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total income
from
continuing
operations $ 1.67 $ 0.92 $ 1.29 $ 1.11 $ 0.79 $ 0.70 $ 0.62 $ 0.31 $ 0.46 $ 0.71 $ 0.74
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Income (loss) from
discontinued
operations $ - $ 1.00 $ 2.58 $ 2.43 $ 1.92 $ (0.63) $ 1.04 $ 0.52 $ 0.69 $ 1.09 $ 0.32
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Net income (loss) $ 1.67 $ 1.92 $ 3.87 $ 3.54 $ 2.71 $ (1.25) $ 1.66 $ 0.83 $ 1.15 $ 1.56 $ 1.06
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Per common share --
assuming dilution:
Income from
continuing
operations $ 1.59 $ 1.49 $ 1.26 $ 1.08 $ 0.77 $ 0.69 $ 0.61 $ 0.31 $ 0.45 $ 0.69 $ 0.73
Loss on sale of
Hartco - (0.60) - - - - - - - - -
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total income
from
continuing
operations $ 1.59 $ 0.89 $ 1.26 $ 1.08 $ 0.77 $ 0.69 $ 0.61 $ 0.31 $ 0.45 $ 0.69 $ 0.73
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Income (loss) from
discontinued
operations $ - $ 0.97 $ 2.52 $ 2.38 $ 1.85 $ (0.61) $ 1.02 $ 0.51 $ 0.68 $ 1.07 $ 0.32
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Net income (loss) $ 1.59 $ 1.86 $ 3.78 $ 3.46 $ 2.62 $ (1.22) $ 1.63 $ 0.82 $ 1.13 $ 1.53 $ 1.05
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Profitability ratios
Segment profit as a
percent of sales:
Food Equipment
Group 5.6% 6.3% 7.4% 7.1% 5.1% 4.7% 4.1% 2.7% 2.3% 6.6% 6.6%
Decorative
Products
Group 10.4 3.9<F1> 7.3 5.3 5.4 6.1 7.3 9.4 9.8 12.0 12.0
Consumer
Products
Group 11.0 10.9 8.8 13.5 9.5 10.1 11.0 9.4 8.5 7.8 7.6
Total 7.9 6.1 7.6 7.4 5.8 5.8 5.9 5.5 5.2 8.1 8.0
Income from continuing
operations as a
percent of sales 4.3 2.5 3.6 3.3 2.7 2.4 2.2 1.1 2.0 3.3 3.9
Return on average
equity 11.6 11.5<F3> 9.7<F3> NM NM NM NM NM NM NM NM
Return on average
invested capital<F4> 11.0 10.9 9.3 NM NM NM NM NM NM NM NM
_____________
<FN>
<F1> Includes pretax loss from the sale of Hartco of $43.1 million.
<F2> Includes loss from the sale of Hartco of $38.6 million.
<F3> Excludes Tupperware and loss on sale of Hartco.
<F4> Net income plus after-tax long-term interest expense divided by average long-term debt and equity of continuing
operations. In 1996, also excludes loss on sale of Hartco.
NM - Not Meaningful
</TABLE>
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
(Dollars in millions,
except per share 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
amounts) --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Financial condition
Working capital $ 532.1 $ 594.4 $ 276.6 $ 281.1 $ 301.2 $ 262.2 $ 171.6 $ 253.2 $ 280.2 $ 254.4 $ 299.2
Property, plant
and equipment, net 435.1 416.4 424.7 401.6 394.4 403.8 409.8 425.6 280.8 275.4 253.3
Total assets 1,765.8 1,660.8 1,546.1 1,475.8 1,332.4 1,297.7 1,294.3 1,288.2 1,077.8 995.7 926.2
Short-term
borrowings
and current
portion of
long-term debt 14.7 3.5 133.0 25.3 3.4 5.3 102.4 33.4 45.6 69.6 5.6
Long-term debt 112.3 115.9 121.7 121.9 122.3 120.9 122.2 322.2 95.4 85.3 81.7
Shareholders'
equity<F1> 907.9 875.9 1,008.8 972.3 811.9 710.3 836.4 757.9 800.6 754.4 663.1
Current ratio 2.0 2.3 1.5 1.5 1.8 1.7 1.4 1.7 1.8 1.8 2.0
Long-term
debt-to-equity<F1> 12.4% 13.2% 12.1% 12.6% 20.7% 38.6% 33.3% 65.4% 31.7% 31.5% 35.5%
Total
debt-to-capital<F1> 12.3% 12.0% 25.1% 17.5% 27.7% 29.6% 32.4% 42.9% 29.3% 30.2% 30.3%
Other data
Net cash provided
by operating
activities $ 165.9 $ 162.4 $ 53.4 $ 184.0 $ 144.5 $ 39.1 $ 157.2 $ 115.0 $ 99.2 $ 45.7 $ 114.1
Capital expenditures 81.4 84.1 85.7 69.5 60.5 56.7 46.7 78.6 49.8 49.3 37.8
Depreciation and
amortization 67.9 68.1 71.4 73.8 67.2 68.1 69.4 62.0 53.0 42.5 40.3
Advertising 53.5 42.0 42.4 39.4 31.2 28.4 27.2 25.2 23.6 25.1 22.5
Research and
development 45.8 39.0 38.1 35.1 31.2 31.3 26.5 27.5 25.4 22.4 18.4
Number of employees
(thousands) 17.2 16.3 17.4 16.6 15.9 16.2 15.8 16.8 15.3 15.4 13.9
Common stock data
Average common
shares outstanding
(thousands) 62,342 62,059 61,411 63,640 63,692 63,310 61,759 62,766 68,058 67,581 67,576
Average common and
common equivalent
shares outstanding
(thousands) 65,326 64,095 62,893 65,088 65,909 65,002 62,685 63,122 69,447 68,853 68,243
Year-end book value
per share<F1> $ 14.69 $ 13.96 $ 16.50 $ 15.22 $ 12.72 $ 11.17 $ 13.43 $ 12.34 $ 11.76 $ 11.14 $ 9.84
Dividends declared
per share 0.35 0.73 1.01 0.74 0.545 0.48 0.42 0.42 0.39 0.265 0.145
Year-end price/earnings
ratio<F1><F2> 17.33 12.30 13.39 12.93 15.31 (17.21) 12.46 10.59 13.61 10.29 10.65
Year-end
market/book ratio<F1> 1.88 1.64 3.07 2.94 3.15 1.88 1.51 0.70 1.31 1.41 1.14
Year-end shareholders
(thousands) 21.7 21.7 23.3 25.3 26.9 29.0 31.3 33.7 36.3 39.3 43.5
_____________
<FN>
<F1> Includes discontinued operations for the years 1987-1995.
<F2> Based on diluted shares outstanding.
</TABLE>
<PAGE>
Financial Table of Contents
Selected Financial Data 36
Report of Management 40
Report of Independent Auditors 40
Financial Statements:
Consolidated Statement of Income 41
Consolidated Statement of Cash Flows 42
Consolidated Balance Sheet 43
Consolidated Statement of Shareholders' Equity 44
Notes to the Consolidated Financial Statements 45
Schedule II - Valuation and Qualifying Accounts 58
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are omitted because they
are not applicable, not required or the required information is shown in the
financial statements or notes thereto.
REPORT OF MANAGEMENT
The management of Premark is responsible for the preparation of the financial
statements and other information contained in this Annual Report. The
financial statements were prepared in accordance with generally accepted
accounting principles and include amounts that are based upon management's
best estimates and judgments, as appropriate. Independent auditors have
audited these financial statements and have expressed independent opinions
thereon.
The company maintains internal control systems, policies and procedures
designed to provide reasonable assurances that assets are safeguarded, that
transactions are executed in accordance with management's authorization and
properly recorded, and that accounting records may be relied upon for the
preparation of financial information. There are inherent limitations in all
internal control systems based on the fact that the cost of such systems
should not exceed the benefits derived. Management believes that the company's
systems provide the appropriate balance of costs and benefits. The company
also maintains an internal auditing function that evaluates and reports on the
adequacy and effectiveness of internal accounting controls, policies and
procedures.
The Audit and Corporate Responsibility Committee of the Board of Directors is
composed entirely of outside directors. The Committee meets periodically and
independently with management, the internal auditors and the independent
accountants to discuss the company's internal accounting controls, auditing
and financial reporting matters. The internal auditors and the independent
accountants have unrestricted access to the Audit and Corporate Responsibility
Committee.
Management recognizes its responsibility for conducting the company's affairs
in a manner that is responsive to the interests of its shareholders and its
employees. This responsibility is characterized in the Code of Conduct, which
provides that the company will fully comply with laws, rules and regulations
of every country in which it operates and will observe the rules of ethical
business conduct. Employees of the company are expected and directed to manage
the businesses of the company accordingly.
James M. Ringler
Chairman of the Board, Chief Executive Officer and President
Lawrence B. Skatoff
Senior Vice President and Chief Financial Officer
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of Premark International, Inc.:
We have audited the consolidated financial statements listed in the Financial
Table of Contents on page 35 of Premark International, Inc., as of December
27, 1997, and for the year then ended. 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 audit. The consolidated
financial statements listed in the Financial Table of Contents on page 35 of
Premark International, Inc., for the years ended December 28, 1996, and
December 30, 1995, were audited by other auditors whose report dated February
14, 1997, expressed an unqualified opinion on those statements.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the 1997 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Premark International, Inc., at December 27, 1997, and the consolidated
results of its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
February 6, 1998
Consolidated Statement of Income
(In millions,
except per share Dec. 27, Dec. 28, Dec. 30,
amounts) Year Ended 1997 1996 1995
---------- ---------- ----------
Net sales $ 2,406.8 $ 2,267.6 $ 2,213.4
Costs and expenses
Cost of products sold 1,525.8 1,443.8 1,420.9
Delivery, sales and
administrative expense 704.3 660.2 648.0
Interest expense 12.1 16.3 26.6
Interest income (7.2) (7.0) (2.0)
Loss on disposition of business - 43.1 -
Other income, net (2.9) (1.7) (0.4)
---------- ---------- ----------
Total costs and expenses 2,232.1 2,154.7 2,093.1
Income before income taxes 174.7 112.9 120.3
Provision for income taxes 70.9 56.2 41.4
---------- ---------- ----------
Income from continuing operations 103.8 56.7 78.9
Discontinued operations:
Income from operations (net of
tax provision of $22.8 and
$57.1 in 1996 and 1995,
respectively) - 62.2 177.0
Costs to effect the business
discontinuance (net of $4.3
tax benefit) - - (18.3)
---------- ---------- ----------
Net income $ 103.8 $ 118.9 $ 237.6
========== ========== ==========
Earnings (loss) per share:
Continuing operations $ 1.67 $ 0.92 $ 1.29
Discontinued operations:
Income from operations - 1.00 2.88
Costs to effect the business
discontinuance - - (0.30)
---------- ---------- ----------
Net income per share $ 1.67 $ 1.92 $ 3.87
========== ========== ==========
Earnings (loss) per share -
assuming dilution:
Continuing operations $ 1.59 $ 0.89 $ 1.26
Discontinued operations:
Income from operations - 0.97 2.81
Costs to effect the
business discontinuance - - (0.29)
---------- ---------- ----------
Net income per share -
assuming dilution $ 1.59 $ 1.86 $ 3.78
========== ========== ==========
See Notes to the Consolidated Financial Statements.
<PAGE>
<TABLE>
Consolidated Statement of Cash Flows
<CAPTION>
Dec. 27, Dec. 28, Dec. 30,
(In millions) Year Ended 1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 103.8 $ 118.9 $ 237.6
Adjustments to reconcile net income to net cash
provided by operating activities from
continuing operations:
Income from discontinued operations - (62.2) (158.7)
Loss on disposition of business - 38.6 -
Depreciation and amortization 67.9 68.1 71.4
Changes in assets and liabilities:
Accounts and notes receivable (35.0) (14.3) (14.9)
Inventory (52.3) (6.5) (11.9)
Net deferred income taxes (5.5) 10.2 (20.3)
Accounts payable and accruals 48.2 1.3 (43.9)
Current income taxes 28.2 1.2 0.7
Other 10.6 7.1 (6.6)
---------- ---------- ----------
Net cash provided by operating activities
of continuing operations 165.9 162.4 53.4
---------- ---------- ----------
Cash flows from investing activities
Capital expenditures (81.4) (84.1) (85.7)
Sales (purchases) of short-term investments 84.3 (84.3) -
(Acquisitions) dispositions of businesses (74.9) 35.3 (5.9)
Other 4.9 5.6 (2.0)
---------- ---------- ----------
Net cash used in investing activities
of continuing operations (67.1) (127.5) (93.6)
---------- ---------- ----------
Cash flows from financing activities
Repayment of long-term debt (0.9) (0.7) (0.7)
Net change in, and repayment of, short-term borrowings (8.3) (129.3) 103.7
Proceeds from long-term borrowing 1.3 5.5 -
Payment of dividends (21.3) (56.8) (58.0)
Proceeds from exercise of stock options 8.1 19.1 14.5
Purchase of treasury stock (53.4) (10.0) (169.7)
---------- ---------- ----------
Net cash used in financing activities
of continuing operations (74.5) (172.2) (110.2)
---------- ---------- ----------
Effect of exchange rate changes on cash and
cash equivalents (3.2) (1.1) 0.8
Cash provided by discontinued operations - 248.8 150.9
---------- ---------- ----------
Net increase in cash and cash equivalents 21.1 110.4 1.3
Cash and cash equivalents at beginning of year 130.2 19.8 18.5
---------- ---------- ----------
Cash and cash equivalents at end of year $ 151.3 $ 130.2 $ 19.8
========== ========== ==========
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
Consolidated Balance Sheet
Dec. 27, Dec. 28,
(Dollars in millions, except per share amounts) 1997 1996
---------- ----------
Assets
Cash and cash equivalents $ 151.3 $ 130.2
Short-term investments - 84.3
Accounts and notes receivable, less allowances of
$18.1 in 1997 and $18.4 in 1996 428.1 384.4
Inventories 394.0 333.1
Recoverable income taxes - 10.8
Deferred income tax benefits 68.8 67.4
Prepaid expenses 35.2 43.8
---------- ----------
Total current assets 1,077.4 1,054.0
Property, plant and equipment, net 435.1 416.4
Intangibles, less accumulated amortization of
$77.8 in 1997 and $73.6 in 1996 172.2 106.8
Other assets 81.1 83.6
---------- ----------
Total assets $ 1,765.8 $ 1,660.8
========== ==========
Liabilities and shareholders' equity
Accounts payable $ 135.2 $ 105.7
Short-term borrowings and current portion of
long-term debt 14.7 3.5
Accrued liabilities 376.4 350.4
Income taxes payable 19.0 -
---------- ----------
Total current liabilities 545.3 459.6
Long-term debt 112.3 115.9
Postretirement benefit cost 124.2 120.8
Other liabilities 76.1 88.6
Shareholders' equity:
Preferred stock, $1.00 par value, authorized
50,000,000 shares; issued - none - -
Series A Junior Participating Preferred stock,
$1.00 par value, authorized 1,000,000 shares;
issued - none - -
Common stock, $1.00 par value, authorized
200,000,000 shares; issued - 69,003,840 shares 69.0 69.0
Capital surplus 348.9 342.7
Retained earnings 749.7 688.2
Treasury stock, 7,201,201 shares at December 27,
1997, and 6,276,776 shares at December 28, 1996,
at cost (236.1) (211.4)
Unearned portion of restricted stock issued for
future service (1.5) (2.3)
Accumulated other comprehensive income (22.1) (10.3)
---------- ----------
Total shareholders' equity 907.9 875.9
---------- ----------
Total liabilities and shareholders' equity $ 1,765.8 $ 1,660.8
========== ==========
See Notes to the Consolidated Financial Statements.
<PAGE>
<TABLE>
Consolidated Statement of Shareholders' Equity
<CAPTION>
Number of Shares Amounts
-------------------- ----------------------------------------------------------------------------
Accumulated
Other
Common Treasury Common Capital Retained Treasury Comprehensive Comprehensive
(In millions) Stock Stock Stock Surplus Earnings Stock Income<F1> Income
-------- -------- -------- -------- -------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1994 69.0 (5.1) $ 69.0 $ 571.7 $ 579.8 $ (125.6) $ (122.3)
Net income 237.6 $ 237.6
Other comprehensive
income - foreign
currency translation
adjustments, net of
tax of $2.7 (4.9) (4.9)
---------
Comprehensive income $ 232.7
=========
Cash dividends declared (61.8)
Purchase of treasury stock (3.9) (167.3)
Treasury stock issued
for incentive plans
and related tax benefits 1.1 18.6 (19.9) 34.9
------- -------- -------- -------- -------- --------- ---------
December 30, 1995 69.0 (7.9) 69.0 590.3 735.7 (258.0) (127.2)
Net income 118.9 $ 118.9
Other comprehensive
income - foreign
currency translation
adjustments, net of
tax of $(1.6) (6.7) (6.7)
---------
Comprehensive income $ 112.2
=========
Cash dividends declared (45.3)
Purchase of treasury
stock (0.2) (7.3)
Treasury stock issued for
incentive plans and
related tax benefits 1.8 14.1 (33.9) 53.9
Distribution of
Tupperware Corporation
to shareholders (261.7) (87.2) 123.6
------- -------- -------- -------- -------- --------- ---------
December 28, 1996 69.0 (6.3) 69.0 342.7 688.2 (211.4) (10.3)
Net income 103.8 $ 103.8
Other comprehensive
income -foreign
currency translation
adjustments, net of
tax of $0.1 (11.8) (11.8)
---------
Comprehensive income $ 92.0
=========
Cash dividends declared (21.8)
Purchase of treasury
stock (2.0) (53.4)
Treasury stock issued
for incentive plans
and related tax
benefits 1.1 6.2 (20.5) 28.7
------- -------- -------- -------- -------- --------- ----------
December 27, 1997 69.0 (7.2) $ 69.0 $ 348.9 $ 749.7 $ (236.1) $ (22.1)
======= ======== ======== ======== ======== ========= ==========
<FN>
<F1> Represents foreign currency translation adjustments.
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of Premark and all
of its subsidiaries. Intercompany accounts and transactions have been
eliminated. The company's fiscal year ends on the last Saturday of December.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions may affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Certain amounts for prior years have been reclassified to conform to the 1997
presentation.
Cash and Cash Equivalents
The company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Short-Term Investments
Short-term investments consist primarily of commercial paper with original
maturities at date of purchase beyond three months and less than 12 months.
Short-term investments are classified as held-to-maturity and are carried at
cost which approximates fair value.
Inventories
Inventories are stated at the lower of cost or market. Inventory cost includes
cost of raw material, labor and overhead. Approximately 65% of inventories,
including substantially all domestic inventories, are valued on the last-in,
first-out (LIFO) cost method. The first-in, first-out (FIFO) cost method is
generally used for the remaining inventories. If inventories valued on the
LIFO method had been valued using the FIFO method, they would have been $40
million higher at the end of 1997 and $40.8 million higher at the end of 1996.
Property and Depreciation
Properties are stated at cost. Depreciation is calculated using a
straight-line method over the estimated useful lives ranging from 10 to 45
years for buildings and improvements and 3 to 20 years for machinery and
equipment. Upon the sale or retirement of property, plant and equipment, a
gain or loss is recognized. If the carrying value of an asset, including
associated intangibles, exceeds the sum of estimated undiscounted future cash
flows, an impairment loss is recognized for the difference between estimated
fair value and carrying value. Expenditures for maintenance and repairs are
charged to expense.
Intangibles
The excess of cost over the fair value of net assets of businesses acquired
($159.9 million in 1997 and $95.3 million in 1996) and other intangibles is
being amortized on a straight-line basis up to 40 years. The increase in 1997
is primarily a result of the purchase of Eurotec and Baxter.
Revenue Recognition
Revenue is recognized when product is shipped or serviced. Revenue from food
equipment service contracts is deferred and recognized ratably over the
service period.
Income Taxes
Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial statement
purposes and the amounts used for income tax purposes. These deferred tax
assets and liabilities are measured based upon tax laws as currently enacted.
Earnings (Loss) Per Share
In 1997, the company adopted Statement of Financial Accounting Standards No.
128, "Earnings per Share" ("SFAS No. 128"). Under the statement, the
calculation of primary and fully diluted earnings per share has been replaced
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effect of options. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have been
presented, and, where appropriate, restated to conform to the SFAS No. 128
requirements.
The following table sets forth the computation of basic and diluted earnings
per share for income from continuing operations.
(In millions) 1997 1996 1995
------- ------- -------
Numerator for both basic
and diluted earnings per
share - net income $103.8 $ 56.7 $ 78.9
Denominator:
Denominator for basic
earnings per share -
weighted average shares 62.3 62.1 61.4
Effect of dilutive securities -
employee stock options 3.0 2.0 1.5
------- ------- -------
Denominator for diluted
earnings per share - weighted
average shares and assumed
conversions 65.3 64.1 62.9
======= ======= =======
Basic earnings per share $ 1.67 $ 0.92 $ 1.29
======= ======= =======
Diluted earnings per share $ 1.59 $ 0.89 $ 1.26
======= ======= =======
For additional disclosures regarding employee stock options, see Note 10,
"Incentive Compensation Plans."
Options to purchase 782,800 shares of common stock at $32.25 per share were
outstanding during 1997 but were not included in the computation of diluted
earnings per share because the options' exercise price was greater than the
average market price of the common shares and, therefore, the effect would be
antidilutive.
Financial Instruments
Forward exchange contracts are periodically used by the company to manage its
foreign currency exposures.
Gains and losses on contracts designated as hedges of net investments in a
foreign subsidiary or intercompany transactions of a long-term nature are
accrued as exchange rates change, and are recognized in shareholders' equity
as "Accumulated Other Comprehensive Income." Gains and losses on contracts
designated as hedges of intercompany transactions that are not of a long-term
nature are accrued as exchange rates change and are recognized in income.
Gains and losses on contracts designated as hedges of identifiable foreign
currency commitments are deferred and included in the measurement of the
related foreign currency transaction.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, short-term investments,
accounts and notes receivable, accounts payable, short-term borrowings and
outstanding forward exchange contracts approximated their fair values at
December 27, 1997, and December 28, 1996, because of the short maturity of
those instruments. The fair value of long-term debt is determined based on the
borrowing rates available to the company for long-term debt with similar terms
and average maturities.
Foreign Currency Translation
The results of operations for foreign subsidiaries, other than those operating
in highly inflationary countries, are translated into U.S. dollars using the
average exchange rates during the year, while the assets and liabilities are
translated using period-end exchange rates. The related translation
adjustments are recorded in a separate component of shareholders' equity,
"Accumulated Other Comprehensive Income." Gains and losses from foreign
currency transactions, as well as from the translation of financial statements
of subsidiaries in highly inflationary countries, are included in income, but
were not significant.
Stock-Based Compensation
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," ("SFAS No. 123") encourages, but does not require,
companies to record compensation cost for stock-based employee compensation
plans at fair value. The company has chosen to continue to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," ("APB No. 25") and related Interpretations. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the company's stock at the date of the grant over the
amount an employee must pay to acquire the stock. Compensation expense
associated with restricted stock grants is equal to the fair market value of
the shares on the date of grant and is recognized ratably over the required
holding period.
Comprehensive Income
In 1997, the company adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income," ("SFAS No. 130"), which requires
companies to report all changes in equity during a period, except those
resulting from investment by owners and distribution to owners, in a financial
statement for the period in which they are recognized. The company has chosen
to disclose Comprehensive Income, which encompasses net income and foreign
currency translation adjustments, in the Consolidated Statement of
Shareholders' Equity. Prior years have been restated to conform to the SFAS
No. 130 requirements.
NOTE 2 DISTRIBUTION OF TUPPERWARE TO SHAREHOLDERS
On November 1, 1995, the company's Board of Directors authorized management to
proceed with a plan to establish Tupperware as an independent company through
a tax-free distribution to Premark's shareholders ("Distribution"). The
Distribution was effected on May 31, 1996.
Net sales of Tupperware were $0.6 billion in 1996 through the date of the
Distribution and $1.4 billion for 1995. As a result of the planned
Distribution, the company recorded a fourth quarter 1995 pretax charge of
$22.6 million ($18.3 million after tax, or 29 cents per diluted share) for
costs to effect the business discontinuance. Included in that amount were $5.5
million of relocation and severance expenses, $6.0 million of professional and
advisory fees, $5.0 million of registration fees and financing expenses, and
$6.1 million of computer systems and facilities expenses. The accrual was
substantially used in 1996.
NOTE 3 BUSINESS ACQUISITIONS AND DIVESTITURE
The company's Food Equipment Group acquired two companies in 1997. In April,
through a series of transactions, the company acquired certain assets and
liabilities of Eurocatering SpA, an Italian company, for approximately $20
million in cash and the assumption of $17 million in debt. The acquisition now
operates under the name Eurotec Srl ("Eurotec"). Eurotec is one of Europe's
largest manufacturers of warewash equipment. In September, the company
acquired the stock of The Baxter Mfg. Co. Inc., of Orting, Washington, a
manufacturer of commercial bakery equipment, for $50.3 million in cash.
Results of operations are included in the consolidated financial statements
from the dates of their respective acquisitions. Pro forma results of these
acquisitions are not materially different from reported amounts.
Subsequent to fiscal year end, Wilsonart completed the acquisition of the
stock of the Resopal (German) and Arborite (Canadian) decorative laminate
businesses from Forbo Holdings AG for approximately $13 million, subject to
final balance sheet adjustments. In addition, the company's Food Equipment
Group completed the acquisition of the assets of Somat Corporation, a
manufacturer of commercial waste systems, for $3.4 million and the stock of
Wittco Foodservice Equipment, Inc., a manufacturer of cooking equipment,
primarily warming, holding and display cabinets, for $5.7 million.
In June 1996, the company sold its Hartco Flooring subsidiary for $35.8
million and the assumption of debt. A pretax loss of $43.1 million ($38.6
million after tax or $0.60 per diluted share) was recognized as a result of
the sale.
NOTE 4 INVENTORIES
(In millions) 1997 1996
-------- --------
Finished goods $ 171.8 $ 163.7
Work in process 14.8 26.2
Raw materials and supplies 207.4 143.2
-------- --------
Total inventories $ 394.0 $ 333.1
======== ========
NOTE 5 PROPERTY, PLANT AND EQUIPMENT
(In millions) 1997 1996
-------- --------
Land $ 25.3 $ 25.2
Buildings and improvements 254.0 243.0
Machinery and equipment 672.5 640.2
Construction in progress 34.2 32.5
-------- --------
Total property, plant and equipment 986.0 940.9
Less accumulated depreciation 550.9 524.5
-------- --------
Property, plant and equipment, net $ 435.1 $ 416.4
======== ========
Depreciation expense was $62.2 million, $62.6 million and $63.1 million for
the years 1997, 1996 and 1995, respectively.
NOTE 6 ACCRUED LIABILITIES
(In millions) 1997 1996
-------- --------
Warranties and maintenance service
agreements $ 107.3 $ 99.7
Compensation and employee benefits 94.6 95.8
Insurance 48.1 47.1
Taxes other than income taxes 19.3 20.0
Other 107.1 87.8
-------- --------
Total accrued liabilities $ 376.4 $ 350.4
======== ========
NOTE 7 FINANCING ARRANGEMENTS
Short-term Borrowings
(In millions) 1997 1996
-------- --------
Total short-term borrowings
at year-end $ 10.3 $ 2.6
Weighted average interest rate
at year-end 6.7% 10.1%
Average borrowings during the year $ 7.3 $ 63.9
Weighted average interest rate
for the year 7.2% 5.7%
Maximum borrowings during the year $ 13.4 $ 196.4
Long-term Debt
(In millions) 1997 1996
-------- --------
10 1/2% notes due 2000 $ 100.0 $ 100.0
5.95% and variable rate industrial
revenue bonds due 1998-2002 7.1 7.5
Other 9.6 9.3
-------- --------
116.7 116.8
Less current portion 4.4 0.9
-------- --------
Total long-term debt $ 112.3 $ 115.9
======== ========
Interest paid in 1997, 1996 and 1995 was $12.9 million, $16.7 million and
$24.0 million, respectively.
The fair value of the 10 1/2% notes at the end of 1997 and 1996 was $110.4
million and $112.8 million, respectively. The fair value of the remaining
long-term debt approximates its book value.
The company had unused lines of credit amounting to $438.2 million at December
27, 1997, including $250.0 million under an unsecured revolving credit
facility, which supports the company's commercial paper borrowing capability
and expires in October 2002. Total principal payments due on long-term debt in
the five years subsequent to December 27, 1997, are $115.3 million, including
the $100 million of 10 1/2% notes due in 2000.
Operating Leases
Rental expense for operating leases (reduced by sublease income of
approximately $1.2 million in 1997, $0.9 million in 1996 and $0.3 million in
1995) totaled $36.7 million in 1997, $35.3 million in 1996 and $34.5 million
in 1995. Approximate minimum rental commitments under noncancelable operating
leases in effect at December 27, 1997, were: 1998 - $26.5 million; 1999 -
$20.8 million; 2000 - $16.5 million; 2001 - $11.1 million; 2002 - $8.8
million; after 2002 - $11.1 million.
Other Financial Instruments
At December 27, 1997, the company had forward exchange contracts maturing
between January 8 and December 16, 1998, to sell $62.7 million and to purchase
$6.3 million in foreign currencies at fixed rates on the value dates. The
larger components of these positions were contracts to sell $19.6 million of
British pounds sterling, $18.0 million of German marks and $9.6 million of
Canadian dollars, and to purchase $5.1 million of German marks. The net
accrued loss on forward exchange contracts was $0.3 million at December 27,
1997, and $1.3 million at December 28, 1996.
NOTE 8 INCOME TAXES
Income before income taxes was as follows:
(In millions) 1997 1996 1995
------- ------- -------
Domestic $181.3 $111.6 $112.4
Foreign (6.6) 1.3 7.9
------- ------- -------
Total $174.7 $112.9 $120.3
======= ======= =======
The provision for income taxes was as follows:
(In millions) 1997 1996 1995
------- ------- -------
Current
Federal $ 63.0 $ 36.7 $ 40.2
Foreign 3.9 5.6 4.2
State 9.4 5.4 5.1
------- ------- -------
76.3 47.7 49.5
------- ------- -------
Deferred
Federal (5.7) 7.5 (1.6)
Foreign 1.3 (0.4) (6.2)
State (1.0) 1.4 (0.3)
------- ------- -------
(5.4) 8.5 (8.1)
------- ------- -------
Total $ 70.9 $ 56.2 $ 41.4
======== ======= =======
The differences between the provision for income taxes and income taxes
computed using the U.S. federal statutory rate were as follows:
1997 1996 1995
------- ------- -------
Statutory federal tax rate 35.0% 35.0% 35.0%
Increase (reduction) in taxes
resulting from:
Foreign income taxes 4.1 3.8 (1.4)
State taxes 3.1 3.9 2.6
Repatriation of foreign earnings 0.2 0.3 (2.6)
Nondeductible loss on
Hartco sale - 9.4 -
Adjustment to tax accruals (0.4) (3.4) (0.6)
Other (1.4) 0.8 1.4
------- ------- -------
Effective income tax rate 40.6% 49.8% 34.4%
======= ======= =======
In 1997 and 1996, the company recognized $6.2 million and $14.1 million,
respectively, of benefits for deductions associated with the exercise of
employee stock options. These benefits were added directly to capital surplus
and are not reflected in the provision for income taxes.
Deferred tax assets (liabilities) are composed of the following:
(In millions) 1997 1996
-------- --------
Depreciation $ (34.6) $ (40.9)
Other (3.8) (3.5)
-------- --------
Gross deferred tax liabilities (38.4) (44.4)
-------- --------
Postretirement benefits 50.6 49.3
Employee benefits 21.3 19.5
Tax carryforwards 16.1 14.1
Self-insurance reserves 14.8 14.6
Adhesive claims 11.7 12.5
Warranty reserves 10.5 7.9
Environmental reserves 4.8 5.4
Other accruals 26.4 27.7
-------- --------
Gross deferred tax assets 156.2 151.0
Valuation allowance (22.7) (16.5)
-------- --------
Net deferred tax assets $ 95.1 $ 90.1
======== ========
The valuation allowance primarily represents reserves for foreign operating
losses and capital loss carryforwards. Management believes it is more likely
than not that these net deferred tax assets will be realized through the
reduction of future taxes payable. Significant factors considered by
management in determining the probability of realization of these assets
include historical operating results of the company, as well as expectations
of future earnings. At December 27, 1997, the company had foreign operating
loss carryforwards of $34.2 million. It also had $14.1 million of capital loss
carryforwards available to offset certain future U.S. federal capital gains
tax obligations. Of the total, $32.2 million of carryforwards expire at
various dates from 1998 to 2004, and the remainder have unlimited lives.
During 1997, the company recognized net benefits of $1.1 million related to
foreign net operating loss carryforwards. Repatriation of foreign earnings
would not result in a significant incremental cost to the company.
The company paid income taxes, net of refunds, in 1997, 1996 and 1995, of
$26.8 million, $37.9 million and $38.0 million, respectively, a portion of
which was owed in 1996 and 1995 as a result of income generated by the
domestic operations of Tupperware.
NOTE 9 RETIREMENT BENEFIT PLANS
The company has various pension plans covering substantially all domestic
employees and certain employees in other countries. In addition to providing
pension benefits, the company provides certain postretirement healthcare and
life insurance benefits for selected U.S. and Canadian employees. Most
employees and retirees outside the United States are covered by government
healthcare programs. Employees may become eligible for these company benefits
if they reach normal retirement age while working for the company and satisfy
certain years of service requirements. The medical plans are contributory,
with retiree contributions adjusted annually, and contain other cost-sharing
features such as deductibles and coinsurance. The U.S. medical plans are
coordinated with Medicare for post-65 retirees. The company has a right to
modify or terminate these plans.
In 1997, the Company adopted Statement of Financial Accounting Standards No.
132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits." This statement standardizes the disclosure requirements for
pensions and other postretirement benefits. Prior years' information has been
restated to conform with the requirements of this statement.
Pension Benefits Postretirement Benefits
------------------- -------------------
(In millions) 1997 1996 1997 1996
-------- -------- -------- --------
Change in benefit obligation:
Beginning balance $ 289.2 $ 289.9 $ 114.7 $ 117.9
Service cost 10.6 10.4 2.4 2.4
Interest cost 21.1 21.0 8.1 7.9
Actuarial loss (gain) 11.6 (16.2) (0.4) (2.8)
Divestitures - - - (4.1)
Benefits paid (17.8) (15.9) (6.3) (6.6)
-------- -------- -------- --------
Ending balance 314.7 289.2 118.5 114.7
-------- -------- -------- --------
Change in plan assets at fair value:
Beginning balance 309.2 285.0 - -
Actual return on
plan assets 57.8 38.5 - -
Company contributions 1.2 1.6 5.1 5.7
Plan participant
contributions - - 1.2 0.9
Benefits paid (17.8) (15.9) (6.3) (6.6)
-------- -------- -------- --------
Ending balance 350.4 309.2 - -
-------- -------- -------- --------
Funded status of the plan 35.7 20.0 (118.5) (114.7)
Unrecognized actuarial
gain (48.0) (27.0) (5.6) (5.5)
Unrecognized prior
service cost (benefit) 4.9 4.4 (6.1) (6.6)
Unrecognized net transition
asset (6.3) (8.3) - -
-------- -------- -------- --------
Accrued benefit cost $ (13.7) $ (10.9) $(130.2) $(126.8)
======== ======== ======== ========
Weighted average assumptions:
Discount rate 7.3% 7.5% 7.3% 7.5%
Return on plan assets 9.0 9.0 9.0 9.0
Salary growth rate 4.5 4.5 N/A N/A
Plan assets consist primarily of equity securities and corporate and
government bonds. However, certain pension plans, primarily at foreign
locations, were unfunded. As of December 27, 1997, and December 28, 1996, the
accumulated benefit obligations of these plans were $5.6 million and $4.1
million, respectively.
Pension Benefits Postretirement Benefits
------------------------- -------------------------
(In millions) 1997 1996 1995 1997 1996 1995
------- ------- ------- ------- ------- -------
Components of net
periodic benefit
cost:
Service cost $ 10.6 $ 10.4 $ 7.9 $ 2.4 $ 2.4 $ 2.5
Interest cost 21.1 21.0 19.7 8.1 7.9 9.0
Actual return
on plan assets (57.8) (38.5) (55.9) - - -
Net amortization
and deferral 32.1 14.5 32.1 (0.7) (0.4) (0.7)
------- ------- ------- ------- ------- -------
Net periodic
benefit cost $ 6.0 $ 7.4 $ 3.8 $ 9.8 $ 9.9 $ 10.8
======= ======= ======= ======= ======= =======
The assumed healthcare cost trend rate is 9.0% for the pre-65 plan and 6.0%
for the post-65 plan for 1997. These rates are assumed to decrease by one
percentage point per year until an ultimate level of 5.5% is reached. The rate
is assumed to remain at that level thereafter. The healthcare cost trend rate
assumption has a significant effect on the amounts reported. A one percentage
point change in the assumed healthcare cost trend rates would have the
following effects:
1 Percentage 1 Percentage
(In millions) Point Increase Point Decrease
-------------- --------------
Effect on total of service and
interest cost components $ 1.4 $ (1.2)
Effect on postretirement benefit
obligation 13.9 (12.4)
The company also has several savings, thrift and profit-sharing plans. Its
contributions to these plans are based upon various levels of employee
participation. The total cost of these plans was $15.3 million in 1997, $14.1
million in 1996 and $11.7 million in 1995.
NOTE 10 INCENTIVE COMPENSATION PLANS
The company has an incentive plan ("Plan") that provides for grants of
performance and stock awards.
Performance Awards
Under the Plan, key employees earned cash performance awards of approximately
$9.1 million in 1997, $11.8 million in 1996 and $11.9 million in 1995. As of
December 27, 1997, 187 employees were eligible to receive performance awards.
Stock Awards
The company has adopted the disclosure-only provisions of SFAS No. 123.
Consistent with prior years, stock-based compensation continues to be recorded
using the intrinsic value method prescribed in APB No. 25 and related
Interpretations.
The Plan includes awards of stock options and restricted stock to employees
and officers. As of December 27, 1997, the maximum number of shares that may
be granted under the Plan is 4,774,305. Of the total shares available for
award, up to 273,431 may be granted in the form of restricted stock. As of
December 27, 1997, 246 employees participated in the Plan.
All outstanding stock options and restricted stock vest three years after
their date of grant. All stock options issued to employees and officers under
the Plan and previous plans have had exercise prices equal to the fair market
value of the shares on the date of grant and have a term of 10 years.
Therefore, the company has not recorded any compensation expense associated
with these stock options.
Compensation expense associated with restricted stock grants is equal to the
fair market value of the shares on the date of grant and is recognized ratably
over the required holding period. Compensation expense associated with
restricted stock grants was not significant.
Under the Director Stock Plan ("Director Plan") non-employee directors may
elect to receive their annual retainers in the form of cash, stock or stock
options. Options granted to directors become exercisable on the last day of
the fiscal year in which they are granted, have a term of 10 years and have an
exercise price that compensates for the foregone cash retainer. This amount
and the value of stock grants on the date of award have been recognized as an
expense by the company. The number of shares initially available for grant
under the Director Plan and the number of shares available as of December 27,
1997, were 600,000 and 417,566, respectively. As of December 27, 1997, options
to purchase 158,238 shares were exercisable.
Restricted stock and stock option activity in 1997, 1996 and 1995 for the
Plan, Director Plan and previous plans is summarized below:
Restricted Stock
(Thousands of shares) 1997 1996 1995
------- ------- -------
Beginning balance 198 44 55
Awarded 8 203 35
Released (13) (22) (46)
Forfeited - (55) -
Adjustment due to Tupperware
distribution - 28 -
------- ------- -------
Ending balance 193 198 44
======= ======= =======
Shares available for issuance 273 281 447
======= ======= =======
Average fair value of shares
awarded during the year $32.25 $17.37 $43.65
======= ======= =======
Stock Options 1997 1996 1995
-------------- -------------- ---------------
Average Average Average
Option Option Option
(Thousands of shares) Shares Price Shares Price Shares Price
------ ------ ------ ------ ------ ------
Beginning balance 8,079 $ 9.79 4,361 $27.59 4,939 $21.88
Granted 814 31.86 1,642 15.43 660 46.16
Canceled (178) 13.72 (1,628) 29.20 (109) 33.32
Exercised (1,070) 7.50 (1,640) 11.61 (1,129) 12.90
Adjustment due to
Tupperware
distribution - 5,344 -
------ ------ ------
Ending balance 7,645 $12.37 8,079 $ 9.79 4,361 $27.59
====== ====== ====== ====== ====== ======
Options exercisable
at year-end 4,107 $ 7.48 3,871 $ 6.03 2,433 $15.47
====== ====== ====== ====== ====== ======
Average fair value
of options granted
during the year $ 9.96 $ 4.63 $12.79
====== ====== ======
After the Distribution in 1996, restricted stock and the outstanding options
to purchase Premark common stock that were held by Premark officers and
employees continued to be solely for the purchase of Premark common stock. The
number of restricted shares was adjusted to maintain their value, and the
number and exercise price of outstanding stock options were adjusted in a
manner that maintained in the aggregate the excess of market value over
exercise price. This adjustment is reflected in the tables above as
"Adjustment due to Tupperware distribution." The number of shares and exercise
prices of outstanding stock options prior to the Distribution are reflected in
the above table at their historical amounts. Restricted stock and options that
were held by Tupperware officers and employees were canceled.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions for
1997, 1996 and 1995, respectively: dividend yield of 1.3%, 1.6% and 2.0%;
average risk-free interest rate of 6.1%, 6.4% and 5.8%; expected volatility of
26%, 25% and 25%; and expected option life of 5.1 years for all years.
Shares subject to option as of December 27, 1997, are summarized below:
(Thousands of
shares) Options Outstanding Options Exercisable
------------------------------- -------------------
Range of Shares Average Average Shares Average
Exercise Subject Option Remaining Subject Option
Prices to Option Price Life to Option Price
- -------- --------- ------- --------- --------- -------
$1.72 - $5.04 2,053 $ 3.87 3.8 years 2,053 $ 3.87
$8.50 - $13.27 3,257 11.51 6.9 2,041 11.06
$15.25 - $32.35 2,335 21.04 8.8 13 16.00
----- -----
7,645 $12.37 6.7 4,107 $ 7.48
===== ====== ========= ===== ======
If the company had determined compensation cost based on the fair value at the
grant dates for the 1997, 1996 and 1995 stock option grants consistent with
SFAS No. 123, the company's net earnings and earnings per share from
continuing operations would have been reduced to the pro forma amounts indicated
below:
(In millions, Dec. 27, Dec. 28, Dec. 30,
except per share amounts) 1997 1996 1995
--------- --------- ---------
Net income from continuing operations:
Reported $ 103.8 $ 56.7 $ 78.9
Pro forma 100.4 54.0 78.6
Net income from continuing operations
per share, assuming dilution:
Reported $ 1.59 $ 0.89 $ 1.26
Pro forma 1.54 0.84 1.25
The above pro forma amounts assume the application of SFAS No. 123 beginning
with the 1995 grants. Prior years' amounts are not representative of the
effects on reported net income for future years as stock compensation expense
is amortized over the three-year vesting period. As a result, 1997 is the
first year in which three years of amortization of stock compensation expense
is reflected.
NOTE 11 SEGMENTS OF THE BUSINESS
The company has the following business segments: the Food Equipment Group -
commercial food equipment for the foodservice and food retail industries; the
Decorative Products Group - decorative laminates and laminate flooring,
ceramic tile and hardwood flooring (prior to the sale of Hartco in June 1996);
and the Consumer Products Group - home appliances, direct-to-the-home products
and physical fitness equipment.
(In millions) 1997 1996 1995
--------- --------- ---------
Net sales
Food Equipment Group:
United States $ 748.0 $ 728.1 $ 710.8
Europe 430.1 414.3 442.2
Other International 107.9 96.0 84.8
--------- --------- ---------
Total Food Equipment Group 1,286.0 1,238.4 1,237.8
Decorative Products Group 790.2 730.4 686.6
Consumer Products Group 330.6 298.8 289.0
--------- --------- ---------
Total net sales $2,406.8 $2,267.6 $2,213.4
========= ========= =========
Segment profit
Food Equipment Group:
United States $ 66.1 $ 63.8 $ 71.1
Europe 2.7 6.2 15.5
Other International 3.1 7.9 5.3
--------- --------- ---------
Total Food Equipment Group 71.9 77.9 91.9
Decorative Products Group 82.4 28.5 50.4
Consumer Products Group 36.3 32.6 25.3
--------- --------- ---------
Total segment profit 190.6 139.0 167.6
Unallocated expenses (11.0) (16.8) (22.7)
Interest expense, net (4.9) (9.3) (24.6)
--------- --------- ---------
Income from continuing operations
before income taxes $ 174.7 $ 112.9 $ 120.3
========= ========= =========
Identifiable assets
Food Equipment Group:
United States $ 474.4 $ 401.3 $ 390.8
Europe 285.0 231.6 246.1
Other International 67.2 58.0 49.8
--------- --------- ---------
Total Food Equipment Group 826.6 690.9 686.7
Decorative Products Group 585.9 525.8 624.5
Consumer Products Group 163.9 149.8 139.0
Corporate 189.4 294.3 95.9
--------- --------- ---------
Total identifiable assets $1,765.8 $1,660.8 $1,546.1
========= ========= =========
Depreciation and amortization
Food Equipment Group:
United States $ 16.8 $ 16.2 $ 16.9
Europe 9.0 8.0 8.5
Other International 2.1 1.5 1.0
--------- --------- ---------
Total Food Equipment Group 27.9 25.7 26.4
Decorative Products Group 31.7 35.3 37.4
Consumer Products Group 6.7 5.5 5.3
Corporate 1.6 1.6 2.3
--------- --------- ---------
Total depreciation and amortization $ 67.9 $ 68.1 $ 71.4
========= ========= =========
Capital expenditures
Food Equipment Group:
United States $ 20.2 $ 22.2 $ 26.9
Europe 6.9 7.5 6.5
Other International 3.8 6.2 2.3
--------- --------- ---------
Total Food Equipment Group 30.9 35.9 35.7
Decorative Products Group 39.2 36.1 40.9
Consumer Products Group 10.9 12.0 8.6
Corporate 0.4 0.1 0.5
--------- --------- ---------
Total capital expenditures $ 81.4 $ 84.1 $ 85.7
========= ========= =========
The Decorative Products and Consumer Products Groups operate primarily in the
United States. Sales to a single customer did not exceed 10% of total sales.
Export sales were $149.1 million, $152.8 million and $124.6 million in 1997,
1996 and 1995, respectively. In the Decorative Products Group, the only class
of products that accounted for more than 10% of consolidated sales was
decorative laminates with sales of approximately $508 million in 1997, $458
million in 1996 and $426 million in 1995. In the Food Equipment Group, service
revenue accounted for $379 million, $372 million and $363 million of sales for
the years 1997, 1996 and 1995, respectively. The cost of sales associated with
these service revenues was $204 million, $201 million and $202 million in
1997, 1996 and 1995, respectively.
Unallocated expenses are corporate expenses and other items not related to the
operations of the segments. Corporate assets consist of cash and assets
maintained for general corporate purposes. As of December 27, 1997, the
company's net investment in international operations was $265.1 million.
NOTE 12 CONTINGENCIES
The company and certain subsidiaries are involved in litigation and various
legal matters that are being defended and handled in the ordinary course of
business. Included among these matters are environmental issues for which the
company estimates its range of possible exposure to be $10 million to $31
million as of December 27, 1997. The company anticipates that any necessary
expenditures would be made over the next 10 years. As of December 27, 1997,
the company had accruals of $13.5 million for these matters. The company has
not recorded any significant claims against third parties associated with
these accruals.
As of December 27, 1997, the company had an accrual of $40.3 million recorded
for the estimated costs of adhesive claims against its Wilsonart subsidiary.
Also recorded were assets totaling $10.4 million representing future amounts
expected to be reimbursed by its insurer for these claims.
None of the company's contingencies is expected to have a material adverse
effect on its financial position, results of operations or any individual
year's cash flow.
NOTE 13 QUARTERLY SUMMARY (UNAUDITED)
Following is a summary of the unaudited interim results of operations, the
dividends declared per share of common stock and the price range of the common
stock composite for each quarter in the years ended December 27, 1997, and
December 28, 1996.
(In millions, except First Second Third Fourth
per share amounts) Quarter Quarter Quarter Quarter
------- ------- ------- -------
Year ended December 27, 1997
Net sales $545.6 $594.4 $601.4 $665.4
Cost of products sold 342.2 371.1 376.4 436.1
Net income 20.8 28.3 33.9 20.8
Net income per share 0.33 0.46 0.54 0.34
Net income per share -
assuming dilution 0.32 0.43 0.52 0.32
Dividends declared per share 0.08 0.09 0.09 0.09
Composite stock price range:
High 23 7/8 30 32 15/16 33 1/8
Low 20 7/8 19 5/8 26 3/4 25 3/16
Close 20 7/8 26 3/4 32 7/16 27 9/16
Year ended December 28, 1996
Net sales $528.7 $565.7 $563.2 $610.0
Cost of products sold 340.7 363.9 353.0 386.2
Income (loss) from
continuing operations 11.8 (17.3) 30.2 32.0
Net income 44.6 12.1 30.2 32.0
Per share:
Income (loss) from
continuing operations 0.19 (0.28) 0.49 0.51
Net income 0.73 0.20 0.49 0.51
Per share - assuming dilution:
Income (loss) from
continuing operations 0.19 (0.27) 0.47 0.49
Net income 0.71 0.19 0.47 0.49
Dividends declared per share 0.27 0.30 0.08 0.08
Composite stock price range:
High 55 1/8 18 1/2* 20 24 1/4
Low 49 5/8 15 1/4* 16 3/8 18 7/8
Close 53 5/8 18 1/2* 19 22 7/8
*On May 31, 1996, Premark spun off its Tupperware business. Stock prices
reflect activity after May 20.
In the fourth quarter of 1997, the company recorded a $14.5 million pretax
charge for global restructuring at the Food Equipment Group.
In the second quarter of 1996, the company sold its Hartco Flooring
subsidiary. A pretax loss of $43.1 million ($38.6 million after tax or $0.60
per diluted share) was recognized as a result of the sale.
NOTE 14 SHAREHOLDERS' RIGHTS PLAN
In November 1996, the company replaced its shareholders' rights plan with a
new plan having a duration of 10 years, under which the company declared a
dividend of one Series A Junior Participating Preferred share purchase right
for each outstanding share of common stock. The company redeemed the common
share purchase rights declared under a ten-year rights agreement adopted in
March 1989.
If an acquirer buys 15% or more of the company's stock, the plan allows other
shareholders to buy, with each right, additional company shares at a 50%
discount. If the company is acquired in a merger or other business combination
transaction, rights holders will be entitled to buy shares of the acquiring
company at a 50% discount. If an acquirer buys between 15% and 50% of the
company's outstanding stock, the company can exchange part or all of the
rights of other holders for shares of the company's stock on a one-for-one
basis, or shares of the Series A Junior Participating Preferred stock on a
one-for-one-hundredth basis. Before an acquirer buys 15% or more of the
company's common stock, the company may redeem the rights. The Board is
authorized to reduce the 15% threshold to not less than 10%.
<PAGE>
<TABLE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the three years ended December 27, 1997
<CAPTION>
(In millions) Additions
------------------------
Charged
Balance at Charged to to Other Balance
Beginning Costs and Accounts- Deductions- at End
Description of Period Expenses Describe Describe of Period
- -------------------------------- ---------- ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts,
current and long term:
Year ended December 27, 1997 $ 19.0 $ 4.4 - $ (4.2)<F1> $ 19.2
(0.9)<F2>
0.9 <F4>
Year ended December 28, 1996 $ 20.2 $ 5.5 - $ (5.8)<F1> $ 19.0
(0.4)<F2>
(0.5)<F3>
Year ended December 30, 1995 $ 18.2 $ 4.5 - $ (3.4)<F1> $ 20.2
0.5 <F2>
0.4 <F4>
Valuation allowance for deferred
tax assets:
Year ended December 27, 1997 $ 16.5 $ 6.2 - - $ 22.7
Year ended December 28, 1996 $ 7.3 $ 9.2 - - $ 16.5
Year ended December 30, 1995 $ 6.9 $ 0.4 - - $ 7.3
<FN>
<F1> Represents write-offs less recoveries.
<F2> Foreign currency translation adjustment.
<F3> Business sold.
<F4> Businesses acquired.
</TABLE>
[DESCRIPTION] EX3
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
PREMARK INTERNATIONAL, INC.
(Originally Incorporated on August 29, 1986)
FIRST: The name of the Corporation is Premark International,
Inc.
SECOND: The address of the Corporation's registered office
in the State of Delaware is Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, County of New Castle. The name
of the Corporation's registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation shall be to engage in
any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is
250,000,000 of which 50,000,000 shares shall be Preferred Stock
of the par value of $1.00 per share and 200,000,000 shares shall
be Common Stock of the par value of $1.00 per share.
A. Preferred Stock. The Board of Directors is expressly
authorized to provide for the issue of all or any shares of the
Preferred Stock, in one or more series, and to fix for each such
series such voting powers, full or limited (which voting powers,
if any, shall be subject to the provisions of Article NINTH of
this Restated Certificate of Incorporation (the "Certificate of
Incorporation")), or no voting powers, and such designations,
preferences and relative, participating, optional or other
special rights and such qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors
providing for the issue of such series (a "Preferred Stock
Designation") and as may be permitted by the General Corporation
Law of the State of Delaware. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the voting power of all of
the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of
directors (the "Voting Stock") (after giving effect to the
provisions of Article NINTH of this Certificate of
Incorporation), voting together as a single class, without a
separate vote of the holders of the Preferred Stock, or any
series thereof, unless a vote of any such holders is required
pursuant to any Preferred Stock Designation.
B. Common stock. Except as otherwise required by law or as
otherwise provided in any Preferred Stock Designation, the
holders of the Common Stock shall exclusively possess all voting
power and, except as set forth in Article NINTH of this
Certificate of Incorporation, each share of Common Stock shall
have one vote.
FIFTH: A. Number, election and terms of directors. Subject
to the rights of the holders of any series of Preferred Stock to
elect additional directors under specified circumstances, the
number of directors shall be fixed from time to time exclusively
by the Board of Directors pursuant to a resolution adopted by a
majority of the Whole Board (as defined in Article EIGHTH). The
directors, other than those who may be elected by the holders of
any series of Preferred Stock under specified circumstances,
shall be divided, with respect to the time for which they
severally hold office, into three classes, with the term of
office of the first class to expire at the 1987 annual meeting of
stockholders, the term of office of the second class to expire at
the 1988 annual meeting of stockholders and the term of office of
the third class to expire at the 1989 annual meeting of
stockholders, with each director to hold office until his or her
successor shall have been duly elected and qualified. At each
annual meeting of stockholders, commencing with the 1987 annual
meeting, (i) directors elected to succeed those directors whose
terms then expire shall be elected for a term of office to expire
at the third succeeding annual meeting of stockholders after
their election, with each director to hold office until his or
her successor shall have been duly elected and qualified and
(ii), if authorized by a resolution of the Board of Directors,
directors may be elected to fill any vacancy on the Board of
Directors, regardless of how such vacancy was created.
B. Stockholder nomination of director candidates and
introduction of business. Advance notice of stockholder
nominations for the election of directors and of business to be
brought by stockholders before any meeting of the stockholders of
the Corporation shall be given in the manner provided in the
By-Laws of the Corporation.
C. Newly created directorships and vacancies. Subject to the
rights of the holders of any series of Preferred Stock, and
unless the Board of Directors otherwise determines, newly created
directorships resulting from any increase in the authorized
number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification,
removal from office or other cause may be filled only by a
majority vote of the directors then in office, though less than a
quorum, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term
of office of the class to which they have been elected expires
and until such director's successor shall have been duly elected
and qualified. No decrease in the number of authorized directors
constituting the entire Board of Directors shall shorten the term
of any incumbent director.
D. Removal. Subject to the rights of the holders of any
series of Preferred Stock, any director, or the entire Board of
Directors, may be removed from office at any time, but only for
cause and only by the affirmative vote of the holders of at least
a majority of the voting power of all of the then outstanding
shares of the Voting Stock (after giving effect to the provisions
of Article NINTH of this Certificate of Incorporation), voting
together as a single class.
E. Amendment repeal or alteration. Notwithstanding any other
provisions of this Certificate of Incorporation or any provision
of law which might otherwise permit a lesser vote or no vote, but
in addition to any affirmative vote of the holders of any
particular class or series of the capital stock required by law,
this Certificate of Incorporation or any Preferred Stock
Designation, the affirmative vote of the holders of at least 80
percent of the voting power of all of the then-outstanding shares
of the Voting Stock (after giving effect to the provisions of
Article NINTH of this Certificate of Incorporation), voting
together as a single class, shall be required to alter, amend or
repeal this Article FIFTH.
SIXTH: In furtherance and not in limitation of the powers
conferred by law, the Board of Directors is expressly authorized
to make, alter, amend and repeal the By-Laws of the Corporation,
subject to the power of the holders of the capital stock of the
Corporation to alter, amend or repeal the By-Laws; provided,
however, that, with respect to the powers of holders of capital
stock to alter, amend and repeal By-Laws of the Corporation,
notwithstanding any other provision of this Certificate of
Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series
of the capital stock of the Corporation required by law, this
Certificate of Incorporation or any Preferred Stock Designation,
the affirmative vote of the holders of at least 80 percent of the
voting power of all of the then-outstanding shares of the Voting
Stock (after giving effect to the provisions of Article NINTH of
this Certificate of Incorporation), voting together as a single
class, shall be required to (i) alter, amend or repeal any
provision of the By-Laws, or (ii) alter, amend or repeal any
provision of this proviso to this Article SIXTH.
SEVENTH: Subject to the rights of the holders of any series
of Preferred Stock, (A) any action required or permitted to be
taken by the stockholders of the Corporation must be effected at
an annual or special meeting of stockholders of the Corporation
and may not be effected by any consent in writing by such
stockholders and (B) special meetings of stockholders of the
Corporation may be called only by the Board of Directors pursuant
to a resolution adopted by a majority of the Whole Board.
Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series
of the capital stock of the Corporation required by law this
Certificate of Incorporation or any Preferred Stock Designation,
the affirmative vote of the holders of at least 80 percent of the
voting power of all of the then-outstanding shares of the Voting
Stock (after giving effect to the provisions of Article NINTH of
this Certificate of Incorporation), voting together as a single
class, shall be required to alter, amend or repeal this Article
SEVENTH.
EIGHTH: A. (1) In addition to any affirmative vote required
by law, by this Certificate of Incorporation or by any Preferred
Stock Designation, and except as otherwise expressly provided in
Section B of this Article EIGHTH:
(i) any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (a) any
Interested Stockholder (as hereinafter defined) or (b) any
other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an
Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of transactions) to or with any Interested
Stockholder or any Affiliate of any Interested Stockholder
of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value (as hereinafter defined) of $10
million or more; or
(iii) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate Fair Market Value of $10 million or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of any Interested Stockholder or any Affiliate of
any Interested Stockholder; or
(v) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise
involving any Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is Beneficially Owned (as hereinafter defined) by any
Interested Stockholder or any Affiliate of any Interested
Stockholder;
shall require the affirmative vote of the holders of at least 80
percent of the voting power of all of the then-outstanding shares
of the Voting Stock (after giving effect to the provisions of
Article NINTH of this Certificate of Incorporation), voting
together as a single class. Such affirmative vote shall be
required notwithstanding any other provisions of this Certificate
of Incorporation or any provision of law or of any agreement with
any national securities exchange or otherwise which might
otherwise permit a lesser vote or no vote.
(2) The term "Business Combination" as used in this Article
EIGHTH shall mean any transaction which is referred to in any one
or more of subparagraphs (i) through (v) of paragraph (1) of this
Section A.
B. The provisions of Section A of this Article EIGHTH shall
not be applicable to any particular Business Combination, and
such Business Combination shall require only such affirmative
vote as is required by law, any other provision of this
Certificate of Incorporation and any Preferred Stock Designation,
if, in the case of a Business Combination that does not involve
any cash or other consideration being received by the
stockholders of the Corporation, solely in their respective
capacities as stockholders of the Corporation, the condition
specified in the following paragraph (l) is met or, in the case
of any other Business Combination, the conditions specified in
either of the following paragraph (1) or paragraph (2) are met:
(1) The Business Combination shall have been approved
by a majority of the Continuing Directors (as hereinafter
defined); provided however, that this condition shall not be
capable of satisfaction unless there are at least five
Continuing Directors.
(2) All of the following conditions shall have been
met:
(i) The consideration to be received by holders of
shares of a particular class (or series) of outstanding
capital stock (including Common Stock and other than
Excluded Preferred Stock (as hereinafter defined))
shall be in cash or in the same form as the Interested
Stockholder or any of its Affiliates has previously
paid for shares of such class (or series) of capital
stock. If the Interested Stockholder or any of its
Affiliates have paid for shares of any class (or
series) of capital stock with varying forms of
consideration, the form of consideration to be received
per share by holders of shares of such class (or
series) of capital stock shall be either cash or the
form used to acquire the largest number of shares of
such class (or series) of capital stock previously
acquired by the Interested Stockholder.
(ii) The aggregate amount of (x) the cash and (y)
the Fair Market Value, as of the date (the
"Consummation Date") of the consummation of the
Business Combination, of the consideration other than
cash to be received per share by holders of Common
Stock in such Business Combination shall be at least
equal to the higher of the following (in each case
appropriately adjusted in the event of any stock
dividend, stock split, combination of shares or similar
event):
(a) (if applicable) the highest per share
price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid
by the Interested Stockholder or any of its
Affiliates for any shares of Common Stock acquired
by them within the two-year period immediately
prior to the date of the first public announcement
of the proposal of the Business Combination (the
"Announcement Date") or in any transaction in
which the Interested Shareholder became an
Interested Stockholder, whichever is higher, plus
interest compounded annually from the first date
on which the Interested Stockholder became an
Interested Stockholder (the "Determination Date")
through the Consummation Date at the publicly
announced base rate of interest of The First
National Bank of Chicago (or such other major bank
headquartered in the City of Chicago as may be
selected by the Continuing Directors) from time to
time in effect in the City of Chicago, less the
aggregate amount of any cash dividends paid, and
the Fair Market Value of any dividends paid in
other than cash, on each share of Common Stock
from the Determination Date through the
Consummation Date in an amount up to but not
exceeding the amount of interest so payable per
share of Common Stock; and
(b) the Fair Market Value per share of Common
Stock on the Announcement Date or the
Determination Date, whichever is higher.
(iii) The aggregate amount of (x) the cash and (y)
the Fair Market Value, as of the Consummation Date, of
the consideration other than cash to be received per
share by holders of shares of any class (or series),
other than Common Stock or Excluded Preferred Stock, of
outstanding capital stock shall be at least equal to
the highest of the following (in each case
appropriately adjusted in the event of any stock
dividend, stock split, combination of shares or similar
event), it being intended that the requirements of this
paragraph (2)(iii) shall be required to be met with
respect to every such class (or series) of outstanding
capital stock whether or not the Interested Stockholder
or any of its Affiliates has previously acquired any
shares of a particular class (or series) of capital
stock:
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by the Interested
Stockholder or any of its Affiliates for any shares of
such class (or series) of capital stock acquired by
them within the two-year period immediately prior to
the Announcement Date or in any transaction in which it
became an Interested Stockholder, whichever is higher,
plus interest compounded annually from the
Determination Date through the Consummation Date at the
publicly announced base rate of interest of The First
National Bank of Chicago (or such other major bank
headquartered in the City of Chicago as may be selected
by the Continuing Directors) from time to time in
effect in the City of Chicago, less the aggregate
amount of any cash dividends paid, and the Fair Market
Value of any dividends paid in other than cash, on each
share of such class (or series) of capital stock from
the Determination Date through the Consummation Date in
an amount up to but not exceeding the amount of
interest so payable per share of such class (or series)
of capital stock;
(b) the Fair Market Value per share of such class
(or series) of capital stock on the Announcement Date
or on the Determination Date, whichever is higher; and
(c) highest preferential amount per share, if any,
to which the holders of shares of such class (or
series) of capital stock would be entitled in the event
of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
(iv) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such
Business Combination: (a) except as approved by a majority
of the Continuing Directors, there shall have been no
failure to declare and pay at the regular date therefor any
full quarterly dividends (whether or not cumulative) on any
outstanding Preferred Stock; (b) there shall have been (I)
no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any subdivision
of the Common Stock), except as approved by a majority of
the Continuing Directors, and (II) an increase in such
annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to
increase such annual rate is approved by a majority of the
Continuing Directors; and (c) neither such Interested
Stockholder nor any of its Affiliates shall have become the
beneficial owner of any additional shares of Voting Stock
except as part of the transaction which results in such
Interested Stockholder becoming an Interested Stockholder;
provided, however, that no approval by Continuing Directors
shall satisfy the requirements of this subparagraph (iv)
unless at the time of such approval there are at least five
Continuing Directors.
(v) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder and any
of its Affiliates shall not have received the benefit,
directly or indirectly (except proportionately, solely in
such Interested Stockholder's or Affiliate's capacity as a
stockholder of the Corporation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such
Business Combination or otherwise.
(vi) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or
regulations) shall be mailed to all stockholders of the
Corporation at least 30 days prior to the consummation of
such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to
such Act or subsequent provisions).
(vii) Such Interested Stockholder shall have supplied
the Corporation with such information as shall have been
requested pursuant to Section E of this Article EIGHTH
within the time period set forth therein.
C. For the purposes of this Article EIGHTH:
(1) A "person" means any individual, limited
partnership, general partnership, corporation or other firm
or entity.
(2) "Interested Stockholder" means any person (other
than the Corporation or any Subsidiary) who or which:
(i) is the beneficial owner (as hereinafter defined),
directly or indirectly, of ten percent or more of the voting
power of the outstanding Voting Stock (determined as if
Article NINTH were not in effect); or
(ii) is an Affiliate or an Associate of the Corporation
and at any time within the two-year period immediately prior
to the date in question was the beneficial owner, directly
or indirectly, of ten percent or more of the voting power of
the then-outstanding Voting Stock (determined as if Article
NINTH were not in effect); or
(iii) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by any Interested Stockholder, if such
assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of
1933, as amended.
(3) A person shall be a "beneficial owner" of, or shall
"Beneficially Own", any Voting Stock:
(i) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns,
directly or indirectly within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as in effect on
September 1,1986; or
(ii) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right
is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (b)
the right to vote pursuant to any agreement, arrangement or
understanding (but neither such person nor any such
Affiliate or Associate shall be deemed to be the beneficial
owner of any shares of Voting Stock solely by reason of a
revocable proxy granted for a particular meeting of
stockholders, pursuant to a public solicitation of proxies
for such meeting, and with respect to which shares neither
such person nor any such Affiliate or Associate is otherwise
deemed the beneficial owner); or
(iii) which are beneficially owned, directly or
indirectly, within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as in effect on September
1, 1986, by any other person with which such person or any
of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting (other than solely by reason of a revocable
proxy as described in subparagraph (ii) of this paragraph
(3)) or disposing of any shares of Voting Stock;
provided, however, that in the case of any employee stock
ownership or similar plan of the Corporation or of any
Subsidiary in which the beneficiaries thereof possess the
right to vote any shares of Voting Stock held by such plan,
no such plan nor any trustee with respect thereto (nor any
Affiliate of such trustee), solely by reason of such
capacity of such trustee, shall be deemed, for any purposes
hereof, to beneficially own any shares of Voting Stock held
under any such plan.
(4) For the purposes of determining whether a person is
an Interested Stockholder pursuant to paragraph (2) of this
Section C, the number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned through
application of paragraph (3) of this Section C but shall not
include any other unissued shares of Voting Stock which may
be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(5) "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on September 1,1986.
(6) "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly
or indirectly, by the Corporation; provided, however, that
for the purposes of the definition of Interested Stockholder
set forth in paragraph (2) of this Section C, the term
"Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly
or indirectly, by the Corporation.
(7) "Continuing Director" means any member of the Board
of Directors of the Corporation who is unaffiliated with the
Interested Stockholder (or, for purposes of Article NINTH,
with a Substantial Stockholder (as defined therein)) and was
a member of the Board prior to the time that the Interested
Stockholder became an Interested Stockholder (or the
Substantial Stockholder became a Substantial Stockholder, as
the case may be), and any director who is thereafter chosen
to fill any vacancy on the Board of Directors or who is
elected and who, in either event, is unaffiliated with the
Interested Stockholder (or the Substantial Stockholder, as
the case may be) and in connection with his or her initial
assumption of office is recommended for appointment or
election by a majority of Continuing Directors then on the
Board.
(8) "Fair Market Value" means: (i) in the case of
stock, the highest closing sale price during the 30-day
period immediately preceding the date in question of a share
of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on
the Composite Tape, on the New York Stock Exchange, or, if
such stock is not listed on such Exchange, on the principal
United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to
a share of such stock during the 30-day period preceding the
date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then
in use, or if no such quotations are available, the fair
market value on the date in question of a share of such
stock as determined by the Board in accordance with Section
D of this Article EIGHTH; and (ii) in the case of property
other than cash or stock, the fair market value of such
property on the date in question as determined by the Board
in accordance with Section D of this Article EIGHTH.
(9) In the event of any Business Combination in which
the Corporation survives, the phrase "consideration other
than cash to be received" as used in paragraphs (2)(ii) and
(2)(iii) of Section B of this Article EIGHTH shall include
the shares of Common Stock and/or the shares of any other
class (or series) of outstanding capital stock retained by
the holders of such shares.
(10) "Whole Board" means the total number of directors
which this Corporation would have if there were no
vacancies.
(11) "Excluded Preferred Stock" means any series of
Preferred Stock with respect to which the Preferred Stock
Designation creating such series expressly provides that the
provisions of this Article EIGHTH shall not apply.
D. A majority of the Whole Board, but only if a majority of
the Whole Board shall then consist of Continuing Directors or, if
a majority of the Whole Board shall not then consist of
Continuing Directors, a majority of the then Continuing
Directors, shall have the power and duty to determine, on the
basis of information known to them after reasonable inquiry, all
facts necessary to determine compliance with this Article EIGHTH,
including, without limitation, (i) whether a person is an
Interested Stockholder, (ii) the number of shares of Voting Stock
beneficially owned by any person, (iii) whether a person is an
Affiliate or Associate of another, (iv) whether the applicable
conditions set forth in paragraph (2) of Section B have been met
with respect to any Business Combination, (v) the Fair Market
Value of stock or other property in accordance with paragraph (8)
of Section C of this Article EIGHTH, and (vi) whether the assets
which are the subject of any Business Combination referred to in
paragraph (l)(ii) of Section A have, or the consideration to be
received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination
referred to in paragraph (l)(iii) of Section A has, an aggregate
Fair Market Value of $10 million or more.
E. A majority of the Whole Board shall have the right to
demand, but only if a majority of the Whole Board shall then
consist of Continuing Directors, or, if a majority of the Whole
Board shall not then consist of Continuing Directors, a majority
of the then Continuing Directors shall have the right to demand,
that any person who it is reasonably believed is an Interested
Stockholder (or holds of record shares of Voting Stock
Beneficially Owned by any Interested Stockholder) supply this
Corporation with complete information as to (i) the record
owner(s) of all shares Beneficially Owned by such person who it
is reasonably believed is an Interested Stockholder, (ii) the
number of, and class or series of, shares Beneficially Owned by
such person who it is reasonably believed is an Interested
Stockholder and held of record by each such record owner and the
number(s) of the stock certificate(s) evidencing such shares, and
(iii) any other factual matter relating to the applicability or
effect of this Article EIGHTH, as may be reasonably requested of
such person, and such person shall furnish such information
within 10 days after receipt of such demand.
F. Nothing contained in this Article EIGHTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
G. Notwithstanding any other provisions of this Certificate
of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series
of the Voting Stock required by law, this Certificate of
Incorporation or any Preferred Stock Designation, the affirmative
vote of the holders of at least 80 percent of the voting power of
all of the then-outstanding shares of the Voting Stock (after
giving effect to the provisions of Article NINTH of this
Certificate of Incorporation), voting together as a single class,
shall be required to alter, amend or repeal this Article EIGHTH.
NINTH: A. (1) So long as any person (as defined in Article
EIGHTH of this Certificate of Incorporation) is the beneficial
owner (as defined in Article EIGHTH of this Certificate of
Incorporation) of more than ten percent of the voting power of
the then outstanding shares of Voting Stock (determined without
giving effect to the provisions of this Article NINTH), the
record holders of any shares Beneficially Owned by such person
(hereinafter a "Substantial Stockholder") shall have limited
voting rights on any matter requiring their vote or consent. With
respect to each vote in excess of 10% of the voting power of the
then outstanding shares of Voting Stock which such record holders
would be entitled to cast without giving effect to this Article
NINTH, the record holders in the aggregate shall be entitled to
cast only one hundredth (1/100) of a vote and the aggregate
voting power of such record holders, so limited, for all shares
of Voting Stock Beneficially Owned by the Substantial Stockholder
shall be allocated proportionately among such record holders. For
each such record holder, this allocation shall be accomplished by
multiplying the aggregate voting power, as so limited, of the
outstanding shares of Voting Stock Beneficially Owned by the
Substantial Stockholder by a fraction whose numerator is the
number of votes represented by the shares of Voting Stock owned
of record by such record holder (and which are Beneficially Owned
by the Substantial Stockholder) and whose denominator is the
total number of votes represented by the shares of Voting Stock
Beneficially Owned by the Substantial Stockholder. A person who
is a record holder of shares of Voting Stock that are
Beneficially Owned simultaneously by more than one person shall
have, with respect to such shares, the right to cast the least
number of votes that such person would be entitled to cast under
this Article NINTH by virtue of such shares being so Beneficially
Owned by any of such persons.
(2) In no event shall the record holder(s) of all shares of
Voting Stock Beneficially Owned by any Substantial Stockholder
collectively be entitled or permitted to cast, by virtue of their
record ownership of shares of Voting Stock Beneficially Owned by
such Substantial Stockholder, in excess of fifteen percent of the
total number of votes which the holders of all then outstanding
shares of Voting Stock would (after giving effect to the
provisions of paragraph (1) of this Section A) be entitled to
cast. If the provisions of the preceding sentence shall have the
effect of reducing the total number of votes which the record
holder(s) of shares of Voting Stock Beneficially Owned by such
Substantial Stockholder shall be entitled to cast, such reduction
shall be effected, and the number of votes which such record
holder(s) shall be entitled to cast by reason of this paragraph
(2) of this Section A shall be determined, in accordance with the
provisions of paragraph (1) of this Section A.
B. A majority of the Whole Board, but only if a majority of
the Whole Board shall then consist of Continuing Directors, or,
if a majority of the Whole Board shall not then consist of
Continuing Directors, a majority of the then Continuing
Directors, shall have the power to construe and apply the
provisions of this Article NINTH and to make all determinations
necessary or desirable to implement such provisions, including
but not limited to matters with respect to (i) the number of
shares of Voting Stock Beneficially Owned by any person, (ii)
whether a person is an Affiliate or Associate of another, (iii)
whether a person has an agreement, arrangement, or understanding
with another as to the matters referred to in the definition
contained in Article EIGHTH of the terms "beneficial owner" and
"Beneficially Own", (iv) the application of any other definition
or operative provision of Article EIGHTH or this Article NINTH to
the given facts, or (v) any other matter relating to the
applicability or effect of this Article NINTH.
C. A majority of the Whole Board shall have the right to
demand, but only if a majority of the Whole Board shall then
consist of Continuing Directors, or, if a majority of the Whole
Board shall not then consist of Continuing Directors, a majority
of the then Continuing Directors shall have the right to demand,
that any person who after reasonable inquiry is believed to be a
Substantial Stockholder (or holds of record shares of Voting
Stock Beneficially Owned by any Substantial Stockholder) supply
the Corporation with complete information as to (i) the record
holder(s) of all shares Beneficially Owned by such person who is
so believed to be a Substantial Stockholder, (ii) the number of,
and class or series of, shares Beneficially Owned by such person
who is so believed to be a Substantial Stockholder and held of
record by each such record holder and the number(s) of the stock
certificate(s) evidencing such shares, and (iii) any other
factual matter relating to the applicability or effect of this
Article NINTH, as may reasonably be requested of such person, and
such person shall furnish such information within 10 days after
the receipt of such demand.
D. Except as otherwise provided by law or expressly provided
in this Section D, the presence, in person or by proxy, of the
holders of record of shares of capital stock of the Corporation
entitling the holders thereof to cast a majority of the votes
(after giving effect, if applicable, to the provisions of this
Article NINTH) entitled to be cast by the holders of shares of
capital stock of the Corporation entitled to vote shall
constitute a quorum at all meetings of the stockholders, and
every reference in this Certificate of Incorporation to a
majority or other proportion of capital stock (or the holders
thereof) for purposes of determining any quorum requirement or
any requirement for stockholder consent or approval shall be
deemed to refer to such majority or other proportion of the votes
(or the holders thereof) then entitled to be cast in respect of
such capital stock.
E. Any construction, application or determination made by
the Board of Directors or by the Continuing Directors, as the
case may be, pursuant to this Article NINTH in good faith and on
the basis of such information and assistance as was then
reasonably available for such purpose shall be conclusive and
binding upon the Corporation and its stockholders, including any
Substantial Stockholder.
F. Nothing contained in this Article NINTH shall be
construed to relieve any Substantial Stockholder from any
fiduciary obligation imposed by law.
G. Notwithstanding any other provisions of this Certificate
of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series
of the Voting Stock required by law, this Certificate of
Incorporation or any Preferred Stock Designation, the affirmative
vote of the holders of at least 80 percent of the voting power of
all of the then-outstanding shares of the Voting Stock (after
giving effect to the provisions of Section A of this Article
NINTH), voting together as a single class, shall be required to
alter, amend or repeal this Article NINTH; provided, however,
that the affirmative vote of a majority of the voting power of
all the then-outstanding shares of Voting Stock (after giving
effect to the provisions of Section A of this Article NINTH),
voting together as a single class, shall be required to delete
Section I of this Article NINTH.
H. In the event any Section (or portion thereof) of this
Article NINTH shall be found to be invalid, prohibited or
unenforceable for any reason, the remaining provisions (or
portions thereof) of this Article NINTH shall remain in full
force and effect, and shall be construed as if such invalid,
prohibited or unenforceable provision had been stricken herefrom
or otherwise rendered inapplicable, it being the intent of this
Corporation and its stockholders that each such remaining
provision (or portion thereof) of this Article NINTH remain, to
the fullest extent permitted by law, applicable and enforceable
as to all stockholders, including Substantial Stockholders,
notwithstanding any such finding.
I. Notwithstanding anything to the contrary herein, this
Article NINTH will expire on the earlier of (a) the date on which
the 1992 annual meeting of the stockholders of the Corporation
shall be held or (b) December 31,1992, unless, prior thereto,
this Section I shall have been deleted from this Article NINTH by
vote of the stockholders as required under the proviso to Section
G of this Article NINTH and the then-applicable provisions of the
law of the State of Delaware.
TENTH: A. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the General Corporation Law of the State of Delaware, or (iv)
for any transaction from which the director derived an improper
personal benefit. If the General Corporation Law of the State of
Delaware is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then
the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as so amended.
Any repeal or modification of this Section A by the stockholders
of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time
of such repeal or modification.
B. (1) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact
that he or she or a person of whom he or she is the legal
representative is or was a director, officer or employee of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer, employee or agent or
in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware as the same exists or
may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered
by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his
or her heirs, executors and administrators; provided, however,
that except as provided in paragraph (2) of this Section B with
respect to proceedings seeking to enforce rights to
indemnification, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or
part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this
Section B shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending
any such proceeding in advance of its final disposition;
provided, however, that if the General Corporation Law of the
State of Delaware requires, the payment of such expenses incurred
by a director or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking by or on
behalf of such director or officer, to repay all amounts so
advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Section B
or otherwise.
(2) If a claim under paragraph (1) of this Section B is not
paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant
has not met the standards of conduct which make it permissible
under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel or
stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General
Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board of
Directors, independent legal counsel or stockholders) that the
claimant has not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(3) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final
disposition conferred in this Section B shall not be exclusive of
any other right which any person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation,
By-Law, agreement, vote of stockholders or disinterested
directors or otherwise.
(4) The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability
or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss
under the General Corporation Law of the State of Delaware.
(5) The Corporation may, to the extent authorized from time
to time by the Board of Directors grant rights to
indemnification, and rights to be paid by the Corporation the
expenses incurred in defending any proceeding in advance of its
final disposition, to any agent of the Corporation to the fullest
extent of the provisions of this Section B with respect to the
indemnification and advancement of expenses of directors,
officers and employees of the Corporation.
ELEVENTH: In addition to any other considerations which the
Board of Directors may lawfully take into account, in determining
whether to take or to refrain from taking corporate action on any
matter, including proposing any matter to the stockholders of the
Corporation, the Board of Directors may take into account the
interests of creditors, customers, employees and other
constituencies of the Corporation and its subsidiaries and the
effect upon communities in which the Corporation and its
subsidiaries do business.
TWELFTH: In furtherance and not in limitation of the powers
conferred by law or in this Certificate of Incorporation, the
Board of Directors (and any committee of the Board of Directors)
is expressly authorized, to the extent permitted by law, to take
such action or actions as the Board or such committee may
determine to be reasonably necessary or desirable to (A)
encourage any person (as defined in Article EIGHTH of this
Certificate of Incorporation) to enter into negotiations with the
Board of Directors and management of the Corporation with respect
to any transaction which may result in a change in control of the
Corporation which is proposed or initiated by such person or (B)
contest or oppose any such transaction which the Board of
Directors or such committee determines to be unfair, abusive or
otherwise undesirable with respect to the Corporation and its
business, assets or properties or the stockholders of the
Corporation, including, without limitation, the adoption of such
plans or the issuance of such rights, options, capital stock,
notes, debentures or other evidences of indebtedness or other
securities of the Corporation, which rights, options, capital
stock, notes, evidences of indebtedness and other securities (i)
may be exchangeable for or convertible into cash or other
securities on such terms and conditions as may be determined by
the Board or such committee and (ii) may provide for the
treatment of any holder or class of holders thereof designated by
the Board of Directors or any such committee in respect of the
terms, conditions, provisions and rights of such securities which
is different from, and unequal to, the terms, conditions,
provisions and rights applicable to all other holders thereof.
THIRTEENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this
Certificate of Incorporation, and any other provisions authorized
by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter provided herein
or by statute, and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Certificate of
Incorporation in its present form or as amended are granted
subject to the rights reserved in this Article.
IN WITNESS WHEREOF, this Restated Certificate of
Incorporation, which restates and integrates and further amends
the provisions of the Certificate of Incorporation of this
Corporation, has been duly adopted in accordance with Sections
242 and 245 of the General Corporation Law of the State of
Delaware, has been executed by its Chairman of the Board and
Chief Executive Officer and attested by its Secretary on this
31st day of October, 1986.
PREMARK INTERNATIONAL, INC.
By: /s/ WARREN L. BATTS
Chairman of the Board
and Chief Executive Officer
PREMARK INTERNATIONAL, INC.
CORPORATE SEAL
1986
DELAWARE
ATTEST:
/s/ JOHN T. KELLY
Secretary
EXHIBIT 10.1
$250,000,000
CREDIT AGREEMENT
dated as of
May 17, 1996
among
Premark International, Inc.
The Banks Listed Herein
and
Bank of America National Trust and Savings Association,
as Agent
Arranged by
BA Securities, Inc.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Accounting Terms and Determinations . . . . . . . . . 14
SECTION 1.3. Types of Borrowings . . . . . . . . . . . . . . . . . 15
ARTICLE II
THE CREDITS. . . . . . . . . . . . . . . 15
SECTION 2.1. Commitments to Lend . . . . . . . . . . . . . . . . . 15
SECTION 2.2. Notice of Committed Borrowings. . . . . . . . . . . . 15
SECTION 2.3. Money Market Borrowings . . . . . . . . . . . . . . . 16
SECTION 2.4. Notice to Banks; Funding of Loans . . . . . . . . . . 20
SECTION 2.5. Notes . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.6. Maturity of Loans . . . . . . . . . . . . . . . . . . 22
SECTION 2.7. Interest Rates. . . . . . . . . . . . . . . . . . . . 22
SECTION 2.8. Facility, Arrangement and Agency Fees . . . . . . . . 25
SECTION 2.9. Optional Termination or Reduction of
Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.10. Mandatory Termination of Commitments . . . . . . . . 26
SECTION 2.11. Method of Electing Interest Rates. . . . . . . . . . 26
SECTION 2.12. Optional Prepayments . . . . . . . . . . . . . . . . 28
SECTION 2.13. General Provisions as to Payments. . . . . . . . . . 29
SECTION 2.14. Funding Losses . . . . . . . . . . . . . . . . . . . 29
SECTION 2.15. Computation of Interest and Fees . . . . . . . . . . 30
SECTION 2.16. Withholding Tax Exemption. . . . . . . . . . . . . . 30
SECTION 2.17. Regulation D Compensation. . . . . . . . . . . . . . 31
ARTICLE III
CONDITIONS . . . . . . . . . . . . . . . 31
SECTION 3.1. Effectiveness; Termination of 1994
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.2. Borrowings. . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 34
SECTION 4.1. Corporate Existence and Power. . . . . . . . . . . . . 34
SECTION 4.2. Corporate and Governmental Authorization;
No Contravention . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.3. Binding Effect. . . . . . . . . . . . . . . . . . . . 34
SECTION 4.4. Financial Information . . . . . . . . . . . . . . . . 34
SECTION 4.5. Litigation. . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.6. Compliance with ERISA . . . . . . . . . . . . . . . . 35
SECTION 4.7. Environmental Matters . . . . . . . . . . . . . . . . 36
SECTION 4.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.9. Subsidiaries. . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.10. Not an Investment Company. . . . . . . . . . . . . . 36
SECTION 4.11. Compliance with Laws. . . . . . . . . . . . . . . . . 36
SECTION 4.12. Full Disclosure . . . . . . . . . . . . . . . . . . . 37
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . 37
SECTION 5.1. Information . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.2. Maintenance of Property; Insurance. . . . . . . . . . 39
SECTION 5.3. Preservation of Corporate Existence, Etc. . . . . . . 40
SECTION 5.4. Debt. . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.5. Minimum Consolidated Net Worth. . . . . . . . . . . . 41
SECTION 5.6. Negative Pledge . . . . . . . . . . . . . . . . . . . 41
SECTION 5.7. Consolidations, Mergers and Sales of
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.8. Use of Proceeds . . . . . . . . . . . . . . . . . . . 43
SECTION 5.9. Change in Business. . . . . . . . . . . . . . . . . . 43
ARTICLE VI
DEFAULTS. . . . . . . . . . . . . . . . 43
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . 43
SECTION 6.2. Notice of Default . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
THE AGENT . . . . . . . . . . . . . . . 46
SECTION 7.1. Appointment and Authorization; "Agent" . . . . . . . 46
SECTION 7.2. Delegation of Duties. . . . . . . . . . . . . . . . . 46
SECTION 7.3. Liability of Agent. . . . . . . . . . . . . . . . . . 46
SECTION 7.4. Reliance by Agent . . . . . . . . . . . . . . . . . . 47
SECTION 7.5. Notice of Default . . . . . . . . . . . . . . . . . . 47
SECTION 7.6. Credit Decision . . . . . . . . . . . . . . . . . . . 48
SECTION 7.7. Indemnification of Agent. . . . . . . . . . . . . . . 48
SECTION 7.8. Agent in Individual Capacity. . . . . . . . . . . . . 49
SECTION 7.9. Successor Agent . . . . . . . . . . . . . . . . . . . 49
SECTION 7.10. Withholding Tax. . . . . . . . . . . . . . . . . . . 50
ARTICLE VIII
CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . 51
SECTION 8.1. Basis for Determining Interest Rate
Inadequate or Unfair . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.2. Illegality. . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.3. Increased Cost and Reduced Return . . . . . . . . . . 53
SECTION 8.4. Loans Substituted for Affected Fixed Rate
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.5. Election of Company to Terminate or
Substitute Banks . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . 56
SECTION 9.1. Notices . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.2. No Waivers. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.3. Costs and Expenses. . . . . . . . . . . . . . . . . . 57
SECTION 9.4. Company Indemnification . . . . . . . . . . . . . . . 58
SECTION 9.5. Sharing of Set-offs . . . . . . . . . . . . . . . . . 58
SECTION 9.6. Amendments and Waivers. . . . . . . . . . . . . . . . 59
SECTION 9.7. Successors and Assigns. . . . . . . . . . . . . . . . 60
SECTION 9.8. Assignments, Participations, etc. . . . . . . . . . . 60
SECTION 9.10. Governing Law. . . . . . . . . . . . . . . . . . . . 62
SECTION 9.11. Waiver of Jury Trial . . . . . . . . . . . . . . . . 63
SECTION 9.12. Counterparts; Integration. . . . . . . . . . . . . . 63
SECTION 9.13. Confidentiality. . . . . . . . . . . . . . . . . . . 63
Schedules and Exhibits
Schedule 3.1(iv) - Dart Spinoff
Schedule 5.9 - Lines of Business
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Money Market Quote Request
Exhibit D - Invitation for Money Market Quotes
Exhibit E - Money Market Quote
Exhibit F - Opinion of Counsel for the Company
Exhibit G - Assignment and Acceptance Agreement
Exhibit H - Purchase/Leaseback Transaction Summary
Exhibit I - Opinion of Counsel for Dart (Spinoff)
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of May 17, 1996 among PREMARK
INTERNATIONAL, INC., the BANKS listed on the signature pages
hereto, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as agent for the Banks.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as
used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of Money
Market Quotes setting forth Money Market Absolute Rates pursuant
to Section 2.3.
"Adjusted CD Rate" has the meaning set forth in Section
2.7(b).
"Administrative Questionnaire" means, with respect to
each Bank, an administrative questionnaire in the form prepared
by the Agent and submitted to the Agent (with a copy to the
Company) duly completed by such Bank.
"Affiliate" means with respect to any Person, the
Parent of such Person, any Subsidiary of such Person, and any
Person that has a Parent in common with such first Person.
"Agent" means BofA in its capacity as agent for the
Banks hereunder, and its successors in such capacity.
"Agent-Related Persons" means BofA and any successor
agent arising under Section 7.9, together with their respective
Affiliates (including, in the case of BofA, the Arranger), and
the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
"Applicable Lending Office" means, with respect to any
Bank, (i) in the case of its Domestic Loans, its Domestic Lending
Office, (ii) in the case of its Offshore Loans, its Offshore
Lending Office and (iii) in the case of its Money Market Loans,
its Money Market Lending Office.
"Arranger" means BA Securities, Inc., a Delaware
corporation.
"Assessment Rate" has the meaning set forth in Section
2.7(b).
"Assignee" has the meaning set forth in Section 9.8.
"Attorney Costs" means and includes all reasonable fees
and disbursements of any law firm or other external counsel, and,
without duplication, the reasonable allocated cost of internal
legal services and all disbursements of internal counsel.
"Bank" means each lender listed on the signature pages
hereof, each Assignee which becomes a Bank pursuant to Section
9.6(c), and their respective successors.
"Bank Default" has the meaning set forth in Section
8.5.
"Bank Proceeding" has the meaning set forth in Section
8.5.
"Bankruptcy Code" means the Federal Bankruptcy Reform
Act of 1978 (11 U.S.C. section 101, et seq.).
"Base Rate" means, for any day, a rate per annum equal
to the higher of (i) the Reference Rate for such day and (ii) the
sum of 1/2 of 1% plus the Federal Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan which bears
interest at the Base Rate pursuant to the applicable Notice of
Committed Borrowing or Notice of Interest Rate Election or the
provisions of Article VIII or (ii) an overdue amount which was a
Base Rate Loan immediately before it became overdue.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" has the meaning set forth in Section 1.3.
"CD Loan" means (i) a Committed Loan which bears
interest at a CD Rate pursuant to the applicable Notice of
Committed Borrowing or Notice of Interest Rate Election or (ii)
an overdue amount which was a CD Loan, or, in the case of each of
clauses (i) and (ii), interest or penalty with respect thereto,
immediately before it became overdue.
"CD Rate" means a rate of interest determined pursuant
to Section 2.7(b) on the basis of an Adjusted CD Rate.
"CD Reference Banks" means Bankers Trust Company,
Chemical Bank and BofA and each such other bank as may be
appointed pursuant to Section 9.8(f).
"Change in Control" shall be deemed to have occurred at
such times as (i) any Person (other than an Investment Fund), or
two or more Persons (other than Investment Funds) acting in
concert, directly or indirectly acquire after the Effective Date,
beneficial ownership (within the meaning of rule 13d-3 of the
Securities and Exchange Commission under the Securities Act of
1934) of 20% or more of the outstanding shares of voting stock of
the Company, or (ii) individuals who constitute the Board of
Directors of the Company on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority of
the Board of Directors of the Company at any time. For purposes
hereof, (A) "Investment Fund" shall mean a mutual fund (1) having
in excess of 1,000 beneficial investors and (2) which does not
operate as a "vulture" fund or "takeover" fund and (B) any
Person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least three-fourths of
the directors comprising the Incumbent Board (either by a
specific vote or by approval of a proxy statement of the Company
in which such Person is named as a nominee for director, without
objection to such nomination) shall be, for purposes of
clause (ii) above, considered as though such Person were a member
of the Incumbent Board (and upon such event, the former director
that has been replaced thereby shall no longer be considered a
member of the Incumbent Board.)
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the signature
pages hereof, as such amount may be reduced from time to time
pursuant to Section 2.9.
"Committed Loan" means a loan made by a Bank pursuant
to Section 2.1; provided that, if any such loan or loans (or
portions thereof) are combined or subdivided pursuant to a Notice
of Interest Rate Election, the term "Committed Loan" shall refer
to the combined principal amount resulting from such combination
or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"Company" means Premark International, Inc., a Delaware
corporation, and its successors.
"Company's 1995 Form 10-K" means the Company's Annual
Report on Form 10-K for 1995, as filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Consolidated Debt" means at any date the Debt of the
Company and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"Consolidated Net Worth" means at any date the
consolidated stockholders' equity of the Company and its
Consolidated Subsidiaries, determined as of such date.
"Consolidated Total Assets" means at any date the value
of the assets of the Company and its Subsidiaries, determined on
a consolidated basis as of such date, as the same would be
reflected on the financial statements required to be delivered
pursuant to Section 5.1(a).
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Company in its consolidated
financial statements if such statements were prepared as of such
date.
"Dart" means Dart Industries Inc., a Delaware
corporation, and its successors.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money (including, without limitation, the fixed and contingent
reimbursement obligations of such Person for standby letters of
credit issued on behalf of the Company or any Consolidated
Subsidiary in support of third party indebtedness), (ii) all
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee
which are capitalized in accordance with generally accepted
accounting principles, (v) all Debt of others secured by a Lien
on any asset of such Person, whether or not such Debt is assumed
by such Person, and (vi) all Debt of others Guaranteed by such
Person; provided that Debt shall not include (A) "back-to-back"
borrowings by foreign Subsidiaries of the Company in foreign
currencies for which there are related deposits or receivables of
equivalent amounts so long as (y) such borrowings are not
included in Consolidated Debt under generally accepted accounting
principles and (z) the borrowing arrangements include rights of
offset allowing defaulted principal and accrued interest to be
offset against the related repayment obligation or (B) the seller
acquisition financing secured by a Lien on certain computer
equipment as described in Exhibit H.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in San
Francisco, California and Chicago, Illinois are authorized by law
to close.
"Domestic Lending Office" means, as to each Bank, its
office located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire
as its Domestic Lending Office) or such other office as such Bank
may hereafter designate as its Domestic Lending Office by notice
to the Company and the Agent; provided that any Bank may so
designate separate Domestic Lending Offices for its Base Rate
Loans, on the one hand, and its CD Loans, on the other hand, in
which case all references herein to the Domestic Lending Office
of such Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or
both.
"Domestic Reserve Percentage" has the meaning set forth
in Section 2.7(b).
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 3.1.
"Eligible Assignee" means (a) a commercial bank
organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least
$100,000,000; (b) a commercial bank organized under the laws of
any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political
subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is
acting through a branch or agency located in the United States;
and (c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Bank, (ii) a
Subsidiary of a Person of which a Bank is a Subsidiary, or (iii)
a Person of which a Bank is a Subsidiary.
"Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous
substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or wastes
or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Company and all members of a
controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which,
together with the Company, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Euro-Dollar Reference Banks" means the principal
London offices of Bankers Trust Company, Chemical Bank and BofA
and each such other bank as may be appointed pursuant to Section
9.8(f).
"Euro-Dollar Reserve Percentage" has the meaning set
forth in Section 2.17.
"Event of Default" has the meaning set forth in Section
6.1.
"Federal Funds Rate" means, for any day, the rate set
forth in the weekly statistical release designated as H.15(519),
or any successor publication, published by the Federal Reserve
Bank of New York (including any such successor, "H.15(519)") on
the preceding Domestic Business Day opposite the caption "Federal
Funds (Effective)"; or, if for any relevant day such rate is not
so published on any such preceding Domestic Business Day, the
rate for such day will be the arithmetic mean as determined by
the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection
2.8(b).
"Fixed Rate Loans" means CD Loans or Offshore Loans or
Money Market Loans (excluding Money Market LIBOR Loans bearing
interest at the Reference Rate pursuant to Section 8.1) or any
combination of the foregoing.
"Foreign Subsidiary" means (i) any Subsidiary organized
under the laws of a jurisdiction outside the United States and
(ii) any branch or office located outside the United States of
any other Subsidiary.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof, any
central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by
any of the foregoing.
"Group of Loans" means at any time a group of Loans
consisting of (i) all Committed Loans which are Base Rate Loans
at such time or (ii) all Committed Loans which are Fixed Rate
Loans having the same Interest Period at such time; provided
that, if Committed Loans of any particular Bank are converted to
or made as Base Rate Loans pursuant to Section 8.2 or 8.4, such
Loans shall be included in the same Group or Groups of Loans from
time to time as they would have been in if they had not been so
converted or made.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or
otherwise) or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term or
Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"IBOR" has the meaning set forth in Section 2.7(c).
"Indemnified Liabilities" has the meaning specified in
Section 9.4.
"Indemnified Person" has the meaning specified in
Section 9.4.
"Identifiable Assets" means identifiable assets within
the meaning of Item 101(b) of Regulation S-K promulgated by the
Securities and Exchange Commission.
"Insolvency Proceeding" means, with respect to any
Person, (a) any case, action or proceeding with respect to such
Person before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or
(b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any
substantial portion of its creditors, undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Interest Period" means:
(1) with respect to each Offshore Loan, a period
commencing on the date of borrowing specified in the
applicable Notice of Committed Borrowing or on the date
specified in the applicable Notice of Interest Rate Election
and ending one, two, three or six months thereafter, as the
Company may elect in the applicable Notice; provided that:
(a) any Interest Period which would otherwise end
on a day which is not an Offshore Business Day shall be
extended to the next succeeding Offshore Business Day
unless such Offshore Business Day falls in another
calendar month, in which case such Interest Period
shall, subject to clause (1)(c) below, end on the next
preceding Offshore Business Day;
(b) any Interest Period which begins on the last
Offshore Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period)
shall, subject to clause (1)(c) below, end on the last
Offshore Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
(2) with respect to each CD Loan, a period commencing
on the date of borrowing specified in the applicable Notice
of Committed Borrowing or on the date specified in the
applicable Notice of Interest Rate Election and ending 30,
60, 90 or 180 days thereafter, as the Company may elect in
the applicable Notice; provided that:
(a) any Interest Period (other than an Interest
Period determined pursuant to clause (2)(b) below)
which would otherwise end on a day which is not a
Domestic Business Day shall be extended to the next
succeeding Domestic Business Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
(3) with respect to each Money Market LIBOR Borrowing,
the period commencing on the date of such Borrowing and
ending one, two, three or six months thereafter, as the
Company may elect in accordance with Section 2.3; provided
that:
(a) any Interest Period which would otherwise end
on a day which is not an Offshore Business Day shall be
extended to the next succeeding Offshore Business Day
unless such Offshore Business Day falls in another
calendar month, in which case such Interest Period
shall, subject to clause (3)(c) below, end on the next
preceding Offshore Business Day;
(b) any Interest Period which begins on the last
Offshore Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period)
shall, subject to clause (3)(c) below, end on the last
Offshore Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
(4) with respect to each Money Market Absolute Rate
Loan, the period commencing on the date of such Borrowing
and ending such number of days thereafter (but not less than
7 nor more than 180 days thereafter) as the Company may
elect in accordance with Section 2.3; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Domestic Business Day shall,
subject to clause 4(b) below, be extended to the next
succeeding Domestic Business Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended, or any successor statute.
"LIBOR Auction" means a solicitation of Money Market
Quotes setting forth Money Market Margins based on the London
Interbank Offered Rate pursuant to Section 2.3.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset. For the purposes of this
Agreement, the Company or any Subsidiary shall be deemed to own
subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan" means a Domestic Loan or an Offshore Loan or a
Money Market Loan and "Loans" means Domestic Loans or Offshore
Loans or Money Market Loans or any combination of the foregoing.
"Loan Documents" means this Agreement, the Notes, the
Fee Letter and all other documents delivered to the Agent or any
Bank in connection herewith or therewith.
"London Interbank Offered Rate" means, with respect to
any applicable Interest Period, the average (rounded upward, if
necessary, to the next higher 1/16th of 1%) of the respective
rates per annum at which deposits in dollars are offered to each
of the Euro-Dollar Reference Banks in the London interbank market
at approximately 11:00 A.M. (London time) two Offshore Business
Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Money Market
LIBOR Loan of such Euro-Dollar Reference Bank to which such
Interest Period is to apply and for a period of time comparable
to such Interest Period.
"Material Debt" means (i) Debt (other than the Notes)
of the Company or one of its Consolidated Subsidiaries arising
under a single indenture, loan agreement or similar document in
an aggregate principal amount exceeding $10,000,000, or (ii) Debt
(other than the Notes) of the Company and/or one or more of its
Consolidated Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal amount
exceeding $25,000,000.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of $25,000,000.
"Material Subsidiary" means at any time, any Subsidiary
of the Company which as of such time meets the definition of a
"significant subsidiary" contained as of the date hereof in
Regulation S-K of the Securities and Exchange Commission.
"Money Market Absolute Rate" has the meaning set forth
in Section 2.3(d).
"Money Market Absolute Rate Loan" means a loan to be
made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank,
its Domestic Lending Office or such other office, branch or
Affiliate of such Bank as it may hereafter designate as its Money
Market Lending Office by notice to the Company and the Agent;
provided that any Bank may from time to time by notice written to
the Company and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and
its Money Market Absolute Rate Loans, on the other hand, in which
case all references herein to the Money Market Lending Office of
such Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a
Bank pursuant to a LIBOR Auction (including such loan bearing
interest at the Reference Rate pursuant to Section 8.1).
"Money Market Loan" means a Money Market LIBOR Loan or
a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.3(d).
"Money Market Quote" means an offer by a Bank to make a
Money Market Loan in accordance with Section 2.3.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of
ERISA to which any member of the ERISA Group is then making or
accruing an obligation to make contributions or has within the
preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"1994 Agreement" means the Credit Agreement dated as of
June 15, 1994, as heretofore or hereafter from time to time
amended, modified or supplemented, among the Company, the banks
listed therein and Morgan Guaranty Trust Company of New York, as
agent.
"Notes" means the promissory notes of the Company,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Company to repay the Loans, and "Note" means
any one of such promissory notes issued hereunder.
"Notice" means a Notice of Borrowing or a Notice of
Interest Rate Election, as the case may be.
"Notice of Borrowing" means a Notice of Committed
Borrowing or a Notice of Money Market Borrowing.
"Notice of Committed Borrowing" has the meaning set
forth in Section 2.2.
"Notice of Interest Rate Election" has the meaning set
forth in Section 2.11.
"Notice of Money Market Borrowing" has the meaning set
forth in Section 2.3(f).
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document
owing by the Company to any Bank, the Agent, or any Indemnified
Person, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now
existing or hereafter arising.
"Offshore Business Day" means any Domestic Business Day
on which commercial banks are open for international business
(including dealings in dollar deposits) and on which dealings are
carried on in the applicable offshore dollar interbank market.
"Offshore Lending Office" means, as to each Bank, its
office, branch or Affiliate located at its address set forth in
its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Offshore Lending Office) or
such other office, branch or Affiliate of such Bank as it may
hereafter designate as its Offshore Lending Office by notice to
the Company and the Agent.
"Offshore Loan" means (i) a Committed Loan which bears
interest at an Offshore Rate pursuant to the applicable Notice of
Committed Borrowing or Notice of Interest Rate Election or (ii)
an overdue amount which was an Offshore Loan, or, in the case of
each of clauses (i) and (ii), interest or penalty with respect
thereto, immediately before it became overdue.
"Offshore Rate" means a rate of interest determined
pursuant to Section 2.7(c).
"Parent" means, with respect to any Person, any other
Person controlling such Person. A Person shall be deemed to
control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person,
whether through the ownership of voting securities, membership
interests, by contract, or otherwise.
"Participant" has the meaning set forth in Section
9.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under
ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan (other than a Multiemployer Plan) which is covered by Title
IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of
the ERISA Group for employees of any Person which was at such
time a member of the ERISA Group.
"Premark FEG" means Premark FEG Corporation, a Delaware
corporation, and its successors.
"Pricing Schedule" means the Schedule attached hereto
identified as such.
"Quarterly Date" means the last day of each January,
April, July and October.
"Reference Banks" means the CD Reference Banks, the
Euro-Dollar Reference Banks or BofA, as the context may require,
and "Reference Bank" means any one of such Reference Banks.
"Reference Rate" means the rate of interest in effect
for such day as publicly announced from time to time by BofA in
San Francisco, California, as its "reference rate." (The
"reference rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below
such announced rate.)
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from time
to time.
"Required Banks" means at any time Banks having at
least 51% of the aggregate amount of the Commitments or, if the
Commitments shall have been terminated, holding Notes evidencing
at least 51% of the aggregate unpaid principal amount of the
Loans.
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time
directly or indirectly owned by the Company.
"Termination Date" means May 17, 2001.
"Total Capitalization" means the aggregate of
Consolidated Net Worth plus the Debt of the Company and its
Consolidated Subsidiaries (without duplication).
"Unfunded Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value
of all benefits under such Plan exceeds (ii) the fair market
value of all Plan assets allocable to such benefits (excluding
any accrued but unpaid contributions), all determined as of the
then most recent valuation date for such Plan, but only to the
extent that such amount represents a potential liability of a
member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA and using the assumptions used for funding the
Plan pursuant to Section 412 of the Code for the applicable plan
year.
"United States" and "U.S." each means the United States
of America.
"Wholly-Owned Consolidated Subsidiary" means any
Consolidated Subsidiary all of the shares of capital stock or
other ownership interests of which (except directors' qualifying
shares) are at the time directly or indirectly owned by the
Company.
SECTION 1.2. Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time
to time; provided that, if the Company notifies the Agent that
the Company wishes to amend any covenant in Article V to
eliminate the effect of any change in generally accepted
accounting principles on the operation of such covenant (or if
the Agent notifies the Company that the Required Banks wish to
amend Article V for such purpose), then the Company's compliance
with such covenant shall be determined on the basis of generally
accepted accounting principles in effect immediately before the
relevant change in generally accepted accounting principles
became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and
the Required Banks.
SECTION 1.3. Types of Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more Banks
to be made to the Company pursuant to Article II on a single date
and for a single Interest Period. Borrowings are classified for
purposes of this Agreement either by reference to the pricing of
Loans comprising such Borrowing (e.g., a "Offshore Borrowing" is
a Borrowing comprised of Offshore Loans) or by reference to the
provisions of Article II under which participation therein is
determined (i.e., a "Committed Borrowing" is a Borrowing under
Section 2.1 in which all Banks participate in proportion to their
Commitments, while a "Money Market Borrowing" is a Borrowing
under Section 2.3 in which the Bank participants are determined
on the basis of their bids in accordance therewith).
ARTICLE II
THE CREDITS
SECTION 2.1. Commitments to Lend. From time to time
prior to the Termination Date, each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans
to the Company pursuant to this Section 2.1 from time to time in
amounts such that the aggregate principal amount of Committed
Loans by such Bank at any one time outstanding shall not exceed
the amount of its Commitment. Each Borrowing under this Section
shall be in an aggregate principal amount of $5,000,000 or any
larger multiple of $1,000,000 (except that any such Borrowing may
be in the aggregate amount available in accordance with Section
3.2(b)) and shall be made from the several Banks ratably in
proportion to their respective Commitments. Within the foregoing
limits, the Company may borrow under this Section, prepay Loans
to the extent permitted by Section 2.12, and, subject to the
terms and conditions set forth in this Agreement, reborrow at any
time prior to the Termination Date.
SECTION 2.2. Notice of Committed Borrowings. The
Company shall give the Agent a notice in the form of Exhibit B
hereto (a "Notice of Committed Borrowing") (x) not later than
12:00 p.m. (New York City time) on the date of each Base Rate
Borrowing, (y) not later than 10:45 a.m. (New York City time) on
the second Domestic Business Day before each CD Borrowing and (z)
not later than 10:45 a.m. (New York City time) on the second
Offshore Business Day before each Offshore Borrowing, specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing or
an Offshore Business Day in the case of an Offshore
Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are
to bear interest initially at the Base Rate or at a CD Rate
or an Offshore Rate, and
(iv) in the case of a Fixed Rate Borrowing, the
duration of the initial Interest Period applicable thereto,
subject to the provisions of the definition of Interest
Period.
It is understood that more than one Borrowing may occur on the
same day.
SECTION 2.3. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed
Borrowings pursuant to Section 2.1, the Company may, as set forth
in this Section, request the Banks to make offers to make Money
Market Loans to the Company. The Banks may, but shall have no
obligation to, make such offers and the Company may, but shall
have no obligation to, accept any such offers in the manner set
forth in this Section.
(b) Money Market Quote Request. When the Company
wishes to request offers to make Money Market Loans under this
Section 2.3, it shall transmit to the Agent by telex or facsimile
transmission a Money Market Quote Request substantially in the
form of Exhibit C hereto so as to be received no later than 12:00
p.m. (New York City time) on (x) the fourth Offshore Business Day
prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the
date of Borrowing proposed therein, in the case of an Absolute
Rate Auction (or, in either case, such other time or date as the
Company and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be an
Offshore Business Day in the case of a LIBOR Auction or a
Domestic Business Day in the case of an Absolute Rate
Auction;
(ii) the aggregate amount of such Borrowing, which
shall be $5,000,000 or a larger multiple of $1,000,000;
provided, however, such requested Borrowing, together with
the then-outstanding principal amount of all Loans shall not
exceed the combined Commitments then in effect;
(iii) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of
Interest Period; and
(iv) whether the Money Market Quotes requested are to
set forth a Money Market Margin or a Money Market Absolute
Rate.
The Company may request offers to make Money Market Loans for
more than one Interest Period in a single Money Market Quote
Request and may request different aggregate principal amounts
(each of which shall be $5,000,000 or a larger multiple of
$1,000,000) for each such Interest Period. No Money Market Quote
Request shall be given within five Offshore Business Days (or
such other number of days as the Company and the Agent may agree)
of any other Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon
receipt of a Money Market Quote Request, the Agent shall send to
the Banks by telex or facsimile transmission an Invitation for
Money Market Quotes substantially in the form of Exhibit D
hereto, which shall constitute an invitation by the Company to
each Bank to submit Money Market Quotes offering to make the
Money Market Loans to which such Money Market Quote Request
relates in accordance with this Section.
(d) Submission and Contents of Money Market Quotes.
(i) Each Bank may submit a Money Market Quote
containing an offer or offers to make Money Market Loans in
response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this
subsection (d) and must be submitted to the Agent by telex
or facsimile transmission at its offices specified in or
pursuant to Section 9.1 not later than (x) 12:00 p.m. (New
York City time) on the third Offshore Business Day prior to
the proposed date of Borrowing, in the case of a LIBOR
Auction or (y) 10:00 a.m. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Company and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by
the Agent (or any Affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the
Agent or such Affiliate notifies the Company of the terms of
the offer or offers contained therein not later than (x)
fifteen minutes prior to the deadline for the other Banks,
in the case of a LIBOR Auction or (y) fifteen minutes prior
to the deadline for the other Banks, in the case of an
Absolute Rate Auction. Subject to Articles III and VI, any
Money Market Quote so made shall be irrevocable except with
the written consent of the Agent given on the instructions
of the Company.
(ii) Each Money Market Quote shall be in substantially
the form of Exhibit E hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan
for which each such offer is being made, which
principal amount (w) may be greater than or less than
the Commitment of the quoting Bank, (x) must be
$5,000,000 or a larger multiple of $1,000,000, (y) may
not exceed the principal amount of Money Market Loans
for which offers were requested and (z) may be subject
to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by
such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin
above or below the applicable London Interbank Offered
Rate (the "Money Market Margin") offered for each such
Money Market Loan, expressed as a percentage (specified
to the nearest 1/10,000th of 1%) to be added to or
subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the
rate of interest per annum (specified to the nearest
1/10,000th of 1%) (the "Money Market Absolute Rate")
offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate
offers, by the quoting Bank with respect to each Interest
Period specified in the related Invitation for Money Market
Quotes.
(iii) Any Money Market Quote shall be disregarded if
it:
(A) is not substantially in conformity with
Exhibit E hereto or does not specify all of the
information required by subsection 2.3(d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation for Money
Market Quotes; or
(D) arrives after the time set forth in
subsection 2.3(d)(i).
(e) Notice to Company. The Agent shall promptly
notify the Company of the terms (x) of any Money Market Quote
submitted by a Bank that is in accordance with subsection 2.3(d)
and (y) of any Money Market Quote that amends, modifies or is
otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Invitation to
Make Money Market Quotes. Any such subsequent Money Market Quote
shall be disregarded by the Agent unless such subsequent Money
Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the
Company shall specify (A) the aggregate principal amount of Money
Market Loans for which offers have been received for each
Interest Period specified in the related Money Market Quote
Request, (B) the respective principal amounts and Money Market
Margins or Money Market Absolute Rates, as the case may be, so
offered and (C) if applicable, limitations on the aggregate
principal amount of Money Market Loans for which offers in any
single Money Market Quote may be accepted.
(f) Acceptance and Notice by Company. Not later than
1:30 p.m. (New York City time) on (x) the third Offshore Business
Day prior to the proposed date of Borrowing, in the case of a
LIBOR Auction or (y) 11:30 a.m. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Company and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective), the Company
shall notify the Agent of its acceptance or non-acceptance of the
offers so notified to it pursuant to subsection 2.3(e). In the
case of acceptance, such notice (a "Notice of Money Market
Borrowing") shall specify the aggregate principal amount of
offers for each Interest Period that are accepted. The Company
may accept any Money Market Quote in whole or in part; provided
that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set
forth in the related Money Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be $5,000,000 or a larger multiple of
$1,000,000,
(iii) acceptance of offers may only be made on the
basis of ascending Money Market Margins or Money Market
Absolute Rates, as the case may be,
(iv) the principal amount of all Money Market
Borrowings plus the aggregate principal amount of other
Loans then outstanding shall not exceed the then aggregate
Commitment of the Banks, and
(v) the Company may not accept any offer that is
described in subsection (d)(iii) or that otherwise fails to
comply with the requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or
more Banks with the same Money Market Margins or Money Market
Absolute Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which such offers
are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are
accepted shall be allocated by the Agent among such Banks as
nearly as possible (in multiples of $1,000,000, as the Agent may
deem appropriate) in proportion to the aggregate principal
amounts of such offers. Determinations by the Agent of the
amounts of Money Market Loans shall be conclusive in the absence
of manifest error.
SECTION 2.4. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent
shall promptly notify each Bank of the contents thereof and of
such Bank's share (if any) of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Company.
(b) Not later than 2:00 p.m. (New York City time) on
the date of each Borrowing, each Bank participating therein shall
make available its share of such Borrowing, in Federal or other
funds immediately available in San Francisco, California, to the
Agent at its address specified in or pursuant to Section 9.1.
Unless the Agent determines that any applicable condition
specified in Article III has not been satisfied, the Agent will
make the funds so received from the Banks available to the
Company at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not
make available to the Agent such Bank's share of such Borrowing,
the Agent may assume that such Bank has made such share available
to the Agent on the date of such Borrowing in accordance with
subsection (b) of this Section 2.4 and the Agent may, but shall
not be required to, in reliance upon such assumption, make
available to the Company on such date a corresponding amount. If
and to the extent that such Bank shall not have so made such
share available to the Agent, such Bank and the Company severally
agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Company until
the date such amount is repaid to the Agent, at the Federal Funds
Rate. If such Bank shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Loan
included in such Borrowing for purposes of this Agreement.
SECTION 2.5. Notes. (a) The Loans of each Bank shall
be evidenced by a single Note payable to the order of such Bank
for the account of its Applicable Lending Office in an amount
equal to the aggregate unpaid principal amount of such Bank's
Loans.
(b) Each Bank may, by notice to the Company and the
Agent, request that its Loans of a particular type be evidenced
by a separate Note in an amount equal to the aggregate unpaid
principal amount of such Loans. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans
of the relevant type. Each reference in this Agreement to the
"Note" of such Bank shall be deemed to refer to and include any
or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.1(a)(iii), the Agent shall mail such Note to such Bank.
Each Bank shall record the date and amount of each Loan made by
it and the date and amount of each payment of principal made by
the Company with respect thereto, and may, if such Bank so elects
in connection with any transfer or enforcement of its Note,
endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to
each such Loan then outstanding; provided that the failure of any
Bank to make any such recordation or endorsement shall not affect
the obligations of the Company hereunder or under the Notes.
Each Bank is hereby irrevocably authorized by the Company so to
endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.
SECTION 2.6. Maturity of Loans. (a) Each Committed
Loan shall mature, and the principal amount thereof shall be due
and payable on the Termination Date.
(b) Each Money Market Loan included in any Money
Market Borrowing shall mature, and the principal amount thereof
shall be due and payable, on the last day of the Interest Period
applicable to such Borrowing.
SECTION 2.7. Interest Rates. (a) Each Base Rate Loan
shall bear interest on the outstanding principal amount thereof,
for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the Base Rate for such day.
Such interest shall be payable quarterly in arrears on each
Quarterly Date and on each date a Base Rate Loan is converted to
an Offshore Loan or a CD Loan. Any overdue principal of or
interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the
sum of 1% plus the rate otherwise applicable to Base Rate Loans
for such day.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each day during each
Interest Period applicable thereto, at a rate per annum equal to
the sum of the CD Margin for such day plus the Adjusted CD Rate
applicable to such Interest Period; provided that if any CD Loan
or any portion thereof shall, as a result of clause (2)(b) of the
definition of Interest Period, have an Interest Period of less
than 30 days, such portion shall bear interest during such
Interest Period at the rate applicable to Base Rate Loans during
such period. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is
longer than 90 days, at intervals of 90 days after the first day
thereof. Any overdue principal of or interest on any CD Loan
shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of 1% plus the higher of (i)
the sum of the CD Margin for such day, plus the Adjusted CD Rate
applicable to the Interest Period for such Loan and (ii) the rate
applicable to Base Rate Loans for such day.
"CD Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ] *
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
___________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100th of 1%
The "CD Base Rate" applicable to any Interest Period is
the rate of interest determined by the Agent to be the
average (rounded upward, if necessary, to the next higher
1/100th of 1%) of the prevailing rates per annum bid at
10:00 a.m. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two
or more New York certificate of deposit dealers of
recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an
amount comparable to the principal amount of the CD Loan of
such CD Reference Bank to which such Interest Period applies
and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day the
maximum reserve percentage (expressed as a decimal) which is
in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor)
for determining the reserve requirement (including, without
limitation, any ordinary, marginal, emergency, supplemental,
special and other reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding
$5,000,000,000 in respect of new non-personal time deposits
in dollars in New York City having a maturity comparable to
the related Interest Period and in an amount of $100,000 or
more. The Adjusted CD Rate shall be adjusted automatically
on and as of the effective date of any change in the
Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. section 327.3(e) (or any successor
provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change
in the Assessment Rate.
(c) Each Offshore Loan shall bear interest on the
outstanding principal amount thereof, for each day during each
Interest Period applicable thereto, at a rate per annum equal to
the sum of the IBOR Margin for such day plus the applicable IBOR.
Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day
thereof.
"IBOR Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
The "IBOR" applicable to any Interest Period means the
rate of interest per annum determined by the Agent as the
rate at which dollar deposits in the approximate amount of
BofA's Offshore Rate Loan for such Interest Period would be
offered by BofA's Grand Cayman Branch, Grand Cayman B.W.I.
(or such other office as may be designated for such purpose
by BofA), to major banks in the offshore dollar interbank
market at their request at approximately 11:00 a.m. (New
York City time) two Offshore Business Days prior to the
commencement of such Interest Period.
(d) Any overdue principal of or interest on any
Offshore Loan shall bear interest, payable on demand, for each
day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal
to the sum of 1% plus the higher of (i) the sum of the IBOR
Margin for such day plus the applicable IBOR and (ii) the IBOR
Margin for such day plus the quotient obtained (rounded upward,
if necessary, to the next higher 1/100th of 1%) by dividing (x)
the rate per annum at which one day (or, if such amount due
remains unpaid more than three Offshore Business Days, then for
such other period of time not longer than three months as the
Agent may select) deposits in dollars in an amount approximately
equal to such overdue payment due to BofA are offered by BofA's
Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as
may be designated for such purpose by BofA), to major banks in
the offshore dollar interbank market at their request at
approximately 11:00 a.m. (New York City time) two Offshore
Business Days for the applicable period determined as provided
above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or,
if the circumstances described in clause (a) or (b) of Section
8.1 shall exist, at a rate per annum equal to the sum of 1% plus
the rate applicable to Base Rate Loans for such day).
(e) Subject to Section 8.1, each Money Market LIBOR
Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the London Interbank Offered Rate
for such Interest Period (determined in accordance with Section
2.7(c) as if the related Money Market LIBOR Borrowing were a
Committed Offshore Borrowing) plus (or minus) the Money Market
Margin quoted by the Bank making such Loan in accordance with
Section 2.3. Each Money Market Absolute Rate Loan shall bear
interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to
the Money Market Absolute Rate quoted by the Bank making such
Loan in accordance with Section 2.3. Such interest shall be
payable for each Interest Period on the last day thereof and, if
such Interest Period is longer than three months, at intervals of
three months after the first day thereof. Any overdue principal
of or interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum
equal to the sum of 1% plus the Reference Rate for such day.
(f) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt
notice to the Company and the participating Banks by telex or
facsimile transmission of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence
of manifest error.
(g) Each Reference Bank agrees to use its best efforts
to furnish quotations to the Agent as contemplated by this
Section. If any Reference Bank does not furnish a timely
quotation, the Agent shall determine the relevant interest rate
on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations
is available on a timely basis, the provisions of Section 8.1
shall apply.
SECTION 2.8. Facility, Arrangement and Agency Fees.
(a) The Company shall pay to the Agent for the account
of the Banks ratably a facility fee at the Facility Fee Rate
(determined daily in accordance with the Pricing Schedule). Such
facility fee shall accrue (i) from and including the Effective
Date to but excluding the Termination Date, on the daily
aggregate amount of the Commitments (whether used or unused) and
(ii) from and including the Termination Date to but excluding the
date the Loans shall be repaid in their entirety, on the daily
outstanding principal amount of the Loans. Accrued fees under
this subsection 2.8(a) shall be payable quarterly on each
Quarterly Date and upon the date of termination of the
Commitments in their entirety and, if later, the date the Loans
shall be repaid in their entirety.
(b) The Company shall pay an arrangement fee to the
Arranger for the Arranger's own account, and shall pay an agency
fee to the Agent for the Agent's own account, as required by the
confidential letter agreement ("Fee Letter") between the Company
and the Arranger and Agent dated April 16, 1996.
SECTION 2.9. Optional Termination or Reduction of
Commitments. The Company may, upon at least three Domestic
Business Days' notice to the Agent, (i) terminate the Commitments
at any time, if no Loans are outstanding at such time or (ii)
ratably reduce the Commitments from time to time by an aggregate
amount of at least $5,000,000 or any larger multiple thereof;
unless, after giving effect thereto and to any prepayments of
Loans made on the effective date thereof, the then-outstanding
principal amount of the Loans would exceed the amount of the
combined Commitments then in effect. Once reduced in accordance
with this Section, the Commitments may not be increased. Any
reduction of the Commitments shall be applied ratably to each
Bank according to each Bank's Commitment prior to such reduction.
All accrued commitment fees to, but not including, the effective
date of any reduction or termination of Commitments, shall be
paid on the effective date of such reduction or termination.
SECTION 2.10. Mandatory Termination of Commitments.
The Commitments shall terminate on the Termination Date, and any
Loans then outstanding (together with accrued interest thereon)
shall be due and payable on such date.
SECTION 2.11. Method of Electing Interest Rates.
(a) The Loans included in each Committed Borrowing shall bear
interest initially at the type of rate specified by the Company
in the applicable Notice of Committed Borrowing. Thereafter, the
Company may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject in
each case to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Company may
elect to convert such Loans to CD Loans as of any Domestic
Business Day or to Offshore Loans as of any Offshore
Business Day;
(ii) if such Loans are CD Loans, the Company may elect
to convert such Loans to Base Rate Loans or Offshore Loans
or elect to continue such Loans as CD Loans for an
additional Interest Period, in each case effective on the
last day of the then current Interest Period applicable to
such Loans; and
(iii) if such Loans are Offshore Loans, the Company may
elect to convert such Loans to Base Rate Loans or CD Loans
or elect to continue such Loans as Offshore Loans for an
additional Interest Period, in each case effective on the
last day of the then current Interest Period applicable to
such Loans.
Notwithstanding the foregoing, if any Default then exists, the
Company shall be deemed to have elected to convert all such
Offshore Loans and CD Loans into Base Rate Loans effective as of
the last day of the then current Interest Period applicable to
such Loans. Each election described in clauses (i), (ii) and
(iii) above shall be made by delivering a notice (a "Notice of
Interest Rate Election") to the Agent at least three Offshore
Business Days before the conversion or continuation selected in
such notice is to be effective (unless the relevant Loans are to
be converted from Domestic Loans to Domestic Loans of the other
type or continued as Domestic Loans of the same type for an
additional Interest Period, in which case such notice shall be
delivered to the Agent at least two Domestic Business Days before
such conversion or continuation is to be effective). A Notice of
Interest Rate Election may, if it so specifies, apply to only a
portion of the aggregate principal amount of the relevant Group
of Loans; provided that (i) such portion is allocated ratably
among the Loans comprising such Group and (ii) the portion to
which such Notice applies, and the remaining portion to which it
does not apply, are each $5,000,000 or any larger multiple of
$1,000,000.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Loans (or portion thereof) to which
such notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall
comply with the applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if such new Loans are
Fixed Rate Loans, the duration of the initial Interest
Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Offshore Loans for an additional Interest Period, the
duration of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition of
Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election
from the Company pursuant to subsection 2.11(a) above, the Agent
shall promptly notify each Bank of the contents thereof and such
notice shall not thereafter be revocable by the Company. If the
Company fails to deliver a timely Notice of Interest Rate
Election to the Agent for any Group of Committed Fixed Rate
Loans, such Loans shall be converted into Base Rate Loans on the
last day of the then current Interest Period applicable thereto.
SECTION 2.12. Optional Prepayments. (a) The Company
may, upon at least one Domestic Business Day's notice to the
Agent, prepay a Group of Base Rate Loans (or a Money Market
Borrowing bearing interest at the Reference Rate pursuant to
Section 8.1) in whole at any time, or from time to time in part
in amounts aggregating $5,000,000 or any larger multiple of
$1,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each
such optional prepayment shall be applied to prepay ratably the
Loans of the several Banks included in such Group or Borrowing.
(b) Subject to Section 2.14, the Company may, upon at
least two Domestic Business Day's notice to the Agent, in the
case of a Group of CD Loans or upon at least three Offshore
Business Days' notice to the Agent, in the case of a Group of
Offshore Loans, prepay the Loans comprising such a Group on the
last day of any Interest Period applicable to such Group, in
whole at any time, or from time to time in part in amounts
aggregating $5,000,000 or any larger multiple of $1,000,000, by
paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the
several Banks included in such Group.
(c) Except as provided in subsection 2.12(a) above,
the Company may not prepay all or any portion of the principal
amount of any Money Market Loans prior to the maturity thereof.
(d) Upon receipt of a notice of prepayment pursuant to
this Section 2.12, the Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share (if any) of
such prepayment and such notice shall not thereafter be revocable
by the Company.
SECTION 2.13. General Provisions as to Payments. (a)
The Company shall make each payment of principal of, and interest
on, the Loans and of fees hereunder, not later than 3:00 p.m.
(New York City time) on the date when due, in Federal or other
funds immediately available in San Francisco, California, to the
Agent at its address referred to in Section 9.1. The Agent will
promptly distribute to each Bank its ratable share of each such
payment received by the Agent for the account of the Banks.
Whenever any payment of principal of, or interest on, the
Domestic Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever
any payment of principal of, or interest on, the Offshore Loans
shall be due on a day which is not an Offshore Business Day, the
date for payment thereof shall be extended to the next succeeding
Offshore Business Day unless such Offshore Business Day falls in
another calendar month, in which case the date for payment
thereof shall be the next preceding Offshore Business Day.
Whenever any payment of principal of, or interest on, the Money
Market Loans shall be due on a day which is not an Offshore
Business Day, the date for payment thereof shall be extended to
the next succeeding Offshore Business Day unless such Offshore
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Offshore Business
Day. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable
for such extended time.
(b) Unless the Agent shall have received notice from
the Company prior to the date on which any payment is due to the
Banks hereunder that the Company will not make such payment in
full, the Agent may assume that the Company has made such payment
in full to the Agent on such date and the Agent may, but shall
not be required to, 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 that the Company
shall not have so made such payment, each Bank shall repay to the
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 Agent, at the Federal Funds Rate.
SECTION 2.14. Funding Losses. If the Company makes
any payment of principal with respect to any Fixed Rate Loan or
any Fixed Rate Loan is converted to a Base Rate Loan (pursuant to
Article VI or VIII or otherwise) on any day other than the last
day of an Interest Period applicable thereto, or the end of an
applicable period fixed pursuant to Section 2.7(d), or if the
Company fails to borrow or prepay any Fixed Rate Loans after
notice has been given to any Bank in accordance with Section
2.4(a) or 2.12(d), the Company shall reimburse each Bank within
15 days after demand for any resulting loss or expense incurred
by it (or by an existing or committed Participant in the related
Loan), including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties,
but excluding loss of margin for the period after any such
payment or conversion or failure to borrow or prepay, provided
that such Bank shall have delivered to the Company a certificate
containing a computation in reasonable detail of the amount of
such loss or expense, which certificate shall be conclusive in
the absence of manifest error. For purposes of this Section
2.14, each Bank may compute its losses or expenses as if each
Fixed Rate Loan made by such Bank was funded by or on behalf of
such Bank by a deposit corresponding in amount and maturity to
such Fixed Rate Loan.
SECTION 2.15. Computation of Interest and Fees.
Interest based on the Reference Rate hereunder shall be computed
on the basis of a year of 365 days (or 366 days in a leap year)
and paid for the actual number of days elapsed (including the
first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the first
day but excluding the last day).
SECTION 2.16. Withholding Tax Exemption. At least
five Domestic Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any
Bank, each Bank that is not incorporated under the laws of the
United States or a state thereof agrees that it will deliver to
each of the Company and the Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Bank is entitled to receive
payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or 4224 further undertakes to
deliver to each of the Company and the Agent two additional
copies of such form (or a successor form) on or before the date
that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent
form so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by
the Company or the Agent, in each case certifying that such Bank
is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States
federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred
prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank advises the Company and the
Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
SECTION 2.17. Regulation D Compensation. Each Bank
may require the Company to pay, contemporaneously with each
payment of interest on the Offshore Loans, additional interest on
the related Offshore Loan of such Bank at a rate per annum
determined by such Bank up to but not exceeding the excess of
(i)(A) the applicable IBOR divided by (B) one minus the Euro-
Dollar Reserve Percentage over (ii) the applicable IBOR. Any Bank
wishing to require payment of such additional interest (x) shall
so notify the Company and the Agent, in which case such
additional interest on the Offshore Loans of such Bank shall be
payable to such Bank at the place indicated in such notice with
respect to each Interest Period commencing at least three
Offshore Business Days after the giving of such notice and (y)
shall notify the Company at least five Offshore Business Days
prior to each date on which interest is payable on the Offshore
Loans of the amount then due it under this Section.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect
of any other category of liabilities which includes deposits by
reference to which the interest rate on Offshore Loans is
determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any
Bank to United States residents).
ARTICLE III
CONDITIONS
SECTION 3.1. Effectiveness; Termination of 1994
Agreement. (a) This Agreement shall become effective on the date
that each of the following conditions shall have been satisfied
(or waived in accordance with Section 9.6):
(i) receipt by the Agent of a payoff letter executed
by the "Agent" under the 1994 Agreement indicating the
amount(s) necessary (A) to pay in full as of the Effective
Date all loans, accrued interest and other amounts
outstanding under the 1994 Agreement (except principal of
and accrued interest on outstanding "Money Market Loans"
under the 1994 Agreement made by Banks parties to this
Agreement) and (B) to terminate all commitments thereunder;
(ii) receipt by the Agent of counterparts hereof signed
by each of the parties hereto (or, in the case of any party
as to which an executed counterpart shall not have been
received, receipt by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation from such
party of execution of a counterpart hereof by such party);
(iii) receipt by the Agent of evidence satisfactory to
the Agent of payment after the date hereof of a cash
dividend by Dart to the Company of not less than
$184,900,000 (the "Dart Dividend");
(iv) receipt by the Agent of evidence satisfactory to
the Agent that the spinoff of Dart more fully described on
Schedule 3.1(iv) hereto shall be effective on terms and
conditions substantially similar to, and in any event, no
less favorable to the Borrower than, the terms and
conditions set forth on Schedule 3.1(iv) (including, without
limitation, an opinion of counsel to Dart, in the form
attached as Exhibit I, addressing the effectiveness of such
transaction and such other matters as the Agent shall
reasonably request);
(v) receipt by the Agent for the account of each Bank
of a duly executed Note dated on or before the Effective
Date complying with the provisions of Section 2.5;
(vi) receipt by the Agent of the opinions of Wachtell,
Lipton, Rosen & Katz, special counsel to the Company, and of
John M. Costigan, Senior Vice President and General Counsel
for the Company, substantially in the form of Exhibit F, and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may
reasonably request;
(vii) receipt by the Agent of a certificate, dated the
Effective Date, signed by the chief financial officer, the
chief accounting officer, or the treasurer of the Company to
the effect set forth in clauses (c) and (d) of Section 3.2
(without regard to the exception in clause (d) thereof);
(viii) receipt by the Agent of a written consent
reasonably acceptable to the Agent from the requisite banks
party to the 1994 Agreement agreeing to (i) the waiver of
the notice periods for prepayments and termination of the
"Commitments" thereunder as set forth in Sections 2.12 and
2.9 thereof, (ii) the payment of the Dart Dividend, and
(iii) waiver of any defaults resulting solely from the
consummation of the transactions described on Schedule
3.1(iv) hereto; and
(ix) receipt by the Agent of all documents it may
reasonably request prior to the date hereof relating to the
existence of the Company, the corporate authority for and
the validity of this Agreement and the Notes, and any other
matters relevant hereto, all in form and substance
satisfactory to the Agent (and which shall include, without
limitation, good standing certificates and an incumbency
certificate for the Company as well as certified copies of
the Company's certificate of incorporation, bylaws and
resolutions adopted in connection with the transactions
contemplated hereby);
provided, that this Agreement shall not become effective or be
binding on any party hereto unless all of the foregoing
conditions are satisfied or waived in accordance with Section 9.6
on or before July 31, 1996. The Agent shall promptly notify the
Company and the Banks of the Effective Date, and such notice
shall be conclusive and binding on all parties hereto.
(b) The Company and the Banks which are parties to the
1994 Agreement hereby agree that the commitments under the 1994
Agreement shall terminate upon the Effective Date.
(c) Each "Money Market Loan" outstanding under the
1994 Agreement made by a Bank party to this Agreement shall on
and after the Effective Date be deemed to be a Money Market Loan
made hereunder, with a maturity and interest rate as determined
under the 1994 Agreement.
SECTION 3.2. Borrowings. The obligation of any Bank
to make a Loan on the occasion of any Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as
required by Section 2.2 or 2.3, as the case may be;
(b) the fact that, immediately after such Borrowing,
the aggregate outstanding principal amount of the Loans will
not exceed the aggregate amount of the Commitments;
(c) the fact that, immediately after such Borrowing,
no Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties
of the Company contained in this Agreement (except the
representations and warranties set forth in Sections 4.4(b),
4.4(c), 4.5(i) and 4.7) and the other Loan Documents shall
be true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation
and warranty by the Company on the date of such Borrowing as to
the facts specified in clauses (b), (c) and (d) of this Section
3.2. An election by the Company to change or continue the type
of interest rate borne by a Loan, pursuant to Section 2.11, is
not a Borrowing subject to the requirements of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
SECTION 4.1. Corporate Existence and Power. The
Company is a corporation duly incorporated, validly existing and
in good standing under the laws of Delaware, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.2. Corporate and Governmental Authorization;
No Contravention. The execution, delivery and performance by the
Company of this Agreement and the other Loan Documents are within
the Company's corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official and
do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the certificate of
incorporation or by-laws of the Company or of any agreement,
judgment, injunction, order, decree or other instrument binding
upon the Company or result in the creation or imposition of any
Lien on any asset of the Company or any of its Subsidiaries.
SECTION 4.3. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Company and each
of the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding
obligations of the Company, in each case enforceable in
accordance with their respective terms except as the same may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
SECTION 4.4. Financial Information.
(a) The consolidated balance sheet of the Company and
its Consolidated Subsidiaries as of December 30, 1995 and the
related consolidated statements of income and cash flows for the
fiscal year then ended, reported on by Price Waterhouse and set
forth in the Company's 1995 Form 10-K, a copy of which has been
delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles, the consolidated
financial position of the Company and its Consolidated
Subsidiaries as of such date and their consolidated results of
operations and cash flows for the fiscal year then ended.
(b) Except as disclosed in the Company's 1995 Form
10-K, since December 30, 1995, there has been no material adverse
change in the business, financial position, results of operations
or prospects of the company and its Consolidated Subsidiaries,
considered as a whole.
(c) Except as disclosed in the Company's 1995 Form
10-K, the Company and its Consolidated Subsidiaries have no
material Debt or other material liabilities, direct or
contingent, including liabilities for taxes, material commitments
and Guarantees.
SECTION 4.5. Litigation. Except as disclosed in the
Company's 1995 Form 10-K, there is no action, suit or proceeding
pending against, or to the knowledge of the Company threatened
against or affecting, the Company or any of its Subsidiaries
before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable possibility of an
adverse decision (i) which could materially adversely affect the
business, consolidated financial position or consolidated results
of operations of the Company and its Consolidated Subsidiaries,
considered as a whole, or (ii) which in any manner draws into
question the validity of this Agreement or any other Loan
Document.
SECTION 4.6. Compliance with ERISA. Each member of
the ERISA Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with
respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and
the Internal Revenue Code with respect to each Plan. No member
of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any contribution or
payment to any Plan or Multiemployer Plan or made any amendment
to any Plan which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security under ERISA
or the Internal Revenue Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.7. Environmental Matters. Except as
disclosed in the Company's 1995 Form 10-K, there are no matters
or activities involving the Company or its Consolidated
Subsidiaries in respect of Environmental Laws which the Company
reasonably believes will have a material adverse effect on the
business, financial condition, results of operations or prospects
of the Company and its Consolidated Subsidiaries, considered as a
whole.
SECTION 4.8. Taxes. The Company and its Subsidiaries
have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them
and have paid all taxes due pursuant to such returns or pursuant
to any assessment received by the Company or any Subsidiary. The
charges, accruals and reserves on the books of the Company and
its Subsidiaries in respect of taxes or payments in lieu of taxes
are, in the opinion of the Company, adequate.
SECTION 4.9. Subsidiaries. Each of the Company's
Material Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction
of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
SECTION 4.10. Not an Investment Company. The Company
is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.11. Compliance with Laws. The nature and
transaction of the Company's and its Subsidiaries' respective
businesses and operations and the use of their respective
properties and assets, including, but not limited to, any real
estate owned or occupied by the Company or any of its
Subsidiaries, do not and during the term of the Loans shall not,
violate or conflict with in any material respect any applicable
law, statute, ordinance, rule, regulation or order of any kind or
nature, including, without limitation, the provisions of the Fair
Labor Standards Act or any zoning, environmental, land use,
building, noise abatement, occupational health and safety or
other laws, any building permit or any condition, grant, easement
covenant, condition or restriction, whether recorded or not,
except where such conflict or waiver could not reasonably be
expected to have a material adverse effect on the business,
financial condition, results of operations or prospects of the
Company and its Consolidated Subsidiaries, considered as a whole
or on the Company's ability to perform its obligations hereunder
or under the other Loan Documents.
SECTION 4.12. Full Disclosure. All written information
heretofore furnished by the Company to the Agent or any Bank for
purposes of or in connection with this Agreement and any other
Loan Document is, and all such information hereafter furnished by
the Company to the Agent or any Bank will be, true and accurate
in all material respects on the date as of which such information
is stated or certified. The Company has disclosed to the Banks
in writing any and all facts which, in the reasonable judgment of
the Company, materially and adversely affect or may affect (to
the extent the Company can now reasonably foresee), the business,
operations or financial condition of the Company and its
Consolidated Subsidiaries, taken as a whole, or the ability of
the Company to perform its obligations under this Agreement or
any other Loan Document.
ARTICLE V
COVENANTS
The Company agrees that, so long as any Bank has any
Commitment hereunder or any Loan or other Obligation shall remain
unpaid or unsatisfied, unless the Required Banks waive compliance
in writing:
SECTION 5.1. Information. The Company will deliver to
each of the Banks:
(a) as soon as available and in any event within 120
days after the end of each fiscal year of the Company, a
consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated statements of income and cash
flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year,
all certified as to fairness of presentation and conformity
with generally accepted accounting principles by Price
Waterhouse or other independent public accountants of
nationally recognized standing;
(b) as soon as available and in any event within 60
days after the end of each of the first three quarters of
each fiscal year of the Company, a consolidated balance
sheet of the Company and its Consolidated Subsidiaries as of
the end of such quarter and the related consolidated
statements of income and the related consolidated statement
of cash flows for such quarter and for the portion of the
Company's fiscal year ended at the end of such quarter,
setting forth in each case in comparative form the figures
for the corresponding quarter and the corresponding portion
of the Company's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of
presentation and conformity with generally accepted
accounting principles by the chief financial officer, the
chief accounting officer or the treasurer of the Company;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b)
above, a certificate of the chief financial officer, the
chief accounting officer or the treasurer of the Company (i)
setting forth in reasonable detail the calculations required
to establish whether the Company was in compliance with the
requirements of Sections 5.4, 5.5, 5.6(b), 5.6(c), 5.6(i)
and 5.6(k) on the date of such financial statements and (ii)
stating whether any Default exists on the date of such
certificate and, if any Default then exists., setting forth
the details thereof and the action which the Company is
taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of
financial statements referred to in clause (a) above, a
report of the firm of independent public accountants which
reported on such statements that provides negative assurance
regarding compliance with Sections 5.4, 5.5, 5.6(b), 5.6(c),
5.6(i) and 5.6(k), insofar as such Sections relate to
accounting matters;
(e) within five days after any officer of the Company
obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer,
the chief accounting officer or the treasurer of the Company
setting forth the details thereof and the action which the
Company is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the
shareholders of the Company generally, copies of all
financial statements, reports and proxy statements so
mailed;
(g) within the respective time frames specified in
clauses (a) and (b) above, reports on Forms 10-K and 10-Q
(or their equivalents), and promptly upon the filing
thereof, copies of all registration statements (other than
the exhibits thereto and any registration statements on Form
S-8 or its equivalent) and reports on Form 8-K (or its
equivalent) which the Company shall have filed with the
Securities and Exchange Commission;
(h) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA)
with respect to any Plan which might constitute grounds for
a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy
of the notice of such reportable event given or required to
be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA or
notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice;
(iii) receives notice from the PBGC under Title IV of ERISA
of an intent to terminate, impose liability (other than for
premiums under section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such
notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code, a
copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi)
gives notice of withdrawal from any Plan pursuant to Section
4063 of ERISA, a copy of such notice; or (vii) fails to make
any payment or contribution to any Plan or Multiemployer
Plan or makes any amendment to any Plan which has resulted
or could result in the imposition of a Lien or the posting
of a bond or other security, a certificate of the chief
financial officer, the chief accounting officer or the
treasurer of the Company setting forth details as to such
occurrence and action, if any, which the Company or
applicable member of the ERISA Group is required or proposes
to take; and
(i) from time to time such additional information
regarding the financial position or business of the Company
and its Consolidated Subsidiaries as the Agent, at the
request of any Bank, may reasonably request.
SECTION 5.2. Maintenance of Property; Insurance. (a)
The Company will keep, and will cause each Subsidiary to keep,
all property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted.
(b) The Company will maintain, and will cause each
Subsidiary to maintain (either in the name of the Company or in
such Subsidiary's own name), with financially sound and
responsible insurance companies, insurance on all their
respective properties in at least such amounts and against at
least such risks (and with such risk retention) as are usually
insured against in the same general area by companies of
established repute engaged in the same or similar business; and
will furnish to the Banks, upon request from the Agent,
information presented in reasonable detail as to the insurance so
carried.
SECTION 5.3. Preservation of Corporate Existence, Etc.
The Company shall, and shall cause each Material Subsidiary to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state
or jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits,
licenses and franchises in the normal conduct of its business
except where the failure to preserve or maintain such
governmental rights, privileges, qualifications, permits,
licenses and franchises could not reasonably be expected to have
a material adverse effect on the business, financial condition,
results of operations or prospects of the Company and its
Consolidated Subsidiaries, considered as a whole or on the
Company's ability to perform its obligations hereunder or under
the other Loan Documents;
(c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill,
except where the failure to preserve its business organization
and goodwill could not reasonably be expected to have a material
adverse effect on the business, financial condition, results of
operations or prospects of the Company and its Consolidated
Subsidiaries, considered as a whole or on the Company's ability
to perform its obligations hereunder or under the other Loan
Documents; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation
of which could reasonably be expected to have a material adverse
effect on the business, financial condition, results of
operations or prospects of the Company and its Consolidated
Subsidiaries, considered as a whole.
SECTION 5.4. Debt. (a) Consolidated Debt will at no
time exceed 50% of Total Capitalization.
(b) The Company shall not permit any of its
Consolidated Subsidiaries to incur, assume or suffer to exist any
Debt or to issue any preferred stock, except:
(i) Debt payable to or preferred stock owned by the
Company or a Wholly-Owned Consolidated Subsidiary;
(ii) Debt of any corporation existing at the time such
corporation becomes a Consolidated Subsidiary and not
incurred or assumed in contemplation of such event;
(iii) Debt of any corporation existing at the time
such corporation is merged into a Consolidated Subsidiary
and not incurred or assumed in connection with such event;
(iv) Debt secured by Liens permitted by Section 5.6(f);
and
(v) Debt and preferred stock of the Company's
Subsidiaries in an aggregate principal amount at any time
outstanding, in addition to the Debt of such Subsidiaries
permitted by clauses (b)(i) through (b)(iv) above, not to
exceed the higher of (a) $100,000,000 and (b) 11% of
Consolidated Total Assets, at such time.
SECTION 5.5. Minimum Consolidated Net Worth.
Consolidated Net Worth will at no time be less than $550,000,000.
SECTION 5.6. Negative Pledge. Neither the Company nor
any Consolidated Subsidiary will create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by
it, except:
(a) Liens existing on the date hereof securing Debt
outstanding on the date hereof in an aggregate principal
amount not exceeding $25,000,000;
(b) Liens hereafter created or assumed securing
obligations in respect of tax exempt revenue bonds not
exceeding $25,000,000 in aggregate principal amount at any
one time outstanding;
(c) any Lien on any asset securing Debt hereafter
incurred or assumed for the purpose of financing all or any
part of the cost of acquiring such asset, provided that (i)
such Lien attaches to such asset concurrently with or within
90 days after the acquisition thereof and (ii) the aggregate
principal amount of Debt secured by all such Liens at any
one time outstanding shall not exceed $50,000,000;
(d) any Lien existing on any asset of any corporation
at the time such corporation becomes a Consolidated
Subsidiary and not created in contemplation of such event;
(e) any Lien on any asset of any corporation existing
at the time such corporation is merged or consolidated with
or into a Consolidated Subsidiary and not created in
contemplation of such event;
(f) any Lien existing on any asset prior to the
acquisition thereof by the Company or a Consolidated
Subsidiary and not created in contemplation of such
acquisition;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any
Lien permitted by any of the foregoing clauses of this
Section 5.6, provided that such Debt is not increased and is
not secured by any additional assets other than fixed
improvements constructed on real estate previously subject
to a Lien securing such Debt;
(h) Liens incidental to conduct of its business or the
ownership of its assets which (i) do not secure Debt and
(ii) do not in the aggregate materially detract from the
value of its assets or materially impair the use thereof in
the operation of its business;
(i) Liens arising from capital leases entered into by
the Company or a Subsidiary of the Company as part of a sale
and leaseback transaction; provided that the aggregate
principal amount of Debt secured by such Liens at any time
outstanding shall not exceed $70,000,000;
(j) Liens securing Debt permitted by Section
5.4(b)(i); and
(k) Liens not otherwise permitted by the foregoing
clauses of this Section securing Debt in an aggregate
principal amount at any time outstanding not to exceed
$25,000,000.
SECTION 5.7. Consolidations, Mergers and Sales of
Assets. The Company will not (i) consolidate or merge with or
into any other Person, (ii) sell, lease or otherwise transfer all
or substantially all of its assets to any other Person or (iii)
sell or transfer all or any portion of its account receivables
(other than sales of account receivables at any one time having
an aggregate value of not more than $100,000,000).
Notwithstanding the foregoing, the Company may merge or
consolidate with a Subsidiary, provided that the surviving entity
in any such transaction shall assume, by operation of law or in a
writing reasonably satisfactory to the Banks, the obligations
hereunder of all parties to such transaction (it being understood
that the surviving entity in any such transaction shall be
treated as the "Company" for all purposes of this Agreement).
SECTION 5.8. Use of Proceeds. The proceeds of the
Loans made under this Agreement will be used for general
corporate purposes, including (i) payments of the face amount of
commercial paper when due and (ii) acquisitions of the assets or
stock of another Person. None of such proceeds will be used in
violation of any applicable law.
SECTION 5.9. Change in Business. The Company shall
not, and shall not suffer or permit any Subsidiary to, engage in
any material line of business substantially different from those
lines of business carried on by the Company and its Subsidiaries
on the date hereof as set forth in Schedule 5.9 hereto and
natural extensions thereof.
ARTICLE VI
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
(a) the Company shall fail to pay when due any
principal of any Loan, or shall fail to pay within five
Domestic Business Days any interest or commitment or
facility fees payable hereunder;
(b) the Company shall fail to observe or perform any
covenant contained in Section 5.4, 5.5, 5.6 or 5.7;
(c) the Company shall fail to observe or perform any
covenant or agreement contained in this Agreement or any
other Loan Document (other than those covered by clause (a),
(b) or (c) above) for 30 days after notice thereof has been
given to the Company by the Agent at the request of any
Bank;
(d) any representation, warranty, certification or
statement made by the Company in this Agreement, any other
Loan Document or in any certificate, financial statement or
other document delivered pursuant to this Agreement or any
other Loan Document shall prove to have been incorrect in
any material respect when made (or deemed made);
(e) the Company or any Subsidiary shall fail to make
any payment in respect of any Material Debt when due or
within any applicable grace period;
(f) any event or condition shall occur which results
in the acceleration of the maturity of any Material Debt or
enables the holder of such Debt or any Person acting on such
holder's behalf to accelerate the maturity thereof;
(g) the Company or any Material Subsidiary shall
commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall be
commenced against the Company or any Material Subsidiary
seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered
against the Company or any Material Subsidiary under the
federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay
when due an amount or amounts aggregating in excess of
$10,000,000 which it shall have become liable to pay under
Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of
ERISA) in respect of, or to cause a trustee to be appointed
to administer any Material Plan; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of
the ERISA Group to incur a current payment obligation in
excess of $25,000,000;
(j) a single judgment or order for the payment of
money in excess of $25,000,000 or judgments or orders for
the payment of money in excess of $40,000,000 in the
aggregate shall be rendered against the Company or any
Material Subsidiary and such judgment(s) or order(s) shall
continue unsatisfied and unstayed for a period of 45 days;
(k) (i) the Company shall, or any Subsidiaries of the
Company shall, without the written consent of the Agent and
the Required Banks, sell, convey, transfer, or otherwise
dispose of (whether in one transaction or in a series of
transactions), or agree to any of the foregoing, all or
substantially all of the assets of Premark FEG or Wilsonart
International, Inc. (whether now owned or hereafter
acquired) to or in favor of any Person or (ii) Premark FEG
or Wilsonart International, Inc. shall cease to be a
Wholly-Owned Consolidated Subsidiary; and
(l) the occurrence of a Change in Control;
then, and in every such event, the Agent shall (i) if requested
by Banks having at least 51% in aggregate amount of the
Commitments, by notice to the Company terminate the Commitments
and they shall thereupon terminate, and (ii) if requested by
Banks holding Notes evidencing having at least 51% in aggregate
principal amount of the Loans, by notice to the Company declare
the Notes (together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company; provided that in the case
of any of the Events of Default specified in clause (g) or (h)
above with respect to the Company, without any notice to the
Company or any other act by the Agent or the Banks, the
Commitments shall thereupon terminate and the Notes (together
with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company.
SECTION 6.2. Notice of Default. The Agent shall give
notice to the Company under Section 6.1(d) promptly upon being
requested to do so by any Bank and shall thereupon notify all the
Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.1. Appointment and Authorization; "Agent".
Each Bank hereby irrevocably (subject to Section 7.9) appoints,
designates and authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor
shall the Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any other Loan Document or otherwise
exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement
with reference to the Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is
used merely as a matter of market custom, and is intended to
create or reflect only an administrative relationship between
independent contracting parties.
SECTION 7.2. Delegation of Duties. The Agent may
execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
SECTION 7.3. Liability of Agent. None of the
Agent-Related Persons shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any
of the Banks for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of
the Company, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or
received by the Agent under or in connection with, this Agreement
or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any
other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in,
or conditions of, this Agreement or any other Loan Document, or
to inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
SECTION 7.4. Reliance by Agent. (a) The Agent shall
be entitled to rely, and shall be fully protected in relying,
upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless
it shall first receive such advice or concurrence of the Required
Banks as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Required
Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 3.1, each Bank that has executed
this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter
either sent by the Agent to such Bank for consent, approval,
acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the
Bank.
SECTION 7.5. Notice of Default. The Agent shall not
be deemed to have knowledge or notice of the occurrence of any
Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent for
the account of the Banks, unless the Agent shall have received
written notice from a Bank or the Company referring to this
Agreement, describing such Default and stating that such notice
is a "notice of default". The Agent will notify the Banks of its
receipt of any such notice. The Agent shall take such action
with respect to such Default as may be requested by the Banks in
accordance with Article VI; provided, however, that unless and
until the Agent has received any such request, the Agent may (but
shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem
advisable or in the best interest of the Banks.
SECTION 7.6. Credit Decision. Each Bank acknowledges
that none of the Agent-Related Persons has made any
representation or warranty to it, and that no act by the Agent
hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other
condition and credit worthiness of the Company and its
Subsidiaries, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision
to enter into this Agreement and to extend credit to the Company
hereunder. Each Bank also represents that it will, independently
and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition
and credit worthiness of the Company. Except for notices,
reports and other documents expressly herein required to be
furnished to the Banks by the Agent, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or
other information concerning the business, prospects, operations,
property, financial and other condition or credit worthiness of
the Company which may come into the possession of any of the
Agent-Related Persons.
SECTION 7.7. Indemnification of Agent. Whether or not
the transactions contemplated hereby are consummated, the Banks
shall indemnify upon demand the Agent-Related Persons (to the
extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), pro rata, from
and against any and all Indemnified Liabilities; provided,
however, that no Bank shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence
or willful misconduct. Without limitation of the foregoing, each
Bank shall reimburse the Agent upon demand for its ratable share
of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation,
execution, delivery, 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, any other Loan Document,
or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or
on behalf of the Company. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
SECTION 7.8. Agent in Individual Capacity. BofA and
its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent
hereunder and without notice to or consent of the Banks. The
Banks acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to
its Loans, BofA 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 Agent, and the terms "Bank" and "Banks" include
BofA in its individual capacity.
SECTION 7.9. Successor Agent. The Agent may, and at
the request of the Required Banks shall, resign as Agent upon 30
days' notice to the Banks. If the Agent resigns under this
Agreement, the Required Banks shall appoint from among the Banks
a successor agent for the Banks which successor agent shall be
approved by the Company (which shall be required only when both
(i) no Event of Default has occurred and been continuing for
thirty (30) or more days and (ii) the Commitments have not been
terminated in accordance with Section 6 hereof.) If no successor
agent is appointed prior to the effective date of the resignation
of the Agent, the Agent may appoint, after consulting with the
Banks and the Company, a successor agent from among the Banks.
Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article VII and Sections 9.3 and 9.4 shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the
duties of the Agent hereunder until such time, if any, as the
Required Banks appoint a successor agent as provided for above.
SECTION 7.10. Withholding Tax. (a) If any Bank is a
"foreign corporation, partnership or trust" within the meaning of
the Internal Revenue Code and such Bank claims exemption from, or
a reduction of, U.S. withholding tax under Sections 1441 or 1442
of the Internal Revenue Code, such Bank agrees with and in favor
of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, two properly completed and executed copies of
Internal Revenue Service Form 1001 before the payment of any
interest in the first calendar year and before the payment
of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States
trade or business of such Bank, two properly completed and
executed copies of Internal Revenue Service Form 4224 before
the payment of any interest is due in the first taxable year
of such Bank and in each succeeding taxable year of such
Bank during which interest may be paid under this Agreement;
and
(iii) such other form or forms as may be required
under the Internal Revenue Code or other laws of the United
States as a condition to exemption from, or reduction of,
United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Bank claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing
Internal Revenue Service Form 1001 and such Bank sells, assigns,
grants a participation in, or otherwise transfers all or part of
the Obligations of the Company to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such
Bank. To the extent of such percentage amount, the Agent will
treat such Bank's Internal Revenue Service Form 1001 as no longer
valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing Internal Revenue Service Form 4224 with
the Agent sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such
Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Internal Revenue Code.
(d) If any Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any
interest payment to such Bank an amount equivalent to the
applicable withholding tax after taking into account such
reduction. However, if the forms or other documentation required
by subsection (a) of this Section are not delivered to the Agent,
then the Agent may withhold from any interest payment to such
Bank not providing such forms or other documentation an amount
equivalent to the applicable withholding tax imposed by Sections
1441 and 1442 of the Internal Revenue Code, without reduction.
(e) If the Internal Revenue Service or any other
governmental authority of the United States or other jurisdiction
asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Bank (because the
appropriate form was not delivered or was not properly executed,
or because such Bank failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Bank
shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction
on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The
obligation of the Banks under this Section shall survive the
payment of all Obligations and the resignation or replacement of
the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any CD Loan, Offshore Loan or Money Market
LIBOR Loan:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not
being offered to the Reference Banks in the relevant market
for such Interest Period, or
(b) in the case of CD Loans or Offshore Loans, Banks
having at least 51% of the aggregate principal amount of the
affected Loans advise the Agent that the Adjusted CD Rate or
the IBOR, as the case may be, as determined by the Agent
will not adequately and fairly reflect the cost to such
Banks of funding their CD Loans or Offshore Loans, as the
case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Company and
the Banks, whereupon until the Agent notifies the Company that
the circumstances giving rise to such suspension no longer exist,
(i) the obligations of the Banks to make CD Loans or Offshore
Loans, as the case may be, or to convert outstanding Loans into
CD Loans or Offshore Loans, as the case may be, shall be
suspended and (ii) each outstanding CD Loan or Offshore Loan, as
the case may be, shall be converted into a Base Rate Loan on the
last day of the then current Interest Period applicable thereto.
Unless the Company notifies the Agent at least two Domestic
Business Days before the date of any Fixed Rate Borrowing for
which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate
Borrowing is a Committed Borrowing, such Borrowing shall instead
be made as a Base Rate Borrowing and (ii) if such Fixed Rate
Borrowing is a Money Market LIBOR Borrowing, the Money Market
LIBOR Loans comprising such Borrowing shall bear interest for
each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the
Reference Rate for such day.
SECTION 8.2. Illegality. If, on or after the date of
this Agreement, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or
regulation, 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 Offshore Lending Office) with
any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall
make it unlawful or impossible for any Bank (or its Offshore
Lending Office) to make, maintain or fund its Offshore Loans and
such Bank shall so notify the Agent, the Agent shall forthwith
give notice thereof to the other Banks and the Company, whereupon
until such Bank notifies the Company and the Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Offshore Loans, or to convert
outstanding Loans into Offshore Loans, shall be suspended.
Before giving any notice to the Agent pursuant to this Section
8.2, such Bank shall designate a different Offshore Lending
Office if such designation will avoid the need for giving such
notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given, each
Offshore Loan of such Bank then outstanding shall be converted to
a Base Rate Loan either (a) on the last day of the then current
Interest Period applicable to such Offshore Loan if such Bank may
lawfully continue to maintain and fund such Loan to such day or
(b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan to such day.
SECTION 8.3. Increased Cost and Reduced Return. (a)
If on or after (x) the date hereof, in the case of any Committed
Loan or any obligation to make Committed Loans or (y) the date of
the related Money Market Quote, in the case of any Money Market
Loan, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, 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 (whether or not having the force of law) of any such
authority, central bank or comparable agency (other than any such
request or directive which merely requires compliance with a law,
rule or regulation as in effect and interpreted and administered
on the date hereof):
(i) shall subject any Bank (or its Applicable Lending
Office) to any tax, duty or other charge with respect to its
Fixed Rate Loans, its Note or its obligation to make Fixed
Rate Loans, or shall change the basis of taxation of
payments to any Bank (or its Applicable Lending office) of
the principal of or interest on its Fixed Rate Loans or any
other amounts due under this Agreement in respect of its
Fixed Rate Loans or its obligation to make Fixed Rate Loans
(except for changes in the rate of tax on the overall net
income of such Bank or its Applicable Lending Office imposed
by the jurisdiction in which such Bank's principal executive
office or Applicable Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any such
requirements imposed by the Board of Governors of the
Federal Reserve System, but excluding (A) with respect to
any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (B) with respect to any
Offshore Loan any such requirement with respect to which
such Bank is entitled to compensation during the relevant
Interest Period under Section 2.17), special deposit,
insurance assessment (excluding, with respect to any CD
Loan, any such requirement reflected in an applicable
Assessment Rate) or similar requirement against assets of,
deposits with or for the account of, or credit extended by,
any Bank (or its Applicable Lending Office) or on the United
States market for certificates of deposit or the applicable
interbank market any other condition affecting its Fixed
Rate Loans, its Note or its obligation to make Fixed Rate
Loans;
and the result of any of the foregoing is to increase the cost to
such Bank (or its Applicable Lending Office) of making or
maintaining any Fixed Rate Loan, or to reduce the amount of any
sum received or receivable by such Bank (or its Applicable
Lending Office) under this Agreement or its Note with respect
thereto, by an amount deemed by such Bank to be material, then
within 15 days after demand by such Bank (with a copy to the
Agent), the Company shall, subject to clause (c) below, pay to
such Bank such additional amount or amounts as will compensate
such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, on or
after the date hereof, the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change in any
such law, rule or regulation 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 any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency (other than any
such request or directive which merely requires compliance with a
law, rule or regulation as in effect and interpreted and
administered on the date hereof), has or would have the effect of
reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations hereunder to
a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then
from time to time, within 15 days after demand by such Bank (with
a copy to the Agent), the Company shall, subject to clause (c)
below, pay to such Bank such additional amount or amounts as will
compensate such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Company and the
Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation
pursuant to this Section 8.3 and will designate a different
Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in
the judgment of such Bank, be otherwise disadvantageous to such
Bank. A certificate of any Bank claiming compensation under this
Section and setting forth in reasonable detail the basis for and
computation of the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error.
In determining such amount, such Bank may use any reasonable
averaging and attribution methods. Notwithstanding clauses (a)
and (b) above, the Company shall only be obligated to compensate
any Bank for any amount arising or accruing during (i) any time
or period commencing not more than 90 days prior to the date on
which such Bank notifies the Agent and the Company that it
proposes to demand such compensation and identifies to the Agent
and the Company the statute, regulation or other basis upon which
the claimed compensation is or will be based and (ii) any time or
period during which, because of the retroactive application of
such statute, regulation or other basis, such Bank did not know,
and could not reasonably have been expected to know, that such
amount would arise or accrue.
SECTION 8.4. Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make or maintain
Offshore Loans has been suspended pursuant to Section 8.2 or (ii)
any Bank has demanded compensation under Section 8.3(a) and the
Company shall, by at least five Offshore Business Days' prior
notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless
and until such Bank notifies the Company that the circumstances
giving rise to such suspension or demand for compensation no
longer apply:
(a) all Loans which would otherwise be made by such
Bank as (or continued as or converted into) CD Loans or
Offshore Loans, as the case may be, shall instead be Base
Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the
other Banks), and
(b) after each of its CD Loans or Offshore Loans, as
the case may be, has been repaid (or converted to a Base
Rate Loan), all payments of principal which would otherwise
be applied to repay such Fixed Rate Loans shall be applied
to repay its Base Rate Loans instead.
If such Bank notifies the Company that the circumstances giving
rise to such notice no longer apply, the principal amount of each
such Base Rate Loan shall be converted into a CD Loan or Offshore
Loan, as the case may be, on the first day of the next succeeding
Interest Period applicable to the related CD Loans or Offshore
Loans of the other Banks.
SECTION 8.5. Election of Company to Terminate or
Substitute Banks. If (i) the obligation of any Bank to make
Offshore Loans has been suspended pursuant to Section 8.2, (ii)
any Bank has demanded compensation under Section 2.17 or 8.3,
(iii) any Bank shall become, or a substantial part of the
property of any Bank shall become, the subject of any
receivership, conservatorship, insolvency, reorganization or
similar proceeding (a "Bank Proceeding") or (iv) any Bank shall
default on its commitment to lend hereunder (a "Bank Default"),
the Company
(a) may elect to terminate this Agreement as to such
Bank, and in connection therewith not to borrow any Base
Rate Loan provided for in Section 8.2 or to prepay any Base
Rate Loan made pursuant to Section 8.2 or 8.4, provided that
the Company: (x) notify such Bank through the Agent of such
election at least three Offshore Business Days before any
date fixed for such borrowing or such prepayment, as the
case may be, (y) repay all of such Bank's outstanding Loans,
on at least three Offshore Business Days' notice, not later
than the end of the respective Interest Periods applicable
thereto or as otherwise required by Section 8.2 and (z)
reimburse such Bank for the amount it is entitled to receive
under section 2.14, provided further that in the case of a
Bank Proceeding or a Bank Default, the Company shall not be
required to pay any outstanding Loan to such Bank on any
date prior to the date that the Group of which such Loan
comprises a part is repaid in full; and
(b) shall have the right, with the assistance of the
Agent, to seek a mutually satisfactory substitute bank or
banks (which may be one or more of the Banks) to purchase
the Notes and assume the Commitment of such Bank, and in
such case such Bank shall be entitled to receive, from the
purchasing bank or banks or the Company, the amount it would
have been entitled to receive under Section 2.14 if its
Notes were prepaid rather than purchased.
Upon receipt by the Agent of the notice referred to in
Section 8.5(a) above, the Commitment of such Bank shall terminate
and, if such notice shall relate to a Bank Proceeding, such Bank
shall cease to have any voting rights with respect to any matters
arising hereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or similar
writing) and shall be given to such party: (x) in the case of the
Company or the Agent, at its address, facsimile number or telex
number set forth on the signature pages hereof, (y) in the case
of any Bank, at its address, facsimile number or telex number set
forth in its Administrative Questionnaire or (z) in the case of
any party, such other address, facsimile number or telex number
as such party may hereafter specify for the purpose by notice to
the Agent and the Company. Each such notice, request or other
communication shall be effective (i) if given by telex, when such
telex is transmitted to the telex number specified in this
Section and the appropriate answerback is received, (ii) if given
by facsimile transmission, when transmitted to the facsimile
number specified in this Section and confirmation of receipt is
received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iv) if given by any other
means, when delivered at the address specified in this Section;
provided that notices to the Agent under Article II or Article VI
shall not be effective until received.
SECTION 9.2. No Waivers. No failure or delay by the
Agent or any Bank in exercising any right, power or privilege
hereunder or under any Note shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.3. Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as
Agent) within five Business Days after demand for all costs and
expenses incurred by BofA (including in its capacity as Agent) in
connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement,
waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other
documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby,
including reasonable Attorney Costs incurred by BofA (including
in its capacity as Agent) with respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each
Bank within five Domestic Business Days after demand for all
costs and expenses (including reasonable Attorney Costs) incurred
by them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an
Event of Default or after acceleration of the Loans (including in
connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate
proceeding).
SECTION 9.4. Company Indemnification. Whether or not
the transactions contemplated hereby are consummated, the Company
shall indemnify, defend and hold the Agent-Related Persons, and
each Bank and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements
(including reasonable Attorney Costs) of any kind or nature
whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or
replacement of the Agent or replacement of any Bank) be imposed
on, incurred by or asserted against any such Indemnified Person
in any way relating to or arising out of this Agreement or any
Loan Document, or the transactions contemplated hereby or
thereby, or any action taken or omitted by any such Indemnified
Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate
proceeding) related to or arising out of this Agreement or the
Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the
Company shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities to the extent
resulting from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section 9.4 shall
survive payment of all other Obligations.
SECTION 9.5. Sharing of Set-offs. Each Bank agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest due with respect to
any Note held by it which is greater than the proportion received
by any other Bank in respect of the aggregate amount of principal
and interest due with respect to any Note held by such other
Bank, the Bank receiving such proportionately greater payment
shall purchase such participation in the Notes held by the other
Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with
respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall
impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such
exercise to the payment of Debt of the Company other than its
Debt under the Notes. The Company agrees, to the fullest extent
it may effectively do so under applicable law, that any holder of
a participation in a Note, whether or not acquired pursuant to
the foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation
as fully as if such holder of a participation were a direct
creditor of the Company in the amount of such participation.
SECTION 9.6. Amendments and Waivers. No amendment or
waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by the
Company or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the
Required Banks (or by the Agent at the written request of the
Required Banks) and the Company and acknowledged by the Agent,
and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Banks and
the Company and acknowledged by the Agent, do any of the
following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 6.1);
(b) postpone or delay any date fixed by this Agreement
or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Banks (or any of them)
hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or (subject to clause (ii) below)
any fees or other amounts payable hereunder or under any other
Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required
for the Banks or any of them to take any action hereunder; or
(e) amend this Section, or Section 9.5, or any
provision herein providing for consent or other action by all
Banks;
and, provided further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to
the Required Banks or all the Banks, as the case may be, affect
the rights or duties of the Agent under this Agreement or any
other Loan Document, and (ii) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed by
the parties thereto.
In the event that the effective adoption of any waiver or
amendment hereunder depends upon the validity or enforceability
of the last sentence of Section 8.5, but only in the case of a
Bank Proceeding, the Agent may require an opinion of counsel
satisfactory to it as to such matter as a condition to the
effectiveness of such waiver or amendment.
SECTION 9.7. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its
rights or obligations under this Agreement without the prior
written consent of the Agent and each Bank.
SECTION 9.8. Assignments, Participations, etc. (a)
Any Bank may, with the written consent of the Company (which
shall be required only when both (i) no Event of Default has
occurred and been continuing for thirty (30) or more days and
(ii) the Commitments have not been terminated in accordance with
Section 6 hereof) and the Agent, at any time assign and delegate
to one or more Eligible Assignees (provided that no written
consent of the Company or the Agent shall be required in
connection with any assignment and delegation by a Bank to an
Eligible Assignee that is an Affiliate of such Bank or to a
Federal Reserve Bank) (each an "Assignee") all, or any ratable
part of all, of the Loans, the Commitments and the other rights
and obligations of such Bank hereunder, in a minimum amount of
$5,000,000 and incremental amounts of $1,000,000 in excess
thereof; provided, however, that the Company and the Agent may
continue to deal solely and directly with such Bank in connection
with the interest so assigned to an Assignee until: (i) written
notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee,
shall have been given to the Company and the Agent by such Bank
and the Assignee; (ii) such Bank and its Assignee shall have
delivered to the Company and the Agent an Assignment and
Acceptance in the form of Exhibit G ("Assignment and Acceptance")
together with any Note or Notes subject to such assignment and
(iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $2,500.
(b) From and after the date that the Agent notifies
the assignor Bank that it has received (and provided its consent
and, to the extent necessary, received the Company's consent,
with respect to) an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) 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, shall have the rights and
obligations of a Bank hereunder and under the other Loan
Documents, and (ii) the assignor Bank shall, to the extent that
all rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five Domestic Business Days after its
receipt of notice by the Agent that it has received an executed
Assignment and Acceptance and payment of the processing fee, and
provided that it consents to such assignment in accordance with
clause (a) of this Section 9.8, to the extent so required, the
Company shall execute and deliver to the Agent, new Notes
evidencing such Assignee's assigned Loans and Commitment and, if
the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the
Loans retained by the assignor Bank (such Notes to be in exchange
for, but not in payment of, the Notes held by such Bank).
Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall
be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company
(a "Participant") participating interests in any Loans, the
Commitment of that Bank and the other interests of that Bank (the
"originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations
under this Agreement shall remain unchanged, (ii) the originating
Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company and the Agent shall continue to
deal solely and directly with the originating Bank in connection
with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall
transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other
Loan Document, except to the extent such amendment, consent or
waiver would require unanimous consent of the Banks as described
in the first proviso to Section 9.6. In the case of any such
participation, the Participant shall be entitled to the benefit
of Sections 8.3 and 9.4 as though it were also a Bank hereunder,
and if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under
this Agreement.
(e) Notwithstanding any other provision in this
Agreement, any Bank may at any time create a security interest
in, or pledge, all or any portion of its rights under and
interest in this Agreement and the Note held by it in favor of
any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
(f) If any Reference Bank assigns its Notes to a
Person which is not an Affiliate, the Company may, in
consultation with the Agent and with the consent of the Required
Banks, appoint another bank to act as a Reference Bank hereunder.
(g) No Assignee, Participant or other transferee of
any Bank's rights shall be entitled to receive any greater
payment under Section 8.3 than such Bank would have been entitled
to receive with respect to the rights transferred, unless such
transfer is made with the Company's prior written consent or by
reason of the provisions of Section 8.2 or 8.3 requiring such
Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.
SECTION 9.9. Collateral. Each of the Banks represents
to the Agent and each of the other Banks that it in good faith is
not relying upon any "margin stock" (as defined in Regulation U)
as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 9.10. Governing Law. (a) This agreement and
the notes shall be governed by, and construed in accordance with,
the law of the State of Illinois; provided that the agent and the
banks shall retain all rights arising under federal law.
(b) Any legal action or proceeding with respect to
this agreement or any other loan document may be brought in the
courts of the State or Illinois or of the United States for the
Northern District of Illinois, and by execution and delivery of
this agreement, each of the Company, the Agent and the Banks
consents, for itself and in respect of its property, to the non-
exclusive jurisdiction of those courts. Each of the Company, the
Agent and the Banks irrevocably waives any objection, including
any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the
bringing of any action or proceeding in such jurisdiction in
respect of this Agreement or any document related hereto. The
Company, the Agent and the Banks each waive personal service of
any summons, complaint or other process, which may be made by any
other means permitted by Illinois law.
SECTION 9.11. Waiver of Jury Trial. The Company, the
Banks and the Agent each waive their respective rights to a trial
by jury of any claim or cause of action based upon or arising out
of or related to this Agreement, the other Loan Documents, or the
transactions contemplated hereby or thereby, in any action,
proceeding or other litigation of any type brought by any of the
parties against any other party or any Agent-related person,
participant or assignee, whether with respect to contract claims,
tort claims, or otherwise. The Company, the Banks and the Agent
each agree that any such claim or cause of action shall be tried
by a court trial without a jury. Without limiting the foregoing,
the parties further agree that their respective right to a trial
by jury is waived by operation of this Section as to any action,
counterclaim or other proceeding which seeks, in whole or in
part, to challenge the validity or enforceability of this
Agreement or the other Loan Documents or any provision hereof or
thereof. This waiver shall apply to any subsequent amendments,
renewals, supplements or modifications to this Agreement and the
other Loan Documents.
SECTION 9.12. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the
subject matter hereof.
SECTION 9.13. Confidentiality. The Agent and each of
the Banks agree to keep confidential any financial information
delivered by the Company hereunder which the Company clearly
indicates in writing to be confidential information; provided
that nothing herein shall prevent the Agent or any Bank from
disclosing such information (i) to the Agent or any Bank, (ii) to
any Affiliate of the Agent or any Bank or any actual or potential
purchaser, participant, assignee or transferee of any Bank's
rights or obligations hereunder or under any Note that agrees in
writing to be bound by this Section 9.13, (iii) upon order of any
court or administrative agency, (iv) upon the request or demand
of any regulatory agency or authority having (or claiming)
jurisdiction over such party, (v) which has been publicly
disclosed, (vi) which has been obtained from any Person that is
not a party hereto or an Affiliate of any such party, (vii) in
connection with the exercise of any remedy hereunder, (viii) to
the certified public accountants or legal counsel for any Bank
(on a confidential basis) or (ix) as otherwise expressly
contemplated by this Agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
PREMARK INTERNATIONAL, INC.
By
Title:
1717 Deerfield Road
Deerfield, Illinois 60015
Facsimile number:
Commitment
$24,000,000 BANKERS TRUST CO.
By
Title:
Domestic and Offshore Lending
Offices:
130 Liberty Street
New York, New York 10006
Primary Credit Contact:
Attention: Katherine A. Judge
Telephone: (212) 250-4969
Facsimile: (212) 669-1570
Primary Operational Contact:
Attention: Aileen Mosier
Telephone: (212) 250-6968
Facsimile: (212) 250-7351<PAGE>
Commitment
$24,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By
Title:
Domestic and Offshore Lending
Offices:
One First National Plaza
Suite 0364/1-10
Chicago, Illinois 60670
Primary Credit Contact:
Attention: Martha F. McGuire
Telephone: (312) 732-7093
Facsimile: (312) 732-1712
Primary Operational Contact:
Attention: Mattie Reed
Telephone: (312) 732-5219
Facsimile: (312) 732-4840<PAGE>
Commitment
$24,000,000 CHEMICAL BANK
By
Title:
Domestic and Offshore Lending
Offices:
270 Park Avenue
New York, New York 10017
Primary Credit Contact:
Attention: Cynthia R. Berkshire
Telephone: (312) 807-4029
Facsimile: (312) 346-9310
Primary Operational Contact:
Attention: Tom Brennan
Telephone: (212) 622-1436
Facsimile: (212) 622-0130<PAGE>
Commitment
$24,000,000 ROYAL BANK OF CANADA
By
Title:
Domestic and Offshore Lending
Offices:
Financial Square
23rd Floor
Attention: Credit Administration
New York, New York 10005-3531
Primary Credit Contact:
Attention: Molly Drennan
Telephone: (312) 551-1615
Facsimile: (312) 551-0805
Primary Operational Contact:
Attention: Linda Smith
Telephone: (212) 428-6323
Facsimile: (212) 428-2372<PAGE>
Commitment
$24,000,000 THE FUJI BANK, LIMITED
By
Title:
Domestic and Offshore Lending
Offices:
225 W. Wacker Drive
Suite 2000
Chicago, Illinois 60611
Primary Credit Contact:
Attention: Lee Prewitt
Telephone: (312) 419-3666
Facsimile: (312) 621-0539
Primary Operational Contact:
Attention: Mr. Vir Guiang
Telephone: (312) 621-3385
Facsimile: (312) 621-0539<PAGE>
Commitment
$24,000,000 MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By
Title:
Domestic and Offshore Lending
Offices:
Morgan Guaranty Trust Company of
New York
Attention: Module 21
New York, New York _____
Primary Credit Contact:
Attention: Charles H. King
Telephone: (212) 648-7138
Facsimile: (212) 648-5336
Primary Operational Contact:
Attention: Beth Cesari
Telephone: (302) 634-1857
Facsimile: (302) 634-1091<PAGE>
Commitment
$24,000,000 COMMERZBANK AKTIENGESELLSCHAFT,
CHICAGO BRANCH
By
Title:
Domestic Lending Office:
311 South Wacker Drive
Suite 5800
Chicago, Illinois 60606
Offshore Lending Office:
COMMERZBANK AG, Grand Cayman Branch
c/o Chicago Branch
311 South Wacker Drive
Suite 5800
Chicago, Illinois 60606
Primary Credit Contacts:
Attention: William Brent
Peterson
Telephone: (312) 408-6913
Facsimile: (312) 435-1486
Attention: Paul Karlin
Telephone: (312) 408-6931
Facsimile: (312) 408-1486
Primary Operational Contact:
Attention: John Dobler
Telephone: (212) 266-7565
Facsimile: (212) 266-7593<PAGE>
Commitment
$24,000,000 CREDIT LYONNAIS CHICAGO BRANCH
By
Title:
Domestic and Offshore Lending
Offices:
227 W. Monroe
Suite 3800
Chicago, Illinois 60606
Primary Credit Contacts:
Attention: David Payne
Telephone: (312) 220-7310
Facsimile: (312) 641-0527
Attention: Helen Dimitriou
Telephone: (312) 220-7312
Facsimile: (312) 641-0527
Primary Operational Contact:
Attention: Rosette Liptak
Telephone: (312) 220-7319
Facsimile: (312) 641-5834<PAGE>
Commitment
$24,000,000 THE NORTHERN TRUST COMPANY
By
Title:
Domestic and Offshore Lending
Offices:
50 South LaSalle Street
Chicago, Illinois 60675
Primary Credit Contact:
Attention: Sidney Dillard
Telephone: (312) 444-3118
Facsimile: (312) 444-5055
Primary Operational Contact:
Attention: Linda Honda
Telephone: (312) 444-3532
Facsimile: (312) 630-1566<PAGE>
Commitment
$34,000,000 BANK OF AMERICA ILLINOIS
By
Title:
Domestic and Offshore Lending
Offices:
231 South LaSalle Street
Chicago, Illinois 60697
Primary Credit Contact:
Attention: William Sweeney
Telephone: (312) 828-1843
Facsimile: (312) 987-1276
Primary Operational Contact:
Attention: Pam Quebbeman
Telephone: (312) 828-3586
Facsimile: (312) 974-9626
Total Commitments
$250,000,000
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By
Title:
1455 Market Street
12th Floor
San Francisco, California 94103
Attention: Alice Zane
Telephone: (415) 436-2767
Facsimile: (415) 436-2700
SCHEDULES AND EXHIBITS
Schedule 3.1(iv) - Dart Spinoff
Schedule 5.9 - Lines of Business
Exhibit A - Note
Exhibit B - Notice of Committed Borrowing
Exhibit C - Money Market Quote Request
Exhibit D - Invitation for Money Market Quotes
Exhibit E - Money Market Quote
Exhibit F - Opinion of Counsel for the Company
Exhibit G - Assignment and Acceptance Agreement
Exhibit H - Purchase/Leaseback Transaction Summary
Exhibit I - Opinion of Counsel for Dart (Spinoff)
SCHEDULE 3.1 (iv)
DART SPIN-OFF
For a description of the spin-off of Dart reference is made to the
Form 10 filed by Tupperware Corporation with the Securities and Exchange
Commission on March 4, 1996, as amended, copies of which have heretofore
been delivered to the Agent and each Bank.
SCHEDULE 5.9
PREMARK LINES OF BUSINESS
FOOD EQUIPMENT GROUP
The Food Equipment Group and its subsidiaries engage in the manufacture and
sale of commercial food preparation, cooking, storage, refrigeration and
cleaning equipment. The Group's operations are international in scope.
Its products are sold to the retail food industry and to the foodservice
industry, and are distributed through company owned operations, distributors,
dealers and licensing arrangements. The Group maintains service networks
for the markets in which it sells.
DECORATIVE PRODUCTS GROUP
Wilsonart, Florida Tile and Hartco make up the Decorative Products Group.
Wilsonart manufactures and sells decorative plastic laminate products used
for numerous interior surfacing applications, including cabinetry,
countertops, vanities, store fixtures, flooring, and furniture. In
addition, Wilsonart manufactures and sells a solid surfacing product,
contact adhesives, metallic surfacings, decorative edge moldings,
and solid surfacing veneer. Its products are used in new construction
and remodeling in residential and commercial markets. The products are sold
through distributors and directly to other equipment manufacturers.
Wilsonart is expanding its distribution and manufacturing outside the U.S.
Florida Tile manufactures glazed ceramic wall and floor tile products for
residential and commercial uses. Tile products are marketed through
company-owned and independent distributors. A small portion of
Florida Tile's sales are exports. Florida Tile also imports foreign-
produced tile products.
Hartco manufactures and distributes prefinished and unfinished flooring, wood
moldings, installation adhesives, and a full line of floor care products for
residential and commercial applications. These products are marketed
to a nationwide network of independent wholesale floor covering distributors,
home improvement store chains, and retail buying groups. A small
portion of Hartco's sales are exports.
CONSUMER PRODUCTS GROUP
The Consumer Products Group consists of West Bend and Precor. West Bend
manufactures and sells small electric appliances such as bread makers,
electric skillets, slow cookers, woks, corn poppers, beverage makers,
electronic timers, and high-quality stainless steel cookware. The small
appliances are sold primarily in the United States and Canada, directly to
mass merchandisers, department stores, hardware stores, warehouse clubs, and
catalog showrooms. The stainless steel cookware is sold to consumers by
independent distributors through dinner parties and by other direct sales
methods, and enjoys substantial international sales. West Bend also
manufactures and sells water purification systems primarily for
residential use.
Precor manufactures physical fitness equipment such as treadmills, stationary
bicycles, and low-impact climbers. Precor equipment is sold primarily
through specialty fitness equipment retail stores and high-end sporting
goods and bicycle stores in the United States and Canada, and is expanding
into international markets. Precor products have been primarily for home
use, but in recent years the company has entered the fitness club market.
EXHIBIT A
NOTE
Chicago, Illinois
May __, 1996
For value received, Premark International, Inc., a
Delaware corporation (the "Company"), promises to pay to the order
of ______________ (the "Bank"), for the account of its Applicable
Lending Office, the unpaid principal amount of each Loan made by
the Bank to the Company pursuant to the Credit Agreement referred
to below on the maturity date provided for in the Credit Agreement.
The Company promises to pay interest on the unpaid principal amount
of each such Loan on the dates and at the rate or rates provided
for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Bank
of America National Trust and Savings Association, ____________,
San Francisco, California.
All loans made by the Bank and all repayments of the
principal thereof shall be recorded by the Bank and, if the Bank so
elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding may be endorsed by the
Bank on the schedule attached hereto, or on a continuation of such
schedule attached to and made a part hereof; provided that the
failure of the Bank to make any such recordation or endorsement
shall not affect the obligations of the Company hereunder or under
the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of May __, 1996 among the Company, the banks
listed on the signature pages thereof and Bank of America National
Trust and Savings Association, as Agent (as the same may be amended
from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein with the same meanings. Reference
is made to the Credit Agreement for provisions for the mandatory
and optional prepayment hereof and the acceleration of the maturity
hereof.
PREMARK INTERNATIONAL, INC.
By:
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Amount of Principal Notation
Date Loan Repaid Made By
EXHIBIT B
Form of Notice of Committed Borrowing
Date: , 199
To: Bank of America National Trust and Savings Association as
Agent for the Banks parties to the Credit Agreement dated
as of May __, 1996 (as extended, renewed, amended or
restated from time to time, the "Credit Agreement") among
Premark International, Inc., certain Banks which are
signatories thereto and Bank of America National Trust
and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned, Premark International, Inc. (the "Company"),
refers to the Credit Agreement, the terms defined therein being
used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.2 of the Credit Agreement, of
the Borrowing specified below:
1. The [Offshore][Domestic] Business Day of the proposed
Borrowing is , 19 .
2. The aggregate amount of the proposed Borrowing is $ .
3. The Borrowing is to be comprised of $ of [Base
Rate] [CD Rate] [Offshore Rate] Loans.
4. The duration of the Interest Period for the [CD Rate Loans]
[Offshore Rate Loans] included in the Borrowing shall be [
days] [ months].
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the
proposed Borrowing, before and after giving effect thereto and to
the application of the proceeds therefrom:
(a) the representations and warranties of the Company
contained in Article IV of the Credit Agreement are true and
correct as though made on and as of such date (except with
respect to the representations and warranties set forth in
Sections 4.4(b), 4.4(c), 4.5(i) and 4.7);
(b) no Default has occurred and is continuing, or would
result from such proposed Borrowing; and
(c) the proposed Borrowing will not cause the aggregate
principal amount of all outstanding Loans to exceed the
combined Commitments of the Banks.
PREMARK INTERNATIONAL, INC.
By:
Title:
FORM OF NOTICE OF INTEREST RATE ELECTION
Date: , 199
To: Bank of America National Trust and Savings Association as
Agent for the Banks parties to the Credit Agreement dated
as of May __, 1996 (as extended, renewed, amended or
restated from time to time, the "Credit Agreement") among
Premark International, Inc., certain Banks which are
signatories thereto and Bank of America National Trust
and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned, Premark International, Inc. (the "Company"),
refers to the Credit Agreement, the terms defined therein being
used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.11 of the Credit Agreement, of
the [conversion] [continuation] of the Loans specified herein,
that:
1. The effective date of the [conversion] [continuation] of the
Loans specified herein is , 19 (the
"Conversion/Continuation Date".
2. The aggregate amount of the Loans to be [converted]
[continued] is $ .
3. The Loans are to be [converted into] [continued as] [CD Rate]
[Offshore Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest Period for the
Loans included in the [conversion] [continuation] shall be [
days] [ months].
The undersigned hereby certifies on the date hereof, and as of the
proposed Conversion/Continuation Date, before and after giving
effect thereto and to the application of the proceeds therefrom, no
Default or Event of Default has occurred and is continuing, or
would result from such proposed [conversion] [continuation].
PREMARK INTERNATIONAL, INC.
By:
Title:
EXHIBIT C
Form of Money Market Quote Request
[Date]
To: Bank of America National Trust and Savings Association
(the "Agent")
From: Premark International, Inc.
Re: Credit Agreement dated as of May __, 1996 (as the same
may be amended from time to time, the "Credit Agreement")
among the Company, the Banks listed on the signature
pages thereof and the Agent
We hereby give notice pursuant to Section 2.3 of the
Credit Agreement that we request Money Market Quotes for the
following proposed Money Market Borrowing(s):
Date of Borrowing:
Principal Amount* Interest Period**
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in
the Credit Agreement.
PREMARK INTERNATIONAL, INC.
By
Title:
* Amount must be $ or a larger multiple of $ .
** Not less than one month (LIBOR Auction) or not less than 7 days
(Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
EXHIBIT D
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes
to Premark International, Inc.
(the "Company")
Pursuant to Section 2.3 of the Credit Agreement dated as
of May __, 1996 (as the same may be amended from time to time, the
"Credit Agreement) among the Company, the Banks parties thereto and
the undersigned, as Agent, we are pleased on behalf of the Company
to invite you to submit Money Market Quotes to the Company for the
following proposed Money Market Borrowing(s):
Date of Borrowing:
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.] Capitalized terms used herein without
definition have the meanings set forth in the Credit Agreement.
Please respond to this invitation by no later than [12:00
p.m.] [10:00 a.m.] (New York City time) on [date].
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Agent
By
Authorized Officer
EXHIBIT E
Form of Money Market Quote
To: Bank of America National Trust and
Savings Association, as Agent
Re: Money Market Quote to
Premark International, Inc.
(the "Company")
In response to your invitation on behalf of the Company
dated , 19 , we hereby make the following Money Market
Quote on the following terms:
1. Quoting Bank:
2. Person to contact at Quoting Bank:
3. Date of Borrowing: *
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following interests Periods and at
the following rates:
Principal Interest Money Market
Amount ** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money Market
Loans for which the above offers may be accepted shall not
exceed $ .]**
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the
sum of the individual offers exceed the amount the Bank is willing
to lend. Bids must be made for $5,000,000 or a larger multiple of
$1,000,000.
(notes continued on following page)<PAGE>
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable conditions set
forth in the Credit Agreement dated as of May __, 1996 (as the same
may be amended from time to time, the "Credit Agreement) among the
Company, the Banks listed on the signature pages thereof and
yourselves, as Agent, irrevocably obligates us to make the Money
Market Loan(s) for which any offer(s) are accepted, in whole or in
part. Capitalized terms used herein without definition have the
meanings set forth in the Credit Agreement.
Very truly yours,
[NAME OF BANK]
Dated: By:
Authorized Officer
*** Not less than one month or not less than 7 days, as specified
in the related Invitation. No more than five bids are permitted
for each Interest Period.
**** Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify percentage
(to the nearest 1/10,000th of 1%) and specify whether "PLUS" or
"MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th
of 1%).
EXHIBIT F
OPINION OF
COUNSEL FOR THE COMPANY
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Bank of America National Trust
and Savings Association, as Agent
[Address]
Dear Sirs:
We have acted as counsel for Premark International, Inc.
(the "Company") in connection with the Credit Agreement (the
"Credit Agreement") dated as of May __, 1996 among the Company, the
banks listed on the signature pages thereof and Bank of America
National Trust and Savings Bank, as Agent. This opinion is being
rendered to you pursuant to Section 3.1(a)(vi) of the Credit
Agreement. Terms defined in the Credit Agreement are used herein
as therein defined.
We have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact
and law as we have deemed necessary or advisable for purposes of
this opinion.
Upon the basis of the foregoing, we are of the opinion
that:
1. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware,
and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
2. The execution, delivery and performance by the
Company of the Credit Agreement and the Notes are within the
Company's corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of,
or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation
or by-laws of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the
Company or result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries.
3. The Credit Agreement constitutes a valid and binding
agreement of the Company and the Notes constitute valid and binding
obligations of the Company, in each case enforceable in accordance
with their respective terms except as the same may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
4. Except as disclosed in the Company's 1995 Form 10-K,
there is no action, suit or proceeding pending against, or to our
knowledge threatened against or affecting, the Company or any of
its Subsidiaries before any court or arbitrator or any governmental
body, agency or official, in which there is a reasonable
possibility of an adverse decision which could materially adversely
affect the business, consolidated financial position or
consolidated results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole or which in any
manner draws into question the validity of the Credit Agreement or
the Notes.
5. Each of the Company's Material Subsidiaries is a
corporation validly existing and in good standing under the laws of
its jurisdiction of incorporation, and has all corporate powers and
all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
We are members of the Bar of the State of Illinois and
the foregoing opinion is limited to the laws of the State of
Illinois, the federal laws of the United States of America and the
General Corporation Law of the State of Delaware.
Very truly yours,
EXHIBIT G
ASSIGNMENT AND ACCEPTANCE AGREEMENT
AGREEMENT dated as of , 19 among [ASSIGNOR]
(the "Assignor"), [ASSIGNEE] (the "Assignee"), PREMARK
INTERNATIONAL, INC. (the "Company") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Acceptance Agreement (the
"Agreement") relates to the Credit Agreement dated as of May __,
1996 (as the same may be amended from time to time, the "Credit
Agreement") among the Company, the Assignor and the other Banks
party thereto, as Banks, and the Agent;
WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Loans to the Company in an
aggregate principal amount at any time outstanding not to
exceed $ ;
WHEREAS, Committed Loans made to the Company by the
Assignor under the Credit Agreement in the aggregate principal
amount of $ are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee
all of the rights of the Assignor under the Credit Agreement in
respect of a portion of its Commitment thereunder in an amount
equal to $ (the "Assigned Amount"), together with a
corresponding portion of its outstanding Committed Loans, and the
Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as
follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings set
forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and
sells to the Assignee all of the rights of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, and the
Assignee hereby accepts such assignment from the Assignor and
assumes all of the obligations of the Assignor under the Credit
Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and delivery
hereof by the Assignor, the Assignee, the Company and the Agent and
the payment of the amounts specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a Commitment
in an amount equal to the Assigned Amount, and (ii) the Commitment
of the Assignor shall, as of the date hereof, be reduced by a like
amount and the Assignor released from its obligations under the
Credit Agreement to the extent such obligations have been assumed
by the Assignee. The assignment provided for herein shall be
without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the Assignee
shall pay to the Assignor on the date hereof in Federal funds an
amount equal to $ . It is understood that facility
fees in respect of the Assigned Amount accrued to the date hereof
are for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee.
Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for
the account of such other party to the extent of such other party's
interest therein and shall promptly pay the same to such other
party.
[SECTION 4. Consent of the Company and the Agent. This
Agreement is conditioned upon the consent of the Company and the
Agent pursuant to Section 9.8 of the Credit Agreement. The
execution of this Agreement by the Company and the Agent is
evidence of this consent. Pursuant to Section 9.8 the Company
agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and acceptance provided for
herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes
no representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition,
or statements of the Company, or the validity and enforceability of
the obligations of the Company in respect of the Credit Agreement
or any Note. The Assignee acknowledges that it has, independently
and without reliance on the Assignor, and based on such documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will
continue to be responsible for making its own independent appraisal
of the business, affairs and financial condition of the Company.
SECTION 6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Illinois.
SECTION 7. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were
upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By
Title:
[ASSIGNEE]
By
Title:
[PREMARK INTERNATIONAL, INC.
By
Title:]
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Agent
By
Title:
EXHIBIT H
PURCHASE/LEASEBACK TRANSACTION SUMMARY
In December 1991, Premark International, Inc. ("Premark"),
through two of its subsidiaries, entered into a purchase/leaseback
transaction with a leasing company (the "seller"). Premark
purchased certain computer equipment totalling $35.85 million and
immediately leased the equipment back to the seller for 66 months.
At the same time, a majority of the lease receivables were sold on
a non-recourse basis for $30.5 million cash.
When purchased, the computer equipment was under lease to
third parties by the seller. The equipment and the user leases are
subject to existing liens in favor of the seller's lenders. The
liens may not be removed or subordinated to Premark's interest.
Additional liens may be placed upon the computer equipment which
may be subject to the lease. Premark has no obligation in respect
of the seller's financing.
EXHIBIT I
None.
WAIVER AND FIRST AMENDMENT TO CREDIT AGREEMENT
THIS WAIVER AND FIRST AMENDMENT TO CREDIT AGREEMENT ("Waiver and
Amendment"), dated as of June 6, 1996, is entered into by and among PREMARK
INTERNATIONAL, INC. (the "Company"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as agent for itself and the Banks (the "Agent"), and the
several financial institutions party to the Credit Agreement (collectively,
the "Banks").
RECITALS
A. The Company, the Banks and the Agent are parties to a Credit
Agreement, dated as of May 17, 1996 (as amended, modified or supplemented, the
"Credit Agreement"; capitalized terms used herein without definition shall
have the meanings set forth in the Credit Agreement) pursuant to which the
Agent and the Banks have agreed, subject to the satisfaction or waiver of
certain conditions to effectiveness contained therein, to extend certain
credit facilities to the Company.
B. The Company has requested (i) that the merger of Premark FEG with
and into the Company which became effective May 23, 1996 (the "Merger") be
consented to by the Banks and that waivers be given by the Banks with respect
thereto and (ii) the Credit Agreement be amended to permit, subject to certain
conditions, the Company or one or more of its Wholly-Owned Consolidated
Subsidiaries to transfer from time to time the assets which respectively
comprise the Company's "Food Equipment Group" and its "Decorative Products
Group" (each as described in the Company's 1995 Form 10-K) to the Company or
to another of the Company's Wholly-Owned Consolidated Subsidiaries (each such
transfer, "Permitted Transfer").
C. The Banks are willing (i) to consent to the Merger and give
certain waivers with respect thereto and (ii) to amend the Credit Agreement to
permit, subject to certain conditions, the Permitted Transfers.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Merger Event and Waiver.
(a) Subject to and upon the terms and conditions hereof
(including, without limitation, the occurrence of the Amendment Effective
Date), the Banks hereby consent to the occurrence of the Merger and waive any
violation of the provisions of Section 6.1(k) of the Credit Agreement
resulting therefrom.
(b) Subject to the consent and waiver in clause (a) above,
nothing contained herein shall be deemed a waiver of (or otherwise affect the
Agent's or the Banks' ability to enforce) any Default or Event of Default,
including without limitation (i) any Default or Event of Default as may now or
hereafter exist and arise from or otherwise be related to the Merger
(including without limitation any cross-default arising under the Credit
Agreement by virtue of any matters resulting from the Merger), and (ii) any
Default or Event of Default arising at any time after the Amendment Effective
Date and which is the same as or similar to the Merger, to the extent the same
is prohibited under the Credit Agreement, as amended hereby.
2. Amendments to Credit Agreement.
(a) The following definitions are hereby added (and are to be
inserted in alphabetical order) to Section 1.1 of the Credit Agreement:
"'FEG Assets' shall mean the assets which comprise the Company's
'Food Equipment Group', as the same are described in the Company's 1995
Form 10-K, and including, without limitation, any assets hereafter
acquired by the 'Food Equipment Group' or any successor thereto."
"'Wilsonart Assets' shall mean the assets which comprise the
portion of the Company's 'Decorative Products Group', as the same are
described in the Company's 1995 Form 10-K, owned, operated, sold,
produced or manufactured by Wilsonart International, Inc. ('Wilsonart')
and including, without limitation, any assets hereafter acquired by
Wilsonart, its Subsidiaries and any successors thereto."
(b) Section 6.1(k) of the Credit Agreement is hereby deleted in
its entirety and the following is inserted in lieu thereof:
"(k) the Company shall, or any Subsidiaries of the Company shall,
without the written consent of the Agent and the Required Banks, sell,
convey, transfer, or otherwise dispose of (whether in one transaction or
in a series of transactions and whether by way of direct sale,
conveyance, transfer, disposition or by merger or consolidation), or
agree to any of the foregoing, all or substantially all of
(A) the assets which comprise the FEG Assets or
(B) the assets which comprise the Wilsonart Assets
in each case (whether now owned or hereafter acquired) to or in favor of
any Person other than (1) the Company or (2) a Wholly-Owned Consolidated
Subsidiary; and"
3. Representations and Warranties. The Company hereby represents and
warrants to the Agent and the Banks as follows:
(a) Subject to the consent and waiver of the Banks in Section
1(a) above, no Default or Event of Default has occurred and is continuing or
would be in existence if the Credit Agreement were effective as of the date
hereof.
(b) Subject to the consent and waiver of the Banks in Section
1(a) above, all representations and warranties of the Company contained in the
Credit Agreement are true and correct and all of the conditions to
effectiveness thereof set forth in Section 3.1 of the Credit Agreement have
been satisfied.
(c) The Company is entering into this Waiver and Amendment on
the basis of its own investigation and for its own reasons, without reliance
upon the Agent and the Banks or any other Person.
4. Amendment Effective Date. This Waiver and Amendment will become
effective as of June 6, 1996 (the "Amendment Effective Date"), provided that
each of the following conditions precedent is satisfied on or before June 30,
1996:
(a) the Agent has received from the Company and each of the
Banks a duly executed original (or, if elected by the Agent, an executed
facsimile copy) of this Waiver and Amendment;
(b) all representations and warranties contained herein are true
and correct as of the date the condition specified under clause (a) above is
satisfied.
5. Reservation of Rights. The Company acknowledges and agrees that
neither the Agent's nor the Banks' forbearance in exercising their rights and
remedies in connection with the Merger, nor the execution and delivery by the
Agent and the Banks of this Waiver and Amendment, shall be deemed (i) to
create a course of dealing or otherwise obligate the Agent or the Banks to
forbear or execute similar waivers under the same or similar circumstances in
the future, or (ii) to waive, relinquish or impair any right of the Agent or
the Banks to receive any indemnity or similar payment from any Person or
entity as a result of any matter arising from or relating to the Merger.
6. Miscellaneous.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein to such Credit Agreement shall henceforth
refer to the Credit Agreement as amended by this Waiver and Amendment. This
Waiver and Amendment shall be deemed incorporated into, and a part of, the
Credit Agreement.
(b) This Waiver and Amendment shall be binding upon and inure to
the benefit of the parties hereto and thereto and their respective successors
and assigns. No third party beneficiaries are intended in connection with
this Waiver and Amendment.
(c) This Waiver and Amendment shall be governed by and construed
in accordance with the law of the State of Illinois.
(d) This Waiver and Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each
of the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by the Agent of a facsimile transmitted document purportedly
bearing the signature of a Lender or the Company shall bind such Lender or the
Company, respectively, with the same force and effect as the delivery of a
hard copy original. Any failure by the Agent to receive the hard copy
executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document of the
party whose hard copy page was not received by the Agent.
(e) This Waiver and Amendment, together with the Credit
Agreement, contains the entire and exclusive agreement of the parties hereto
with reference to the matters discussed herein and therein. This Waiver and
Amendment supersedes all prior drafts and communications with respect
thereto. This Waiver and Amendment may not be amended except in accordance
with theprovisions of Section 9.6 of the Credit Agreement.
(f) If any term or provision of this Waiver and Amendment shall
be deemed prohibited by or invalid under any applicable law, such provision
shall be invalidated without affecting the remaining provisions of this Waiver
and Amendment or the Credit Agreement, respectively.
(g) The Company covenants to pay to or reimburse the Agent, upon
demand, for all costs and expenses (including reasonable Attorney Costs)
incurred in connection with the development, preparation, negotiation,
execution and delivery of this Waiver and Amendment.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Waiver and Amendment as of the date first above written.
PREMARK INTERNATIONAL, INC.
By:__________________________
Title:_______________________
[Two additional signature pages follow]
BANKERS TRUST CO.
By
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
Title:
CHEMICAL BANK
By
Title:
ROYAL BANK OF CANADA
By
Title:
THE FUJI BANK, LIMITED
By
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By
Title:
COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO
BRANCH
By
Title:
CREDIT LYONNAIS CHICAGO BRANCH
By
Title:
THE NORTHERN TRUST COMPANY
By
Title:
BANK OF AMERICA ILLINOIS
By
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Agent
By
Title:
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Amendment"), dated as of
October 3, 1997, is entered into by and among PREMARK INTERNATIONAL, INC. (the
"Company"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
agent for itself and the Banks (the "Agent"), and the several financial
institutions party to the Credit Agreement (collectively, the "Banks").
RECITALS
A. The Company, the Banks and the Agent are parties to a Credit
Agreement, dated as of May 17, 1996 (as amended, modified or supplemented, the
"Credit Agreement"; capitalized terms used herein without definition shall
have the meanings set forth in the Credit Agreement) pursuant to which the
Agent and the Banks have agreed, subject to the satisfaction or waiver of
certain conditions to effectiveness contained therein, to extend certain
credit facilities to the Company.
B. The Company has requested an extension of the Termination Date to
October 3, 2002 and the Banks are willing to consent to such extension.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Amendment.
(a) Subject to and upon the terms and conditions hereof
(including, without limitation, the occurrence of the Amendment Effective
Date), the Banks hereby consent to the amendment of the definition of
"Termination Date" in Section 1.1 of the Credit Agreement to read as follows:
"Termination Date" means October 3, 2002.
2. Representations and Warranties. The Company hereby represents and
warrants to the Agent and the Banks as follows:
(a) No Default or Event of Default has occurred and is
continuing.
(b) All representations and warranties of the Company contained
in Article IV of the Credit Agreement are true and correct as of the date
hereof, except to the extent the same expressly relate to an earlier date.
References to the Company's 1995 Form 10-K are understood, for purposes of
this provision, to be references to the Company's 1996 Form 10-K.
(c) The Company is entering into this Amendment on the basis of
its own investigation and for its own reasons, without reliance upon the Agent
and the Banks or any other Person.
3. Amendment Effective Date. This Amendment will become effective as
of October 3, 1997 (the "Amendment Effective Date"), provided on or before
October 3, 1997 the Agent has received from the Company and each of the Banks
a duly executed original (or, if elected by the Agent, an executed facsimile
copy) of this Amendment.
4. Reservation of Rights. The Company acknowledges and agrees that
the execution and delivery by the Agent and the Banks of this Amendment shall
not be deemed (i) to create a course of dealing or otherwise obligate the
Agent or the Banks to execute similar amendments under the same or similar
circumstances in the future, or (ii) to waive, relinquish or impair any right
of the Agent or the Banks under the Credit Agreement.
5. Miscellaneous.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein to such Credit Agreement shall henceforth
refer to the Credit Agreement as amended by this Amendment. This Amendment
shall be deemed incorporated into, and a part of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with this
Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of Illinois.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each
of the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by the Agent of a facsimile transmitted document purportedly
bearing the signature of a Lender or the Company shall bind such Lender or the
Company, respectively, with the same force and effect as the delivery of a
hard copy original. Any failure by the Agent to receive the hard copy
executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document of the
party whose hard copy page was not received by the Agent.
(e) This Amendment, together with the Credit Agreement, contains
the entire and exclusive agreement of the parties hereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior
drafts and communications with respect thereto. This Amendment may not be
amended except in accordance with the provisions of Section 9.6 of the Credit
Agreement.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or
the Credit Agreement, respectively.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment as of the date first above written.
PREMARK INTERNATIONAL, INC.
By
Title:
[Two additional signature pages follow]
BANKERS TRUST CO.
By
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
Title:
THE CHASE MANHATTAN BANK
By
Title:
ROYAL BANK OF CANADA
By
Title:
THE FUJI BANK, LIMITED
By
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By
Title:
COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO
BRANCH
By
Title:
CREDIT LYONNAIS CHICAGO BRANCH
By
Title:
THE NORTHERN TRUST COMPANY
By
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (as successor to BANK OF
AMERICA ILLINOIS)
By
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Agent
By
Title:
ACKNOWLEDGMENT AND CONSENT TO CREDIT AGREEMENT
THIS ACKNOWLEDGMENT AND CONSENT TO CREDIT AGREEMENT (this
"acknowledgment and
Consent"), dated as of October 3, 1997, is entered into by and among PREMARK
INTERNATIONAL, INC. (the "Company"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as agent for itself and the Banks (the "Agent"), and the
several financial institutions party to the Credit Agreement (collectively,
the "Banks").
RECITALS
A.The Company, the Banks and the Agent are parties to a Credit Agreement,
dated as of May 17, 1996 (as amended, modified or supplemented, the "Credit
Agreement"; capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement) pursuant to which the Agent and
the Banks have agreed, subject to the satisfaction or waiver of certain
conditions to the effectiveness contained therein, to extend certain credit
facilities to the Company.
B. In connection with the Second Amendment to the Credit Agreement dated as
of October 3, 1997 (the "Second Amendment") pursuant to which the Company
requested an extension of the Termination Date to October 3, 2002, Credit
Lyonnaise Chicago Branch has indicated that its Commitment was to terminate
while Banks were willing to consent to such extension.
C. The undersigned Banks have agreed, consistent with commitment letters
previously delivered to the Agent, that, in the case of Bank of America
National Trust and Savings Association, its Commitment will be $34,000,000,
and, in the case of the other undersigned Banks, that their respective
Commitments will each be $27,000,000, respectively, in order to replace the
Commitments of the terminating institution and that they will ratify the
Second Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Acknowledgment and Consent.
(a) Subject to and upon the terms and conditions hereof, the undersigned Banks
(other than Bank of America National Trust and Savings Association) hereby
acknowledge and agree that their respective Commitments will each be
$27,000,000 and Bank of America National Trust and Savings Association hereby
acknowledges and agrees that its Commitment will be $34,000,000, in all cases
effective as of the date first written above.
(b) Each of the Company and the undersigned Banks ratifies in all respect the
Second Amendment.
2. Reservation of Rights. The Company acknowledges and agrees that the
execution and delivery by the Agent and the undersigned Banks of this
Acknowledgment and Consent shall not be deemed (i) to create a course of
dealing or otherwise obligate the Agent or the undersigned Banks to execute
similar acknowledgments and consent under the same or similar circumstances in
the future, or (ii) to waive, relinquish or impair any right of the Agent or
the undersigned Banks under the Credit Agreement.
3. Miscellaneous.
(a) Except as herein expressly acknowledged and consented, all terms,
covenants and provision of the Credit Agreement are and shall remain in full
force and effect and all references therein to such Credit Agreement shall
henceforth refer to the Credit Agreement as acknowledged and consent to by
this Acknowledgment and Consent. This Acknowledgment and Consent shall be
deemed incorporated into, and a part of, the Credit Agreement.
(b) This Acknowledgment and Consent shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with this
Acknowledgment and Consent.
(c) This Acknowledgment and Consent shall be governed by and construed in
accordance with the law of the State of Illinois.
(d) This acknowledgment and Consent may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each
of the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by the Agent of a facsimile transmitted document purportedly
bearing the signature of an undersigned Bank or the Company shall bind such
undersigned Bank or the Company, respectively, with the same force and effect
as the delivery of a hard copy original. Any failure by the Agent to receive
the hard copy executed original of such document shall not diminish the
binding effect of receipt of the facsimile transmitted executed original of
such document of the party whose hard copy page was not received by the Agent.
(e) This Acknowledgment and Consent, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with
reference to the matters discussed herein and therein. This Acknowledgment
and Consent supersedes all prior drafts and communications with respect
thereto. This Acknowledgment and Consent may not be amended except in
accordance with the provisions of Section 9.6 of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Acknowledgment and Consent as of the date first above written.
PREMARK INTERNATIONAL, INC.
By:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
Title:
BANKERS TRUST CO.
By:
Title
THE CHASE MANHATTAN BANK
By:
Title:
ROYAL BANK OF CANADA
By:
Title:
THE FUJI BANK, LIMITED
By:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:
Title:
COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO BRANCH
By:
Title:
THE NORTHERN TRUST COMPANY
By:
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (as successor to
BANK
OF AMERICA ILLINOIS)
By:
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent
By:
Title:
EXHIBIT 10.3
Premark International, Inc. Supplemental Plan
(As Amended and Restated Effective April 1, 1997)
Contents
Section
Article I. Establishment and Construction
1.1 Establishment and Amendment
1.2 Purpose
Article II. Definitions, Construction, and Interpretation
2.1 Definitions
2.2 Gender and Number
2.3 Employment Rights
2.4 Severability
2.5 Applicable Law
Article III. Benefit Limitations Relating To Defined Contribution Plans
3.1 Participation
3.2 Benefit Amount
3.3 Earnings
3.4 Establishment of Accounts
3.5 Benefit Payment or Commencement
3.6 Form of Distribution
Article IV. Benefit Limitations Relating to Defined Benefit Plans
4.1 Participation
4.2 Benefit Amount
4.3 Establishment of Accounts
4.4 Benefit Payment or Commencement
4.5 Form of Distribution
Article V. Change of Control
5.1 Participation
5.2 Benefit Amount
5.3 Establishment of Accounts
5.4 Benefit Payment
5.5 Form of Distribution
Article VI. General Provisions
6.1 Funding
6.2 Vesting
6.3 Form of Distribution
6.4 Death Benefits
6.5 Administration
6.6 Claims and Appeals
6.7 Expenses
6.8 Indemnification and Exculpation
6.9 Interests Not Transferable
6.10 Action by the Corporation or Affiliates
6.11 Effect on Other Benefit Plans
6.12 Tax Liability
Article VII. Amendment and Termination
7.1 Amendment and Termination
<PAGE>
Article I. Establishment and Construction
1.1 Establishment and Amendment
Premark International, Inc. (the "Corporation") presently maintains an
unfunded deferred compensation plan, known as "The Premark International,
Inc. Supplemental Plan", which provides benefits to certain eligible employees
of the Corporation and its Affiliates. This plan was established effective as
of September 28, 1986, and was last amended and restated effective as of
September 1, 1994. Said plan is hereby further amended and restated as set
forth herein effective as of April 1, 1997.
1.2 Purpose
The Corporation and its Affiliates sponsor several defined benefit plans and
defined contribution plans for the benefit of their U.S. employees and their
beneficiaries. These plans cover a variety of employee groups and are
intended to operate as "qualified plans" as that term is defined under the
Code.
These qualified plans are subject to limitations under section 415 of the
Code that sometimes result in the diminution of allocations and benefits
payable on behalf of certain employees. This Plan is established to offset
this diminution for eligible employees. These benefits are intended to
constitute an "unfunded excess benefit plan" under section 3(36) of ERISA.
These qualified plans also contain certain other restrictions, including
restrictions under sections 401(a)(17), 401(k), and 402(g), that sometimes
result in a diminution of benefits available to certain highly compensated
employees. This Plan is also established to offset this diminution, in part
and to the extent provided herein, for eligible employees. These benefits
are intended as constituting an unfunded deferred compensation plan for a
select group of highly compensated employees, as described in sections 201(2),
301(a)(3), and 401(a)(1) of ERISA.
<PAGE>
Article II. Definitions, Construction, and Interpretation
2.1 Definitions
The following terms shall have the meaning stated below unless the context
clearly indicates otherwise.
(a) "Administrator(s)" means such Employee, Employees, or committee of
Employees as may from time to time be designated by the Board of Directors of
the Corporation ("Board") or a committee of the Board to have the authority
and control over some specified portion of the administration and management
of the Plan.
(b)"Affiliate" means--
(1) any corporation other than an Employer, i.e., either a subsidiary
corporation or an affiliated or associated corporation of an Employer, which
together with an Employer is a member of a "controlled group" of corporations
(as defined in section 414(b) of the Code);
(2) any organization which together with an Employer is under "common
control" (as defined in section 414(c) of the Code);
(3) any organization which together with an Employer is an "affiliated
service group" (as defined in section 414(m) of the Code); or
(4) any other entity required to be aggregated with an Employer pursuant
to regulations under section 414(o) of the Code.
(c) "Change of Control" effective November 6, 1996, means the following
events:
(1) the acquisition, other than from the Corporation, by any individual,
entity, or group (within the meaning of section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of securities representing twenty (20) percent or more of the
combined voting power of the Corporation's securities entitled to vote in the
election of directors; provided, however, that any acquisition by the
Corporation or any of its subsidiaries, or by any employee benefit plan (or
related trust) sponsored or maintained by the Corporation or any of its
subsidiaries, or any merger or acquisition following which more than sixty
(60) percent of the combined voting power of the securities of the resulting
parent corporation is held by the holders of the combined voting power of the
Corporation's securities in substantially the same proportion as their
ownership immediately prior to such transaction and the Incumbent Board still
constitutes at least a majority of the Board, shall not constitute a Change
of Control; or
(2) individuals who, as of November 6, 1996, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board, provided that any individual becoming a director subsequent to
November 6, 1996, whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office is
in connection with an actual or threatened election contest (as such terms are
used in Rule 14a-11 of regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents; or
(3) approval by the shareholders of the Corporation of--
(A) a complete liquidation or dissolution of the Corporation, or
(B) the sale or other disposition of all or substantially all of the
assets of the Corporation, or
(C) a reorganization, merger, or consolidation of the Corporation;
(1)provided that such transaction shall not constitute a Change of
Control if, following such transaction, the holders of the combined voting
power of the Corporation's securities own more than sixty (60) percent of the
combined voting power of the securities of the Corporation which acquires the
assets in (B) above or the parent Corporation which results from the
reorganization, merger or consolidation in (C) above and the Incumbent Board
still constitutes at least a majority of such entities; or
(D) the sale or other disposition, in response to a pending or
threatened Change of Control, of a majority of the voting stock or all or
substantially all of the assets of the Corporation comprising the decorative
laminate business or the food equipment business, if the sales or operating
income of such business constituted at least twenty (20) percent of the
Corporation's consolidated sales or operating income during the most recently
completed fiscal year. The Board shall determine, in its sole discretion,
whether the sale or other disposition of such businesses is in response to a
pending or threatened Change of Control. If the Board determines that such
transaction is not in response to a pending or threatened Change of Control,
the Participant shall have no right to the benefits resulting from a Change
of Control; provided, however, that the Board shall review the circumstances of
such transaction, including management's role in initiating the transaction,
its effect on shareholder value, and its effect on the Participant's
responsibilities and terms of employment, and shall determine, in its sole
discretion, whether all or any part of the benefits resulting from a Change
of Control shall be awarded to the Participant.
(d) "Code" means the Internal Revenue Code of 1986, as it may be amended from
time to time.
(e) "Defined Benefit Plan" means any of the following qualified defined
benefit plans on account of which a Participant becomes eligible under this
Plan:
(1) the Premark International, Inc. Base Retirement Plan, or
(2) the Retirement Plan for Salaried Employees of the PMI Food Equipment
Group.
(f) "Defined Contribution Plan" means the Premark International, Inc.
Retirement Savings Plan.
(g) "Employer" means the Corporation and its Affiliates the employees of
which participate in any Defined Benefit Plan or Defined Contribution Plan.
(h) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
(i) "Highly Compensated Employee" means an employee of the Employer whom the
Administrator(s) determines to be a highly compensated employee within the
meaning of Code section 414(q).
(j) "Participant" means a Highly Compensated Employee or former Highly
Compensated Employee or Level I Employee, who meets the participation
requirements set forth in section 3.1, 4.1, or 5.1 (whichever is applicable)
of this Plan.
(k) "Retirement" means a Participant's termination of employment with the
Corporation and Affiliates on or after the date the Participant either--
(1) has become eligible to receive an immediate retirement benefit under
the Defined Benefit Plan or, in the event the Participant is not covered by
the Defined Benefit Plan, the Participant either has attained (A) age
fifty-five (55) with ten (10) years of service or (B) age sixty-five (65), or
(2) has immediate coverage under a retiree medical plan maintained by the
Employer.
Unless the context clearly indicates otherwise, terms not defined in this
section shall have the meaning specified in the applicable Defined Benefit
Plan or Defined Contribution Plan (if defined therein). Where the defined
meaning is intended, the term is capitalized.
2.2 Gender and Number
Unless the context clearly requires otherwise, masculine pronouns whenever
used shall include the feminine and neuter pronouns, and the singular shall
include the plural.
2.3 Employment Rights
Establishment of the Plan shall not be construed to give any Participant the
right to be retained by the Employer or to receive any benefits not
specifically provided by the Plan.
2.4 Severability
If a provision of this Plan shall be held illegal or invalid, the illegality
or invalidity shall not affect the remaining parts of the Plan and the Plan
shall be construed and enforced as if the illegal or invalid provision had
not been included in this Plan. The Corporation shall have the privilege and
opportunity to correct and remedy such questions of illegality or invalidity
by amendment as provided in the Plan.
2.5 Applicable Law
(a) This Plan, to the extent considered an "unfunded supplemental executive
retirement plan", is fully exempt from Titles II, III, and IV of ERISA. The
Plan shall be governed and construed in accordance with Title I of ERISA.
(b) In addition, this Plan, to the extent considered an "unfunded excess
benefit plan", is fully exempt from the provisions of ERISA pursuant to
section 4(B)(5) thereof.
(c) To the extent not governed by ERISA, the Plan shall be governed by and
construed according to the laws of the State of Illinois.
<PAGE>
Article III. Benefit Limitations Relating to Defined Contribution Plans
3.1 Participation
A person who is a Highly Compensated Employee or who, on or after January 1,
1995, is a Level I Employee (who is designated as such by the
Administrator(s)), and who is a participant in a Defined Contribution Plan
shall be an eligible Participant under this Article for a plan year on the
first date upon which employee contributions, employer contributions,
forfeitures, compensation, or allocations under the applicable Defined
Contribution Plan are restricted for that plan year as a result of the
provisions of Code sections 415, 401(a)(17), and/or 402(g), or any successor
provisions thereto.
3.2 Benefit Amount
For each plan year of the Defined Contribution Plan, a Participant shall be
credited with a benefit equal to the sum of the amounts in (a) and (b) below--
(a) Employer-Provided Benefits. The amount of Employer-Provided Benefits
shall equal the sum of:
(1) the excess of (A) the amount which would have been allocated for the
plan year, but for the limitations described in section 3.1, over (B) the
amount allocated for the plan year, to the Participant's Defined Contribution
Plan account balance, without regard to the rate of contribution elected by
the Participant under the Defined Contribution Plan; and,
(2) provided that the Participant has made a timely submission to the
Administrator of an election to make before-tax deferrals for the plan year
to this Plan, the excess of (A) the amount which would have been allocated for
the plan year, but for the limitations described in section 3.1, over (B) the
amount allocated for the plan year, to the Participant's Defined Contribution
Plan account, where both (A) and (B) are based on the rate of contribution
specified in a timely election by the Participant under this Plan and the
Defined Contribution Plan, as in effect on January 1 of such plan year,
subject to the percentage of pay restriction on elective deferrals of Highly
Compensated Employees imposed by the Corporation under the Defined
Contribution Plan for such plan year.
For purposes of this subsection, contributions made pursuant to a salary
reduction agreement shall be deemed a Participant contribution and not an
Employer-provided benefit.
(b) Salary Reduction Contributions. Upon timely submission to the
Administrator(s) of an election to participate, a Participant shall be
eligible to make before-tax deferrals to this Plan equal to the amount of
contributions that would have been made to the Defined Contribution Plan
pursuant to a salary reduction agreement but for the limitations described in
section 3.1, and subject to the percentage of pay restriction on elective
deferrals of Highly Compensated Employees imposed by the Corporation in order
to pass the actual deferral percentage and actual compensation percentage
discrimination tests of Code sections 401(k) and 401(m). Such amount shall
be based on the rate of salary reductions elected by the Participant under the
Defined Contribution Plan as in effect on January 1 of each year for which an
election is effective, subject to the restrictions imposed by the Corporation
as mentioned above.
(C) Election to Participate. To be effective for a plan year, an election to
participate must be communicated in writing to the Administrator(s) prior to
January 1st of such year. Once an election is made, it shall continue in
effect unless and until the Participant notifies the Administrator(s) in
writing of his intention to change or cancel his election, which cancellation
or change shall not be effective for purposes of this Plan until the first
day of the calendar year following the year in which the Administrator(s)
receives such notification.
(1) For a person first becoming an eligible Participant under this
Article 3.2(b), such election to participate must be communicated in writing
to the Administrator(s) no later than thirty (30) days after the date he is
notified of his eligibility to make such deferrals, in which event--
(A) the election shall be effective for the first pay cycle occurring
after the Administrator(s) receives such written election, and
(B) deferrals pursuant to such election shall be determined with
reference to contributions to the Defined Contribution Plan beginning with
said pay cycle.
(2) If an election to participate is not timely filed, the eligible
Participant may elect to participate at the beginning of any subsequent
calendar year by submitting an election to the Administrator(s) prior to the
beginning of any subsequent calendar year.
(d) Contribution Rate Changes. Notwithstanding the fact that a Participant
changes the rate of contribution or ceases contributions to the Defined
Contribution Plan during a calendar year, the benefit amount of
Employer-Provided Benefits and Salary Reduction Contributions shall continue
for the balance of the calendar year at the rate in effect at the beginning
of the calendar year as if no change had been made.
3.3 Earnings
The benefit amount for each Participant pursuant to section 3.2 shall be
adjusted and credited to each Participant's account at the end of each
calendar year quarter ("Quarter") to reflect an assumed rate of earnings, as
follows:
(a) The rate of earnings communicated to the participants in the Defined
Contribution Plan with respect to the Fixed Income Core Investment Fund (the
"Fund") at the end of each Quarter (the "Quarterly Rate"). The amount of
earnings credited to each Participant shall be calculated by taking the
balance in the Participant's account at the end of the prior Quarter, plus
one-half the amount of the contributions to the account during the current
Quarter, times the Quarterly Rate.
(b) (1) In the event of a distribution (whether in a lump sum or installments
and whether or not deferred), earnings shall be credited to the Participant's
account in the manner and amount specified in 3.3(a) through the end of the
Quarter preceding the month in which the distribution is made or installment
payments begin. In addition, for any month(s) less than a full Quarter, the
rate of earnings credited to the account shall be the actual monthly rate of
return on the Fund for said month(s), times the account balance at the end of
the preceding month.
(2) In the event the Participant elects to receive the distribution in
installments pursuant to section 6.3(b), the benefit amount shall be further
credited with an assumed rate of earnings over the installment payment period
at the actual annualized rate of return of the Fund for the year preceding
the year in which installment payments begin. The rate shall be credited so
that the level payments made pursuant to section 6.3(b) shall fully amortize
the account balance and the earnings thereon and each payment shall consist
of a portion of the account balance as of the date benefits thereunder commence
and of earnings on the unpaid portion of the account balance. If any amounts
are added to a Participant's account as the result of any supplemental or
subsequent contributions thereto, the payments of the Participant's benefit
shall be revised (as of the time of such additional contribution) to reflect
the additional amounts.
3.4 Establishment of Accounts
An account shall be established on the Corporation's financial ledgers for
Participants entitled to a benefit under section 3.2. The amounts credited
to the account shall be equal to the amounts of the Participants' benefit under
section 3.2 and section 3.3.
3.5 Benefit Payment or Commencement
(a) Subject to Article V, in the event the Participant is to receive a lump
sum distribution under 6.3(a) or elects to receive an immediate lump sum
distribution under 6.3(b), the Participant's account established under
section 3.4 shall be payable as soon as practicable in the Quarter following
the Quarter of the Participant's termination of employment with the Corporation
and Affiliates.
(b) Subject to Article V, each Participant who satisfies the requirements of
section 6.3(b) may elect to defer the lump sum payment or commencement of
installment payments. In such event, the payment or commencement of
installments shall be made as soon as practicable after the end of the
Quarter following the first anniversary of termination of employment with the
Corporation and Affiliates. The Participant shall be permitted to revoke
such election or to change the election in a manner consistent with section
6.3(b), provided that such a revocation or change shall not be effective
unless the Participant's new written election has been on file with the
Administrator(s) for at least twelve (12) months prior to the date of
Participant's termination of employment with the Employer.
(C) To the extent the payment or commencement of a benefit is deferred under
this section, the amount so deferred shall continue to accrue an assumed rate
of earnings, as described in subsection 3.3(b).
3.6 Form of Distribution
The account established for a Participant under section 3.4, in conjunction
with the account(s) established under section 4.3 shall be payable in the
same manner described under section 6.3; or if applicable, section 5.4.
<PAGE>
Article IV. Benefit Limitations Relating to Defined Benefit Plans
4.1 Participation
An employee who is a Highly Compensated Employee or who on or after January
1, 1998, is a Level I Employee (who is designated as such by the
Administrator(s)) and who is a participant in a Defined Benefit Plan shall
become a Participant under this Article on the first date upon which his
compensation and/or benefits under the applicable Defined Benefit Plan are
restricted as a result of the provisions of Code sections 415 and/or
401(a)(17).
4.2 Benefit Amount
A Participant shall receive a benefit equal to the actuarial equivalent of
the benefit under the Defined Benefit Plan that he is prevented from receiving
as a result of the restrictions described in section 4.1. This amount is equal
to the excess of (a) over (b) below:
(a) the amount of benefit which the Participant would have received under the
Defined Benefit Plan if his benefits under any of such Defined Benefit Plan
had not been reduced by the restrictions described in section 4.1; and
(b) the amount of benefit the Participant actually receives under the Defined
Benefit Plan.
For purposes of this section, "actuarial equivalent" shall be determined on
the same basis as single sum distributions payable from the Defined Benefit
Plan and subject to the same actuarial factors and adjustments.
4.3 Establishment of Accounts
An account shall be established on the Corporation's financial ledgers for
Participants entitled to a benefit under section 4.2. The amount credited
shall be equal to the amount of the Participant's benefit under section 4.2,
and, if applicable, adjusted for earnings pursuant to section 4.4(c).
4.4 Benefit Payment or Commencement
(a) Subject to Article V and except as otherwise specified in section 6.3(b),
the benefit payable under Section 4.2 shall be payable to the Participant as
soon as practicable in the Quarter following the Quarter of the Participant's
termination of employment with the Corporation and Affiliates.
(b) Subject to Article V, each Participant who satisfies the requirements of
section 6.3(b) may elect to defer the lump sum payment or commencement of
installment payments. In such event, the payment or commencement of
installments shall be made as soon as practicable after the end of the
Quarter following the first anniversary of termination of employment with the
Corporation and Affiliates. The Participant shall be permitted to revoke
such election or to change the election in a manner consistent with
section 6.3(b), provided that such a revocation or change shall not be
effective unless the Participant's new written election has been on file with
the Administrator(s) for at least twelve (12) months prior to the date of
Participant's termination of employment with the Employer.
(c) To the extent the payment or commencement of a benefit is deferred under
this section, the amount so deferred shall accrue an assumed rate of earnings
in the manner and amount described in section 3.3(b).
4.5 Form of Distribution
The account established for a Participant under section 4.3, in conjunction
with the account(s) established under section 3.4 shall be payable in the
manner described under section 6.3; or if applicable, section 5.4
Article V. Change of Control
5.1 Participation
A Participant shall become entitled to a benefit under this Article only if
covered by the Corporation's change of control policy or an employment
agreement with the Corporation and Affiliates which becomes effective upon a
Change of Control.
5.2 Benefit Amount
A Participant shall receive a benefit only if there is a Change of Control of
the Corporation and the Participant terminates employment with the
Corporation and Affiliates as a result of the Change of Control pursuant to
an employment agreement or the Corporation's change of control policy. The
benefit amount payable will equal the excess of (a) over (b) below:
(a) the amount of benefit which the Participant would have received under
this Plan and all of his Employer-sponsored qualified retirement plans had the
Participant been fully vested in such plans at his termination of employment
with the Corporation and its Affiliates; and
(b) the amount of benefit in which the Participant has a vested interest
under this Plan and all of his Employer-sponsored qualified retirement plans
at his termination of employment with the Corporation and Affiliates.
5.3 Establishment of Accounts
An account shall be established on the Corporation's financial ledgers for
Participants entitled to a benefit under this Article V. The amount credited
shall be equal to the amount of the Participants' benefit under section 5.2.
5.4 Benefit Payment
Notwithstanding any other term or provision of this Plan and in lieu of any
other benefit payable under this Plan, payment of benefits under this Article
V, if any, and the benefit amount payable under Articles III and IV shall be
made within thirty (30) days following the Participant's termination of
employment with the Corporation and Affiliates.
5.5 Form of Distribution
Such benefits described in section 5.4 shall be paid in a single sum
payment. In determining the single sum value of a benefit payable as a
result of participation in a Defined Benefit Plan, the single sum shall be
determined on the same basis as single sum distributions payable from the
Defined Benefit Plan and subject to the same actuarial factors and adjustments.
<PAGE>
Article VI. General Provisions
6.1 Funding
All amounts paid under this Plan shall be paid in cash from the general
assets of the Employer. Such amounts shall be reflected on the accounting
records of the Corporation but shall not be construed to create or require
the creation of a trust, custodial account, or escrow account. No Participant
shall have any right, title, or interest whatever in or to any investment
reserves, accounts or funds that the Corporation and Affiliates may purchase,
establish, or accumulate to aid in providing benefits under this Plan. Nothing
contained in this Plan, and no action taken pursuant to its provisions, shall
create a trust or fiduciary relationship of any kind between the Corporation
and Affiliates and an employee or any other person. Neither a Participant nor
beneficiary of a Participant shall acquire any interest greater than that of
an unsecured creditor.
6.2 Vesting
Benefits under this Plan shall become nonforfeitable when and to the extent
they would have become nonforfeitable had they been attributable to the
applicable qualified plan, except as otherwise provided in section 5.2.
Notwithstanding the preceding sentence, a Participant or his beneficiary
shall have no right to benefits under this Plan if the Administrator(s)
determines that he engaged in a willful, deliberate, or gross act of
commission or omission which is substantially injurious to the finances or
reputation of the Employer.
6.3 Form of Distribution
Subject to Article V,
(a) if the total value of the account(s) established for a Participant under
section 3.4 and/or section 4.3 is equal to or less than $100,000, the total
Plan benefit shall be payable in a single-sum distribution on the date
determined pursuant to sections 3.5(a) and 4.4(a). No other form of
distribution will be available to the Participant.
(b) if the total value of the account(s) established for a Participant under
section 3.4 and/or section 4.3 exceeds $100,000, the total Plan benefit shall
be payable in a single sum distribution on the date determined pursuant to
sections 3.5(a) and/or 4.4(a). However, each Participant may elect that
payment be made in either a single sum distribution or equal annual
installments over a period of ten (10) years beginning with the date
determined pursuant to sections 3.5(b) and/or 4.4(b) provided that such
election shall not be effective unless--
(1) the Participant's termination is on account of his Retirement, and
(2) the Participant's written election of such alternative distribution
has been on file with the Administrator(s) for at least twelve (12) months
prior to the date of Participant's termination of employment with the
Employer.
6.4 Death Benefits
(a) Each Participant shall have the right to designate a beneficiary to
receive death benefits under this Plan upon the death of the Participant;
provided, however, that the beneficiary of a married Participant shall be the
Participant's spouse unless the spouse has consented in writing to the
designation of a different beneficiary. In the absence of a valid
beneficiary designation, the Participant's spouse or, if the Participant
is unmarried, the Participant's Beneficiary under the Defined Contribution
Plan shall be the beneficiary of the Participant's benefits under this Plan.
(b) In the event of a Participant's death prior to the commencement of
benefits, his beneficiary will receive such benefits in a single-sum
distribution as soon as practicable after the Participant's death. Benefits
attributable to Defined Benefit Plans shall be calculated and subject to the
same actuarial factors and adjustments used in determining the death benefits
under the applicable Defined Benefit Plan.
(c) If the Participant dies after the commencement of benefits and before all
benefits have been distributed, the beneficiary shall receive all unpaid
benefit amounts, if any, in the same manner and form of distribution as the
Participant.
6.5 Administration
This Plan shall be administered by the Administrator(s). The
Administrator(s) shall have, to the extent appropriate, the same powers,
rights, duties, and obligations with respect to this Plan as they do for
the applicable qualified plans; provided, however, that the Administrator(s)
determination of the questions of construction and interpretation shall be
final, binding, and conclusive upon all persons.
6.6 Claims and Appeals
If any part of an application for benefits under the Plan is denied, the
following claim procedure applies:
(a) The Administrator(s) shall act upon each application for benefits within
ninety (90) days after receipt of the application. If special circumstances
require an extension of time, such Administrator(s) shall notify the
applicant of the delay and shall act within one hundred eighty (180) days
after receipt of the application. The Administrator(s) shall also explain
the reason for the delay and indicate the date on which a decision may be
expected. If the Administrator(s) does not act on an application for benefits
within ninety (90) days (or one hundred eighty (180) days, if applicable),
the application will be deemed to have been denied.
(b) If a claim is denied in whole or in part, the applicant shall be notified
in writing of the following information:
(1) the specific reasons for such denial;
(2) specific reference to pertinent Plan provisions on which the denial
is based;
(3) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary; and
(4) an explanation of the Plan's claim review procedure.
(c) The applicant may appeal by delivering a written notice to the
Administrator(s) within sixty (60) days after receiving notice of denial from
the Administrator(s) or, if no notice of denial was received, within one
hundred fifty (150) days (or two hundred forty (240) days, if applicable)
after the claim was filed. The applicant's notice of appeal should:
(1) request a review of his application for benefits by the
Administrator(s);
(2) set forth all of the grounds upon which his request for review is
based and any facts in support; and
(3) set forth any issues or comments which the applicant deems pertinent
to his application.
If he appeals, the applicant may review pertinent documents at any reasonable
time and place specified by the Administrator(s) and may submit any
additional written materials pertinent to the appeal not set forth in the
notice of appeal.
(d) Any appeal will be reviewed by the Administrator(s). The applicant, who
may be represented by any person, will be entitled to appear before the
Administrator(s) to present his claim. The Administrator(s) will decide the
appeal not later than sixty (60) days after receiving the notice of appeal.
If special circumstances require an extension of time, a decision will be
made as soon as possible, but not later than one hundred twenty (120) days
after receipt of the notice of appeal. The Administrator(s) shall also
explain the reason for the delay and indicate the date on which a decision
may be expected. The decision of the Administrator(s) will be in writing
and will state clearly the reasons for the decision, including specific
reference to the provisions of the Plan supporting the decision. The
decision of the Administrator(s) on any and all appeals shall be final
and conclusive upon all applicants.
6.7 Expenses
The expenses of administering the Plan shall be borne by the Employer.
6.8 Indemnification and Exculpation
The Administrator(s), its agents, and officers, directors, and employees of
the Corporation and its Affiliates shall be indemnified and held harmless by
the Corporation against and from any and all loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by them in
connection with or resulting from any claim, action, suit, or proceeding
to which they may be a party or in which they may be involved by reason
of any action taken or failure to act under this Plan and against and
from any and all amounts paid by them in settlement (with the Corporation's
written approval) or paid by them in satisfaction of a judgement in any
such action, suit, or proceeding. The foregoing provision shall not be
applicable to any person if the loss, cost, liability, or expense is due
to such person's gross negligence or willful misconduct.
6.9 Interests Not Transferable
The interests of the Participants and their beneficiaries under the Plan are
not subject to the claims of their creditors and may not be voluntarily or
involuntarily transferred, assigned, alienated, or encumbered.
6.10 Action by the Corporation or Affiliates
Any action required of or permitted by the Corporation or an Affiliate under
this Plan shall be by approval of the Administrator(s) or any person or
persons authorized by the Administrator(s).
6.11 Effect on Other Benefit Plans
Amounts credited or paid under this Plan shall not be considered to be
compensation for the purposes of a qualified pension plan maintained by the
Corporation and Affiliates. The treatment of such amounts under other
employee benefit plans shall be determined pursuant to the provisions of such
plans.
6.12 Tax Liability
The Employer may withhold from any payment of benefits hereunder any taxes
required to be withheld and such sum as the Employer may reasonably estimate
to be necessary to cover any taxes for which the Employer may be liable and
which may be assessed with regard to such payment.
<PAGE>
Article VII. Amendment and Termination
7.1 Amendment and Termination
The Corporation, by written action of the Administrator(s), reserves the
right to amend this Plan from time to time or to terminate the Plan at
any time; provided, however, the Corporation will not be entitled to
amend the provisions of Article V following a Change of Control.
EXHIBIT 21
Subsidiaries of the Registrant
(as of Wednesday, March 4, 1998)
COMPANY NAME PLACE OF INCORPORATION
Adamatic, A Corporation New Jersey
Arborite Inc. Canada
Baxter Mfg. Co. Inc., The Washington
Bourgeois Tricault Regithermic France
Comercializadora West Bend, S.A. de C.V. Mexico
Compagnie Hobart S.A. France
Corporacion Coral, S.A. de C.V. Mexico
Display Edge Technology, Ltd. Ohio
Equipment Technique Service S.A.R.L. France
Eurotec Srl Italy
Florida Tile Industries, Inc. Florida
Foster Refrigerator (U.K.) Limited United Kingdom
Foster Refrigerator France S.A. France
Foster Refrigerator U.K. Management Services United Kingdom
FTI Factors, Inc. Delaware
Hobart (Japan) K.K. Japan
Hobart (Swiss) A.G. Switzerland
Hobart Andina S.A. Columbia
Hobart Argentina S.A. Argentina
Hobart Corporation Delaware
Hobart Dayton Mexicana, S.A. de C.V. Mexico
Hobart do Brasil Ltda. Brazil
Hobart Equipment Leasing Limited United Kingdom
Hobart Food Equipment Co., Ltd. China
Hobart Food Equipment Pty Ltd. Australia
Hobart Foster Belgium N.V. Belgium
Hobart Foster Danmark A/S Denmark
Hobart Foster Holland B.V. Netherlands
Hobart Foster Sverige AB Sweden
Hobart Foster Techniek B.V. Netherlands
Hobart Foster, Norge A/S Norway
Hobart GmbH Germany
Hobart Holdings, Inc. Delaware
Hobart International (Singapore) PTE LTD Singapore
Hobart International (South Asia), Inc. Delaware
Hobart International, Inc. Delaware
Hobart Korea Co. Ltd. Korea
Hobart Manufacturing Company Limited, The United Kingdom
Hobart Manufacturing Company Pty Ltd., The Australia
Hobart Sales & Service, Inc. Ohio
Hopital Services Systemes S.A. France
ICI Products, Inc. Delaware
Inox Equipment S.A. France
International Product Supply, Inc. Delaware
LAI SRI (AL) Italy
Mahelma SA Spain
Maquilas y Componentes Industriales, S.A.
de C.V. Mexico City, Mexico
Marcap, Inc. Washington
Mark France France
PMI FEG Holland B.V. Netherlands
PMI Food Equipment (Hong Kong) Limited Hong Kong
PMI Food Equipment Group (Malaysia), Inc. Delaware
PMI Food Equipment Group Europe S.A. France
PMI Food Equipment Group France S.A. France
Precor Incorporated Delaware
Precor Products Limited United Kingdom
Precor Sportgerate GmbH Germany
Premark Canada Inc. Canada
Premark Export Sales, Ltd. Barbados
Premark FEG Beteiligingsgesellschaft MbH Germany
Premark FEG GmbH & Co. KG Germany
Premark FEG L.L.C. Delaware
Premark FT Holdings, Inc. Delaware
Premark HII Holdings, Inc. Ohio
Premark International Holdings B.V. Netherlands
Premark International, Inc. Delaware
Premark International, Inc. (Wyoming) Wyoming
Premark N.V. Netherlands Antilles
Premark Real Estate Holdings, Inc. Delaware
Premark RWP Holdings, Inc. Delaware
Premark Services, Inc. Delaware
Premark WB Holdings, Inc. Delaware
Quality Food Equipment (PTY) Ltd South Africa
Resopal Germany
Sarsfield Corporation N.V. Netherlands Antilles
SC Bourgeois France
Sencotel SL Spain
Servizi Ovadesi Srl Italy
Tasselli Industria Frigoriferi SpA Italy
Wavebest Limited United Kingdom
West Bend Company, The Delaware
West Bend de Mexico, S.A. de C.V. Mexico
Wilsonart (Shanghai) Co. Ltd. Shanghai
Wilsonart Germany GmbH Germany
Wilsonart India Private Limited India
Wilsonart International Holdings, Inc. Delaware
Wilsonart International, Inc. Delaware
Wilsonart Korea Ltd. Korea
Wilsonart Limited England
Wilsonart Singapore Pte. Ltd. Singapore
Wilsonart South Africa (Pty) Ltd. South Africa
Wittco Foodservice Equipment, Inc. Wisconsin
Wolf Catering Equipment (U.K.) United Kingdom
Wolf Range L.L.C. Delaware
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 333-26745, 33-53561 and 33-51021) pertaining to the Premark
International, Inc. Director Stock Plan and the Premark International, Inc.
1994 Incentive Plan, and in the Registration Statement (Form S-3 No. 33-35137)
of Premark International, Inc. and in the related Prospectus of our report
dated February 6, 1998, with respect to the consolidated financial statements
and schedules of Premark International, Inc. included in this Annual report
(Form 10-K) for the year ended December 27, 1997.
ERNST & YOUNG LLP
Chicago, Illinois
March 18, 1998
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-26745), the Registration Statement on
Form S-8 (No. 33-53561), the Registration Statement on Form S-8
(No. 33-51021), and the Prospectus constituting part of the Registration
Statement on Form S-3 (No. 33-35137) of Premark International, Inc. of
our report dated February 14, 1997 appearing as Exhibit 99.1 of this
Form 10-K.
PRICE WATERHOUSE LLP
Chicago, Illinois
March 18, 1998
EXHIBIT 24
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
directors of Premark International, Inc., a Delaware corporation,
(the "Corporation"), hereby constitute and appoint John M.
Costigan, L. John Fletcher and Gregory J. Mancuso, and each of
them, true and lawful attorneys-in-fact and agents of the
undersigned, with full power of substitution and resubstitution,
for and in the name, place and stead of the undersigned, in any
and all capacities, to sign the Annual Report on Form 10-K of the
Corporation for its fiscal year ended December 27, 1997, and any
and all amendments thereto, and to file or cause to be filed the
same, together with any and all exhibits thereto and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents and substitutes, and each of them, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises as
fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and substitutes, and each of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his or her hand and seal this 4th day of March, 1998.
James M. Ringler
Harry W. Bowman
Ruth M. Davis
Lloyd C. Elam
W. James Farrell
Richard S. Friedland
John B. McKinnon
David R. Parker
Janice D. Stoney
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PREMARK
INTERNATIONAL, INC.'S 1997 FINANCIAL STATEMENTS AS FILED IN ITS ANNUAL REPORT
ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> DEC-27-1997
<CASH> 151,300
<SECURITIES> 0
<RECEIVABLES> 446,200
<ALLOWANCES> 18,100
<INVENTORY> 394,000
<CURRENT-ASSETS> 1,077,400
<PP&E> 986,000
<DEPRECIATION> 550,900
<TOTAL-ASSETS> 1,765,800
<CURRENT-LIABILITIES> 545,300
<BONDS> 112,300
0
0
<COMMON> 69,000
<OTHER-SE> 838,900
<TOTAL-LIABILITY-AND-EQUITY> 1,765,800
<SALES> 2,406,800
<TOTAL-REVENUES> 2,406,800
<CGS> 1,525,800
<TOTAL-COSTS> 1,525,800
<OTHER-EXPENSES> (2,900)
<LOSS-PROVISION> 4,400
<INTEREST-EXPENSE> 12,100
<INCOME-PRETAX> 174,700
<INCOME-TAX> 70,900
<INCOME-CONTINUING> 103,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103,800
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.59
</TABLE>
EXHIBIT 99.1
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
of Premark International, Inc.:
In our opinion, the consolidated financial statements as of and for each
of the two years in the period ended December 28, 1996 (listed in the
financial table of contents appearing on page 35 of this Form 10-K Annual
Report under the heading "Financial Statements") present fairly, in all
material respects, the financial position, results of operations and cash
flows of Premark International, Inc. and its subsidiaries as of and for
each of the two years in the period ended December 28, 1996, in conformity
with generally accepted accounting principles. 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 of these statements in accordance with generally
accepted auditing standards which 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, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
the opinion expressed above. We have not audited the consolidated financial
statements of Premark International, Inc. for any period subsequent to
December 28, 1996.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 14, 1997
