SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
April 2, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-10182
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Scotsman Industries, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 36-3635892
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(State of Incorporation) (I.R.S. Employer Identification No.)
775 Corporate Woods Parkway, Vernon Hills, Illinois 60061
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (708) 215-4500
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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
----- ----
At May 9, 1995 there were 8,943,020 shares of registrant's common
stock outstanding.
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SCOTSMAN INDUSTRIES, INC.
FORM 10-Q
April 2, 1995
INDEX
PART I--FINANCIAL INFORMATION:
Item 1. FINANCIAL STATEMENTS-
HISTORICAL-
Condensed Statement of Income
Condensed Balance Sheet
Condensed Statement of Cash Flows
Notes to Condensed Financial Statements
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
PART II--OTHER INFORMATION:
Item 1. LEGAL PROCEEDINGS
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURE
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PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
SCOTSMAN INDUSTRIES, INC.
CONDENSED STATEMENT OF INCOME
(Unaudited)
(In thousands, except per share amount)
For the Three
Months Ended
-------------------------
April 2, April 3,
1995 1994
-------- --------
Net sales $76,074 $37,986
Cost of sales 55,874 26,800
------- -------
Gross profit $20,200 $11,186
Selling and administrative expenses 13,223 7,476
------- -------
Income from operations $ 6,977 $ 3,710
Interest expense, net 1,577 907
------- --------
Income before income taxes $ 5,400 $ 2,803
Income taxes 2,570 1,259
------- -------
Net income $ 2,830 $ 1,544
Preferred stock dividends 310 -
------- --------
Net income available
to common shareholders $ 2,520 $ 1,544
======= =======
Net income per share (i):
Primary $ 0.29 $ 0.22
======= =======
Fully diluted $ 0.27 $ 0.22
======= =======
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PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONDENSED STATEMENT OF INCOME - continued
(i) Primary earnings per common share are computed by dividing net
income available to common shareholders by the weighted average
number of common shares and common stock equivalents outstanding
during each period: 8,565,289 and 7,136,085, respectively.
The calculation of fully-diluted net income per share is based on
net income before preferred stock dividends. The number of
shares assumes the conversion of the convertible preferred stock
from April 29, 1994, the date of issue, and also includes the
dilutive impact, as if issuance had occurred on April 29, 1994,
the date of the acquisition of The Delfield Company ("Delfield")
and Whitlenge Drink Equipment Limited ("Whitlenge"), of
contingent shares which were distributed to the sellers of
Delfield and Whitlenge in March 1995 based on those businesses
having achieved a specified combined level of earnings during
fiscal year 1994. The total number of shares used in the fully
diluted calculation for the three months ended April 2, 1995 was
10,640,578.
See notes to unaudited condensed financial statements.
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SCOTSMAN INDUSTRIES, INC.
CONDENSED BALANCE SHEET
(In thousands)
April 2, January 1,
A S S E T S 1995 1995
-------- ----------
(unaudited)
CURRENT ASSETS:
Cash and temporary cash investments $ 11,172 $ 9,770
Trade accounts receivable, net of
reserves of $2,367 and $2,296 54,588 50,102
Inventories 52,628 48,613
Deferred income taxes 4,480 4,642
Other current assets 3,707 3,255
-------- --------
Total current assets $126,575 $116,382
PROPERTIES AND EQUIPMENT, net of
accumulated depreciation of $32,402
and $31,816 41,319 40,657
COST OF INVESTMENTS IN ACQUIRED BUSINESSES
IN EXCESS OF THE FAIR VALUE OF NET
ASSETS AT ACQUISITION, net 95,912 84,038
OTHER NONCURRENT ASSETS 3,448 3,714
-------- --------
$267,254 $244,791
======== ========
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current maturities
of long-term debt and capitalized
lease obligations $ 3,693 $ 3,030
Trade accounts payable 28,757 24,290
Accrued income taxes 6,251 4,173
Deferred income taxes 288 288
Accrued expenses 27,737 30,036
-------- --------
Total current liabilities $ 66,726 $ 61,817
LONG-TERM DEBT AND CAPITALIZED LEASE
OBLIGATIONS 88,134 85,161
DEFERRED INCOME TAXES 2,931 2,917
OTHER NONCURRENT LIABILITIES 8,769 8,433
-------- --------
Total liabilities $166,560 $158,328
======== ========
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value $ 913 $ 846
Preferred stock, $1.00 par value 2,000 2,000
Additional paid in capital 70,175 58,085
Retained earnings 34,255 31,959
Deferred compensation and
unrecognized pension cost (23) (53)
Foreign currency translation adjustments (5,283) (5,031)
Less: Common stock held in treasury (1,343) (1,343)
-------- --------
Total Shareholders' Equity $100,694 $ 86,463
-------- --------
$267,254 $244,791
======== ========
See notes to unaudited condensed financial statements.
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SCOTSMAN INDUSTRIES, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(In Thousands)
For the Three
Months Ended
--------------------
April 2, April 3,
1995 1994
-------- --------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 2,830 $ 1,544
Adjustments to reconcile net income to
net cash provided by operating activities-
Depreciation and amortization 1,824 894
Change in assets and liabilities-
Trade accounts receivable (5,126) (5,766)
Inventories (4,412) (435)
Trade accounts payable and other
liabilities 5,088 1,066
Other, net (146) (879)
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Net cash provided by (used in)
operating activities $ 58 $ (3,576)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in properties and equipment $ (2,043) $ (586)
Proceeds from disposal of property,
plant and equipment 47 6
-------- --------
Net cash used in investing activities $ (1,996) $ (580)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under long-term debt
and capitalized lease obligations $ (55) $ (26)
Issuance of long-term debt 3,000 -
Dividends paid to shareholders (517) (175)
Short-term debt, net 694 525
-------- --------
Net cash provided by financing
activities $ 3,122 $ 324
-------- --------
Effect of exchange rate changes on
cash and temporary cash investments 218 39
NET DECREASE IN CASH AND TEMPORARY CASH
INVESTMENTS $ 1,402 $ (3,793)
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CASH AND TEMPORARY CASH INVESTMENTS, beginning
of period 9,770 8,462
CASH AND TEMPORARY CASH INVESTMENTS, -------- --------
end of period $ 11,172 $ 4,669
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,115 $ 136
======== ========
Income taxes $ 1,344 $ 722
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Investment in properties and equipment
through issuance of capitalized lease
obligations $ (32) $ -
======== ========
Issuance of common stock for acquisition $(12,089) $ -
======== ========
See notes to unaudited condensed financial statements.
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SCOTSMAN INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION:
The condensed consolidated financial statements include the accounts
of Scotsman Industries, Inc. and its consolidated subsidiaries (the
"Company").
All accounting policies used in the preparation of the quarterly
condensed financial statements are consistent with the accounting
policies described in the notes to financial statements for the year
ended January 1, 1995, appearing in the Company's 1994 Annual Report
to Shareholders ("Annual Report"). In the opinion of management, the
interim financial statements reflect all adjustments which are
necessary for a fair presentation of the Company's financial position,
results of operations and cash flows for the interim periods
presented. The results for such interim periods are not necessarily
indicative of results for the full year. These financial statements
should be read in conjunction with the consolidated financial
statements and the accompanying notes to consolidated financial
statements included in the aforementioned Annual Report.
(2) INVENTORIES:
Inventories consisted of the following (in thousands):
April 2, January 1,
1995 1995
-------- ---------
Finished goods $22,811 $19,450
Work-in-process 9,823 9,805
Raw materials 19,994 19,358
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Total inventories $52,628 $48,613
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(3) CONTINGENCIES:
On March 26, 1993, Remcor Products Company ("Remcor") filed a lawsuit
against the Company's subsidiaries, Scotsman Group Inc. and Booth,
Inc., in the United States District Court for the Northern District of
Illinois. In its Complaint, Remcor alleged that certain ice/drink
dispensers made and sold by Scotsman Group and Booth infringe a patent
owned by Remcor relating to a cold plate system. The Complaint seeks
compensatory damages, treble damages for willful infringement,
prejudgment interest and attorneys' fees, and also a permanent
injunction from further alleged acts of infringement.
During the course of discovery, Remcor asserted that it has suffered
damages attributable to the Company's alleged infringement of
approximately $8.24 million during the period from 1989 through year-
end 1993, exclusive of treble damages, prejudgment interest and
attorneys' fees. This damages claim consists of claims for lost
profits and a royalty on certain sales.
The Company has denied that any of its products infringe Remcor's
patent and has asserted that the Remcor patent is invalid and
unenforceable. The Company also has strongly disputed Remcor's
contention that it is appropriate to apply a lost profits measure of
damages in this case and contended that, even assuming infringement
and the validity and enforceability of the patent, the amount of
compensatory damages for sales occurring through year-end 1993 would
be a royalty of approximately $500,000.
The court has set a trial date of June 5, 1995. Discovery in this
case has been completed, except for any discovery directed to the
updating of Remcor's damages claim to account for sales occurring
during 1994 and 1995.
The Company is vigorously defending this lawsuit. Sales of ice/drink
dispensers accounted for less than 5 percent of the Company's
consolidated net sales in 1993 and 1994. Although no assurances can
be given, after consultation with legal counsel, the Company does not
believe that this lawsuit will have a material adverse effect upon the
financial condition of the Company or its results of operations.
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(4) ACQUISITION OF DELFIELD AND WHITLENGE:
On April 29, 1994, the Company completed the acquisition of The
Delfield Company ("Delfield") and Whitlenge Drink Equipment Limited
("Whitlenge") for approximately $69.3 million in a combination of
cash, preferred stock and common stock.
The method of accounting which was used for the combination was the
purchase method. Allocation of the purchase price has not been
finalized; however, it is expected to be completed within the second
quarter of 1995. The acquisition price included: i) $30.4 million in
cash, ii) 1.2 million shares of Scotsman common stock (with a market
value of $16.5 million on the acquisition date) and iii) 2.0 million
shares of Series A $0.62 cumulative convertible preferred stock, with
an aggregate liquidation preference of $22.5 million and which are
convertible into 1,525,393 shares of common stock. In addition, the
acquisition price also included 667,000 shares of additional common
stock which were issued on March 17, 1995, based on Delfield and
Whitlenge having achieved a specified level of earnings before
interest, income taxes, depreciation and amortization for the fiscal
year 1994. Such shares had an aggregate market value of $12.1 million
on the date of issuance. The Company also assumed $35 million of
Delfield and Whitlenge debt as a result of the acquisitions. The
preliminary amount of goodwill as a result of these acquisitions,
including the issuance of the additional 667,000 shares, was $85.8
million, which will be amortized over 40 years using the straight-line
method.
Delfield, headquartered in Mt. Pleasant, Michigan, manufactures and
sells refrigerated foodservice equipment, primarily in the United
States. Whitlenge, located near Birmingham, England, manufactures and
sells drink dispensing equipment in Western Europe.
Restating the Company's first quarter 1994 results to reflect the
acquisition as if it took place as of the first day of fiscal year
1994 would have resulted in unaudited pro forma net sales of $66.9
million and net income before extraordinary item and cumulative effect
of accounting changes of $2.4 million, or 23 cents per share
(including the dilutive impact of the additional common and
convertible preferred shares issued in April of 1994 and the
contingent shares). Pro forma results are based on assumptions and
estimates and are not necessarily indicative of the results of
operations of the Company as they might have been had the transaction
occurred as discussed above.
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SCOTSMAN INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The Company reported record first quarter sales and earnings in 1995
which were driven primarily by the financial results of the newly
acquired businesses, Delfield and Whitlenge, and by the strengthening
European markets.
Net sales for the first quarter of 1995 were $76.1 million, up $38.1
million or 100 percent from sales of $38.0 million for the first
quarter of 1994. Delfield and Whitlenge contributed 83 percent of
this first quarter sales increase over the first quarter of the prior
year. Net income for the first quarter of 1995 was $2.8 million, up
$1.3 million or 83 percent compared to the first quarter of 1994.
Changes in foreign exchange rates did not have a significant impact on
the comparison of the results of operations between the first quarter
of 1995 and the first quarter of 1994.
Results for the current year reflect the April 29, 1994, acquisitions
of Delfield and Whitlenge. In comparison to prior year pro forma
results, assuming the acquisitions of Delfield and Whitlenge had taken
place on January 2, 1994, fully-diluted earnings per share for the
first quarter 1995 would have been up 17 percent (27 cents versus 23
cents) on a 14 percent increase in sales ($76.1 million versus $66.9
million) and a 16 percent increase in net income ($2.8 million versus
$2.4 million).
Scotsman's worldwide ice machine sales, representing 49 percent of the
Company's sales for the first quarter of 1995, were up 16 percent in
U.S. dollars compared with the first quarter of 1994. The Company's
worldwide ice machine sales were up due to strong recovery in the
Western European markets, and continuing growth in the domestic
market.
First quarter 1995 sales of beverage dispensing equipment,
representing approximately 13 percent of the Company's sales for the
quarter, more than doubled compared to the first quarter of 1994 due
to the inclusion of Whitlenge in 1995 results. On a pro forma basis,
drink dispensing sales were up 11 percent, primarily due to increased
European sales.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - continued
Sales of food preparation and storage equipment, representing
approximately 38 percent of the Company's sales for the first quarter
of 1995, including Delfield sales and the European bakery and
refrigeration products, were up 12 percent on a pro forma basis
compared to the first quarter of 1994. Delfield's strong sales gains
through its dealer network and increases at most national accounts
more than offset lower sales to two significant customers resulting
from their internal restructuring.
The Company's gross profit increased by $9.0 million compared with the
first quarter of 1994; however, gross profit margin decreased 2.8
points, from 29.4 to 26.6 percent of sales. This decrease was
primarily attributable to higher raw material costs and the impact of
the historically lower gross profit margins at Delfield.
Selling and administrative expenses increased by $5.7 million when
compared to the first quarter of 1994 but, as a percentage of sales,
decreased from 19.7 percent to 17.4 percent. The percentage decline
was primarily attributable to Delfield and Whitlenge which have
historically lower ratios of selling and administrative expenses to
sales, along with lower domestic litigation expenses.
Interest expense, net, increased by $0.7 million or 74 percent when
compared to the prior year's first quarter, primarily the result of
the increased domestic borrowings resulting from the financing of the
acquisitions of Delfield and Whitlenge in April 1994, along with, to a
smaller extent, higher domestic interest rates during 1995.
The Company's overall tax rate for the first quarter of 1995 was 48
percent, compared with 45 percent for the prior-year period. This
higher rate is primarily attributable to a greater percentage of
earnings from higher taxed foreign operations and also the impact of
non-tax deductible goodwill as a result of the acquisitions of
Delfield and Whitlenge.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
Cash and temporary cash investments increased by $1.4 million from
December of 1994 reflecting higher cash balances at the Company's
foreign subsidiaries. Excluding the foreign exchange impact on
inventory, inventory increased by $4.4 million from December of 1994,
which reflects normal seasonal activity in anticipation of the
Company's major selling season. Excluding the impact of changes in
foreign exchange rates, accounts receivable was $5.1 million higher
than December 1994 primarily resulting from the sales increase when
comparing the first quarter of 1995 to the fourth quarter of 1994.
Excluding the impact of changes in foreign exchange rates, trade
accounts payable was $4.9 million higher than December 1994 which also
reflects the increased inventory purchases.
Goodwill was also higher than December of 1994 reflecting the issuance
in March 1995 of common shares as additional purchase price for the
Delfield and Whitlenge acquisitions which is discussed in Note 4 of
Notes to the Condensed Consolidated Financial Statements.
Shareholders' equity also increased $14.2 million from December 1994
primarily as a result of this share issuance, along with net income
for the first quarter of 1995. These increases were partially offset
by dividends to shareholders and a reduction due to changes in
accumulated translation adjustments.
The debt-to-capital ratio at March 1995 was 48 percent compared with
50 percent at December 1994 and compared with 55 percent at June 1994
(the quarter in which Delfield and Whitlenge were acquired by the
Company).
On February 16, 1995 the Company's Board of Directors declared a
dividend of 2 1/2 cents per share payable to shareholders of record on
March 31, 1995.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
LITIGATION RELATING TO THE GLENCO STAR LEASE. On July 1, 1993, Jerome
P. and Flora P. Heilweil, as landlord of the facility which housed the
Company's former Glenco Star division, filed suit against the
Company's subsidiary, Scotsman Group Inc. ("SGI"), and Glenco Star
Corporation ("Glenco Star") in the United States District Court for
the Eastern District of Pennsylvania in connection with certain
disputes arising out of the lease of that facility. On August 4,
1994, Glenco Holdings, Inc. ("Glenco Holdings"), the purchaser of the
Glenco Star business, and James E. Ferrell, a principal stockholder of
Glenco Holdings, filed suit against SGI and Boatmen's First National
Bank of Kansas City (the "Bank") in the Circuit Court of Jackson
County, Missouri, challenging SGI's right to draw against a letter of
credit issued by the Bank which was furnished to the Company by Glenco
Holdings to reimburse the Company for any rent payments made by the
Company to the landlord under the lease after August 1, 1994. For a
more detailed discussion of these lawsuits, see Part I, Item 3, of the
Company's Annual Report on Form 10-K for the Fiscal Year Ended January
1, 1995.
On April 25, 1995, SGI entered into settlement agreements with the
landlord, Glenco Holdings and Ferrell. Under the terms of the
settlement agreements, SGI paid the landlord an amount which was
within the reserve previously established by the Company, in exchange
for (i) a release by the landlord of all claims relating to the lease
or the leased premises, including any claim for rent due for the
duration of the lease term, (ii) an agreement by the landlord to
dismiss the landlord's claims against SGI in the lawsuit pending in
the United States District Court for the Eastern District of
Pennsylvania and in the related pending arbitration proceeding, (iii)
a release and agreement by Ferrell and Glenco Holdings to dismiss
their claims in the lawsuit pending in the Circuit Court of Jackson
County, Missouri, and (iv) Ferrell's agreement to make a lump sum
payment to the landlord. SGI also agreed not to make any further
draws upon the letter of credit and to notify the Bank that the letter
of credit could be terminated. The Company believes that the
settlement agreements will not have a material adverse effect upon the
Company's financial condition or the results of its operations.
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Item 6. Exhibits and Reports
on Form 8-K
(a) Exhibits
Exhibit 10.1 Scotsman Group Inc. Plans Trust
Agreement, dated as of December 29,
1994, among Scotsman Group Inc., The
Delfield Company and Putnam Fiduciary
Trust Company.
Exhibit 10.2 Amendment No. 1 to Credit Agreement,
dated as of March 31, 1995, among
Scotsman Group Inc. and the other
parties named therein, as Borrowers, the
Lenders named therein and The First
National Bank of Chicago, as Agent
(amending the Credit Agreement, dated as
of April 29, 1994, among the Borrowers,
the Lenders and the Agent).
Exhibit 27 Article 5 Financial Data Schedule for
the Period Ended April 2, 1995.
(b) The Registrant filed no reports on Form 8-K during the
quarterly period ended April 2, 1995.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
SCOTSMAN INDUSTRIES, INC.
Date May 16, 1995 By: /s/ Donald D. Holmes
------------------------------
Donald D. Holmes
Vice President-Finance
and Secretary
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EXHIBIT INDEX
Number Description Page Number
- ------ ----------- -----------
10.1 Scotsman Group Inc. Plans Trust 20
Agreement, dated as of December 29,
1994, among Scotsman Group Inc., The
Delfield Company and Putnam Fiduciary
Trust Company.
10.2 Amendment No. 1 to Credit Agreement, 45
dated as of March 31, 1995, among
Scotsman Group Inc. and the other
parties named therein, as Borrowers, the
Lenders named therein and The First
National Bank of Chicago, as Agent
(amending the Credit Agreement, dated as
of April 29, 1994, among the Borrowers,
the Lenders and the Agent).
27 Article 5 Financial Data Schedule for 52
the Period Ended April 2, 1995.
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EXHIBIT 10.1
SCOTSMAN GROUP INC. PLANS
TRUST AGREEMENT
This Trust Agreement is made as of this 29th day of December,
1994, by and among each of the corporations listed in Schedule 1
attached hereto and signatories to this Agreement (the "Companies"),
and PUTNAM FIDUCIARY TRUST COMPANY, a Massachusetts trust company
having its principal office in Boston, Massachusetts (the "Trustee").
WITNESSETH:
1. Establishment of Plans. The employee pension benefit plans
----------------------
listed in Schedule 1 hereto (collectively the "Plans" and
each individually a "Plan") have been adopted by the
Companies and are intended to satisfy those provisions of
the Internal Revenue Code of 1986, as the same may be
amended from time to time (the "Code"), relating to
qualified employer plans. References throughout this
document to "the Plan" shall be considered to refer to each
Plan as though the Trust were maintained with respect to it
alone. The Trustee shall maintain such records as shall be
necessary to reflect the interests of each of the Plans in
the assets of the Trust. The Companies are members of a
controlled group of corporations, within the meaning of
Section 414(b) of the Code. References throughout this
document to "the Company" shall be considered to refer to
each Company and the Plan or Plans that it maintains.
2. Creation of Trust. There is hereby established a trust
-----------------
which shall be known as the "Scotsman Group Inc. Plans
Trust." The provisions of this Agreement shall supersede
and take precedence over any provision of the Plan which
deals with the Trustee's responsibilities and/or which may
conflict in any way with the Plan. All money and such
property as shall be acceptable to the Trustee as shall from
time to time be paid or delivered to the Trustee in its
capacity as such, all investments made therewith and
proceeds thereof and all earnings and profits thereon, less
the payments which at the time of reference shall have been
made by the Trustee, as authorized herein, are referred to
herein as the "Trust." The Trustee hereby accepts the Trust
created hereunder and agrees to perform the provisions of
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this Agreement on its part to be performed. Subject to the
conditions and limitations set forth herein, the Trustee
shall be responsible for the property received by it as
Trustee, but shall not be responsible for the administration
of the Plan or for those assets of the Plan which have not
been delivered to and accepted by the Trustee. The Trustee
shall not have any authority or obligation to determine the
adequacy of or to enforce the collection from the Company of
any contribution to the Trust. Certain other agreements and
obligations between the Company and the Trustee or its
affiliates may be set forth from time to time in a service
agreement between such parties (the "Service Agreement").
The establishment of the Trust created by this Agreement
shall not be considered as giving any Plan member or any
other person any legal or equitable rights as against the
Company or the Trustee or the property, whether corpus or
income, of the Trust unless such right is specifically
provided for in this Agreement, the Plan, or by law, nor
shall it be considered as giving any Plan member or other
employee the right to continue in the service of the
Company.
3. Purposes. The Plan and the Trust have been established for
--------
the exclusive benefit of the eligible employees and their
beneficiaries. So far as possible this Agreement shall be
interpreted in a manner consistent with the intention of the
Company that the Trust satisfy those provisions of the Code
relating to qualified employees' trusts exempt from taxation
under Section 501(a) of the Code. It is specifically
intended that the Company shall have sole responsibility for
maintaining the tax-qualified status of the Plan and Trust.
No property of the Trust or contributions made by the
Company pursuant to the terms of the Plan shall revert to
the Company or be used for any purpose other than providing
benefits to eligible employees or their beneficiaries and
defraying the expenses of the Plan and the Trust, except
that to the extent provided in the Plan:
(a) Upon request of the Company, contributions made to the
Plan before the issuance of favorable determination
letter by the Internal Revenue Service with respect to
the initial qualification of the Plan under Section
401(a) of the Code may be returned to the contributor,
with all attributable earnings, within one year after
the Internal Revenue Service refuses in writing to
issue such a letter.
(b) Any amount contributed under the Plan by the Company by
a mistake of fact as determined by the Company may be
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<PAGE>
returned to the Company, upon its request, within one
year after its payment to the Trust.
(c) Any amount contributed under the Plan by the Company on
the condition of its deductibility under Section 404 of
the Code may be returned to the Company, upon its
request, within one year after the Internal Revenue
Service disallows the deduction in writing.
(d) Earnings attributable to contributions returnable under
paragraph (b) or (c) shall not be returned to the
Company, and any losses attributable to those
contributions shall reduce the amount returned.
4. Management of Trust. It shall be the duty of the Trustee:
-------------------
(a) to hold and, subject to the provisions of this
Agreement, to invest and to reinvest the assets of the
Trust, and
(b) to make payments therefrom in accordance with the
written directions of the Plan Administrator (the
"Administrator") specified in the Plan or otherwise
appointed by the Board of Directors of the Company
pursuant to the Plan to administer the Plan. The
Administrator shall be the "plan administrator" of the
Plan as defined in Section 3(16)(A) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), and a
"named fiduciary" within the meaning of Section 402(a)
of ERISA. The Administrator may direct payments to be
made from the Trust to any person, including any member
of the Administrator, or to the Company, or to any
paying agent designated by the Administrator, and in
such amounts as the Administrator may direct. Each
such direction of the Administrator shall be in writing
and shall be deemed to include a certification that any
payment directed thereby is one which the Administrator
is authorized to direct, and the Trustee may
conclusively rely on such certification without further
investigation. Payments by the Trustee may be made by
its check to the order of the payee and mailed the
payee at the address last furnished to the Trustee by
the Administrator or by the payee, if no such address
has been furnished, to the payee in care of the
Company. The Trustee shall make disbursements in the
amounts and in the manner that the Administrator
directs from time to time in writing. The Trustee
shall have no responsibility to ascertain any
direction's compliance with the terms of the Plan or of
any applicable law or the direction's effect for tax
purposes or otherwise; nor shall the Trustee have any
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<PAGE>
responsibility to see to the application of any
disbursement. The Trustee shall not be required to
make any disbursement in excess of the net realizable
value of the assets of the Trust at the time of the
disbursement. The Trustee shall not be required to
make any disbursement in cash unless the Administrator
has provided a written direction as to the assets to be
converted to cash for the purpose of making the
disbursement.
5. Investments. Except as otherwise provided in Sections 6, 7
-----------
and 8 below, the Trustee shall invest and reinvest the
assets of the Trust and keep the same invested, without
distinction between principal and income, in stocks, bonds,
stock options, option contract of any type, contracts for
the immediate or future delivery of financial instruments
and other property, or other securities or certificates of
participation or shares of any mutual investment company,
trust or fund (including mutual funds which are sponsored,
underwritten or managed by affiliates of the Trustee), or
deposits in the Trustee which bear a reasonable rate in
interest, or annuity or investment contracts issued by an
insurance company, or other property of any kind, real or
personal, tangible or intangible, as it may deem advisable,
provided that the Trustee may hold assets of the Trust
uninvested from time to time if and to the extent that it
may deem such to be in the best interests of the Trust, but
in no event more than 10 days without the written approval
of the Company. Notwithstanding the foregoing, unless an
investment manager is appointed in accordance with Section
8, of the Service Agreement between the Company and the
Trustee or its affiliate otherwise specifically provides,
all of the assets of the Trust shall be invested as the
Administrator directs in investment products sponsored,
underwritten or managed by affiliates of the Trustee, loans
to Plan members of securities issued by the Company
satisfying the conditions of Section 6.
6. Investment Funds. The Administrator from time to time may
----------------
direct the Trustee to establish one or more separate
investment accounts within the Trust, each such separate
account being hereinafter referred to as an "Investment
Fund." The Trustee shall transfer to each such Investment
Fund such portion of the assets of the Trust as the
administrator or Plan members direct in accordance with the
specific provisions of the Plan and in the manner provided
in the service agreement between the Company and the Trustee
or its affiliate. The Trustee shall invest and reinvest the
assets which have been allocated to an Investment Fund in
accordance with the investment guidelines, objectives and
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<PAGE>
restrictions which have been established by the
Administrator for that Investment Fund and, in the case of
an Investment Fund for which an Investment Manager has been
appointed, the specific investment directions of such
Investment Manager. If, and to the extent, specifically
authorized by the Plan, and provided in the service
agreement between the Company and the Trustee or its
affiliate, the Administrator may direct the Trustee to
establish an Investment Fund all of the assets of which
shall be invested in shares of stock of the Company (a
"Company Stock Fund"), subject to the terms and conditions
of Section 7.
The Trustee shall be under no duty to question or review the
investment guidelines, objectives and restrictions
established, or the specific investment directions given, by
the Administrator or the Plan members for any Investment
Fund or to make suggestions to the Administrator in
connection therewith. The Trustee shall not be liable for
any loss, or by reason of any breach, which arises from the
Administrator's or Plan members' exercise or non-exercise of
rights under this Section 6, or from any direction of the
Administrator or Plan members unless it is clear on the face
of the direction that the actions to be taken under the
direction are prohibited by the fiduciary duty rules of
Section 404(a) of ERISA. The Trustee shall incur no
liability on account of investing the assets of the Trust in
accordance with investment elections of the Administrator or
Plan members so delivered to the Trustee.
Except as otherwise provided in Section 7, all interests,
dividends and other income received with respect to, and any
proceeds received from the sale or other disposition of,
securities or other property held in an Investment Fund
shall be credited to and reinvested in such Investment Fund,
and all expenses of the Trust which are properly allocable
to a particular Investment Fund shall be so allocated and
charged. The Administrator may at any time direct the
Trustee to eliminate any Investment Fund or Funds, and the
Trustee shall thereupon dispose of the assets of such
Investment Fund and reinvest the proceeds thereof in
accordance with the directions of the Administrator.
Pending investment in the Investment Funds in accordance
with the directions of the Administrator or the Plan
members, the Trustee shall invest assets of the Trust as
provided in the service agreement between the Company and
the Trustee or its affiliate, or if there is no such
provision, the Trustee may invest assets of the Trust, in
whole or in part, at any time or from time to time, in
interest-bearing accounts or certificates of deposit
(including deposits in the Trustee which bear a reasonable
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<PAGE>
interest rate), Treasury Bills, commercial paper, money
market funds (including any such fund sponsored,
underwritten or managed by one of its affiliates), short-
term investment funds or other short-term obligations in it
discretion, and the investment return thereon shall be
allocated among the Plan members whose assets have been so
invested and added to their respective investments in the
Investment Funds.
7. Trust Investments in Company Stock. Trust investments
----------------------------------
pursuant to this Section 7 shall be made only in securities
constituting "qualifying employer securities" within the
meaning of Section 407(d)(5) of ERISA. Trust investments in
such securities of the Company ("Company Stock") shall be
subject to the following terms and conditions:
(a) Acquisition Limit. Pursuant to the Plan, the Trust may
-----------------
be invested in Company Stock to the extent necessary to
comply with investment directions under Section 6 of
this Agreement.
(b) Fiduciary Duties of Named Fiduciaries. The
-------------------------------------
Administrator as named fiduciary shall continually
monitor the suitability of acquiring and holding
Company Stock under the fiduciary duty rules of Section
404(a)(1) of ERISA (as modified by Section 404(a)(2) of
ERISA). The Trustee shall not be liable for any loss,
or by reason of any breach, which arises from the
direction of the Administrator with respect to the
acquisition and holding of Company Stock, unless it is
clear on the face of the direction that the actions to
be taken under the direction would be prohibited under
ERISA. The Company hereby appoints as named
fiduciaries, solely with respect to the voting of
Company Stock held in the Trust that has been credited
to their accounts, and the tender or retention of such
Company Stock in response to a tender offer, the Plan
members to whose accounts such Company Stock has been
credited at the time in question. The Company shall be
responsible for determining whether, under the
circumstances prevailing at a given time, its fiduciary
duty to Plan members and beneficiaries under the Plan
and ERISA requires that the Company follow the advice
of independent counsel as to the voting and tender or
retention of Company Stock.
(c) Execution of Purchases and Sales. To implement the
--------------------------------
- 25 -
<PAGE>
investment of new contributions, the Trustee shall
purchase Company Stock on the open market as soon as
practicable following the date on which the Trustee
receives from the Company in good order all information
and documentation necessary to effect the purchase.
Such purchase or sale shall be for no more than
adequate consideration (within the meaning of Section
3(18) of ERISA) and the Company shall pay any related
commission. Redemptions and exchanges of Company Stock
may be netted against purchases made in accordance with
the preceding sentence, and to the extent necessary
after such netting, the Trustee shall, as soon as
practicable following the date of such purchases,
purchase or sell Company Stock on the open market to
accomplish such redemptions and exchanges.
The Trustee may purchase or sell Company Stock from or
to the Company if the purchase or sale is for no more
than adequate consideration (within the meaning of
Section 3(18) of ERISA), no commission is charged, and
such purchase or sale is permitted by the Plan,
authorized by the Board of Directors of the issuer of
the Company Stock and provided for in the applicable
registration statement covering the offer and sale of
Company Stock pursuant to the Plan. To the extent that
Company contributions under the plan are to be invested
in Company Stock, the Company may transfer Company
Stock to the Trust in lieu of cash, subject to the same
conditions set forth in the preceding sentence. The
number of shares so transferred shall be determined by
dividing the amount of the contribution by the closing
price of Company Stock on any national securities
exchange on the trading day immediately preceding the
date as of which the contribution is made.
The Trustee and the Company may, in an appendix to this
Section 7, agree upon such prescribed dates for
purchases and sale of Company Stock and such rules and
conventions in connection with such purchases and sales
as they may find mutually acceptable.
(d) Securities Law Reports. The Administrator shall be
----------------------
responsible for filing all reports required under
federal or state securities laws with respect to the
Trust's ownership of Company Stock, including, without
limitation, any reports required under Section 13 or 16
of the Securities Exchange Act of 1934, and shall
immediately notify the Trustee in writing of any
requirement to stop purchases or sales of Company Stock
pending the filing of any report. The Trustee shall
provide to the Administrator such information on the
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<PAGE>
Trust's ownership of Company Stock as the Administrator
may reasonably request in order to comply with federal
or state securities laws.
(e) Voting. Notwithstanding any other provision of this
------
Agreement, the provisions of this Section 7(e) shall
govern the voting of Company Stock. When the issuer of
Company Stock files preliminary proxy solicitation
materials with the Securities and Exchange Commission,
the Company shall cause a copy of all the materials to
be simultaneously sent to the Trustee, and the Trustee
shall prepare a voting instruction form based upon
these materials. At the time of mailing of notice of
each annual or special stockholders' meeting of the
issuer of Company Stock, the Company shall cause a copy
of the notice and all proxy solicitation materials to
be sent to each Plan member, together with the
foregoing voting instruction form to be returned to the
Trustee or its designee. The form shall show the
number of full and fractional shares of Company Stock
credited to the Plan member's accounts, whether or not
vested. For purposes of this Section 7(e), the number
of shares of Company Stock deemed credited to a Plan
member's account shall be determined as of the date of
record determined by the Company for which an
allocation has been completed and Company Stock has
actually been credited to Plan members' accounts. The
Company shall provide the Trustee with a copy of any
materials provided to Plan members and shall certify to
the Trustee that the materials have been mailed or
otherwise sent to Plan members.
Each Plan member shall have the right to direct the
Trustee as to the manner in which to vote that number
of shares of Company Stock credited to his accounts.
Such directions shall be communicated by completion of
the voting instruction form (or other directions in
writing or by facsimile or similar means). Upon its
receipt of directions, the Trustee shall vote the
shares of Company Stock credited to the Plan member's
account as directed by the Plan member.
The Trustee shall vote those shares of Company Stock
not credited to Plan member's accounts, if any, and
those shares of Company Stock credited to the accounts
of Plan members for which no voting directions are
received, in the same proportion on each issue as it
votes those shares credited to Plan members' accounts
for which it received voting direction from Plan
members.
- 27 -
<PAGE>
(f) Tender Offers. Upon commencement of a tender offer for
-------------
any Company Stock, the Company shall notify each Plan
member and use its best efforts to timely distribute or
cause to be distributed to Plan members the same
information that is distributed to shareholders of the
issuer of Company Stock in connection with the tender
offer, and after consulting with the Trustee shall
provide at the Company's expense a means by which Plan
members may direct the Trustee whether or not to tender
the Company Stock credited to their accounts (whether
or not vested). The Company shall provide to the
Trustee a copy of any material provided to Plan members
and shall certify to the Trustee that the materials
have been mailed or otherwise sent to Plan members.
Each Plan member shall have the right to direct the
Trustee to tender or not to tender some or all of the
whole shares of Company Stock credited to his accounts.
Fractional shares shall be disregarded. Directions
from a Plan member to the Trustee concerning the tender
of Company Stock shall be communicated in writing or by
facsimile or such similar means as is agreed upon by
the Trustee and the Company. The Trustee shall tender
or not tender shares of Company Stock as directed by
the Plan member. The Trustee shall not tender shares
of Company Stock credited to a Plan member's accounts
for which it has received no directions from the Plan
member.
The Trustee shall tender that number of shares of
Company Stock not credited to Plan members' accounts
determined by multiplying the total number of such
shares by a fraction, of which the numerator is the
number of shares of Company Stock credited to Plan
members' accounts for which the Trustee has received
directions from Plan members to tender (which direction
have not been withdrawn as of the date of this
determination), and of which the denominator is the
total number of shares of Company Stock credited to
Plan members' accounts.
A Plan member who has directed the Trustee to tender
some or all of the shares of Company Stock credited to
his accounts may, at any time before the tender offer
withdrawal date, direct the Trustee to withdraw some or
all of the tendered shares, and the Trustee shall
withdraw the directed number of shares from the tender
offer before the tender offer withdrawal deadline. A
Plan member shall not be limited as to the number of
directions to tender or withdraw that he may give to
the Trustee.
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<PAGE>
A direction by a Plan member to the Trustee to tender
shares of Company Stock credited to his accounts shall
not be considered a written election under the Plan by
the Plan member to withdraw or to have distributed to
him any or all of such shares. The Trustee shall
credit to each account of the Plan member from which
the tendered shares were taken the proceeds received by
the Trustee in exchange for the shares of Company Stock
tendered from that account. Pending receipt of
directions through the Administrator from the Plan
member as to the investment of the proceeds of the
tendered shares, the Trustee shall invest the proceeds
in the Investment Funds, other than the Common Stock
Fund, in the same proportions as are set forth in the
Plan member's election then in effect under the Plan,
or, if such election directs the investment of all the
Plan member's account in the Company Stock Fund,
pursuant to a new investment election made by the Plan
member under the Plan.
(g) General. With respect to all rights other than the
-------
right to vote, the right to tender, and the right to
withdraw shares previously tendered, the Trustee shall
follow the directions of the Plan member as to Common
Stock credited to his accounts, and if no such
directions are received, the directions of the
Administrator. The Trustee shall have no duty to
solicit directions from Plan members. With respect to
all rights other than the right to vote and the right
to tender, in the case of Company Stock not credited to
Plan members' accounts, the Trustee shall follow the
directions of the Administrator. All provisions of
this Section 7 shall apply to any securities received
as a result of a conversion of Company Stock.
(h) Certain Rights of Beneficiaries of Plan Members. In
-----------------------------------------------
the event of the death of a Plan member, his
beneficiary shall have all the rights of the Plan
member set forth in this Section 7.
(i) Confidentiality of Instructions Received from Plan
--------------------------------------------------
Members. Instructions received from Plan members
-------
pursuant to Section 7(e) and (f) shall be held in
strictest confidence by the Trustee and shall not,
except as otherwise required by law, be divulged or
released by the Trustee to any other person including
officers, directors or employees of the Company or of
the issuer of the Company Stock.
- 29 -
<PAGE>
8. Appointment of Investment Managers. The Administrator from
----------------------------------
time to time may appoint one or more Investment Managers (as
that term is defined in Section 3(38) of ERISA) to manage
(including the power to acquire and dispose of) all or any
portion or portions of the Trust. The Administrator may
enter into such agreements setting forth the terms and
conditions of any such appointment as it determines to be
appropriate. The Administrator shall retain the right to
remove and discharge any Investment Manager. The
compensation of such Investment Managers shall be an expense
payable in accordance with Section 14. The Administrator
shall notify the Trustee of the appointment of any
Investment Manager by delivering to the Trustee an executed
copy of the agreement under which such Investment Manager
was appointed together with a written acknowledgment by such
Investment Manager that it is:
(a) a fiduciary with respect to the Plan,
(b) bonded as required by ERISA, and
(c) either
(i) registered as an investment advisor under the
Investment Advisers Act of 1940, or
(ii) a bank as defined in said Act, or
(iii) an insurance company qualified to perform
investment management services under the laws
of more than one state of the United States.
The Trustee shall be entitled to rely upon such notice until
such time as the Administrator shall notify and direct the
Trustee in writing that another Investment Manager has been
appointed in the place and stead of the first-named
Investment Manager, or in the alternative, that the
Investment Manager has been removed. In each case where an
Investment Manager is appointed, the Administrator shall
determine the assets of the Trust to be allocated to the
Investment Manager from time to time and shall issue
appropriate instructions to the Trustee with respect
thereto. The Trustee shall carry out the written
instructions of any Investment Manager with respect to the
management and investment of the assets then under control
of such Investment Manger and shall not incur any liability
on account of its compliance with such instructions.
Purchase and sale orders may be placed without the
intervention of the Trustee and, in such event, the
Trustee's sole obligation shall be to make payment for
purchased securities and deliver those that have been sold
- 30 -
<PAGE>
when advised of the transaction. The Trustee shall not
incur any liability on account of its failure to exercise
any of the powers delegated to any Investment Manager
because of the failure of such Investment Manager to give
instructions for the management of the assets under the
control of such Investment Manager. The Trustee shall be
under no duty to question any Investment Manager, nor to
review any securities or other property acquired or retained
at the direction of any Investment Manager, nor to make any
suggestions to any Investment Manager in connection
therewith. The Trustee shall have no obligation to vote
upon any securities over which the Investment manager has
investment management control unless the Trustee is
instructed in writing by the Investment Manager as to the
voting of such securities within a reasonable time before
the time for voting thereof expires.
Each Investment Manager shall have the authority to exercise
all of the powers of the Trustee hereunder with respect to
assets under its control but only to the extent that such
powers relate to the investment of such assets.
9. Insurance Contract. If provided in the Service Agreement,
------------------
the Administrator may direct the Trustee to receive and hold
or apply assets of the Trust to the purchase of individual
or group insurance or annuity contracts ("policies" or
"contracts") issued by any insurance company and in a form
approved by the Administrator (including contracts under
which the contract holder is granted options to purchase
insurance or annuity benefits), or financial agreements
which are backed by group insurance or annuity contracts
("financial agreements"). If such investments are to be
made, the Administrator shall direct the Trustee to execute
and deliver such applications and other documents as are
necessary to establish record ownership, to value such
policies, contracts or financial agreements under the method
of valuation selected by the Administrator, and to record or
report such values to the Administrator or any investment
manager selected by the Administrator, in the form and
manner agreed to by the Administrator.
The Administrator may direct the Trustee to exercise or may
exercise directly the powers of contract holder under any
policy, contract or financial agreement, and the Trustee
shall exercise such powers only upon direction of the
Administrator. The Trustee shall have no authority to act
in its own discretion, with respect to the terms,
acquisition, valuation, continued holding and/or disposition
of any such policy, contract or financial agreement or any
asset held thereunder. The Trustee shall be under no duty
to question any direction of the Administrator or to review
- 31 -
<PAGE>
the form of any such policy, contract or financial agreement
or the selection of the issuer thereof, or to make
recommendations to the Administrator or to any issuer with
respect to the form of any such policy, contract or
financial agreement.
The Trustee shall be fully protected in acting in accordance
with written directions of the Administrator, and shall be
under no liability for any loss of any kind which may result
by reason of any action taken or omitted by it in accordance
with any direction of the Administrator, or by reason of
inaction in the absence of written directions from the
Administrator. In the event that the Administrator directs
that any monies or property be paid or delivered to the
contract holder other than for the benefit of specific
individual beneficiaries, the Trustee agrees to accept such
monies or property as assets of the Trust subject to all the
terms hereof.
10. Powers of Trustee. Subject to the foregoing provisions and
-----------------
limitations, the Trustee is authorized and empowered:
(a) to sell at public auction or by private contract,
redeem, convey, transfer, exchange, pledge, or
otherwise realize upon, any securities, investments or
other property forming a part of the Trust, and for
such purposes may execute such instruments and writings
and do such things as it shall deem proper;
(b) to keep any or all securities or other property in the
name of some other person, nominee, firm or corporation
or in its own name without disclosing its fiduciary
capacity, but the books and records of the Trustee
shall at all times show that all such securities and
other property are part of the Trust;
(c) except as otherwise provided in Sections 7 and 8, to
the extent that the Trustee receives direction from the
Administrator or the Plan members, as the case may be,
to vote upon any stock, bonds or other securities of
any corporation, association or trust at any time
comprising the Trust, or otherwise consent to or
request any action on the part of such corporation,
association or trust, and to give general or special
proxies or powers of attorney, with or without power of
substitution, and to exercise any conversion
privileges, subscription rights or other options, to
participate in reorganizations, recapitalizations,
consolidations, mergers and similar transactions with
respect to such securities; to deposit such stocks or
other securities in any voting trust, or with any
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<PAGE>
protective or like committee, or with a trustee, or
with depositories designated thereby; and generally to
exercise any of the powers of an owner with respect to
stock or other securities or property comprising the
Trust which the Trustee deems to be for the best
interests of the Trust. The Trustee will not vote such
stock or other securities as to which it receives no
written directions;
(d) when instructed or directed by the Administrator, to
borrow money for the purposes of this Trust in such
amounts and upon such terms and conditions as the
Administrator, in its discretion, may approve, and for
any amount so borrowed to issue the promissory note of
the Trustee and to secure the repayment thereof by
pledge, mortgage, or hypothecation of all or any part
of the property of the Trust, and no person loaning
money to the Trustee shall be bound to see to the
application of the money loaned or to inquire into the
validity of any such borrowing;
(e) to make, execute, acknowledge and deliver any and all
instruments that it shall deem necessary or appropriate
to carry out the powers herein granted;
(f) to manage, administer, operate, lease for any number of
years, develop, improve, repair, alter, demolish,
mortgage, pledge, grant options with respect to, or
otherwise deal with any real property or interest
therein at any time held by it, and to cause to be
formed a corporation or trust to hold title to any such
real property with the aforesaid powers, all upon such
terms and conditions as may be deemed advisable;
(g) to renew or extend or participate in the renewal or
extension of any mortgage, upon such terms as may be
deemed advisable, and to agree to a reduction in the
rate of interest on any mortgage or to any other
modification or change in the terms of any mortgage or
of any guarantee pertaining thereto, in any manner and
to any extent that may be deemed advisable for the
protection of the Trust or the preservation of the
value of the investment, to waive any default whether
in the performance of any covenant or condition of any
mortgage or in the performance of any guarantee, or to
enforce any such default in such manner and to such
extent as may be deemed advisable, to exercise and
enforce any and all rights of foreclosure, to bid in
property on foreclosure, to take a deed in lieu of
foreclosure with or without paying a consideration
therefor and in connection therewith to release the
obligation on the bond secured by such mortgage; and to
- 33 -
<PAGE>
exercise and enforce in any action, suit or proceedings
at law or in equity any rights or remedies in respect
to any such mortgage or guarantee;
(h) upon express direction by the Administrator, to
transfer assets of the Trust to itself as trustee or to
any other trustee of any trust which has been qualified
under Section 401(a) and is exempt from tax under
Section 501(a) of the Code, and which is maintained by
it or such other trustee as a medium for the collective
investment of funds of pension, profit-sharing or other
employee benefit trusts, in which event such trust
shall be deemed to be a part of the Plan, and to
withdraw any assets of the Trust so transferred;
(i) when instructed or directed by the Administrator, to
settle, compromise or submit to arbitration any claims,
debts, or damages, due or owing to or from the Trust,
to commence or defend suits or legal proceedings and to
represent the Trust in all suits or legal proceedings
in any court of law or before any other body or
tribunal; provided, however, that the Trustee shall
have no obligation to take any legal action for the
benefit of the Trust unless it shall have been first
indemnified for all expenses in connection therewith,
including counsel fees;
(j) to lend to Plan members such amount or amounts, and
upon such terms and conditions, as the Administrator
may direct in accordance with the provisions of the
Plan, if applicable;
(k) to employ such agents, consultants, custodians,
depositories, advisors, and legal counsel as may be
reasonably necessary or desirable in the Trustee's
judgment in managing and protecting the Trust and,
subject to the provisions of Section 14, to pay them
reasonable compensation out of the Trust; however, if
the amount exceeds $10,000, the Trustee shall obtain
advance written consent of the Company;
(l) to cause any securities or other property which may at
any time form a part of the Trust to be issued, held or
registered in the individual name of the Trustee, or in
the name of its nominee (including any custodian
employed by the Trustee, any nominee of such a
custodian,and any depository, clearing corporation or
other similar system), or in such form that title will
pass by delivery;
(m) to enter into stand-by agreements for future investment
either with or without a stand-by fee;
- 34 -
<PAGE>
(n) to transfer any assets of the Trust to a custodian or
sub-custodian employed by the Trustee;
(o) when directed by the Administrator, to participate in a
securities lending program sponsored and administered
by the Trustee and, in connection therewith, the
Trustee is authorized to release and deliver securities
and return collateral received for loaned securities in
accordance with the provisions of such program; and
(p) to do all other acts in its judgment necessary or
desirable for the proper administration of the Trust,
in accordance with the provisions of the Plan and this
Agreement, although the power to do such acts is not
specifically set forth herein.
No person dealing with the Trustee shall be required to take
any notice of this Agreement, but all persons so dealing
shall be protected in treating the Trustee as the absolute
owner with full power of disposition of all the monies,
securities and other property of the Trust, and all persons
dealing with the Trustee are released from inquiry into the
decision or authority of the Trustee and from seeing to the
application of monies, securities or other property paid or
delivered to the Trustee.
11. Liquidation of Assets. Upon termination with respect to a
---------------------
Plan, the Trustee shall distribute the assets held by the
Plan in the manner directed by the Company, in kind to the
extent of identified assets and the balance in cash or in
kind or partly in each as the Trustee and the Company shall
agree, except that unless the Company provides the Trustee
with a suitable indemnification satisfactory to the Trustee
based upon a reasonable analysis by the Trustee of the
Company's financial condition, the Trustee shall be entitled
to prior receipt of such rulings and determinations from
such administrative agencies as it may deem necessary or
advisable to assure itself that the distribution directed is
in accordance with law and will not subject the Trust Fund
or the Trustee to liability. The Trustee shall not be
required to make any payments in excess of the net
realizable value of the assets of the Trust at the time of
such payment. The Trustee shall not be required to make any
payments in cash unless there shall be in the Trust at the
time an amount of cash sufficient for the purpose. In case
of a deficiency in cash, the Trustee shall take such action
as to the disposition of securities or other property
forming a part of the Trust as will provide the amount of
cash for such payments. The Trustee shall not be required
to make any payment in cash until the Administrator has
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<PAGE>
provided direction as to the assets to be converted to cash
for the purpose of making such payment.
12. Direction by Company or Administrator. The Company shall
-------------------------------------
certify to the Trustee the names and specimen signatures of
the Administrator. The Company shall give prompt notice to
the Trustee of changes in the Administrator, and until such
notice is received by the Trustee, the Trustee shall be
fully protected in assuming that the Administrator is
unchanged and in acting accordingly. The Administrator may
certify to the Trustee the names of persons authorized to
act for it in relation to the Trustee and may designate a
person, corporation or other entity, whether or not
affiliated with the Company, to so act. Whenever the
Trustee is required or authorized to take any action
hereunder pursuant to any written direction or determination
of the Company or the Administrator, such direction or
determination shall be sufficient protection to the Trustee
if contained in a writing signed by any one or more of the
persons authorized to execute documents on behalf of the
Company or the Administrator, as the case may be, pursuant
to the Plan. The Trustee shall act, and shall be fully
protected in acting, in accordance with such orders,
requests and instructions of the Company or the
Administrator. By such a writing the Company or the
Administrator, as the case may be, may ratify, approve or
confirm any action taken by the Trustee, and upon such
ratification, approval or confirmation the Trustee shall be
protected as though authorization or determination by the
Company or the Administrator had preceded such action. In
the absence of direction by the Company or the Administrator
as to any matter provided in this Agreement or the Plan, the
Trustee may in its discretion take such action as it deems
fit and proper with respect thereto after reasonable
attempts to secure Company or Administrator direction,
provided, however, that the Trustee shall not be obligated
to take any such action. The Trustee may deliver documents
to the Company or the Administrator by delivering the same,
or by mailing the same, postage prepaid, addressed to the
Company or the Administrator, as the case may be, at its
principal place of business.
13. Records and Accounting. The Trustee shall keep adequate and
----------------------
accurate accounts of investments, receipts, disbursements
and other transactions hereunder, and all accounts, books
and records relating thereto shall be open at all reasonable
times to inspection and audit by the Administrator and its
authorized representatives. The Trustee shall render to the
Company and the Administrator in writing, at least once each
twelve (12) months and at such times as required by the Plan
- 36 -
<PAGE>
and, in any event,within ninety (90) days after its removal
or resignation as provided in Section 15 hereof, accounts of
its transactions under this Agreement, and the Administrator
may approve such accounts of the Trustee by an instrument in
writing delivered to the Trustee. In the absence of the
filing in writing with the Trustee by the Administrator of
exceptions or objections to any such account within one year
after the receipt thereof, the Administrator shall be deemed
to have approved such account; and in such case, or upon the
written approval of the Administrator of any such account,
the Trustee, to the extent permitted by applicable law,
shall be released, relieved and discharged with respect to
all matters and things set forth in such account. The
Trustee shall from time to time make such other reports and
furnish such other information concerning the Trust
(including valuations of each Investment Fund established
pursuant to Section 6) to the Administrator as the
Administrator may reasonably request or as may be required
by the Plan. The Administrator shall arrange for each
Investment Manager appointed pursuant to Section 8, and each
insurance company issuing contracts held by the Trustee
pursuant to Section 9, to furnish the Trustee with such
valuations and reports as are necessary to enable the
Trustee to fulfill its obligations under this Section 13,
and the Trustee shall be fully protected in relying upon
such valuations and reports. In any proceeding instituted
by the Trustee, the Company or the Administrator or all of
them with respect to any account of the Trustee, only the
Company, the Administrator and the Trustee shall be
necessary parties.
14. Trustee's Compensation and Expenses. The Trustee shall be
-----------------------------------
paid such reasonable compensation as provided in the service
agreement between the Company and the Trustee or its
affiliate. The compensation of the Trustee and any
reasonable expenses,, including reasonable attorneys' fees,
and the cost of any bond, surety or other security which may
be required of the Trustee by ERISA, incurred by the Trustee
in the performance of its duties, and all other proper
charges and disbursements of the Trustee may be paid by the
Company within thirty (30) days after so billed, and will
automatically be deducted from the Trust if, upon the
expiration of thirty (30) days, such fees are not separately
paid by the Company. The Trustee shall obtain advance
written consent of the Company if the attorneys' fees will
exceed $10,000. All expenses (including taxes pursuant to
Section 21) of the Trust, other than those expenses which
are paid by the Company, which are allocable to an
Investment Fund established pursuant to Section 6 shall be
charged to such Investment Fund. All such expenses which
are not so allocable shall be charged against each of the
- 37 -
<PAGE>
Investment Funds in the same proportion as the value of the
assets held in such Investment Fund bears to the value of
the total assets held in all of the Investment Funds. Any
account maintenance or administration fees applicable to any
Plan member's account which are not paid hereunder by the
Company shall be charged against the interest of the Plan
member and, in the case of a loan of a Plan member, if
applicable, all expenses (including taxes pursuant to
Section 21) of the Trust, other than those expenses which
are paid by the Company, which are allocable to such loan,
shall be charged against the interest of such Plan member
under the Plan.
15. Resignation or Removal of Trustee. The Trustee may resign
---------------------------------
at any time upon thirty (30) days' written notice to the
Company, and the Company may remove the Trustee at any time
upon thirty (30) days' written notice to the Trustee;
provided, however, that the parties may by written
instrument waive such notice. The Trustee reserves the
right at any time to resign immediately if the Company
transfers the Plan's administration to a recordkeeper other
than the recordkeeper designated in the service agreement
between the Company and the Trustee or its affiliate, a copy
of which is attached hereto, without the Trustee's prior
written consent, by delivering to the Company a notice of
resignation certified by the Trustee. The Trustee further
reserves the right at any time to resign immediately by
delivering to the Company a notice of resignation certified
by the Trustee if the assets of the Trust are not invested
in investment products which are sponsored, underwritten or
managed by affiliates of the Trustee, or in Company Stock
unless the service agreement between the Company and the
Trustee or its affiliates otherwise specifically provides.
If the Trustee shall resign, be removed or for any other
reason cease to be Trustee, the Company shall appoint a
successor Trustee or Trustees to whom the Trustee, upon
receipt of acceptance by such successor, shall promptly
deliver all of the assets of the Trust less any unpaid fees
or expenses. Subject to the foregoing provisions, any
resignation or removal of the Trustee or appointment of a
new Trustee shall be by instrument in writing and shall
become effective on the date therein specified. Any
successor Trustee shall have the same powers and duties as
the succeeded Trustee, subject to such changes as the
Company may then determine. Upon request of such successor
Trustee or Trustees, the Company and the Trustee ceasing to
act shall execute and deliver such instruments of conveyance
and further assurance and do such things as may reasonably
be required for more fully and certainly vesting and
confirming in such successor Trustee or Trustees all the
right, title and interest of the retiring Trustee in and to
- 38 -
<PAGE>
the assets of the Trust. The Trustee is authorized,
however, to reserve such sums of money as may be reasonable
for payment of its compensation and expenses (including
legal fees) in connection with the settlement of its account
or otherwise, and any balance of such reserve remaining
after payment of such compensation and expenses shall be
promptly paid over to the successor Trustee or Trustees.
16. Duties of Trustee. The Trustee shall discharge its duties
-----------------
with respect to the Trust solely in the interests of the
Plan members and their beneficiaries and with the care,
skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an
enterprise of like character and with like aims. The duties
of the Trustee shall be only those specifically undertaken
by the Trustee pursuant to this Trust Agreement. The
Trustee shall have no responsibility for the administration
of the Plan (including, but not limited to, the
determination of Plan participation rights of employees of
the Company, the determination of benefits of members of the
Plan and the maintenance of individual accounts of members
of the Plan). Except as otherwise provided by ERISA, in no
event shall the Trustee be responsible for any act or
omission of any other fiduciary of the Plan. The Trustee
shall have no liability for the acts or omissions of any
predecessors and successors in office.
17. Indemnification. The Company hereby agrees to indemnify and
---------------
hold harmless the Trustee from and against any losses,
damages, liabilities, claims, costs or expenses (including
reasonable attorneys' fees) which the Trustee may incur by
reason of this Trust Agreement, (including, without
limitation, by reason of the Trustee's making benefit
payments pursuant to fraudulent or unauthorized
instructions) excepting only losses, damages, liabilities,
claims, costs or expenses arising from the Trustee's
negligence or willful misconduct. A waiver by the Trustee
of any signature guarantee requirement relating to the
investments held hereunder shall not be construed as
negligence or willful misconduct on the part of the Trustee.
The provisions of this Section 17 shall survive the
termination of this Trust Agreement.
18. Amendment or Termination. The Company reserves the right at
------------------------
any time and from time to time to amend, in whole or in
part, any or all of the provisions of, or to terminate, this
Agreement by delivering to the Trustee a copy of any
amendment or a notice of termination certified by an officer
- 39 -
<PAGE>
of the Company; provided, that no such amendment which
affects the rights, duties or responsibilities of the
Trustee may be made without its consent, and provided
further that no such amendment shall authorize or permit any
part of the corpus or income of the Trust to be used for or
diverted to purposes other than those set forth in Section
3. Any such amendment shall be effective upon delivery to
the Trustee unless a different effective date is
specifically stated and any such amendment may be made
retroactively as shall be permitted under applicable law.
Upon termination of this Agreement, the Trustee, upon
direction of the Administrator shall liquidate the Trust to
the extent required for distribution and, after the final
account of the Trustee has been approved and settled, shall
distribute the balance of the Trust remaining in its hands
as directed by the Administrator or in the absence of such
direction, as may be directed by a judgment or decree of a
court of competent jurisdiction. Following any such
termination the powers of the Trustee hereunder shall
continue as long as any of the assets of the Trust remain in
its hands, but only as to those assets which during such
time remain in the Trust.
19. Additional Participating Companies. Any affiliate or
----------------------------------
subsidiary of the Company may, with the consent of the
Company, become a participating employer by action of the
board of directors of such affiliate or subsidiary to adopt
the Trust as a trust for the benefit of its employees. Each
such additional participating employer shall be deemed the
"Company" hereunder and shall have and exercise all the
rights, powers, and duties thereof with respect to the Trust
as applied to itself and its employees and that part of the
Trust which represents the interest of members employed by
it; provided, however, that each such additional
participating employer hereby delegates all such rights,
powers, and duties, including amendment or termination of
the Trust, to Scotsman Industries, Inc. acting alone, except
as such additional participating employer may exercise the
same for itself with the approval of Scotsman Industries,
Inc.
20. Spendthrift Provision. Except as provided under the Plan
---------------------
with respect to loans, and except as may otherwise be
required by law, benefits payable under the Plan shall not
be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either
voluntary or involuntary, prior to actually being received
by the person entitled to the benefit under the terms of the
Plan, and any attempt to anticipate, alienate, sell,
- 40 -
<PAGE>
transfer, assign, pledge, encumber, charge or otherwise
dispose of any right to benefits payable under the Plan
shall be void. The account of any Participant, however,
shall be subject to and payable in accordance with the
applicable requirements of any qualified domestic relations
order, as that term is defined in Code Section 414(p), and
the Committee shall direct the Trustee to provide for
payment from a Participant's account in accordance with such
order and with the provisions of Code Section 414(p) and any
regulations promulgated thereunder. A payment from a
Participant's account may be made to an alternate payee (as
defined in Code Section 414(p)(8) prior to the date the
Participant reaches his earliest retirement age (as defined
in Code Section 414(p)(4)(B)) if such payments are made
pursuant to a qualified domestic relations order. Payments
shall be made to the alternate payee from one or more of the
Investment Funds in which the Participant's account is
invested, in such manner and proportion as shall be set
forth in the qualified domestic relations order. If the
qualified domestic relations order does not designate the
Investment Funds from which payment is to be made to the
alternate payee, payment shall be made in equal amounts from
all such Investment Funds. All payments pursuant to a
qualified domestic relations order shall be subject to
reasonable rules and regulations promulgated by the
Committee respecting the time of payment pursuant to such
order and the valuation of the Participant's accounts from
which payment is made; provided that all such payments are
made in accordance with such order and Code Section 414(p).
The balance of an account that is subject to any qualified
domestic relations order shall be reduced by the amount of
any payment made pursuant to such order. With respect to
all payments under this Section pursuant to a qualified
domestic relations order, the Trustee shall act only as
directed by the Committee.
21. Payment of Taxes. The Trustee may pay out of the Trust (or
----------------
the appropriate Investment Fund or Funds) any and all taxes
of any and all kinds, including without limitation property
taxes and income taxes levied or assessed under existing or
future laws upon or in respect of the Trust or any monies,
securities or other property forming a part thereof or the
income therefrom subject to the terms of any agreements or
contracts made with respect to trust investments which make
other provision for such tax payments. The Trustee may
assume that any taxes assessed on or in respect of the Trust
or its income are lawfully assessed unless the Administrator
shall in writing advise the Trustee that in the opinion of
counsel for the Company such taxes are or may be unlawfully
assessed. In the event that the Administrator shall so
advise the Trustee, the Trustee will, if so requested in
- 41 -
<PAGE>
writing by the Administrator contest the validity of such
taxes in any manner deemed appropriate by the Company or its
counsel but at the expense of the Trust; or the Company may
contest the validity of any such taxes at the expense of the
Trust and in the name of the Trustee; and the Trustee agrees
to execute all documents, instruments, claims, and petitions
necessary or advisable in the opinion of the Company or its
counsel for the refund, abatement, reduction or elimination
of any such taxes. At the direction of the Administrator
the Trustee shall collect all income tax to be withheld from
any benefit payments from the Trust and shall report and pay
over such taxes to the Internal Revenue Service, except for
payments made directly by an insurer to a Plan member or
beneficiary under an annuity or insurance contract, if
applicable.
22. Successor to Company or Trustee. Any successor to all or a
-------------------------------
major part of the business of the Trustee, by whatever form
or manner resulting, shall ipso facto succeed to all the
rights, powers and duties hereunder of the Trustee. Any
successor to all or a major part of the business of the
Company, by whatever form or manner resulting, may continue
the Plan and Trust be executing appropriate amendments
thereto, and thereupon such successor shall ipso facto
succeed to all the rights, powers and duties hereunder of
the Company.
23. Construction. In any question of interpretation or other
------------
matter of doubt, the Trustee, the Administrator and the
Company may rely upon the opinion of counsel for the Company
or any other attorney at law designated by the Company with
the approval of the Trustee. The provisions of this
Agreement shall be construed, administered and enforced
according to the laws of the United States and, to the
extent permitted by such laws, by the laws of the
Commonwealth of Massachusetts. All contributions to the
Trust shall be deemed to be made in the Commonwealth of
Massachusetts.
24. Impossibility of Performance. In case it becomes impossible
----------------------------
for the Company, the Administrator or the Trustee to perform
any act under this Trust Agreement, that act shall be
performed which in the judgment of the Administrator will
most nearly carry out the intent and purpose of the Plan and
Trust. All parties to this Agreement or in any way
interested in the Trust shall be bound by any acts performed
under such condition.
- 42 -
<PAGE>
25. Definition of Words. Feminine or neuter pronouns shall be
-------------------
substituted for those of the masculine form, and the plural
shall be substituted for the singular, in any place or
places herein where the context may require such
substitution or substitutions.
26. Titles. The titles of sections are included only for
------
convenience and shall not be construed as part of this
Agreement or in any respect affecting or modifying its
provisions.
27. Execution of Trust Agreement. This Trust Agreement may be
----------------------------
executed in any number of counterparts and each fully
executed counterpart shall be deemed an original.
IN WITNESS WHEREOF these presents have been signed and sealed for
and in behalf of the Company and the Trustee by their duly authorized
officers as of the 29th day of December, 1995.
SCOTSMAN GROUP INC.
/s/ Caroline A. Damask By:/s/ Richard M. Holden
- ----------------------- -------------------------------
Witness Title: Vice President
Date: 12/29/1994
THE DELFIELD COMPANY
________________________ By:/s/ W. Joseph Manifold
-------------------------------
Witness Title: Vice President
Date:
PUTNAM FIDUCIARY TRUST COMPANY
/s/ John P. Capece By:/s/ Arthur R. Abelson
- ----------------------- -------------------------------
Witness Title: Vice President
Date: 01/06/1995
- 43 -
<PAGE>
SCHEDULE 1
Name of Company Name of Plan Maintained
--------------- -----------------------
1. Scotsman Group Inc. The Scotsman Tax Reduction
Investment Plan
2. The Delfield Company The Delfield Company 401(k)
Savings and Profit Sharing
Retirement Plan
- 44 -
EXHIBIT 10.2
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This Amendment No. 1 to Credit Agreement (this "Amendment
Agreement") is entered into as of March 31, 1995 by and among Scotsman
Group Inc., The Delfield Company, Scotsman Drink Limited, Whitlenge
Drink Equipment Limited, Frimont S.p.A., Castel MAC S.p.A.
(collectively, the "Borrowers"), the undersigned lenders (the
"Lenders") and The First National Bank of Chicago, as agent (the
"Agent").
W I T N E S S E T H
WHEREAS, the Borrowers, the Lenders and the Agent entered into
that certain Credit Agreement dated as of April 29, 1994 (the "Credit
Agreement"); and
WHEREAS, the Borrowers, the Lenders and the Agent have agreed to
amend the Credit Agreement on the terms and conditions herein set
forth.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
-------------
defined herein shall have the meanings attributed to such terms in the
Credit Agreement, as amended hereby.
2. Amendments to Credit Agreement.
------------------------------
2.1 Article I of the Credit Agreement is hereby amended by (a)
deleting the definition of "Applicable Eurocurrency Margin" in its
entirety and replacing it with the following:
"Applicable Eurocurrency Margin" means, subject to the last
sentence of this definition, for any period, the applicable of
the following percentages in effect with respect to such period
as the Interest Expense Coverage Ratio of Industries shall fall
within the indicated ranges:
- 45 -
<PAGE>
Applicable
Interest Expense Coverage Ratio Eurocurrency Main
------------------------------- -----------------
Greater than
or equal to But less than
----------- -------------
6.5:1.0 -------- .50%
5.0:1.0 6.5:1.0 .75%
------- 5.0:1.0 1.00%
The Interest Expense Coverage Ratio shall be calculated by
Industries as of the end of each of its Fiscal Quarters
commencing with the fourth Fiscal Quarter of 1994, and shall be
reported to the Agent pursuant to a certificate executed by an
Authorized Officer of Industries and delivered in accordance with
Section 6.1(a) or (b) hereof, as applicable. The Applicable
---------------------
Eurocurrency Margin shall be adjusted, if necessary, as of the
last day of each Fiscal Quarter, giving effect to the Interest
Expense Coverage Ratio as of the last day of the immediately
preceding Fiscal Quarter; provided, that if such certificate,
--------
together with the financial statements to which such certificate
relates, is not delivered to the Agent at least three (3)
Business Days prior to the last day of the next Fiscal Quarter
(except with respect to such information relating to the fourth
Fiscal Quarter of each year, which shall be delivered no later
than the last day of the next Fiscal Quarter), then the
Applicable Eurocurrency Margin shall be equal to 1.00% until the
next adjustment date. Until adjusted as described above, the
Applicable Eurocurrency Margin shall be equal to 1.00%.
(b) deleting the definition of "Issuer" in its entirety and replacing
it with the following:
"Issuer" means the Lender which has been requested by Group to
act as the issuer of a Facility Letter of Credit.
and (c) adding the following definition:
"Commitment Fee Percentage" means, subject to the last
sentence of this definition, for any period, the applicable of
the following percentages in effect with respect to such period
as the Interest Expense Coverage Ratio of Industries shall fall
within the indicated ranges:
- 46 -
<PAGE>
Interest Expense Coverage Ratio Commitment Fee Percentage
------------------------------- -------------------------
Greater than
or equal to But less than
----------- -------------
6.5:1.0 ------- .175%
5.0:1.0 6.5:1.0 .20%
------- 5.0:1.0 .25%
The Interest Expense Coverage Ratio shall be calculated by
Industries as of the end of each of its Fiscal Quarters,
commencing with the fourth Fiscal Quarter of 1994, and shall be
reported to the Agent pursuant to a certificate executed by an
Authorized Officer of Industries and delivered in accordance with
Section 6.1(a) or (b) hereof, as applicable. The Commitment Fee
---------------------
Percentage shall be adjusted, if necessary, as of the last day of
each Fiscal Quarter, giving effect to the Interest Expense
Coverage Ratio as of the last day of the immediately preceding
Fiscal Quarter; provided, that if such certificate, together with
--------
the financial statements to which such certificate relates, is
not delivered to the Agent at least three (3) Business Days prior
to the last day of the next Fiscal Quarter (except with respect
to such information relating to the fourth Fiscal Quarter of each
year, which shall be delivered no later than the last day of the
next Fiscal Quarter), then the Commitment Fee Percentage shall be
equal to .25% until the next adjustment date. Until adjusted as
described above, the Commitment Fee Percentage shall be equal to
.25%.
2.2 Article II of the Credit Agreement is hereby amended by
deleting the first sentence of Section 2.4(a) in its entirety and
replacing it with the following:
Group shall or shall cause the other Borrowers to pay to the
Agent for the account of each Lender a commitment fee equal to
the then applicable Commitment Fee Percentage per annum
multiplied by the daily unused portion of such Lender's
Commitment (based on the Current Dollar Equivalent of (i) the
principal amount of the aggregate Loans and (ii) the aggregate
amount of outstanding Facility Letter of Credit Obligations) from
the date hereof to and excluding the Facility Termination Date,
payable on each Payment Date hereafter and on the Facility
Termination Date.
3. Representations and Warranties of the Borrowers.
-----------------------------------------------
3.1 Each Borrower represents and warrants that the execution,
delivery and performance by such Borrower of this Amendment Agreement
- 47 -
<PAGE>
have been duly authorized by all necessary corporate action and that
this Amendment Agreement is a legal, valid and binding obligation of
such Borrower, enforceable against such Borrower in accordance with
its terms, except as the enforcement thereof may be subject to (a) the
effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally and
(b) general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law).
3.2 Each Borrower hereby certifies that each of the
representations and warranties contained in the Credit Agreement is
true and correct in all material respects on and as of the date hereof
as if made on the date hereof.
4. Reference to and Effect on the Credit Agreement.
-----------------------------------------------
4.1 Upon the effectiveness of this Amendment Agreement, each
reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import and each reference to the
Credit Agreement in each Loan Document shall mean and be a reference
to the Credit Agreement as amended hereby.
4.2 Except as specifically amended above, all of the terms,
conditions and covenants of the Credit Agreement and the other Loan
Documents shall remain unaltered and in full force and effect and
shall be binding upon each Borrower in all respects and are hereby
ratified and confirmed.
4.3 The execution, delivery and effectiveness of this Amendment
Agreement shall not operate as a waiver of (a) any right, power or
remedy of any Lender or the Agent under the Credit Agreement or any of
the Loan Documents, or (b) any Default or Unmatured Default under the
Credit Agreement.
5. Costs and Expenses. Each Borrower agrees to pay on demand all
------------------
costs and expenses of the Agent in connection with the preparation,
execution and delivery of this Amendment Agreement, including the
reasonable fees and out-of-pocket expenses of counsel for the Agent
with respect thereto.
6. CHOICE OF LAW. THIS AMENDMENT AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
7. Execution in Counterparts. This Amendment Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be
- 48 -
<PAGE>
deemed to be an original and all of which taken together shall
constitute one and the same agreement. This Amendment Agreement shall
become effective as of the date first above written; provided, that
--------
the Agent has received counterparts of this Amendment Agreement duly
executed by each Borrower and each Lender.
8. Headings. Section headings in this Amendment Agreement are
--------
included herein for convenience of reference only and shall not
constitute a part of this Amendment Agreement for any other purposes.
[signature pages to follow]
- 49 -
<PAGE>
IN WITNESS WHEREOF, the Borrowers, the Agent and the Lenders have
executed this Amendment Agreement as of the date first above written.
Borrowers: SCOTSMAN GROUP INC.
- ---------
By: /s/ D. D. Holmes
----------------------------------------
Title: Vice President
-------------------------------------
THE DELFIELD COMPANY
By: /s/ D. D. Holmes
----------------------------------------
Title: Vice President
-------------------------------------
SCOTSMAN DRINK LIMITED
By: /s/ D. D. Holmes
----------------------------------------
Title: Vice President
-------------------------------------
WHITLENGE DRINK EQUIPMENT LIMITED
By: /s/ D. D. Holmes
----------------------------------------
Title: Director
-------------------------------------
FRIMONT S.P.A.
By: /s/ Richard C. Osborne
----------------------------------------
Title: Director
-------------------------------------
CASTEL MAC S.P.A.
By: /s/ Richard C. Osborne
----------------------------------------
Title: Director
-------------------------------------
- 50 -
<PAGE>
Lenders: THE FIRST NATIONAL BANK OF CHICAGO
- -------
Individually and as Agent
By: /s/ Julia A. Bristow
----------------------------------------
Title: Vice President
-------------------------------------
BANK OF AMERICA ILLINOIS
(formerly, Continental Bank, N.A.)
By: /s/ J.T. Koch
----------------------------------------
Title: Senior Vice President
-------------------------------------
COMERICA BANK -- ILLINOIS
By: /s/ Shonagh Aylsworth
----------------------------------------
Title: Vice President
-------------------------------------
THE BANK OF NOVA SCOTIA
By: /s/ Amanda Norsworthy
----------------------------------------
Title: Assistant Agent
-------------------------------------
SCOTIABANK (UK) LIMITED
By: /s/ P. D. Girling
----------------------------------------
Title: Manager
-------------------------------------
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ David Bouhl, F.V.P.
----------------------------------------
Title: Head of Corporate Banking - Chicago
-------------------------------------
BANK OF SCOTLAND
By: /s/ Elizabeth Wilson
----------------------------------------
Title: Vice President and Branch Manager
-------------------------------------
- 51 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from Scotsman Industries, Inc. Condensed
Balance Sheet (Unaudited) as of April 2, 1995 and
Scotsman Industries, Inc. Condensed Statement of Income
(Unaudited) for the Three Months Ended April 2, 1995
and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> APR-02-1995
<CASH> 11,172
<SECURITIES> 0
<RECEIVABLES> 54,588
<ALLOWANCES> 2,367
<INVENTORY> 52,628
<CURRENT-ASSETS> 126,575
<PP&E> 41,319
<DEPRECIATION> 32,402
<TOTAL-ASSETS> 267,254
<CURRENT-LIABILITIES> 66,726
<BONDS> 88,134
<COMMON> 913
0
2,000
<OTHER-SE> 97,781
<TOTAL-LIABILITY-AND-EQUITY> 267,254
<SALES> 76,074
<TOTAL-REVENUES> 76,074
<CGS> 55,874
<TOTAL-COSTS> 55,874
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,577
<INCOME-PRETAX> 5,400
<INCOME-TAX> 2,570
<INCOME-CONTINUING> 2,830
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,830
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.27
</TABLE>
