UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From to
----- -----
Commission File Number 1-12001
ALLEGHENY TELEDYNE INCORPORATED
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(Exact Name of Registrant as Specified in its Charter)
Delaware 25-1792394
------------------------------- -----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222-5479
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(Address of Principal Executive Offices) (Zip Code)
(412) 394-2800
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(Registrant's Telephone Number, Including Area Code)
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 November 8, 1996, Registrant had outstanding 174,320,036
shares of its Common Stock.
<PAGE>
ALLEGHENY TELEDYNE INCORPORATED
SEC FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1996
INDEX
Page No.
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial
Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 15
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions except share and per share amounts)
(Unaudited)
September 30, December 31,
1996 1995
------------- ------------
ASSETS
Cash and cash equivalents $ 204.8 $ 112.6
Receivables 520.1 554.5
Inventories 461.7 465.9
Deferred income taxes 62.6 59.8
Prepaid expenses and other current assets 24.0 27.2
------- --------
Total current assets 1,273.2 1,220.0
Property and Equipment 730.0 755.9
Prepaid Pension Cost 366.5 314.9
Cost in Excess of Net Assets Acquired 173.2 161.0
Other Assets 130.3 163.7
-------- --------
Total Assets $2,673.2 $ 2,615.5
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 198.8 $ 223.9
Accrued liabilities 339.5 332.2
Current portion of long-term debt 5.8 8.7
-------- --------
Total current liabilities 544.1 564.8
Long-Term Debt 590.7 561.1
Accrued Postretirement Benefits 565.1 541.8
Other Long-Term Liabilities 128.6 128.9
-------- --------
Total Liabilities 1,828.5 1,796.6
-------- --------
Redeemable Preferred Stock, par value
$1.00: authorized- 2,500,000
shares; issued- 2,209,122 shares
in 1995 - 33.1
-------- --------
Stockholders' Equity:
Preferred Stock, par value $0.10:
authorized- 50,000,000 shares;
issued- none
Common Stock, par value $0.10:
authorized- 600,000,000 shares,
issued and outstanding- 174,167,144
shares in 1996 and 174,486,110 shares
in 1995 17.4 17.4
3
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ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions except share and per share amounts)
(Unaudited)
-Continued-
September 30, December 31,
1996 1995
------------- ------------
(Unaudited)
Additional Paid-in Capital 244.8 255.8
Retained Earnings 573.2 498.1
Net Unrealized Appreciation 6.6 10.3
Currency Translation Adjustment 2.7 4.2
--------- --------
Total stockholders' equity 844.7 785.8
--------- --------
Total Liabilities and
Stockholders' Equity $2,673.2 $2,615.5
======== ========
The accompanying notes are an integral part of these statements.
4
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ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------ ------ -------- --------
Sales $879.7 $962.8 $2,895.3 $3,075.8
Costs and Expenses:
Cost of sales 664.0 746.2 2,219.8 2,395.3
Selling and administrative
expenses 132.3 117.1 383.1 356.4
Merger and restructuring
costs 31.9 0.3 38.6 6.1
Interest expense, net 9.4 9.1 29.1 28.5
------ ------ ------- --------
837.6 872.7 2,670.6 2,786.3
------ ------ -------- --------
Earnings Before Other Income 42.1 90.1 224.7 289.5
Other Income 1.4 8.3 52.5 71.1
------ ------ -------- --------
Income before Income Taxes 43.5 98.4 277.2 360.6
Provision for Income Taxes 23.9 33.7 115.6 135.7
------ ------ -------- --------
Net Income 19.6 64.7 161.6 224.9
Preferred Stock Dividends - 0.5 2.0 0.9
------ ------ -------- --------
Net Income Applicable to
Common Stockholders $ 19.6 $ 64.2 $ 159.6 $ 224.0
====== ====== ======== ========
Net Income Per Common Share $ 0.11 $ 0.36 $ 0.91 $ 1.27
====== ====== ======== ========
Dividends Per Common Share $ 0.16 $ 0.13 $ 0.48 $ 0.38
====== ====== ======= ========
The accompanying notes are an integral part of these statements.
5
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ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
-----------------
1996 1995
-------- -------
Operating Activities:
Net income $ 161.6 $ 224.9
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Gains on sales of businesses (44.3) (51.1)
Depreciation and amortization of
property and equipment 82.8 84.2
Deferred income taxes 19.2 31.8
Increase in prepaid pension costs (56.2) (79.5)
Increase (decrease) in accrued
postretirement benefits 9.3 (2.8)
Decrease (increase) in receivables 17.9 (10.0)
Decrease (increase) in inventories (11.8) 7.4
Decrease in accounts payable (18.6) (51.8)
Increase in accrued liabilities 12.8 28.5
Other (11.0) (0.1)
------- -------
Cash provided by operating activities 161.7 181.5
------- -------
Investing Activities:
Proceeds from the sales of businesses 106.0 69.0
Purchase of property and equipment, net (46.9) (55.5)
Purchases of businesses (17.0) (9.5)
Other (5.2) (11.3)
------- --------
Cash provided by (used in) investing
activities 36.9 (7.3)
------- --------
Financing Activities:
Dividends paid - common and preferred stock (78.2) (34.4)
Redemption of preferred stock (41.4) -
Increase in long term debt 34.6 15.8
Purchase of common stock (23.7) (50.5)
Payments on long-term debt and capital leases (10.4) (7.2)
Exercises of stock options 12.7 6.2
------- -------
Net cash used in financing activities (106.4) (70.1)
------- -------
Increase in cash and cash equivalents 92.2 104.1
6
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ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
-Continued-
Nine Months Ended
September 30,
-----------------
1996 1995
-------- -------
Cash and cash equivalents at beginning
of period 112.6 40.9
------- -------
Cash and cash equivalents at end of period $ 204.8 $ 145.0
======= =======
Non-cash transactions:
Preferred stock dividend on common stock $ 8.3 $ 24.8
======= =======
The accompanying notes are an integral part of these statements.
7
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ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Accounting Policies -
Basis of Presentation
The interim consolidated financial statements include the
accounts of Allegheny Teledyne Incorporated and its subsidiaries.
As described in Note 2, on August 15, 1996 Allegheny Ludlum
Corporation ("Allegheny Ludlum") and Teledyne, Inc. ("Teledyne")
combined to form Allegheny Teledyne Incorporated. The
combination was accounted for under the pooling of interests
method of accounting and these consolidated financial statements
reflect the combined financial position, operating results and
cash flows of Allegheny Ludlum and of Teledyne as if they had
been combined for all periods presented.
These unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and note
disclosures required by generally accepted accounting principles
for complete financial statements. In the opinion of
management, all adjustments (which include only recurring normal
adjustments except as discussed below) considered necessary for a
fair presentation have been included. These consolidated
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in
the Company s Current Report on Form 8-K dated August 30, 1996.
The results of operations for these interim periods are not
necessarily indicative of the operating results for a full year.
Depreciation and Amortization
The straight-line method of depreciation was adopted for all
property placed into service after July 1, 1996. For buildings
and equipment acquired prior to July 1, 1996, depreciation is
computed using a combination of accelerated and straight-line
methods. The Company believes the new method will more
appropriately reflect its financial results by better allocating
costs of new property over the useful lives of these assets. In
addition, the new method more closely conforms with that
prevalent in the industries in which the Company operates and to
that used by the Company's other operating entities. The effect
of this change on net income for the period ended September 30,
1996 was not material.
8
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Note 2. Combination of Allegheny Ludlum and Teledyne -
On August 15, 1996, Allegheny Ludlum and Teledyne became
wholly owned subsidiaries of Allegheny Teledyne Incorporated.
Allegheny Ludlum shareholders received one share of common stock
in Allegheny Teledyne Incorporated for each one of their shares
in Allegheny Ludlum. Teledyne stockholders received 1.925 shares
of common stock in Allegheny Teledyne for each of their Teledyne
common shares. There were 174.2 million shares of Allegheny
Teledyne Incorporated issued in the combination. Revenues and
net income for the six months ended June 30, 1996 (the most
recent interim period prior to the pooling) were $691.7 million
and $39.6 million, respectively, for Allegheny Ludlum and
$1,331.5 million and $102.4 million, respectively, for Teledyne.
Intercompany transactions prior to the combination were not
material.
Note 3. Inventories -
Inventories were as follows (in millions):
September 30, December 31,
1996 1995
------------- ------------
Raw materials and supplies $110.1 $141.7
Work-in-process 501.9 544.4
Finished goods 128.4 97.1
------ ------
Total inventories at current cost 740.4 783.2
Less allowances to reduce current
cost values to LIFO basis (247.9) (273.0)
Progress payments (30.8) (44.3)
------ ------
$461.7 $465.9
====== ======
Note 4. Credit Agreement and Long-Term Debt -
Credit Agreement
In August 1996, the domestic credit facilities of Allegheny
Ludlum and Teledyne were replaced with a new five year credit
agreement for Allegheny Teledyne Incorporated that provides for
borrowings of up to $500 million on a revolving credit basis.
Interest is payable at prime or other alternative interest rate
bases, at the Company's option. The agreement provides for an
annual facility fee of 0.075%.
The credit agreement has various covenants which limit the
Company's ability to dispose of properties and merge with another
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corporation. The Company is also required to maintain certain
financial ratios as defined in the agreement which can also limit
the amount of dividend payments and share repurchases. Under the
most restrictive requirement, approximately 50% of the Company's
retained earnings are currently free of restrictions pertaining
to cash dividend distributions and share repurchases. Borrowings
outstanding under the credit agreement are unsecured.
Long Term Debt
During the 1996 third quarter, the Company guaranteed the
payment of outstanding Teledyne 10% subordinated debentures, due in
2004, Teledyne 7% subordinated debentures, due in 1999, and
Allegheny Ludlum 6.95% debentures, due in 2025.
During the 1996 third quarter, the Company called for the
redemption of the Teledyne 10% subordinated debentures, due in
2004. These debentures were subsequently redeemed on October 9,
1996 utilizing $250 million from the new credit facilities
discussed above and $115 million from cash on hand. As a result,
an extraordinary loss of $22.3 million pretax, or approximately
$0.08 per share net of tax, will be recognized in the 1996 fourth
quarter to expense the related unamortized original issue
discount.
Note 5. Redemption of Preferred Stock -
On August 14, 1996, all of the outstanding shares of
Teledyne Series E Cumulative Preferred Stock were redeemed at
$15.00 per share, together with an additional $0.60 per share,
representing an amount equal to the dividend payment that would
have otherwise been due September 1, 1996.
Note 6. Business Segments -
Information on the Company's business segments for the
three and nine months ended September 30, 1996 and 1995 was as
follows (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
-------- -------- ------- --------
1996 1995 1996 1995
-------- -------- -------- --------
Sales:
Specialty metals $486.4 $545.0 $1,562.4 $1,683.3
Aerospace and electronics 223.7 223.5 735.0 682.8
Industrial 100.2 91.2 343.2 287.8
Consumer 68.2 67.7 207.2 195.8
------ ------ --------- --------
10
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Three Months Ended Nine Months Ended
September 30, September 30,
-------- -------- -------- --------
1996 1995 1996 1995
-------- -------- -------- --------
Total Continuing Operations 878.5 927.4 2,847.8 2,849.7
Discontinued Operations 1.2 35.4 47.5 226.1
------ ------ --------- --------
$879.7 $962.8 $2,895.3 $3,075.8
====== ====== ======== ========
Operating Profit:
Specialty metals $59.2 $ 76.2 $208.3 $243.5
Aerospace and electronics 19.0 21.7 65.1 66.7
Industrial 8.7 8.5 32.9 29.0
Consumer 3.2 4.0 12.5 7.9
----- ------ ------ ------
Total operating profit 90.1 110.4 318.8 347.1
Closed operations 0.6 (0.7) 44.2 62.7
Corporate expenses (12.2) (4.3) (32.3) (29.8)
Merger and restructuring
costs (31.9) (0.3) (38.6) (6.1)
Interest expense, net (9.4) (9.1) (29.1) (28.5)
Operating income from
assets held for sale 0.3 2.4 2.2 9.7
Excess pension income 6.0 - 12.0 5.5
----- ------ ------ ------
Income before income taxes $43.5 $ 98.4 $277.2 $360.6
===== ====== ====== ======
Operating results for closed operations for the nine months
include pretax gains of $41.0 million on the sale of the defense
vehicle business in 1996 and $50.7 million on the sale of the
defense electronics systems business in 1995. These amounts are
included with other income in the statements of income for the
respective periods.
Corporate expenses for the 1995 periods include $5.9 million
for the recovery of an amount previously written off. Merger and
restructuring costs include proxy expenses in 1995.
Pension income in excess of amounts allocated to business
segments to offset pension and other post retirement benefit
expenses is presented separately.
11
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Note 7. Net Income Per Share -
The weighted average number of shares of common stock used
in the computation of net income per share for the three and nine
months ended September 30, 1996 was 174,068,161 and 174,010,470,
respectively, and 176,186,299 and 176,879,918, respectively, for
the same periods in 1995.
Note 8. Commitments and Contingencies -
The Company is subject to federal, state and local
environmental laws and regulations which require that it
investigate and remediate the effects of the release or disposal
of materials at sites associated with past and present
operations, including sites at which the Company has been
identified as a potentially responsible party under the federal
Superfund laws and comparable state laws. The Company is
currently involved in the investigation and remediation of a
number of sites under these laws.
The Company accrues for losses associated with environmental
remediation obligations when the Company's liability is probable
and the costs are reasonably estimable. In many cases, however,
investigations are not yet at a stage where the Company has been
able to determine whether it is liable or, if liability is
probable, to reasonably estimate the loss or range of loss, or
certain components thereof. Estimates of the Company's liability
are further subject to uncertainties regarding the nature and
extent of site contamination, the range of remediation
alternatives available, evolving remediation standards, imprecise
engineering evaluations and estimates of appropriate cleanup
technology, methodology and cost, the extent of corrective
actions that may be required, and the number and financial
condition of other potentially responsible parties, as well as
the extent of their responsibility for the remediation.
Accordingly, as investigation and remediation of these sites
proceeds, it is likely that adjustments in the Company's accruals
will be necessary to reflect new information. The amounts of any
such adjustments could have a material adverse effect on the
Company's results of operations in a given period, but are not
reasonably estimable. Based on currently available information,
however, management does not believe future environmental costs
at sites with which the Company has been identified in excess of
those accrued are likely to have a material adverse effect on the
Company's financial condition or liquidity.
At September 30, 1996, the Company's reserves for
environmental remediation obligations totaled approximately $49
million, of which approximately $18 million was included in other
current liabilities. The reserve includes estimated probable
future costs of $18 million for federal Superfund and comparable
state-managed sites; $9 million for formerly owned or operated
12
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sites for which the Company has remediation or indemnification
obligations; $10 million for owned or controlled sites at which
Company operations have been discontinued; and $12 million for
sites utilized by the Company in its ongoing operations. The
Company is evaluating whether it may be able to recover a portion
of future costs for environmental liabilities from its insurance
carriers and from third parties other than participating
potentially responsible parties.
The timing of expenditures depends on a number of factors
that vary by site, including the nature and extent of
contamination, the number of potentially responsible parties, the
timing of regulatory approvals, the complexity of the
investigation and remediation, and the standards for remediation.
The Company expects that it will expend present accruals over
many years, and will complete remediation of all sites with which
it has been identified in up to thirty years.
Various claims (whether based on U.S. government or Company
audits and investigations or otherwise) have been or may be
instituted or asserted against the Company related to its U.S.
government contract work, including claims based on business
practices and cost classifications and actions under the False
Claims Act. Although such claims are generally resolved by
detailed fact-finding and negotiation, on those occasions when
they are not so resolved, civil or criminal legal or
administrative proceedings may ensue. Depending on the
circumstances and the outcome, such proceedings could result in
fines, penalties, compensatory and treble damages or the
cancellation or suspension of payments under one or more U.S.
government contracts. Under government regulations, a company,
or one or more of its operating divisions or units, can also be
suspended or debarred from government contracts based on the
results of investigations. However, although the outcome of
these matters cannot be predicted with certainty, management does
not believe there is any audit, review or investigation currently
pending against the Company of which management is aware that is
likely to result in suspension or debarment of the Company, or
that is otherwise likely to have a material adverse effect on the
Company's financial condition or liquidity, although the
resolution in any reporting period of one or more of these
matters could have a material adverse effect on the Company's
results of operations for that period.
In October 1996, the Company reached an agreement in
principle with the U.S. government for a joint settlement of two
cases, one involving the Company's former Teledyne Neosho unit,
divested in 1992 and the other involving the Company's Teledyne
Thermatics unit, divested in 1996, for an aggregate of $11.5
million. The matter involving Teledyne Neosho was an action
brought in 1991 under the False Claims Act in the U.S. District
Court for the Western District of Missouri and related to alleged
13
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misappropriations of government-owned aircraft parts and
falsification of inventory control documents. The matter
involving Teledyne Thermatics commenced in 1993 when Teledyne
Thermatics sought admission into the Department of Defense
Voluntary Disclosure Program with respect to testing practices at
variance from military specifications. Previously established
reserves for these matters amounted to $3.8 million. The
agreement in principle to settle these cases is subject to formal
approval by the Department of Justice and negotiation of a final
settlement agreement both of which are expected to be consummated
before year end.
The Company learns from time to time that it has been named
as a defendant in civil actions filed under seal pursuant to the
False Claims Act. Generally, as these cases are under seal, the
Company does not possess sufficient information to determine
whether the Company will sustain a material loss in such matters,
or to reasonably estimate the amount of any loss attributable to
such case or cases. Consequently, the Company is not able to
identify whether a material loss contingency could arise
therefrom.
A number of other lawsuits, claims and proceedings have been
or may be asserted against the Company relating to the conduct of
its business, including those pertaining to product liability,
patent infringement, commercial, employment, employee benefits,
stockholder and tax matters. While the outcome of litigation
cannot be predicted with certainty, and some of these lawsuits,
claims or proceedings may be determined adversely to the Company,
management does not believe that the disposition of any such
pending matters is likely to have a material adverse effect on
the Company's financial condition or liquidity, although the
resolution in any reporting period of one or more of these
matters could have a material adverse effect on the Company's
results of operations for that period.
In June 1996, the United States Court of Appeals for the
Third Circuit upheld a lower court ruling that found in favor of
Allegheny Ludlum in a case brought by Allegheny International,
Inc. ("AI") to recover a $5.5 million refund received by
Allegheny Ludlum in 1989 with respect to a federal income tax
overpayment. The case, which was brought in the United States
District Court for the Western District of Pennsylvania, arose
out of the 1980 management-led buyout of Allegheny Ludlum from AI
and was pursued by Sunbeam Corporation, the successor to AI
following AI's bankruptcy reorganization. The Third Circuit
denied Sunbeam's request for a rehearing. No further appeals are
available to Sunbeam.
14
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
COMBINATION OF ALLEGHENY LUDLUM AND TELEDYNE
On August 15, 1996, Allegheny Ludlum Corporation ("Allegheny
Ludlum") and Teledyne, Inc. ("Teledyne") combined to form
Allegheny Teledyne Incorporated. As a result of the combination,
Allegheny Ludlum and Teledyne became wholly owned subsidiaries of
Allegheny Teledyne Incorporated. Allegheny Ludlum shareholders
received one share of common stock in Allegheny Teledyne
Incorporated for each one of their shares in Allegheny Ludlum.
Teledyne stockholders received 1.925 shares of common stock in
Allegheny Teledyne for each of their Teledyne common shares. The
combination was accounted for under the pooling of interests
method of accounting and the consolidated financial statements
reflect the combined financial position, operating results and
cash flows of Allegheny Ludlum and Teledyne as if they had been
combined for all periods presented. As a result, income includes
nonrecurring merger and restructuring costs of $31.9 million,
$26.3 net of tax, in the 1996 third quarter and $38.6 million,
$31.5 million net of tax, for the 1996 nine months.
Additionally, income for the 1995 nine months was adversely
affected by costs of $6.1 million, $3.7 million net of tax,
related to an unsolicited merger proposal and ensuing proxy
contest involving Teledyne.
RESULTS OF OPERATIONS
Allegheny Teledyne Incorporated is a federation of
technology-based manufacturing businesses with significant
concentration in specialty metals complemented by aerospace and
electronics, industrial, and consumer products.
Sales and operating profit for the Company's four business
segments are discussed below.
Specialty Metals
Sales declined 10.7 percent to $486.4 million and operating
profit declined 22.3 percent to $59.2 million for the 1996 third
quarter compared to 1995. For the 1996 nine months, sales
declined 7.2 percent to $1,562.4 million and operating profit
declined 14.4 percent to $208.3 million from the comparable
periods of 1995.
In flat rolled products, sales and operating profits for
Allegheny Ludlum and Rodney Metals combined declined 20.5 percent
and 47.0 percent, respectively, from the 1995 third quarter and
declined 13.7 percent and 30.9 percent, respectively, from the
1995 nine months. Sales and operating profit for all other
businesses in the specialty metals segment increased 18.0 percent
15
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and 161.6 percent, respectively, over the year ago third quarter
and increased 12.6 percent and 102.7 percent, respectively, over
the 1995 nine months. This performance was helped by robust
sales to commercial aerospace and industrial markets that use
highly specialized metals from Allvac and Wah Chang.
Commodity stainless steel pricing declined steeply under
heavy pressure from European and Asian commodity stainless steel
imports. At the same time, flat rolled tonnage shipments were
weaker than recent third quarter levels. Tons shipped in the
third quarter and first nine months of 1996 were 126,000 and
409,000 respectively, compared to 139,000 and 461,000 for the
same periods of 1995. The average price per ton of flat rolled
specialty metals shipped in the quarter was $2,554 compared with
$2,880 in the 1995 third quarter. Even with the price declines,
higher valued non-commodity products at Allegheny Ludlum and
Rodney Metals kept the average price per ton higher than the
balance of the industry. Lower raw material costs and tight
operating controls did not offset the price and volume declines.
On November 6, 1996, Allegheny Ludlum announced price
increases of approximately 5% for stainless steel sheet, strip,
continuous mill plate and plate mill plate, effective with
shipments March 3, 1997. All current raw material surcharges
will continue to apply.
Aerospace and Electronics
On sales of $223.7 million, the same level as last year,
third quarter operating profit declined 12.8 percent to $19.0
million from the comparable 1995 quarter. For the 1996 nine
months, sales increased 7.6 percent to $735.0 million while
operating profit declined 2.4 percent to $65.1 million compared
to the 1995 period.
Sales improvements resulted from increased development work
on the "Global Hawk". Sales also increased for electronic
devices and electromechanical relays for commercial customers,
and engineering services related to environmental cleanup of
chemical munitions. Sales declined in electronic countermeasure
equipment for the international market, and fabricated products
and airframe structures for the U.S. Government. Increases in
operating profit primarily due to improved performance from
electronic devices and instruments, and electromechanical relays,
were more than offset by higher research, development and
contract proposal costs.
Industrial
Sales increased 9.8 percent to $100.2 million and operating
profit increased 2.4 percent to $8.7 million for the 1996 third
quarter compared to the same period of 1995. For the 1996 nine
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months, sales increased 19.2 percent to $343.2 million and
operating profit increased 13.4 percent to $32.9 million for the
same period last year. The improvement in sales and operating
profit was due principally to the acquisition in December 1995 of
the European-based Stellram Group, a manufacturer of high
precision milling, boring and drilling systems.
Consumer
While sales of $68.2 million in the 1996 third quarter were
marginally higher compared to the same period of 1995, operating
profit decreased by 20.0 percent to $3.2 million. For the 1996
nine months, sales increased 5.8 percent to $207.2 million and
operating profit improved 58.2 percent to $12.5 million. Sales
improved primarily due to two acquisitions: Jandy Industries, a
major United States producer of water flow control valves and
electronic control systems for the swimming pool industry, and
Envases Comerciales, S.A., a Costa Rican manufacturer of
specialty packaging for pharmaceutical and food companies. These
improved sales were partially offset by declining revenues in
oral health, shower, and filtration products. Operating profit
benefited from reduced product introduction expenses in the 1996
nine months compared to the 1995 period. Operating profit for the
1996 third quarter was adversely affected by a patent litigation
settlement.
DISPOSITIONS
In March 1996, the Company sold Teledyne Vehicle Systems, a
defense supplier, at a pretax gain of $41.0 million, which is
included in other income. In January 1995, the Company sold
substantially all of its defense electronic systems business and
related assets at a pretax gain of $50.7 million, which is
included in other income.
INCOME TAXES
The Company's higher effective tax rates for 1996 third
quarter and nine months were the result of non-deductible merger
and restructuring costs.
FINANCIAL CONDITION AND LIQUIDITY
Working capital increased to $729.1 million at September 30,
1996 compared to $655.2 million at the end of 1995. The current
ratio increased to 2.3 from 2.2 in the same periods. The
increase in working capital of $73.9 million was primarily due to
an increase in cash balances of $92.2 million and lower accounts
payable partially offset by a decrease in receivables.
In the first nine months of 1996, cash generated from
operations of $161.7 million, proceeds from the sales of
17
<PAGE>
businesses of $106.0 million and an increase in net borrowings of
$24.2 million were used to pay dividends on common and preferred
stock of $78.2 million and invest $63.9 million in capital
equipment and business expansion. In addition, prior to the
combination, $41.4 million was used to redeem the outstanding
Teledyne Series E Preferred Stock and $23.7 million was used to
repurchase common stock. Cash transactions plus cash on hand at
the beginning of the year resulted in a cash position of $204.8
million at September 30, 1996. Allegheny Ludlum and Teledyne
terminated their respective stock repurchase programs on or
before April 1, 1996. Minor amounts of common stock are acquired
from time to time under stock-based employee compensation plans.
Capital expenditures for 1996 are expected to approximate
$110 million.
In August 1996, the domestic credit facilities of Allegheny
Ludlum and Teledyne were replaced with a new five year credit
agreement for Allegheny Teledyne Incorporated that provides for
borrowings of up to $500 million on a revolving credit basis.
Interest is payable at prime or other alternative interest rate
bases, at the Company's option. For additional discussion of the
new credit agreement, see Note 4 to the condensed consolidated
financial statements of the Company.
During the 1996 third quarter, the Company guaranteed the
payment of the outstanding Teledyne 10% subordinated debentures,
due in 2004, Teledyne 7% subordinated debentures, due in
1999, and Allegheny Ludlum 6.95% debentures, due in 2025.
During the 1996 third quarter the Company called for the
redemption of the Teledyne 10% subordinated debentures, due in
2004. These debentures were subsequently redeemed on October 9,
1996 utilizing $250 million from the new credit facilities
discussed above and $115 million from cash on hand. As a result,
an extraordinary loss of $22.3 million pre-tax, or approximately
$0.08 per share net of tax, will be recognized in the 1996 fourth
quarter to expense the related unamortized original issue
discount.
Additionally, in the 1996 fourth quarter, the Company
completed a $25 million sale of commercial real estate related to
a business previously sold. The Company expects to record a gain
on this transaction.
During the 1996 third and fourth quarters, the underfunded
defined benefit pension plans of Allegheny Ludlum are being
merged with overfunded defined benefit pension plans of Teledyne.
The resulting pension plan will be fully funded with assets
significantly in excess of the projected benefit obligations. As
a result, the Company does not anticipate that it will have to
contribute to its defined benefit pension plans for the
18
<PAGE>
indefinite future. Under current Internal Revenue Code
regulations, certain amounts paid for retiree medical expenses
may be reimbursed annually from the excess pension plan assets.
The Company believes that internally generated funds,
current cash on hand and borrowing from existing credit lines
will be adequate to meet foreseeable needs.
OTHER MATTERS
Environmental
The Company is subject to federal, state and local
environmental laws and regulations which require that it
investigate and remediate the effects of the release or disposal
of materials at sites associated with past and present
operations, including sites at which the Company has been
identified as a potentially responsible party under the federal
Superfund laws and comparable state laws. The Company is
currently involved in the investigation and remediation of a
number of sites under these laws.
The Company's reserves for environmental investigation and
remediation totaled approximately $49 million at September 30,
1996, of which approximately $18 million was included in other
current liabilities. The reserve includes estimated probable
future costs of $18 million for federal Superfund and comparable
state-managed sites; $9 million for formerly owned or operated
sites for which the Company has remediation or indemnification
obligations; $10 million for owned or controlled sites at which
Company operations have been discontinued; and $12 million for
sites utilized by the Company in its ongoing operations.
With respect to proceedings brought under the Comprehensive
Environmental Response, Compensation and Liability Act, commonly
known as Superfund, or similar state statutes, the Company has
been identified as a potentially responsible party at
approximately 60 of such sites, excluding those at which it
believes it has no future liability. The Company's involvement
is very limited or de minimis at approximately 50 of these sites,
and the potential loss exposure with respect to any individual
site is not considered to be material.
The measurement of environmental liabilities by the Company
is based on currently available facts, present laws and
regulations, and current technology. As investigation and
remediation of these sites proceeds, it is likely that
adjustments in the Company's accruals will be necessary to
reflect new information. The amounts of any such adjustments
could have a material adverse effect on the Company's results of
operations in any one period, but are not reasonably estimable.
Based on currently available information, however, management
19
<PAGE>
does not believe future environmental costs at sites with which
the Company has been identified in excess of those accrued are
likely to have a material adverse effect on the Company's
financial condition or liquidity.
For additional discussion of environmental matters, see
Note 8 to the condensed consolidated financial statements of the
Company.
Government Contracts
A number of Company subsidiaries perform work on contracts
with the U.S. government. Many of these contracts include price
redetermination clauses, and most are terminable at the
convenience of the government. Certain of these contracts are
fixed-price or fixed-price incentive development contracts.
There is risk on such contracts that costs may exceed those
expected when the contracts were negotiated. Absent modification
of these contracts, any costs incurred in excess of the fixed or
ceiling prices must be borne by the Company. In addition,
virtually all defense programs are subject to curtailment or
cancellation due to the year-to-year nature of the government
appropriations and allocations process. A material reduction in
U.S. government appropriations may have an adverse effect on the
Company's business, depending upon the specific programs affected
by any such reduction. Since certain contracts extend over a
long period of time, all revisions in cost and funding estimates
during the progress of work have the effect of adjusting the
current period earnings on a cumulative catch-up basis. When the
current contract estimate indicates a loss, provision is made for
the total anticipated loss.
Various claims (whether based on U.S. government or Company
audits and investigations or otherwise) have been or may be
instituted or asserted against the Company related to its U.S.
government contract work, including claims based on business
practices and cost classifications and actions under the False
Claims Act. Although such claims are generally resolved by
detailed fact-finding and negotiation, on those occasions when
they are not so resolved, civil or criminal legal or
administrative proceedings may ensue. Depending on the
circumstances and the outcome, such proceedings could result in
fines, penalties, compensatory and treble damages or the
cancellation or suspension of payments under one or more U.S.
government contracts. Under government regulations, a company,
or one or more of its operating divisions or units, can also be
suspended or debarred from government contracts based on the
results of investigations. Given the extent of the Company's
business with the U.S. government, a suspension or debarment of
the Company could have a material adverse effect on the future
operating results and consolidated financial condition of the
Company. However, although the outcome of these matters cannot
20
<PAGE>
be predicted with certainty, management does not believe there is
any audit, review or investigation currently pending against the
Company of which management is aware that is likely to result in
suspension or debarment of the Company, or that is otherwise
likely to have a material adverse effect on the Company's
financial condition or liquidity, although the resolution in any
reporting period of one or more of these matters could have a
material adverse effect on the Company's results of operations
for that period.
For additional discussion of government contract matters,
see Note 8 to the condensed consolidated financial statements of
the Company.
FORWARD-LOOKING STATEMENTS
Certain forward-looking statements are contained in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Note 8 to the condensed consolidated
financial statements of the Company, including statements
concerning anticipated effects of the business combination of
Allegheny Ludlum and Teledyne on future earnings, cost savings
and operations of the Company (including anticipated benefits
relating to the merger of the respective pension plans of
Allegheny Ludlum and Teledyne), expected capital expenditures,
the outcome of any government inquiries, litigation or other
proceedings related to government contract or other matters, and
future environmental costs. These statements are based on
current expectations that involve a number of risks and
uncertainties, including those described above under the captions
"Other Matters--Government Contracts" and "Other Matters--
Environmental." In addition, realization of the anticipated
benefits of the combination of Allegheny Ludlum and Teledyne
could take longer than expected and implementation difficulties
and market factors could alter the anticipated benefits. Actual
results may differ materially from the results anticipated in the
forward-looking statements. Additional risk factors are
described from time to time in the Company's filings with the
Securities and Exchange Commission, including its Report on Form
8-K dated August 30, 1996.
21
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
10 Credit Agreement dated as of August 30, 1996
18 Letter re change in accounting principles
27 Financial data schedule
(b) Registrant filed the following reports on Form 8-K
relating to items 2, 5 and 7: August 21, 1996 relating to the
guarantee of debt and August 30, 1996 related to the combination.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ALLEGHENY TELEDYNE INCORPORATED
(Registrant)
Date: November 13, 1996 By /s/ James L. Murdy
------------------------------
James L. Murdy
Senior Vice President - Finance
and Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
23
<PAGE>
EXHIBIT INDEX
Exhibit Sequential Page
Number Number
-------- ----------------
10 Credit Agreement dated as of August 30, 1996
18 Letter re change in accounting principles
27 Financial data schedule
24
<PAGE>
EXHIBIT 10
CREDIT AGREEMENT
Dated as of
August 30, 1996
By and Among
ALLEGHENY TELEDYNE INCORPORATED
as the Borrower
THE BANKS HERETO
as the Lenders hereunder
BANK OF AMERICA ILLINOIS
THE CHASE MANHATTAN BANK
MELLON BANK, N.A.
PNC BANK, NATIONAL ASSOCIATION
as Managing Agents
and
PNC BANK, NATIONAL ASSOCIATION
as the Documentation and Administrative Agent
BF 44539.13
TABLE OF CONTENTS
Page
TABLE OF EXHIBITS
ARTICLE I. DEFINITIONS. 1
1.1 Defined Terms . . . . . . . . . . . . . . . . 1
1.2 GAAP Definitions . . . . . . . . . . . . . . . 17
1.3 Other Definitional Conventions and Rules of
Construction . . . . . . . . . . . . . . . . . 17
ARTICLE II. THE LOANS 18
2.1 The Revolving Credit . . . . . . . . . . . . . 18
2.2 Bid Rate Loans . . . . . . . . . . . . . . . . 20
2.3 Swingline Loans . . . . . . . . . . . . . . . 24
2.4 Interest Rates, Interest Payment and Certain
Provisions Relating to Interest and Fees . . . 28
2.5 Yield-Protection, Capital Adequacy and
Miscellaneous Provisions Relating to Euro-
Rate . . . . . . . . . . . . . . . . . . . . . 31
2.6 Facility Fee . . . . . . . . . . . . . . . . . 33
2.7 Calculation of Interest and Facility Fee . . . 34
2.8 Extension of Termination Date . . . . . . . . 34
2.9 Substitution or Replacement of a Lender . . . 34
2.10 Loan Repayment . . . . . . . . . . . . . . . . 35
2.11 Additional Payments by the Borrower . . . . . 36
2.12 Voluntary Reduction of Availability . . . . . 36
2.13 Loan Account . . . . . . . . . . . . . . . . . 36
2.14 Payment from Accounts Maintained by Borrower . 37
2.15 Time, Place and Manner of Payments . . . . . . 37
ARTICLE III. REPRESENTATIONS AND WARRANTIES 37
3.1 Corporate Existence . . . . . . . . . . . . . 37
3.2 Corporate Authority . . . . . . . . . . . . . 37
3.3 Enforceability . . . . . . . . . . . . . . . . 38
3.4 No Restrictions . . . . . . . . . . . . . . . 38
3.5 Financial Statements. . . . . . . . . . . . . 38
3.6 Absence of Litigation . . . . . . . . . . . . 39
3.7 Tax Returns and Payments . . . . . . . . . . . 39
3.8 Pension Plans . . . . . . . . . . . . . . . . 39
-i-
Page
3.9 Compliance with Applicable Laws . . . . . . . 39
3.10 Environmental Matters . . . . . . . . . . . . 40
3.11 Governmental Approval . . . . . . . . . . . . 40
3.12 Regulations G, T, U and X . . . . . . . . . . 40
3.13 Investment Company Act . . . . . . . . . . . . 40
3.14 Public Utility Holding Company Act . . . . . . 40
3.15 Disclosure . . . . . . . . . . . . . . . . . . 40
ARTICLE IV. AFFIRMATIVE COVENANTS 41
4.1 Use of Proceeds . . . . . . . . . . . . . . . 41
4.2 Furnishing Information . . . . . . . . . . . . 41
4.3 Visitation . . . . . . . . . . . . . . . . . . 42
4.4 Preservation of Existence; Qualification . . . 42
4.5 Compliance with Laws and Contracts . . . . . . 42
4.6 Payment of Taxes and Other Liabilities . . . . 43
4.7 Insurance . . . . . . . . . . . . . . . . . . 43
4.8 Maintenance of Properties . . . . . . . . . . 43
4.9 Plans and Benefit Arrangements . . . . . . . . 43
4.10 Senior Debt Status . . . . . . . . . . . . . . 44
4.11 Ownership of ALC and TI . . . . . . . . . . . 44
ARTICLE V. NEGATIVE COVENANTS 44
5.1 Indebtedness . . . . . . . . . . . . . . . . . 44
5.2 Encumbrances . . . . . . . . . . . . . . . . . 44
5.3 Leverage Ratio . . . . . . . . . . . . . . . . 45
5.4 Interest Coverage Ratio . . . . . . . . . . . 45
5.5 Sales of Assets . . . . . . . . . . . . . . . 45
5.6 Merger . . . . . . . . . . . . . . . . . . . . 46
5.7 Restriction on Dividends . . . . . . . . . . . 46
5.8 Restriction on Guarantees. . . . . . . . . . . 46
5.9 Regulation G, T, U and X Compliance . . . . . 46
5.10 ERISA . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VI. CONDITIONS PRECEDENT TO ALL DISBURSEMENTS 47
6.1 All Disbursements . . . . . . . . . . . . . . 47
6.2 Conditions Precedent to the Initial
Disbursement Under the Commitment. . . . . . . 47
-ii-
Page
ARTICLE VII. DEFAULTS 49
7.1 Payment Default . . . . . . . . . . . . . . . 49
7.2 Nonpayment of Other Indebtedness . . . . . . . 49
7.3 Insolvency . . . . . . . . . . . . . . . . . . 49
7.4 Termination of Existence . . . . . . . . . . . 50
7.5 Failure to Comply with Covenants . . . . . . . 50
7.6 Misrepresentation . . . . . . . . . . . . . . 50
7.7 Adverse Judgments, Etc . . . . . . . . . . . . 51
7.8 Invalidity or Unenforceability . . . . . . . . 51
7.9 ERISA . . . . . . . . . . . . . . . . . . . . 51
7.10 Change of Control . . . . . . . . . . . . . . 51
7.11 Consequences of an Event of Default . . . . . 52
7.12 Remedies Upon Default . . . . . . . . . . . . 52
ARTICLE VIII. AGREEMENT AMONG LENDERS 53
8.1 Appointment and Grant of Authority . . . . . . 53
8.2 Non-Reliance on Agent . . . . . . . . . . . . 53
8.3 Responsibility of Agent and Other Matters . . 53
8.4 Action on Instructions . . . . . . . . . . . . 54
8.5 Indemnification . . . . . . . . . . . . . . . 54
8.6 Agent's Rights as a Lender . . . . . . . . . . 55
8.7 Payment to Lenders . . . . . . . . . . . . . . 55
8.8 Pro Rata Sharing . . . . . . . . . . . . . . . 55
8.9 Successor Agent. . . . . . . . . . . . . . . . 55
8.10 Managing Agents. . . . . . . . . . . . . . . . 56
ARTICLE IX. GENERAL PROVISIONS 56
9.1 Amendments and Waivers . . . . . . . . . . . . 56
9.2 Expenses . . . . . . . . . . . . . . . . . . . 57
9.3 Notices . . . . . . . . . . . . . . . . . . . 58
9.4 Tax Withholding . . . . . . . . . . . . . . . 59
9.5 Successors and Assigns . . . . . . . . . . . . 60
9.6 Assignments and Participations . . . . . . . . 60
9.7 Severability . . . . . . . . . . . . . . . . . 62
9.8 Survival . . . . . . . . . . . . . . . . . . . 62
9.9 Governing Law . . . . . . . . . . . . . . . . 62
9.10 Non-Business Days . . . . . . . . . . . . . . 62
9.11 Integration . . . . . . . . . . . . . . . . . 62
-iii-
Page
9.12 Headings . . . . . . . . . . . . . . . . . . . 62
9.13 Set-Off . . . . . . . . . . . . . . . . . . . 62
9.14 Forum . . . . . . . . . . . . . . . . . . . . 63
9.15 Waiver of Jury Trial . . . . . . . . . . . . . 63
9.16 Indemnity . . . . . . . . . . . . . . . . . . 63
9.17 Termination of Existing Bank Credit
Agreements . . . . . . . . . . . . . . . . . 64
9.18 Counterparts . . . . . . . . . . . . . . . . . 64
-iv-
TABLE OF EXHIBITS
Name of Exhibit
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Bid Rate Note
Exhibit C - Form of Bid Rate Quote Request
Exhibit D - Form of Bid Rate Quote
Exhibit E - Form of Swingline Note
Exhibit F - Form of Swingline Quote Request
Exhibit G - Form of Swingline Quote
Exhibit H - Form of Compliance Certificate
Exhibit I - Form of Opinion of Counsel
Exhibit J - Form of Assignment and Assumption Agreement
Schedules
3.8 Plans
5.1 Existing Indebtedness
5.2 Existing Encumbrances Securing Indebtedness
5.5 Assets Held For Sale
-v-
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of August 30, 1996, by
and among ALLEGHENY TELEDYNE INCORPORATED, a Delaware corporation
(the "Borrower"), the FINANCIAL INSTITUTIONS listed on the
signature pages hereto, and each other financial institution
which, from time to time, becomes a party hereto in accordance
with Subsection 9.6a (individually, a "Lender" and collectively,
the "Lenders"), BANK OF AMERICA ILLINOIS, THE CHASE MANHATTAN
BANK, MELLON BANK, N.A. and PNC BANK, NATIONAL ASSOCIATION as
Managing Agents (individually a "Managing Agent" and collectively
the Managing Agents) and PNC BANK, NATIONAL ASSOCIATION, a
national banking association, as Documentation and Administrative
Agent for the Lenders (in such capacity the "Agent").
WITNESSETH:
WHEREAS, the Borrower desires to obtain a Commitment
(as defined below) from each of the Lenders pursuant to which
Loans, in a maximum aggregate principal amount at any one time
outstanding not to exceed $500,000,000, will be made to the
Borrower from time to time prior to the Termination Date (as
defined below); and
WHEREAS, the Lenders are willing, on the terms and
subject to the conditions hereinafter set forth, to extend such
Commitment and make such Loans to the Borrower.
NOW, THEREFORE, in consideration of mutual promises
contained herein and other valuable consideration and with the
intent to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I. DEFINITIONS.
1.1 Defined Terms. As used herein the following terms
shall have the meaning specified unless the context otherwise
requires:
"Absolute Rate Auction" means a solicitation of Bid
Rate Quotes setting forth Bid Rate Absolute Rates pursuant to
Subsection 2.2c.
"ALC" means Allegheny Ludlum Corporation, a
Pennsylvania corporation, which prior to the Effective Time of
the Combination, was a publicly held corporation and at the
Effective Time of the Combination, as the surviving corporation
of a merger of a wholly owned Subsidiary of the Borrower with and
into it, became a wholly owned Subsidiary of the Borrower. Any
reference to ALC herein, in respect of an event or occurrence
prior to the Effective Time of the Combination, shall be a
reference to ALC as a publicly held corporation, and any
reference to ALC herein, in respect of an event or occurrence
after the Effective Time of the Combination, shall be a reference
to ALC as a wholly owned Subsidiary of the Borrower.
"Adjusted Euro-Rate" means the interest rate relating
to the Euro-Rate Option as described in item (ii) of Subsection
2.4b.
"Agent" has the meaning set forth in the preamble to
this Agreement.
"Agent's Fees" means those certain fees for the sole
account of the Agent set forth in that certain letter agreement
by and between the Agent and the Borrower dated August 30, 1996.
"Agreement" means this Credit Agreement together with
the exhibits and schedules hereto and all extensions, renewals,
amendments, modifications, substitutions and replacements hereto
and hereof.
"Applicable Euro-Rate Margin" means for each Euro-Rate
Portion, the percentage (expressed in basis points) determined
from time to time based upon the Senior Ratings then in effect
from Moody's and S&P set forth under the relevant column heading
below:
Senior Ratings Applicable Euro-
Rate Margin
-------------- ----------------
Level I
-------
Senior Ratings are equal to or better than
A from S&P or A2 from Moody's 15.0 Basis Points
Level II
--------
Senior Ratings are A- from S&P or A3 from
Moody's 16.0 Basis Points
Level III
---------
Senior Ratings are BBB+ from S&P or Baa1
from Moody's 20.0 Basis Points
Level IV
--------
Senior Ratings are BBB from S&P or Baa2
from Moody's 25.0 Basis Points
-2-
Senior Ratings Applicable Euro-
Rate Margin
-------------- ----------------
Level V
-------
Senior Ratings are equal to or less than
BBB- from S&P and Baa3 from Moody's 30.0 Basis Points
; provided, however, that (i) in the event the Senior Ratings of
S&P and Moody's do not coincide, the Applicable Euro-Rate Margin
shall be determined utilizing the higher of such Senior Ratings;
and (ii) in the event only one Senior Rating is in effect, the
Applicable Euro-Rate Margin set forth opposite such Senior Rating
shall apply.
"Applicable Facility Fee Percentage" means the
percentage (expressed in basis points) determined from time to
time based upon the Senior Ratings then in effect from Moody's
and S&P set forth under the relevant column heading below:
Senior Ratings Applicable
Facility Fee
Percentage
-------------- ------------
Level I
-------
Senior Ratings are equal to or better than
A from S&P or 7.5 Basis Points
A2 from Moody's
Level II
--------
Senior Ratings are A- from S&P or A3 from
Moody's 9.0 Basis Points
Level III
---------
Senior Ratings are BBB+ from S&P or Baa1
from Moody's 10.0 Basis Points
Level IV
--------
Senior Ratings are BBB from S&P or Baa2
from Moody's 15.0 Basis Points
Level V
-------
Senior Ratings are equal to or less than
BBB- from S&P and Baa3 from Moody's 20.0 Basis Points
; provided, however, that (i) in the event the Senior Ratings of
S&P and Moody's do not coincide, the Applicable Facility Fee
Percentage shall be determined utilizing the higher of such
Senior Ratings; and (ii) in the event only one Senior Rating is
in effect, the Applicable Facility Fee Percentage set forth
-3-
opposite such Senior Rating shall apply.
"Assignment and Assumption Agreement" means an
Assignment and Assumption Agreement in the form of Exhibit "J"
hereto.
"Authorized Officer" means the President, any Vice
President, the Chief Financial Officer, the Treasurer or the
principal accounting officer of the Borrower. The Agent and the
Lenders shall be entitled to rely on the incumbency certificate
delivered pursuant to Subsection 6.2 (vii) for the initial desig-
nation of each Authorized Officer. Additions or deletions to the
list of Authorized Officers may be made by the Borrower at any
time by delivering to the Agent for redelivery to each Lender a
revised incumbency certificate.
"Bank Indebtedness" means the liability of the Borrower
to pay the Loans, the Facility Fee, the Agent's Fees, interest
thereon, and the other amounts, including, without limitation,
expenses, due hereunder.
"Base Rate" means, for any day, the higher of (i) the
sum of (A) the Federal Funds Effective Rate for such day plus (B)
fifty (50) basis points (1/2%) per annum and (ii) the Prime Rate,
as of such day.
"Base Rate Option" means the interest rate option
described in item (i) of Subsection 2.4b.
"Base Rate Portion" means a Revolving Credit Loan or a
portion thereof which bears, or is to bear, interest at the Base
Rate.
"Bid Rate" means the rate or rates of interest from
time to time in effect pursuant to agreements reached between the
Borrower and any or all of the Lenders pursuant to Section 2.2.
"Bid Rate Absolute Rate" has the meaning set forth in
Subsection 2.2c(iii)(B)(4).
"Bid Rate Interest Period" means any individual period
of one (1) to two hundred seventy (270) days, all determined in
accordance with Section 2.2, commencing on the date of the
extension of the relevant Bid Rate Loan; provided, however, that
no Bid Rate Interest Period shall extend beyond the Termination
Date.
"Bid Rate Loan" means a Disbursement by any Lender
-4-
pursuant to Section 2.2.
"Bid Rate Margin" has the meaning set forth in
Subsection 2.2c(iii)(B)(3).
"Bid Rate Notes" means any one or all of the several
promissory notes of the Borrower evidencing Indebtedness of the
Borrower under the Bid Rate Option, which notes are substantially
in the form of Exhibit "B" to this Agreement, together with all
extensions, renewals, amendments, modifications, substitutions
and replacements thereto and thereof.
"Bid Rate Option" means the interest rate option that
may be agreed upon between the Borrower and one or more of the
Lenders pursuant to Section 2.2 hereof.
"Bid Rate Quote" means each offer by a Lender to make a
Bid Rate Loan which offer is substantially in the form of Exhibit
"D".
"Bid Rate Quote Request" means the written request of
the Borrower for a Bid Rate Loan delivered to the Agent in
accordance with the provisions of Subsection 2.2c, which request
shall be substantially in the form of Exhibit "C" hereto.
"Borrower" has the meaning given it in the preamble to
this Agreement.
"Borrowing Date" means the date on which any
Disbursements are to be made hereunder.
"Business Day" means, any day other than a Saturday or
Sunday or a legal holiday on which commercial banks are
authorized or required to be closed for business in Pittsburgh,
Pennsylvania or New York, New York and, if the applicable
Business Day relates to any Disbursement to which the Euro-Rate
Option or the Bid Rate Margin applies, such day must also be a
day on which dealings are carried on in the London interbank
market.
"Capital Adequacy Event" shall have the meaning given
it in Subsection 2.5b.
"Capital Compensation Amount" shall have the meaning
given it in Subsection 2.5b.
"Closing" means the execution and delivery of this
Agreement which execution and delivery shall occur at the offices
-5-
of Tucker Arensberg, P.C. in Pittsburgh, Pennsylvania, at 10:00
A.M. (eastern time) on August 30, 1996, or such other date and
time as is mutually agreeable to the parties hereto.
"Closing Date" means the day on which the Closing
occurs.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor legislation thereto,
together with all regulations promulgated and rulings issued
thereunder.
"Combination" means the combination pursuant to the
Agreement and Plan of Merger and Combination dated as of April 1,
1996, as amended and restated, pursuant to which (i) a wholly
owned Subsidiary of the Borrower was merged with and into ALC
with ALC being the surviving corporation, (ii) with certain
limited exceptions, each share of common stock of ALC outstanding
immediately prior to such merger was automatically converted, at
the effective time of such merger, into the right to receive one
share of the common stock of the Borrower, (iii) a wholly owned
Subsidiary of the Borrower was merged with and into TI, with TI
being the surviving corporation and (iv) with certain limited
exceptions, each share of common stock of TI outstanding
immediately prior to such merger was automatically converted, at
the effective time of such merger, into the right to receive
1.925 shares of the common stock of the Borrower.
"Commitment" means, as to each Lender, the obligation
of such Lender to make Revolving Credit Loans available to the
Borrower pursuant to Section 2.1 in an aggregate principal amount
not to exceed the amount set opposite such Lender's name on the
signature pages hereto (as the same may be reduced at any time or
from time to time pursuant to Subsection 2.1f and Section 2.12)
and, as to all Lenders, the obligation of the Lenders to make
Revolving Credit Loans available to the Borrower in a maximum
aggregate amount not to exceed $500,000,000 as set forth in
Section 2.1.
"Commitment Percentage" means, as to each Lender, the
percentage of the Commitment set forth opposite such Lender's
name on the signature pages hereto.
"Compliance Certificate" means a Compliance Certificate
substantially in the form of Exhibit "H".
"Consolidated" means the consolidation of the accounts
of any two or more Persons in accordance with GAAP.
-6-
"Consolidated EBIT" means for any period Consolidated
Net Income for such period (x) excluding therefrom (A) any
extraordinary items of gain or loss (including without limitation
those items created by mandated changes in accounting treatment)
and (B) any gain or loss of any other Person accounted for on the
equity method, except to the extent of cash distributions
received during the relevant period (y) plus the aggregate
amounts deducted in determining Consolidated Net Income for such
period in respect of (i) Consolidated Interest Expense and (ii)
income taxes.
"Consolidated Interest Expense" means, for the relevant
period, on a Consolidated basis, the sum of all interest due and
payable by the Borrower and its Consolidated Subsidiaries with
regard to Indebtedness for such period.
"Consolidated Net Income" means the net income (or
deficit) of the Borrower and its Consolidated Subsidiaries, for
the period in question, after deducting all operating expenses,
provisions for all taxes and reserves (including reserves for all
deferred income taxes) and all other proper deductions, all
determined on a Consolidated basis in accordance with GAAP,
consistently applied.
"Consolidated Shareholders' Equity" means the total of
those items enumerated under the heading "Shareholders' Equity"
in the Borrower's relevant balance sheets determined on a
Consolidated basis in accordance with GAAP, consistently applied.
"Consolidated Subsidiary" means any Subsidiary (whether
now existing or hereafter organized or acquired) which shall,
during the applicable period, be Consolidated with the Borrower
in any Consolidated financial statement furnished to the Lenders.
"Consolidated Tangible Net Worth" means the
Consolidated Shareholders' Equity in the Borrower and its
Consolidated Subsidiaries, except that there shall be deducted
therefrom (if not otherwise deducted or eliminated) good will,
corporate organization expenses (other than initial organization
expenses and fees), unamortized debt discount and expense,
patents, trademarks, licenses, copyrights, franchises, research
and development expenses, any amounts for treasury stock and
other intangibles not approved in writing by the Required
Lenders, all determined on a Consolidated basis and in accordance
with GAAP, consistently applied.
"Consolidated Total Assets" means as of any date of
determination on a Consolidated basis, the value of all
-7-
properties and all right, title and interest in such properties
which would be classified as assets, determined in accordance
with GAAP exclusive of all write-ups above depreciated costs
(other than write-ups resulting from foreign currency
translations, write-ups to market value of marketable securities
and of swaps, hedges and futures and write-ups of assets of a
going concern business made within twelve months after the
acquisition of such business) subsequent to the Effective Time of
Combination in the book value of any asset owned by the Borrower
or a Consolidated Subsidiary.
"Consolidated Total Capitalization" means as of any
date of determination the sum of (i) Consolidated Total
Indebtedness plus (ii) Consolidated Shareholders' Equity
(calculated before taking into effect adjustments required by FAS
Statement No. 87 and before taking into account those items
created by mandated changes in accounting treatment).
"Consolidated Total Indebtedness" means the
Indebtedness of the Borrower and its Consolidated Subsidiaries
determined on a Consolidated basis in accordance with GAAP,
consistently applied.
"Disbursement" means each advance of funds by a Lender
hereunder whether as a Revolving Credit Loan, a Bid Rate Loan or
a Swingline Loan.
"Dollars" or "$" means the legal tender of the United
States of America.
"Effective Time of Combination" means August 15, 1996.
"Encumbrance" means any encumbrance, mortgage, lien,
charge, pledge, security interest, priority payment, conditional
sales agreement right, or other title retention agreement right
(including any right under a lease which, in accordance with
GAAP, would be treated as a capitalized item) in, upon or against
any asset of any Person.
"Environmental Law(s)" means any and all statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions of any Federal, state or local
governmental authority relating to the environment or the release
of any materials into the environment, whether now in existence
or hereafter enacted, agreed to, issued or otherwise becoming
effective.
-8-
"ERISA" means the Employee Retirement Income Security
Act of 1974, together with the regulations thereunder, as now in
effect and as hereafter from time to time amended or any
successor statute.
"ERISA Affiliate" means, as of any date, any member of
a controlled group of corporations of which the Borrower or any
Subsidiary is a member, which, in any event together with the
Borrower are treated as of such date as a single employer under
Section 414 of the Code.
"Euro-Rate" means, with respect to the Loans comprising
any Disbursement to which the Euro-Rate Option or the Bid Rate
Margin applies for any Interest Period, the interest rate per
annum determined by the Agent by dividing (the resulting quotient
rounded upward to the nearest 1/100th of 1% per annum) (i) the
rate of interest determined by the Agent in accordance with its
usual procedures (which determination shall be conclusive and
binding upon the Borrower, absent manifest error on the part of
the Agent) to be equal to the offered rates for deposits in
Dollars for the applicable Euro-Rate Interest Period which appear
on Page 3750 of the TELERATE rate reporting system or other
similar system as of approximately 11:00 a.m., Greenwich Mean
Time, two (2) Business Days prior to the first day of such Euro-
Rate Interest Period for an amount comparable to such Loan and
having a borrowing date and a maturity comparable to such
Interest Period by (ii) a number equal to 1.00 minus the Euro-
Rate Reserve Percentage. The Euro-Rate may also be expressed by
following formula:
Euro-Rate = Offered rate on TELERATE page 3750
-----------------------------------
1.00 - Euro-Rate Reserve Percentage
If more than one offered rate appears on 3750 of the TELERATE
rate reporting system or similar system, the rate will be the
arithmetic mean of such offered rates.
"Euro-Rate Auction" means a solicitation of Bid Rate
Quotes setting forth Bid Rate Margins pursuant to Subsection
2.2c.
"Euro-Rate Interest Period" means, subject to the
provisions of Subsection 2.4c, any individual period of one (1),
two (2), three (3) or six (6) months selected by the Borrower
commencing on the Borrowing Date, conversion date or renewal date
of a Euro-Rate Portion or a Bid Rate Loan to which the Bid Rate
Margin applies, in either case, to which such period shall apply.
-9-
"Euro-Rate Option" means the interest rate option
described in item (ii) of Subsection 2.4b.
"Euro-Rate Portion" means a Revolving Credit Loan, or
portion thereof, which bears, or is to bear, interest at the
Adjusted Euro-Rate.
"Euro-Rate Reserve Percentage" means the maximum
effective percentage (expressed as a decimal, rounded upward to
the nearest 1/100th of 1%), as determined in good faith by the
Agent (which determination shall be conclusive), which is in
effect on such day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the
reserve requirements (including, without limitation,
supplemental, marginal and emergency reserve requirements) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities").
"Event of Default" has the meaning given it in Article
VII.
"Existing Bank Credit Agreements" means either or both
of (i) the Credit Agreement dated as of June 30, 1995 by and
among ALC, the financial institutions party thereto as lenders
and PNC Bank, National Association as agent and (ii) the Credit
Agreement dated as of July 12, 1994 by and among TI, the
financial institutions party thereto as lenders and Bank of
America Illinois as agent.
"Extension Agreement" has the meaning given it in
Section 2.8.
"Extension Date" has the meaning given it in Section
2.8.
"Facility Fee" means the fee described in Subsection
2.6.
"Federal Funds Effective Rate" means, for any day, the
rate per annum (based on a year of 360 days and the actual days
elapsed and rounded upward to the nearest 1/100th of 1%)
announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates
on overnight federal funds transactions arranged by federal funds
brokers on the previous trading day, as computed and announced by
Federal Reserve Bank New York (or any successor) in substantially
the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds
-10-
Effective Rate" as of the date of this Agreement; provided, if
such Federal Reserve Bank (or its successor) does not announce
such rate on any day, the "Federal Funds Effective Rate" for such
day shall be the Federal Funds Effective Rate for the last day
for which such rate was announced.
"Fiscal Quarter" means the three month fiscal period of
the Borrower beginning on each January 1, April 1, July 1 and
October 1 and ending on the succeeding March 31, June 30,
September 30 and December 31.
"Fiscal Year" means each fiscal period of the Borrower
beginning January 1 and ending on the succeeding December 31.
"GAAP" means generally accepted accounting principles
which shall include, but not be limited to, the official
interpretations thereof as defined by the Financial Accounting
Standards Board, its predecessors and its successors.
"Governmental Authority" means the government of the
United States or the government of any state or locality therein,
any political subdivision or any governmental, quasi-
governmental, judicial, public or statutory instrumentality,
authority, body or entity, or other regulatory bureau, authority,
body or entity of the United States or any state or locality
therein, including the Federal Deposit Insurance Corporation, the
Office of the Comptroller of the Currency and the Board of
Governors of the Federal Reserve System, and any central bank of
any other country or any comparable authority.
"Governmental Rule" means any law, statute, rule,
regulation, ordinance, order, judgment, guideline or decision of
any Governmental Authority.
"Guaranty" or "Guarantee" means any obligation, direct
or indirect, by which a Person undertakes to guaranty, assume or
remain liable for the payment or performance of another Person's
obligations, including but not limited to (i) endorsements of
negotiable instruments, (ii) discounts with recourse, (iii)
agreements to pay or perform upon a second Person's failure to
pay or perform, (iv) remaining liable on obligations assumed by a
second Person, (v) agreements to maintain the capital, working
capital solvency or general financial condition of a second
Person and (vi) agreements for the purchase or other acquisition
of products, materials, supplies or services, if in any case
payment therefor is to be made regardless of the non-delivery of
such products, materials or supplies or the non-furnishing of
such services; provided however, such term shall not include the
-11-
Borrower's or any Subsidiary's Performance Guarantees.
"Hazardous Substances" means any (i) hazardous, toxic
or polluting substances or wastes as defined by any Environmental
Law or (ii) petroleum products.
"Indebtedness" as applied to any Person means, without
duplication, all liabilities of such Person for borrowed money
(other than trade accounts payable arising in the ordinary course
of business), direct or contingent, whether evidenced by a bond,
note, debenture, capitalized lease obligation, deferred purchase
price arrangement, title retention device, letter of credit
obligation, reimbursement agreement, Guaranty, book entry or
otherwise.
"Interest Period" means any or all of a Euro-Rate
Interest Period or a Bid Rate Interest Period.
"Invitation for Bid Rate Quotes" means the written
solicitation by the Agent for Bid Rate Quotes delivered to the
Lenders in accordance with the provisions of Subsection 2.2c.
"Lender" has the meaning given in the preamble to this
Agreement.
"Loan" means with respect to any Lender as of any date,
the aggregate amount of all Disbursements then outstanding from
such Lender to the Borrower hereunder as of such date.
"Loan Account" means the individual loan account
maintained by each Lender as more fully described in Section
2.13.
"Loan Documents" means collectively this Agreement, the
Notes and any other documents furnished in connection herewith.
"Managing Agent" has the meaning set forth in the
preamble of the Agreement.
"Margin Stock" is defined herein as defined in
Regulation U.
"Material Adverse Effect" means, with respect to any
Person relative to any occurrence of whatever nature (including,
without limitation, any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), a
materially adverse effect on (i) the business, revenues,
financial condition or operations of the affected Person, or (ii)
-12-
the ability of the affected Person to perform any of its
obligations under or with respect to any Loan Document to which
it is a party.
"Moody's" means Moody's Investors Service, Inc.
"Note" means any one or all of the several Revolving
Credit Notes, Bid Rate Notes or Swingline Notes.
"Notice of Bid Rate Borrowing" has the meaning set
forth in Subsection 2.2c(v).
"Option" means any one or more of the Base Rate Option,
the Euro-Rate Option or the Bid Rate Option.
"Participant" means any financial institution or other
Person to which a Lender sells a Participation in its Loan.
"Participation" means the sale by a Lender to any
Participant of an undivided interest in all or any part of such
Lender's Loan.
"PBGC" means the Pension Benefit Guaranty Corporation
or any successor Person.
"Performance Guarantee" means any undertaking by the
Borrower or any Subsidiary of the Borrower pursuant to which, in
the ordinary course of such Person's business, such Person
guarantees the performance by a Subsidiary of such Subsidiary's
performance under a contract for the production or delivery of
goods or services.
"Permitted Encumbrance" shall mean, as to any Person,
any of the following:
(i) Encumbrances for taxes, assessments,
governmental charges or levies on any of such Person's
properties, which taxes, assessments, governmental charges
or levies are at the time due and payable or if they can
thereafter be paid without penalty or are being contested in
good faith by appropriate proceedings diligently conducted
and with respect to which the affected Person has created
adequate reserves;
(ii) Pledges or deposits to secure payment of
workers' compensation obligations, unemployment insurance,
deposits or indemnities to secure public or statutory
obligations or for similar purposes;
-13-
(iii) Encumbrances arising out of judgments or
awards against such Person but only to the extent that the
creation of any such encumbrance shall not be an event or
condition which, with or without notice or lapse of time or
both, would cause the Borrower to be in violation of Section
7.7;
(iv) Mechanics', carriers', workmen's, repairmen's
and other similar statutory Encumbrances incurred in the
ordinary course of such Person's business, so long as the
obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate actions or
proceedings diligently conducted;
(v) Security interests in favor of lessors of
personal property, which property is the subject of a true
lease between such lessor and such Person;
(vi) Encumbrances securing Indebtedness existing
on the Closing Date without enlargement or extension of the
Indebtedness secured thereby or the assets encumbered
thereby (any such Encumbrance securing Indebtedness in
excess of $1,000,000 on the Closing Date is listed on
Schedule 5.2);
(vii) Encumbrances created against production
contracts to secure Indebtedness incurred to acquire
equipment and facilities required to produce the items being
sold pursuant to such production contracts, provided that
the Indebtedness secured thereby together with all other
outstanding Indebtedness permitted by such item does not
exceed the limitation set forth in item (iii) of Section
5.1;
(viii) Encumbrances created in the ordinary
course of business in favor of lenders granting an extension
of credit to the Borrower in the form of bankers
acceptances, provided that the Indebtedness secured thereby,
together with the principal amount of all Loans then
outstanding does not exceed the aggregate Commitment of the
Lenders, and provided further, that such Encumbrances shall
be limited to the goods (or documents evidencing the goods)
the purchase or shipment of which shall have been financed
by such bankers' acceptances;
(ix) Easements, rights-of-way, restrictions,
leases or subleases to others or other similar Encumbrances
created in the ordinary course of business which
-14-
Encumbrances do not interfere in any material respect with
the ordinary conduct of the business of the Borrower and its
Subsidiaries;
(x) Encumbrances in favor of any Governmental
Authority created pursuant to production contracts with such
Governmental Authority;
(xi) Encumbrances securing (i) the non-delinquent
performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii)
contingent obligations on surety and appeal bonds, and (iii)
other non-delinquent obligations of a like nature; in each
case, incurred in the ordinary course of business, provided
all such Encumbrances in the aggregate would not (even if
enforced) cause a Material Adverse Effect on the Borrower
and its Consolidated Subsidiaries taken as a whole;
(xii) Encumbrances arising solely by virtue of
any statutory or common law provision relating to banker's
liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a
creditor depository institution; provided that (i) such
deposit account is not a dedicated cash collateral account
and is not subject to restrictions against access by the
Borrower or its Subsidiaries in excess of those set forth by
regulations promulgated by the Federal Reserve Board, and
(ii) such deposit account is not intended by the Borrower or
any Subsidiary to provide collateral to the depository
institution; and
(xiii) Encumbrances consisting of pledges of cash
collateral or government securities to secure obligations
under Swap Contracts entered into in the ordinary course of
business as bona fide hedging transactions, provided that
the counterparty to such Swap Contract is under a similar
requirement to deliver similar collateral from time to time
to the Borrower or the Subsidiary party thereto.
"Person" means any individual, partnership,
corporation, trust, joint venture, banking association,
unincorporated organization or any other entity or enterprise or
government or department or agency thereof.
"Plan" means an employee pension benefit plan (other
than a multiemployer plan) which is maintained by the Borrower or
any ERISA Affiliate for employees of the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA or subject to
-15-
the minimum funding standards under Section 302 of ERISA and
Section 412 of the Code.
"Portion" means either the Base Rate Portion, the Euro-
Rate Portion, or all of the foregoing, as the case may be.
"Potential Default" means an event which, with the
passage of time or the giving of notice or both, shall be an
Event of Default.
"Prime Rate" means the interest rate per annum
announced from time to time by the PNC Bank, National Association
as its prime rate, which rate may not be the lowest rate of
interest then being charged by the PNC Bank, National Association
to its commercial borrowers.
"Purchase Money Indebtedness" means Indebtedness
incurred by a Person solely for the acquisition of an asset,
which Indebtedness is secured by an Encumbrance only on the asset
so acquired, additions and accessions thereto and any proceeds
thereof and which Indebtedness does not exceed ninety percent
(90%) of the purchase price of such asset.
"Purchasing Lender" has the meaning given it in
Subsection 9.6a.
"Register" has the meaning given it in Subsection 9.6b.
"Regulation D" means Regulation D promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
204 et seq.) as such regulation is now in effect and as may
hereafter be amended.
"Regulation G" means Regulation G promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
207 et seq.) as such regulation is now in effect and as may
hereafter be amended.
"Regulation T" means Regulation T promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
220 et seq.) as such regulation is now in effect and as may
hereafter be amended.
"Regulation U" means Regulation U promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
221 et seq.) as such regulation is now in effect and as may
hereafter be amended.
-16-
"Regulation X" means Regulation X promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
224 et seq.) as such regulation is now in effect and as may
hereafter be amended.
"Reportable Event" means any one or more event, defined
in Section 4043(b) of ERISA and in 29 C.F.R. Part 2615, other
than an event for which the requirement for the thirty (30) day
notice to the PBGC is waived.
"Required Lenders" means as of a particular date (i)
prior to the termination of the Commitments, the Lenders whose
Commitment Percentages aggregate at least fifty-one percent (51%)
of the aggregate Commitment Percentages of all the Lenders and
(ii) after the termination of the Commitments, fifty-one (51%) of
the aggregate principal amount of the Loans at the particular
time outstanding.
"Revolving Credit" has the meaning assigned to it in
Section 2.1, as the same may be reduced pursuant to Section 2.12.
"Revolving Credit Loans" means Disbursements by a
Lender pursuant to Section 2.1.
"Revolving Credit Notes" means any one or all of the
several promissory notes of the Borrower evidencing Indebtedness
of the Borrower under the Revolving Credit which notes are
substantially in the form of Exhibit "A" to the Agreement,
together with all extensions, renewals, amendments,
modifications, substitutions and replacements thereto and
thereof.
"S&P" means Standard & Poor's Rating Group, a division
of McGraw-Hill, Inc.
"Senior Ratings" means (i) if the Borrower has a long
term senior unsecured public debt rating, such long term senior
unsecured public debt rating in effect from time to time as
assigned by Moody's and S&P; provided that if the ratings issued
by Moody's and S&P are not at the same level the rating at the
higher level shall be selected; and (ii) if the Borrower has no
long term senior unsecured public debt rating in effect but
either of its two principal operating Subsidiaries, ALC or TI
does have a long term senior unsecured public debt rating in
effect such long term unsecured public debt rating; provided
further that if both such Subsidiaries have long term senior
unsecured public debt ratings the rating selected shall be the
highest of such ratings. For the purposes of this definition a
-17-
level of rating is the smallest increment of adjustment used by
Moody's or S&P. By way of example, the difference between a Baa1
and Baa2 rating by Moody's or a BBB+ and a BBB rating by S&P
represents one level of rating.
"Significant Subsidiary" means, as of any date of
determination, any Subsidiary of the Borrower that has on that
date total assets constituting five percent (5%) or more of the
Borrower's Consolidated Total Assets.
"Subordinated Debentures" means the Series A and Series
C 10% Subordinated Debentures, each Series due 2004 and each
Series issued by TI.
"Subsidiary" means, as to any Person, any corporation
of which at least a majority of the outstanding stock having by
the terms thereof ordinary voting power to elect a majority of
the Board of Directors of such corporation is at the time
directly or indirectly owned or controlled by such Person and/or
by one or more Subsidiaries of such Person.
"Swap Contract" means swap agreements (as such term is
defined in Section 101 of the Federal Bankruptcy Reform Act of
1978, as amended), and any other agreements or arrangements
designed to provide protection against fluctuations of interest
or currency exchange rates or commodity prices.
"Swingline Interest Rate" means, as to the relevant
Swingline Loan, the interest rate therefor mutually agreed upon
by the Borrower and the relevant Swingline Lender, all pursuant
to Section 2.3
"Swingline Lender" means each of PNC Bank, National
Association, Bank of America Illinois, The Chase Manhattan Bank
and Mellon Bank, N.A.
"Swingline Loan" means a Disbursement made by one or
more Swingline Lenders to Borrower pursuant to Section 2.3.
"Swingline Loan Period" means as to each respective
Swingline Loan a period of one (1) Business Day; provided,
however, that no Swingline Loan Period shall extend beyond the
Termination Date.
"Swingline Notes" means any one or all of the
promissory notes of the Borrower evidencing Indebtedness of the
Borrower under the Swingline Option which notes are substantially
in the form of Exhibit "E" to the Agreement, together with all
-18-
extensions, renewals, amendments, modifications, substitutions
and replacements thereto and thereof.
"Swingline Option" means the loan and interest rate
option that may be agreed upon between the Borrower and one or
more of the Swingline Lenders pursuant to Section 2.3 hereof.
"Swingline Quote" means each offer by a Swingline
Lender to make a Swingline Loan which offer is substantially in
the form of Exhibit "G".
"Swingline Quote Request" means the written request of
the Borrower for a Swingline Loan delivered to the Agent in
accordance with the provision of Subsection 2.3c.
"Termination Date" means August 31, 2001, or such later
date as is determined pursuant to Section 2.8.
"Termination Proceedings" means any action taken by the
PBGC under ERISA to terminate any plan.
"TI" means Teledyne, Inc., a Delaware corporation,
which, prior to the Effective Time of the Combination, was a
publicly held corporation and at the Effective Time of the
Combination, as the surviving corporation of a merger of a wholly
owned Subsidiary of the Borrower with and into it, became a
wholly owned Subsidiary of the Borrower. Any reference to TI
herein, in respect of an event or occurrence prior to the
Effective Time of the Combination, shall be a reference to TI as
a publicly held corporation, and any reference to TI herein, in
respect of an event or occurrence after the Effective Time of the
Combination, shall be a reference to TI as a wholly owned
Subsidiary of the Borrower.
"Transfer Effective Date" has the meaning given it in
each respective Assignment and Assumption Agreement.
"Transferor Lender" has the meaning given it in
Subsection 9.6a.
1.2 GAAP Definitions. Accounting terms used herein but not
defined herein shall have the meanings ascribed to them under
GAAP in effect at the time of the execution of this Agreement.
1.3 Other Definitional Conventions and Rules of
Construction. (i) The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall,
unless otherwise expressly specified, refer to this Agreement as
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a whole and not to any particular provision of this Agreement,
and Article, Section and Subsection references are to this
Agreement unless otherwise expressly specified.
(ii) All terms defined in this Agreement in the
singular shall have comparable meanings when used in plural,
and vice versa, unless otherwise specified.
(iii) The word "or" as used herein shall mean and
connote nonexclusive alternatives, unless expressly stated
or the context clearly requires otherwise.
(iv) Captions, headings and Articles, Section and
Subsection references used in this Agreement are for
convenience only and shall not, and are not intended to, in
any way or manner affect the scope or intent of this
Agreement or of any provisions or subdivisions hereof.
ARTICLE II. THE LOANS.
2.1 The Revolving Credit.
2.1a Revolving Credit Loans. The Lenders hereby severally
establish, upon the terms and conditions hereinafter set forth
and relying upon the representations and warranties herein set
forth, a revolving credit in favor of the Borrower in the maximum
aggregate amount of FIVE HUNDRED MILLION AND NO/100 DOLLARS
($500,000,000.00) (the "Revolving Credit"). The Borrower shall
have the right to borrow, repay and reborrow from the Lenders
from the date hereof until the Termination Date pursuant to draws
upon the Revolving Credit the principal amount of which, together
with the principal amount of Bid Rate Loans and Swingline Loans
then outstanding, shall not exceed $500,000,000 in the aggregate
at any one time outstanding.
2.1b Commitment of Each Lender. Each Lender agrees, for
itself only, and subject to the terms and conditions of this
Agreement, to make Revolving Credit Loans to the Borrower from
time to time not to exceed an aggregate principal amount at any
one time outstanding equal to the amount of its respective
Commitment Percentage of the Revolving Credit.
2.1c Notes. The obligation of the Borrower to repay, on or
before the Termination Date, the aggregate unpaid principal
amount of all Revolving Credit Loans shall be evidenced by the
several Revolving Credit Notes, each substantially in the form of
Exhibit "A" hereto, drawn by the Borrower to the order of a
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Lender in the maximum amount of such Lender's Commitment. The
principal amount actually due and owing to a Lender at any time
shall be the then aggregate unpaid principal amount of all
Revolving Credit Loans made by such Lender as shown on the Loan
Account established and maintained by such Lender in accordance
with Section 2.13. Each Revolving Credit Note shall be dated the
date hereof and shall be delivered to the Lenders on such date.
2.1d Disbursements. The amount (i) of any Disbursement
consisting of a Base Rate Portion shall be in the minimum
aggregate principal amount of $1,000,000 or an integral multiple
thereof and (ii) of any disbursement consisting of a Euro-Rate
Portion shall be in the minimum aggregate principal amount of
$5,000,000; provided, however that each incremental unit in
excess of $5,000,000 shall be $1,000,000 or an integral multiple
thereof.
2.1e Method of Making Disbursements. (i) Each request for
Disbursements under the Commitment shall be made by an Authorized
Officer to the Agent orally or in writing (A) in the case of
Disbursements to bear interest at the Base Rate, by 11:00 A.M.
(eastern time) on the Borrowing Date, and (B) in the case of
Disbursements to bear interest at the Adjusted Euro-Rate, by
11:00 A.M. (eastern time) at least three (3) Business Days prior
to the Borrowing Date. Each such request shall (i) specify the
Borrowing Date, (ii) specify the amount of the Disbursements and
each Lender's ratable share thereof, (iii) select the Option or
Options therefor and (iv) in the case of Disbursements which will
bear interest at the Adjusted Euro-Rate, the Interest Period
therefor. Any oral request for Disbursements hereunder shall be
followed by the Borrower's written confirmation of such request
immediately thereafter. A request from the Borrower with respect
to any Disbursements bearing interest at an Adjusted Euro-Rate
shall irrevocably commit the Borrower to take such Disbursements
on the Borrowing Date specified in the request. The Borrower
may, without liability or cost hereunder, cancel any request for
Disbursements bearing interest at the Base Rate at any time prior
to the funding thereof by each of the Lenders by delivering
notice of such cancellation to the Agent.
(ii) Notification of Proposed Disbursement. The Agent
shall promptly notify the Lenders of each request for a
Disbursement.
(iii) Not later than 2:00 P.M. (eastern time) on
the Borrowing Date, each Lender shall make available to the
Agent in immediately available funds at the principal office
of the Agent such Lender's pro-rata share of the
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Disbursements, for the account of the Borrower. No Lender's
obligation to make a Disbursement shall be affected by any
other Lender's failure to make funds available for the same
or any other Disbursement. Nothing in this Subsection 2.1e
shall be deemed to relieve any Lender from its obligation to
fulfill its obligations to the Borrower under this Agreement
or to prejudice any rights which the Borrower may have
against any Lender as a result of any default by such Lender
under this Agreement.
2.1f Temporary Reduction of Available Commitment. While
each Bid Rate Loan advanced pursuant to Section 2.2 and each
Swingline Loan advanced pursuant to Section 2.3 is outstanding,
the principal amount available to be borrowed under the aggregate
Commitment shall be reduced by an amount equal to the principal
amount of each such Bid Rate Loan or Swingline Loan then
outstanding. The foregoing notwithstanding, each Lender shall
remain responsible for funding its Commitment Percentage of the
Revolving Credit Loans. Such reduction shall not affect the
calculation of the Facility Fee.
2.2 Bid Rate Loans.
2.2a Bid Rate. Subject to the provisions of this Section
2.2, each Lender severally agrees that the Borrower may request
Bid Rate Loans, in an aggregate amount at any one time
outstanding not to exceed $500,000,000 less the aggregate
principal amount of all Revolving Credit Loans and Swingline
Loans then outstanding, which shall bear interest at the Bid Rate
Option. In selecting a Bid Rate Option from any Lender, such
Lender may make an advance in excess of such Lender's Commitment.
2.2b Limitations on and Evidence of Bid Rate Loans. Except
as provided under Subsection 2.2c(vi), each Bid Rate Loan or
repayment of a Bid Rate Loan must be in the minimum principal
amount of $5,000,000 or, if in excess of $5,000,000 in integral
multiples of $1,000,000. The obligation of the Borrower to
repay, prior to the Termination Date, the aggregate unpaid
principal amount of such Bid Rate Loans advanced by each Lender
shall be evidenced by the Bid Rate Notes substantially in the
form of Exhibit "B" hereto, one made payable to each Lender in
the amount of $500,000,000. The principal amount actually due
and owing each Lender shall be the aggregate unpaid principal
amount of all Disbursements of Bid Rate Loans made by such
Lender, all as shown on such Lender's Loan Account established
pursuant to Section 2.13.
2.2c Bid Rate Loan Procedure.
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(i) Bid Rate Loan Request. When the Borrower wishes
to request offers to make Bid Rate Loans under this Section,
it shall transmit to the Agent by telex or facsimile
transmission a Bid Rate Quote Request substantially in the
form of Exhibit "C" hereto so as to be received no later
than 11:00 A.M. (eastern time) on (x) the fifth Business Day
prior to the date of Disbursement proposed therein, in the
case of a Euro-Rate Auction or (y) the Business Day next
preceding the date of Disbursement proposed therein, in the
case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have
mutually agreed and shall have informed the Lenders of not
later than the date of the Bid Rate Quote Request for the
first Euro-Rate Auction or Absolute Rate Auction for which
such change is to be effective) specifying:
(A) the proposed date of Disbursement, which
shall be a Business Day,
(B) the aggregate amount of such Disbursement,
which shall be $5,000,000 or a larger multiple of
$1,000,000,
(C) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of Interest Period, and
(D) whether the Bid Rate Quotes requested are to
set forth a Bid Rate Margin or a Bid Rate Absolute Rate.
The Borrower may request offers to make Bid Rate Loans for more
than one Interest Period in a single Bid Rate Quote Request.
(ii) Invitation for Bid Rate Quotes. Promptly upon
receipt of a Bid Rate Quote Request, the Agent shall send to
the Lenders by telex or facsimile transmission an Invitation
for Bid Rate Quotes, which shall constitute an invitation by
the Borrower to each Lender to submit Bid Rate Quotes
offering to make the Bid Rate Loans to which such Bid Rate
Quote Request relates in accordance with this Subsection.
(iii) Submission and Contents of Bid Rate Quotes. (A)
Each Lender may submit a Bid Rate Quote containing an offer
or offers to make Bid Rate Loans in response to any Bid Rate
Quote Request. Each Bid Rate Quote must comply with the
requirements of this paragraph (iii) and must be submitted
to the Agent by telex or facsimile transmission at its
offices specified in or pursuant to Section 9.3 not later
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than (x) 2:00 P.M. (eastern time) on the fourth Business Day
prior to the proposed date of Disbursement, in the case of a
Euro-Rate Auction or (y) 9:45 A.M. (eastern time) on the
proposed date of Disbursement, in the case of an Absolute
Rate Auction (or, in either case, such other time or date as
the Borrower and the Agent shall have mutually agreed and
shall have informed the Lenders of not later than the date
of the Bid Rate Quote Request for the first Euro-Rate
Auction or Absolute Rate Auction for which such change is to
be effective); provided that Bid Rate Quotes submitted by
the Agent (or any affiliate of the Agent) in the capacity of
a Lender may be submitted, and may only be submitted, if the
Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x)
one hour prior to the deadline for the other Lenders, in the
case of a Euro-Rate Auction or (y) 15 minutes prior to the
deadline for the other Lenders, in the case of an Absolute
Rate Auction.
(B) Each Bid Rate Quote shall be in substantially
the form of Exhibit "D" hereto and shall in any case
specify:
(1) the proposed date of Disbursement and
the Interest Period therefor,
(2) the principal amount of the Bid Rate
Loan for which each such offer is being made,
which principal amount (w) may be greater than or
less than the Commitment of the quoting Lender,
(x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the principal
amount of Bid Rate Loans for which offers were
requested and (z) may be subject to an aggregate
limitation as to the principal amount of Bid Rate
Loans for which offers being made by such quoting
Lender may be accepted,
(3) in the case of a Euro-Rate Auction, the
margin above or below the applicable Euro-Rate
(the "Bid Rate Margin") offered for each such Bid
Rate Loan, expressed as a percentage (specified to
the nearest 1/10,000th of 1%) to be added to or
subtracted from such base rate,
(4) in the case of an Absolute Rate Auction,
the rate of interest per annum (specified to the
nearest 1/10,000th of 1%) (the "Bid Rate Absolute
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Rate") offered for each such Bid Rate Loan, and
(5) the identity of the quoting Lender.
A Bid Rate Quote may set forth up to three separate offers by the
quoting Lender with respect to each Interest Period specified in
the related Bid Rate Quote Request.
(C) Any Bid Rate Quote shall be disregarded if
it:
(1) is not substantially in conformity with
Exhibit "D" hereto or does not specify all of the
information required by paragraph (iii)(B)
immediately above;
(2) contains qualifying, conditional or
similar language or, in particular, is conditioned
on acceptance by the Borrower of all or some
specified minimum principal amount of the Bid Rate
Loan for which such Bid Rate Quote is being made;
(3) proposes terms other than or in addition
to those set forth in the applicable Bid Rate
Quote Request; or
(4) arrives after the time set forth in
paragraph (iii)(A) above.
(iv) Notice to Borrower. The Agent shall notify the
Borrower promptly, and in the case of an Absolute Rate
Auction no later than 45 minutes after receipt by the Agent,
of the terms (x) of any Bid Rate Quote submitted by a Lender
that is in accordance with paragraph (iii) above and (y) of
any Bid Rate Quote that amends, modifies or is otherwise
inconsistent with a previous Bid Rate Quote submitted by
such Lender with respect to the same Bid Rate Quote Request.
Any such subsequent Bid Rate Quote shall be disregarded by
the Agent unless such subsequent Bid Rate Quote is submitted
solely to correct a manifest error in such former Bid Rate
Quote. The Agent's notice to the Borrower shall specify (A)
the aggregate principal amount of Bid Rate Loans for which
offers have been received for each Interest Period specified
in the related Bid Rate Quote Request, (B) the respective
principal amounts and Bid Rate Margins or Bid Rate Absolute
Rates, as the case may be, so offered and (C) if applicable,
limitations on the aggregate principal amount of Bid Rate
Loans for which offers in any single Bid Rate Quote may be
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accepted.
(v) Acceptance and Notice by Borrower. Not later than
11:00 A.M. (eastern time) on (x) the third Business Day
prior to the proposed date of Disbursement, in the case of a
Euro-Rate Auction or (y) the proposed date of Disbursement,
in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall
have mutually agreed and shall have informed the Lenders of
not later than the date of the Bid Rate Quote Request for
the first Euro-Rate Auction or Absolute Rate Auction for
which such change is to be effective), the Borrower shall
notify the Agent of its acceptance or non-acceptance of the
offers so presented to it pursuant to Subsection (iv). In
the case of acceptance, such notice (a "Notice of Bid Rate
Borrowing") shall specify the aggregate principal amount of
offers for each Interest Period that are accepted. The
Borrower may accept any Bid Rate Quote in whole or in part;
provided that:
(A) the aggregate principal amount of each Bid
Rate Disbursement may not exceed the applicable amount set
forth in the related Bid Rate Quote Request,
(B) the principal amount of each Bid Rate
borrowing must be $5,000,000 or a larger multiple of
$1,000,000,
(C) acceptance of offers may only be made on the
basis of ascending Bid Rate Margins or Bid Rate Absolute
Rates, as the case may be, and
(D) the Borrower may not accept any offer that is
described in subsection (iii)(C) or that otherwise fails to
comply with the requirements of this Agreement.
(vi) Allocation by Agent. If offers are made by two
or more Lenders with the same Bid Rate Margins or Bid Rate
Absolute Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which such
offers are accepted for the related Interest Period, the
principal amount of Bid Rate Loans in respect of which such
offers are accepted shall be allocated by the Agent among
such Lenders as nearly as possible (in multiples of
$1,000,000, as the Agent may deem appropriate) in proportion
to the aggregate principal amounts of such offers.
Determinations by the Agent of the amounts of Bid Rate Loans
shall be conclusive in the absence of manifest error.
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(vii) Bid Rate Loan Prepayment. No Bid Rate Loan
shall be prepaid prior to the end of the relevant Bid Rate
Interest Period without the prior consent of the Lender
extending such Bid Rate Loan.
2.2d Bid Rate Loan Interest. Interest on the Bid Rate Loans
shall accrue at the rate per annum agreed upon between the Lender
or Lenders making such Bid Rate Loans and the Borrower pursuant
to the Bid Rate selection procedures set forth in Subsection 2.2c
above.
2.2e Base Rate Option Borrowing in Event of Cancelled Bid
Rate Loan Request. In the event of cancellation by the Borrower
of a Bid Rate Loan Request pursuant to paragraph (v) of
Subsection 2.2c, the Borrower may, before 1:00 P.M. (eastern
time) on the day of such cancellation, submit to the Agent a
request for a Disbursement under the Commitment to be made on the
day of such cancellation and to bear interest at the Base Rate
Option. The Lenders shall use their best efforts to make their
respective pro rata shares of such Disbursement available at the
office of the Borrower prior to 2:00 P.M. (eastern time) on the
date of such Disbursement in accordance with the procedures set
forth in Subsection 2.1e(iii).
2.3 Swingline Loans.
2.3a Swingline Rate. Subject to the provisions of this
Section 2.3, each Swingline Lender severally agrees that the
Borrower may request that Swingline Loans, in an aggregate amount
at any one time outstanding not to exceed the lesser of (i)
$25,000,000 or (ii) an amount which, when added to the aggregate
principal amount of all other Loans then outstanding, does not
exceed $500,000,000, which shall bear interest at the Swingline
Option.
2.3b Limitations on and Evidence of Swingline Loans. Except
as provided under Subsection 2.3c(iv), each Swingline Loan or
repayment of a Swingline Loan must be in the minimum principal
amount of $10,000 or, if in excess of $10,000 in integral
multiples of $10,000. Each Swingline Loan shall be for a
Swingline Loan Period. The obligation of the Borrower to repay,
prior to the Termination Date, the aggregate unpaid principal
amount of such Swingline Loans advanced by each Swingline Lender
shall be evidenced by the Swingline Notes substantially in the
form of Exhibit "E" hereto, one made payable to each Swingline
Lender in the amount of $25,000,000. The principal amount
actually due and owing each Swingline Lender shall be the
aggregate unpaid principal amount of all Disbursements of
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Swingline Loans made by such Swingline Lender, all as shown on
such Lender's Loan Account established pursuant to Section 2.13.
2.3c Swingline Loan Procedure.
(i) Swingline Loan Request. When the Borrower wishes
to request offers to make Swingline Loans under this
Section, it shall transmit to the Agent by telex or
facsimile transmission for each Swingline Loan Period a
Swingline Quote Request, substantially in the form of
Exhibit "F" hereto, so as to be received no later than 11:00
A.M. (eastern time) on the Business Day of Disbursement
proposed therein specifying:
(A) the proposed date of Disbursement, which
shall be a Business Day, and
(B) the aggregate amount of such Disbursement,
which shall be $10,000 or a larger multiple of $10,000.
(ii) Invitation for Swingline Quotes. Promptly upon
receipt of a Swingline Quote Request, the Agent shall send
to the Swingline Lenders by telex or facsimile transmissions
an Invitation for Swingline Quote, which shall constitute an
invitation by the Borrower to each Swingline Lender to
submit Swingline Quotes offering to make the Swingline Loan
for such Swingline Loan Period to which such Swingline Quote
Request relates in accordance with this Subsection.
(iii) Submission and Contents of Swingline Quotes.
(A) Each Swingline Lender may submit a Swingline Quote
containing an offer to make a Swingline Loan for such
Swingline Loan Period in response to any Swingline Quote
Request. Each Swingline Quote must comply with the
requirements of this paragraph (iii) and must be submitted
to the Agent by telex or facsimile transmission at its
offices specified in or pursuant to Section 9.3 not later
than (x) 1:00 P.M. (eastern time) on the Business Day on the
proposed date of Disbursement (or such other time or date as
the Borrower and the Swingline Lenders shall have mutually
agreed); provided that Swingline Quotes submitted by the
Agent (or any affiliate of the Agent) in the capacity of a
Swingline Lender may be submitted, and may only be
submitted, if the Agent or such affiliate notifies the
Borrower of the terms of the offer or offers contained
therein not later than 15 minutes prior to the deadline for
the other Swingline Lenders.
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(B) Each Swingline Quote shall be in
substantially the form of Exhibit "G" hereto and shall in
any case specify:
(1) the proposed date of Disbursement,
(2) the principal amount of the Swingline
Loan for which each such offer is being made,
which principal amount, (x) must be $10,000 or a
larger multiple of $10,000, (y) may not exceed the
principal amount of Swingline Loan for which
offers were requested and (z) may be subject to an
aggregate limitation as to the principal amount of
Swingline Loans for which offers being made by
such quoting Swingline Lender may be accepted,
(3) the rate of interest per annum
(specified to the nearest 1/10,000th of 1%)
offered for each such Swingline Loan; and
(4) the identity of the quoting Swingline
Lender.
(C) Any Swingline Quote shall be disregarded if
it:
(1) is not substantially in conformity to
Exhibit "G" hereto or does not supply all of the
information required by paragraph (iii)(B)
immediately above;
(2) contains qualifying, conditional or
similar language or, in particular, is conditioned
on acceptance by the Borrower of all or some
specified minimum principal amount of the
Swingline Loan for which such Swingline Quote is
being made;
(3) proposes terms other than or in addition
to those set forth in the applicable Swingline
Loan Request; or
(4) arrives after the time set forth in
paragraph (iii)(A) above.
(iv) Notice to Borrower. The Agent shall notify the
Borrower, no later than 45 minutes after receipt by the
Agent, of the terms (x) of any Swingline Quote submitted by
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a Swingline Lender that is in accordance with paragraph
(iii) above (y) of any Swingline Quote that amends, modifies
or is otherwise inconsistent with a previous Swingline Quote
submitted by such Swingline Lender with respect to the same
Swingline Quote Request. Any such subsequent Swingline
Quote shall be disregarded by the Agent unless such
subsequent Swingline Quote is submitted solely to correct a
manifest error. The Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Swingline
Loans for which offers have been received, (B) the
respective principal amounts so offered and (C), if
applicable, limitations on the aggregate principal amount of
the Swingline Loans for which offers in any single Swingline
Quote may be accepted.
(v) Acceptance and Notice by Borrower. Not later than
1:30 P.M. (eastern time) on the proposed date of
Disbursement (or such other time or date as the Borrower and
the Swingline Lenders shall have mutually agreed), the
Borrower shall notify the Agent of its acceptance or non-
acceptance of the offers so presented to it pursuant to
Subsection (iii). In the case of acceptance, such notice (a
"Notice of Swingline Borrowing") shall specify the aggregate
principal amount of offers that are accepted. The Borrower
may accept any Swingline Quote in whole or in part; provided
that:
(A) the aggregate principal amount of each
Swingline Disbursement may not exceed the applicable amount
set forth in the related Swingline Quote Request,
(B) the principal amount of each Swingline
borrowing must be $10,000 or a larger multiple of $10,000,
(C) acceptance of offers may only be made on the
basis of ascending Swingline Interest Rate, and
(D) the Borrower may not accept any offer that
fails to comply with the requirements of this Agreement.
(vi) Allocation by Borrower. If offers are made by
two or more Swingline Lenders with the same Swingline
Interest Rate for a greater aggregate principal amount than
the amount in respect of which such offers are accepted for
the related Swingline Loan, the principal amount of
Swingline Loans in respect of which such offers are accepted
shall be allocated by the Borrower among such Swingline
Lenders as nearly as possible (in multiples of $10,000, as
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the Agent may deem appropriate) in proportion to the
aggregate principal amounts of such offers. Determinations
by the Borrower of the amounts of Swingline Loans shall be
conclusive.
(vii) Swingline Loan Prepayment. A Swingline Loan
shall be prepaid at any time without the prior consent of
the Swingline Lender extending such Swingline Loan.
2.3d Swingline Loan Interest. Interest on the Swingline
Loans shall accrue at the rate per annum agreed upon between the
Swingline Lender or Swingline Lenders making such Swingline Loans
and the Borrower, pursuant to the Swingline selection procedures
set forth in Subsection 2.3c above.
2.3e Risk Participation. Upon the Disbursement of each
Swingline Loan and without any further action by or on behalf of
such Lender, each Lender hereby agrees to purchase, upon the
occurrence of an Event of Default, an undivided full risk non-
recourse participation in such Swingline Loan, in an amount equal
to (i) such Lender's Commitment Percentage (ii) multiplied by the
outstanding principal amount of such Swingline Loan on the date
of the Event of Default; provided however, no Lender shall
participate in any Swingline Loan which Swingline Loan is made
after a notice of an Event of Default has been given. If and to
the extent any Swingline Lender receives payment of principal or
interest on a participated Swingline Loan, such Swingline Lender
shall deliver to each Lender such Lender's pro rata share of such
payment.
2.4 Interest Rates, Interest Payment and Certain Provisions
Relating to Interest and Fees.
2.4a Payments of Interest. The Borrower shall pay interest
on the principal amount of the Loans from time to time
outstanding hereunder, from the date thereof until payment in
full, at the rates of interest determined pursuant to this
Section 2.4. The Borrower shall pay accrued interest on the
unpaid principal balance of the Loans in arrears: (i) with
respect to each Base Rate Portion, at the Base Rate on the last
Business Day of each month during the term thereof; (ii) with
respect to each Euro-Rate Portion, at the Adjusted Euro-Rate on
the last day of each Euro-Rate Interest Period as provided for in
Subsection 2.4c (provided, however, if the Euro-Rate Interest
Period chosen for a Euro-Rate Portion exceeds three (3) months,
interest on that Euro-Rate Portion shall be due and payable on
the day which is (A) three months after the first day of Euro-
Rate Interest Period and (B) the last day of such Euro-Rate
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Interest Period); (iii) with respect to each Bid Rate Loan, at
the Bid Rate on the last day of each Bid Rate Interest Period as
provided for in Subsection 2.4c (provided, however, if the Bid
Rate Interest Period chosen for a Bid Rate Loan exceeds ninety
(90) days, interest on that Bid Rate Loan shall be due and
payable every ninety (90) days during such Bid Rate Interest
Period and on the last day of such Bid Rate Interest Period);
(iv) with respect to each Swingline Loan at the Swingline Rate on
the last day of the Swingline Loan Period; and (v) with respect
to all such Portions, at the applicable interest rate (A) when
due, whether at maturity of such Note, by acceleration or
otherwise, and (B) after maturity, on demand until paid in full.
2.4b Interest Rate Options. The unpaid principal amount of
the Revolving Credit Loans shall bear interest, for each day
until due, at one or more rates of interest selected by the
Borrower from among the Options set forth below; it being
understood that, subject to the provisions of this Agreement, the
Borrower may select different Options to apply simultaneously to
different Portions of the Revolving Credit Loans and may select
different Interest Periods to apply simultaneously to different
Portions of the Euro-Rate Portions of the Revolving Credit Loans.
(i) Base Rate Option: A rate of interest per annum
(computed upon the basis of a year of 365 or 366 days, as
the case may be, and the actual number of days elapsed)
equal to the Base Rate. The rate of interest per annum
under the Base Rate Option shall be adjusted automatically,
from time to time, upon each change in the Base Rate.
(ii) Euro-Rate Option: A rate of interest per annum
(computed on the basis of a year of 360 days and the actual
number of days elapsed) equal to the sum of (A) the Euro-
Rate plus (B) the Applicable Euro-Rate Margin (the "Adjusted
Euro-Rate"). The Applicable Euro-Rate Margin for each Euro-
Rate Portion then outstanding shall be adjusted
automatically, from time to time, effective upon each change
in the Senior Ratings.
2.4c Interest Periods; Limitations on Elections. At any
time when the Borrower shall select, convert to or renew at the
Euro-Rate Option with respect to all or any Portion of the
outstanding Revolving Credit Loans or select, convert or renew a
Bid Rate Loan to which the Bid Rate Margin applies, it shall fix
one or more Interest Periods during which such Option(s) shall
apply. All of the foregoing, however, is subject to the
following:
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(i) any Euro-Rate Interest Period which would
otherwise end on a day which is not a Business Day shall be
extended to the next Business Day unless such Business Day
falls in the succeeding calendar month in which case such
Euro-Rate Interest Period shall end on the next preceding
Business Day; and
(ii) any Euro-Rate Interest Period which begins on the
last day of a calendar month or on a day for which there is
no numerically corresponding day in the subsequent calendar
month during which such Euro-Rate Interest Period is to end
shall end on the last Business Day of such subsequent month.
In addition, elections by the Borrower of the Euro-Rate
Option shall be subject to the following further limitations:
(i) If a Euro-Rate Interest Period is elected with
regard to amounts outstanding under the Revolving Credit and
such Interest Period would end after the Termination Date,
such Interest Period shall end on the Termination Date; and
(ii) At no time may there be more than six (6) Euro-
Rate Interest Periods in effect relating to Revolving Credit
Loans; provided, however if a Base Rate Portion is
outstanding there shall be not more than five (5) Euro-Rate
Interest Periods in effect relating to Revolving Credit
Loans.
2.4d Election, Conversion or Renewal of Interest Rate
Options. Elections of or conversions to the Base Rate Option
shall continue in effect until converted to the Euro-Rate Option
as hereinafter provided. Elections of, conversions to or
renewals of the Euro-Rate Option shall expire as to each Euro-
Rate Portion at the expiration of the applicable Interest Period.
Elections of Bid Rate Loans shall expire as to each such Bid Rate
Loan at the end of the applicable Bid Rate Interest Period.
At any time, with respect to any Base Rate Portion, or
at the expiration of the applicable Interest Period, with respect
to any Euro-Rate Portion, the Borrower (subject to Subsection
2.4c) may cause all or any part of the principal amount of such
Portion to be converted to and/or (in the case of a Euro-Rate
Portion) to be renewed under the Euro-Rate Option by notice to
each of the Lenders as hereinafter provided. Such notice (i)
shall be irrevocable; (ii) shall be given not later than 11:00
A.M. (eastern time) in the case of a conversion to or renewal
of, either in whole or in part, the Euro-Rate Option on the third
Business Day prior to the proposed effective date for the
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conversion or renewal; and (iii) shall set forth:
(A) the effective date of such conversion or renewal,
which shall be a Business Day;
(B) the new Euro-Rate Interest Period(s) selected; and
(C) with respect to each such Interest Period, the
aggregate principal amount of the corresponding Euro-Rate
Portion.
At the expiration of each Euro-Rate Interest Period,
any part (including the whole) of the principal amount of the
corresponding Euro-Rate Portion as to which no notice of
conversion or renewal has been received as provided above, shall
automatically be converted to the Base Rate Option.
2.4e Notification of Election of an Interest Rate Option.
The Borrower, by an Authorized Officer, shall notify the Agent of
(i) each election or renewal of an Option and each conversion
from one Option to another, (ii) the Portion of the Revolving
Credit Loans then outstanding to be allocated to each Option and
(iii) where relevant, the Interest Periods applicable to each
Option, by communication as provided for in this Agreement. Any
such communication may be oral or written and if oral, it shall
be followed immediately by written confirmation of such Option
election executed by an Authorized Officer.
2.4f Default Interest. After the occurrence of and during
the continuance of an Event of Default and whether or not
judgment has been entered against the Borrower on the Revolving
Credit Notes, all Base Rate Portions shall bear interest at a
rate per annum which shall be two hundred (200) basis points (2%)
per annum above the rate otherwise in effect under the Base Rate
Option, such interest rate to change automatically from time to
time, effective as of the effective date of each change in the
Base Rate. After the occurrence of and during the continuance of
an Event of Default and whether or not judgment has been entered
against the Borrower on the Revolving Credit Notes and the Bid
Rate Notes, all such Euro-Rate Portions and Bid Rate Loans shall
bear interest (i) until the end of the then current Interest
Period, at a rate per annum which shall be two hundred (200)
basis points (2%) per annum above the rate otherwise in effect
under the Euro-Rate Option and the Bid Rate Option, as the case
may be, and (ii) at the end of the then current Interest Period,
and thereafter at the sum of (A) the Base Rate plus (B) two
hundred (200) basis points (2%) per annum. After the occurrence
of and during the continuance of an Event of Default whether or
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not judgment has been entered against the Borrower on the
Swingline Notes, all Swingline Loans shall bear interest at the
sum of (A) the Base Rate plus (B) two hundred (200) basis points
(2%) per annum.
2.5 Yield-Protection, Capital Adequacy and Miscellaneous
Provisions Relating to Euro-Rate.
2.5a Yield Protection. Notwithstanding other provisions of
this Section 2.5:
(i) If any Governmental Rule (including, without
limitation, Regulation D), or if any change therein on or
after the date hereof, or in the interpretation thereof by
any Governmental Authority charged with the administration
thereof, shall:
(A) subject any Lender to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind with
respect to payments of principal or interest or other
amounts due hereunder (other than any tax imposed or based
upon the income of a Lender and payable to any Governmental
Authority in the United States of America or any state
thereof); or
(B) change the basis of taxation of any Lender
with respect to payments of principal or interest or other
amounts due hereunder (other than any change which affects,
and only to the extent that it affects, the taxation by the
United States or any state thereof of the total net income
of such Lender); or
(C) impose, modify or deem applicable any
reserve, special deposit or similar requirements against
assets held by any Lender applicable to the Commitment or
Loans made hereunder (other than such requirements which are
included in the determination of the applicable rate of
interest hereunder); or
(D) impose upon any Lender any other obligation
or condition with respect to this Agreement,
and the result of any of the foregoing is to increase the cost to
the affected Lender, reduce the income receivable by the affected
Lender, reduce the rate of return on the affected Lender's
capital, or impose any expenses upon the affected Lender, all
with respect to any of the Loans (or any portion thereof) by an
amount which the affected Lender reasonably deems material, and
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if the affected Lender is then demanding similar compensation for
such occurrences from other borrowers who are similarly situated
and who have a similar relationship with the affected Lender and
from which the affected Lender has the right to demand such
compensation, then and in any such case:
(1) the affected Lender shall promptly
notify the Borrower of the happening of such event;
(2) the Borrower shall pay to the affected
Lender, on demand, such amount as will compensate the
affected Lender for such reduction in its rate of
return; and
(3) the Borrower may pay the affected
portion of the affected Lender's Loans in full without
the payment of any additional amount, including
prepayment penalties, other than amounts payable on
account of the affected Lender's out-of-pocket losses
(including funding loss, if any, as provided in Section
2.11) which are not otherwise provided for in
subparagraph (2) immediately above.
(ii) A certificate as to the increased cost or reduced
amount as a result of any event mentioned in this Subsection
2.5a shall be promptly submitted by the affected Lender to
the Borrower in accordance with the provisions hereof. Such
certificate shall be prima facie evidence as to the amount
of such increased cost or reduced amount.
2.5b Capital Adequacy. If, after the date hereof, (i) any
adoption of or any change in or in the interpretation of any
Governmental Rule, or (ii) compliance with any Governmental Rule
of any Governmental Authority exercising control over banks or
financial institutions generally or any court of competent
jurisdiction, requires that the Commitment (including, without
limitation, obligations in respect of any Revolving Credit Loans,
Bid Rate Loans or Swingline Loans) hereunder be treated as an
asset or otherwise be included for purposes of calculating the
appropriate amount of capital to be maintained by any Lender or
any corporation controlling any Lender (a "Capital Adequacy
Event"), the result of which is to reduce the rate of return on a
Lender's capital as a consequence of its Commitment to a level
below that which the affected Lender could have achieved but for
such Capital Adequacy Event, taking into consideration the
Lender's policies with respect to capital adequacy, by an amount
which the affected Lender reasonably deems to be material, the
affected Lender shall promptly deliver to the Borrower a
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statement of the amount necessary to compensate the affected
Lender or the reduction in the rate of return on its capital
attributable to its Commitment (the "Capital Compensation
Amount"). The affected Lender shall determine the Capital
Compensation Amount in good faith, using reasonable attribution
and averaging methods. Each affected Lender shall from time to
time notify the Borrower of the amount so determined. Each such
notification shall be prima facie evidence of the amount of the
Capital Compensation Amount set forth therein, and such Capital
Compensation Amount shall be due and payable by the Borrower to
the affected Lender thirty (30) days after such notice is given.
As soon as practicable after any Capital Adequacy Event, the
affected Lender shall submit to the Borrower estimates of the
Capital Compensation Amounts that would be payable as a function
of the affected Lender's Commitment hereunder. Notwithstanding
the foregoing, however, no Lender shall demand Capital
Compensation Amounts hereunder unless it is demanding similar
compensation from other borrowers who are similarly situated and
who have a similar relationship with such Lender and from which
such Lender has the right to demand such compensation.
2.5c Euro-Rate Unascertainable. If, on any date on which
the Adjusted Euro-Rate would otherwise be set, the Agent
reasonably shall have determined (which determination shall be
final and conclusive) that by reason of circumstances affecting
the interbank Eurodollar market, adequate and reasonable means do
not exist for ascertaining the Euro-Rate, the Agent shall give
prompt notice of such determination to the Borrower and the
Lenders and, until the Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such determination
no longer exist, the right of the Borrower to borrow under,
convert to or renew the Euro-Rate Option shall be suspended. Any
notice of borrowing under, conversion to or renewal of the Euro-
Rate Option which was to become effective during the period of
such suspension shall be treated as a request to borrow under,
convert to or renew at the Base Rate Option with respect to the
principal amount therein specified.
2.5d Illegality. If a Lender shall determine in good faith
(which determination shall be final and conclusive) that
compliance by such Lender with any applicable law, treaty or
other Governmental Rule, (whether or not having the force of
law), or the interpretation or application thereof by any
Governmental Authority, has made it unlawful for such Lender to
make or maintain the Revolving Credit Loans under the Euro-Rate
Option or Bid Rate Loans to which the Bid Rate Margin applies
(including but not limited to acquiring Eurodollar liabilities to
fund such Loans), such Lender shall give notice of such
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determination to the Borrower and the other Lenders.
Notwithstanding any provision of this Agreement to the contrary,
unless and until the affected Lender shall have given notice to
the Borrower and the other Lenders that the circumstances giving
rise to such determination no longer apply:
(i) with respect to any Interest Periods thereafter
commencing, interest on the Revolving Credit Loans bearing
interest at the Adjusted Euro-Rate (whichever one or more
have been determined by the affected Lender to be unlawful)
shall, unless the Borrower shall have selected a different
Option which is then available, be computed and payable
under the Base Rate Option; and
(ii) on such date, if any, as shall be required by law,
any Loans bearing interest at the Adjusted Euro-Rate or any
Bid Rate Loan to which the Bid Rate Margin applies then
outstanding shall be automatically converted to the Base
Rate Option, and the Borrower shall pay to the affected
Lender the accrued and unpaid interest on such Loans to (but
not including) the date of such conversion at the applicable
interest rate or rates in effect for such Loans prior to
such conversion.
2.6 Facility Fee. The Borrower agrees to pay to the
Lenders, on a pro rata basis, beginning on September 30, 1996,
and continuing quarterly in arrears thereafter on the last day of
each December, March, June and September during the term hereof
to and including the Termination Date, a Facility Fee calculated
at the Applicable Facility Fee Percentage, on the daily (computed
at the opening of business) average amount of the Commitment for
the quarter then ending; provided, however, the first payment
under this Subsection 2.6 shall be only for the actual number of
days elapsed between the actual execution of this Agreement and
September 30, 1996 and the last payment under this Subsection 2.6
shall be only for the actual number of days elapsed between the
last quarterly payment date and the Termination Date. The
Applicable Facility Fee Percentage shall be adjusted
automatically, from time to time, effective upon each change in
the Senior Ratings.
2.7 Calculation of Interest and Facility Fee. The
calculation of the amount of interest due and owing to each
Lender shall be made by each Lender and shall be evidenced by
such Lender posting the amount of interest due under such
Lender's Revolving Credit Loans, Bid Rate Loans and Swingline
Loans to the Loan Account established by such Lender pursuant to
Section 2.13. The Facility Fee shall be calculated on the basis
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of a 360 day year and actual number of days elapsed. The
calculation of the amount of the Facility Fee due and owing to
each Lender shall be made by each Lender and shall be evidenced
by posting such amount due under the Loan Account established by
such Lender pursuant to Section 2.13.
2.8 Extension of Termination Date. The Termination Date
may be extended, in the manner set forth in this Section 2.8, on
August 31, 1997 and on each anniversary of such date (an
"Extension Date") for successive periods of one year each. If
the Borrower wishes to request an extension of the Termination
Date on any Extension Date, it shall give written notice to that
effect to the Agent not less than sixty (60) nor more than
seventy-five (75) days prior to such Extension Date. Each Lender
will use its best efforts to respond to such request, whether
affirmatively or negatively, within thirty (30) days after
receipt of such notice from the Agent. If the Borrower shall
have received affirmative responses from the Lenders, then,
subject to receipt by the Borrower of counterparts of an
agreement duly completed and signed by the Borrower and each such
Lender (an "Extension Agreement"), the Termination Date shall be
extended, effective on such Extension Date, for a period of one
year to the date stated in such Extension Agreement. If the
Borrower shall not have received affirmative responses from all
Lenders the Termination Date shall not be extended. For purposes
of this Section 2.8, the failure of any Lender to respond shall
be deemed to be a negative response from such Lender.
2.9 Substitution or Replacement of a Lender. The Borrower
shall have the right (provided that at such time, no Event of
Default and no Potential Default has occurred and is continuing),
in its sole discretion, to either:
(i) repay, (A) at any time if either no Loans are
outstanding or if Loans bearing interest under the Base Rate
Option are the only Loans outstanding, (B) subject to
Section 2.11, upon three (3) days prior notice if the Loans
outstanding include Revolving Credit Loans bearing interest
under the Euro-Rate Option or the Bid Rate Option or the
Swingline Loans, the outstanding Loans of such Lender in
whole, together with interest thereon and any other amount
due such Lender pursuant to the terms of this Agreement, and
to terminate the Commitment of such Lender; or
(ii) seek a substitute lending institution or
institutions (which may be one or more of the other Lenders)
to purchase the Notes and assume the Loans, the Commitment
and the other obligations of such Lender under this
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Agreement,
if any of the following conditions occur:
(i) the obligation of any such Lender to make
Revolving Credit Loans which bear or are to bear interest
under the Euro-Rate Option has been suspended pursuant to
Subsection 2.5d; or
(ii) any such Lender has responded negatively to a
request for extension of the Termination Date pursuant to
Section 2.8.
Any proposed substitute lending institution, which is
not a Lender prior to the Borrower's selection thereof, must be
acceptable to the Agent, whose consent shall not be unreasonably
withheld.
2.10 Loan Repayment. Each repayment of the Loans shall be
in the minimum amount of $1,000,000, in the aggregate, or an
integral multiple thereof, or such lesser amount as is actually
outstanding thereunder. The Borrower, upon (i) oral or written
notice to Agent by 11:00 A.M. (eastern time) on the day of the
proposed repayment, in the case of Revolving Credit Loans bearing
interest at the Base Rate or the Swingline Loans or (ii) three
(3) Business Days' prior oral or written notice to the Agent, in
the case of Revolving Credit Loans bearing interest at the
Adjusted Euro-Rate, followed immediately thereafter by the
Borrower's written confirmation to the Agent of any oral notice,
may repay the outstanding amount of the Loans in whole or in part
with accrued interest, fees and other amounts then due and
payable on the amount repaid to the date of such repayment. The
Borrower may repay any Portion of the Revolving Credit Loans
bearing interest at the Base Rate or the Swingline Loans without
premium or penalty.
In the event that principal payments are received on a
day on which principal payments are due on Revolving Credit
Loans, Bid Rate Loans and Swingline Loans the principal payments
shall be applied: first, to repay in full outstanding Swingline
Loans, if any; second, to repay in full the principal amount of
the Revolving Credit Loans then due and payable, if any; and
third, to repay in full the principal amount of the Bid Rate
Loans then due and payable, if any.
Any repayment of the Loans shall increase, by the
amount of that repayment, the unborrowed balance of the
Commitment; it being contemplated that the Borrower may repay and
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reborrow from time-to-time under the Commitment until the
Termination Date.
2.11 Additional Payments by the Borrower. If (i) the
Borrower shall fail to make any payment due hereunder on the due
date thereof, (ii) the Borrower shall make a payment, prepayment
or conversion of any Euro-Rate Portion of the Revolving Credit
Loans or any Bid Rate Loan on a day other than the last day of
the applicable Interest Period, (iii) the Borrower shall convert
any Portion to the Base Rate Option from another Option pursuant
to Subsection 2.4d on a day other than the last day of the
relevant Interest Period, or (iv) the Borrower shall fail on the
date specified therefor to consummate any borrowing, conversion
or renewal after giving a request for a Disbursement or notice of
conversion or renewal or Notice of Bid Rate Borrowing, and, as a
result of any such action or inaction, a Lender reasonably incurs
any losses and expenses which it would not have incurred but for
such action or inaction, the Borrower shall pay such additional
amounts as will compensate the affected Lender for such losses
and expenses, including the cost of reemployment of any funds
prepaid at rates lower than the cost to the affected Lender of
such funds. Such losses and expenses, which the affected Lender
shall exercise reasonable efforts to minimize, shall be specified
in writing (setting forth, in reasonable detail, the basis of
calculation) to the Borrower by the affected Lender, which
writing shall be prima facie evidence of the amounts set forth
therein, and such amounts shall be payable within thirty (30)
days of demand therefor.
2.12 Voluntary Reduction of Availability. At any time and
from time to time upon no less than three (3) Business Days prior
written notice to the Agent, the Borrower may terminate, in whole
or in part, without penalty, the then unused portion of the
Commitments, thereby causing a corresponding abatement of the
Facility Fee. Each such reduction shall be in a minimum
principal amount of $10,000,000 or in integral multiples thereof.
The Facility Fee shall cease to accrue with respect to any unused
portion of the commitments so terminated on either (i) the date
five (5) Business Days after receipt of such notice or (ii) the
date so designated in the written notice if such written notice
is given to the Agent more than five (5) Business Days prior to
the effective date of such termination. Notice of termination
once given shall be irrevocable and the portion of the
Commitments so terminated shall not be available for borrowing
once such notice has been given under the terms hereof. The
Agent shall promptly notify each Lender of its pro rata share of
such terminated unused portion and the date of each such
termination.
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2.13 Loan Account. Each Lender shall open and maintain on
its books a Loan Account in the name of the Borrower with respect
to Disbursements made, repayments, prepayments, the computation
and payment of interest and the Facility Fee and the computation
of other amounts due and sums paid and payable to such Lender
pursuant to this Article II. Such Loan Account shall be prima
facie evidence as to the amount at any time due to such Lender
from the Borrower pursuant to this Article II; provided, however,
that the failure of a Lender to make notations, or to make
accurate notations, on its Loan Account including without
limitation notations with respect to interest and Facility Fees
pursuant to Section 2.7 shall not limit, expand or otherwise
affect any obligations of the Borrower hereunder.
2.14 Payment from Accounts Maintained by Borrower. In the
event that any payment of principal, interest, Facility Fee or
any other amount due to the Lenders or the Agent under the
Agreement, the Notes or the other Loan Documents is not paid when
due, the Agent is hereby authorized to effect such payment by
debiting any demand deposit account of the Borrower maintained
with the Agent (excluding however any special purpose fiduciary
accounts, which are designated as such at the time of their
creation, and mandated by applicable statutes, regulations or
rules) and distributing such payment to the party to whom such
amounts are due. This right of debiting accounts of the Borrower
is in addition to any right of set-off accorded the Lenders or
the Agent hereunder or by operation of law.
2.15 Time, Place and Manner of Payments. All payments to be
made by the Borrower under the Notes (other than those provided
for in Sections 2.5 and 2.11 hereof), and of all fees and any
other amounts due hereunder shall be made at the principal office
of the Agent. The Agent will promptly pay each such payment
received to each Lender or its order. All payments due a Lender
by reason of Sections 2.5 or 2.11 hereof shall be paid at the
principal office of the Lender which invoices the Borrower for
such payment. All payments to be made by the Borrower under this
Agreement shall be paid in immediately available funds no later
than 12:00 Noon (eastern time) on the date such payment is due.
ARTICLE III. REPRESENTATIONS AND WARRANTIES.
To induce the Lenders to enter into this Agreement and
to make the Loans herein provided for, the Borrower warrants to
the Lenders that:
3.1 Corporate Existence. The Borrower and each of its
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Significant Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its respective
state of incorporation and it is duly qualified and in good
standing as a foreign corporation authorized to do business in
each jurisdiction where, because of the nature of its respective
properties or businesses, such qualification is required or, if
not so qualified or in good standing in any state, the lack of
such qualification or good standing will not materially affect
the Agent's or the Lender's ability to enforce this Agreement,
the Notes or the other Loan Documents or will not have a Material
Adverse Effect on the Borrower's or such Subsidiary's ability to
carry on its business or the Borrower's ability to comply with
this Agreement, the Notes or the other Loan Documents.
3.2 Corporate Authority. The Borrower is duly authorized
to execute and deliver this Agreement, the Notes and the other
Loan Documents to which it is or will become a party; all
necessary corporate action to authorize the execution and
delivery of this Agreement, the Notes and the other Loan
Documents to which it is or will become a party has been properly
taken; and it is and will continue to be duly authorized to
borrow hereunder and to perform all of the other terms and
provisions of this Agreement, the Notes and the other Loan
Documents to which it is or will become a party.
3.3 Enforceability. This Agreement and the Notes have each
been, and each other Loan Document to which it will become a
party will be, duly and validly executed and delivered by the
Borrower and each constitutes or will constitute a valid and
legally binding agreement of the Borrower enforceable in
accordance with its terms.
3.4 No Restrictions. Neither the execution and delivery of
this Agreement, the Notes and the other Loan Documents to which
it is or will become a party, the consummation of the
transactions herein contemplated nor compliance with the terms
and provisions hereof or of the Notes, will conflict with or
result in a breach of any of the terms, conditions or provisions
of the certificate of incorporation or the by-laws of the
Borrower or of any law or of any regulation, order, writ,
injunction or decree of any court or governmental agency or of
any agreement, indenture or other instrument to which the
Borrower or any Significant Subsidiary is a party or by which any
of them is bound or to which it is subject, or constitute a
default thereunder or result in the creation or imposition of any
Encumbrance of any nature whatsoever upon any of the property or
assets of the Borrower pursuant to the terms of any agreement,
indenture or other instrument, except those restrictions which,
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individually or in the aggregate, would not have a Material
Adverse Effect upon the Borrower and its Consolidated
Subsidiaries taken as a whole.
3.5 Financial Statements. The Borrower has furnished to
the Lenders and the Agent the consolidated balance sheets and the
related consolidated statements of income, shareholders' equity
and changes in financial position of (i) ALC and its consolidated
subsidiaries as at ALC's fiscal year ending December 31, 1995 and
for its fiscal quarter ending June 30, 1996 and (ii) TI and its
consolidated subsidiaries as at TI's fiscal year ending December
31, 1995 and for its fiscal quarter ending June 30, 1996. All
such financial statements, including the related notes, have been
prepared in accordance with GAAP, except as expressly noted
therein, and fairly present the financial position and
consolidated respective financial positions of ALC and TI and
their consolidated subsidiaries as at the dates thereof and the
results and consolidated results of their operations and the
changes in their financial position and in their consolidated
financial position for the periods ended on such dates. There
were no material liabilities of the Borrower and its Consolidated
Subsidiaries, taken as a whole, contingent or otherwise, not
reflected in such financial statements. Except as has been fully
disclosed in writing to the Lenders and the Agent prior to the
date hereof there has been no material adverse change in the
business, condition or operations (financial or otherwise) of (i)
ALC from June 30, 1996 to the Effective Time of the Combination,
(ii) of TI from June 30, 1996 to the Effective Time of the
Combination and (iii) of the Borrower and its Subsidiaries from
the Effective Time of the Combination to the Closing Date.
3.6 Absence of Litigation. Except as set forth in the
Borrower's Form S-4 filed to register the Borrower's securities
to be offered as a result of the Combination or in the Forms 10-
K, 10-Q or 8-K most recently filed by ALC and TI respectively,
there are no actions, suits, investigations, litigation or
governmental proceedings pending or, to the Borrower's knowledge,
threatened against the Borrower or any Consolidated Subsidiary or
any of their respective properties, which would have a Material
Adverse Effect on the Borrower and the Consolidated Subsidiaries
taken as a whole, or which purport to affect the legality,
validity or enforceability of this Agreement or the Notes.
3.7 Tax Returns and Payments. As of the date hereof, the
Borrower and its Subsidiaries have filed all Federal and other
material tax returns required by law to be filed and have paid
all material taxes, material assessments and other material
governmental charges levied upon the Borrower and its
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Subsidiaries taken as a whole, or any of the respective
properties, assets, income or franchises of the Borrower and its
Subsidiaries taken as a whole, which are due and payable, other
than those currently payable or deferrable without penalty or
interest or those which are being contested in good faith and by
appropriate proceedings diligently conducted. As of the date
hereof, the charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of Federal, state and
local income taxes for all fiscal periods are adequate, and the
Borrower knows of no unpaid assessments for additional Federal,
state or local income taxes for any such fiscal period or any
basis therefor.
3.8 Pension Plans. Except as otherwise noted on Schedule
3.8, (i) each Plan has been and will be maintained and funded, in
all material respects, in accordance with its terms and with all
provisions of ERISA and the Code applicable thereto; (ii) no
Reportable Event has occurred and is continuing with respect to
any Plan; (iii) no liability to PBGC has been incurred with
respect to any Plan, other than for premiums due and payable;
(iv) no Plan has been terminated, no proceedings have been
instituted to terminate any Plan, and there exists no intent to
terminate or institute proceedings to terminate any Plan, which
has caused or would cause the Borrower or any ERISA Affiliate to
incur any liability to the PBGC under Title IV of ERISA; (v) no
withdrawal, either complete or partial, has occurred or commenced
with respect to any multiemployer Plan, and there exists no
intent to withdraw either completely or partially from any
multiemployer Plan and (vi) the Borrower is not subject to any
liability for unpaid penalties or taxes imposed under Section
502(i) of ERISA or Section 4975 of the Code and has not engaged
in a prohibited transaction as defined in Section 406 of ERISA
and Section 4975 of the Code.
3.9 Compliance with Applicable Laws. The Borrower and each
Consolidated Subsidiary (i) is not in default with respect to any
order, writ, injunction or decree of any court or of any Federal,
state, municipal or other Governmental Authority; and (ii) is
substantially complying with all applicable statutes and
regulations of each Governmental Authority having jurisdiction
over its activities; except for those orders, writs, injunctions,
decrees, statutes and regulations, non-compliance with which
would not have a Material Adverse Effect upon the Borrower and
its Consolidated Subsidiaries taken as a whole.
3.10 Environmental Matters. To the Borrower's knowledge,
except as set forth on the most recent Borrower's Form S-4 filed
with Securities and Exchange Commission to register the
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Borrower's securities to be offered as a result of the
Combination or in the Forms 10-K, 10-Q or 8K most recently filed
by ALC and TI respectively, the Borrower and its Subsidiaries are
in compliance with all applicable Environmental Laws; except for
matters which do not have a Material Adverse Effect on the
financial condition of the Borrower and its Consolidated
Subsidiaries taken as a whole.
3.11 Governmental Approval. No order, authorization,
consent, license, validation or approval of, or notice to,
filing, recording, or registration with, any Governmental
Authority, or exemption by any Governmental Authority, is
required to authorize, or is required in connection with, (i) the
execution, delivery and performance of this Agreement or the
Notes or (ii) the legality, binding effect or enforceability of
this Agreement or the Notes.
3.12 Regulations G, T, U and X. The Borrower is not engaged
in the business of purchasing or selling Margin Stock or
extending credit to others for the purpose of purchasing or
carrying Margin Stock and no part of the proceeds of the Loans
will be used to purchase or carry any Margin Stock or for any
other purpose which would violate or be inconsistent with
Regulations G, T, U or X.
3.13 Investment Company Act. The Borrower is not an
"investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of
1940, as amended.
3.14 Public Utility Holding Company Act. The Borrower is
not a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
3.15 Disclosure. Neither this Agreement nor any other
document, certificate or statement furnished to the Lenders or
the Agent by or on behalf of the Borrower pursuant to this
Agreement contains any untrue statement of a material fact.
There is no fact known to the Borrower which materially and
adversely affects or in the future may (so far as the Borrower
now foresees) have a Material Adverse Effect on the business,
operations, affairs, condition, prospects, properties or assets
of the Borrower and its Consolidated Subsidiaries, taken as a
whole, which has not been set forth in this Agreement or in the
other documents, certificates and statements (financial or
otherwise) furnished to the Lenders or the Agent or otherwise
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disclosed in writing to the Lenders or the Agent by or on behalf
of the Borrower prior to or on the date hereof.
ARTICLE IV. AFFIRMATIVE COVENANTS.
From the date hereof and thereafter until the
termination of the Commitments and until all of the Bank
Indebtedness is paid in full, the Borrower agrees that:
4.1 Use of Proceeds. The proceeds of the Loans will be
used by the Borrower and its Consolidated Subsidiaries for
general corporate purposes and working capital purposes of the
Borrower and its Consolidated Subsidiaries, including, without
limitation, redemption of the Subordinated Debentures.
4.2 Furnishing Information. The Borrower shall:
(i) deliver to the Lenders, as soon as available but
not later than forty-five (45) days after the last day of
each of the first three Fiscal Quarters of each Fiscal Year,
the Borrower's quarterly report to shareholders, if any, and
its quarterly report on Form 10-Q as filed with the
Securities and Exchange Commission and, within ninety (90)
days after the end of each Fiscal Year, the Borrower's
annual report to shareholders and its annual report on Form
10-K as filed with the Securities and Exchange Commission,
in each case accompanied by a completed Compliance
Certificate substantially in the form of Exhibit "H"
attached hereto duly executed by an Authorized Officer
stating that (A) such Authorized Officer has reviewed the
terms of the Agreement and of the Notes and has made, or
caused to be made under his supervision, a review of the
transactions and condition of the Borrower during the
accounting period covered by such financial statements and
that such review has not disclosed the existence during such
accounting period, and that the signer does not have
knowledge of the existence as at the date of such Officer's
Certificate, of any condition or event which constitutes, a
Potential Event of Default or an Event of Default or, if an
Event of Default did exist, a statement describing such
Event of Default and the action the Borrower has taken or
proposes to take with respect thereto and (B) the Borrower
was in compliance with the covenants set forth in Sections
5.3 and 5.4 of this Agreement;
(ii) deliver to the Lenders promptly upon their
becoming available, copies of all financial statements,
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reports, notices and information statements sent or made
available generally by the Borrower to its security holders
(including, without limitation, proxy materials) and copies
of all other regular and periodic reports (including,
without limitation, Form 8-K) filed by the Borrower with the
Securities and Exchange Commission or any Governmental
Authority succeeding to any of its functions, and of all
press releases and other statements made available generally
by the Borrower to the public concerning material
developments in the business of the Borrower and any of its
Subsidiaries taken as a whole;
(iii) promptly after receipt thereof, by the
Borrower or the administrator of any Plan, deliver to the
Lenders a copy of any notice from the PBGC that the PBGC is
instituting Termination Proceedings;
(iv) promptly and in any event within 30 days after the
Borrower or the administrator of any Plan knows or has
reason to know that any Reportable Event has occurred which
would cause the PBGC to institute termination proceedings,
if the liability of the Borrower to the PBGC would exceed
five percent (5%) of the Consolidated Tangible Net Worth of
the Borrower at the time of notice thereof, give notice
thereof to the Lenders;
(v) promptly, but not later than five (5) Business
Days, after any Authorized Officer obtains knowledge of the
happening of any event which constitutes an Event of Default
or a Potential Default, give written notice thereof to the
Lenders; and
(vi) promptly, deliver to the Lenders such other
publicly available information and data with respect to the
Borrower or any of its Subsidiaries as from time to time may
be reasonably requested by any Lender.
4.3 Visitation. The Borrower will permit the Lenders and
the Lender's designated employees and agents to have access, at
any time and from time to time, upon reasonable notice and during
normal business hours at any reasonable time, to visit any of the
properties of the Borrower, to examine and make copies of any of
its books of record and account and such reports and returns as
the Borrower may file with any Governmental Authority and discuss
the Borrower's affairs and accounts with, and be advised about
them, by any Authorized Officer.
4.4 Preservation of Existence; Qualification. At its own
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cost and expense, the Borrower will do all things necessary to
preserve and keep in full force and effect its and each of its
Consolidated Subsidiaries' corporate existence and qualification
under the laws of their respective states of incorporation and
each state where, due to the nature of their respective
activities or the ownership of their respective properties,
qualification to do business is required except where (i) the
lack of corporate existence of a Subsidiary or (ii) the failure
to be so qualified would not have a Material Adverse Effect upon
the Borrower and its Consolidated Subsidiaries taken as a whole
or except as permitted by Sections 5.6 and 7.4.
4.5 Compliance with Laws and Contracts. The Borrower shall
and shall cause each Subsidiary to comply with all applicable
Governmental Rules (including, but not limited to, Environmental
Laws), except where failure to comply would not have a Material
Adverse Effect on the Borrower and its Consolidated Subsidiaries
taken as a whole.
4.6 Payment of Taxes and Other Liabilities. The Borrower
shall and shall cause each Subsidiary to promptly pay and
discharge all obligations, accounts and liabilities to which it
is subject or which are asserted against it and which
obligations, accounts and liabilities are, to the Borrower and
the Subsidiaries taken as a whole, material, including but not
limited to all taxes, assessments and governmental charges and
levies upon it or upon any of its income, profits, or property
prior to the date on which penalties attach thereto; provided,
however, that for purposes of this Agreement, neither the
Borrower nor the relevant Subsidiary shall be required to pay any
tax, assessment, charge or levy (i) the payment of which is being
contested in good faith by appropriate and lawful proceedings
diligently conducted and (ii) as to which the Borrower shall have
set aside on its books reserves for such claims as are determined
to be adequate pursuant to the accounting procedures employed by
the Borrower, but only to the extent that failure to discharge
any such liabilities would not result in any additional liability
which would have a Material Adverse Effect upon the Borrower and
its Consolidated Subsidiaries taken as a whole.
4.7 Insurance. The Borrower will keep and maintain, and
cause each Subsidiary to keep and maintain, insurance with
responsible insurance companies, satisfactory to the Agent, on
such of their respective properties, in such amounts and against
such risks as is customarily maintained by similar businesses
similarly situated and owning, leasing or operating similar
properties. The Borrower may satisfy the requirements of the
preceding sentence with self insurance and deductibles consistent
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with customary and prudent industry standards. The Borrower will
furnish to the Agent at the Closing and together with the annual
reports delivered pursuant to Subsection 4.2(ii) hereof, a
certificate of an Authorized Officer of the Borrower certifying
that such insurance is in force, is adequate in nature and amount
and complies with the Borrower's and each Subsidiary's
obligations under this Section 4.7.
4.8 Maintenance of Properties. The Borrower shall and
shall cause its Significant Subsidiaries to maintain, preserve,
protect and keep their respective properties in good repair,
working order and condition (ordinary wear and tear excepted),
and make all necessary and proper repairs, renewals and
replacements so that their business carried on in connection
therewith may be properly and advantageously conducted at all
times, except where the failure to maintain, preserve, protect or
keep such properties would not have a Material Adverse Effect
upon the Borrower and its Consolidated Subsidiaries taken as a
whole.
4.9 Plans and Benefit Arrangements. The Borrower shall,
and shall cause each ERISA Affiliate to, comply with ERISA, the
Code and all other applicable laws which are applicable to Plans,
except where the failure to do so, alone or in conjunction with
any other failure to do so, would not have a Material Adverse
Effect upon the Borrower and its Consolidated Subsidiaries taken
as a whole.
4.10 Senior Debt Status. The Bank Indebtedness will rank at
least pari passu in priority of payment with all other
Indebtedness of the Borrower, except Indebtedness of the Borrower
which may be secured by Encumbrances pursuant to Section 5.2.
4.11 Ownership of ALC and TI. At all times during the term
hereof the Borrower shall be the legal and beneficial owner of,
and shall retain all voting rights relating to, all of the issued
and outstanding capital stock of ALC and TI.
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ARTICLE V. NEGATIVE COVENANTS.
From the date hereof and thereafter until the
Commitments are terminated and until the Bank Indebtedness is
paid in full, the Borrower agrees that:
5.1 Indebtedness. The Borrower shall not and shall not
permit any Consolidated Subsidiary to create, incur, assume,
cause, permit or suffer to exist or remain outstanding any
Consolidated Indebtedness except for:
(i) Bank Indebtedness;
(ii) Existing Indebtedness set forth on Schedule 5.1
hereof; provided however, (A) the Indebtedness set forth on
Schedule 5.1 outstanding under the Existing Bank Credit
Agreements must be repaid in full on the Closing Date and
(B) all outstanding Subordinated Debentures must be redeemed
or defeased not later than 50 days after the Closing Date;
and
(iii) Additional Indebtedness (including additional
Purchase Money Indebtedness) provided such additional
Indebtedness, when added to the Borrower's then outstanding
Consolidated Indebtedness, would not cause the Borrower to
be in violation of Sections 5.2, 5.3 and 5.4 hereof; and
provided further the additional Indebtedness permitted
pursuant to this item (iii) which is incurred by the
Borrower's Consolidated Subsidiaries shall not exceed, in
the aggregate at any one time outstanding, $150,000,000.
In addition, Indebtedness incurred pursuant to item (iii) may not
contain covenants (other than covenants relating to collateral,
if any, securing such Indebtedness as such security interests are
permitted hereby) more restrictive than or in addition to those
contained herein.
5.2 Encumbrances. The Borrower shall not and shall not
permit any Consolidated Subsidiary to create, assume, incur,
permit or suffer to exist upon any of their respective assets and
properties, whether tangible or intangible and whether now owned
or in existence or hereafter acquired or created and wherever
located, any Encumbrance except for:
(i) Permitted Encumbrances (including without
limitation those listed on Schedule 5.2),
(ii) Additional Encumbrances which secure additional
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Purchase Money Indebtedness permitted pursuant to Section 5.1,
(iii) Additional Encumbrances on assets acquired by
the Borrower or any Consolidated Subsidiary, provided (A)
those Encumbrances existed prior to the acquisition of such
assets by the Borrower or any Consolidated Subsidiary and
(B) the lien thereof is limited to the assets then being
acquired and additions or accessions to such assets and
identifiable proceeds thereof; and
(iv) Additional Encumbrances which secure Indebtedness
of the Borrower and its Consolidated Subsidiaries, provided
however Encumbrances permitted pursuant to this item (iv),
shall not, at any time, secure Indebtedness which exceeds in
the aggregate $70,000,000 at any one time outstanding.
5.3 Leverage Ratio. At no time shall its Consolidated
Total Indebtedness be more than sixty percent (60%) of its
Consolidated Total Capitalization.
5.4 Interest Coverage Ratio. At no time shall the ratio of
its Consolidated EBIT for the four (4) most recently completed
Fiscal Quarters, taken as a single accounting period, to its
Consolidated Interest Expense for the four (4) most recently
completed Fiscal Quarters, taken as a single accounting period,
be less than 2.5 to 1.0.
5.5 Sales of Assets. The Borrower shall not nor shall it
permit any Consolidated Subsidiary to enter into any arrangement,
direct or indirect, pursuant to which the Borrower or any
Consolidated Subsidiary shall sell or otherwise transfer or
dispose of any property, real, personal or mixed, whether now
owned or hereafter acquired, except (i) sales, transfers or
dispositions in the ordinary course of business, (ii) the sale,
transfer or other disposition of the stock or assets set forth on
Schedule 5.5, and (iii) sales, transfers or dispositions not in
the ordinary course of business provided that the aggregate
proceeds of all such sales, transfers and dispositions permitted
by this item (iii) shall not exceed, (A) from the date hereof
until August 31, 2001 and, if the Termination Date is extended to
August 31, 2002 through the last day of the Borrower's Fiscal
Year 2001, thirty percent (30%) of the Borrower's Consolidated
Total Assets as of June 30, 1996, and (B) beginning with the
first day of the Borrower's Fiscal Year 2002, if and to the
extent that the Termination Date is extended pursuant to Section
2.8, in any Fiscal Year of the Borrower thereafter more than ten
(10%) of the Borrower's Consolidated Total Assets as of the
beginning of such Fiscal Year.
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5.6 Merger. The Borrower shall not merge or consolidate
with any other Person except a merger or consolidation in which
each of the following conditions is satisfied:
(i) the Borrower is the surviving Person;
(ii) no Event of Default or Potential Default occurs
as a result of such a merger or consolidation; and
(iii) the Borrower's Consolidated Shareholder's Equity
immediately after such merger or consolidation is not less
than the Borrower's Consolidated Shareholder's Equity
immediately prior to such merger or consolidation.
5.7 Restriction on Dividends. The Borrower shall not and
shall not permit any Subsidiary to enter into any agreement which
restricts in any manner dividends or distributions to the
Borrower from any Subsidiary; provided however this restriction
shall not apply to Subsidiaries, the assets of which, in the
aggregate, constitute less than five percent (5%) of the
Borrower's Consolidated Total Assets as of any date of
determination.
5.8 Restriction on Guarantees. The Borrower shall not and
shall not permit any Subsidiary to enter into an agreement
pursuant to which any such Subsidiary guarantees either the
payment of Indebtedness incurred by the Borrower or the
performance of the Borrower's contractual obligations.
5.9 Regulation G, T, U and X Compliance. The Borrower
shall not and shall not permit any Subsidiary to use the proceeds
of a Loan to purchase or carry Margin Stock or otherwise act so
as to cause any Lender, in extending credit hereunder, to be in
contravention of Regulations G, T, U or X.
5.10 ERISA. The Borrower shall not and shall not permit any
ERISA Affiliate to permit any Plan to:
(i) engage in any "prohibited transaction", as such
term is defined in Section 406 of ERISA and Section 4975 of
the Code;
(ii) incur any "accumulated funding deficiency", as
such term is defined in Section 302 of ERISA, whether or not
waived;
(iii) be terminated in a manner which could result
in liability to the PBGC under Title IV of ERISA or the
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imposition of a lien on the property of the Borrower or any
ERISA Affiliate pursuant to Section 4068 of ERISA; or
(iv) partially or completely withdraw from any Plan,
which withdrawal shall subject the Borrower or any ERISA
Affiliate to multiemployer withdrawal liability pursuant to
Section 4201 of ERISA.
ARTICLE VI. CONDITIONS PRECEDENT TO ALL DISBURSEMENTS.
6.1 All Disbursements. The obligation of the Lenders to
make any Disbursements is subject to the satisfaction of each of
the following conditions precedent:
6.1a No Default. The Borrower shall have performed and
complied, in all material respects, with all agreements and
conditions herein required to be performed or complied with by it
prior to any Disbursements and, at the time of such
Disbursements, no Potential Default or Event of Default shall
exist.
6.1b Representations Correct. The representations and
warranties contained in Article III hereof shall be correct in
all material respects (i) when made and (ii) at the time of each
Disbursement except for such representations and warranties which
relate solely to an earlier date (in which case such
representations and warranties shall have been true and correct
in all material respects as of such date); provided, however,
that for purposes of clause (ii) of this Subsection 6.1b, the
representations and warranties contained in Section 3.6 shall be
deemed updated if, and to the extent that, an action, suit,
investigation, litigation or governmental investigation is set
forth in any Form 10-K or 10-Q filed by the Borrower in respect
of any period subsequent to the date hereof or in any Form 8-K
filed by the Borrower subsequent to the date hereof.
6.1c Disbursement Requirements. The Borrower shall have
complied with the requirements of Section 2.1, Section 2.2 or
Section 2.3, as appropriate, with respect to the requested
Disbursements.
Each request for Disbursement shall constitute, as at the time
made, a representation and warranty by the Borrower that the
matters set forth in Subsections 6.1a and 6.1b above are true and
correct.
6.2 Conditions Precedent to the Initial Disbursement Under
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the Commitment. The obligation of the Lenders to make the
initial Disbursements is subject to the satisfaction of each of
the following conditions precedent in addition to the applicable
conditions precedent set forth in Section 6.1 above:
(i) Receipt by the Agent on behalf of each Lender of a
counterpart original of this Agreement executed by the other
Lenders and the Borrower.
(ii) Receipt by the Agent on behalf of each Lender of a
Revolving Credit Note, substantially in the form of Exhibit
"A" attached hereto, made payable to such Lender in the
amount of such Lender's Commitment and otherwise properly
completed and executed by the Borrower.
(iii) Receipt by the Agent on behalf of each Lender
of a Bid Rate Note substantially in the form of Exhibit "B"
attached hereto, made payable to such Lender and otherwise
properly completed and executed by the Borrower.
(iv) Receipt by the Agent on behalf of each Swingline
Lender of a Swingline Note substantially in the form of
Exhibit "E" attached hereto, made payable to such Swingline
Lender and otherwise properly completed and executed by the
Borrower.
(v) Receipt by the Agent of evidence satisfactory to
it that the Combination has occurred.
(vi) Receipt by the Agent of a copy of a certified
copy (certified by the appropriate governmental official) of
the Borrower's Certificate of Incorporation which
certification is dated not more than 30 days prior to the
Closing.
(vii) Receipt by the Agent of a certificate, duly
certified as of the date of the Closing by the secretary or
assistant secretary of the Borrower, as to (A) the By-Laws
of the Borrower in effect as of the Closing, (B) the
resolutions of the Borrower's Board of Directors authorizing
the borrowings hereunder and the execution and delivery of
this Agreement, the Notes, and all documents supplemental
hereto and (C) the names of the officers of the Borrower
authorized to sign this Agreement, the Notes, and all
supplemental documentation and which contains a true
signature of each such officer.
(viii) Receipt by the Agent of good standing
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certificates for the Borrower from the Secretary of State of
the States of Delaware and Pennsylvania each dated not more
than 30 days prior to the Closing.
(ix) Receipt by the Agent of the certificate of the
Borrower required pursuant to Section 4.7 of the Agreement.
(x) Receipt by the Agent of written instructions
addressed to the Agent and executed by an Authorized Officer
of the Borrower relating to the initial Disbursement.
(xi) Receipt by the Agent of written notice from each
of the agents under the Existing Bank Credit Agreements,
that upon payment on the Closing Date of principal, interest
and fees, if any, due thereunder, such Agreement will be
cancelled.
(xii) Receipt by the Agent on behalf of each Lender of
a signed favorable opinion of Mary W. Snyder, Corporate
Counsel and Assistant Secretary, substantially in the form
of Exhibit "I" attached hereto.
ARTICLE VII. DEFAULTS.
Each of the events or occurrences described in Sections
7.1 to and including 7.10 below shall constitute an "Event of
Default" hereunder.
7.1 Payment Default. Default in the payment of (i)
interest on any Loan, the Facility Fee, or any other amount due
hereunder, and continuance of any such nonpayment of such
interest, Facility Fee or other amount for five (5) Business
Days, or (ii) principal of any Loan when due.
7.2 Nonpayment of Other Indebtedness. The Borrower or any
Subsidiary shall fail to pay any Indebtedness of the Borrower or
such Subsidiary, as the case may be, other than the Bank
Indebtedness, in an aggregate amount as to the Borrower and its
Subsidiaries collectively of $20,000,000 or more, as and when the
same shall become due, or the occurrence of any default under any
agreement or instrument under or pursuant to which such
Indebtedness is incurred or issued and continuance of such
default beyond the period of grace, if any, allowed with respect
thereto; provided however, that the foregoing provisions shall
not apply to any such default or defaults by one or more
Subsidiaries during the term hereof where the aggregate assets of
such Subsidiaries do not exceed five percent (5%) of the
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Borrower's Consolidated Total Assets.
7.3 Insolvency.
7.3a Involuntary Proceedings. A proceeding shall have been
instituted in a court having jurisdiction seeking a decree or
order for relief in respect of the Borrower or a Subsidiary in an
involuntary case under the Federal bankruptcy laws, or any other
similar applicable Federal or state law, now or hereafter in
effect, or for the appointment of a receiver, liquidator,
trustee, sequestrator or similar official for the Borrower or any
of its Subsidiaries or for a substantial part of its or their
property, or for the winding up or liquidation of its or their
affairs, and the same (i) is not controverted with a period
fifteen (15) days or (ii) shall remain undismissed or unstayed
and in effect for a period of sixty (60) days; provided however,
that the foregoing provisions shall not apply to any such event
or events commenced by or against one or more Subsidiaries during
the term hereof where the aggregate assets of such Subsidiaries
do not exceed five percent (5%) of the Borrower's Consolidated
Total Assets.
7.3b Voluntary Proceedings. The Borrower or a Subsidiary
shall institute proceedings to be adjudicated a voluntary
bankrupt, or any of them shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under the Federal
bankruptcy laws, or any other similar applicable Federal or state
law now or hereinafter in effect, or shall consent to the filing
of any such petition or shall consent to the appointment of a
receiver, liquidator, trustee, sequestrator or similar official
for the Borrower or any of its Subsidiaries or for a substantial
part of its or their property, or shall make an assignment for
the benefit of creditors, or shall admit in writing its or their
inability to pay its or their debts generally as they become due,
or corporate action shall be taken by the Borrower or any of its
Subsidiaries in furtherance of any of the aforesaid purposes;
provided however, that the foregoing provisions shall not apply
to any such event or events commenced by or against one or more
Subsidiaries during the term hereof where the aggregate assets of
such Subsidiaries do not exceed five percent (5%) of the
Borrower's Consolidated Total Assets.
7.4 Termination of Existence. The Borrower shall terminate
its existence or cease to exist or any Subsidiary (other than any
Subsidiary the capital of which is less than $10,000,000 on the
date hereof) shall terminate its existence or cease to exist
except by reason of a merger or liquidation into or a
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consolidation with the Borrower or a Consolidated Subsidiary;
provided however, that the foregoing provisions shall not apply
to any such terminations or cessations of existence by one or
more Subsidiaries during the term hereof where the aggregate
assets of such Subsidiaries do not exceed five percent (5%) of
the Borrower's Consolidated Total Assets.
7.5 Failure to Comply with Covenants.
7.5a Failure to Comply with Article V Covenants and Certain
Article IV Covenants. The Borrower shall default in the
observance or performance of Section 4.11 or of any covenant
contained in Article V.
7.5b Failure to Comply with Other Covenants. The Borrower
shall default in the due performance or observance of any other
covenant, condition or provision set forth herein and such
default shall not be remedied for a period of thirty (30) days
after such default is known to any Authorized Officer of the
Borrower or notice thereof has been given to the Borrower by the
Agent.
7.6 Misrepresentation. Any representation or warranty made
by the Borrower herein proves to have been untrue in any material
respect as of the date when made, or any certificate or other
document furnished by the Borrower to the Agent pursuant to the
provisions hereof proves to have been untrue in any material
respect on the date as of which the facts set forth therein are
stated or certified.
7.7 Adverse Judgments, Etc. Entry or filing of any one or
more judgments, writs or warrants of attachment or of any similar
process in an aggregate amount, as to the Borrower and its
Subsidiaries collectively, of $10,000,000 or more in excess of
any third-party insurance protecting against such liability
against the Borrower and its Subsidiaries or against any of their
respective properties and failure of the Borrower or its
Subsidiaries to vacate, pay, bond, stay or contest in good faith
such judgments, writs, warrants of attachment or other process
within a period of thirty (30) days; provided however, the
foregoing provisions shall not apply to any such judgment or
judgments against one or more Subsidiaries during the term hereof
where the aggregate assets of such Subsidiaries do not exceed
five percent (5%) of the Borrower's Consolidated Total Assets.
7.8 Invalidity or Unenforceability. This Agreement, the
Notes or any other Loan Document ceases to be valid and binding
on the Borrower or is declared null and void, or the validity or
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enforceability thereof is contested by the Borrower or the
Borrower denies it has any or further liability under this
Agreement, any Note or under the other Loan Documents to which it
is a party.
7.9 ERISA. (i) A trustee shall be appointed by a court of
competent jurisdiction to administer any Plan of the Borrower or
any ERISA Affiliate; (ii) the PBGC shall terminate any Plan of
the Borrower or any ERISA Affiliate or appoint a trustee to
administer any such Plan; or (iii) the Borrower or any ERISA
Affiliate shall incur any liability to the PBGC in connection
with any Plan, which, in any such case, likely would have a
Material Adverse Effect on the Borrower and the Consolidated
Subsidiaries, taken as a whole.
7.10 Change of Control.
7.10a Change of Beneficial Ownership. Any Person or
group of Persons (within the meaning of Sections 13(a) or 14(a)
of the Securities and Exchange Act of 1934), other than the then
current officers or directors of the Borrower or an underwriter
which obtains such ownership as a result of effecting a firm
committed underwriting of a secondary offering of the Borrower's
voting stock on behalf of such officers or directors, shall have
acquired beneficial ownership of (within the meaning of Rule 13d-
3 promulgated by the Securities and Exchange Commission under
said Act) thirty percent (30%) or more of the voting stock of the
Borrower. For purposes of calculating the acquisition of
beneficial ownership, any transfer of voting stock of the
Borrower by any Person or group of Persons to a Permitted
Transferee shall be deemed not to constitute a conveyance and
acquisition of such stock. A "Permitted Transferee" includes any
of the following with respect to any then current officer or
director of the Borrower: (i) spouse; (ii) lineal descendants of
all generations and spouses of such lineal descendants; (iii) a
charitable corporation or trust established by such then current
officer or director or by a person described in (i) or (ii)
preceding; (iv) a trust (or in the case of a minor, a custodial
account under a Uniform Gifts or Transfers to Minors Act) of
which the beneficiar(ies) are one or more Persons described in
(i), (ii) or (iii) preceding; and (v) an executor or
administrator upon the death of such then current officer or
director or any Person described in (i) or (ii) preceding.
7.10b Change of Composition of Board of Directors.
Within a period of twelve (12) consecutive calendar months
individuals who were directors of the Borrower on the first day
of such period shall cease to constitute a majority of the board
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of directors of the Borrower.
7.11 Consequences of an Event of Default. If one or more of
the Events of Default occur then (a) if such Event of Default is
set forth in Sections 7.3 or 7.4, the Commitments shall
automatically terminate and the Notes then outstanding shall
become immediately due and payable, without necessity of demand,
presentation, protest, notice of dishonor or notice of default;
or (b) if such Event of Default is set forth in any of the
remaining Sections of this Article VII, then the Agent, at the
request of the Required Lenders, and without notice to the
Borrower, shall declare the Borrower in default hereunder, and
upon such declaration, shall, at the request of the Required
Lenders, terminate the Commitment and/or declare the Notes then
outstanding immediately due and payable, without necessity of any
further demand, presentation, protest, notice of dishonor or
further notice of default, whereupon such Notes shall be
immediately due and payable.
7.12 Remedies Upon Default. Upon the termination of the
Commitments and acceleration of the Notes following the
occurrence of an Event of Default, the Lenders shall, unless such
termination and acceleration subsequently have been rescinded,
have the full panoply of rights and remedies granted to them
under this Agreement and all those rights and remedies granted by
law to creditors, and the Agent, at the direction of the Required
Lenders, shall proceed to protect and enforce the Lenders' rights
by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement
contained herein, in the Notes or in any of the other Loan
Documents, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law. No right, power or remedy
conferred by this Agreement, in the Notes, or by any other Loan
Document, upon the Agent or the Lenders shall be exclusive of any
other right, power or remedy referred to herein or therein or now
or hereafter available at law, in equity, by statute or
otherwise. No exercise of any one right or remedy shall be
deemed a waiver of other rights or remedies. The rights and
remedies of the Agent and the Lenders specified herein are for
the sole and exclusive benefit, use and protection of the Agent
and the Lenders, and the Agent and the Lenders shall be entitled,
but shall have no duty or obligation, to exercise or to refrain
from exercising any right or remedy reserved to the Agent or the
Lenders hereunder.
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ARTICLE VIII. AGREEMENT AMONG LENDERS.
8.1 Appointment and Grant of Authority. Each of the
Lenders hereby appoints PNC Bank, National Association, and PNC
Bank, National Association hereby agrees to act as, the Agent
under this Agreement, the Notes and the other Loan Documents. As
such Agent, PNC Bank, National Association shall have and may
exercise such powers under this Agreement as are specifically
delegated to the Agent, by the terms hereto, of the Notes or of
the other Loan Documents, together with such other powers as are
incidental thereto. Without limiting the foregoing, the Agent,
on behalf of the Lenders, is authorized to execute all of the
Loan Documents (other than this Agreement) and to accept all of
the Loan Documents and all other agreements, documents or
instruments reasonably required to carry out the intent of the
parties to this Agreement.
8.2 Non-Reliance on Agent. Each Lender agrees that it has,
independently and without reliance on the Agent, based on such
documents and information as it has deemed appropriate, made its
own credit analysis and evaluation of the Borrower and its
operations and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent, and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement.
Except as otherwise provided herein, the Agent shall have no duty
to keep the Lenders informed as to the performance or observance
by the Borrower of this Agreement or any other document or
instrument referred to or provided for herein or to inspect the
properties or books of the Borrower. The Agent, in the absence
of gross negligence or willful misconduct, shall not be liable to
any Lender for its failure to relay or furnish to the Lender any
information. The preceding provisions of this Section 8.2 to the
contrary notwithstanding, the Agent shall notify each of the
Lenders as soon as practicable after it receives a notice of an
Event of Default from the Borrower.
8.3 Responsibility of Agent and Other Matters.
8.3a Ministerial Nature of Duties. As among the Lenders and
the Agent, the Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement, the Notes or
in the other Loan Documents, and those duties and
responsibilities shall be subject to the limitations and
qualifications set forth in this Article VIII. The duties of the
Agent shall be ministerial and administrative in nature.
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8.3b Limitation of Liability. As among the Lenders and the
Agent, neither the Agent nor any of its directors, officers,
employees or agents shall be liable for any action taken or
omitted (whether or not such action taken or omitted is within or
without the Agent's responsibilities and duties expressly set
forth in this Agreement) under or in connection with this
Agreement or any other instrument or document in connection
herewith except for gross negligence or willful misconduct.
Without limiting the foregoing, neither the Agent nor any of its
directors, officers or employees shall be responsible for, or
have any duty to examine (i) the genuineness, execution,
validity, effectiveness, enforceability, value or sufficiency of
(A) this Agreement, the Notes or any of the other Loan Documents
or (B) any other document or instrument furnished pursuant to or
in connection with this Agreement, (ii) the collectibility of any
amounts owed by the Borrower to the Lenders, (iii) the
truthfulness of any recitals, statements, representations or
warranties made to the Agent or the Lenders in connection with
this Agreement, (iv) any failure of any party to this Agreement
to receive any communication sent, including any telegram,
teletype, facsimile transmission or telephone message or any
writing, application, notice, report, statement, certificate,
resolution, request, order, consent letter or other instrument or
paper or communication entrusted to the mails or to a delivery
service, or (v) the assets, liabilities, financial condition,
results of operations or business, or creditworthiness of the
Borrower.
8.3c Reliance. The Agent shall be entitled to act, and
shall be fully protected in acting upon, any telegram, teletype,
facsimile transmission or any writing, application, notice,
report, statement, certificate, resolution, request, order,
consent, letter or other instrument, paper or communication
believed by the Agent in good faith to be genuine and correct and
to have been signed or sent or made by a proper Person. The
Agent may consult counsel and shall be entitled to act, and shall
be fully protected in any action taken in good faith, in
accordance with advice given by counsel. The Agent may employ
agents and attorneys-in-fact and shall not be liable for the
default or misconduct of any such agents or attorneys-in-fact
selected by the Agent with reasonable care. The Agent shall not
be bound to ascertain or inquire as to the performance or obser-
vance of any of the terms, provisions or conditions of this
Agreement or any of the other Loan Documents on the part of the
Borrower or any other party thereto.
8.4 Action on Instructions. The Agent shall be required to
act and shall be fully protected in so acting and shall be
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entitled to refrain from acting, and shall be fully protected in
refraining from so acting, under this Agreement, the Notes, the
other Loan Documents or any other instrument or document executed
or delivered in connection herewith or therewith, in accordance
with written instructions from the Required Lenders or, in the
case of the matters set forth in items (A) through (G) of Section
9.1, from all of the Lenders.
8.5 Indemnification. To the extent the Borrower does not
reimburse and save harmless the Agent according to the terms
hereof for and from all costs, expenses and disbursements in
connection herewith, such costs, expenses and disbursements shall
be borne by the Lenders ratably in accordance with their
respective Commitment Percentages. Each Lender hereby agrees on
such basis (i) to reimburse the Agent for such Lender's pro rata
share of all such reasonable costs, expenses and disbursements on
request and (ii) to the extent of each such Lender's pro rata
share, to indemnify and save harmless the Agent against and from
any and all losses, obligations, penalties, actions, judgments
and suits and other costs, expenses and disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or
asserted against the Agent, other than as a consequence of gross
negligence or willful misconduct on the part of the Agent,
arising out of or in connection with (i) this Agreement, the
Notes, the other Loan Documents or any other agreement,
instrument or document executed or delivered in connection
herewith or therewith, or (ii) any action taken at the request of
the Required Lenders or all of the Lenders hereunder, as the case
may be, including without limitation the reasonable costs,
expenses and disbursements in connection with defending
themselves against any claim or liability, or answering any
subpoena or other process related to the exercise or performance
of any of their powers or duties under this Agreement, the other
Loan Documents, or any of the other agreements, instruments or
documents executed or delivered in connection herewith or the
taking or refraining from any action under or in connection with
any of the foregoing.
8.6 Agent's Rights as a Lender. With respect to the
Commitment of the Agent as a Lender hereunder, and any Loans of
the Agent under this Agreement, the other Loan Documents and any
other agreements, instruments and documents delivered pursuant
hereto and any other amounts due to the Agent under this
Agreement, the Agent shall have the same rights and powers,
duties and obligations under this Agreement, the Notes, the other
Loan Documents or other agreement, instrument or document as any
Lender and may exercise such rights and powers and shall perform
such duties and fulfill such obligations as though it were not
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the Agent. The Agent may accept deposits from, lend money to,
and generally engage, and continue to engage, in any kind of
business with the Borrower as if it were not the Agent.
8.7 Payment to Lenders. Promptly after receipt from the
Borrower of any principal repayment of the Loans, interest due on
the Loans and any Facility Fees owing to the Lenders or other
amounts due under any of the Loan Documents (except for such
amounts which are payable for the sole account of any Lender or
the Agent), the Agent shall distribute to each Lender that
Lender's share of the funds so received.
8.8 Pro Rata Sharing. All interest and principal payments
on the Revolving Credit Loans and all Facility Fees are to be
divided pro rata among the Lenders in accordance with their
respective Commitment Percentages. Any sums obtained from the
Borrower by any Lender by reason of the exercise of its rights of
set-off, banker's lien or in collection shall be shared (net of
costs) pro rata among the Lenders on the basis of the principal
amount of Loans outstanding. Nothing in this Section 8.8 shall
be deemed to require the sharing among the Lenders of collections
specifically relating to, or of the proceeds of any collateral
securing, any other Indebtedness of the Borrower to any Lender.
8.9 Successor Agent.
8.9a Resignation of Agent. The Agent may resign as Agent
hereunder by giving ninety (90) days' prior written notice to the
Lenders and the Borrower. If such notice shall be given, the
Lenders shall appoint a successor agent for the Lenders, during
such ninety (90) day period, which successor agent shall be
reasonably satisfactory to the Borrower, to serve as agent
hereunder and under the several Loan Documents. If at the end of
such ninety (90) day period, the Lenders have not appointed such
a successor, the Agent shall use reasonable commercial efforts to
procure a successor reasonably satisfactory to the Lenders and
the Borrower, to serve as agent for the Lenders hereunder and
under the several Loan Documents. Any such successor agent shall
succeed to the rights, powers and duties of the Agent.
8.9b Rights of the Former Agent. Upon the appointment of
such successor agent or upon the expiration of such ninety (90)
day period (or any longer period to which the Agent has agreed),
the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part
of such former Agent or any of the parties to this Agreement.
After any retiring Agent's resignation hereunder as Agent
hereunder, the provisions of this Article VIII shall inure to the
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benefit of such retiring Agent as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
8.10 Managing Agents. None of the Lenders identified herein
as a "Managing Agent" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. Each Lender
acknowledges that it has not relied, and will not rely, on any of
the Lenders identified as Managing Agents in deciding to enter
into this Agreement or in taking action hereunder.
ARTICLE IX. GENERAL PROVISIONS
9.1 Amendments and Waivers. Subject to the remaining
provisions of this Section 9.1, the Agent, the Lenders and the
Borrower may, from time to time, enter into amendments,
extensions, renewals, modifications, supplements and replacements
to and of this Agreement, the Notes or the other Loan Documents
and the Lenders or the Required Lenders, as the case may be, may,
from time to time, waive compliance with a provision thereof. No
amendment, renewal, modification, extension, supplement,
replacement or waiver of any provision of the Agreement, the
Notes or the other Loan Documents or consent to any departure
therefrom by the Borrower shall be effective unless it is in
writing and is signed by the Required Lenders (or the Agent with
the written consent of the Required Lenders), and then such
waiver or consent shall be effective only for the specific
instance and for the specific purpose for which it is given;
provided, however, that no amendment, renewal, modification,
waiver or consent, unless in writing and signed by all of the
Lenders (or the Agent with the written consent of all of the
Lenders), shall do any of the following:
(A) increase the Commitment of any Lender or subject
any Lender to any additional obligations hereunder;
(B) except for changes permitted by Section 2.12
hereof or changes made pursuant to an Assignment and
Assumption Agreement, change any Lender's Commitment
Percentage or the aggregate or individual unpaid principal
amount of the Notes, or forgive the payment of the principal
or interest payable on the Notes;
(C) waive an Event of Default in the payment of
principal and/or interest due hereunder and under any of the
Notes;
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(D) decrease the interest rate relating to the
Revolving Credit Loans;
(E) postpone any date fixed for any payment of
principal of or interest on the Revolving Credit Loans, the
Facility Fee, or any other obligations of the Borrower set
forth in Article II;
(F) reduce the Facility Fee; or
(G) amend the definition of the term "Required
Lenders" or amend or waive the provisions of Section 8.8 or
this Section 9.1.
Any such supplemental agreement shall apply equally to the
Borrower and each of the Lenders and shall be binding upon the
Borrower, the Lenders, the Agent and all future holders of the
Notes. In the case of any waiver, the Borrower, the Lenders and
the Agent shall be restored to their former positions and rights,
and any Event of Default waived shall be deemed to be cured and
not continuing, but no such waiver shall extend to any subsequent
or other Event of Default, or impair any right consequent
thereon.
9.2 Expenses. The Borrower shall pay:
(i) All reasonable costs and expenses of the Agent
(including without limitation the reasonable fees and
disbursements of the Agent's special counsel, Tucker
Arensberg, P.C.), incurred in connection with the
preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and any and all other
documents and instruments prepared in connection herewith,
including but not limited to all amendments, extensions,
modifications, replacements, waivers, consents and other
documents and instruments prepared or entered into from time
to time;
(ii) All reasonable costs and expenses of the Agent and
the Lenders (including without limitation the reasonable
fees and disbursements of the Agent's and the Lenders'
counsels, which may be in house counsel) in connection with
(A) the enforcement of this Agreement and the other Loan
Documents arising pursuant to a breach by the Borrower of
any of the terms, conditions, representations, warranties or
covenants of any Loan Document to which it is a party, and
(B) defending or prosecuting any actions, suits or
proceedings relating to any of the Loan Documents.
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All of such costs and expenses shall be payable by the Borrower
to the Lenders or the Agent, as the case may be, upon demand or
as otherwise agreed upon by the Lenders or the Agent and the
Borrower, and shall constitute Bank Indebtedness under this
Agreement. The Borrower further agrees to pay, and save the
Agent and the Lenders harmless from any and all liability for,
any stamp or other taxes which may be payable with respect to the
execution or delivery of this Agreement or the issuance of the
Notes. The Borrower's obligation to pay such costs and expenses
shall survive the termination of this Agreement and the repayment
of the Bank Indebtedness.
9.3 Notices.
9.3a Notice to the Borrower. All notices required to be
delivered to the Borrower pursuant to this Agreement shall be in
writing and shall be sent to the following address, by hand
delivery, recognized national overnight courier service, telex,
telegram, facsimile transmission or other means of electronic
data communications or by the United States mail, first class,
postage prepaid:
If by U.S. Mail: If by other means:
Allegheny Teledyne Incorporated Allegheny Teledyne Incorporated
1000 Six PPG Place 1000 Six PPG Place
Pittsburgh, Pennsylvania 15222 Pittsburgh, Pennsylvania
15222
Attn: Vice President, Treasurer Attn: Vice President, Treasurer
Telecopier: (412) 394-2805
Telephone: (412) 394-2822
9.3b Notice to the Agent. All notices required to be
delivered to the Agent pursuant to this Agreement shall be in
writing and shall be sent to the following address, by hand
delivery, recognized national overnight courier service, telex,
telegram, facsimile transmission or other means of electronic
data communications or by the United States mail, first class,
postage prepaid:
If by U.S. Mail: If by other means:
PNC Bank, National Association PNC Bank, National Association
Multi-Bank Loan Administration Multi-Bank Loan Administration
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One PNC Plaza - 4th Floor Annex One PNC Plaza - 4th Floor Annex
249 Fifth Avenue 249 Fifth Avenue
Pittsburgh, Pennsylvania Pittsburgh, Pennsylvania
15222-2707 15222-2707
Attention: Arlene M. Ohler Attention: Arlene M. Ohler
Telephone: (412) 762-3627
Telecopier: (412) 762-7568
with a copy to:
PNC Bank, National Association PNC Bank, National Association
Metals Group Metals Group
One PNC Plaza, 2nd Floor One PNC Plaza, 2nd Floor
249 Fifth Avenue 249 Fifth Avenue
Pittsburgh, Pennsylvania Pittsburgh, Pennsylvania
15222-2707 15222-2707
Attention:Lawrence W. Jacobs Attention:Lawrence W. Jacobs
Vice President Vice President
Telephone: (412) 762-2524
Telecopier: (412) 762-6484
9.3c Notice to the Lenders. All notices required to be
delivered to the Lenders pursuant to this Agreement shall be in
writing and shall be sent to the addresses set forth on the
signature pages of the Agreement, by hand delivery, recognized
national overnight courier service, telex, telegram, facsimile
transmission or other means of electronic data communication or
by the United States mail, first class, postage prepaid.
9.3d Receipt of Notices. All such notices shall be
effective three (3) days after mailing, the date of electronic
transmission or when received, whichever is earlier. The
Borrower, the Lenders and the Agent may each change the address
for service of notice upon it by a notice in writing to the other
parties hereto.
9.4 Tax Withholding. At least five (5) Business Days prior
to the first date on which interest or fees are payable hereunder
for the account of each Lender, each Lender that is not
incorporated under the laws of the United States of America or a
state thereof agrees that it will deliver to the Agent and the
Borrower two (2) duly completed copies of either (i) IRS Form W-
9, 1001 or 4224 or such other applicable form prescribed by the
IRS, certifying in each case that such Lender is entitled to
receive payments under this Agreement or its Notes without
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deduction or withholding of United States federal income taxes,
or is subject to such tax at a reduced rate under an applicable
tax treaty or (ii) IRS Form W-8 or such other applicable form
prescribed by the IRS or a certificate of such Lender indicating
that no such exemption or reduced rate of taxation is allowable
with respect to such payments. Each Lender which delivers an IRS
Form W-8, W-9, 4224 or 1001 further undertakes to deliver to the
Agent and the Borrower two (2) additional copies of any such form
(or any successor form) on or before the date on which that form
expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it,
and such amendments thereto or extensions or renewals thereof as
may be reasonably requested by the Borrower or the Agent, either
certifying that such Lender is entitled to receive payments under
this Agreement or its Notes without deduction or withholding of
any United States federal income taxes or is subject to such tax
at a reduced rate under an applicable tax treaty or stating the
date on which that no such exemption or reduced rate is
allowable. The Agent shall be entitled to withhold, from each
payment hereunder or under the Notes payable to it, United States
federal income taxes at the full withholding rate unless each
Lender referred to in the first sentence of this Section 9.4
establishes an exemption or at the applicable reduced rate
established pursuant to the above provisions.
9.5 Successors and Assigns. This Agreement shall be
binding upon the Borrower, the Agent and the Lenders and their
respective successors and assigns, and shall inure to the benefit
of the Borrower, the Agent and the Lender and the successors and
assigns of the Agent and the Lender.
9.6 Assignments and Participations.
9.6a Assignments. Subject to the remaining provisions of
this Subsection 9.6a, any Lender (a "Transferor Lender"), at any
time, in the ordinary course of its commercial banking business
and in accordance with applicable law, may sell to one or more
financial institutions (individually a "Purchasing Lender"), a
portion or all of its rights and obligations under this Agreement
and the Notes then held by it, pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit "J"
executed by the Transferor Lender, such Purchasing Lender and the
Agent; subject, however to the following requirements:
(i) Each such assignment must be in a minimum amount
of $10,000,000, or, if in excess thereof, in integral
multiples of $1,000,000, unless such Lender's Commitment is
less than $10,000,000, in which case such assignment shall
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be in the full amount of such Lender's Commitment;
(ii) During the first ninety (90) days following the
Closing Date, each assignment made shall become effective
only on a date which coincides with the expiration date of
any Euro-Rate Interest Period then in effect, unless the
Agent agrees to waive this provision;
(iii) The Borrower and the Agent shall consent to
each such assignment, which consent shall not be
unreasonably withheld; and
(iv) The Transferor Lender shall pay to the Agent a
$3,500 service fee for each such transfer at the time of
each such transfer;
provided, however the restrictions set forth in item (i) above
shall not apply (x) in the case of an assignment by a Lender to
an Affiliate of such Lender or (y) in the case of any assignment
by any Transferor Lender upon the occurrence and during the
continuation of an Event of Default; and provided further, that
upon the occurrence and during the continuance of an Event of
Default the consent of the Borrower to any assignment is not
required.
Upon the execution, delivery, acceptance and recording of any
such Assignment and Assumption Agreement, from and after the
Transfer Effective Date determined pursuant to such Assignment
and Assumption Agreement, all parties hereto agree that (a) the
Purchasing Lender thereunder shall be a party hereto as a Lender
and, to the extent provided in such Assignment and Assumption
Agreement, shall have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein, and (b) the
Transferor Lender thereunder shall, to the extent provided in
such Assignment and Assumption Agreement, be released from its
obligations as a Lender under this Agreement. Such Assignment
and Assumption Agreement shall be deemed to amend this Agreement
(without further action) to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender as a
Lender and the resulting adjustment of Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such Transferor Lender
under this Agreement and its Notes. On or prior to the Transfer
Effective Date, the Borrower shall execute and deliver to the
Agent, in exchange for the surrendered Notes held new Notes to
the order of such Purchasing Lender in an amount equal to the
Commitment or the Loans assumed by it and purchased by it
pursuant to such Assignment and Assumption Agreement, and new
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Notes to the order of the Transferor Lender in an amount equal to
the Commitment or the Loans retained by it hereunder.
In addition to the assignments permitted above, any Lender may
assign and pledge all or any portion of its Loans and Notes to
any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve
System and any Operating Circular issued by such Federal Reserve
Bank. No such assignment shall release the assigning Lender from
its obligations and duties hereunder.
9.6b Assignment Register. The Agent shall maintain, at its
address referred to in Subsection 9.3b, a copy of each Assignment
and Assumption Agreement delivered to it and a register (the
"Register") for the recordation of the names and addresses of the
Lenders and the amount of the Loans owing to each Lender from
time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Agent and
the Lenders may treat each Person whose name is recorded in the
Register as the owner of the Loans recorded therein for all
purposes of this Agreement. The Register shall be available at
the office of the Agent set forth in Subsection 9.3b for
inspection by either Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
9.6c Participations. Each Lender, in the ordinary course of
its commercial banking business and in accordance with applicable
law, may sell to one or more Participants a participating
interest in any Loan owing to such Lender, the interest of such
Lender in any Notes or the Commitment of such Lender. In the
event of any such sale by a Lender of a participating interest to
a Participant, such Lender's obligations under this Agreement to
the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of its Notes for all
purposes under this Agreement and the Borrower, the other Lenders
and the Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and
obligations under this Agreement or its Notes and the
Participants shall have voting rights only with respect to
matters described in items (B), (C), (D), (E) and (F) of Section
9.1.
9.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions
hereof or affecting the validity or enforceability of such
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provision in any other jurisdiction.
9.8 Survival. All representations, warranties, covenants
and agreements of the Borrower contained herein in the Notes or
in the other Loan Documents or made in writing in connection
herewith or therewith shall survive the issuance of the Notes and
shall continue in full force and effect so long as the Borrower
may borrow hereunder and so long thereafter until payment in full
of all the Notes and the Bank Indebtedness.
9.9 Governing Law. This Agreement, each Note and each
other Loan Document shall be a contract made under, governed by
and construed in accordance with the laws of the Commonwealth of
Pennsylvania without reference to the provision thereof regarding
conflicts of law except where such law is superseded by
applicable Federal law.
9.10 Non-Business Days. Except as otherwise specifically
required pursuant to the terms of this Agreement, whenever any
payment hereunder or under the Notes is due and payable on a day
which is not a Business Day, such payment may be made on the next
succeeding Business Day.
9.11 Integration. This Agreement constitutes the entire
agreement between the parties relating to this financing
transaction and it supersedes all prior understandings and
agreements, whether written or oral, between the parties hereto
concerning the subject matter of this Agreement.
9.12 Headings. Article, Section and other headings used in
this Agreement are intended for convenience only and shall not
affect the meaning or construction of this Agreement.
9.13 Set-Off. The Borrower hereby gives to the Lenders a
lien and security interest for the amount of any Bank
Indebtedness upon and in any property, credits, securities or
money of the Borrower which may at any time be delivered to, or
be in the possession of, or owed by any Lender in any capacity
whatever, including the balance of any deposit account but
excluding any trust or fiduciary accounts, in each case
maintained by the Borrower with such Lender. The Borrower hereby
authorizes each Lender in case of an Event of Default, at such
Lender's option, at any time and from time to time, to apply, at
the discretion of such Lender, to the payment of Bank
Indebtedness, any and all such property, credits, securities or
money now or hereafter in the hands of such Lender belonging or
owed to the Borrower. Nothing herein shall restrict any Lender's
ability to set off any property, credits, securities or money of
-72-
the Borrower which may at any time be delivered to, or be in
possession or owed to any Lender in any capacity whatever to
satisfy an independent obligation of the Borrower to the Lender.
9.14 Forum. The parties hereto agree that any action or
proceeding arising out of or relating to this Agreement, the
Notes or the other Loan Documents shall be commenced only in the
Court of Common Pleas of Allegheny County, Pennsylvania, or in
the District Court of the United States for the Western District
of Pennsylvania and each party agrees that a summons and
complaint commencing an action or proceeding in either of such
courts shall be properly served and shall confer personal
jurisdiction if served personally or by certified mail to the
party at its respective address set forth in Section 9.3, or as
otherwise provided under the laws of the Commonwealth of
Pennsylvania. Further, the parties hereby specifically consent
to the personal jurisdiction of the Court of Common Pleas of
Allegheny County, Pennsylvania, and the District Court of the
United States for the Western District of Pennsylvania, and waive
and hereby acknowledge that the parties are estopped from raising
any claim that any such court lacks personal jurisdiction over
such party so as to prohibit either such court from adjudicating
any issues raised in a complaint filed with any such court
against the Borrower or the Lenders concerning this Agreement.
9.15 Waiver of Jury Trial. Each of the Agent, the Lenders
and the Borrower hereby knowingly, voluntarily and intentionally
waive any rights they may have to a trial by jury in respect of
any litigation based hereon, or arising out of, under, or in
connection with, this Agreement or any other Loan Document, or
any course of conduct, course of dealing, statements (whether
verbal or written) or actions of the Agent, the Lenders or the
Borrower relating hereto or thereto. The Borrower acknowledges
and agrees that it has received full and sufficient consideration
for this provision (and each other provision of each other Loan
Document to which it is a party) and that this provision is a
material inducement for the Lenders to enter into this Agreement
and each such other Loan Document.
9.16 Indemnity. The Borrower hereby agrees to indemnify the
Agent, the Managing Agents, the Lenders and each of their
respective directors, officers, employees, attorneys, agents and
Affiliates against, and hold each of them harmless from, any
loss, liabilities, damages, claims, and reasonable costs and
expenses, joint or several, (including reasonable attorneys' fees
and disbursements reasonably incurred by any such Person in
connection with the preparation for or defense of any pending or
threatened claim, action or proceeding) suffered or incurred by
-73-
any of them under any applicable federal or state law or
otherwise caused by, arising out of, resulting from or in any
manner connected with, the execution, delivery and performance of
each of the Loan Documents, the Loans and any and all
transactions related to or consummated in connection with the
Loans. The indemnity set forth in this Section 9.16 shall be in
addition to any other obligations or liabilities of the Borrower
to the Agents or the Lenders, or at common law or otherwise. The
provisions of this Section 9.16 shall survive the payment of the
Obligations and the termination of this Agreement. The foregoing
provisions of this Section 9.16 to the contrary notwithstanding,
the Borrower shall not be obligated to indemnify the Agent, the
Managing Agents or any Lender pursuant to this Section 9.16 for
any losses, liabilities, damages, claims, or costs which arise
directly from the Agent's, such Managing Agent's or such Lender's
gross negligence or willful misconduct. All amounts owed
pursuant to this Section 9.16 shall be part of the Obligations.
9.17 Termination of Existing Bank Credit Agreements. It is
the intent of the parties hereto (A) that on the Closing Date the
Borrower shall comply with each of items (i) through (x)
inclusive and item (xii) of Section 6.2 and (B) that each of the
agents for the Lenders party to the Existing Bank Credit
Agreements shall comply with item (xi) of Section 6.2. Upon
satisfaction of all of the provisions of Section 6.2, the
Existing Bank Credit Agreements shall be terminated.
9.18 Counterparts. This Agreement and any amendment,
modification, extension or renewal hereto or hereof may be
executed in several counterparts and by each party on a separate
counterpart, each of which, when so executed and delivered, shall
be an original, but all of which together shall constitute but
one and the same instrument. In proving this Agreement or any
amendment, modification, extension or renewal, it shall not be
necessary to produce or account for more than one such
counterpart signed by the other party against whom enforcement is
sought.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-74-
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the
date first written above.
ATTEST: ALLEGHENY TELEDYNE INCORPORATED
/s/ M.W. Snyder By /s/ R.S. Park
--------------- -------------
Name Mary W. Snyder Robert S. Park
Title Asst. Secretary Vice President, Treasurer
PNC BANK, NATIONAL ASSOCIATION, in
its capacity as the Agent hereunder
By /s/ Lawrence W. Jacobs
----------------------
Lawrence W. Jacobs
Vice President
BF 44539.13
08/29/96:12
000011-011923
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by and
among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS PARTY HERETO
and PNC BANK, NATIONAL ASSOCIATION, as the Agent to be executed
by its duly authorized officers as of the date first above
written.
Commitment: PNC BANK, NATIONAL ASSOCIATION
$55,000,000
Commitment Percentage:
11% By /s/ Lawrence W. Jacobs
-----------------------
Lawrence W. Jacobs
Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
PNC Bank, National Association PNC Bank, National Association
Multi-Bank Loan Administration Multi-Bank Loan Administration
One PNC Plaza - 4th Floor Annex One PNC Plaza - 4th Floor Annex
249 Fifth Avenue 249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707Pittsburgh, Pennsylvania15222-2707
Attention: Arlene M. Ohler Attention: Arlene M. Ohler
Telephone: (412) 762-3627
Telecopier: (412) 762-8672
With a copy to: With a copy to:
PNC Bank, National Association PNC Bank, National Association
Metals Group Metals Group
One PNC Plaza - 2nd Floor One PNC Plaza - 2nd Floor
249 Fifth Avenue 249 Fifth Avenue
Pittsburgh, Pennsylvania Pittsburgh, Pennsylvania
15222-2707 15222-2707
Attention: Lawrence W. Jacobs Attention: Lawrence W. Jacobs
Vice President Vice President
Telephone: (412) 762-2524
Telecopier: (412) 762-6484
Address for Euro-Rate Loan Funding if different from above:
N/A
Telephone:
Telecopier:
Telex:
-76-
-77-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by and
among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS PARTY HERETO
and PNC BANK, NATIONAL ASSOCIATION, as the Agent to be executed
by its duly authorized officers as of the date first above
written.
Commitment: BANK OF AMERICA ILLINOIS
$55,000,000
Commitment Percentage: By /s/ Paul B. Higdon
------------------
Name Paul B. Higdon
-----------------
11% Title Managing Director
-----------------
Addresses for notice purposes:
If by United States Mail: If by other means:
Bank of America Illinois Bank of America Illinois
231 South LaSalle Street 231 South LaSalle Street
Chicago, Illinois 60697 Chicago, Illinois 60697
Attention: Sandra S. Ober Attention: Sandra S. Ober
Vice President Vice President
Telephone: (312) 828-1307
Telecopier: (312) 987-0303
Address for Eurodollar Rate Loan Funding if different from above:
N/A
Telephone:
Telecopier:
Telex:
-78-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by and
among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS PARTY HERETO
and PNC BANK, NATIONAL ASSOCIATION, as the Agent to be executed
by its duly authorized officers as of the date first above
written.
Commitment: MELLON BANK, N.A.
$55,000,000
Commitment Percentage: By /s/ Martin T. Hanning
_____________________
11% Name: Martin T. Hanning
Title: Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
Mellon Bank, N.A. Mellon Bank, N.A.
One Mellon Bank Center One Mellon Bank Center
151-4401 151-4401
Pittsburgh, Pennsylvania Pittsburgh, Pennsylvania
Attention: Martin T. Hanning Attention: Martin T. Hanning
Vice President Vice President
Telephone: (412) 234-4710
Telecopier:(412) 234-5049
Telex: 199103 MELBNKPGH
Address for Eurodollar Rate Loan Funding if different from above:
N/A
Telephone:
Telecopier:
Telex:
-79-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by and
among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS PARTY HERETO
and PNC BANK, NATIONAL ASSOCIATION, as the Agent to be executed
by its duly authorized officers as of the date first above
written.
Commitment: THE CHASE MANHATTAN BANK
$55,000,000
Commitment Percentage: By /s/ James H. Ramage
--------------------
11% Name James H. Ramage
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
The Chase Manhattan Bank The Chase Manhattan Bank
One Chase Manhattan Plaza One Chase Manhattan Plaza
New York, New York 10081 New York, New York 10081
Attention: James Ramage Attention: James Ramage
Vice President Vice President
Telephone: (212) 552-7784
Telecopier:(212) 552-5555
Address for Eurodollar Rate Loan Funding if different from above:
N/A
Telephone:
Telecopier:
Telex:
-80-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by
and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as of
the date first above written.
Commitment: THE BANK OF NEW YORK
$35,000,000
Commitment Percentage: By /s/ Robert J. Joyce
7% Name Robert J. Joyce
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
The Bank of New York The Bank of New York
One Wall Street One Wall Street
Midwest Division, 22nd Floor Midwest Division, 22nd Floor
New York, New York 10286 New York, New York 10286
Attention: Robert J. Joyce Attention: Robert J. Joyce
Vice President Vice President
Telephone: (212) 635 7919
Telecopier: (212) 635-6434
Address for Eurodollar Rate Loan Funding if different
from above:
N/A
Telephone:
Telecopier:
Telex:
-81-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement
by and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as
of the date first above written.
Commitment: MORGAN GUARANTY TRUST
$35,000,000 COMPANY OF NEW YORK
Commitment Percentage: By /s/ Charles H. King
7% Name Charles H. King
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
Morgan Guaranty Trust Company Morgan Guaranty Trust Company
of New York of New York
60 Wall Street 60 Wall Street
New York, New York 10260-0060 New York, New York 10260-0060
Attention: Laura E. Reim Attention: Laura E. Reim
Vice President Vice President
Telephone: (212) 648-6793
Telecopier: (212) 648-5336
Address for Eurodollar Rate Loan Funding if different from
above:
N/A
Telephone:
Telecopier:
Telex:
-82-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement
by and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as of
the date first above written.
Commitment: NATIONSBANK, N.A.
$35,000,000
Commitment Percentage: By /s/ Rajesh Sood
7% Name Rajesh Sood
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
NationsBank, N.A. NationsBank, N.A.
NCI-007-08-04 NCI-007-08-04
100 N. Tyron Street 100 N. Tyron Street
Charlotte, North Carolina Charlotte, North Carolina
Attention: Rajesh Sood Attention: Rajesh Sood
Telephone: (704) 388-3234
Telecopier: (704) 388-0960
Address for Eurodollar Rate Loan Funding if different from
above:
N/A
Telephone:
Telecopier:
Telex:
-83-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by
and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as of
the date first above written.
Commitment: ABN AMRO BANK N.V.
$25,000,000
By: ABN AMRO NORTH
AMERICA, INC., as
agent
Commitment Percentage: By /s/ James M. Janovsky
5% Name James M. Janovsky
Title Group Vice President and
Director
By /s/ Kathryn C. Toth
Name Kathryn C. Toth
Title Group Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
ABN AMRO Bank N.V. ABN AMRO Bank N.V.
One PPG Place, Suite 2950 One PPG Place, Suite 2950
Pittsburgh, Pennsylvania Pittsburgh, Pennsylvania
15222-5400 15222-5400
Attention: David M. Eichenlaub Attention: David M.Eichenlaub
Telephone: (412) 566-2297
Telecopier: (412) 566-2266
Address for Eurodollar Rate Loan Funding if different from
above:
N/A
Telephone:
Telecopier:
Telex:
-84-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by
and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as of
the date first above written.
Commitment: BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
$25,000,000
Commitment Percentage: By /s/ M. R. Marron
5% Name M. R. Marron
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
Bank of Tokyo-Mitsubishi Trust Bank of Tokyo-Mitsubishi Trust
Company Company
1251 Avenue of the Americas 1251 Avenue of the Americas
New York, New York 10020-1104 New York, New York 10020-1104
Attention: James M. Fuell Attention: James M. Fuell
Assistant Vice Assistant Vice
President President
Telephone: (212) 782-4221
Telecopier: (212) 782-6440
Address for Eurodollar Rate Loan Funding if different from
above:
N/A
Telephone:
Telecopier:
Telex:
-85-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by
and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as of
the date first above written.
Commitment: THE FIRST NATIONAL BANK OF
CHICAGO
$25,000,000
Commitment Percentage: By /s/ Amy R. Fahey
5% Name Amy R. Fahey
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
The First National Bank The First National Bank
of Chicago of Chicago
One First National Plaza One First National Plaza
1-10 Suite 0374 1-10 Suite 0374
Chicago, Illinois 60670 Chicago, Illinois 60670
Attention: Amy Fahey Attention: Amy Fahey
Telephone: (312) 732-1206
Telecopier: (312) 732-3885
Address for Eurodollar Rate Loan Funding if different from
above:
N/A
Telephone:
Telecopier:
Telex:
-86-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by
and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as of
the date first above written.
Commitment: FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
$25,000,000
Commitment Percentage: By /s/ Mark M. Harden
5% Name Mark M. Harden
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
First Union Capital Markets First Union Capital Markets
One First Union Center, DC 5 One First Union Center,DC 5
301 South College Street 301 South College Street
Charlotte, North Carolina Charlotte, North Carolina
28288-0745 28288-0745
Attention: John S. Cannon Attention: John S. Cannon
Director Director
Telephone: (704) 383-4747
Telecopier: (704) 374-2802
Address for Eurodollar Rate Loan Funding if different from
above:
N/A
Telephone:
Telecopier:
Telex:
-87-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by
and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as of
the date first above written.
Commitment: THE FUJI BANK LIMITED,NEW
YORK BRANCH
$25,000,000
Commitment Percentage: By /s/ Masanobu Kobayashi
5% Name Masanobu Kobayashi
Title Vice President & Senior
Team Leader
Addresses for notice purposes:
If by United States Mail: If by other means:
The Fuji Bank Limited, The Fuji Bank Limited,
New York Branch New York Branch
Two World Trade Center Two World Trade Center
79th Floor 79th Floor
New York, New York 10048 New York, New York 10048
Attention: Walter T. Duffy Attention: Walter T. Duffy
Telephone: (212) 898-2063
Telecopier: (212) 912-0516
Address for Eurodollar Rate Loan Funding if different from
above:
N/A
Telephone:
Telecopier:
Telex:
-88-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by
and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as of
the date first above written.
Commitment: NATIONAL CITY BANK OF
PENNSYVANIA
$25,000,000
Commitment Percentage: By /s/ William S. Harris
5% Name William S. Harris
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
National City Bank of National City Bank of
Pennsylvania Pennsylvania
300 Fourth Avenue 300 Fourth Avenue
15th Floor - Corporate Banking 15th Floor - Corporate Banking
LOC #01-151 LOC #01-151
Pittsburgh, Pennsylvania 15278 Pittsburgh, Pennsylvania 15278
Attention: William S. Harris Attention: William S. Harris
Vice President Vice President
Telephone: (412) 644-7795
Telecopier: (412) 471-4883
Address for Eurodollar Rate Loan Funding if different
from above:
N/A
Telephone:
Telecopier:
Telex:
-89-
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement
by and among ALLEGHENY TELEDYNE INCORPORATED, THE LENDERS
PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as the
Agent to be executed by its duly authorized officers as
of the date first above written.
Commitment: UNION BANK OF SWITZERLAND
NEW YORK BRANCH
$25,000,000
Commitment Percentage: By /s/ Dieter Hoeppli
5% Name Dieter Hoeppli
Title Assistant Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
Union Bank of Switzerland Union Bank of Switzerland
New York Branch New York Branch
299 Park Avenue 299 Park Avenue
New York, New York 10171 New York, New York 10171
Attention: Robert W. Casey, Jr. Attention: Robert W. Casey, Jr.
Managing Director Managing Director
Telephone: (212) 821-3329/3415
Telecopier:(212) 821 3383
Telex:MCI(023)620317ubs uw
Address for Eurodollar Rate Loan Funding if different from
above:
N/A
Telephone:
Telecopier:
Telex:
-90-
EXHIBIT 18
[ERNST & YOUNG LLP LOGO] One Oxford Centre Phone 412 644 7800
Pittsburgh, Pennsylvania 15219
November 13, 1996
Mr. James L. Murdy
Senior Vice President and Chief Financial Officer
Allegheny Teledyne Incorporated
Pittsburgh, Pennsylvania
Dear Sir:
Note 1 of notes to condensed Consolidated Financial
Statements of Allegheny Teledyne Incorporated (the Company)
included in its Form 10-Q for the period ended September 30, 1996
describes changes in the method of accounting for depreciation
of buildings and equipment. Effective July 1, 1996, the
Company adopted the straight-line method of depreciation for all
buildings and equipment placed in service on or after that date.
Buildings and equipment placed in service prior to July 1, 1996
are depreciated principally using accelerated methods of
depreciation. You have advised us that you believe that this
change is to a preferable method in your circumstances because
the change more appropriately reflects the Company's financial
results by better allocating costs of new property over the
useful lives of these assets. In addition, the new method more
closely conforms with that prevalent in the industry and to that
used by the Company's other operating units.
There are no authoritative criteria for determining
a preferable depreciation method based on the particular
circumstances; however, we conclude that the change in the method
of accounting for depreciating property is to an acceptable
alternative method which based on your business judgment to make
this change for the reasons cited above, is preferable in your
circumstances. As more fully described in Notes 1 and 2 of
the condensed financial statements included in Form 10-Q for
the period ended September 30, 1996, Allegheny Teledyne
Incorporated was formed effective August 15, 1996, as a result of
the merger of Allegheny Ludlum Corporation and Teledyne, Inc. The
merger was accounted for under the pooling of interests method of
accounting. We have not conducted an audit in accordance with
generally accepted auditing standards of any financial statements
of Allegheny Teledyne Incorporated as of any date or for any
period subsequent to December 31, 1995, and therefore do not
express any opinion on any financial statements of Allegheny
Teledyne Incorporated subsequent to that date.
Very truly yours,
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
registrant's consolidated statement of income for the fiscal nine months ended
September 30, 1996 and consolidated balance sheet as of September 30, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 205
<SECURITIES> 0
<RECEIVABLES> 533
<ALLOWANCES> 13
<INVENTORY> 462
<CURRENT-ASSETS> 1273
<PP&E> 1577
<DEPRECIATION> 847
<TOTAL-ASSETS> 2673
<CURRENT-LIABILITIES> 544
<BONDS> 591
0
0
<COMMON> 17
<OTHER-SE> 828
<TOTAL-LIABILITY-AND-EQUITY> 2673
<SALES> 2895
<TOTAL-REVENUES> 2895
<CGS> 2220
<TOTAL-COSTS> 2220
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29
<INCOME-PRETAX> 277
<INCOME-TAX> 115
<INCOME-CONTINUING> 162
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 162
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
</TABLE>
