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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-K
(Mark One)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______ to ________
Commission file number 1-7006
BRUSH WELLMAN INC.
(Exact name of Registrant as specified in charter)
OHIO 34-0119320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17876 ST. CLAIR AVENUE, CLEVELAND, OHIO 44110
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 216-486-4200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
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COMMON STOCK, PAR VALUE $1 PER SHARE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /x/
The aggregate market value of Common Stock, par value $1 per share, held by
non-affiliates of the registrant (based upon the closing sale price on the New
York Stock Exchange) on March 7, 1995 was approximately $264,265,909.
As of March 7, 1995, there were 16,123,055 shares of Common Stock, par
value $1 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to shareholders for the year ended December
31, 1994 are incorporated by reference into Parts I and II.
Portions of the proxy statement for the annual meeting of shareholders to
be held on May 2, 1995 are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
Brush Wellman Inc. ("Company") manufactures and sells engineered
materials for use by manufacturers and others who perform further operations
for eventual incorporation into capital, aerospace/defense or consumer
products. These materials typically comprise a small portion of the final
product's cost. They are generally premium priced and are often developed or
customized for the customer's specific process or product requirements. The
Company's product lines are supported by research and development activities,
modern processing facilities and a global distribution network.
Customers include manufacturers of electrical/electronic
connectors, communication equipment, computers, automobiles, lasers,
appliances, spacecraft, aircraft, oil field instruments and equipment, sporting
goods, and defense contractors and suppliers to all of the foregoing
industries.
The Company operates in a single business segment with product
lines comprised of beryllium-containing materials and other specialty
materials.
The Company is a fully integrated producer of beryllium,
beryllium alloys (primarily copper beryllium), and beryllia ceramic, each of
which exhibits its own unique set of properties. The Company holds extensive
mineral rights and mines the beryllium bearing ore, bertrandite, in central
Utah. Beryllium is extracted from both bertrandite and imported beryl ore. In
1994, 70% of the Company's sales were of products containing the element
beryllium (74% in 1993 and 80% in 1992). Beryllium-containing products are
sold in competitive markets throughout the world through a direct sales
organization and through owned and independent distribution centers. NGK
Metals Corporation of Reading, Pennsylvania and NGK Insulators, Ltd. of Nagoya,
Japan compete with the Company in the beryllium alloys field. Beryllium alloys
also compete with other generally less expensive materials, including phosphor
bronze, stainless steel and other specialty copper and nickel alloys. General
Ceramics Inc. is a domestic competitor in beryllia ceramic. Other competitive
materials include alumina, aluminum nitride and composites. While the Company
is the only domestic producer of the metal beryllium, it competes with other
fabricators as well as with designs utilizing other materials.
Sales of other specialty materials, principally metal systems and
precious metal products, were 30% of total sales in 1994 (26% in 1993 and 20%
in 1992). Precious metal products are produced by Williams Advanced Materials
Inc. (hereinafter referred to as "WAM"), a subsidiary of the Company comprised
of businesses acquired in 1986, 1989 and 1994. In October 1994, WAM acquired
the assets of Hydrostatics Inc., located in Bethlehem, Pennsylvania. The
Bethlehem facility produces ultra fine wire products for the semiconductor and
electronics markets. WAM's major product lines include sealing lid assemblies,
vapor deposition materials, contact ribbon products for various segments of the
semiconductor markets, clad and precious metal preforms and restorative dental
products. WAM also specializes in precious metal refining and recovery.
______________________________
As used in this report, except as the context otherwise requires, the term
"Company" means Brush Wellman Inc. and its consolidated subsidiaries, all of
which are wholly owned.
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WAM's principal competitors are Semi-Alloys and Johnson Matthey
in the sealing lid assembly business and Materials Research Corporation in the
vapor deposition materials product line. The products are sold directly from
WAM's facilities in Buffalo, New York, Bethlehem, Pennsylvania, and Singapore
as well as through sales representatives.
Technical Materials, Inc. (hereinafter referred to as "TMI"), a
subsidiary of the Company, produces specialty metal systems, consisting
principally of narrow metal strip, such as copper alloys, nickel alloys and
stainless steels into which strips of precious metal are inlaid. TMI also
offers a number of other material systems, including electron beam welded dual
metal, contour milling and skiving, thick and thin selective solder coatings,
selective electroplated products and bonded aluminum strips on nickel-iron
alloys for semiconductor leadframes. Divisions of Handy & Harman, Texas
Instruments and Metallon are competitors for the sale of inlaid strip. Strip
with selective electroplating is a competitive alternative as are other design
approaches. The products are sold directly and through sales representatives.
Sales and Backlog
The backlog of unshipped orders as of December 31, 1994, 1993 and
1992 was $95,354,000, $86,531,000 and $90,201,000, respectively. Backlog is
generally represented by purchase orders that may be terminated under certain
conditions. The Company expects that, based on recent experience,
substantially all of its backlog of orders at December 31, 1994 will be filled
during 1995.
Sales are made to approximately 6,230 customers. Government
sales, principally subcontracts, accounted for about 3.2% of consolidated sales
in 1994 as compared to 6.1% in 1993 and 8.9% in 1992. Sales outside the United
States, principally to Western Europe, Canada and Japan, accounted for
approximately 33% of sales in 1994, 29% in 1993 and 27% in 1992. Financial
information as to sales, identifiable assets and profitability by geographic
area set forth on pages 16-17 in Note L to the consolidated financial
statements in the annual report to shareholders for the year ended December 31,
1994 is incorporated herein by reference.
Research & Development
Active research and development programs seek new product
compositions and designs as well as process innovations. Expenditures for
research and development amounted to $8,754,000 in 1994, $7,121,000 in 1993 and
$7,294,000 in 1992. A staff of 51 scientists, engineers and technicians was
employed in this effort during 1994. Some research and development projects
were externally sponsored and expenditures related to those projects
(approximately $102,000 in 1994, $80,446 in 1993 and $217,000 in 1992) are
excluded from the above totals.
Availability of Raw Materials
The more important raw materials used by the Company are
beryllium (extracted from both imported beryl ore and bertrandite mined from
the Company's Utah properties), copper, gold, silver, nickel and palladium.
The availability of these raw materials, as well as other materials used by the
Company, is adequate and generally not dependent on any one
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supplier. Certain items are supplied by a preferred single source, but
alternatives are believed readily available.
Patents and Licenses
The Company owns patents, patent applications and licenses
relating to certain of its products and processes. While the Company's rights
under the patents and licenses are of some importance to its operations, the
Company's businesses are not materially dependent on any one patent or license
or on the patents and licenses as a group.
Environmental Matters
The inhalation of excessive amounts of airborne beryllium
particulate may present a health hazard to certain individuals. For decades the
Company has operated its beryllium facilities under stringent standards of
inplant and outplant discharge. These standards, which were first established
by the Atomic Energy Commission over forty years ago, were, in general,
subsequently adopted by the United States Environmental Protection Agency and
the Occupational Safety and Health Administration. The Company's experience in
sampling, measurement, personnel training and other aspects of environmental
control gained over the years, and its investment in environmental control
equipment, are believed to be of material importance to the conduct of its
business.
Employees
As of December 31, 1994 the Company had 1,833 employees.
ITEM 2. PROPERTIES
The material properties of the Company, all of which are owned in
fee except as otherwise indicated, are as follows:
Cleveland, Ohio - A structure containing 110,000 square feet on
an 18 acre site housing corporate and administrative offices, data processing
and research and development facilities.
Elmore, Ohio - A complex containing approximately 676,000 square
feet of building space on a 385 acre plant site. This facility employs diverse
chemical, metallurgical and metalworking processes in the production of
beryllium, beryllium oxide, beryllium alloys and related products. Beryllium
ore concentrate from the Delta, Utah plant is used in all beryllium-containing
products.
Shoemakersville (Reading), Pennsylvania - A 123,000 square foot
plant on a ten acre site that produces thin precision strips of beryllium
copper and other alloys and beryllium copper rod.
Newburyport, Massachusetts - A 30,000 square foot manufacturing
facility on a four acre site that produces alumina, beryllia ceramic and direct
bond copper products.
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Tucson, Arizona - A 45,000 square foot plant on a ten acre site
for the manufacture of beryllia ceramic parts from beryllium oxide powder
supplied by the Elmore, Ohio facility.
Delta, Utah - An ore extraction plant consisting of 86,000 square
feet of buildings and large outdoor facilities situated on a two square mile
site. This plant extracts beryllium from bertrandite ore from the Company's
mines as well as from imported beryl ore.
Juab County, Utah - The Company holds extensive mineral rights in
Juab County, Utah from which the beryllium bearing ore, bertrandite, is mined
by the open pit method. A substantial portion of these rights is held under
lease. Ore reserve data set forth on page 15 of this Form 10-K annual report
for the year ended December 31, 1994 are incorporated herein by reference.
Fremont, California - A 49,000 square foot leased facility for
the fabrication of precision electron beam welded, brazed and diffusion bonded
beryllium structures. The lease expires in December 1995. The Company does
not plan to renew the lease and is looking to lease space at a smaller
facility.
Theale (Reading), England - A 19,700 square foot leased facility
principally for distribution of beryllium alloys.
Stuttgart, West Germany - A 24,750 square foot leased facility
principally for distribution of beryllium alloys.
Fukaya, Japan - A 35,500 square foot facility on 1.8 acres of
land in Saitama Prefecture principally for distribution of beryllium alloys.
Lincoln, Rhode Island - A manufacturing facility consisting of
124,000 square feet located on seven and one-half acres. This facility
produces metal strip inlaid with precious metals and related metal systems
products.
Buffalo, New York - A complex of approximately 97,000 square feet
on a 3.8 acre site providing facilities for manufacturing, refining and
laboratory services relating to high purity precious metals.
Syracuse, New York - A 14,000 square foot leased portion of a
multi-story facility for the sale of direct bond copper products.
Singapore, Singapore - A 4,500 square foot leased facility for
the assembly and sale of precious metal hermetic sealing lids.
Bethlehem, Pennsylvania - A 6,000 square foot leased facility for
the production and sales of ultra fine wire. The Company plans to close this
facility by the end of 1995. Production will be moved to and absorbed in both
the Buffalo, New York and Singapore facilities.
Production capacity is believed to be adequate to fill the
Company's backlog of orders and to meet the current level of demand. However,
the Company is currently re-
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evaluating production capacity in light of anticipated sales increases from
development of new applications for the Company's products and expanding
international presence.
ITEM 3. LEGAL PROCEEDINGS
The Company is from time to time a defendant in various civil and
administrative proceedings that relate to the ordinary course of its operating
business. These proceedings include environmental, health and safety related
actions and other matters relating to the Company's present and former
operations. Included in such proceedings are the matters discussed below.
(a) Environmental Proceedings.
In April 1993, the Company learned that the Ohio Environmental
Protection Agency ("the Ohio EPA") had referred it to the Ohio Attorney
General's Office (the "OAG") for consideration of initiation of enforcement
proceedings against the Company with respect to alleged violations of various
environmental laws at its facility in Elmore, Ohio. On October 19, 1994, the
Court of Common Pleas for Ottawa County, Ohio entered a consent decree
resolving alleged violations relating to air emission standards. Pursuant to
the terms of the consent decree, the Company paid a total of $47,000.
Negotiations between the OAG and the Company regarding alleged hazardous waste
and solid waste violations, including matters discovered during the course of
such negotiations, have resulted in a preliminary agreement pursuant to which a
consent decree would be entered providing that the Company would pay a total of
$227,000 and undertake a specific pollution prevention project in lieu of
paying additional penalties. This resolution requires the OAG and the Company
to finalize the language of a consent decree to be approved and entered by the
Court of Common Pleas for Ottawa County, Ohio.
On or about September 25, 1992, the Company was served with a
third-party complaint alleging that the Company, along with 159 other
third-party defendants, were jointly and severally liable under the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Sections 9607(a) and 9613(b), for response costs incurred
in connection with the clean-up of hazardous substances in soil and groundwater
at the Douglassville Site (the "Site") located in Berks County, Pennsylvania.
United States of America v. Berks Associates, Inc., et al. v. Aamco
Transmissions, et al., United States District Court for the Eastern District of
Pennsylvania, Case No. 91-4968. Prior to the commencement of litigation, the
Company responded to a request for information from the United States
Environmental Protection Agency (the "United States EPA") by denying that it
arranged to send any substances to the Site. Although the Company has no
documents in its own files relating to the shipment of any waste to the Site,
documents maintained by third-party plaintiffs suggest that 8,344 gallons of
waste oil from the Company may have been taken there. According to a
consultant retained by third-party plaintiffs, approximately 153 million
gallons of waste were sent to the Site. It has been reported by counsel for
the third-party plaintiffs that the United States claims that it has spent $17
million in remediating the Site. The Company denies liability. Defendants and
some third-party defendants have spent approximately $2 million on studies and
preliminary clean-up. Consultants have estimated that the total clean-up costs
could range from $25-100
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million, depending on the type of remedy ultimately implemented. An alternate
remedy being presented by the Berks Associates PRP Group is estimated by its
consultants to cost approximately $30 million. The Company has been
participating in court-ordered settlement proceedings, which have resulted in a
de minimis settlement offer by the United States. The Company has accepted the
offer and is awaiting notice from the government showing the final settlement
calculation.
On July 26, 1994, the Company received a complaint, service of
which was waived on September 29, 1994, in Glidden Company et al. v. American
Color and Chemical, et al., No. 94-C3970, filed in the United States District
Court for the Eastern District of Pennsylvania. The plaintiffs are five
companies which, pursuant to orders issued by the United States EPA under
CERCLA, have been spending funds to secure, maintain and conduct an
investigation of the Berks Landfill in Sinking Springs, Pennsylvania. The
plaintiffs are alleged to have had their wastes disposed of at the landfill,
which operated from 1950 through October 1, 1986. The 18 defendants consist of
former owners or operators of the site and alleged transporters and/or
generators of waste disposed of at the site. It is believed that hundreds of
other entities disposed of waste at the site during its long period of
operation. The plaintiffs seek to recover their past and future costs pursuant
to rights of contribution under CERCLA and the Pennsylvania Hazardous Sites
Cleanup Act. Plaintiffs allege that, as of September 1994, they had spent
$355,000 to secure and maintain the site and that they expected to spend $1.7
million for a remedial investigation/feasibility study and a risk assessment.
A proposed case management order has been submitted to the court.
Proceedings Concluded Since the End of Third Quarter 1994. On
November 1, 1989, the Company appealed to the Ohio Environmental Board of
Review to vacate or modify certain conditions in an NPDES wastewater discharge
permit issued by the Ohio EPA for the Company's Elmore, Ohio facility. The
Company challenged these conditions on several bases, including technical
infeasibility and economic unreasonableness. Settlement discussions resulted
in an agreement pursuant to which the Ohio EPA modified the permit and the
Company dismissed its appeal.
(b) Beryllium Exposure Claims
The inhalation of excessive amounts of airborne beryllium
particulate may present a health hazard to certain individuals. For decades
the Company has operated its beryllium facilities under stringent standards of
inplant and outplant discharge. These standards, which were first developed by
the Atomic Energy Commission over forty years ago, were, in general,
substantially adopted by the United States EPA and the Occupational Safety and
Health Administration.
Pending Claims. The Company is currently a defendant in the
following product liability actions where the plaintiffs allege injury
resulting from exposure to beryllium and beryllium-containing materials and are
claiming recovery based on various legal theories. The Company believes that
resolution of these cases will not have a material adverse effect on the
Company.
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<TABLE>
<CAPTION>
=========================================================================================================================
Date Lawsuit
Name of Plaintiff Instituted Forum Relief Requested
----------------- ---------- ----- ----------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John W. Rosenbauer and Spouse February 1989 Court of Common Pleas, Damages in excess of $20,000 for
Westmoreland County, personal injury and loss of consortium
Pennsylvania
Richard Neiman and Spouse November 1990 Court of Common Pleas, Damages in excess of $20,000 for
Philadelphia County, personal injury and in excess of
Pennsylvania $20,000 for loss of consortium
Geraldine G. Ruffin, September 1991 Superior Court, Essex Compensatory and punitive damages of
individually and as executrix County, New Jersey an unspecified amount
Steven Campbell January 1992 Superior Court for Compensatory and punitive damages of
Orange County, an unspecified amount
California
Ray Amante April 1992 Superior Court for Compensatory and punitive damages of
Orange County, an unspecified amount
California
McKinley Houk October 1992 United States District Compensatory damages of $5 million and
Court, Eastern District punitive damages of $3 million
of Tennessee
William Ray Vance and Spouse October 1992 United States District Compensatory damages of $3 million for
Court, Eastern District personal injury, $1 million for loss
of Tennessee of consortium and combined punitive
damages of $5 million
David Taggart and Spouse October 1992 Court of Common Pleas, Compensatory damages in excess of
Chester County, Pennsyl- $25,000 each for personal injury and loss
vania of consortium against Williams Ad-
vanced Materials, Inc. a subsidiary of
the Company
Ernest Needham December 1992 Superior Court of New Compensatory damages of an unspecified
Jersey, Passaic County amount
Harry Robbins and Spouse June 1993 Court of Common Pleas, Both parties individually seek
Montgomery County, compensatory damages in excess of
Pennsylvania $50,000. Mr. Robbins also seeks
punitive damages in excess of $50,000
Bruce Hand and Spouse September 1993 Superior Court, Passaic Compensatory damages of an unspecified
County, New Jersey amount
Frances Lutz February 1994 Superior Court, Passaic Compensatory damages of an unspecified
County, New Jersey amount
Troy Murphy Morgan, Corky June 1994 United States District Aggregate claim, including
Dean McCarter and Spouse, Court, Eastern District compensatory and punitive damages, in
Richard Emory Myers, Sr. and of Tennessee the amount of $19 million
Spouse and Kathlene Beatty
Larry Roberts and Spouse December 1994 Superior Court, Orange Both parties seek compensation damages
County, California in unspecified amounts. Mr. Roberts
also seeks punitive damages in an
unspecified amount
</TABLE>
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Defense for each of the cases identified above is being conducted by counsel
selected by the Company and retained, with certain reservations of rights, by
the Company's insurance carriers.
The Company is also a defendant in separate suits filed on June
10, 1994 by six Company employees and their spouses against the Company and
certain Company employees in the Superior Court of Pima County, Arizona. The
plaintiffs claim that, during their employment with the Company, they
contracted chronic beryllium disease as a result of exposure to beryllium and
beryllium- containing products. The plaintiffs seek compensatory and punitive
damages of an unspecified amount based on allegations that the Company
intentionally misrepresented the potential danger of exposure to beryllium and
breached an agreement to pay certain benefits in the event the plaintiffs
contracted chronic beryllium disease. Defense of this case is being conducted
by counsel retained by the Company, and the Company's insurance carrier is
investigating its liability for these claims. The Company believes that
resolution of these cases will not have a material adverse effect on the
Company.
Recent Developments Relating to Pending Claims. David Taggart
and his spouse filed suit against WAM on October 2, 1992 in the Court of Common
Pleas of Chester County, Pennsylvania. Mr. Taggart claimed that he was exposed
to beryllium-containing materials manufactured, distributed or sold by WAM
during his employment. Mrs. Taggart claimed loss of consortium. The complaint
sought damages in excess of $25,000 under various theories. On August 3,
1994, the plaintiffs dismissed their complaint against WAM for lack of product
involvement so that the Company remains a party only as a defendant to
remaining cross-claims by other defendants.
(c) Asbestos Exposure Claims
A subsidiary of the Company (the "Subsidiary") is a co-defendant
in thirty cases making claims for asbestos-induced illness allegedly relating
to the former operations of the Subsidiary, then known as The S. K. Wellman
Corp. All of these cases have been reported in prior filings with the S.E.C.
The Subsidiary is one of a large number of defendants in each case. The plain-
tiffs seek compensatory and punitive damages, in most cases of unspecified
sums. Each case has been referred to a liability insurance carrier for
defense. With respect to those referrals on which a carrier has acted to date,
a carrier has accepted the defense of the actions, without admitting or denying
liability. Two hundred and ten similar cases previously reported have been
dismissed or disposed of by pre-trial judgment, one by jury verdict of no
liability and ten others by settlement for nominal sums. The Company believes
that resolution of the pending cases referred to above will not have a material
effect upon the Company.
The Subsidiary has entered into an agreement with the predecessor
owner of its operating assets, Pneumo Abex Corporation (formerly Abex
Corporation), and five insurers, regarding the handling of these cases. Under
the agreement, the insurers share expenses of defense, and the Subsidiary,
Pneumo Abex Corporation and the insurers share payment of settlements and/or
judgments. Certain expenses of handling the cases are also subject to a
limited, separate reimbursement agreement with Pneumo Abex Corporation. In
eleven of the pending cases, both expenses of defense and payment of
settlements and/or judgments are subject to a limited, separate reimbursement
agreement with MLX Corp., the parent of the company that purchased the
Subsidiary's operating assets in 1986.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Executive Officers of the Registrant
The following table provides information as to the executive
officers of the Company.
<TABLE>
<CAPTION>
Name Age Positions and Offices
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<S> <C> <C>
Gordon D. Harnett 52 Chairman of the Board, President, Chief Executive Officer and Director
Carl Cramer 46 Vice President Finance, Chief Financial Officer
Jere H. Brophy 60 Vice President Technology
Stephen Freeman 48 Vice President Alloy Products
Craig B. Harlan 57 Vice President International - Europe
Robert H. Rozek 60 Senior Vice President International and Beryllium Products
Andrew J. Sandor 55 Vice President Operations
Daniel A. Skoch 45 Vice President Human Resources
</TABLE>
Mr. Harnett was elected Chairman of the Board, President, Chief
Executive Officer and Director of the Company effective January 22, 1991. He
had served as a Senior Vice President of The B. F. Goodrich Company from
November 1988.
Mr. Cramer was elected Vice President Finance and Chief
Financial Officer in December 1994. Prior to that, he served as President of
U.S. Operations and Director for the Americas and Australasia for the Swedish
multinational, Esselte Meto.
Dr. Brophy was elected Vice President Technology effective March
31, 1988. Prior to that, he was Vice President of Engineering, Engine and
General Components Group, Automotive Sector of TRW Inc.
Mr. Freeman was elected Vice President Alloy Products effective
February 7, 1995. He had served as Vice President Sales and Marketing since
August 3, 1993. He had served as Vice President Sales and Marketing-Alloy
Products since July, 1992. Prior to that, he had served as Management
Consultant for Adastra, Inc.
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Mr. Harlan was elected Vice President International-Europe
effective June 7, 1994. He had served as Vice President Business Development
since August, 1993. He had served as Senior Vice President, Sales and
Marketing since October, 1991. He had served as Vice President/General
Manager, Alloy Division since January 1, 1987.
Mr. Rozek was elected Senior Vice President International and
Beryllium Products on March 7, 1995. He had served as Vice President
International effective October 1991. He had served as Vice President,
Corporate Development effective February 27, 1990. He was elected Vice
President, Governmental and Environmental Affairs in April 1989.
Mr. Sandor was elected Vice President Operations in October 1991.
He had served as Senior Vice President since September 1989. He was appointed
Vice President/General Manager, Material Systems Division effective January 1,
1988.
Mr. Skoch was elected Vice President Human Resources in July
1991. Prior to that he was Corporate Director - Personnel.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock
Exchange. As of March 7, 1995, there were 2,519 shareholders of record.
Information as to stock price and dividends declared set forth on page 17 in
Note M to the consolidated financial statements in the annual report to
shareholders for the year ended December 31, 1994 is incorporated herein by
reference. The Company's ability to pay dividends is generally unrestricted,
except that it is obligated to maintain a specified level of tangible net worth
pursuant to an existing credit facility.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on pages 22 and 23 of the annual report
to shareholders for the year ended December 31, 1994 is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Worldwide sales in 1994 were $346 million compared to $295
million in 1993 and $265 million in 1992. The product lines of beryllium
alloys, specialty metal systems and precious metal products achieved
significant sales increases in 1994. Sales also increased in the ceramics
product line while beryllium product line sales had a significant reduction in
1994 as compared to 1993.
The significant sales growth in beryllium alloys was achieved in
both domestic and international markets. The principal markets driving the
increase were automotive electronics, computers, telecommunications and
appliances. Most beryllium alloy products experienced gains in 1994 as
compared to 1993. On the economic front, beryllium alloys were supported by a
strong U.S. economy, continued growth in Asia and improving conditions in
Europe. While the favorable economic background was a plus, the key to the
added volume was a focused marketing effort. This effort was a combination of
the marketing, sales, technical, quality and operating groups working as a team
to provide quality, cost-competitive products on a timely basis. This was best
seen in the expanding use of the Company's Alloy 174 strip in automotive
electronics on a growing list of car platforms and global demand for the
Company's products in undersea cable components. Also, in the steel industry,
Phase 3HP Mold Plate underwent field trials at two slab casters during 1994
with performance results exceeding expectations in all respects.
Beryllium sales were lower due to completion of the Defense
Logistics Agency (DLA) supply contract and reduced AlBeMet(R) sales due to the
end of an application at a computer disk drive manufacturer. Although overall
defense spending is at a reduced level, this is still the base business to
support the beryllium product line in the near term. Looking further out,
efforts in marketing, research and manufacturing are devoted to developing
materials and applications for
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aerospace and avionics markets where evolving needs for high performance
materials are strong.
Ceramic sales increased in 1994 as compared to 1993. The
increase was principally in the U.S. automotive and worldwide
telecommunications industries, which have more than offset declining defense
applications. New applications with long- term growth potential are being
developed with recently introduced products derived from beryllia tape and
direct bond copper. Prospects for growth are promising in automotive
electronics and wireless communications.
Specialty metal systems saw major gains in 1994 as compared to
1993. During 1994, this product line was able to maintain the momentum of
programs set in motion in 1992 and 1993. The additional sales resulted
primarily from a combination of successfully executing marketing strategies,
enlarging market share and new product applications. The improved economy also
contributed to growth. In 1995, these combined efforts will continue, along
with a strong emphasis on the manufacturing and engineering areas.
Precious metal products also showed a significant increase in
1994 over 1993. Continued high demand and increased market share for frame lid
assemblies from semiconductor manufacturers, along with increasing vapor
deposition target sales, accounted for most of the improved volume. A
substantial portion of the increase came from frame lid assembly sales in Asia
through the Singapore facility. To further enhance this product line, Williams
Advanced Materials purchased the assets, including net working capital, of
Hydrostatics Inc., a small manufacturer of precious metal ultra-fine wire
produced using an innovative technology. This product fills an identified need
to support markets in the semiconductor and hybrid microelectronics industries.
The transaction was completed in October, 1994. Sales in 1995 are expected to
be adversely affected by technology changes that impact the frame lid assembly
volume. However, the newly acquired fine wire product will be introduced to
their customer base throughout 1995.
International sales were $115 million in 1994, $86 million in
1993 and $71 million in 1992. The 1994 increase was primarily from beryllium
alloys and the previously mentioned frame lid assemblies fabricated in
Singapore. This increase occurred even though delivery of disk drive
components ceased in 1994. Although much of the beryllium alloy sales increase
was in Europe and Asia, growth was also seen in other parts of the world.
International sales in 1995 will probably not match the 1994 growth rate, due
to anticipated lower sales of frame lid assemblies.
The Company's increased sales in 1993 as compared to 1992
involved all five product lines. A significant increase in precious metal
products, AlBeMet(R) sales for the disk drive application and higher beryllium
alloy sales in the U.S. and Asia accounted for most of the increase. Key
growth markets were automotive electronics, computers, semiconductors and
telecommunications.
Gross margin (sales less cost of sales) was 26.6%, 22.9% and
27.2% of sales in the years 1994, 1993 and 1992, respectively. A major portion
of the $2.6 million of provisions taken in 1994 was included in cost of sales.
A provision of $2 million was reserved for downsizing the Applications
Development Center in Fremont, California and a charge of $0.6 million was made
in the ceramic product line to transfer direct bond copper production from the
Syracuse, New
-12-
<PAGE> 14
York facility to the Newburyport, Massachusetts plant. Without these charges,
gross margin would have been 27.2%. Higher sales and production volumes of
beryllium alloys account for much of the improvement. The beryllium alloy
product line has also been experiencing lower unit costs from the higher
throughput and has benefitted from manufacturing improvements, especially in
strip products. In the beryllium product line, margins recovered from 1993.
However, the major reason for improvement in the beryllium product line was
that 1994 did not experience the negative impact of manufacturing problems with
the AlBeMet(R) disk drive component that occurred in 1993.
The lower gross margin in 1993 compared to 1992 was caused by a
product mix shift to lower margin products, particularly those with a high
precious metal content, and manufacturing problems associated with the
AlBeMet(R) disk drive component.
Selling, administrative and general expenses in 1994 were $55.5
million (16.0% of sales) compared to $47.8 million (16.2% of sales) in 1993.
The increase was across all expense categories and includes an increased
accrual for incentive compensation. A portion of the increase in
administrative costs relates to an alloy business process redesign effort. A
group of employees and consultants have been charged with reviewing/analyzing
specific activities in the Company to find opportunities for improvement. This
process redesign effort will continue throughout 1995.
Selling, administrative and general expenses in 1993 increased
from 1992. The increase in marketing, selling and customer service activities
was partially offset by a reduction in administrative and general expenses
which included lower incentive compensation.
Research and development (R&D) expenses of $8.8 million in 1994
exceeded the $7.1 million spent in 1993 by more than 20%. The addition was
primarily in the beryllium and ceramic product lines where efforts are centered
on new product development. The beryllium alloy product line also saw an
increase as efforts were directed at both product development and process
technology enhancements. R&D expenses in 1995 are expected to be in the $8
million range. In 1992, R&D expenses were $7.3 million.
Interest expense was $2.1 million in 1994, $3.0 million in 1993
and $3.2 million in 1992. All amounts are net of interest capitalized on
active construction and mine development projects. Lower average debt reduced
interest costs in 1994. Lower interest rates and less debt, on average,
favorably impacted interest costs in 1993 as compared to 1992.
Other-net expense was $2.6 million in 1994, $2.2 million in 1993
and $1.3 million in 1992. This category included such expenses as amortization
of goodwill and other intangibles, the effect of currency exchange and
translation and other non- operating items. Included in all three years were
the postretirement benefit costs pursuant to Statement of Financial Accounting
Standard (FAS) 106 for a divested operation. In 1993, the Company made an
adjustment to the FAS 106 demographic assumptions for the divested operation,
which resulted in a reduction of the liability and increased income by $1.3
million. Concurrently, the carrying value of a building from the divested
operation was reduced by $0.9 million. Included in 1993 and 1992,
respectively, were $0.7 million and $1.4 million of nonrecurring gains.
-13-
<PAGE> 15
Income before income taxes in 1994 of $23.0 million was
significantly higher than the 1993 pre-tax income of $7.7 million. Higher
sales volume and related gross margin improvements account for the increase.
The increased selling, general and administrative expense offsets some of the
gains in gross margin. In 1993, pre-tax income of $7.7 million was
significantly lower than the 1992 pre-tax income of $13.7 million. The
reduction was due to the lower gross margin, owing principally to manufacturing
problems with the disk drive component and lower sales of beryllium for
defense-related applications.
The effective tax rate employed for 1994 was 19.4% of pre-tax
income as compared to 16.2% of pre-tax income in 1993. The increase in
pre-tax income accounts for the higher rate. The effective rate was
significantly below statutory rates due to relatively fixed tax credits and
allowances as shown in Note H to the Consolidated Financial Statements. In
1992, an effective rate of 23.6% of pre-tax income was utilized.
Comparative earnings per share were $1.14 in 1994, $0.40 in 1993
and $0.65 in 1992.
FINANCIAL POSITION
CAPITAL RESOURCES AND LIQUIDITY
Cash flow from operating activities totaled $35.2 million in
1994. Cash balances increased by $12.7 million while total debt decreased by
$1.1 million. During 1994, accounts receivable increased $5.8 million or 13%,
which is slightly above the 12% year-on-year increase in fourth quarter sales.
Total inventories increased $7.1 million. The beryllium product line invento-
ries have been reduced to correspond to lower sales. The beryllium alloy
product line inventories grew in line with the higher sales levels.
Capital expenditures for property, plant and equipment amounting
to $17 million in 1994 were for upgrades and additions to improve quality and
productivity. Expenditures in 1994 included a project to extend the life and
capacity of the waste disposal pond at the Company's Utah extraction facility.
Capital expenditures in 1995 will probably exceed the $17 million spent in
1994.
Long-term financial resources available to the Company include
$60 million of medium-term notes and $50 million under a bank credit agreement
(unused at December 31, 1994). Long-term debt at December 31, 1994 was $18.5
million or 9% of total capital.
Short-term debt at December 31, 1994 was $20.6 million, of which
$5 million represents the current maturity of a medium-term note, and the
remainder is denominated principally in gold and yen to provide hedges against
assets so denominated. In addition, credit lines amounting to $59.8 million
are available.
Funds being generated from operations plus the available
borrowing capacity are believed adequate to support operating requirements,
capital expenditures, remediation projects, dividends and small acquisitions.
Excess cash, if any, is invested in money market instruments and other high
quality investments.
-14-
<PAGE> 16
Cash flow from operating activities in 1993 was $18 million. The
Company borrowed the $15 million cash surrender value from a group of
Company-owned life insurance policies. The proceeds were used to repay all
borrowings under the bank credit agreement. Total debt was reduced $13.4
million while capital expenditures for property, plant and equipment totaled
$11.9 million and dividends totalled $4.2 million. Long-term debt at December
31, 1993 was 12% of total capital.
ORE RESERVES
The Company's reserves of beryllium-bearing bertrandite ore are
located in Juab County, Utah. An ongoing drilling program has generally added
to proven reserves. Proven reserves are the measured quantities of ore
commercially recoverable through the open pit method. Probable reserves are
the estimated quantities of ore known to exist, principally at greater depths,
but prospects for commercial recovery are indeterminable. Ore dilution that
occurs during mining approximates 7%. About 87% of beryllium in ore is
recovered in the extraction process. The Company augments its proven reserves
of bertrandite ore through the purchase of imported beryl ore (approximately 4%
beryllium) which is also processed at the Utah extraction plant.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Proven bertrandite ore reserves at
year end (thousands of dry tons) 6,747 6,786 6,787 6,855 6,758
Grade % beryllium 0.251% 0.251% 0.251% 0.251% 0.251%
Probable bertrandite ore reserves at
year-end (thousands of dry tons) 7,559 7,594 7,482 7,215 7,302
Grade % beryllium 0.279% 0.279% 0.281% 0.284% 0.281%
Bertrandite ore processed (thousands
of dry tons, diluted) 79 92 91 80 85
Grade % beryllium, diluted 0.240% 0.232% 0.234% 0.237% 0.234%
</TABLE>
INFLATION AND CHANGING PRICES
The prices of major raw materials, such as copper, nickel and
gold, purchased by the Company were up during 1994. Such changes in costs are
generally reflected in selling price adjustments. The prices of labor and
other factors of production generally increase with inflation. Additions to
capacity, while more expensive over time, usually result in greater
productivity or improved yields. However, market factors, alternative
materials and competitive pricing have affected the Company's ability to offset
wage and benefit increases. The Company employs the last-in, first-out (LIFO)
inventory valuation method domestically to more closely match current costs
with revenues.
-15-
<PAGE> 17
ENVIRONMENTAL MATTERS
As indicated in Note K to the Consolidated Financial
Statements, the Company maintains an active program of environmental
compliance. For projects involving remediation, estimates of the probable
costs are made and the Company has set aside a reserve of $3.8 million at
December 31, 1994 ($4.4 million at December 31, 1993). This reserve covers
existing or currently foreseen projects.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of independent auditors and the following
consolidated financial statements of the Company included in the annual report
to shareholders for the year ended December 31, 1994 are incorporated herein by
reference:
Consolidated Balance Sheets - December 31, 1994 and 1993.
Consolidated Statements of Income - Years ended December 31, 1994,
1993 and 1992.
Consolidated Statements of Shareholders' Equity - Years ended December
31, 1994, 1993 and 1992.
Consolidated Statements of Cash Flows - Years ended December 31, 1994,
1993 and 1992.
Notes to Consolidated Statements.
Report of Independent Auditors.
Quarterly Data on page 17 of the annual report to shareholders for the years
ended December 31, 1994 and December 31, 1993 and Ore Reserves on page 15 of
this Form 10-K annual report for the year ended December 31, 1994 are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
-16-
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information under Election of Directors on pages 2 through
5 of the Proxy Statement dated March 13, 1995 is incorporated herein by
reference. Information with respect to Executive Officers of the Company is
set forth earlier on pages 9 and 10 of this Form 10-K annual report.
ITEM 11. EXECUTIVE COMPENSATION
The information under Executive Officer Compensation on pages
8 through 16 of the Proxy Statement dated March 13, 1995 is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information under Common Stock Ownership of Certain
Beneficial Owners and Management on pages 6 and 7 of the Proxy Statement dated
March 13, 1995 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under Compensation Committee Interlocks and
Insider Participation and Related Party Transactions on page 16 of the Proxy
Statement dated March 13, 1995 is incorporated herein by reference.
-17-
<PAGE> 19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) 1. Financial Statements and Supplemental Information
Included in Part II of this Form 10-K annual report
by reference to the annual report to shareholders for
the year ended December 31, 1994 are the following
consolidated financial statements:
Consolidated Balance Sheets - December 31, 1994 and
1993.
Consolidated Statements of Income - Years ended
December 31, 1994, 1993 and 1992.
Consolidated Statements of Shareholders' Equity -
Years ended December 31, 1994, 1993 and 1992.
Consolidated Statements of Cash Flows - Years ended
December 31, 1994, 1993 and 1992.
Notes to Consolidated Statements.
Report of Independent Auditors.
(a) 2. Financial Statement Schedules
The following consolidated financial information for
the years 1994, 1993 and 1992 is submitted herewith:
Schedule II - Valuation and qualifying accounts
All other schedules for which provision is made in
the applicable accounting regulations of the
Securities and Exchange Commission are not required
under the related instructions or are inapplicable,
and therefore have been omitted.
-18-
<PAGE> 20
(a) 3. Exhibits
(3a) Articles of Incorporation of the Company as
amended February 28, 1989.
(3b) Regulations of the Company as amended April
25, 1989 and further amended April 27, 1993.
(4a) Credit Agreement dated as of December 13,
1994 between the Company and National City
Bank acting for itself and as agent for three
other banking institutions.
(4b) Rights Agreement between the Company and
Society National Bank (formerly Ameritrust
Company National Association) as amended
February 28, 1989.
(4c) Issuing and Paying Agency Agreement dated as
of February 1, 1990, including a specimen
form of a medium term note issued thereunder,
between the Company and First Trust N.A.
(formerly with Morgan Guaranty Trust Company
of New York).
(4d) Pursuant to Regulation S-K, Item 601 (b)(4),
the Company agrees to furnish to the
Commission, upon its request, a copy of the
instruments defining the rights of holders of
long-term debt of the Company that are not
being filed with this report.
(10a) * Employment Agreement entered into by the
Company and Mr. Gordon D. Harnett on
March 20, 1991 (filed as Exhibit 10a to
the Company's Form 10-K Annual Report for
the year ended December 31, 1990),
incorporated herein by reference.
(10b) * Form of Employment Agreement entered into
by the Company and Messrs. Brophy, Hanes,
Harlan, Rozek and Sandor on
February 20, 1989.
(10c) * Form of Amendment to the Employment
Agreement (dated February 20, 1989)
entered into by the Company and Messrs.
Brophy, Hanes, Harlan, Rozek and Sandor
dated February 28, 1991 (filed as Exhibit
10c to the Company's Form 10-K Annual
Report for the year ended December 31,
1990), incorporated herein by reference.
(10d) * Form of Employment Agreement entered into
by the Company and Mr. Daniel A. Skoch on
January 28, 1992, Mr. Stephen Freeman
dated August 3, 1993, and Mr. Carl Cramer
dated December 6, 1994 (filed as Exhibit
10d to the Company's Form 10-K Annual
Report for the year ended December 31,
1991), incorporated herein by reference.
*Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
-19-
<PAGE> 21
(10e) * Form of Trust Agreement between the
Company and Key Trust Company of Ohio,
N.A. (formerly Ameritrust Company
National Association) on behalf of
Messrs. Waite, Brophy, Hanes, Harlan,
Rozek and Sandor dated February 20, 1989,
Mr. Harnett dated March 20, 1991 and Mr.
Skoch dated January 28, 1992, Mr. Stephen
Freeman dated August 3, 1993, and Mr.
Carl Cramer dated December 6, 1994.
(10f) Form of Indemnification Agreement entered
into by the Company and Mr. C. G. Waite
on June 27, 1989 and Mr. G. D. Harnett on
March 20, 1991.
(10g) Form of Indemnification Agreement entered
into by the Company and Messrs. J. H.
Brophy, A. J. Sandor, C. B. Harlan, H.
D. Hanes, and R. H. Rozek on June 27,
1989, Mr. D. A. Skoch on January 28,
1992, Mr. Stephen Freeman dated August 3,
1993, and Mr. C. Cramer on December 6,
1994.
(10h) Form of Indemnification Agreement entered
into by the Company and Messrs. C. F.
Brush, F. B. Carr, W. E. MacDonald, J.
L. McCall, W. P. Madar, G. C. McDonough,
R. M. McInnes, H. G. Piper and J.
Sherwin Jr. on June 27, 1989 and Mr. A.
C. Bersticker on April 27, 1993.
(10i) * Directors' Retirement Plan as amended
January 26, 1993 (filed as Exhibit 10i to
the Company's Form 10-K Annual Report for
the year ended December 31, 1992),
incorporated herein by reference.
(10j) * Deferred Compensation Plan for
Nonemployee Directors effective January
1, 1992 (filed as Exhibit I to the
Company's Proxy Statement dated March 6,
1992), incorporated herein by reference.
(10k) * Form of Trust Agreement between the
Company and National City Bank dated
January 1, 1992 on behalf of Nonemployee
Directors of the Company (filed as
Exhibit 10k to the Company's Form 10- K
Annual Report for the year ended December
31, 1992), incorporated herein by
reference.
(10l) * Incentive Compensation Plan adopted
December 16, 1991, effective January 1,
1992 (filed as Exhibit 10l to the
Company's Form 10-K Annual Report for the
year ended December 31, 1991),
incorporated herein by reference.
*Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
-20-
<PAGE> 22
(10m) * Management Performance Compensation Plan
adopted February 22, 1993, effective
January 1, 1993 (filed as Exhibit 10m to
the Company's Form 10-K Annual Report for
the year ended December 31, 1992),
incorporated herein by reference.
(10n) * Supplemental Retirement Plan as amended
and restated December 1, 1992 (filed as
Exhibit 10n to the Company's Form 10-K
Annual Report for the year ended December
31, 1992), incorporated herein by
reference.
(10o) * Amendment Number 3, adopted February 8,
1995, to Supplemental Retirement Benefit
Plan as amended and restated December 1,
1992.
(10p) * Form of Trust Agreement between the
Company and Key Trust Company of Ohio,
N.A. (formerly Society National Bank)
dated January 8, 1993 pursuant to the
December 1, 1992 amended Supplemental
Retirement Benefit Plan (filed as Exhibit
10p to the Company's Form 10-K Annual
Report for the year ended December 31,
1992), incorporated herein by reference.
(10q) * Management Performance Compensation Plan
adopted February 7, 1995, effective
January 1, 1995.
(10r) * 1979 Stock Option Plan, as amended
pursuant to approval of shareholders on
April 21, 1982 (filed as Exhibit 15A to
Post-Effective Amendment No. 3 to
Registration Statement No. 2- 64080),
incorporated herein by reference.
(10s) * 1984 Stock Option Plan as amended by the
Board of Directors on April 18, 1984 and
February 24, 1987 (filed as Exhibit 4.4
to Registration Statement No. 33-28605),
incorporated herein by reference.
(10t) * 1989 Stock Option Plan (filed as Exhibit
4.5 to Registration Statement No.
33-28605), incorporated herein by
reference.
(10u) * 1990 Stock Option Plan for Nonemployee
Directors (filed as Exhibit 4.6 to
Registration Statement No. 33-35979),
incorporated herein by reference.
(10v) * 1977 Stock Appreciation Rights Plan
(filed as Exhibit 4.6 to Registration
Statement No. 33- 28605), incorporated
herein by reference.
*Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
-21-
<PAGE> 23
(10w) * 1995 Stock Incentive Plan subject to
approval by shareholders at the Company's
annual meeting to be held on May 2, 1995
(filed as Exhibit A to the Proxy
Statement dated March 13, 1995),
incorporated herein by reference.
(11) Statement re: calculation of per share
earnings for the years ended December 31,
1994, 1993 and 1992.
(13) Portions of the Annual Report to shareholders
for the year ended December 31, 1994.
(21) Subsidiaries of the registrant.
(23) Consent of Ernst & Young LLP.
(24) Power of Attorney.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the fourth
quarter of the year ended December 31, 1994.
*Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
-22-
<PAGE> 24
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
March 22, 1995
BRUSH WELLMAN INC.
By: /s/Gordon D. Harnett By: /s/Carl Cramer
------------------------------------- ---------------------------
Gordon D. Harnett Carl Cramer
Chairman of the Board, Vice President and
President and Chief Executive Officer Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
GORDON D. HARNETT* Chairman of the Board,
- ------------------------------- President, Chief Executive March 22, 1995
Gordon D. Harnett Officer and Director
(Principal Executive Officer)
CARL CRAMER* Vice President and Chief March 22, 1995
- ------------------------------- Financial Officer
Carl Cramer
ALBERT C. BERSTICKER* Director March 22, 1995
- -------------------------------
Albert C. Bersticker
CHARLES F. BRUSH, III* Director March 22, 1995
- -------------------------------
Charles F. Brush, III
FRANK B. CARR* Director March 22, 1995
- -------------------------------
Frank B. Carr
WILLIAM P. MADAR* Director March 22, 1995
- -------------------------------
William P. Madar
JULIEN L. McCALL* Director March 22, 1995
- -------------------------------
Julien L. McCall
GERALD C. McDONOUGH* Director March 22, 1995
- -------------------------------
Gerald C. McDonough
ROBERT M. McINNES* Director March 22, 1995
- -------------------------------
Robert M. McInnes
HENRY G. PIPER* Director March 22, 1995
- ------------------------------
Henry G. Piper
JOHN SHERWIN, JR.* Director March 22, 1995
- ----------------------------
John Sherwin, Jr.
CLARK G. WAITE* Director March 22, 1995
- ------------------------------
Clark G. Waite
</TABLE>
*The undersigned, by signing his name hereto, does sign and
execute this report on behalf of each of the above-named officers and
directors of Brush Wellman Inc., pursuant to Powers of Attorney executed by
each such officer and director filed with the Securities and Exchange
Commission.
By: /s/Carl Cramer
----------------------
Carl Cramer March 22, 1995
Attorney-in-Fact
-23-
<PAGE> 25
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
BRUSH WELLMAN AND SUBSIDIARIES
Years ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------------------
DESCRIPTION Balance at Beginning (1) (2) Deductions--Describe BALANCE AT END
of Period Charged to Costs Charged to Other of Period
and Expenses Accounts--Describe
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1994
Deducted from asset accounts:
Allowance for doubtful
accounts receivable $ 904,913 $ 254,042 $ -0- $ 122,158(A) $1,036,797
Inventory reserves and
obsolescence $3,187,135 $ -0- $ -0- $1,721,096(C) $1,466,039
Allowance for deferred tax
assets $1,540,000 $ -0- $ -0- $1,540,000(D) $ -0-
Year ended December 31, 1993
Deducted from asset accounts:
Allowance for doubtful
accounts receivable $ 781,389 $ 234,392 $ -0- $ 110,868(A) $ 904,913
Inventory reserves and
obsolescence $ -0- $3,187,135 $ -0- $ -0- $3,187,135
Allowance for deferred tax
assets $ -0- $ -0- $1,540,000(B) $ -0- $1,540,000
Year ended December 31, 1992
Deducted from asset accounts:
Allowance for doubtful
accounts receivable $ 792,162 $ 5,245 $ -0- $ 16,018(A) $ 781,389
</TABLE>
Note A - Bad debts written off.
Note B - The Company adopted SFAS No. 109, "Accounting for Income Taxes,"
effective January 1, 1993. Under Statement 109, a deferred tax asset of
$1,540,000 was recorded for net operating loss carryforwards. Since it
was unknown as to whether the deferred tax asset would be utilized, a
valuation allowance was recorded to offset the asset.
Note C - Inventory written off.
Note D - Net operating loss carryforwards utilized or expired.
<PAGE> 1
EXHIBIT 3a
CERTIFICATE OF ADOPTION
OF
AMENDED ARTICLES OF INCORPORATION
OF
BRUSH WELLMAN INC.
Raymond A. Foos, Chairman of the Board, President and Chief Executive
Officer, and Clark G. Waite, Secretary, of Brush Wellman Inc., an Ohio
corporation (hereinafter called the "Corporation") with its principal office
located at Cleveland, Ohio, do hereby certify that at a meeting of the Board of
Directors duly called and held on February 28, 1989, at which a quorum was
present and acting throughout, the said Board of Directors adopted the following
resolution to consolidate and restate the Amended Articles of Incorporation of
the Corporation pursuant to Section 1701.72 of the Ohio Revised Code.
Resolved, that the Chairman of the Board and President or any Vice President
and the Secretary or any Assistant Secretary of the Corporation be, and each of
them hereby is, authorized, in the name and on behalf of the Corporation, to
execute and file with the Secretary of State of Ohio new Amended Articles of
Incorporation which supersede and take the place of the existing Amended
Articles of Incorporation and all amendments thereto:
First: The name of the Corporation shall be BRUSH WELLMAN INC.
Second: The place in the State of Ohio where its principal office is to
be located is the City of Cleveland, Cuyahoga County.
Third: The purpose or purposes for which it is formed are:
1. To engage in, and exploit the results of, scientific research.
2. To acquire, own, lease, work and operate mines, and to deal in
minerals, and to produce or cause to be produced products therefrom.
3. To manufacture, buy or otherwise acquire, own, mortgage, pledge,
sell, assign, lease, license, or otherwise dispose of, import, export, trade
and deal in and with goods, wares, merchandise, and personal property
of every kind and description.
4. To secure, register, purchase, lease or otherwise acquire, hold, use,
own, operate and introduce, and sell, assign, or otherwise dispose of, any
trademarks, trade names, copy-rights, patents, inventions, improvements and
processes, whether used in connection with or secured under letters patent
of the United States or elsewhere, or otherwise, and to use, exercise,
develop and grant licenses in respect of, or otherwise turn to account any
such trademarks, copyrights, patents, licenses, processes and the like, or
any property or rights.
5. To acquire, own, hold, dispose of, and generally deal in bonds,
debentures, notes, stocks, mortgages, choses in action and intangible
property of every nature.
6. To purchase, lease, or otherwise acquire, own, improve, operate,
lease, mortgage, sell, or otherwise dispose of, real property, and interests
therein, and to construct, erect, equip,
1
<PAGE> 2
manufacture, occupy, conduct, manage, repair, improve, lease, mortgage,
sell, or otherwise dispose of, fixtures, mills, residences, buildings,
and structures of all kinds.
7. To carry on and transact any of the foregoing purposes as principal,
agent or broker.
8. To the same extent and as fully as natural persons might lawfully or
could do, to do all and every lawful act and thing and to enter into, make
and perform contracts of every kind, without limitation as to amount,
necessary, suitable or convenient and proper for the accomplishment of any
of the purposes or the performance of any of the objects or incidental to
any of the powers hereinbefore enumerated or which at any time shall appear
conducive or expedient for the protection or benefit of the Corporation; the
enumeration of specific powers not being a limitation or restriction in any
manner of the general powers of the Corporation.
9. To do all or any of such acts or things and exercise any of such
powers in the State of Ohio, other states, the District of Columbia, the
territories, colonies, and possessions of the United States, and in any
foreign countries, to comply with the requirements of laws of such other
jurisdictions to enable it to do business therein, and to maintain such
offices, branches or plants either within or without the State of Ohio as
may be convenient.
Fourth: The authorized number of shares of the Corporation is 50,000,000
consisting of 5,000,000 shares of Serial Preferred Stock, without par value,
and 45,000,000 shares of Common Stock of the par value of $1 per share. All
authorized but unissued shares of Common Stock of the Corporation shall be
free from preemptive rights of shareholders to subscribe for and purchase
any part thereof, and may be disposed of by the Board of Directors of the
Corporation at any time or from time to time for such consideration not less
than the par value thereof as may be fixed by the Board of Directors.
DIVISION A
EXPRESS TERMS OF THE SERIAL PREFERRED STOCK
Section 1. The Serial Preferred Stock may be issued from time to time in one
or more series. All shares of Serial Preferred Stock shall be of equal rank and
shall be identical, except in respect of the matters that may be fixed by the
Board of Directors as hereinafter provided, and each share of each series shall
be identical with all other shares of such series, except as to the date from
which dividends are cumulative. Subject to the provisions of Section 2 to 8,
both inclusive, of this Division A, which provisions shall apply to all Serial
Preferred Stock, the Board of Directors hereby is authorized to cause such
shares to be issued in one or more series, and with respect to each such series,
prior to the issuance thereof, to fix:
(a) The designation of the series which may be by distinguishing number,
letter or title.
(b) The number of shares of the series, which number the Board of
Directors may (except where otherwise provided in the creation of the
series) increase or decrease (but not below the number of shares thereof
then outstanding).
(c) The annual dividend rate of the series.
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(d) The dates at which dividends, if declared, shall be payable, and the
dates from which dividends shall be cumulative.
(e) The redemption rights and price or prices, if any, for shares of the
series.
(f) The terms and amount of any sinking fund provided for the purchase or
redemption of shares of the series.
(g) The amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation.
(h) Whether the shares of the series shall be convertible into Common
Stock, and, if so, the conversion price or prices, any adjustments thereof,
and all other terms and conditions upon which such conversion may be made.
(i) Restrictions (in addition to those set forth in Section 6(b) and 6(c)
of this Division) on the issuance of shares of the same series or of any
other class or series.
The Board of Directors is authorized to adopt from time to time amendments
to the Articles of Incorporation fixing, with respect to each such series, the
matters described in clauses (a) to (i), both inclusive, of this Section 1.
Section 2. The holders of Serial Preferred Stock of each series, in
preference to the holders of Common Stock and of any other class of shares
ranking junior to the Serial Preferred Stock, shall be entitled to receive out
of any funds legally available and when and as declared by the Board of
Directors dividends in cash at the rate for such series fixed in accordance with
the provisions of Section 1 of this Division and no more, payable quarterly on
the dates fixed for such series. Such dividends shall be cumulative, in the case
of shares of each particular series, from and after the date or dates fixed with
respect to such series. No dividends may be paid upon or declared or set apart
for any of the Serial Preferred Stock for any quarterly dividend period unless
at the same time a like proportionate dividend for the same quarterly dividend
period, ratably in proportion to the respective annual dividend rates fixed
therefor, shall be paid upon or declared or set apart for all Serial Preferred
Stock of all series then issued and outstanding and entitled to receive such
dividend.
Section 3. In no event so long as any Serial Preferred Stock shall be
outstanding shall any dividends, except a dividend payable in Common Stock or
other shares ranking junior to the Serial Preferred Stock, be paid or declared
or any distribution be made except as aforesaid on the Common Stock or any other
shares ranking junior to the Serial Preferred Stock, nor shall any Common Stock
or any other shares ranking junior to the Serial Preferred Stock be purchased,
retired, or otherwise acquired by the Corporation (except out of the proceeds of
the sale of Common Stock or other shares ranking junior to the Serial Preferred
Stock received by the Corporation subsequent to March 31, 1968):
(a) Unless all accrued and unpaid dividends on Serial Preferred Stock,
including the full dividends for the current quarterly dividend period,
shall have been declared and paid or a sum sufficient for payment thereof
set apart; and
(b) Unless there shall be no arrearages with respect to the redemption of
Serial Preferred Stock of any series from any sinking fund provided for
shares of such series in accordance with the provisions of Section 1 of this
Division.
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Section 4. (a) Subject to the express terms of each series and to the
provisions of Section 6(b) (iii) of this Division, the Corporation may from time
to time redeem all or any part of the Serial Preferred Stock of any series at
the time outstanding (i) at the option of the Board of Directors at the
applicable redemption price for such series fixed in accordance with the
provisions of Section 1 of this Division, or (ii) in fulfillment of the
requirements of any sinking fund provided for shares of such series at the
applicable sinking fund redemption price, fixed in accordance with the
provisions of Section 1 of this Division, together in each case with an amount
equal to all dividends accrued and unpaid thereon (whether or not such dividends
shall have been earned or declared) to the redemption date.
(b) Notice of every such redemption shall be mailed, postage prepaid, to the
holders of record of the Serial Preferred Stock to be redeemed at their
respective addresses then appearing on the books of the Corporation, not less
than 30 days nor more than 60 days prior to the date fixed for such redemption.
At any time before or after notice has been given as above provided, the
Corporation may deposit the aggregate redemption price of the shares of Serial
Preferred Stock to be redeemed, together with accrued and unpaid dividends
thereon to the redemption date, with any bank or trust company in Cleveland,
Ohio, or New York, New York, having capital and surplus of more than $5,000,000,
named in such notice, and direct that such deposited amount be paid to the
respective holders of the shares of Serial Preferred Stock so to be redeemed,
upon surrender of the stock certificate or certificates held by such holders.
Upon the giving of such notice and the making of such deposit, such holders
shall cease to be shareholders with respect to such shares and shall have no
interest in or claim against the Corporation with respect to such shares except
only to receive such money from such bank or trust company without interest or
the right to exercise any unexpired privileges of conversion. In case less than
all of the outstanding shares of Serial Preferred Stock are to be redeemed, the
Corporation shall select pro rata or by lot the shares so to be redeemed in such
manner as shall be prescribed by its Board of Directors.
If the holders of shares of Serial Preferred Stock which shall have been
called for redemption shall not, within six years after such deposit, claim the
amount deposited for the redemption thereof, any such bank or trust company
shall, upon demand, pay over to the Corporation such unclaimed amounts and
thereupon such bank or trust company and the Corporation shall be relieved of
all responsibility in respect thereof and to such holders.
(c) Any shares of Serial Preferred Stock which are redeemed by the
Corporation pursuant to the provisions of this Section 4 and any shares of
Serial Preferred Stock which are purchased and delivered in satisfaction of any
sinking fund requirements provided for shares of such series and any shares of
Serial Preferred Stock which are converted in accordance with the express terms
thereof shall be cancelled and not reissued. Any shares of Serial Preferred
Stock otherwise acquired by the Corporation shall resume the status of
authorized and unissued shares of Serial Preferred Stock without serial
designation.
Section 5. (a) The holders of Serial Preferred Stock of any series shall, in
case of voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, be entitled to receive in full out of the assets of
the Corporation, including its capital, before any amount shall be paid or
distributed among the holders of the Common Stock or any other shares ranking
junior to the Serial Preferred Stock, the amounts fixed with respect to shares
of such series in accordance with Section 1 of this Division plus in any such
event an amount equal to all
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dividends accrued and unpaid thereon (whether or not such dividends shall have
been earned or declared) to the date of payment of the amount due pursuant to
such liquidation, dissolution or winding up of the affairs of the Corporation.
In case the net assets of the Corporation legally available therefor are
insufficient to permit the payment upon all outstanding shares of Serial
Preferred Stock of the full preferential amount to which they are respectively
entitled, then such net assets shall be distributed ratably upon outstanding
shares of Serial Preferred Stock in proportion to the full preferential amount
to which each such share is entitled.
After payment to holders of Serial Preferred Stock of the full preferential
amounts as aforesaid, holders of Serial Preferred Stock as such have no right or
claim to any of the remaining assets of the Corporation.
(b) The merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into it, or the sale, lease
or conveyance of all or substantially all the property or business of the
Corporation, shall not be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary, for the purposes of this Section 5.
Section 6. (a) The holders of Serial Preferred Stock shall be entitled to
one vote for each share of such stock upon all matters presented to the
shareholders; and, except as otherwise provided herein or required by law, the
holders of Serial Preferred Stock and the holders of Common Stock shall vote
together as one class on all matters. No adjustment of the voting rights of the
holders of Serial Preferred Stock shall be made in the event of an increase or
decrease in the number of shares of Common Stock authorized or issued or in the
event of a stock split or combination of the Common Stock or in the event of a
stock dividend on any class of stock payable solely in Common Stock.
If, and so often as, the Corporation shall be in default in the payment of
dividends in an amount equivalent to six quarterly dividends (whether or not
consecutive) on any series of Serial Preferred Stock at the time outstanding,
whether or not earned or declared, the holders of Serial Preferred Stock of all
series, voting separately as a class and in addition to all other rights to vote
for directors, shall thereafter be entitled to elect, as herein provided, two
members of the Board of Directors of the Corporation who shall serve, except as
hereinbelow provided, until the next annual meeting of the shareholders and
until their successors have been elected and qualified; provided, however, that
the holders of shares of Serial Preferred Stock shall not have or exercise such
special class voting rights except at meetings of the shareholders for the
election of directors at which the holders of not less than 35% of the
outstanding shares of Serial Preferred Stock of all series then outstanding are
present in person or by proxy; and provided further that the special class
voting rights provided for herein when the same shall have become vested shall
remain so vested until all accrued and unpaid dividends on the Serial Preferred
Stock of all series then outstanding shall have been paid, whereupon the holders
of Serial Preferred Stock shall be divested of their special class voting rights
in respect of subsequent elections of directors and the terms of the directors
elected by the holders of the Serial Preferred Stock shall automatically
terminate, subject to the revesting of such special class voting rights in the
event hereinabove specified in this paragraph.
In the event of default entitling the holders of Serial Preferred Stock to
elect two directors as above specified, a special meeting of the shareholders
for the purpose of electing such
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directors shall be called by the Secretary of the Corporation upon written
request of, or may be called by, the holders of record of at least 10% of the
shares of Serial Preferred Stock of all series at the time outstanding, and
notice thereof shall be given in the same manner as that required for the annual
meeting of shareholders; provided, however, that the Corporation shall not be
required, and the holders of Serial Preferred Stock shall not be entitled, to
call such special meeting if the annual meeting of shareholders shall be held
within 90 days after the date of receipt of the foregoing written request from
the holders of Serial Preferred Stock. At any meeting at which the holders of
Serial Preferred Stock shall be entitled to elect directors, the holders of 35%
of the then outstanding shares of Serial Preferred Stock of all series, present
in person or by proxy, shall be sufficient to constitute a quorum, and the vote
of the holders of a majority of such shares so present at any such meeting at
which there shall be such a quorum shall be sufficient to elect the members of
the Board of Directors which the holders of Serial Preferred Stock are entitled
to elect as hereinabove provided. If at any such meeting there shall be less
than a quorum present, the holders of a majority of the shares so present may
adjourn the meeting from time to time without notice other than announcement at
the meeting until a quorum shall attend.
The two directors who may be elected by the holders of Serial Preferred
Stock pursuant to the foregoing provisions shall be in addition to any other
directors then in office or proposed to be elected otherwise than pursuant to
such provisions, and nothing in such provisions shall prevent any change
otherwise permitted in the total number of directors of the Corporation or
require the resignation of any director elected otherwise than pursuant to such
provisions.
(b) The affirmative vote or consent of the holders of at least two-thirds of
the shares of Serial Preferred Stock at the time outstanding, given in person or
by proxy either in writing or at a meeting called for the purpose at which the
holders of Serial Preferred Stock shall vote separately as a class, shall be
necessary to effect any one or more of the following (but so far as the holders
of Serial Preferred Stock are concerned, such action may be effected with such
vote or consent):
(i) Any amendment, alteration or repeal of any of the provisions of the
Articles of Incorporation or of the Regulations of the Corporation which
affects adversely the voting powers, rights or preferences of the holders of
Serial Preferred Stock; provided, however, that, for the purpose of this
clause (i) only, neither the amendment of the Articles of Incorporation so
as to authorize or create, or to increase the authorized or outstanding
amount of, Serial Preferred Stock or of any shares of any class ranking on a
parity with or junior to the Serial Preferred Stock, nor the amendment of
the provisions of the Regulations so as to increase the number of directors
of the Corporation, shall be deemed to affect adversely the voting powers,
rights or preferences of the holders of Serial Preferred Stock; and provided
further, that if such amendment, alteration or repeal affects adversely the
rights or preferences of one or more but not all series of Serial Preferred
Stock at the time outstanding, only the vote or consent of the holders of at
least two-thirds of the number of the shares at the time outstanding of the
series so affected shall be required; or
(ii) The authorization or creation of, or the increase in the authorized
amount of, any shares of any class, or any security convertible into shares
of any class, ranking prior to the Serial Preferred Stock; or
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(iii) The purchase or redemption (for sinking fund purposes or otherwise)
of less than all of the Serial Preferred Stock then outstanding except in
accordance with a stock purchase offer made to all holders of record of
Serial Preferred Stock, unless all dividends upon all Serial Preferred Stock
then outstanding for all previous quarterly dividend periods shall have been
declared and paid or funds therefor set apart and all accrued sinking fund
obligations applicable thereto shall have been complied with.
(c) The affirmative vote or consent of the holders of at least a majority of
the shares of Serial Preferred Stock at the time outstanding, given in person or
by proxy in writing or at a meeting called for the purpose at which the holders
of Serial Preferred Stock shall vote separately as a class, shall be necessary
to effect any one or more of the following (but so far as the holders of Serial
Preferred Stock are concerned, such action may be effected with such vote or
consent):
(i) The consolidation of the Corporation with or its merger into any
other corporation unless the corporation resulting from such consolidation
or merger will have after such consolidation or merger no class of shares
either authorized or outstanding ranking prior to or on a parity with the
Serial Preferred Stock except the same number of shares ranking prior to or
on a parity with the Serial Preferred Stock and having the same rights and
preferences as the shares of the Corporation authorized and outstanding
immediately preceding such consolidation or merger, and each holder of
Serial Preferred Stock immediately preceding such consolidation or merger
shall receive the same number of shares, with the same rights and
preferences of the resulting corporation; or
(ii) The authorization of any shares ranking on a parity with the Serial
Preferred Stock or an increase in the authorized number of shares of Serial
Preferred Stock; or
(iii) The sale, lease or conveyance by the Corporation of all or
substantially all of its property or business.
Section 7. If the shares of any series of Serial Preferred Stock shall be
convertible into Common Stock, then upon conversion of shares of such series the
stated capital of the Common Stock issued upon such conversion shall be the
aggregate par value of the shares so issued having par value, or, in the case of
shares without par value, shall be an amount equal to the stated capital
represented by each share of Common Stock outstanding at the time of such
conversion multiplied by the number of shares of Common Stock issued upon such
conversion. The stated capital of the Corporation shall be correspondingly
increased or reduced to reflect the difference between the stated capital of the
shares of Serial Preferred Stock so converted and the stated capital of the
Common Stock issued upon such conversion.
Section 8. For the purpose of this Division A:
Whenever reference is made to shares "ranking prior to the Serial Preferred
Stock", such reference shall mean and include all shares of the Corporation in
respect of which the rights of the holders thereof as to the payment of
dividends or as to distributions in the event of an involuntary liquidation,
dissolution or winding up of the Corporation are given preference over the
rights of the holders of Serial Preferred Stock; whenever reference is made to
shares "on a parity with the Serial Preferred Stock", such reference shall mean
and include all shares of the Corporation in respect of which the rights of the
holders thereof as to the payment of dividends
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and as to distributions in the event of an involuntary liquidation, dissolution
or winding up of the Corporation rank on an equity (except as to the amounts
fixed therefor) with the rights of the holders of Serial Preferred Stock; and
whenever reference is made to shares "ranking junior to the Serial Preferred
Stock" such reference shall mean and include all shares of the Corporation in
respect of which the rights of the holders as to the payment of dividends and as
to distributions in the event of an involuntary liquidation, dissolution or
winding up of the Corporation are junior and subordinate to the rights of the
holders of the Serial Preferred Stock.
DIVISION A-I
SERIAL PREFERRED STOCK, SERIES A
Section 1. There is established hereby a series of Serial Preferred Stock
that shall be designated "Serial Preferred Stock, Series A" (hereinafter
sometimes called this "Series" or the "Series A Preferred Shares") and that
shall have the terms set forth in this Division A-1.
Section 2. The number of shares of this Series shall be 450,000.
Section 3. (a) The holders of record of Series A Preferred Shares shall be
entitled to receive, when and as declared by the Board of Directors in
accordance with the terms hereof, out of funds legally available for the
purpose, cumulative quarterly dividends payable in cash on the first day of
January, April, July and October in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a Series A Preferred
Share or fraction of a Series A Preferred Share in an amount per share (rounded
to the nearest cent) equal to the lesser of (i) $1.50 or (ii) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock, or a subdivision of the outstanding
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any Series A Preferred Share or fraction of a Series A Preferred Share. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount to
which holders of Series A Preferred Shares were entitled immediately prior to
such event under clause (ii) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Dividends shall begin to accrue and be cumulative on outstanding Series
A Preferred Shares from the Quarterly Dividend Payment Date next preceding the
date of issue of such Series A Preferred Shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of
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Series A Preferred Shares entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. No dividends shall
be paid upon or declared and set apart for any Series A Preferred Shares for any
dividend period unless at the same time a dividend for the same dividend period,
ratably in proportion to the respective annual dividend rates fixed therefor,
shall be paid upon or declared and set apart for all Serial Preferred Stock of
all series then outstanding and entitled to receive such dividend. The Board of
Directors may fix a record date for the determination of holders of Series A
Preferred Shares entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 40 days prior to the
date fixed for the payment thereof.
Section 4. Subject to the provisions of Section 6(b)(iii) of Division A and
in accordance with Section 4 of Division A, the Series A Preferred Shares shall
be redeemable from time to time at the option of the Board of Directors of the
Corporation, as a whole or in part, at any time at a redemption price per share
equal to one hundred times the then applicable Purchase Price as defined in that
certain Rights Agreement, dated as of January 26, 1988 between the Corporation
and Ameritrust Company National Association (the "Rights Agreement"), as the
same may be from time to time amended in accordance with its terms, which
Purchase Price is $100 as of January 26, 1988, subject to adjustment from time
to time as provided in the Rights Agreement. Copies of the Rights Agreement are
available from the Company upon request. In the event that fewer than all of the
outstanding Series A Preferred Shares are to be redeemed, the number of shares
to be redeemed shall be as determined by the Board of Directors and the shares
to be redeemed shall be selected pro rata or by lot in such manner as shall be
determined by the Board of Directors.
Section 5. (a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation (hereinafter
referred to as a "Liquidation"), no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon Liquidation) to
the Series A Preferred Shares, unless, prior thereto, the holders of Series A
Preferred Shares shall have received at least an amount per share equal to one
hundred times the then applicable Purchase Price as defined in the Rights
Agreement, as the same may be from time to time amended in accordance with its
terms which Purchase Price is $100 as of January 26, 1988, subject to adjustment
from time to time as provided in the Rights Agreement, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Shares shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of Common
Stock (the "Series A Liquidation Preference").
(b) In the event, however, that the net assets of the Corporation are not
sufficient to pay in full the amount of the Series A Liquidation Preference and
the liquidation preferences of all other series of Serial Preferred Stock, if
any, which rank on a parity with the Series A Preferred Shares as to
distribution of assets in Liquidation, all shares of this Series and of such
other Serial Preferred Stock shall share ratably in the distribution of assets
(or proceeds thereof) in Liquidation in proportion to the full amounts to which
they are respectively entitled.
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(c) In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in Common Stock, or effect a subdivision or
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount to which holders of Series A Preferred Shares were entitled
immediately prior to such event pursuant to the proviso set forth in paragraph
(a) above, shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(d) The merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into it, or the sale, lease
or conveyance of all or substantially all the property or business of the
Corporation, shall not be deemed to be a Liquidation for the purposes of this
Section 5.
Section 6. The Series A Preferred Shares shall not be convertible into
Common Stock.
Fifth: The Corporation may from time to time, pursuant to authorization
by the Board of Directors and without action by shareholders, purchase or
otherwise acquire shares of the Corporation of any class or classes in such
manner, upon such terms and in such amounts as the Board of Directors shall
determine.
Sixth: Notwithstanding any provision of the Ohio Revised Code now or
hereafter in force requiring for any purpose the vote, consent, waiver or
release of the holders of shares entitling them to exercise two-thirds, or
any other proportion, of the voting power of the Corporation or of any class
or classes of shares thereof, such action, unless otherwise expressly
required by statute or by the Articles of the Corporation, may be taken by
the vote, consent, waiver or release of the holders of shares entitling them
to exercise a majority of the voting power of the Corporation or of such
class or classes.
Seventh: Section 1. In addition to any affirmative vote required by law
or these Articles of Incorporation, any Related Party Transaction shall
require the affirmative vote of not less than both a majority of the
Corporation's outstanding Voting Stock and a majority of the portion of the
Corporation's outstanding Voting Stock excluding the Voting Stock owned by
the Related Party involved in the Related Party Transaction. In the event of
any inconsis- tency between this Article Seventh and any other provision of
these Articles of Incorporation, this Article Seventh shall govern.
Section 2. The provisions of Section 1 of this Article Seventh shall not
be applicable to Related Party Transactions in which (a) the aggregate
amount of the cash and the fair market value of consideration other than
cash received per share by holders of outstanding shares of each class or
series of Voting Stock of the Corporation who receive cash or other
consideration in the Related Party Transaction is not less than the highest
per share price (with appropriate adjustments for recapitalizations and for
stock splits, stock dividends, and other distributions) paid by the Related
Party in acquiring any of its holdings of each class or series of such
Voting Stock and (b) the form of consideration received by holders of shares
of each class or series of such Voting Stock is cash or the same form of
consideration
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used by the Related Party to acquire the largest percentage of each class
or series of such Voting Stock owned by the Related Party.
Section 3. The provisions of Section 1 of this Article Seventh shall not
be applicable to any Related Party Transaction expressly approved by a majority
vote of the Continuing Directors of the Corporation.
Section 4. For the purpose of this Article Seventh:
(a) The term "Related Party Transaction" shall mean (i) any merger or
consolidation of the Corporation or a Subsidiary with a Related Party,
irrespective of which party, if either, is the surviving party, (ii) any
sale, purchase, lease, exchange, transfer, or other transaction (or
series of transactions) between the Corporation or a Subsidiary and a
Related Party involving the acquisition or disposition of assets for
consideration of $5,000,000 or more in value (except transactions in the
ordinary course of business), (iii) the issuance or transfer of any
securities of the Corporation or of a Subsidiary to a Related Party
(other than an issuance or transfer of securities which is effected on a
pro rata basis to all shareholders of the Corporation), (iv) any
reclassification of securities of the Corporation (including any reverse
stock split) or any recapitalization or other transaction involving the
Corporation or its Subsidiaries that would have the effect of increasing
the voting power of a Related Party, except for any mandatory redemption
required by the terms of outstanding securities, and (v) the adoption of
any plan or proposal for the liquidation or dissolution of the
Corporation in favor of which a Related Party votes its Voting Stock.
(b) The term "Related Party" shall mean (i) any individual,
corporation, partnership, or other person, group or entity which,
together with its Affiliates and Associates, is the beneficial owner of
ten percent (10%) or more but less than ninety percent (90%) of the
Voting Stock of the Corporation or (ii) any such Affiliate or Associate.
(c) A person shall be a "beneficial owner" of any shares of Voting
Stock:
(1) Which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(2) Which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote pursuant to
any agreement, arrangement or understanding; or
(3) Which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
(d) The terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
April 22, 1986.
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(e) The term "consideration other than cash" as used in Section 2(a)
of this Article Seventh shall include, without limitation, Voting Stock
of the Corporation retained by its existing shareholders in the event of
a merger or consolidation with a Related Party in which the Corporation
is the surviving corporation.
(f) The term "Subsidiary" shall mean any Affiliate of the Corporation
more than fifty percent (50%) of the outstanding securities of which
representing the right, other than as affected by events of default, to
vote for the election of directors is owned by the Corporation or by
another Subsidiary (or both).
(g) The term "Voting Stock" shall mean all securities of the
Corporation entitled to vote generally in the election of directors.
(h) The term "Continuing Director" shall mean a director who either
(i) was a member of the Board of Directors of the Corporation immediately
prior to the time that the Related Party involved in a Related Party
Transaction became a Related Party, or (ii) was designated (before his or
her initial election as a director) as a Continuing Director by a
majority of the then Continuing Directors.
Section 5. A majority of the Continuing Directors shall have the power
and duty to determine conclusively for the purposes of this Article Seventh, on
the basis of information known to them, (a) whether a person is a Related Party,
(b) whether a person is an Affiliate or Associate of another, (c) whether a
transaction between the Corporation or a Subsidiary and a Related Party involves
the acquisition or disposition of assets for consideration of $5,000,000 or more
in value, (d) the fair market value of consideration other than cash received by
holders of Voting Stock in a Related Party Transaction, and (e) such other
matters with respect to which a determination or interpretation is required
under this Article Seventh.
Section 6. Nothing contained in this Article Seventh shall be construed
to relieve any Related Party from any fiduciary or other obligation imposed by
law.
Section 7. Notwithstanding any other provision of these Articles of
Incorporation or the Regulations of the Corporation or any provision of law
which might otherwise permit a lesser vote, but in addition to any affirmative
vote of the holders of any particular class or series of stock required by law,
these Articles of Incorporation or the Regulations of the Corporation, the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the Corporation's Voting Stock, voting as a single class, shall be
required to alter, amend or adopt any provision inconsistent with or repeal this
Article Seventh.
Eighth: These Amended Articles of Incorporation supersede and take the
place of the heretofore existing Articles of Incorporation of the Corporation
and all amendments thereto.
12
<PAGE> 13
In Witness Whereof, said Raymond A. Foos, Chairman of the Board,
President and Chief Executive Officer, and Clark G. Waite, Secretary, of Brush
Wellman Inc. acting for and on behalf of the Corporation, have hereunto
subscribed their names this February 28, 1989.
Raymond A. Foos
------------------------------------------
Raymond A. Foos, Chairman of the Board,
President and Chief Executive Officer
Clark G. Waite
------------------------------------------
Clark G. Waite, Secretary
13
<PAGE> 1
EXHIBIT 3b
4/27/93
REGULATIONS
OF
BRUSH WELLMAN INC.
ARTICLE I
SHAREHOLDERS' MEETINGS
Section 1. Annual Meeting
The annual meeting of shareholders for the election of Directors, the
consideration of reports laid before the meeting and the consideration of such
other business as may come before the meeting shall be held on the first Tuesday
in May in each year, if not a legal holiday, and if a legal holiday, then on the
next day not a legal holiday, or on such other date as may from time to time be
fixed by the Directors. Upon due notice, there may also be considered and acted
upon at an annual meeting any matter which could properly be considered and
acted upon at a special meeting, in which case and for which purpose the annual
meeting shall also be considered as, and shall be, a special meeting. When the
annual meeting is not held or Directors are not elected thereat, they may be
elected at a special meeting called for that purpose.
Section 2. Special Meetings
Special meetings of shareholders may be called at any time by the Chairman
of the Board, or the President or a Vice President or by the Directors by action
at a meeting, or by a majority of the Directors acting without a meeting, or by
the person or persons who hold not less than fifty per cent of all shares
outstanding and entitled to be voted on any proposal to be submitted at said
meeting.
Upon request in writing delivered either in person or by registered mail to
the President or Secretary by any person or persons entitled to call a meeting
of shareholders, such officer shall forthwith cause to be given, to the
shareholders entitled thereto, notice of a meeting to be held not less than
seven nor more than sixty days after the receipt of such request, as such
officer shall fix. If such notice is not given within twenty days after the
delivery or mailing of such request, the person or persons calling the meeting
may fix the time of meeting and give, or cause to be given, notice in the manner
hereinafter provided.
Section 3. Place of Meetings
Any meeting of shareholders may be held either at the principal office of
the Corporation or at such place within or without the State of Ohio, but within
the United States of America, as may be designated in the notice of said
meeting.
Section 4. Notice of Meetings
Not more than sixty days nor less than seven days before the date fixed for
a meeting of shareholders, whether annual or special, written notice of the
time, place and purposes of such meeting shall be given by or at the direction
of the President, a Vice President, the Secretary or an Assistant Secretary.
Such notice shall be given either by personal delivery or by mail to each
shareholder of record entitled to notice of such meeting. If such notice is
mailed, it shall be addressed to the shareholders at their respective addresses
as they appear on the records of the Corporation, and notice shall be deemed to
have been given on the day so mailed. Notice of adjournment of a meeting need
not be given if the time and place to which it is adjourned are fixed and
announced at such meeting.
Section 5. Shareholders Entitled to Notice and to Vote
If a record date shall not be fixed pursuant to statutory authority, the
record date for the determination of shareholders who are entitled to notice of,
or who are entitled to vote at, a meeting of shareholders, shall be the close of
business on the date next preceding the day on which notice is given, or the
close of business on the date next preceding the day on which the meeting is
held, as the case may be.
<PAGE> 2
Section 6. Inspectors of Election - List of Shareholders
Inspectors of Election may be appointed to act at any meeting of
shareholders in accordance with statute.
At any meeting of shareholders, an alphabetically arranged list, or
classified lists, of the shareholders of record as of the applicable record date
who are entitled to vote, showing their respective addresses and the number and
classes of shares held by each, shall be produced on the request of any
shareholder.
Section 7. Quorum
To constitute a quorum at any meeting of shareholders there shall be
present in person or by proxy shareholders of record entitled to exercise not
less than a majority of the voting power of the Corporation in respect of any
one of the purposes for which the meeting is called.
The shareholders present in person or by proxy, whether or not a quorum be
present, may adjourn the meeting from time to time.
Section 8. Voting
In all cases, except where otherwise by statute or the Articles or the
Regulations provided, a majority of the votes cast shall control.
Cumulative voting in the election of Directors shall be permitted as
provided by statute.
Section 9. Reports to Shareholders
At the annual meeting, or the meeting held in lieu thereof, the officers of
the Corporation shall lay before the shareholders a financial statement as
required by statute.
Section 10. Action Without a Meeting
Any action which may be authorized or taken at a meeting of the
shareholders may be authorized or taken without a meeting in a writing or
writings signed by all of the shareholders who would be entitled to notice of a
meeting for such purpose, which writing or writings shall be filed with or
entered upon the records of the Corporation.
ARTICLE II
DIRECTORS
Section 1. Election, Number and Term of Office
The Directors shall be elected at the annual meeting of shareholders, or,
if not so elected, at a special meeting of shareholders called for that purpose.
At any meeting of shareholders at which Directors are to be elected, only
persons nominated as candidates shall be eligible for election.
The Directors shall be divided into three classes, each class to consist of
four Directors unless and until the number of Directors of any such class is
changed by the shareholders or Directors as herein provided. The number of
Directors of any class may be changed to any number not less than three (i) by
the shareholders at a meeting called for the purpose of electing Directors, by
the affirmative vote of the shareholders of record entitled to exercise a
majority of the voting power for such purpose, or (ii) by the Directors at a
meeting or by action without a meeting, provided, that the number of Directors
of each class so changed by the Directors shall not differ by more than one from
the number of Directors of such class as last fixed by the shareholders. Any
such change in the number of Directors pursuant to the provisions of this
Section (i) shall remain in effect until changed by vote of the shareholders or
Directors in accordance with this Section, and (ii) shall be in such class or
classes as the shareholders or Directors making such change determine. In the
event that the Directors increase the number of Directors, the Directors who are
in office may fill any vacancy created thereby. Any decrease in the number of
Directors to less than the number of Directors then in office by action of the
shareholders or Directors pursuant to the provisions of this Section shall not
of itself have the effect of removing any incumbent Director or of reducing the
term of any incumbent Director and shall only become
2
<PAGE> 3
effective as the resignation, removal from office, death or expiration of the
term of any incumbent Director occurs. A separate election shall be held for
each class of Directors as hereinafter in this paragraph provided. Directors
elected at the first election for the first class shall hold office for the term
of one year from the date of their election and until the election of their
successors, Directors elected at the first election for the second class shall
hold office for the term of two years from the date of their election and until
the election of their successors, and Directors elected at the first election
for the third class shall hold office for the term of three years from the date
of their election and until the election of their successors. At each annual
election the successors to the Directors of each class whose term shall expire
in that year shall be elected to hold office for the term of three years from
the date of their election and until the election of their successors. In case
of any increase in the number of Directors of any class, any additional
Directors elected to such class shall hold office for a term which shall
coincide with the term of such class. All Directors, for whatever terms elected,
shall hold office subject to applicable statutory provisions as to the creation
of vacancies and removal.
Section 2. Meetings
Regular meetings of the Directors shall be held immediately after the
annual meeting of shareholders and at such other times and places as may be
fixed by the Directors, and such meetings may be held without further notice.
Special meetings of the Directors may be called by the Chairman of the
Board or by the President or by a Vice President or by the Secretary of the
Corporation, or by any two Directors. Notice of the time and place of a special
meeting shall be served upon or telephoned to each Director at least twenty-four
hours, or mailed, telegraphed or cabled to each Director at least forty-eight
hours, prior to the time of the meeting.
Section 3. Quorum
A majority of the number of Directors then in office shall be necessary to
constitute a quorum for the transaction of business, but if at any meeting of
the Directors there shall be less than a quorum present, a majority of those
present may adjourn the meeting from time to time without notice other than
announcement at the meeting until a quorum shall attend.
Section 4. Action Without a Meeting
Any action which may be authorized or taken at a meeting of the Directors
may be authorized or taken without a meeting in a writing or writings signed by
all the Directors, which writing or writings shall be filed with or entered upon
the records of the Corporation.
Section 5. Committees
The Directors may from time to time create an executive committee or any
other committee or committees of Directors to act in the intervals between
meetings of the Directors and may delegate to such committee or committees any
of the authority of the Directors other than that of filling vacancies among the
Directors or in any committee of the Directors. No committee shall consist of
less than three Directors. The Directors may appoint one or more Directors as
alternate members of any such committee, who may take the place of any absent
member or members at a meeting of such committee.
Unless otherwise ordered by the Directors, a majority of the members of any
committee appointed by the Directors pursuant to this section shall constitute a
quorum at any meeting thereof, and the act of a majority of the members present
at a meeting at which a quorum is present shall be the act of such committee.
Action may be taken by any such committee without a meeting by a writing or
writings signed by all of its members. Any such committee shall prescribe its
own rules for calling and holding meetings and its method of procedure, subject
to any rules prescribed by the Directors, and shall keep a written record of all
action taken by it.
3
<PAGE> 4
ARTICLE III
OFFICERS
Section 1. Officers
The Corporation may have a Chairman of the Board and shall have a President
(both of whom shall be Directors), a Secretary and a Treasurer. The Corporation
may also have one or more Vice Presidents and such other officers and assistant
officers as the Directors may deem necessary. All of the officers and assistant
officers shall be elected by the Directors.
Section 2. Authority and Duties of Officers
The officers of the Corporation shall have such authority and shall perform
such duties as are customarily incident to their respective offices, or as may
be specified from time to time by the Directors regardless of whether such
authority and duties are customarily incident to such office.
ARTICLE IV
INDEMNIFICATION
The Corporation shall indemnify:
(a) each Director or officer of the Corporation who is elected by the
Board of Directors (an "officer"),
(b) each former Director or officer of the Corporation,
(c) each such Director or officer of the Corporation who is serving or
has served at the request of the Corporation as a director, trustee or
officer of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust or other enterprise, and
(d) the heirs, executors and administrators of each such Director or
officer of the Corporation
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him (by reason of the fact
that he is serving or has served in one or more of the foregoing capacities or
by reason of any action alleged to have been taken or omitted in any of the
foregoing capacities) in connection with any threatened, pending or completed
action, suit or proceeding (including any appeals), whether civil, criminal,
administrative or investigative to the full extent permitted by applicable law.
The indemnification provided for herein shall not be deemed to restrict the
right of the Corporation:
(i) to indemnify employees, agents and others to the extent not
prohibited by applicable law,
(ii) to purchase and maintain insurance or furnish similar protection
on behalf of or for
(A) any person who is or was a Director, officer, employee or
agent of the Corporation,
(B) any person who is serving or has served at the request of
the Corporation as a director, trustee, officer, employee or agent of
another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust or other enterprise, and
(C) the heirs, executors and administrators of any of the
foregoing
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such (or by reason of action alleged to
have been taken or omitted in any such capacity), and
(iii) to enter into agreements with persons of the class identified in
clause (ii) above indemnifying them against any and all liabilities (or such
lesser indemnification as may be provided in such agreements) asserted against
or incurred by them in such capacities.
4
<PAGE> 5
ARTICLE V
MISCELLANEOUS
Section 1. Transfer and Registration of Certificates
The Directors shall have authority to make such rules and regulations as
they deem expedient concerning the issuance, transfer and registration of
certificates for shares and the shares represented thereby and may appoint
transfer agents and registrars thereof.
Section 2. Substituted Certificates
Any person claiming a certificate for shares to have been lost, stolen or
destroyed shall make an affidavit or affirmation of that fact, shall give the
Corporation and its registrar or registrars and its transfer agent or agents a
bond of indemnity satisfactory to the Directors or to the Executive Committee or
to the President or a Vice President and the Secretary or the Treasurer, and, if
required by the Directors or the Executive Committee or such officers, shall
advertise the same in such manner as may be required, whereupon a new
certificate may be executed and delivered of the same tenor and for the same
number of shares as the one alleged to have been lost, stolen or destroyed.
Section 3. Voting Upon Shares Held by the Corporation
Unless otherwise ordered by the Directors, the President in person or by
proxy or proxies appointed by him shall have full power and authority on behalf
of the Corporation to vote, act and consent with respect to any shares issued by
other corporations which the Corporation may own.
Section 4. Corporate Seal
The seal of the Corporation shall be circular in form with the name of the
Corporation stamped around the margin and the word "Seal" stamped across the
center.
Section 5. Articles to Govern
In case any provision of these Regulations shall be inconsistent with the
Articles, the Articles shall govern.
Section 6. Amendments
These Regulations may be amended by the affirmative vote or the written
consent of the shareholders of record entitled to exercise a majority of the
voting power on such proposal, provided, however, that if an amendment is
adopted by written consent without a meeting of the shareholders, the Secretary
shall mail a copy of such amendment to each shareholder of record who would have
been entitled to vote thereon and did not participate in the adoption thereof.
5
<PAGE> 1
EXHIBIT 4(a)
------------
AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
BRUSH WELLMAN INC.
AND
FOUR BANKS
AND
NATIONAL CITY BANK, AGENT
<TABLE>
<S> <C> <C>
$20,000,000 2/5 NATIONAL CITY BANK
$10,000,000 1/5 NBD BANK, N.A.
$10,000,000 1/5 SOCIETY NATIONAL BANK
$10,000,000 1/5 THE BANK OF NOVA SCOTIA
----------
$50,000,000 Total
</TABLE>
December 13, 1994
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C> <C>
1A. CROSS-REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1B. SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2A. SUBJECT COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2A.01 AMOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2A.02 TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2A.03 OPTIONAL REDUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2A.04 COMMITMENT FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2A.05 EXTENSION OF SUBJECT COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2B. LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2B.01 COMPETITIVE BID RATE BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2B.02 SUBJECT NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2B.03 LOAN MIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2B.04 AMOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2B.05 CONTRACT PERIODS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2B.06 MATURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2B.07 ROLLOVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2B.08 INTEREST: PRIME RATE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2B.09 INTEREST: FIXED-RATE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2B.10 PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2C. GENERAL TERMS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2C.01 CREDIT REQUESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2C.02 CONDITION: NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2C.03 CONDITION: PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2C.04 PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2C.05 NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2C.06 LIBOR LOANS: UNAVAILABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2C.07 LIBOR LOANS: ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3A. INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3A.01 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3A.02 NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3B. GENERAL FINANCIAL STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3B.01 TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3B.02 LEVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3B.03 CURRENT RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3B.04 INTEREST COVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3B.05 FUNDED DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3C. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3C.01 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3C.02 FINANCIAL RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3C.03 VISITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3C.04 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3C.05 CORPORATE EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3C.06 COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3C.07 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3C.08 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3D. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
3D.01 CREDIT EXTENSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3D.02 BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3D.03 LIENS, LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3D.04 EQUITY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4A. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4A.01 SUBJECT NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4A.02 RESOLUTIONS AND INCUMBENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4A.03 LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4A.04 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4B. WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4B.01 EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4B.02 GOVERNMENTAL RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4B.03 CORPORATE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4B.04 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4B.05 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4B.06 TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4B.07 LAWFUL OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4B.08 ERISA COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4B.09 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4B.10 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4B.11 DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4B.12 INVESTMENT COMPANY ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5A. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5A.01 PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5A.02 WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5A.03 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5A.04 CROSS-DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5A.05 SUBSIDIARY'S SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5A.06 BORROWER'S SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5A.07 CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5B. EFFECTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5B.01 OPTIONAL DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5B.02 AUTOMATIC DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5B.03 OFFSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5B.04 EQUALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6A. INDEMNITY: STAMP TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6B. INDEMNITY: GOVERNMENTAL COSTS/FIXED RATE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6C. INDEMNITY: FUNDING COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6D. INDEMNITY: CREDIT REQUESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6E. INDEMNITY: UNFRIENDLY TAKEOVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6F. INDEMNITY: CAPITAL REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6G. INDEMNITY: COLLECTION COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
6H. CERTIFICATE FOR INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7A. BANKS' PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7B. NCB-AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7B.01 NATURE OF APPOINTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7B.02 NCB AS A BANK; OTHER TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7B.03 INSTRUCTION FROM BANKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7B.04 BANKS' DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7B.05 NO IMPLIED REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7B.06 SUB-AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7B.07 NCB-AGENT'S DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7B.08 NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7B.09 NCB-AGENT'S LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7B.10 COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7B.11 DISBURSEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7B.12 NCB-AGENT'S INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7B.13 RESIGNATION; SUCCESSOR AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.01 WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.02 CUMULATIVE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.03 BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.04 SURVIVAL OF PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.05 IMMEDIATE U.S. FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.06 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.07 SUBSECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.08 ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.09 OHIO LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.10 INTEREST/FEE COMPUTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.11 NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.12 ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10. EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
-iii-
<PAGE> 5
AMENDED AND RESTATED
CREDIT AGREEMENT
----------------
Amended and Restated Credit Agreement made as of December 13, 1994 by
and among Brush Wellman Inc., an Ohio corporation ("Borrower"), the banks named
in subsection 2A.01 below (collectively, the "Banks"), and National City Bank,
as agent (in that capacity, "NCB-Agent") for the Banks for the purposes
indicated in this Agreement and the Related Writings (as hereafter defined):
PRELIMINARY STATEMENTS:
A. The Banks, NCB-Agent and Borrower entered into a Credit Agreement
dated as of December 23, 1991 (as the same has been amended, the "Original
Credit Agreement"); and
B. Borrower and the Banks desire to amend certain terms and provisions
of the Original Credit Agreement, including, among other reasons, to increase
the Subject Commitments and to extend the Expiration Date, and the Banks are
agreeable to such amendments.
NOW, THEREFORE, for and in consideration of the foregoing, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1A. CROSS-REFERENCE. Certain capitalized terms used herein are defined in
Section 9.
1B. SUMMARY. This Agreement sets forth the terms and conditions upon
which, at Borrower's request, the Banks will Ratably make loans to Borrower on
a revolving basis until the Expiration Date (as defined in Section 2A.02).
This Agreement also sets forth covenants and warranties made by the parties to
induce each other to enter into this Agreement and contains other material
provisions.
2A. SUBJECT COMMITMENTS. The basic terms of the Subject Commitments and
the compensation therefor are as follows:
2A.01 AMOUNTS. The aggregate amount of the Subject Commitments shall be
fifty million dollars ($50,000,000), but that amount may be reduced from time
to time pursuant to subsection 2A.03 and the Subject Commitments may be
terminated pursuant to Section 5B. The amount of each Bank's Subject
Commitment (subject to such reduction or termination), and the
<PAGE> 6
proportion (expressed as a fraction) that it bears to all of the Subject
Commitments, is set forth opposite the Bank's name below, to-wit:
<TABLE>
<S> <C> <C>
$20,000,000 2/5 National City Bank
$10,000,000 1/5 NBD Bank, N.A.
$10,000,000 1/5 Society National Bank
$10,000,000 1/5 The Bank of Nova Scotia
----------- -----------------------
$50,000,000 Total
</TABLE>
2A.02 TERM. Each Subject Commitment shall commence as of the date of
this Agreement and shall remain in effect on a revolving basis until April 30,
1998 (the "Expiration Date"), except that a later Expiration Date may be
established from time to time pursuant to subsection 2A.05 and except that the
Subject Commitments shall end in any event upon any earlier reduction thereof
to zero pursuant to subsection 2A.03 or any earlier termination pursuant to
Section 5B.
2A.03 OPTIONAL REDUCTIONS. Borrower shall have the right, at all
times and without the payment of a premium, to permanently reduce all of the
Subject Commitments in whole or in part by giving NCB-Agent notice (to be given
not later than 12:00 noon Cleveland, Ohio time of the Banking Day next
preceding the effective date of the reduction and either to be given in writing
or to be promptly confirmed in writing) of the aggregate amount by which the
Subject Commitments are to be reduced and the effective date thereof, subject,
however, to the following:
(a) Each such reduction of the Subject Commitments shall
aggregate one million dollars ($1,000,000) or any multiple thereof.
(b) Each reduction shall be allocated Ratably among the
Subject Commitments.
(c) Concurrently with each reduction Borrower shall make a
principal payment on each Bank's Subject Loans then outstanding in a
principal amount equal to the excess, if any, of the amount of that
Bank's then Credit Exposure over that Bank's Subject Commitment as so
reduced. Subsection 2B.10 and Section 6C shall apply to each such
prepayment.
2A.04 COMMITMENT FEE. Each Bank shall, so long as its Subject
Commitment remains in effect, earn a commitment fee
(a) based on the average daily difference between the amount
of that Bank's Subject Commitment from time to time in effect and the
then amount of that Bank's Credit Exposure (as to each Bank, the
"Unused Commitment"),
-2-
<PAGE> 7
(b) computed (in accordance with subsection 8.10) at the
Applicable Rate set forth below that corresponds to the Interest
Coverage Ratio as of the last day of the immediately preceding fiscal
quarter of the Companies; provided, however, that the Applicable Rate
from the date of this Agreement through and including March 31, 1995,
will be .15%:
<TABLE>
Interest Coverage Ratio Applicable Rate
----------------------- ---------------
<S> <C>
less than 4.0 to 1.0; .25%
equal to or greater than 4.0 to 1.0 .20%
but less than 5.0 to 1.0
equal to or greater than 5.0 to 1.0 .15%, and
</TABLE>
(c) payable in arrears by Borrower to NCB-Agent for the
account of the Banks on April 1, 1995, and quarter-annually thereafter
and at the end of the Subject Commitment.
Each Bank shall be entitled to such commitment fee on its Unused Commitment, if
any, irrespective of the principal amount of any outstanding Competitive Loans
made by any or all of the other Banks from time to time.
2A.05 EXTENSION OF SUBJECT COMMITMENTS. Annually, beginning in 1996,
Borrower may request the Banks to extend the Expiration Date for a period of
one (1) year from the later of April 30, 1998, or such other Expiration Date as
may have been previously established pursuant to this subsection 2A.05, by
delivering to the Banks a written request for such extension in the form of
Exhibit A hereto and Borrower's audited financial statements delivered pursuant
to subsection 3A.01 hereof. The Banks shall have until thirty (30) days after
receipt of such written request and financial statements to agree to such
extension and if the Banks do not so notify Borrower in writing of their
agreement to such extension, the Expiration Date shall not be extended. If the
Banks do agree to such extension, NCB-Agent shall so notify Borrower, and
Borrower shall then promptly deliver to the Banks Subject Notes, executed by
Borrower, in the form and substance of Exhibits C-1 and C-2, but bearing the
extended Expiration Date, together with a certified copy of the resolution of
Borrower's Board of Directors authorizing such extension and the execution and
delivery of the new Subject Notes. The Banks, upon receipt of the new
substitute Subject Notes, shall endorse thereon all Subject Loans then
outstanding, together with the dates thereof, and shall return to Borrower the
Subject Notes bearing the no longer correct Maturity date, such returned
Subject Notes marked "Expiration Date extended to
__________________________".
-3-
<PAGE> 8
2B. LOANS. Each Bank (for itself only and not for the other) agrees,
subject to the conditions of this Agreement, that so long as that Bank's
Subject Commitment remains in effect it will grant Borrower such loan or loans
pursuant to this Agreement as Borrower may from time to time request.
2B.01 COMPETITIVE BID RATE BORROWINGS.
(a) THE COMPETITIVE BID OPTION. Subject to the terms and conditions
of this Agreement, Borrower may, as set forth in this subsection, request the
Banks to make offers to make Competitive Loans to Borrower. The Banks may, but
shall have no obligation to, make such offers, and Borrower may, but shall have
no obligation to, accept any such offers in the manner set forth in this
subsection.
(b) COMPETITIVE BID REQUEST. When Borrower wishes to request offers
to make Competitive Loans under this subsection, it shall transmit to each Bank
by telex or telecopy a Competitive Bid Request substantially in the form of
Exhibit B hereto or may request such offers orally of the Banks, in any case so
as to be received no later than 12:00 noon (Cleveland, Ohio, time) on the date
of the borrowing proposed therein, specifying:
(i) the proposed date of borrowing, which shall be a Banking
Day,
(ii) the aggregate amount of such borrowing, which shall be
three million dollars ($3,000,000) or any greater amount that is a
multiple of five hundred thousand dollars ($500,000), and
(iii) the duration of the Contract Period applicable thereto.
In the case of an oral request to any Bank for Competitive Loans, such Bank
shall be entitled to rely thereon, and Borrower shall assume the risk of
misunderstanding.
(c) SUBMISSION AND CONTENTS OF COMPETITIVE BIDS.
(i) Each Bank may submit a Competitive Bid containing an offer
or offers to make Competitive Loans in response to any invitation for
Competitive Bids. Each Competitive Bid must comply with the
requirements of this subsection (c) and must be submitted to Borrower
by telex or orally (or by such other means as to which Borrower and
that Bank may agree) not later than 12:00 noon (Cleveland, Ohio time)
on the proposed date of borrowing.
(ii) Each Competitive Bid shall be in writing or may be
conveyed orally and shall in any case specify:
(A) the proposed date of borrowing,
-4-
<PAGE> 9
(B) the principal amount of the Competitive Loan for which
each such offer is being made, which principal amount (y) may be
greater than or less than the Subject Commitment of the quoting
Bank, and (z) may not exceed the principal amount of Competitive
Loans for which offers were requested,
(C) the rate of interest per annum (rounded to the nearest
1/100th of 1%) (the "Competitive Bid Rate") offered for each such
Competitive Loan, and
(D) the identity of the quoting Bank.
(d) ACCEPTANCE AND NOTICE BY BORROWER. Not later than 12:00 noon
(Cleveland, Ohio, time) on the proposed date of borrowing (or such other time
and date as to which Borrower and that Bank may agree), Borrower shall notify
the particular quoting Bank(s) of its acceptance of the offer(s) so received by
it pursuant to subsection (c). Borrower's failure to notify a quoting Bank of
its acceptance of that Bank's Competitive Bid on a timely basis shall be deemed
to be an indication of Borrower's nonacceptance of said quote. In the case of
acceptance, such notice shall specify the aggregate principal amount of offers
for each Contract Period that are accepted. Borrower may accept any
Competitive Bid in whole or in part; provided that:
(i) the aggregate principal amount of each Competitive Loan
may not exceed the applicable amount set forth in the related
Competitive Bid Request, and
(ii) the principal amount of each Competitive Loan must be
three million dollars ($3,000,000) or any greater amount that is a
multiple of five hundred thousand dollars ($500,000).
Upon Borrower's acceptance of any Competitive Bid hereunder, Borrower shall
promptly notify each Bank which responded to the Competitive Bid Request in
question of (x) the range of interest rates bid with respect thereto, (y) the
aggregate amount of Competitive Loans taken by the Borrower thereunder, and (z)
the duration of the loan Contract Period with respect thereto.
(e) NOTICE TO NCB-AGENT; FUNDING OF COMPETITIVE LOANS.
(i) Upon Borrower's determination to accept a Competitive Bid
under this subsection, Borrower shall promptly notify NCB-AGENT (but
in no case later than 12:00 noon Cleveland, Ohio, time on the proposed
date of borrowing) of the identity of the Bank or Banks making such
Competitive Loan and the terms thereof.
-5-
<PAGE> 10
(ii) Not later than 12:00 noon (Cleveland, Ohio time) on the
date a Competitive Loan is to be obtained, each Bank participating
therein shall (except as provided in subpart (iii) of this subsection)
make available the amount of its Competitive Loan in federal or other
funds immediately available in Cleveland, Ohio, to Borrower in
accordance with such instructions, as Borrower shall give such Bank or
Banks.
(iii) If any Bank makes a new Competitive Loan hereunder on a
day on which Borrower is to repay all or any part of an outstanding
Competitive Loan from such Bank, such Bank shall apply the proceeds of
its new Competitive Loan to make such repayment and only an amount
equal to the difference (if any) between the amount being borrowed and
the amount being repaid shall be made available by such Bank.
2B.02 SUBJECT NOTES. Each Bank's Subject Loans shall be evidenced by
two Subject Notes payable to the order of that Bank, with respect to Prime Rate
Loans and LIBOR Loans, in the principal amount equal to the dollar amount of
that Bank's Subject Commitment as then in effect, and with respect to
Competitive Loans, equal to the aggregate amount of all the Subject
Commitments, as then in effect, each note being in the form and substance of
Exhibits C-1 and C-2, respectively, with the blanks appropriately filled.
(a) Whenever Borrower shall obtain a Series of Subject Loans,
each Bank shall endorse an appropriate entry on the appropriate
Subject Note or make an appropriate entry in a loan account in that
Bank's books and records, or both. Each entry shall be prima facie
evidence of the data entered; but such entries shall not be a
condition to, or in any way affect, Borrower's obligation to pay.
(b) Whenever Borrower shall obtain a Series of Prime Rate
Loans or LIBOR Loans, each Bank shall disburse the proceeds in
immediately available funds from any office selected by that Bank to
Borrower's general checking account with NCB not later than 12:00 noon
(Cleveland, Ohio time) on the Banking Day specified in the Credit
Request or in accordance with such other instructions, if any, as
Borrower may give the Banks in writing or orally and immediately
confirmed in writing.
(c) No holder of any Subject Note shall transfer a Subject
Note, or seek a judgment or file a proof of claim based on a Subject
Note without in each case first endorsing the Subject Note to reflect
the true amount owing thereon.
2B.03 LOAN MIX. The Subject Loans may include Prime Rate Loans or
Competitive Loans or LIBOR Loans or any combination thereof, all as Borrower
may from time to time duly elect, except
-6-
<PAGE> 11
that each Series of Subject Loans shall at all times consist of only Prime Rate
Loans or only Competitive Loans or only LIBOR Loans and, in the case of
Fixed-Rate Loans, shall have identical Contract Periods.
2B.04 AMOUNTS. Each Series of Prime Rate Loans and LIBOR Loans shall
be divided Ratably among the Banks and shall be in such aggregate principal
amount as Borrower may request, subject, however, to the following:
(a) In the case of Prime Rate Loans, the aggregate principal
amount shall be five hundred thousand dollars ($500,000) or any
multiple thereof.
(b) In the case of LIBOR Loans, the aggregate principal
amount shall be two million dollars ($2,000,000) or any greater amount
that is a multiple of five hundred thousand dollars ($500,000).
(c) In no event shall any Bank's Credit Exposure at any time
exceed the then amount of that Bank's Subject Commitment, except in
respect of Competitive Loans to the extent agreed upon by that Bank
with Borrower.
2B.05 CONTRACT PERIODS. Each Series of Fixed-Rate Loans shall have
applicable thereto a Contract Period to be duly elected by Borrower in the
Credit Request therefor. Each Contract Period shall begin on the date of
borrowing and shall end on such date, not later than the Expiration Date, as
Borrower may select, subject, however, to the following:
(a) The Contract Period for each Series of LIBOR Loans shall
end one or two or three or six or twelve months after the date of
borrowing, except that
(1) if any such Contract Period otherwise would end on a day
that is not a Banking Day, it shall end instead on the next
following Banking Day unless that day falls in another calendar
month, in which case it shall end instead on the next preceding
Banking Day, and
(2) if the Contract Period commences on a day for which there
is no numerical equivalent in the calendar month in which the
Contract Period is to end, it shall end on the last Banking Day
of that calendar month.
(b) The Contract Period for each Series of Competitive Bid
Loans shall end not less than seven days, but in any event shall end
on or prior to one hundred eighty days, after the date of borrowing,
except that if the Contract Period otherwise would end
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<PAGE> 12
on a day not a Banking Day, it shall end on the next following
Banking Day.
2B.06 MATURITIES. The stated Maturity of each Prime Rate Loan shall
be the Expiration Date. The stated Maturity of each Fixed-Rate Loan shall be
the last day of the Contract Period applicable thereto, except that in no event
shall the stated Maturity be later than the Expiration Date.
2B.07 ROLLOVER. If
(a) any Series of Subject Loans shall not be paid in full at
the stated Maturity thereof and
(b) no Default Under This Agreement shall then exist,
Borrower shall be deemed to have duly given NCB-Agent a timely Credit Request
to obtain (and at that Maturity the Banks shall make) a Series of Prime Rate
Loans in an aggregate principal amount equal to the aggregate unpaid principal
of the Subject Loans then due and the proceeds of those Prime Rate Loans shall
be applied to the payment in full of the Subject Loans then due; provided, that
no such Prime Rate Loan shall of itself cure any then-existing Default Under
This Agreement.
2B.08 INTEREST: PRIME RATE LOANS. The principal of and overdue
interest on the Prime Rate Loans shall bear interest payable in arrears on the
first Banking Day of each January, April, July and October and at Maturity and
computed (in accordance with subsection 8.10)
(a) prior to Maturity, at a fluctuating rate equal to the
Prime Rate from time to time in effect and
(b) after Maturity (whether occurring by lapse of time or by
acceleration) and upon the occurrence of an Event of Default, at a
fluctuating rate equal to the Prime Rate from time to time in effect
plus two percent (2%) per annum,
with each change in the Prime Rate automatically and immediately changing the
rate thereafter applicable to the Prime Rate Loans; provided, that in no event
shall the rate applicable to the Prime Rate Loans after the Maturity thereof be
less than the rate applicable thereto immediately before Maturity.
2B.09 INTEREST: FIXED-RATE LOANS. The principal of and overdue
interest on each Fixed-Rate Loan shall bear interest computed (in accordance
with subsection 8.10) and payable as follows:
(a) Prior to Maturity, each LIBOR Loan shall bear interest
with respect to any Contract Period commencing
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<PAGE> 13
on or after April 1, 1995, at a rate equal to the LIBOR Rate in effect
at the start of the applicable Contract Period plus the margin
indicated below that corresponds to the Interest Coverage Ratio as of
the start of the applicable Contract Period:
<TABLE>
Interest Coverage Ratio Margin
- ----------------------- ------
<S> <C>
less than 4.0 to 1.0 5/8%
equal to or greater than 4.0 to 1.0
but less than 5.0 to 1.0 1/2%
equal to or greater than 5.0 to 1.0 3/8%;
</TABLE>
provided, however, that from the date of this Agreement through and including
March 31, 1995, the margin will be 3/8%.
(b) Prior to Maturity, each Competitive Loan shall bear
interest at a rate equal to the Competitive Bid Rate.
(c) After Maturity (whether occurring by lapse of time or by
acceleration), each Fixed-Rate Loan shall bear interest computed and
payable in the same manner as set forth in subsection 2B.08(b) for
Prime Rate Loans, except that in no event shall any Fixed-Rate Loan
bear interest after Maturity at a lesser rate than that applicable
thereto immediately before Maturity.
(d) Interest on each Fixed-Rate Loan shall be payable in
arrears on the last day of the Contract Period applicable thereto and
at Maturity and, in the case of any Contract Period having a longer
term than ninety (90) days or three (3) months, as the case may be,
shall also be payable every ninety (90) days (in the case of
Competitive Loans) and every three (3) months (in the case of LIBOR
Loans) after the first day of the Contract Period.
2B.10 PREPAYMENTS. Borrower may from time to time prepay the
principal of the Prime Rate Loans in whole or in part and may from time to time
prepay the principal of any given Series of Fixed-Rate Loans in whole or in
part, subject to the following:
(a) Borrower shall give NCB-Agent an appropriate notice not
later than 12:00 noon (Cleveland, Ohio time) on the Banking Day next
preceding any such prepayment, which notice, if not originally given
in writing, shall be promptly confirmed in writing. NCB-Agent shall
promptly report the notice to each Bank.
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<PAGE> 14
(b) Each prepayment of Prime Rate Loans shall aggregate the
principal amount of five hundred thousand dollars ($500,000) or any
multiple thereof or an amount equal to the then aggregate principal
outstanding and shall be allocated thereto Ratably. Each prepayment
of a Series of Competitive Loans shall aggregate three million dollars
($3,000,000) or any greater amount that is a multiple of five hundred
thousand dollars ($500,000) or an amount equal to the aggregate unpaid
principal balance of that Series and shall be applied Ratably to the
Subject Loans comprising the Series.
(c) Each prepayment of a Series of LIBOR Loans shall
aggregate two million dollars ($2,000,000) or any greater amount that
is a multiple of five hundred thousand dollars ($500,000) or an amount
equal to the aggregate unpaid principal balance of that Series and
shall be applied Ratably to the Subject Loans comprising the Series.
(d) Each prepayment of the Prime Rate Loans may be made
without penalty or premium. Any prepayment of any Fixed-Rate Loan
(regardless of the reason for the prepayment) shall be subject to the
payment of any indemnity required by Section 6C.
(e) No prepayment shall of itself reduce any Subject
Commitment.
(f) Concurrently with each prepayment, Borrower shall prepay
the interest accrued on the prepaid principal.
2C. GENERAL TERMS AND CONDITIONS. The Subject commitments shall be
subject to the following additional terms and conditions:
2C.01 CREDIT REQUESTS. Whenever Borrower desires to obtain a
Series of Subject Loans other than by a Competitive Bid Request, Borrower shall
give NCB-Agent an appropriate notice (a "Credit Request") to be in the form of
Exhibit D (or in other form and detail satisfactory to NCB-Agent) with the
blanks appropriately filled. The Credit Request shall be irrevocable, shall be
given to NCB-Agent not later than 12:00 noon (Cleveland, Ohio time)
(a) on the Banking Day next preceding the date on which Prime
Rate Loans are to be obtained,
(b) three (3) Banking Days prior to the date any LIBOR Loans
are to be obtained, and
(c) shall either be made in writing or orally and immediately
confirmed in writing.
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<PAGE> 15
In the case of any oral Credit Request, NCB-Agent shall be entitled to rely
thereon and Borrower shall assume the risk of misunderstanding. NCB-Agent
shall give each Bank prompt notice of each Credit Request.
2C.02 CONDITION: NO DEFAULT. Borrower shall not be entitled to
obtain any Subject Loan if
(a) any Default Under This Agreement shall then exist or
would thereupon begin to exist or
(b) any representation or warranty made in subsections 4B.01
through 4B.12 (both inclusive) shall have ceased to be true or
complete in any Material respect or
(c) there shall have occurred any Material adverse change in
the consolidated financial condition, properties or business of the
Companies since the date of Borrower's Most Recent 4A.04 Financial
Statements or of its then most recent financial statements, if any,
furnished to the Banks pursuant to subsection 3A.01 or
(d) Borrower has not complied with or caused compliance with
Section 4A.
Each Credit Request, both when made and when honored, shall of itself
constitute a continuing representation and warranty by Borrower to NCB-Agent
for the benefit of the Banks that Borrower is entitled to make the Credit
Request and that the Banks are obligated to honor it.
2C.03 CONDITION: PURPOSE. Borrower shall not use the proceeds of any
Subject Loan in any manner that would violate or be inconsistent with
Regulation U or X of the Board of Governors of the Federal Reserve System; nor
will it use any such proceeds for the purpose of financing the acquisition of
any corporation or other business entity if the acquisition is publicly opposed
by the latter's management and if any Bank deems that its participation in the
financing of the acquisition would involve it in a conflict of interest.
Borrower will use such proceeds only for general corporate purposes.
2C.04 PAYMENTS. All payments (including prepayments) of any Subject
Indebtedness (excluding payments on Competitive Loans) shall be made by
Borrower to NCB-Agent for the account of the Banks in immediately available
funds, which payment to NCB-Agent shall constitute payment to the Banks. Any
payment received by NCB-Agent after 1:30 p.m. (Cleveland, Ohio time) shall be
deemed to have been made and received on the next following Banking Day;
provided that if Borrower shall have given one of its depositories instructions
before 12:00 noon (Cleveland, Ohio time) to transfer "federal funds" that day
to NCB-Agent and shall have received and provided to NCB-Agent a
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<PAGE> 16
Federal Reserve reference number for the transfer, the payment shall be deemed
to have been timely even if received after 1:30 p.m. that day. NCB-Agent shall
distribute to each Bank its Ratable share of each such payment in immediately
available funds forthwith upon NCB-Agent's receipt thereof. All payments
(including prepayments) of any Competitive Loans shall be made by Borrower
directly to the Bank or Banks making such Competitive Loans in immediately
available funds.
2C.05 NOTICE. NCB-Agent shall give Borrower and the Banks prompt
notice of the fixed rate initially applicable to each Series of Fixed- Rate
Loans and of each change in NCB's Prime Rate. In making interest payments,
Borrower shall be entitled to rely upon the most recent such notice received by
it; provided, that if any interest payment shall be made in the wrong amount by
reason of Borrower's failure to receive a timely notice for any reason or by
reason of any error in computation, the difference between the correct amount
and the erroneous amount shall be promptly paid by Borrower or promptly
refunded to Borrower (in either case with interest computed at the Prime Rate
on the amount of the difference), whichever is applicable.
2C.06 LIBOR LOANS: UNAVAILABILITY. If at any time
(a) any of the Banks shall determine that dollar deposits of
the relevant amount for the relevant Contract Period are not available
in the London Interbank Eurodollar Market (in the case of LIBOR Loans)
for the purpose of funding the LIBOR Loans in question, or
(b) NCB-Agent shall determine that circumstances affecting
the relevant market make it impracticable for NCB-Agent to ascertain
the rate or rates applicable to such Fixed-Rate Loans, or
(c) any of the Banks shall give NCB-Agent written notice that
the costs of that Bank in funding any one or more Series of LIBOR
Loans are equal to or greater than the interest payable by Borrower in
respect thereof,
then and in each such case NCB-Agent shall, by written notice to Borrower and
the Banks, suspend Borrower's right thereafter to obtain Fixed- Rate Loans of
the kind in question, which suspension shall remain in effect until such time,
if any, as NCB-Agent may give written notice to Borrower that the condition
giving rise to the suspension no longer prevails.
2C.07 LIBOR LOANS: ILLEGALITY. If any Bank shall give NCB-Agent
written notice that it is, or any governmental authority has asserted that it
is, unlawful for that Bank to fund, make or maintain (other than by reason of a
change in
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<PAGE> 17
Capital Requirements, the effect of which is dealt with in Section 6F) the
LIBOR Loans in question,
(a) NCB-Agent shall give Borrower and the other Banks prompt
written notice thereof, and
(b) Borrower shall promptly pay in full the principal of and
interest on the LIBOR Loans in question and make the reimbursement, if
any, required by Section 6C.
3A. INFORMATION. Borrower agrees that so long as the Subject
Commitments remain in effect and thereafter until all the Subject Indebtedness
shall have been paid in full, Borrower will perform and observe each of the
following:
3A.01 FINANCIAL STATEMENTS. Borrower will furnish to each Bank
(a) within forty-five (45) days after the end of each of the
first three quarter-annual periods of each of Borrower's fiscal years,
balance sheets of the Companies as at the end of that period and their
income statements and surplus reconciliations for the year to the end
of that period, all prepared (but unaudited) on a consolidated basis,
on a comparative basis with the prior year (as to the consolidated
statements only), in accordance with GAAP (except as disclosed
therein) and in form and detail reasonably satisfactory to the Banks;
(b) as soon as available (and in any event within ninety (90)
days after the end of each of Borrower's fiscal years), a complete
copy of the annual audit report (including without limitation the
consolidated financial statements of the Companies and notes thereto)
of Borrower for that year, which shall be
(1) prepared on a consolidated basis, on a comparative basis with
the prior year, in accordance with GAAP (except as disclosed
therein) and in form and detail reasonably satisfactory to the
Banks, and
(2) certified (without qualification as to GAAP) by
independent public accountants selected by Borrower and
reasonably satisfactory to the Banks;
(c) concurrently with each delivery of financial statements
pursuant to clause (a) or (b), a certificate, substantially in the form
of Exhibit E, by Borrower's chief financial officer
(1) certifying that to the best of such officer's knowledge
and belief, (i) those financial
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<PAGE> 18
statements fairly present in all Material respects the financial
condition and results of operations of the Companies in
accordance with GAAP, subject, in the case of interim financial
statements, to routine year-end audit adjustments and (ii) no
Default Under This Agreement then exists or, if any does, a brief
description of such default and Borrower's intentions in respect
thereof, and
(2) setting forth the calculations necessary to determine
whether or not the Companies are in compliance with the general
financial standards set forth in Section 3B;
(d) promptly when filed (in final form) or sent, a copy of
(1) each registration statement, Form 10-K annual report,
Form 10-Q quarterly report, Form 8-K current report or similar
document filed by Borrower with the Securities and Exchange
Commission (or any similar federal agency having regulatory
jurisdiction over Borrower's securities) or with any securities
exchange, and
(2) each proxy statement, annual report, certificate, notice
or other document sent by Borrower to the holders of any of its
securities (or any trustee under any indenture which secures any
of its securities or pursuant to which such securities are
issued); and
(e) forthwith upon any Bank's written request such other
information about the financial condition, properties and operations
of the Companies and their Pension Plans as that Bank may from time to
time reasonably request.
3A.02 NOTICE. Borrower will cause its chief financial officer, or in
his absence another officer designated by Borrower, to give each Bank prompt
written notice whenever any officer of any Company
(a) reasonably believes any Reportable Event (as defined in
ERISA) to have occurred in respect of any Pension Plan or receives
notice of any ERISA Regulator's allegation of a Default under ERISA by
any Company,
(b) receives from the Internal Revenue Service or any other
federal, state, local or foreign taxing authority any allegation of
any default or defaults by any Company in the payment of any tax or
notice of any
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<PAGE> 19
assessment in respect thereof in an amount in excess of five hundred
thousand dollars ($500,000),
(c) learns there has been brought against any Company before
any court, administrative agency or arbitrator any litigation or
proceeding which, if successful, might have a Material adverse effect
on the Companies on a consolidated basis,
(d) receives from any governmental agency or authority notice
alleging that any Company has violated, is required to take corrective
action, or is otherwise liable under or in respect of any
Environmental Law, or
(e) reasonably believes that any representation or warranty
made in subsections 4B.01 through 4B.12 (both inclusive) shall for any
reason have ceased in any Material respect to be true and complete or
that any Default Under This Agreement shall have occurred.
3B. GENERAL FINANCIAL STANDARDS. Borrower agrees that so long as the
Subject Commitments remain in effect and thereafter until the Subject
Indebtedness shall have been paid in full, Borrower will observe each of the
following:
3B.01 TANGIBLE NET WORTH. Borrower will not suffer or permit the
consolidated Tangible Net Worth of the Companies at any time to be less than
one hundred fifty-five million dollars ($155,000,000) plus an amount equal to
forty percent (40%) of Borrower's annual earnings for the four fiscal quarters
ending December 31, 1994 and each December 31 thereafter; provided, that if
annual earnings for any fiscal year are a negative figure, the annual earnings
for the fiscal year in question shall be treated as zero (0) for the purposes
of this subsection.
3B.02 LEVERAGE. Borrower will not suffer or permit the Companies'
Total Liabilities at any time to exceed an amount equal to one and one- quarter
(1.25) times the Companies' Tangible Net Worth, all as determined on a
consolidated basis.
3B.03 CURRENT RATIO. Borrower will not suffer or permit the Current
Assets of the Companies at any time to fall below an amount equal to one and
one-half (1.5) times their Current Liabilities (including, without limitation,
the outstanding amount of all Subject Loans), all as determined on a
consolidated basis.
3B.04 INTEREST COVERAGE. Borrower will not at any time suffer or
permit the ratio (the "Interest Coverage Ratio") of (a) the aggregate of the
Net Income, interest expense and income taxes (whether federal, state or local)
of the Companies for the four consecutive fiscal quarters then ended, to (b)
the aggregate interest expense of the Companies for that period (in calculating
such interest expense, there shall be included
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<PAGE> 20
capitalized interest of the Companies in excess of $900,000 at any fiscal year
end), to be less 3.00 to 1:00, all as determined on a consolidated basis.
3B.05 FUNDED DEBT. Borrower will not suffer or permit the Funded
Indebtedness of the Companies, at any time, to exceed an amount equal to
one-half (0.5) times the sum of the Funded Indebtedness of the Companies plus
the Tangible Net Worth of the Companies, all as determined on a consolidated
basis.
3C. AFFIRMATIVE COVENANTS. Borrower agrees that so long as the
Subject Commitments remain in effect and thereafter until the Subject
Indebtedness shall have been paid in full, Borrower will perform and observe,
and will cause each Subsidiary to perform and observe, each of the following
provisions on their respective parts to be complied with, namely:
3C.01 TAXES. Each Company will pay in full
(a) prior in each case to the date when penalties for the
nonpayment thereof would attach, all taxes, assessments and
governmental charges and levies for which it may be or become subject
and
(b) prior in each case to the date the claim would become
delinquent for non-payment, all other lawful claims (whatever their
kind or nature) which, if unpaid, might become a lien or charge upon
its property;
PROVIDED, that no item need be paid so long as and to the extent that (i) it is
contested in good faith and by timely and appropriate proceedings which are
effective to stay enforcement thereof or (ii) with respect to items not
exceeding five hundred thousand dollars ($500,000) in the aggregate, it is
being negotiated in good faith with the relevant governmental authority.
3C.02 FINANCIAL RECORDS. Each Company will at all times keep true and
complete financial records in accordance with GAAP and, without limiting the
generality of the foregoing, make appropriate accruals to reserves for
estimated and contingent losses and liabilities.
3C.03 VISITATION. Each Company will permit each Bank at all
reasonable times
(a) to examine that Company's properties and its financial
records and to make copies of and extracts from such records and
(b) to consult with that Company's officers, employees,
accountants, actuaries, trustees and plan administrators in respect of
its financial condition,
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<PAGE> 21
properties and operations and the financial condition of its Pension
Plans, each of which parties is hereby authorized to make such
information available to each Bank to the same extent that it would to
that Company.
3C.04 INSURANCE. Each Company will
(a) keep itself and all of its insurable properties insured
at all times to such extent, with such deductibles, by such insurers
and against such hazards and liabilities as is generally and prudently
done by other business enterprises respectively similar to the
Companies, except that if a more specific standard is provided in any
Related Writing, the more specific standard shall prevail and
(b) forthwith upon any Bank's written request, cause an
appropriate officer to deliver to each of the Banks a certificate
setting forth, in form and detail satisfactory to the Banks, such
information about that insurance, all as any Bank may from time to
time reasonably request.
3C.05 CORPORATE EXISTENCE. Each Company will at all times maintain
its corporate existence, rights and franchises; provided, however, that this
subsection shall not prevent any dissolution and liquidation of any Subsidiary
or any merger or consolidation permitted by subsection 3D.04.
3C.06 COMPLIANCE WITH LAW. Each Company will comply with all
applicable occupational safety and health laws and Environmental Laws and every
other law (whether statutory, administrative, judicial or other and whether
federal, state or local) and every lawful governmental order if non-compliance
with such law or order would Materially and adversely affect the business,
properties or financial condition of the Companies viewed on a consolidated
basis; provided, that in the event of any alleged non-compliance, no Company
shall be in default under this subsection if and to the extent that it notifies
the Banks and
(a) within thirty (30) days after the non-compliance becomes
apparent or is alleged, appropriate corrective measures are commenced
and such measures are diligently pursued to the satisfaction of the
Banks, or
(b) the alleged non-compliance is contested in good faith by
timely and appropriate proceedings which are effective to stay
enforcement thereof.
No Company will cause or permit the release or disposal of hazardous waste,
solid waste or other wastes on, under or to any real property in which such
Company holds any interest, or performs any of its operations, in violation of
any Environmental
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<PAGE> 22
Law. Borrower shall defend, indemnify and hold the Banks harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind (including, without limitation, the reasonable fees and disbursements of
counsel) arising out of or resulting from any Company's non-compliance with any
Environmental Law.
3C.07 PROPERTIES. Each Company will maintain all fixed assets
necessary to its continuing operations in good working order and condition,
ordinary wear and tear excepted.
3C.08 ERISA. If any Company shall at any time receive notice from any
ERISA Regulator that a Default under ERISA exists in respect of any of its
Pension Plans, or receive written notice from the Required Banks that they have
determined to their reasonable satisfaction that such a default exists,
Borrower will
(a) thereafter, so long as the default has not been corrected
to the satisfaction of the Banks, treat as a current liability (if not
otherwise so treated) all liability of the Company that would arise by
reason of the termination of the Pension Plan or Plans in question if
they were then terminated and
(b) within forty-five (45) days of the receipt of the initial
such notice, furnish to each Bank a current consolidated balance sheet
of the Companies with the amount of the aforesaid current liability
certified by an independent actuary selected by Borrower and
satisfactory to the Required Banks.
3D. NEGATIVE COVENANTS. Borrower agrees that so long as the Subject
Commitments remain in effect and thereafter until the Subject Indebtedness
shall have been paid in full, Borrower will observe, and will cause each
Subsidiary to observe, each of the following provisions on their respective
parts to be complied with, namely:
3D.01 CREDIT EXTENSIONS. No Company will
(a) make or keep any investment in any notes, bonds or other
obligations of any kind for the payment of money or make or have
outstanding at any time any advance or loan to anyone or
(b) be or become a Guarantor of any kind;
provided, that this subsection shall not apply to
(i) any existing or future advance to an officer or employee
of any Company in the normal course of business and
consistent with past practice,
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<PAGE> 23
(ii) any endorsement of a check or other medium of payment for
deposit or collection, or any similar transaction in the normal
course of business,
(iii) any investment in an existing or future Subsidiary,
(iv) any guaranty by Borrower of indebtedness of any Company otherwise
permitted by this Agreement,
(v) investments in notes, bonds or other obligations of
persons (other than Subsidiaries) in which Borrower has an equity
investment, provided that the aggregate amount of such
investments, excluding any equity investments permitted by
Section 3D.04, do not exceed fifteen million dollars
($15,000,000),
(vi) guarantees not otherwise permitted hereby, in an amount
not to exceed twenty million dollars ($20,000,000) outstanding at
any time,
(vii) any existing or future Receivable of any Company so long
as such Receivable arises from the sale of goods or services in
the normal course of such Company's business and is consistent
with such Company's past practice, or
(viii) any existing or future investment in Eligible Investments.
3D.02 BORROWINGS. No Company will create, assume or have outstanding
at any time any indebtedness for borrowed money or any Funded Indebtedness of
any kind if after giving effect to such indebtedness or Funded Indebtedness,
Borrower would be in non-compliance with any of the financial standards set
forth in subsections 3B.01 to 3B.05, inclusive.
3D.03 LIENS, LEASES. No Company will
(a) lease any property as lessee or acquire or hold any
property subject to any land contract, inventory consignment (except
for any Company that deals in precious metals which are subject to any
consignment arrangement in effect as of the date of this Agreement,
and replacements, renewals or extensions thereof) or other title
retention contract,
(b) sell or otherwise transfer any Receivables, whether with
or without recourse or
(c) suffer or permit any property (whether real, personal or
mixed and whether tangible or intangible, including, without
limitation, inventory and accounts
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<PAGE> 24
receivable) now owned or hereafter acquired by it to be or become
encumbered by any mortgage, security interest, lien or financing
statement;
PROVIDED, that this subsection shall not apply to
(i) any tax lien, or any lien securing workers' compensation or
unemployment insurance obligations, or any mechanics', carrier's or
landlord's lien, or any lien arising under ERISA, or any security
interest arising under article four (bank deposits and collections) or
five (letters of credit) of the Uniform Commercial Code, or any
similar security interest or other lien, except that this clause (i)
shall apply only to security interests and other liens arising by
operation of law (whether statutory or common law) and in the ordinary
course of business and shall not apply to any security interest or
other lien that secures any indebtedness for borrowed money or any
guaranty thereof or any obligation that is in Material default in any
manner (other than any default contested in good faith by timely and
appropriate proceedings effective to stay enforcement of the security
interest or other lien in question),
(ii) zoning or deed restrictions, public utility easements, minor title
irregularities and similar matters having no adverse effect as a
practical matter on the ownership or use of any of the property in
question,
(iii) any lien securing or given in lieu of surety, stay, appeal or
performance bonds, or securing performance of contracts or bids
(other than contracts for the payment of money borrowed), or
deposits required by law or governmental regulations or by any
court order, decree, judgment or rule or as a condition to the
transaction of business or the exercise of any right, privilege or
license, except that this clause (iii) shall not apply to any lien
or deposit securing an obligation that is in Material default in
any manner (other than any default contested in good faith by
timely and appropriate proceedings effective to stay enforcement of
the security interest or other lien in question),
(iv) any mortgage, security interest or other lien securing only the
Subject Indebtedness,
(v) any mortgage, security interest or other lien (each, a "Purchase Money
Security Interest") which
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<PAGE> 25
is created or assumed in purchasing, leasing, constructing or
improving any real property or equipment or to which any such
property is subject when purchased, provided that (A) the
Purchase Money Security Interest shall be confined to the aforesaid
property, (B) the indebtedness secured thereby does not exceed the
total cost of the purchase, construction or improvement, (C) any
such indebtedness, if repaid in whole or in part, cannot be
reborrowed and (D) the aggregate amount of such indebtedness
incurred in any fiscal year cannot exceed ten million dollars
($10,000,000),
(vi) any lease other than any capitalized lease (it being agreed that a
capitalized lease is a lien rather than a lease for the purposes of
this Agreement), so long as the aggregate annual rentals under all
such leases of all the companies do not exceed five million dollars
($5,000,000),
(vii) any mortgage, security interest or other lien which (together with
the indebtedness secured thereby) is fully disclosed in Borrower's
Most Recent 4A.04 Financial Statements or in the Supplemental
Schedule,
(viii) any financing statement perfecting a security interest that would
be permissible under this subsection, or
(ix) the sale by Brush Wellman Japan Ltd. of any of its Receivables
provided the sale of such Receivables occurs in the normal course
of its business and is consistent with its past practice and that
any indebtedness arising in connection therewith is permitted by
subsection 3D.02.
3D.04 EQUITY TRANSACTIONS. No Company will
(a) be a party to any merger or consolidation,
(b) be or become a party to any joint venture or
partnership, or make or keep any investment in any other stocks
or other equity securities of any kind or otherwise acquire all or
substantially all of the assets of another person, except that this
clause (b) shall not apply to (i) Borrower's existing investments
in the stocks and other equity securities of existing or future
Subsidiaries, (ii) any other investment reflected in Borrower's
Most Recent 4A.04 Financial Statements or in the Supplemental
Schedule, or (iii) acquisitions of assets of persons or equity
investments made in persons, other than Subsidiaries, after the
date of this Agreement in an aggregate amount,
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excluding investments permitted by subsection 3D.01(v), not to exceed
twenty million dollars ($20,000,000) in the aggregate during any
fiscal year of Borrower, or
(c) lease as lessor, sell, sell-leaseback or otherwise
transfer (whether in one transaction or a Series of transactions) all
or any substantial part of its fixed assets (other than chattels that
shall have become obsolete or no longer useful in its present business
with a fair market value not exceeding ten million dollars
($10,000,000) in the aggregate during any fiscal year);
PROVIDED, that if no Default Under This Agreement shall then exist and if none
would thereupon begin to exist, this subsection shall not apply (A) to any
merger or consolidation not involving Borrower, or (B) to any dissolution and
liquidation of a Subsidiary, or any transfer of assets between Companies.
4A. CLOSING. Prior to or at the execution and delivery of this
Agreement and, with respect to Section 4A.03, prior to the obtaining of any
Subject Loan, Borrower shall have complied or caused compliance with each of
the following:
4A.01 SUBJECT NOTES. Borrower shall have executed and delivered a
Subject Note to each Bank in accordance with subsection 2B.01.
4A.02 RESOLUTIONS AND INCUMBENCY. Borrower's secretary or assistant
secretary shall have certified to each Bank (i) a copy of resolutions duly
adopted by Borrower's board of directors in respect of this Agreement and the
Related Writings and (ii) the names and true signatures of the officers of
Borrower authorized to sign this Agreement and Related Writings on behalf of
Borrower.
4A.03 LEGAL OPINION. Borrower's counsel shall have rendered to each
Bank their written opinion in respect of the matters referred to in subsections
4B.01, 4B.02, 4B.03 and 4B.04, which opinion may be subject to such
qualifications and exceptions, if any, as shall be satisfactory to the Banks.
4A.04 FINANCIAL STATEMENTS. Borrower shall have furnished to each
Bank at least one true and complete copy of each of the following: Borrower's
annual audit report (including, without limitation, all financial statements
therein and notes thereto and the accompanying accountants' certificate)
prepared as at December 31, 1993, and annual audit reports for each of
Borrower's two next preceding fiscal years (each having been certified by Ernst
& Young) and Borrower's unaudited interim financial statements prepared as at
September 30, 1994.
4B. WARRANTIES. Subject only to such exceptions, if any, as may be
set forth in the Supplemental Schedule or in Borrower's
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Most Recent 4A.04 Financial Statements, Borrower represents and warrants as
follows:
4B.01 EXISTENCE. Borrower is a duly organized and validly existing
Ohio corporation in good standing. Exhibit F sets forth the name of each of
Borrower's Subsidiaries, the address of its chief executive office and the
jurisdiction in which it is incorporated. Each Subsidiary is a duly organized
and validly existing corporation in good standing where incorporated, and all
of its outstanding stock is fully paid and non-assessable and owned by Borrower
free from any security interest, option, equity or other right of any kind
except to the extent, if any, set forth in Exhibit G. Each Company is duly
qualified to transact business in each state or other jurisdiction in which it
owns or leases any real property or in which the nature of the business
conducted makes such qualification necessary or, if not so qualified, such
failure to qualify will have no Material adverse effect upon the financial
condition of the Companies and their ability to transact business, all on a
consolidated basis.
4B.02 GOVERNMENTAL RESTRICTIONS. No registration with or approval of
any governmental agency of any kind is required on the part of any Company for
the due execution and delivery or for the enforceability of this Agreement or
any Related Writing.
4B.03 CORPORATE AUTHORITY. Borrower has all requisite corporate power
and authority to enter into and perform this Agreement and to borrow and repay
the Subject Loans in accordance with this Agreement. Each officer executing
and delivering this Agreement or any Related Writing on behalf of Borrower has
in each case been duly authorized by Borrower to do so. Neither any such
execution and delivery nor any performance and observance by the Companies of
such of the respective provisions of this Agreement and those Related Writings
as are on their respective parts to be complied with will violate any existing
provision in their respective articles of incorporation, regulations or by-laws
or any applicable law or violate or otherwise constitute a default under any
contract or other obligation now existing and binding upon that Company. This
Agreement and each such Related Writing will, upon the execution and delivery
thereof, become a valid and binding obligation enforceable against Borrower
according to its tenor against Borrower, subject, however, to any applicable
insolvency or bankruptcy law and general principles of equity.
4B.04 LITIGATION. No litigation or proceeding is pending against any
Company before any court, administrative agency or arbitrator which might, if
successful, have a Material adverse effect on the Companies on a consolidated
basis.
4B.05 TAXES. Each Company has filed all federal, state and local tax
returns which are required to be filed by it and paid all taxes due as shown
thereon (except to the extent, if
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any, permitted by subsection 3C.01 or as set forth in the Supplemental
Schedule). The Internal Revenue Service has audited (or the relevant
limitations period has expired with respect to) Borrower's tax returns through
the year ended December 31, 1988 and the Internal Revenue Service has not
alleged any Material default by Borrower in the payment of any tax Material in
amount or threatened to make any assessment in respect thereof which has not
been reflected in Borrower's Most Recent 4A.04 Financial Statements.
4B.06 TITLE. The Companies have good and marketable title to all
assets reflected in Borrower's Most Recent 4A.04 Financial Statements except
for changes resulting from transactions in the ordinary course of business and
except with respect to precious metals held in inventory by any Company that
deals in precious metals pursuant to a consignment arrangement described on the
Supplementary Schedule. All such assets are clear of any mortgage, security
interest or other lien of any kind other than any permitted by subsection
3D.03.
4B.07 LAWFUL OPERATIONS. Each Company's operations are in full
compliance with all Material requirements imposed by law, whether federal,
state or local, and whether statutory, regulatory or other, including (without
limitation) all occupational safety and health laws and zoning ordinances but
excluding Environmental Laws. Each Company is in compliance in all Material
respects with all Environmental Laws including, without limitation, all
Environmental Laws in all jurisdictions in which any Company owns or operates,
or has owned or operated, a facility or site, arranges or has arranged for
disposal or treatment of hazardous substances, solid waste or other wastes,
accepts or has accepted for transport any hazardous substances, solid waste or
other wastes or holds or has held any interest in real property. Except as set
forth on the Supplemental Schedule or as otherwise disclosed in writing to
NCB-Agent prior to the execution and delivery of this Agreement by Borrower,
(i) no litigation or proceeding arising under, relating to or in connection
with any Environmental Law is pending or threatened against any Company, or any
real property in which any Company holds or has held an interest or which is or
has been operated by any Company, and (ii) no investigation or inquiry which
would subject any Company to any liability under any Environmental Law by any
governmental agency or authority, individual or other person or entity is
pending or, to the best knowledge of any Company, threatened against any
Company, or any real property in which any Company holds or has held an
interest or which is or has been operated by any Company. No release,
threatened release or disposal of hazardous waste, solid waste or other wastes
is occurring, or has occurred, on, under or to any real property in which any
Company holds any interest or performs any of its operations, in violation of
any Environmental Law or which would subject any Company to any liability under
any Environmental Law, which violation or liability, together with other
outstanding liabilities of the Companies in respect of Environmental Laws,
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would Materially and adversely affect the business, properties or financial
condition of the Companies viewed on a consolidated basis. Further, no
release, threatened release or disposal of any hazardous substance is
occurring, or has occurred, on, under or to any real property in which any
Company holds any interest or performs any of its operations, in violation of
any Environmental Law which violation or liability, together with other
outstanding liabilities of the Companies in respect of Environmental Laws,
would Materially and adversely affect the business, properties or financial
condition of the Companies viewed on a consolidated basis. As used in this
subsection, "litigation or proceeding" means any Material demand, claim,
notice, suit, suit in equity, action or administrative action whether brought
by any governmental agency or authority, individual or other person or entity
or otherwise.
4B.08 ERISA COMPLIANCE. No Material Accumulated Funding Deficiency
exists in respect of any of the Companies' Pension Plans. No Reportable Event
has occurred in respect of any such Pension Plan which is continuing and which
constitutes grounds either for termination of the plan or for court appointment
of a trustee for the administration thereof.
4B.09 INSURANCE. The Companies' insurance coverage complies with the
standards set forth in subsection 3C.04.
4B.10 FINANCIAL STATEMENTS. Each of the financial statements referred
to in subsection 4A.04 has been prepared in accordance with GAAP applied on a
basis consistent with those used by it during its then next preceding full
fiscal year except to the extent, if any, specifically noted therein and fairly
presents in all Material respects (subject to routine year end audit
adjustments in the case of the unaudited financial statements) the consolidated
financial condition of the Companies as of the date thereof (including a full
disclosure of Material contingent liabilities, if any) and the consolidated
results of their operations, if any, for the fiscal period then ended. There
has been no Material adverse change in the financial condition, properties or
business of the Companies viewed on a consolidated basis since the date of
Borrower's Most Recent 4A.04 Financial Statements nor any change in their
accounting procedures or fiscal year since the end of Borrower's latest full
fiscal year covered by those statements.
4B.11 DEFAULTS. No Default Under This Agreement exists, nor will any
exist immediately after the execution and delivery of this Agreement.
4B.12 INVESTMENT COMPANY ACT. 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.
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5A. EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default hereunder:
5A.01 PAYMENTS. If any Subject Indebtedness or any other Debt of the
Companies or any thereof to the Banks and NCB-Agent or any thereof shall not be
paid in full promptly when the same becomes due and payable and shall remain
unpaid for five (5) consecutive days thereafter or, if earlier, on the
Expiration Date.
5A.02 WARRANTIES. If any representation, warranty or statement made
in this Agreement or in any Related Writing referred to in subsection 4A shall
be false or erroneous in any Material respect; or if any representation,
warranty or statement hereafter made by or on behalf of any Company in any
Related Writing not referred to in section 4A shall be false or erroneous in
any Material respect.
5A.03 COVENANTS. If anyone (other than the Banks and NCB-Agent and
their respective agents) shall fail or omit to perform and observe any
agreement (other than those referred to in subsection 5A.01) contained in this
Agreement or any Related Writing that is on its part to be complied with, and
that failure or omission shall not have been fully corrected within thirty (30)
days after the giving of written notice to Borrower by any Bank that it is to
be remedied.
5A.04 CROSS-DEFAULT. If, in respect of any existing or future
indebtedness for borrowed money (regardless of maturity) or Funded Indebtedness
now owing or hereafter incurred by any Company, there should occur or exist
under its original provisions (except for any amendment made prior to the date
of this Agreement but without giving effect to any amendment, consent or waiver
after the date of this Agreement) any event, condition or other thing which
constitutes, or which with the giving of notice or the lapse of any applicable
grace period or both would constitute, a default which accelerates (or permits
any creditor or creditors or representative of creditors to accelerate) the
maturity of any such indebtedness; or if any such indebtedness (other than any
payable on demand) shall not be paid in full at its stated maturity; or if any
such indebtedness payable on demand shall not be paid in full on demand
therefor.
5A.05 SUBSIDIARY'S SOLVENCY. If (a) any Subsidiary shall commence any
Insolvency Action of any kind or admit (by answer, default or otherwise) the
Material allegations of, or consent to any relief requested in, any Insolvency
Action of any kind commenced against that Subsidiary by its creditors or any
thereof, or (b) any creditor or creditors shall commence against that
Subsidiary any Insolvency Action of any kind which shall remain in effect
(neither dismissed nor stayed) for thirty (30) consecutive days.
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5A.06 BORROWER'S SOLVENCY. If (a) Borrower shall discontinue
operations, or (b) Borrower shall commence any Insolvency Action of any kind or
admit (by answer, default or otherwise) the Material allegations of, or consent
to any relief requested in, any Insolvency Action of any kind commenced against
Borrower by its creditors or any thereof, or (c) any creditor or creditors
shall commence against Borrower any Insolvency Action of any kind which shall
remain in effect (neither dismissed nor stayed) for thirty (30) consecutive
days.
5A.07 CHANGE IN CONTROL. If any person or group of persons acting in
concert shall beneficially own more than twenty percent (20%) of Borrower's
outstanding voting capital stock except that this subsection shall not apply to
any person who, with the associates and affiliates of that person, is the
record and beneficial owner of not less than five percent (5%) of Borrower's
outstanding voting capital stock at the date of this Agreement.
5B. EFFECTS OF DEFAULT. Notwithstanding any contrary provision or
inference in this Agreement or in any Related Writing:
5B.01 OPTIONAL DEFAULTS. If any Event of Default referred to in
subsection 5A.01 shall occur and be continuing, any Bank in its reasonable
discretion, or if any Event of Default referred to in subsections 5A.02 through
5A.05 (both inclusive) or subsection 5.07 shall occur and be continuing, the
Required Banks in their discretion shall, in either case, have the right,
(a) to terminate the Subject Commitments (if not already
expired or reduced to zero pursuant to Section 2A or terminated
pursuant to this Section) and no Bank shall have any obligation
thereafter to grant any Subject Loan, and
(b) to accelerate the Maturity of all of the Subject
Indebtedness and all other Debt, if any, then owing to the Banks and
NCB-Agent or any thereof (other than Debt, if any, already due and
payable), and all such Debt shall thereupon become and thereafter be
immediately due and payable in full without any presentment or demand
and without any further or other notice of any kind, all of which are
hereby waived by Borrower.
5B.02 AUTOMATIC DEFAULTS. If any Event of Default referred to in
subsection 5A.06 shall occur,
(a) the Subject Commitments shall automatically and
immediately terminate (if not already expired or reduced to zero
pursuant to Section 2A or terminated pursuant to this Section) and no
Bank shall have any obligation thereafter to grant any Subject Loan,
and
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(b) all of the Subject Indebtedness and all other Debt, if
any, then owing to the Banks and NCB-Agent or any thereof (other than
Debt, if any, already due and payable) shall thereupon become and
thereafter be immediately due and payable in full, all without any
presentment, demand or notice of any kind, which are hereby waived by
Borrower.
5B.03 OFFSETS. If there shall occur or exist any Default Under This
Agreement referred to in subsection 5A.05 or 5A.06 or if the Maturity of any
Subject Indebtedness is accelerated, each Bank shall, so long as that Default
Under This Agreement exists, have the right at any time to set off against and
to appropriate and apply toward the payment of the Subject Indebtedness then
owing to it, whether or not the same shall then have matured, any and all
deposit balances then owing by that Bank to or for the credit or account of the
Companies or any thereof, all without notice to or demand upon Borrower or any
Subsidiary or any other person, all such notices and demands being hereby
expressly waived.
5B.04 EQUALIZATION. Each Bank agrees with the other Banks that if at
any time it shall obtain any advantage over the other Banks or any Bank in
respect of the Subject Loans it will purchase from such other Bank or Banks,
for cash and at par, such additional participation in the Subject Loans owing
to the other or others as shall be necessary to nullify the advantage. If any
such advantage resulting in the purchase of an additional participation as
aforesaid shall be recovered in whole or in part from the Bank receiving the
advantage, each such purchase shall be rescinded, and the purchase price
restored (with interest and other charges if and to the extent actually
incurred by the Bank receiving the advantage) Ratably to the extent of the
recovery. During the existence of any Default Under This Agreement, any
payment (whether made voluntarily or involuntarily, by offset of any deposit or
other indebtedness or otherwise) of any indebtedness for borrowed money owing
by Borrower to any Bank shall be applied to the Subject Loans owing to that
Bank until the same shall have been paid in full before any thereof shall be
applied to other indebtedness for borrowed money owing to that Bank.
6A. INDEMNITY: STAMP TAXES. Borrower will pay all stamp taxes and
similar taxes, if any, including interest and penalties, if any, payable in
respect of the issuance of the Subject Indebtedness. Further, Borrower shall
pay upon demand to NCB-Agent, for NCB-Agent's sole account, a documentation fee
for costs incurred in preparing this Agreement.
6B. INDEMNITY: GOVERNMENTAL COSTS/FIXED RATE LOANS. If
(a) there shall be introduced or changed any treaty, statute,
regulation or other law, or there shall be any change in the
interpretation or
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administration thereof, or there shall be made any request from any
central bank or other lawful governmental authority, the effect
of any of which events shall be to (1) impose, modify or deem
applicable any reserve or special deposit requirements against assets
held by or deposits in or loans by any national banking association or
other commercial banking institution (whether or not applicable to any
Bank) or (2) subject any Bank to any tax, duty, fee, deduction or
withholding or (3) change the basis of taxation of payments due to any
Bank from Borrower (otherwise than by a change in taxation of that
Bank's overall net income), or (4) impose on any Bank any penalty in
respect of any Fixed-Rate Loans and
(b) in that Bank's sole opinion any such event increases the
cost to that Bank of making, funding or maintaining any Fixed-Rate
Loan or reduces the amount of any payment to be made to that Bank in
respect of the principal or interest on any Fixed-Rate Loan or other
payment under this Agreement,
then, upon that Bank's demand, Borrower shall pay to that Bank from time to
time such additional amounts as will compensate that Bank for and indemnify it
against such increased costs or reduced payment, as the case may be.
6C. INDEMNITY: FUNDING COSTS. Borrower agrees to indemnify each
Bank against any loss relating in any way to its funding of any Fixed- Rate
Loan paid before its stated Maturity (whether a prepayment or a payment
following any acceleration of Maturity) and to pay that Bank, as liquidated
damages for any such loss, an amount (discounted to the present value in
accordance with standard financial practice at a rate equal to the Treasury
Yield) equal to interest computed on the principal payment from the payment
date to the respective stated maturities thereof at a rate equal to the
difference of the contract rate less the Treasury Yield, all as determined by
that Bank in its reasonable discretion. "TREASURY YIELD" means the annual
yield on direct obligations of the United States having a principal amount and
Maturity similar to that of the principal being paid.
6D. INDEMNITY: CREDIT REQUESTS. Whenever Borrower shall revoke any
Credit Request for a Fixed-Rate Loan or shall for any other reason fail to
borrow pursuant thereto or shall fail otherwise to comply therewith, or shall
fail to honor any prepayment notice, then, in each case on any Bank's demand,
Borrower shall pay that Bank such amount as will compensate it for any loss,
cost or loss of profit incurred by it by reason of its liquidation or
reemployment of deposits or other funds.
6E. INDEMNITY: UNFRIENDLY TAKEOVERS. Borrower agrees to indemnify
each Bank and NCB-Agent and their directors, officers, employees, attorneys and
other agents (each, an "Indemnitee") and
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hold each indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind (including, without limitation, the
reasonable fees and disbursements of counsel for any Indemnitee in connection
with any investigative, administrative or judicial proceeding, whether or not
such Indemnitee shall be designated a party thereto) which may be incurred by
any Indemnitee relating to or arising out of any actual or proposed use of
proceeds of the Subject Loans or any thereof in connection with the financing
of an acquisition of any corporation or other business entity, provided that no
Indemnitee shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
6F. INDEMNITY: CAPITAL REQUIREMENTS. If
(a) at any time any governmental authority shall require any
Bank (or any corporate shareholder of that Bank), whether or not the
requirement has the force of law, to maintain, as support for that
Bank's Subject Commitment, capital in a specified minimum amount that
either is not required or is greater than that required at the date of
this Agreement, whether the requirement is implemented pursuant to the
"risk-based capital guidelines" (published at 12 CFR 3 in respect of
"national banking associations", 12 CFR 208 in respect of "state
member banks" and 12 CFR 225 in respect of "bank holding companies")
or otherwise, and
(b) as a result thereof the rate of return on capital of that
Bank or its shareholder or both (taking into account their then
policies as to capital adequacy and assuming full utilization of their
capital) shall be directly or indirectly reduced by reason of any new
or added capital thereby allocable to that Bank's Subject Commitment,
((a) and (b) above collectively, "Capital Requirements") then and in each such
case Borrower shall, on that Bank's demand, pay that Bank as an additional fee
such amounts as will in that Bank's reasonable opinion reimburse that Bank or
its shareholder for any such reduced rate of return.
6G. INDEMNITY: COLLECTION COSTS. If any Event of Default shall occur
and shall be continuing, Borrower will pay the Banks and NCB-Agent such
further amounts, to the extent permitted by law, as shall cover their
respective costs and expenses (including, without limitation, the reasonable
fees, interdepartmental charges and disbursements of counsel for the Banks and
NCB-Agent or any thereof) incurred in collecting the Subject Indebtedness or in
otherwise enforcing their respective rights and remedies in respect thereof.
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6H. CERTIFICATE FOR INDEMNIFICATION. Each demand by NCB-Agent or a
Bank for payment pursuant to Section 6A, 6B, 6C, 6D, 6E, 6F or 6G shall be
accompanied by a certificate setting forth the reason for the payment, the
amount to be paid, and the computations and assumptions in determining the
amount, which certificate shall be presumed to be correct so long as it is
undertaken in good faith. In determining the amount of any such payment, each
Bank may use reasonable averaging and attribution methods.
7A. BANKS' PURPOSE. Each Bank represents and warrants to the other
Banks and to Borrower that such Bank is familiar with the Securities Act of
1933, as amended, and the rules and regulations thereunder and that it is not
entering into this Agreement with any intention to violate that Act or any rule
or regulation thereunder, it being understood, however, that each Bank shall at
all times retain full control over the disposition of its assets subject only
to this Agreement and to all applicable law.
7B. NCB-AGENT. Each Bank irrevocably appoints NCB to be its agent
(in that capacity, NCB-Agent) with full authority to take such actions, and to
exercise such powers, on behalf of the Banks in respect of this Agreement and
the Related Writings as are therein respectively delegated to NCB-Agent or as
are reasonably incidental to those delegated powers.
7B.01 NATURE OF APPOINTMENT. NCB-Agent shall have no fiduciary
relationship with any Bank by reason of this Agreement, nor shall NCB-Agent
have any duty or responsibility whatever to any Bank except those expressly set
forth in this Agreement and the Related Writings. Without limiting the
generality of the foregoing, each Bank acknowledges that NCB-Agent is acting as
such solely as a convenience to the Banks and not as a manager of the Subject
Commitments or Subject Indebtedness. This Section 7B does not confer any
rights upon Borrower or anyone else (except NCB-Agent and the Banks), whether
as a third party beneficiary or otherwise.
7B.02 NCB AS A BANK; OTHER TRANSACTIONS. NCB's rights under this
Agreement and the Related Writings shall not be affected by its serving as
NCB-Agent. NCB and its affiliates may generally transact any banking,
financial, trust, advisory or other business with the Companies (including,
without limitation, the acceptance of deposits, the extension of credit and the
acceptance of fiduciary appointments) without notice to the Banks, without
accounting to the Banks, and without prejudice to NCB's rights as a Bank under
this Agreement and the Related Writings.
7B.03 INSTRUCTION FROM BANKS. NCB-Agent shall not be required to
exercise any discretion or take any action as to matters not expressly provided
for by this Agreement and the Related Writings (including, without limitation,
collection and
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enforcement actions in respect of the Subject Indebtedness and any collateral
therefor), except that NCB-Agent shall take such action (or omit to take such
action) as may be reasonably requested of it in writing by the Required Banks,
which instructions and which actions and omissions shall be binding upon the
Banks; provided, that NCB-Agent shall not be required to act (or omit any act)
if, in its judgment, any such action or omission might expose NCB-Agent to
personal liability or might be contrary to this Agreement, any Related Writing
or any applicable law.
7B.04 BANKS' DILIGENCE. Each Bank
(a) represents and warrants that it has made its decision to
enter into this Agreement and the Related Writings and
(b) agrees that it will make its own decision as to taking or
not taking future actions in respect of this Agreement and the Related
Writings
in each case without reliance on NCB-Agent or the other Bank and on the basis
of its independent credit analysis and its independent examination of and
inquiry into such documents and other matters as it deems relevant and
Material.
7B.05 NO IMPLIED REPRESENTATIONS. NCB-Agent shall not be liable for
any representation, warranty, agreement or obligation of any kind of any other
party to this Agreement or anyone else, whether made or implied by any Company
in this Agreement or any Related Writing or by a Bank in any notice or other
communication or by anyone else or otherwise.
7B.06 SUB-AGENTS. NCB-Agent may employ agents and shall not be liable
(except as to money or property received by it or its agents) for any
negligence or misconduct of any such agent selected by it with reasonable care.
NCB-Agent may consult with legal counsel, certified public accountants and
other experts of its choosing (including, without limitation, NCB's salaried
employees, any employed by Borrower or any otherwise not independent) and shall
not be liable for any action or inaction taken or suffered in good faith by it
in accordance with the advice of any such counsel, accountants or other
experts.
7B.07 NCB-AGENT'S DILIGENCE. NCB-Agent shall not be required (a) to
keep itself informed as to anyone's compliance with any provision of this
Agreement or any Related Writing, (b) to make any inquiry into the properties,
financial condition or operations of any Company or any other matter relating
to this Agreement or any Related Writing, (c) to report to the Banks any
information (other than information which this Agreement or any Related Writing
expressly requires to be so reported) that NCB-Agent or any of its affiliates
may have or acquire in respect of any Company's properties, business or
financial condition or any
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other matter relating to this Agreement or any Related Writing or (d) to
inquire into the validity, effectiveness or genuineness of this Agreement or
any Related Writing.
7B.08 NOTICE OF DEFAULT. NCB-Agent shall not be deemed to have
knowledge of any Default Under This Agreement unless and until it shall have
received a written notice describing it and citing the relevant provision of
this Agreement or any Related Writing.
7B.09 NCB-AGENT'S LIABILITY. Neither NCB-Agent nor any of its
directors, officers, employees, attorneys and other agents shall be liable for
any action or omission on their respective parts except for gross negligence or
willful misconduct.
7B.10 COMPENSATION. From time to time after the execution and
delivery of this Agreement, Borrower shall pay NCB-Agent a fee. NCB-Agent
shall receive from Borrower such other compensation, if any, for its services
as agent of the Banks in respect of this Agreement and the Related Writings as
Borrower and NCB-Agent may from time to time agree, and Borrower shall
reimburse NCB-Agent periodically on its demand for out-of-pocket expenses, if
any, reasonably incurred by it as such.
7B.11 DISBURSEMENTS. Whenever NCB-Agent shall receive any funds in
respect of the Subject Indebtedness or otherwise in respect of this Agreement
or any Related Writing, whether from Borrower for the account of the Banks or
from the Banks for the account of Borrower, NCB-Agent shall disburse the funds
on the day the funds shall be deemed to have been received. NCB-Agent shall be
entitled (but not obligated) to make a timely disbursement of loan proceeds to
Borrower before actually receiving funds from the Banks (except if and to the
extent NCB-Agent shall have received written instructions to the contrary from
any Bank) and to make a timely disbursement of payments to the Banks before
actually receiving funds from Borrower. If the funds to be disbursed are not
received by NCB-Agent on a timely basis, NCB-Agent at its option may (a)
rescind the disbursement and require the recipient to return the funds in
question with interest or (b) require the party who failed to furnish the funds
for disbursement on a timely basis to pay NCB-Agent interest thereon, such
interest in each case to be computed at the Federal Funds Rate and to be paid
on demand.
7B.12 NCB-AGENT'S INDEMNITY. The Banks shall indemnify NCB-Agent (to
the extent NCB-Agent is not reimbursed by Borrower) from and against any loss
or liability (other than any caused by NCB-Agent's gross negligence or willful
misconduct) incurred by NCB-Agent as such in respect of this Agreement or any
Related Writing and from and against any out-of-pocket expenses incurred in
defending itself or otherwise related to this Agreement or any Related Writing,
including, without limitation, reasonable fees and disbursements of legal
counsel of its own
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<PAGE> 38
selection (including, without limitation, the reasonable interdepartmental
charges of its salaried attorneys) in the defense of any claim against it or in
the prosecution of its rights and remedies as NCB-Agent; provided, that each
Bank shall be liable for only its Ratable share of the whole loss or liability.
7B.13 RESIGNATION; SUCCESSOR AGENT. NCB-Agent may resign as agent for
the Banks hereunder upon thirty (30) days written notice to the Banks and
Borrower. If NCB-Agent shall resign as agent under this Agreement, then the
Required Banks shall appoint from among the Banks a successor agent, which
successor agent shall be approved by Borrower, such approval not to be
unreasonably withheld (or, if the Required Banks and Borrower are unable to
select such successor agent within such thirty-day period, a successor agent
shall be selected by NCB-Agent), whereupon such successor agent shall succeed
to the rights, powers and duties of NCB-Agent under this Agreement, and the
term "NCB-Agent" shall mean such successor agent effective upon its
appointment. In such event, NCB-Agent's rights, powers and duties as agent
shall be terminated, without any other or further act or deed on the part of
NCB-Agent or any of the parties to this Agreement. After NCB-Agent's
resignation hereunder as agent, the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
the agent under this Agreement.
8. INTERPRETATION. This Agreement and the Related Writings shall be
governed by the following provisions:
8.01 WAIVERS. Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Banks; provided, however,
that no such agreement shall (i) change the principal amount of, or extend or
advance the Maturity of or any date for the payment of any principal of or
interest on, any note, or waive or excuse any such payment or any part thereof,
or change the rate of interest on any note, without the written consent of each
holder affected thereby, (ii) change the commitment of any Bank without the
written consent of such Bank, or (iii) amend or modify the provisions of this
subsection or the definition of Required Banks without the written consent of
each Bank. Without limiting the generality of the foregoing, Borrower agrees
that no course of dealing in respect of, nor any omission or delay in the
exercise of, any right, power or privilege by the Banks and NCB-Agent or any
thereof shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude any further or other
exercise thereof or of any other right, power or privilege (whether granted by
other contract or by operation of law or otherwise), as each right, power or
privilege may be exercised either independently or concurrently with others and
as often and in such order as the party or parties exercising the same may deem
expedient.
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8.02 CUMULATIVE PROVISIONS. Each right, power or privilege specified
or referred to in this Agreement is in addition to and not in limitation of any
other rights, powers and privileges that the Banks and NCB-Agent may
respectively otherwise have or acquire by operation of law, by other contract
or otherwise.
8.03 BINDING EFFECT. The provisions of this Agreement shall bind and
benefit Borrower, NCB-Agent and each Bank and their respective successors and
assigns, including each subsequent holder, if any, of the Subject Notes or any
thereof; provided, that no person other than Borrower shall have or acquire any
right to obtain any Subject Loan; and provided, further, that neither any
holder of any Subject Note nor assignee of any Subject Loan, whether in whole
or in part, shall thereby become obligated thereafter to grant Borrower any
Subject Loan.
8.04 SURVIVAL OF PROVISIONS. All representations and warranties made
in or pursuant to this Agreement shall survive the execution and delivery of
this Agreement and of the Subject Notes. The provisions of sections 6A, 6B,
6C, 6D and 6E and subsection 7B.12 shall survive the payment of the Subject
Indebtedness.
8.05 IMMEDIATE U.S. FUNDS. Any reference to money is a reference to
lawful money of the United States of America which, if in the form of credits,
shall be in immediately available funds.
8.06 CAPTIONS. The several captions to different Sections and to the
respective subsections thereof are inserted for convenience only and shall be
ignored in interpreting the provisions of this Agreement.
8.07 SUBSECTIONS. Each reference to a Section includes a reference to
all subsections thereof except where the context clearly does not so permit.
8.08 ILLEGALITY. If any provision in this Agreement or any Related
Writing shall for any reason be or become illegal, void or unenforceable, that
illegality, voidness or unenforceability shall not affect any other provision.
8.09 OHIO LAW. This Agreement and the Related Writings and the
respective rights and obligations of the parties hereto shall be construed in
accordance with and governed by the internal law of the State of Ohio.
8.10 INTEREST/FEE COMPUTATIONS. All interest and all fees for any
given period shall accrue on the first day thereof but not on the last day
thereof and in each case shall be computed on the basis of a 360-day year and
the actual number of days elapsed. In no event shall interest accrue at a
higher rate than the maximum rate, if any, permitted by law.
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<PAGE> 40
8.11 NOTICE. A notice to or request of Borrower shall be deemed to
have been given or made under this Agreement or any Related Writing either upon
the delivery of a writing to that effect to an officer of Borrower, or five (5)
days after a writing to that effect shall have been deposited in the United
States mail and sent, with postage prepaid, by registered or certified mail,
addressed to Borrower (Attention: Borrower's chief financial officer), at the
address set forth below (or such other address as Borrower may hereafter
furnish to each Bank in writing for that purpose). No other method of giving
actual notice to or making a request of Borrower is hereby precluded. Every
notice required to be given to a Bank pursuant to this Agreement shall be
delivered at that Bank's address set forth below (or at such other address as
that Bank may furnish to Borrower and to the other Banks in writing for that
purpose) to an Account Officer of that Bank. Each Bank agrees to give prompt
notice to the other Banks whenever it gives any notice pursuant to Section 5A
or 5B or grants any waiver or consent as provided in subsection 8.01.
8.12 ACCOUNTING TERMS. Any accounting term used in this Agreement
shall have the meaning ascribed thereto by GAAP, subject, however, to such
modification, if any, as may be provided in section 9 or elsewhere in this
Agreement.
9. DEFINITIONS. As used in this Agreement and in the Related
Writings, except where the context clearly requires otherwise,
ACCOUNT OFFICER means that officer of the Bank in question who at the
time in question is designated by that Bank as the officer
having the primary responsibility for giving consideration to
Borrower's request for credit or, in that officer's absence, that
officer's immediate superior or any other officer who reports directly
to that superior officer;
ACCUMULATED FUNDING DEFICIENCY shall have the meaning ascribed thereto
in section 302(a)(2) of ERISA;
AGREEMENT means this Agreement and includes each amendment, if any, to
this Agreement;
BANK means one of the banking institutions that is a party to this
Agreement;
BANKING DAY means (a) in the case of a LIBOR Loan, a day on which
Banks in the London Interbank Market deal in United States
dollar deposits and on which banking institutions are generally open
for domestic and international business in Cleveland, Ohio and in New
York City and (b) in any other case, any day other than a Saturday or
a Sunday or a public holiday or other day on which banking
institutions in Cleveland, Ohio or Detroit, Michigan are generally
closed and do not conduct a banking business;
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<PAGE> 41
BORROWER means Brush Wellman Inc., an Ohio corporation;
CAPITAL REQUIREMENTS is defined in subsection 6F;
COMPANY refers to Borrower or to a Subsidiary of Borrower, as the case
may be, and COMPANIES refers to Borrower and its Subsidiaries;
COMPETITIVE BID means an offer by a Bank to make a Competitive Loan
pursuant to Section 2B.01;
COMPETITIVE BID RATE means, as to any Competitive Bid made by a Bank
pursuant to Section 2B.01, the Fixed Rate of interest offered by
the Bank making such Competitive Bid and accepted by Borrower;
COMPETITIVE BID REQUEST means a request made pursuant to Section
2B.01, in the form of Exhibit B.
COMPETITIVE LOAN means a Subject Loan from a Bank to Borrower pursuant
to the bidding procedure described in Section 2B.01.
CONTRACT PERIOD is defined in subsection 2B.05;
CONTRACT RATE means the rate of interest applicable to a Fixed-Rate
Loan prior to Maturity;
CREDIT EXPOSURE, as applied to a given Bank, means the aggregate at
the time in question of the unpaid principal of the Subject
Loans then owing to it, and as applied to the Banks, means the sum at
the time in question of the aggregate unpaid principal of the Subject
Loans;
CREDIT REQUEST means a request made pursuant to subsection 2C.01;
CURRENT ASSETS means the net book value of all such assets (after
deducting applicable reserves, if any, and without consideration
to any reappraisal or write-up of assets) as determined in accordance
with GAAP;
CURRENT LIABILITIES means all such liabilities as determined in
accordance with GAAP and includes (without limitation) all accrued
taxes and all principal of any Funded Indebtedness maturing within
twelve months of the date of determination;
DEBT means, collectively, all liabilities of the person or persons in
question to the Banks and NCB-Agent or any thereof, whether owing by
one such party alone or with one or more others in a joint, several,
or joint and several capacity, whether now owing or hereafter arising,
whether owing absolutely or contingently, whether created by loan,
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overdraft, guaranty of payment or other contract or by quasi-contract
or tort, statute or other operation of law or otherwise, whether
incurred directly to the Banks and NCB-Agent or any thereof or acquired
by purchase, pledge or otherwise, and whether participated to or from
the Banks and NCB-Agent or any thereof in whole or in part; and in the
case of Borrower includes, without limitation, the Subject
Indebtedness;
DEFAULT UNDER ERISA means (a) the occurrence or existence of a Material
Accumulated Funding Deficiency in respect of any of the Companies'
respective Pension Plans, (b) any failure by a Company to make a full
and timely payment of premiums required by ERISA for insurance against
any employer's liability in respect of any such Pension Plan, (c) the
occurrence or existence of any Material breach of any fiduciary duty by
any fiduciary in respect of any such Pension Plan or (d) the
institution or existence of any action for the forcible termination of
any such Pension Plan;
DEFAULT UNDER THIS AGREEMENT means an event, condition or thing which
constitutes, or which with the lapse of any applicable grace period or
the giving of notice or both would constitute, any Event of Default
referred to in section 5A and which has not been appropriately waived
in writing in accordance with this Agreement or fully corrected, prior
to becoming an actual Event of Default, to the full satisfaction of the
Banks;
ELIGIBLE INVESTMENTS means any of the following investments (each
reference to a "rating category" of either Moody's or Standard & Poor's
shall refer to a rating category of such corporation without regard to
gradations within ratings):
(i) obligations issued or guaranteed as to full and timely
payment by the United States of America or by any person controlled or
supervised by or acting as an instrumentality of the United States of
America pursuant to authority granted by Congress;
(ii) obligations issued or guaranteed by any state or political
subdivision thereof and rated in the highest rating category (if rated
as short-term obligations) or the second highest rating category (if
rated as long-term obligations) by Moody's or Standard & Poor's;
(iii) commercial or finance paper rated in the highest rating
category by Moody's or Standard & Poor's;
(iv) deposit accounts, bankers' acceptances, certificates of
deposit or bearer deposit notes in any
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<PAGE> 43
Bank or any bank affiliated with any Bank and with a reported capital
and surplus of not less than $50,000,000, the debt obligations (or, in
the case of the principal bank in a bank holding company, debt
obligations of the bank holding company) of which are rated by Moody's
or Standard & Poor's not lower than the second highest rating category
(if rated as long-term obligations) or the second highest rating
category (if rated as short-term obligations);
(v) repurchase agreements secured fully by obligations of the
type specified in clause (i) and issued by any government bond dealer
reporting to, trading with and recognized as a primary dealer by, the
Federal Reserve Bank of New York;
(vi) interests in a unit investment trust composed of
obligations rated in the highest rating category, whether rated as
short-term or long-term obligations, by Moody's or Standard & Poor's;
(vii) money market mutual funds, rated in the highest rating
category by Moody's or Standard & Poor's, and invested solely in
obligations or securities described in clause (i), (ii), (iii) and (v)
above; and
(viii) investment agreements other than repurchase agreements
with banks or bank holding companies or other qualified providers which
have ratings assigned to their long-term unsecured obligations by
Moody's or Standard & Poor's which are not lower than the second
highest rating category for long-term debt or which have ratings
assigned to their short-term obligations by Moody's or Standard &
Poor's in the highest rating category for short-term debt;
ENVIRONMENTAL LAWS mean all laws, ordinances, rules and
regulations pertaining to environmental matters, including, without
limitation, solid waste disposal, toxic substances, hazardous
substances, hazardous materials, hazardous waste, toxic chemicals,
pollutants, contaminants, and air or water pollution and to the
storage, use, handling, transportation, discharge and disposal
(including spills and leaks) of gaseous, liquid, semi-solid or solid
materials (all terms pertaining to Environmental Laws not defined in
this Agreement shall have the meanings ascribed thereto in the
respective Environmental Laws);
ERISA means the Employee Retirement Income Security Act of 1974
(P.L. 93-406) as amended from time to time; and in the event of any
amendment affecting any section thereof referred to in this Agreement,
that reference shall be a
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<PAGE> 44
reference to that section as amended, supplemented, replaced or
otherwise modified;
ERISA REGULATOR means any governmental agency (such as the
Department of Labor, the Internal Revenue Service and the Pension
Benefit Guaranty Corporation) having any regulatory authority over any
of the Companies' Pension Plans;
EVENT OF DEFAULT is defined in section 5A;
EXPIRATION DATE means the date referred to as such in
subsection 2A.02;
FEDERAL FUNDS RATE means the rate of interest, as reasonably
determined by NCB-Agent, paid by NCB for the purchase of "federal
funds" at the time or times in question on a daily overnight basis;
FIXED-RATE LOAN means a Subject Loan that is not a Prime Rate
Loan;
FUNDED INDEBTEDNESS means indebtedness of the person or entity
in question which matures or which (including each renewal or
extension, if any, in whole or in part) remains unpaid for more than
twelve months after the date originally incurred and includes, without
limitation, (a) any indebtedness (regardless of its maturity) if it is
renewable or refundable in whole or in part solely at the option of
that person or entity (in the absence of default) to a date more than
one year after the date of determination, (b) any guaranty of Funded
Indebtedness owing by another person or entity and (c) any Funded
Indebtedness secured by a security interest, mortgage or other lien
encumbering any property owned or being acquired by the person or
entity in question even if the full faith and credit of that person or
entity is not pledged to the payment thereof; provided, that in the
case of any indebtedness payable in installments or evidenced by serial
notes or calling for sinking fund payments, those payments maturing
within twelve months after the date of determination shall be
considered current indebtedness rather than Funded Indebtedness for the
purposes of Section 3B but shall be considered Funded Indebtedness for
all other purposes;
GAAP means generally accepted accounting principles applied in
a manner consistent with those used in Borrower's latest fiscal
year-end financial statements referred to in subsection 4A.04;
GUARANTOR means one who pledges his credit or property in any
manner for the payment or other performance of the indebtedness,
contract or other obligation of another and includes (without
limitation) any Guarantor (whether of collection or payment), any
obligor in respect of a standby
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<PAGE> 45
letter of credit or surety bond issued for the obligor's
account, any surety, any co-maker, any endorser, and anyone who agrees
conditionally or otherwise to make any loan, purchase or investment in
order thereby to enable another to prevent or correct a default of any
kind; and Guaranty means the obligation of a Guarantor;
INSOLVENCY ACTION means either (a) a pleading of any kind filed
by the person, corporation or entity (an "insolvent") in question to
seek relief from the insolvent's creditors, or filed by the insolvent's
creditors or any thereof to seek relief of any kind against that
insolvent, in any court or other tribunal pursuant to any law (whether
federal, state or other) relating generally to the rights of creditors
or the relief of debtors or both, or (b) any other action of any kind
commenced by an insolvent or the insolvent's creditors or any thereof
for the purpose of marshalling the insolvent's assets and liabilities
for the benefit of the insolvent's creditors; and "Insolvency Action"
includes (without limitation) a petition commencing a case pursuant to
any chapter of the federal bankruptcy code, any application for the
appointment of a receiver, trustee, liquidator or custodian for the
insolvent or any substantial part of the insolvent's assets, and any
assignment by an insolvent for the general benefit of the insolvent's
creditors;
INTEREST COVERAGE RATIO means the ratio described in subsection
3B.04;
LIBOR LOAN means a Subject Loan having a Contract Period
described in subsection 2B.05 and bearing interest in accordance with
clause (a) of subsection 2B.09;
LIBOR RATE means the rate per annum (rounded upwards, if
necessary, to the next higher 1/16 of 1%), as determined by NCB-Agent,
which is the average rate per annum at which deposits in United States
dollars are offered for deposits of the maturity and amount in
question, at 11:00 A.M. London time (or as soon thereafter as
practicable) two Banking Days prior to the first day of the Contract
Period in question, to NCB by prime banking institutions in any
eurodollar market reasonably selected by NCB-Agent;
MATERIAL means material as determined by the Banks in the
reasonable exercise of their discretion;
MATURITY means the date on which the Subject Indebtedness (or
portion thereof) in question is scheduled for payment in accordance
with this Agreement (without the benefit of any grace period), except
that in the event of any acceleration of Maturity pursuant to Section
5B, "Maturity" means the date as of which the sum becomes immediately
payable in full in accordance with subsection 5B;
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<PAGE> 46
MOODY'S means Moody's Investors Services Inc., and its
successors and assigns.
MOST RECENT 4A.04 FINANCIAL STATEMENTS means Borrower's most
recent financial statements that are referred to in subsection 4A.04;
NCB means National City Bank;
NET INCOME means net income as determined on a consolidated
basis in accordance with GAAP, after taxes and after extraordinary
items, but without giving effect to any gain from any re-appraisal or
write-up of any asset;
PENSION PLAN means a defined benefit plan (as defined in
section 3(35) of ERISA) of the Companies or any thereof and includes,
without limitation, any such plan that is a multi-employer plan (as
defined in section 3(37) of ERISA) applicable to any of the Companies'
employees;
PRIME RATE means the fluctuating rate, as in effect at the time
in question, that is publicly announced by NCB from time to time in
Cleveland, Ohio, as being its prime rate thereafter in effect;
PRIME RATE LOAN means a Subject Loan described in the first
sentence of subsection 2B.06 and bearing interest in accordance with
subsection 2B.08;
RATABLE and RATABLY mean in the proportion of the Subject
Commitments as set forth in subsection 2A.01, except that with respect
to Competitive Loans, RATABLE and RATABLY mean in proportion of the
Credit Exposure;
RECEIVABLE means a claim for money due or to become due,
whether classified as an account, instrument, chattel paper, general
intangible, incorporeal hereditament or otherwise, and any proceeds of
the foregoing;
RELATED WRITING means any note, mortgage, security agreement,
other lien instrument, financial statement, audit report, notice, legal
opinion, Credit Request, officer's certificate or other writing of any
kind which is delivered to the Banks and NCB-Agent or any thereof and
which is relevant in any manner to this Agreement or any Related
Writing and includes, without limitation, the Subject Notes and the
other writings referred to in sections 2A, 2B, 2C, 3A and 4A;
REPORTABLE EVENT has the meaning ascribed thereto by ERISA;
REQUIRED BANKS means (i) so long as any Bank has a commitment
to make Subject Loans hereunder, Banks representing 66-2/3% of the
commitments and (ii) after the
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<PAGE> 47
Expiration Date or the earlier termination of the commitments,
Banks representing 66-2/3% of the Subject Loans outstanding; PROVIDED,
HOWEVER, that for purposes of accelerating the loans pursuant to
subsection 5B, Required Banks means Banks representing 51% of the
Subject Loans outstanding.
SERIES means a borrowing consisting of Subject Loans made on
the same day pursuant to a single Credit Request and divided Ratably
among the Banks, if and to the extent (in the case of Competitive
Loans) appropriate, and includes, without limitation, a borrowing the
proceeds of which represent new money to Borrower and a borrowing the
proceeds of which are applied to other Subject Loans at the stated
Maturity thereof;
STANDARD & POOR'S means Standard & Poor's Corporation, and its
successors and assigns.
SUBJECT COMMITMENT means the commitment of a Bank to extend
credit to Borrower pursuant to sections 2A, 2B and 2C of this Agreement
and upon the terms, subject to the conditions and in accordance with
other provisions of this Agreement;
SUBJECT INDEBTEDNESS means, collectively, all principal of and
interest on the Subject Loans and all fees and other liabilities, if
any, incurred to the Banks and NCB-Agent or any thereof by Borrower
pursuant to this Agreement or any Related Writing;
SUBJECT LOAN means a LIBOR Loan, Competitive Loan or a Prime
Rate Loan, as the case may be;
SUBJECT NOTE means a note executed and delivered by Borrower
and being in the form and substance of Exhibit C-1 and C-2 with the
blanks appropriately filled;
SUBSIDIARY means a corporation or other business entity of
which shares constituting a majority of its outstanding capital stock
(or other form of ownership) or constituting a majority of the voting
power in any election of directors (or shares constituting both
majorities) are (or upon the exercise of any outstanding warrants,
options or other rights would be) owned directly or indirectly at the
time in question by the corporation in question or another "subsidiary"
of that corporation or any combination of the foregoing;
TANGIBLE NET WORTH means (a) book net worth, less (b) such
assets of the Companies, on a consolidated basis, as consist of good
will, costs of businesses over net assets acquired, patents,
copyrights, trademarks, mailing lists, catalogues, bond discount,
underwriting expense, organizational expenses and intangibles (except
that intangibles such as treasury
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<PAGE> 48
stock which shall have already been deducted from book net
worth shall not be deducted again);
TOTAL LIABILITIES means the aggregate (without duplication) of
all liabilities of the corporation or corporations in question and
includes, without limitation, (a) any indebtedness which is secured by
any mortgage, security interest or other lien on any of their property
even if the full faith and credit of none of them is pledged to the
payment thereof, (b) any indebtedness for borrowed money or Funded
Indebtedness of any kind if any such corporation or corporations is a
Guarantor thereof and (c) any subordinated indebtedness;
UNUSED COMMITMENT is defined in subsection 2A.04(a);
the foregoing definitions shall be applicable to the respective plurals of the
foregoing defined terms.
[Remainder of page intentionally left blank]
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<PAGE> 49
10. EXECUTION. This Agreement may be executed in one or more
counterparts, each counterpart to be executed by Borrower, by NCB-Agent and by
one or any number of the Banks. Each such executed counterpart shall be deemed
to be an executed original for all purposes, but all such counterparts taken
together shall constitute but one agreement, which agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof.
Address: BRUSH WELLMAN INC.
17876 St. Clair Avenue
Cleveland, Ohio 44110
By:___________________________
Title:________________________
Address: NATIONAL CITY BANK,
Deliveries: Individually and as Agent
Metro/Ohio Division
1900 East Ninth Street
Cleveland, Ohio 44114-3484 By:___________________________
Fax: (216) 575-9396
Title:________________________
Mail:
Metro/Ohio Division
P.O. Box 5756
Cleveland, Ohio 44101
Address: SOCIETY NATIONAL BANK
127 Public Square
Cleveland, Ohio 44114 By____________________________
Title:________________________
Address: THE BANK OF NOVA SCOTIA
600 Peachtree St., NE
Suite 2700
Atlanta, GA 30308 By:___________________________
Title:________________________
Address: NBD BANK, N.A.
611 Woodward
Detroit, Michigan 48226 By____________________________
Title:________________________
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<PAGE> 50
SUPPLEMENTARY SCHEDULE
(See Sections 3D.03, 3D.04(b), 4B, 4B.05, 4B.06, and 4B.07)
Section 4B.06
- -------------
Canadian Imperial Bank of Commerce Gold/Silver
Loan and gold, silver, platinum and palladium consignment; all subject to a
maximum market value of U.S.$27,000,000.
Section 4B.07
- -------------
The Company is currently in negotiations with the Ohio EPA regarding air,
hazardous waste and solid waste complaints. Settlement cost of such
complaints is expected to be not more than $265,000.
<PAGE> 51
EXHIBIT A
EXTENSION REQUEST
_________________
_________________
_________________
Subject: Extension of Subject Commitments under Amended and Restated Credit
Agreement dated as of December ___, 1994
Greetings:
Reference is made to the Amended and Restated Credit Agreement by and among
you, the undersigned ("Borrower") and National City Bank as your agent (the
"Credit Agreement") which provides for, among other things, Subject Commitments
aggregating up to $50,000,000 and available to Borrower, upon certain terms and
conditions, on a revolving basis until ____________________, 19___ (the
"Expiration Date" now in effect) subject, however, to earlier reduction or
termination pursuant to the Credit Agreement.
Borrower hereby requests that the Credit Agreement be amended by deleting the
date "________________________, 199__" from subsection 2A.02 (captioned "Term")
and by substituting for that deleted date the date "___________________,
199__".
In all other respects the Credit Agreement shall remain in full effect.
This letter has been executed and delivered to each of you in triplicate. If
you assent to the extension, kindly send two copies of your assent to your
agent who will, if the extension becomes effective, forward one such copy to
Borrower and inform you of the extension.
BRUSH WELLMAN, INC.
By:________________________
Printed Name:______________
Title:_____________________
The undersigned hereby each assent to the foregoing.
National City Bank NBD Bank, N.A.
By:_______________________ By:______________________
Printed Name:_____________ Printed Name:____________
Title:____________________ Title:___________________
Society National Bank The Bank of Nova Scotia
By:_______________________ By:______________________
Printed Name:_____________ Printed Name:____________
Title:____________________ Title:___________________
<PAGE> 52
EXHIBIT B
COMPETITIVE BID REQUEST
-----------------------
Cleveland, Ohio
_________, 19___
TO: _________________________________
SUBJECT: Amended and Restated Credit Agreement dated as of December ___, 1994
with National City Bank, four banks, and National City Bank, as agent
(the "Credit Agreement")
Gentlemen:
Each term in this Credit Request shall be defined in accordance with the
subject Credit Agreement. Pursuant to subsection 2C.01 of the Credit
Agreement, we request a Competitive Loan on the terms set forth below:
1. Date of borrowing: __________________________;
(which is a Banking Day)
2. Amount of borrowing: $_______________________;
3. Contract Period and the
last day thereof: _____________________________;
and to disburse the proceeds as follows: ______________________
_______________________________________________________________.
Address: Brush Wellman Inc.
17876 St. Clair Avenue
Cleveland, Ohio 44110
By:___________________________
Title: _______________________
<PAGE> 53
EXHIBIT C-1
NOTE
----
$_______________ Cleveland, Ohio
___________, 19___
FOR VALUE RECEIVED, the undersigned, Brush Wellman Inc., an Ohio corporation,
promises to pay to the order of ______________, at the main office of National
City Bank ("NCB"), Cleveland, Ohio, the principal sum of
________________________________________________________ DOLLARS
(or, if less, the aggregate unpaid principal balance from time to time shown on
the reverse side hereof or in the books and records of the payee), together
with interest computed in the manner provided in the Credit Agreement referred
to below, which principal and interest are payable in accordance with
provisions in the Credit Agreement.
This Note is issued pursuant to an Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of __________________, 1994 by and among Borrower,
four banks and NCB (as agent of the Banks for the purposes of the Credit
Agreement) which establishes "Subject Commitments" (one by each Bank)
aggregating fifty million dollars ($50,000,000) pursuant to which Borrower may
obtain Subject Loans from the Banks upon certain terms and conditions.
Reference is made to the Credit Agreement for the definitions of certain terms,
for provisions governing the making of Subject Loans, the acceleration of the
Maturity thereof, rights of prepayment, and for other provisions to which this
Note is subject. Any endorsement by the payee on the reverse side of this Note
(or any allonge thereto) shall be presumptive evidence of the data so endorsed.
Borrower hereby waives diligence, presentment, demand, protest and notice of
any kind whatsoever. The nonexercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
Address: Brush Wellman Inc.
17876 St. Clair Avenue
Cleveland, Ohio 44110
By:___________________________
Title: _______________________
<PAGE> 54
EXHIBIT C-2
COMPETITIVE LOAN NOTE
---------------------
$____________ Cleveland, Ohio
_______________, 19__
FOR VALUE RECEIVED, the undersigned, Brush Wellman Inc., an Ohio corporation
("Maker"), promises to pay to the order of ______________ ("Payee"), at its
office located at the address set forth in the Credit Agreement referred to
below (or at such other address as it may furnish to maker from time to time)
the principal sum of ________________ dollars ($______________) (or, if less,
the aggregate unpaid principal balance of all competitive loans (as defined in
the Credit Agreement) made by Payee from time to time shown on the reverse side
hereof or in the books and records of Payee), together with interest computed
in the manner provided in the Credit Agreement referred to below, which
principal and interest are payable in accordance with provisions in the Credit
Agreement.
This note is issued pursuant to an Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of December ___, 1994, by and among Borrower, four
banks and NCB (as agent of the Banks for the purposes of the Credit Agreement)
which establishes "Subject Commitments" (one by each Bank) aggregating fifty
million dollars ($50,000,000) pursuant to which Borrower may obtain Subject
Loans from the Banks upon certain terms and conditions.
Reference is made to the Credit Agreement for the definitions of certain terms,
for provisions governing the making of Subject Loans, the acceleration of the
maturity thereof, rights of prepayment, and for other provisions to which this
Note is subject. Any endorsement by the payee on the reverse side of this Note
(or any allonge thereto) shall be presumptive evidence of the data so endorsed.
Borrower hereby waives diligence, presentment, demand, protest and notice of
any kind whatsoever. The nonexercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
Address: Brush Wellman Inc.
17876 St. Clair Avenue
Cleveland, Ohio 44110
By:___________________________
Title: _______________________
<PAGE> 55
EXHIBIT D
REVOLVING CREDIT REQUEST
------------------------
Cleveland, Ohio
_________, 19___
TO: National City Bank, as Agent
SUBJECT: Amended and Restated Credit Agreement dated as of December ___, 1994,
with four banks and National City Bank as agent (the "Credit
Agreement")
Gentlemen:
Each term in this Credit Request shall be defined in accordance with the
subject Credit Agreement. Pursuant to subsection 2C.01 of the Credit
Agreement, we request
( ) the Banks to grant us a Series of LIBOR Loans in the aggregate principal
sum of $_____________ to be made available to us on the _____ day of
_____________, 19___;
( ) the Banks to grant us a Series of Prime Rate Loans in the aggregate
principal sum of $_____________ to be made available to us on the _____ day
of _____________, 19___ and;
and to disburse the proceeds as follows: ______________________
_______________________________________________________________.
Address: Brush Wellman Inc.
17876 St. Clair Avenue
Cleveland, Ohio 44110
By:___________________________
Title: _______________________
<PAGE> 56
EXHIBIT E
COMPLIANCE REPORT
-----------------
___________, 19__
To: National City Bank
__________________
__________________
__________________
Subject: Amended and Restated Credit Agreement dated as of December __, 1994,
with four banks and National City Bank as agent (the "Credit
Agreement")
Greetings:
Pursuant to subsection 3A.01 of the subject Credit Agreement and in my capacity
as the chief financial officer of Brush Wellman Inc., I hereby certify that to
the best of my knowledge and belief
(a) the financial statements of the Companies accompanying this letter
are true and complete and fairly present in all Material respects
their consolidated financial condition as of _____________________,
199_ (the "Closing Date") and the consolidated results of their
operations for the fiscal period then ending,
(b) no Default under the Credit Agreement exists *[except for those
which, together with our intentions in respect thereof, are set forth
in Exhibit One to this letter] and
(c) as indicated by the calculations below, the Companies are *[not]
in full compliance with subsections 3B.01 through 3B.04, both
inclusive.
[* - In (b) and (c), delete the bracketed language if inapplicable.]
3B.01 The actual amount of the Companies' Tangible Net Worth at the Closing
Date is equal to or is greater than the required amount.
$155,000,000
plus $__________ 40% of $_________ annual earnings accumulated from
December 31, 1994 to the end of the
preceding fiscal year (see Section
3B.01)
sum $__________ required amount
$__________ actual Tangible Net Worth
<PAGE> 57
3B.02 The actual LEVERAGE of the Companies is equal to or less than the
maximum factor permitted, namely, 1.25 -- leverage being a factor equal to the
quotient of Total Liabilities divided by Tangible Net Worth.
$__________ Total Liabilities
divided by $__________ Tangible Net Worth
quotient __________% Actual Leverage
3B.03 The actual CURRENT RATIO of the Companies is greater than the minimum
factor required, namely, 1.5 -- the Current Ratio being a factor equal to the
quotient of Current Assets divided by Current Liabilities.
$_________ Current Assets
divided by $_________ Current Liabilities
quotient _________ Actual Current Ratio
3B.04 The actual INTEREST COVERAGE RATIO is greater than the minimum factor
(3:00 to 1:00) required, the Interest Coverage being a factor equal to the
quotient of the sum of items (a), (b) and (c) below divided by item (b).
(a) $__________ Net Income
plus (b) $__________ interest expense (including any required capitalized
interest)
plus (c) $__________ income taxes
sum (d) $__________ total
quotient(e) __________ Actual Interest Coverage--(d)/(b)
3B.05 The actual FUNDED DEBT of the Companies is equal to or less than the
maximum factor permitted, namely, 0.5 -- the Funded Debt being a factor equal
to the quotient of Funded Indebtedness divided by Funded Indebtedness plus
Tangible Net Worth.
$_________ Funded Indebtedness
divided by $_________ Funded Indebtedness plus Tangible Net Worth
quotient _________ Actual Funded Indebtedness
BRUSH WELLMAN INC.
By:______________________________
Title: __________________________
<PAGE> 58
EXHIBIT F
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
Address of Jurisdiction
Name of its Chief Where Equity
Subsidiary Executive Office Incorporated Ownership
- ----------------- ----------------- ------------ --------
<S> <C> <C> <C>
Egbert Corp. 17876 St. Clair Avenue Ohio 100.0%
Cleveland, Ohio 44110
S.K. Wellman Co. 17876 St. Clair Avenue Delaware 100.0%
of Delaware Cleveland, Ohio 44110
Technical Materials 17876 St. Clair Avenue Ohio 100.0%
Inc. Cleveland, Ohio 44110
Williams Advanced 17876 St. Clair Avenue New York 100.0%
Materials Inc. Cleveland, Ohio 44110
Tegman Corp. 17876 St. Clair Avenue New York 20.0%
Cleveland, Ohio 44110
Metals Engineering 17876 St. Clair Avenue Pennsylvania 100.0%
Co. Cleveland, Ohio 44110
Brush Wellman 17876 St. Clair Avenue Delaware 100.0%
Acquisition Co. Cleveland, Ohio 44110
Brush Wellman 17876 St. Clair Avenue U.S. Virgin 100.0%
Export Corp. Cleveland, Ohio 44110 Island
Brush Wellman GmbH 17876 St. Clair Avenue West Germany 100.0%
Cleveland, Ohio 44110
Brush Wellman Ltd. 17876 St. Clair Avenue England 100.0%
Cleveland, Ohio 44110
Brush Wellman 17876 St. Clair Avenue Japan 100.0%
(Japan) Ltd. Cleveland, Ohio 44110
William Advanced 17876 St. Clair Avenue Singapore 100.0%
Materials Far Cleveland, Ohio 44110
East PTE Ltd.
</TABLE>
<PAGE> 59
EXHIBIT G
Exceptions to Section 4B.01
---------------------------
None
RAS1372:01278:91004:RAS-01E.LOA
ras 12/12/94
<PAGE> 1
EXHIBIT 4(b)
BRUSH WELLMAN INC.
and
AMERITRUST COMPANY NATIONAL ASSOCIATION
RIGHTS AGREEMENT
Dated as of January 26, 1988
(Amended February 28, 1989)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
RECITALS............................................... 1
Section 1. Certain Definitions........................ 2
Section 2. Appointment of Rights Agent................ 9
Section 3. Issue of Right Certificates................ 9
Section 4. Form of Right Certificates................. 13
Section 5. Countersignature and Registration.......... 14
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates......................... 15
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.................. 17
Section 8. Cancellation and Destruction of
Right Certificates......................... 20
Section 9. Reservation and Availability of
Preferred Shares........................... 21
Section 10. Preferred Shares Record Date............... 24
Section 11. Adjustment of Purchase Price, Number
and Type of Shares or Number of Rights..... 25
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares.................. 51
Section 13. Notice of Adjusted Purchase Price
or Number or Type of Shares to
Holders of Rights.......................... 52
Section 14. Fractional Rights and Fractional
Shares..................................... 52
Section 15. Rights of Action........................... 55
Section 16. Agreement of Rights Holders................ 56
Section 17. Right Certificate Holder Not Deemed
a Shareholder.............................. 57
</TABLE>
- i -
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 18. Concerning the Rights Agent............... 58
Section 19. Merger or Consolidation or Change
of Name of Rights Agent................... 59
Section 20. Duties of Rights Agent.................... 60
Section 21. Change of Rights Agent.................... 65
Section 22. Issuance of New Right Certificates........ 67
Section 23. Redemption................................ 67
Section 24. Notice of Certain Events.................. 69
Section 25. Notices................................... 71
Section 26. Supplements and Amendments................ 72
Section 27. Successors................................ 73
Section 28. Benefits of this Agreement................ 74
Section 29. Action by the Board of Directors.......... 75
Section 30. Severability.............................. 75
Section 31. Governing Law............................. 75
Section 32. Counterparts.............................. 75
Section 33. Descriptive Headings...................... 76
Exhibit A.............................................. A-1
Exhibit B.............................................. B-1
Exhibit C.............................................. C-1
</TABLE>
- ii -
<PAGE> 4
RIGHTS AGREEMENT
This RIGHTS AGREEMENT dated as of January 26, 1988 (this "Agreement") is
made and entered into by and between Brush Wellman Inc., an Ohio corporation
(the "Company"), and Ameritrust Company National Association (the "Rights
Agent").
RECITALS
WHEREAS, on January 26, 1988, the Board of Directors of the Company
authorized and declared a dividend distribution of one right ("Right") for each
share of Common Stock, $1.00 par value, of the Company (the "Common Shares")
outstanding as of the close of business on February 8, 1988 (the "Record Date"),
each Right initially representing the right to purchase one one-hundredth of a
Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and further authorized and directed the issuance of
one Right with respect to each Common Share that shall become outstanding for
any reason between the Record Date and the earliest of the Distribution Date
(or, in the case of Common Shares issued upon the conversion of any convertible
securities which the Company may hereafter issue, or upon exercise of existing
and future employee stock options, prior to the fifteenth day after the
Distribution Date), the Expiration Date or the Final Expiration Date (as such
terms are hereinafter defined).
<PAGE> 5
WHEREAS, the Company and the Rights Agent originally executed this Rights
Agreement on January 26, 1988; the Company and the Rights Agent desire to make
certain amendments to (and restate) this Rights Agreement; the following is the
Rights Agreement as so amended and restated; and all references thereto shall
refer to the Rights Agreement as amended on February 28, 1989 but to be dated as
of January 26, 1988.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, after the Record Date,
shall be the Beneficial Owner (as such term is hereinafter defined) of 20
percent or more of the Common Shares then outstanding; provided, however,
that an Acquiring Person shall not include the Company, any Subsidiary, any
employee benefit or stock ownership plan of the Company, any Person or
entity organized, appointed or established by the Company for or pursuant
to the terms of any such plan or an Authorized Shareholder.
-2-
<PAGE> 6
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2, as in effect on the date of this
Agreement, of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(c) "Authorization Statute" shall mean Section 1701.831 of the Ohio
Revised Code, as it may be amended from time to time, so long as the
provisions of such Section 1701.831 are applicable to the acquisition of
Common Shares.
(d) "Authorized Shareholder" shall mean any Person (other than the
Company, any Subsidiary or any employee benefit or stock ownership plan of
the Company or any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates, that shall, at any time after
the date of this Agreement, become the Beneficial Owner of 20 percent or
more of the Common Shares then outstanding (or of any other percentage of
the Common Shares which requires compliance with the Authorization Statute)
after (i) receiving the prior authorization (or authorizations) required to
Beneficially Own such Common Shares pursuant to the Authorization Statute
and (ii) otherwise complying in full with the requirements of the
Authorization Statute.
-3-
<PAGE> 7
(e) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities),
arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or payment; or (B) the right to vote or dispose of,
whether pursuant to any agreement, arrangement or
-4-
<PAGE> 8
understanding (whether or not in writing) or otherwise; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has any
agreement (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities), arrangement or understanding (whether
or not in writing), for the purpose of acquiring, holding, voting
(except as described below) or disposing of any voting securities of
the Company;
provided, however, that a Person shall not be deemed the Beneficial Owner of,
nor to beneficially own, any security if such Person has the right to vote such
security pursuant to an agreement, arrangement or understanding which (1) arises
solely from a revocable proxy given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report).
-5-
<PAGE> 9
(f) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the States of Ohio or New York are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., New York
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(h) "Common Shares" when used with reference to the Company shall mean the
shares of Common Stock of the Company; provided, however, that, if the Company
is the continuing or surviving corporation in a transaction described in Section
11(d)(ii) hereof, "Common Shares" when used with reference to the Company shall
mean the capital stock with the greatest aggregate voting power of the Company,
or, if the Company is a subsidiary of another corporation or other legal entity
having equity securities, the corporation or other legal entity having equity
securities which ultimately controls the Company. "Common Shares" when used with
reference to any corporation or other legal entity having equity securities,
other than the Company, shall mean the capital stock with the greatest aggregate
voting power of such corporation or other legal entity having equity securities,
or, if such corporation or
-6-
<PAGE> 10
other legal entity having equity securities is a subsidiary
of another corporation or other legal entity having equity
securities, the corporation or other legal entity having
equity securities which ultimately controls such
first-mentioned corporation or other legal entity having
equity securities.
(i) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(j) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(k) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(l) "Flip-in Event" shall mean any event described in clauses (A), (B) or
(C) of Section 11(a)(ii) hereof.
(m) "Flip-over Event" shall mean any event described in subsections (i),
(ii) or (iii) of Section 11(d).
(n) "Person" shall mean any individual, firm, corporation, partnership,
joint venture or other enterprise or entity of any kind, and shall include any
successor (by merger or otherwise) of such Person.
-7-
<PAGE> 11
(o) "Preferred Shares" shall mean shares of Serial Preferred Stock, Series
A, without par value, of the Company having the rights and preferences set forth
in Exhibit A to this Agreement.
(p) "Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.
(q) "Right Certificate" shall have the meaning set forth in Section 3(a)
hereof.
(r) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person (by press release, filing
made with the Securities and Exchange Commission or otherwise) that an Acquiring
Person has become such.
(s) "Subsidiary" of any Person shall mean any corporation or other
enterprise or entity of any kind of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or indirectly,
by such Person.
(t) "Triggering Event" shall mean any Flip-in Event or Flip-over Event.
-8-
<PAGE> 12
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall also be, prior to the Distribution
Date, the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the New York Stock
Exchange governing transfer agents and registrars. The Company may from time to
time act as Co-Rights Agent or appoint such Co-Rights Agents as it may deem
necessary or desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the
tenth calendar day (or such later date as may be specified by a majority of the
Directors then in office) after the Share Acquisition Date, (ii) the tenth
calendar day (or such later date as may be specified by a majority of the
Directors then in office) after the date of the commencement of a tender or
exchange offer (as determined by reference to Rule 14d-2(a) under the Exchange
Act) by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company or any
entity organized, appointed or established by the Company for or pursuant to the
terms of any such plan), the consummation of which would result in beneficial
ownership by such Person of 20
-9-
<PAGE> 13
percent or more of the outstanding Common Shares or (iii) the date of the
occurrence of a Triggering Event (the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates representing Common Shares registered in the names of the record
holders thereof (which certificates representing Common Shares shall also be
deemed to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of Common Shares on the stock transfer books of the Company
maintained by the Company or its appointed transfer agent. As soon as
practicable after the Distribution Date, the Rights Agent will send, by
first-class, insured, postage prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate in
substantially the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held, subject to adjustment as herein
provided, together with a notice setting forth the Purchase Price as in effect
on the Distribution Date. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) Promptly after February 28, 1989, the Company will send a copy of a
Summary of Rights to Purchase Preferred Shares in substantially the form
attached hereto as Exhibit C
-10-
<PAGE> 14
as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage:
This Certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Brush Wellman
Inc. and Ameritrust Company National Association, dated as of January
26, 1988, as the same may be amended from time to time in accordance
with its terms (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Brush Wellman Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by
this certificate. Brush Wellman Inc. will mail to the holder of this
Certificate a copy of the Rights Agreement without charge within five
business days after receipt of a written request therefor. Under certain
circumstances as set forth in the Rights Agreement, Rights beneficially
owned by an Acquiring Person or an Authorized Shareholder or any
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement) and any subsequent holder of such Rights may become null and
void.
With respect to certificates bearing the legend described above, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby.
-12-
<PAGE> 15
Section 4. Form of Right Certificates. (a) The Right Certificates (and the
forms of election to purchase and of assignment to be printed on the reverse
thereof) shall be substantially the same as Exhibit B hereto with such changes,
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to Sections 11 and 22 hereof,
the Right Certificates, whenever issued, shall be dated as of the Distribution
Date, and on their face shall entitle the holders thereof to purchase such
number of one one-hundredths of a Preferred Share as shall be set forth therein
at the Purchase Price per one one-hundredth of a share set forth therein, but
the number of such shares and the Purchase Price shall be subject to adjustment
as provided herein.
(b) Any Right Certificate issued pursuant hereto that represents Rights
beneficially owned by an Acquiring Person or Authorized Shareholder or any
Associate or Affiliate thereof and any Right Certificate issued at any time upon
the transfer of any Rights to an Acquiring Person or Authorized Shareholder or
any Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Authorized Shareholder, Associate or
-13-
<PAGE> 16
Affiliate shall be subject to and contain the following legend or such similar
legend as the Company may deem appropriate and as is not inconsistent with this
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to
conform to usage:
The Rights represented by this Right Certificate are or were issued to,
or beneficially owned by, a Person who is or was an Acquiring Person or
an Authorized Shareholder or an Affiliate or an Associate of an
Acquiring Person or an Authorized Shareholder (as such terms are defined
in the Rights Agreement). This Right Certificate and the Rights
represented hereby may become null and void in the circumstances
specified in Section 11(a)(ii) or Section 11(d) of the Rights Agreement.
Section 5. Countersignature and Registration. (a) The Right Certificates shall
be executed on behalf of the Company by its Chairman of the Board, President or
any Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such
-14-
<PAGE> 17
Right Certificates, nevertheless, may be countersigned by the Rights Agent, and
issued and delivered by the Company with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such officer of
the Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office or offices designated as the appropriate place
for surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the earlier of
the Expiration Date or the Final Expiration Date, any Right Certificate or
-15-
<PAGE> 18
Right Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered holder
to purchase a like amount of Preferred Shares (or other securities) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent or at any
other office of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any
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transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal office of the Rights Agent or at any other
office of the Rights Agent designated for such purpose, together with payment of
the Purchase Price for each one one-hundredth of a Preferred Share (or other
securities) as to which such
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surrendered Rights are exercised, at or prior to the Close of Business on the
earlier of (i) January 26, 1998 (the "Final Expiration Date"), or (ii) the date
on which the Rights are redeemed as provided in Section 23 hereof (such earlier
date being herein referred to as the "Expiration Date").
(b) The purchase price for each one one-hundredth of a Preferred Share (the
"Purchase Price") pursuant to the exercise of a Right shall initially be $100,
shall be subject to adjustment from time to time as provided in Section 11
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof in cash, or by certified check
or bank draft payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares (or make available, if the Rights Agent is the transfer agent)
certificates representing the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of
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Preferred Shares issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of the issuance of fractional shares in accordance with
Section 14 hereof or the amount of cash to be paid in lieu of the issuance of
Common Shares in accordance with Sections 11(a)(iii) or 11(d) hereof, (iii)
promptly after receipt of such certificates (or depositary receipts, when
appropriate), cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Company is obligated to issue other
securities (including Common Shares) of the Company pursuant to Section 11
hereof, the Company will make all arrangements necessary so that such other
securities are available for distribution by the Rights Agent, if and when
appropriate.
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<PAGE> 22
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported transfer or
exercise unless such registered holder shall have (i) completed and signed the
certificate following the form of assignment or election to purchase set forth
on the reverse side of the Right Certificate surrendered for such assignment or
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
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expressly permitted by this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Shares. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares, the number of
Preferred Shares that will be sufficient to permit the exercise pursuant to
Section 7 hereof of all outstanding Rights; such number of Preferred Shares
reserved and kept available shall be adjusted from time to time, if and to the
extent required, upon the occurrence of any of the events described in Section
11 hereof.
(b) So long as the Company's Preferred Shares (or other securities) may be
listed on a national securities exchange, the Company shall endeavor to cause,
from and after such time as the Rights become exercisable, all Preferred Shares
(or other securities) reserved for issuance upon exercise of the Rights to be
listed on such exchange upon official notice of issuance.
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(c) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares (or other securities)
delivered upon exercise of Rights shall be, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), duly
and validly authorized and issued, fully paid, nonassessable and freely
tradeable shares, free and clear of any liens, encumbrances or other adverse
claims other than the Company's right to redeem the Preferred Shares pursuant to
the express terms thereof.
(d) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares (or other securities) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax that may be
payable in respect of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates or depositary receipts
representing the Preferred Shares (or other securities) in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any certificates for Preferred
Shares (or other securities) upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender)
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or until it has been established to the Company's satisfaction that no such tax
is due.
(e) The Company shall use its best efforts to (i) file on an appropriate
form, as soon as is required by law following the Distribution Date, a
registration statement under the Securities Act of 1933 (the "Act") with respect
to the securities purchasable upon exercise of the Rights, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the Expiration Date. The Company will also use its best
efforts to take such action as may be appropriate under the securities or "blue
sky" laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first sentence of
this Section 9(e), the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the
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contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained or the
exercise of the Rights shall not be permitted under applicable law.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate representing Preferred Shares (or other securities) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Preferred Shares (or other securities) represented
thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Shares (or other securities) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such securities
on, and such certificate shall be dated, the next succeeding Business Day on
which the Preferred Shares (or other securities) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a shareholder of the
Company with respect to securities for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any
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notice of any proceedings of the Company, except as provided erein.
Section 11. Adjustment of Purchase Price, Number and Type of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of shares, or (D) issue
any shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) or in Section 11(d) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and/or
the number and/or kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date
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<PAGE> 28
and at a time when the Preferred Shares transfer books of the Company were open,
he or she would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof or Section 11(d) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) or Section 11(d)
hereof.
(ii) In the event that
(A) any Acquiring Person or Authorized Shareholder or any Associate or
Affiliate of any Acquiring Person or Authorized Shareholder, at any time
after the date of this Agreement, directly or indirectly, shall (1) merge
into the Company or otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of such merger or
combination, other than in a transaction subject to Section 11(d)(ii)
hereof, (2) merge or otherwise combine with any Subsidiary of the Company,
(3) in one or more transactions (other than in connection with the exercise
of Rights or the exercise or conversion of securities exercisable or
convertible into capital stock of the Company or any of its Subsidiaries)
transfer any assets to the Company or any of its Subsidiaries in exchange
(in
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whole or in part) for shares of any class of capital stock of the Company
or any of its Subsidiaries or for securities exercisable for or convertible
into shares of any class of capital stock of the Company or any of its
Subsidiaries, or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares of any
class of capital stock of the Company or any of its Subsidiaries or
securities exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries (other than as part
of a pro rata distribution to all holders of such shares of any class of
capital stock of the Company, or any of its Subsidiaries), (4) sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise dispose
(in one or more transactions), to, from, with, or of, as the case may be,
the Company or any of its Subsidiaries, other than in a transaction subject
to Section 11(d) hereof, assets, including securities, on terms and
conditions less favorable to the Company than the Company would be able to
obtain in arm's-length negotiation with an unaffiliated third party, (5)
receive any compensation from the Company or any of its Subsidiaries other
than compensation as a director or for full-time employment as a regular
employee, in either case, at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (6) receive the benefit, directly or
indirectly (except proportionately as a shareholder), of any loans,
advances, guarantees, pledges
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or other financial assistance or any tax credits or other tax advantage
provided by the Company or any of its Subsidiaries, or
(B) during such time as there is an Acquiring Person or an Authorized
Shareholder, there shall be any reclassification of securities (including
any reverse stock split), or recapitalization of the Company, or any merger
or consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an
Acquiring Person or an Authorized Shareholder), other than a transaction
subject to Section 11(d) hereof, which has the effect, directly or
indirectly, of increasing by more than one percent the proportionate share
of the outstanding shares of any class of equity securities or of
securities exercisable for or convertible into equity securities of the
Company or any of its Subsidiaries that is directly or indirectly
beneficially owned by any Acquiring Person or Authorized Shareholder or any
Associate or Affiliate of any Acquiring Person or Authorized Shareholder,
or
(C) any Person (other than the Company, any Subsidiary or any employee
benefit or stock ownership plan of the Company or any Person or entity
organized, appointed
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or established by the Company for or pursuant to the terms of any such
plan), alone or together with its Affiliates and Associates, shall, at any
time after the date of this Agreement, become the Beneficial Owner (other
than in a transaction subject to Section 11(d) hereof) of 20 percent or
more of the Common Shares then outstanding or any other percentage of the
Common Shares the acquisition of which requires compliance with the
Authorization Statute, (excluding, however, any case where both (v) the
Authorization Statute is in full force and effect and applies to the
acquisition of Common Shares by such Person and (w) such Person obtains the
prior authorization (or authorizations) of the Company's shareholders
pursuant to, and otherwise complies in full with, the Authorization Statute
prior to becoming the Beneficial Owner of 20 percent or more, or any other
percentage specified in such Authorization Statute, of the Common Shares
then outstanding),
then and thereafter, and in each such case, each holder of a Right, except as
provided below, shall have a right to receive, upon exercise thereof in
accordance with the terms of this Agreement at an exercise price per Right equal
to the product of the then current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right is then exercisable,
in lieu of Preferred Shares, such number of Common Shares as shall equal the
result obtained by (x)
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multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable and dividing that
product by (y) 50 percent of the current per share market price of the Common
Shares (determined pursuant to Section 11(e) hereof) on the date of the
occurrence of any Flip-in Event. Notwithstanding the foregoing, upon the
occurrence of any Flip-in Event, any Rights that are or were at any time
beneficially owned by any Acquiring Person or Authorized Shareholder or any
Associate or Affiliate of such Acquiring Person or Authorized Shareholder (which
Acquiring Person, Authorized Shareholder, Associate or Affiliate is engaging in
one or more of the transactions set forth in subparagraph (ii)(A) above, or
realizing the benefit set forth in subparagraph (ii)(B) above, or owning the
Common Shares described in subparagraph (ii)(C) above, as the case may be) after
the date upon which such Acquiring Person or Authorized Shareholder became such,
shall become void and any holder of such Rights shall thereafter have no right
to exercise such Rights under any provision of this Agreement. The Company shall
not enter into any transaction of the kind listed in this subparagraph (ii) if
at the time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as a result of
the consummation of such transactions, would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
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(iii) In the event that there shall not be sufficient authorized but
unissued Common Shares or authorized and issued Common Shares held in treasury
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be necessary to
authorize additional Common Shares for issuance upon exercise of the Rights;
provided, however, if the Company is unable so to cause the authorization of
additional Common Shares then, notwithstanding any other provision of this
Agreement, in lieu of issuing such additional Common Shares and requiring
payment therefor, upon exercise of the Rights, the Company shall pay, with
respect to each Right, to the extent permitted by applicable law and any
agreements or instruments in effect on the Share Acquisition Date to which it is
a party, cash at a rate per Right equal to the product of the Purchase Price in
effect at the time of exercise multiplied by the number of one one-hundredths of
a Preferred Share for which a Right was exercisable immediately prior to the
first occurrence of any Flip-in Event. To the extent that any legal or
contractual restrictions prevent the Company from paying the full amount of cash
payable in accordance with the foregoing sentence, the Company shall pay to
holders of the Rights as to which such payments are being made all amounts which
are not then restricted on a pro rata basis. The Company shall continue to make
payments on a pro rata basis as funds become available until such payments have
been paid in full.
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<PAGE> 34
(b)(i) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
current per share market price of the Preferred Shares (as determined pursuant
to Section 11(e) hereof) on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
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convertible securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(ii) In the event that, after the Distribution Date, the Company shall fix
a record date for the issuance of rights, options or warrants to all holders of
Common Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Common Shares (or shares
having the same rights, privileges and preferences as the Common Shares
("equivalent common shares")) or securities convertible into Common Shares or
equivalent common shares at a price per Common Share or equivalent common share
(or having a conversion price per share, if a security convertible into Common
Shares or equivalent common shares) less than the
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current per share market price of the Common Shares (as determined pursuant to
Section 11(e) hereof) on such record date, the purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Common Shares outstanding on such record date plus
the number of Common Shares which the aggregate offering price of the total
number of Common Shares and/or equivalent common shares so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Common Shares outstanding on such record date plus
the number of additional Common Shares and/or equivalent common shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. Common Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued,
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the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c)(i) In the event that the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a periodic cash dividend at a rate not in excess
of 125 percent of the rate of the last cash dividend theretofore paid), assets,
stock (other than a dividend payable in Preferred Shares) or subscription
rights, options or warrants (excluding those referred to in Section 11(b)(i)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current per
share market price of the Preferred Shares (as determined pursuant to Section
11(e) hereof) on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes) of the portion of the cash, assets, stock or evidences of
indebtedness so to be distributed (in the case of periodic cash dividends at a
rate in excess of 125 percent of the rate of the last cash dividend theretofore
paid, only that
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portion in excess of 125 percent of such rate) or of such subscription rights,
options or warrants applicable to one Preferred Share, and the denominator of
which shall be such current per share market price of the Preferred Shares. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(ii) In the event that, after the Distribution Date, the Company shall fix
a record date for the making of a distribution to all holders of the Common
Shares (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash (other than a periodic cash dividend at a rate
not in excess of 125 percent of the rate of the last cash dividend theretofore
paid), assets, stock (other than a dividend payable in Common Shares) or
subscription rights, options or warrants (excluding those referred to in Section
11(b)(ii) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
current per share market price of the Common Shares (as determined pursuant to
Section 11(e) hereof) on such record date, less the fair market value (as
determined in good faith
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<PAGE> 39
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes) of the portion of the cash, assets, stock or evidences of indebtedness
so to be distributed (in the case of periodic cash dividends at a rate in excess
of 125 percent of the rate of the last cash dividend theretofore paid, only that
portion in excess of 125 percent of such rate) or of such subscription rights,
options or warrants applicable to one Common Share, and the denominator of which
shall be such current per share market price of the Common Shares. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) In the event that, directly or indirectly, (i) the Company shall
consolidate with, or merge with or into, any Acquiring Person or Authorized
Shareholder or any Associate or Affiliate of any Acquiring Person or Authorized
Shareholder and the Company shall not be the continuing or surviving corporation
of such merger or combination, (ii) any Acquiring Person or Authorized
Shareholder or any Associate or Affiliate of any Acquiring Person or Authorized
Shareholder shall consolidate with the Company, or merge with or into the
Company and the Company shall be the continuing or surviving corporation of such
merger or consolidation and, in connection
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with such merger or consolidation, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of such other Person or
cash or any other property, or (iii) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one or more transactions, assets or earning power aggregating 50 percent or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any Acquiring Person or Authorized Shareholder or any Associate
or Affiliate of any Acquiring Person or Authorized Shareholder, then, and in
each such case, proper provision shall be made so that (A) except as provided
below, each holder of a Right shall thereafter have the right to receive, upon
the exercise thereof in accordance with the terms of this Agreement at an
exercise price per Right equal to the product of the then current Purchase Price
multiplied by the then number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in lieu of Preferred Shares, such number of
validly authorized and issued, fully paid, nonassessable and freely tradeable
Common Shares of such surviving, resulting or acquiring Person (including the
Company as the continuing or surviving corporation of a transaction described in
clause (ii) above), as the case may be, free and clear of any liens,
encumbrances and other adverse claims and not subject to any rights of call or
first refusal, as shall be equal to the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-hundredths of a Preferred
Share
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for which a Right is then exercisable and dividing that product by (y) 50
percent of the current per share market price of the Common Shares of such
Person (determined pursuant to Section 11(e) hereof) on the date of the
consummation of such Flip-over Event; (B) the issuer of such Common Shares shall
thereafter be liable for, and shall assume, by virtue of such Flip-over Event,
all the obligations and duties of the Company pursuant to this Agreement; (C)
the term "Company" shall thereafter be deemed to refer to such issuer; and (D)
such issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares to permit the exercise
of all outstanding Rights) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be possible, to its Common Shares thereafter
deliverable upon the exercise of the Rights. Notwithstanding the foregoing, if
the surviving, resulting or acquiring Person in any of the events listed above
in subparagraphs (i) through (iii), inclusive, is not a corporation or other
legal entity having equity securities, then, and in each such case, if such
surviving, resulting or acquiring Person is directly or indirectly wholly owned
by a corporation or other legal entity having equity securities, then all
references to Common Shares of such surviving, resulting or acquiring Person in
this Section 11(d) shall be deemed to be references to the Common Shares of the
corporation or other legal entity having equity securities which ultimately
controls such Person, and if there is no such
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corporation or other legal entity having equity securities, (Y) proper provision
shall be made so that such surviving resulting or acquiring Person shall create
or otherwise make available for purposes of the exercise of the Rights in
accordance with the terms of this Agreement, a type or types of security or
securities having a fair market value at least equal to the economic value of
the Common Shares which each holder of a Right would have been entitled to
receive if such surviving, resulting or acquiring Person had been a corporation
or other legal entity having equity securities; and (Z) all other provisions of
this Section 11(d) shall apply to the issuer of such securities as if such
securities were Common Shares. The Company shall not consummate any of the
transactions listed above in subparagraphs (i) through (iii), inclusive, unless
prior thereto the Company and the issuer of the Common Shares or other
securities, as the case may be, shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the foregoing, or if at the time of
such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements that, as a result of the
consummation of such transaction, would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights. Notwithstanding
the foregoing, upon the occurrence of any Flip-over Event, any Rights that are
or were at any time beneficially owned by any Acquiring Person or Authorized
Shareholder or any Associate or Affiliate of such Acquiring
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Person or Authorized Shareholder (which Acquiring Person, Authorized
Shareholder, Associate or Affiliate is engaging in one or more of the
transactions set forth in subparagraphs (i) through (iii), inclusive, above)
after the date upon which such Acquiring Person or Authorized Shareholder became
such, shall become void and any holder of such Rights shall thereafter have no
right to exercise such Rights under this Agreement. The provisions of this
Section 11(d) shall similarly apply to successive mergers or consolidations or
sales or other transfers.
In the event that the Company shall be the continuing or surviving
corporation in a merger or consolidation referred to in subparagraph (ii) above
and Common Shares of the Company are required to be issued upon exercise of the
Rights following such merger or consolidation, and if there shall not be
sufficient authorized but unissued Common Shares or authorized and issued Common
Shares held in treasury to permit the exercise in full of the Rights in
accordance with the foregoing, the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon exercise of
the Rights; provided, however, if the Company is unable to cause the
authorization of additional Common Shares, then, notwithstanding any other
provision of this Agreement, in lieu of issuing such additional Common Shares
and requiring payment therefor, upon exercise of the Rights, the Company shall
pay, with respect to each Right, to the extent
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permitted by applicable law and any agreements or instruments in effect on the
Share Acquisition Date to which it is a party, cash at a rate per Right equal to
the product of the Purchase Price in effect at the time of exercise multiplied
by the number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the occurrence of the merger or consolidation
referred to in subparagraph (ii) above. To the extent that any legal or
contractual restrictions prevent the Company from paying the full amount of cash
payable in accordance with the foregoing sentence, the Company shall pay to
holders of the Rights as to which such payments are being made all amounts which
are not then restricted on a pro rata basis. The Company shall continue to make
payments on a pro rata basis as funds become available until such payments have
been paid in full.
(e) (i) For the purpose of any computation hereunder, the "current per
share market price" of Common Shares on any date shall be deemed to be the
average of the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the current per share
market price of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible into such Common Shares (other than the
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Rights), or (B) any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "current
market price" shall be appropriately adjusted to take into account ex-dividend
trading or to reflect the current market price per Common Share equivalent. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common Shares are
not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or, if on any such date the Common Shares are not quoted by
any such organization, the average of the closing bid and asked
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prices as furnished by a professional market maker making a market in the Common
Shares selected by the Board of Directors of the Company. The term "Trading Day"
shall mean any day on which the principal national securities exchange on which
the Common Shares are listed or admitted to trading is open for the transaction
of business or, if the Common Shares are not listed or admitted to trading on
any national securities exchange, a Business Day. If the Common Shares are not
publicly held or not so listed or traded, or not the subject of available bid
and asked quotes, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current per share
market price" of the Preferred Shares shall be determined in the same manner as
set forth above for Common Shares in clause (i) of this Section 11(e) (other
than the last sentence thereof). If the current per share market price of the
Preferred Shares cannot be determined in the manner provided above, the "current
per share market price" of the Preferred Shares shall be conclusively deemed to
be the current per share market price of the Common Shares multiplied by one
hundred (as such may be appropriately adjusted to reflect any stock split, stock
dividend, recapitalization or similar transaction relating to the Common
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Shares occurring after the date of this Agreement). If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded, or the
subject of available bid and asked quotes, "current per share market price"
shall mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the "current market price" of one one-hundredth of a
Preferred Share shall be equal to the "current market price" of one Preferred
Share divided by 100.
(f) Except as set forth below, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least 1 percent in such price; provided, however, that any adjustments which by
reason of this Section 11(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a Common Share or other share or one-millionth of a Preferred
Share, as the case may be. Notwithstanding the first sentence of this Section
11(f), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which requires
such adjustment, or (ii) the Expiration Date.
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(g) If as a result of an adjustment made pursuant to Sections 11(a) or
11(d) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
shares contained in this Section 11 and the provisions of Sections 7, 9, 10 and
14 hereof with respect to the Preferred Shares shall apply on like terms to any
such other shares.
(h) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(i) Unless the Company shall have exercised its election as provided in
Section 11(j) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one one-millionth
of
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a Preferred Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a Preferred Share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(j) The Company may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been
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issued, shall be at least 10 calendar days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(j), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(k) Irrespective of any adjustment or change in the Purchase Price or the
number or kind of shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-hundredth of a share and the number of shares
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which were expressed in the initial Right Certificate issued hereunder.
(l) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(m) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the
Preferred Shares or other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares or other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
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(n) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare a dividend on the outstanding Common
Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares,
(iii) combine the outstanding Common Shares into a smaller number of shares, or
(iv) issue any shares of its capital stock in a reclassification of the
outstanding Common Shares, the number of Rights associated with each Common
Share then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each Common Share following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event.
(o) Anything in Sections 11 (a) through (n), inclusive, hereof to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that the Company in its sole discretion
shall determine to be advisable in order that
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any consolidation or subdivision of the Preferred Shares, issuance wholly for
cash of any of the Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, stock dividends or
issuance of rights, options or warrants referred to hereinabove in this Section
11, hereafter made by the Company to holders of its Preferred Shares shall not
be taxable to such shareholders.
(p) Notwithstanding any other provision of this Agreement, no adjustment to
the Purchase Price, the number of shares of capital stock (or fractions of a
share) for which a Right is exercisable or the number of Rights outstanding
shall be made or be effective if such adjustment would have the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such adjustment, including, without limitation, the benefits under
Sections 11(a)(ii) and 11(d) hereof, unless the terms of this Agreement are
amended so as to preserve such benefits.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 hereof, the Company
shall promptly prepare a certificate setting forth such adjustment (including a
description of any Rights which have become void as a result thereof) and a
brief statement of the facts accounting for such
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adjustment and promptly file with the Rights Agent and with each transfer agent
for the Preferred Shares and Common Shares a copy of such certificate.
Section 13. Notice of Adjusted Purchase Price or Number or Type of Shares
to Holders of Rights. Whenever an adjustment is made as provided in Section 11
hereof after the Distribution Date, the Company shall mail a brief summary of
such adjustment to each holder of a Right Certificate in accordance with Section
25 hereof.
Section 14. Fractional Rights and Fractional Shares. (a) The Company shall
not be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall
be paid as promptly as practicable to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated
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transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used and shall be conclusive. for all purposes.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a
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Preferred Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one one-hundredth
of a Preferred Share, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one
one-hundredth of a Preferred Share. For purposes of this Section 14(b), the
current market value of one one-hundredth of a Preferred Share shall be the
closing price of one one-hundredth of a Preferred Share (as determined pursuant
to Section 11(e)(ii) hereof) for the Trading Day immediately prior to the date
of such exercise.
(c) Following the occurrence of an event described in Section 11(a)(ii) or
Section 11(d), the Company shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of fractional Common Shares, the Company may
pay to the registered holders of Right
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Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one Common Share. For purposes of this
Section 14(c), the current market value of one Common Share
shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(e)(i) hereof) for
the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as otherwise provided by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate
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and in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations under this
Agreement, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Share
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certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Share certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
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the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, suit, action, proceeding or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the
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costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly.
The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of
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Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement
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upon the following terms and conditions, by all of which the Company and the
holders of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own negligence,
bad faith or willful misconduct.
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(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution and delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 hereof (including any adjustment which results in Rights becoming
void) or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice of any such adjustment or voidance); nor shall
it by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares or other securities to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any Preferred Shares or other securities will,
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when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Secretary or the Treasurer, of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein
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shall preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof. The Rights Agent shall not be under any duty
or responsibility to insure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of Right
Certificates.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of
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election to purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred Shares by registered or certified mail, and
to the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any
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Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of the States of Ohio or New
York (or of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the States of Ohio or New
York), in good standing, having a principal office in the States of Ohio or New
York, which is authorized under such laws to exercise corporate trust powers and
is subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 million and which shall otherwise meet any requirements
imposed by the New York Stock Exchange on transfer agents and registrars. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and
Preferred Shares, and mail a notice thereof in writing to the
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registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company may, at
its option, at any time prior to 5:00 P.M., Cleveland, Ohio time, on the earlier
of (i) the occurrence of a Triggering Event or (ii) the Final Expiration Date,
redeem all but not less than all of the then-outstanding Rights at a redemption
price of $.03 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
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(b) In addition, if at any time (including, without limitation, after the
Distribution Date) a Person shall obtain the prior authorization of the
Company's shareholders required pursuant to the Authorization Statute for a
transaction in which such Person will make a fully financed offer for all
outstanding Common Shares offering only cash, then, in connection with the
consummation of such transaction, the Directors of the Company shall (even
though the right of redemption may have otherwise expired) redeem all, but not
less than all, of the Rights at the Redemption Price.
(c) Immediately upon the effective date of the action of the Board of
Directors of the Company ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall publicly
announce such action. Within 10 calendar days after ordering the redemption of
the Rights, the Company shall give notice of such redemption to the holders of
the then-outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given,
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whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
(d) At any time following the Share Acquisition Date, the Directors of
the Company may relinquish their right to redeem the Rights under paragraph (a)
above by duly adopting a resolution to that effect subject, however, to Section
23(b) hereof. Promptly after adoption of such a resolution, the Company shall
publicly announce such action. Immediately upon adoption of such resolution, the
rights of the Directors under Section 23(a) shall terminate without further
action and without any notice.
Section 24. Notice of Certain Events. In case, after the Distribution Date,
the Company shall propose (a) to pay any dividend payable in stock of any class
to the holders of Preferred Shares or to make any other distribution to the
holders of Preferred Shares (other than a periodic cash dividend at a rate not
in excess of 125 percent of the rate of the last periodic cash dividend
theretofore paid), or (b) to offer to the holders of Preferred Shares rights,
options or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, or (c) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding
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Preferred Shares), or (d) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50 percent of the assets or earning power of the Company and its
Subsidiaries, taken as a whole, to any other Person or Persons, or (e) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution or
offering of rights, options or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares, if any such date is to be fixed,
and such notice shall be so given, in the case of any action covered by clause
(a) or (b) above, at least 20 calendar days prior to the record date for
determining holders of the Preferred Shares for purposes of such action, and, in
the case of any such other action, at least 20 calendar days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of the Preferred Shares, whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) or Section 11(d)
hereof shall occur, then, in any
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such case, the Company shall as soon as practicable thereafter give to the
Rights Agent and each holder of a Right Certificate, in accordance with Section
25 hereof, a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights.
Section 25. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Brush Wellman Inc.
1200 Hanna Building
Cleveland, Ohio 44115
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Ameritrust Company National Association
Corporate Trust Division
P.O. Box 6477
Cleveland, Ohio 44101
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent
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by first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Rights Agent.
Section 26. Supplements and Amendments. Prior to the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing Common Shares. From and after the Distribution Date and subject to
the penultimate sentence of this Section 26, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem desirable,
including, without limitation, the addition of other events requiring adjustment
to the Rights under Section 11(a)(ii) or 11(d) or procedures relating to the
redemption of the Rights, which change, amendment or supplement shall not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or Authorized Shareholder or an Affiliate or Associate of
any such person); provided, this Agreement may not be supplemented or amended to
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lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating
to when the Rights may be redeemed at such time as the Rights are not then
redeemable (subject, however, to Section 23(b) hereof), or (B) any other time
period unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, or the benefits to, the holders of Rights. Upon the
delivery of a certificate from an officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration Date, the
Purchase Price, or the number of one one-hundredths of a Preferred Share for
which a Right is exercisable. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares.
Section 27. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder. The Company
covenants and agrees that it shall not (i) consolidate with, (ii) merge with or
into, or (iii) sell or transfer to, in one or more transactions, assets or
earning power aggregating more than 50 percent of the assets or earning power of
the Company
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and its Subsidiaries, taken as a whole, any Acquiring Person or Authorized
Shareholder or any Affiliates or Associates of such Acquiring Person or
Authorized Shareholder if at the time of or after such consolidation, merger or
sale there would be any charter or by-law provisions or any rights, options,
warrants or other instruments or securities outstanding or agreements in effect
or any other actions taken which would eliminate or otherwise diminish the
benefits intended to be afforded by the Rights without the affirmative vote of
the holders of at least 80 percent of the then-outstanding Rights beneficially
owned by Persons other than such Acquiring Person or Authorized Shareholder or
any Affiliates or Associates of such Acquiring Person or Authorized Shareholder.
The Company shall not consummate any such consolidation, merger or sale unless
prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section.
Section 28. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates.
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Section 29. Action by the Board of Directors. Whenever any action hereunder
or in connection with the Rights is required or permitted to be taken by the
Board of Directors of the Company, such action may be taken by the Executive
Committee of the Board of Directors or by any other duly authorized committee
thereof.
Section 30. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the internal substantive
laws of the State of Ohio and for all purposes shall be governed by and
construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all
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such counterparts shall together constitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BRUSH WELLMAN INC.
[SEAL]
Attest:
By /s/ Clark G. Waite By /s/ Raymond A. Foos
--------------------------- ----------------------------
Secretary Chairman of the Board,
President and Chief
Executive Officer
[SEAL]
Attest: AMERITRUST COMPANY NATIONAL
ASSOCIATION
By /s/ Neal J. Gerstenschlager By /s/ Victor W. LaTessa
---------------------------- ----------------------------
Neal J. Gerstenschlager Victor W. LaTessa
Senior Trust Officer Trust Officer
& Assistant Secretary & Assistant Secretary
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Exhibit A
CERTIFICATE OF
ADOPTION OF AMENDMENT
TO AMENDED ARTICLES OF INCORPORATION
of
BRUSH WELLMAN INC.
We, Raymond A. Foos, Chairman of the Board, President and Chief Executive
Officer, and Clark G. Waite, Secretary, of Brush Wellman Inc., an Ohio
corporation (the "Corporation"), do hereby certify that pursuant to the
authority conferred upon the Board of Directors by the Amended Articles of
Incorporation of the Corporation, the said Board of Directors at a meeting duly
called and held on February 28, 1989, at which a quorum was present and acting
throughout, adopted the following resolution to amend the Amended Articles of
Incorporation of the Corporation pursuant to Section 1701.70(B)(1) of the Ohio
Revised Code:
RESOLVED, that Division A of Article FOURTH of the Amended Articles of
Incorporation of this Corporation, which was added to Article FOURTH of the
Amended Articles of Incorporation on January 26, 1988, be, and it hereby is,
amended and restated as set forth below:
DIVISION A-1
SERIAL PREFERRED STOCK, SERIES A
Section 1. There is established hereby a series of Serial Preferred Stock
that shall be designated "Serial Preferred Stock, Series A" (hereinafter
sometimes called this "Series" or the "Series A Preferred Shares") and that
shall have the terms set forth in this Division A-1.
Section 2. The number of shares of this Series shall be 450,000.
Section 3. (a) The holders of record of Series A Preferred Shares shall be
entitled to receive, when and as declared by the Board of Directors in
accordance with the terms hereof, out of funds legally available for the
purpose, cumulative quarterly dividends payable in cash on the first day
<PAGE> 80
of January, April, July and October in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a Series A Preferred
Share or fraction of a Series A Preferred Share in an amount per share (rounded
to the nearest cent) equal to the lesser of (i) $1.50 or (ii) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock, or a subdivision of the outstanding
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any Series A Preferred Share or fraction of a Series A Preferred Share. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount to
which holders of Series A Preferred Shares were entitled immediately prior to
such event under clause (ii) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Dividends shall begin to accrue and be cumulative on outstanding Series
A Preferred Shares from the Quarterly Dividend Payment Date next preceding the
date of issue of such Series A Preferred Shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Shares entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. No dividends
shall be paid upon or declared and set apart for any Series A Preferred Shares
for any dividend period unless at the same time a dividend for the same dividend
period, ratably in proportion to the respective annual dividend rates fixed
therefor, shall be paid upon or declared and set apart for all Serial Preferred
Stock of all
A-2
<PAGE> 81
series then outstanding and entitled to receive such dividend. The Board of
Directors may fix a record date for the determination of holders of Series A
Preferred Shares entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 40 days prior to the
date fixed for the payment thereof.
Section 4. Subject to the provisions of Section 6(b)(iii) of Division A and
in accordance with Section 4 of Division A, the Series A Preferred Shares shall
be redeemable from time to time at the option of the Board of Directors of the
Corporation, as a whole or in part, at any time at a redemption price per share
equal to one hundred times the then applicable Purchase Price as defined in that
certain Rights Agreement, dated as of January 26, 1988 between the Corporation
and AmeriTrust Company National Association (the "Rights Agreement"), as the
same may be from time to time amended in accordance with its terms, which
Purchase Price is $100 as of January 26, 1988, subject to adjustment from time
to time as provided in the Rights Agreement. Copies of the Rights Agreement are
available from the Company upon request. In the event that fewer than all of the
outstanding Series A Preferred Shares are to be redeemed, the number of shares
to be redeemed shall be as determined by the Board of Directors and the shares
to be redeemed shall be selected pro rata or by lot in such manner as shall be
determined by the Board of Directors.
Section 5. (a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation (hereinafter
referred to as a "Liquidation"), no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon Liquidation) to
the Series A Preferred Shares, unless, prior thereto, the holders of Series A
Preferred Shares shall have received at least an amount per share equal to one
hundred times the then applicable Purchase Price as defined in the Rights
Agreement, as the same may be from time to time amended in accordance with its
terms which Purchase Price is $100 as of January 26, 1988, subject to adjustment
from time to time as provided in the Rights Agreement, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Shares shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of Common
Stock (the "Series A Liquidation Preference").
(b) In the event, however, that the net assets of the Corporation are not
sufficient to pay in full the amount of the Series A Liquidation Preference and
the liquidation preferences of all other series of Serial Preferred Stock, if
A-3
<PAGE> 82
any, which rank on a parity with the Series A Preferred Shares as to
distribution of assets in Liquidation all shares of this Series and of such
other series of Serial Preferred Stock shall share ratably in the distribution
of assets (or proceeds thereof) in Liquidation in proportion to the full amounts
to which they are respectively entitled.
(c) In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in Common Stock, or effect a subdivision or
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount to which holders of Series A Preferred Shares were entitled
immediately prior to such event pursuant to the proviso set forth in paragraph
(a) above, shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(d) The merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into it, or the sale, lease
or conveyance of all or substantially all the property or business of the
Corporation, shall not be deemed to be a Liquidation for the purposes of this
Section 5.
Section 6. The Series A Preferred Shares shall not be convertible into
Common Stock.
IN WITNESS WHEREOF, Raymond A. Foos, Chairman of the Board, President and
Chief Executive Officer, and Clark G. Waite, Secretary, of Brush Wellman Inc.,
acting for and on behalf of the Corporation, have hereunto subscribed their
names this 28th day of February, 1989.
------------------------------
Chairman of the Board,
President and Chief Executive
Officer
------------------------------
Secretary
A-4
<PAGE> 83
Exhibit B
[Form of Right Certificate]
Certificate No. R-
Rights
-------------------
NOT EXERCISABLE AFTER JANUARY 26, 1998 OR EARLIER IF REDEEMED. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.03 PER RIGHT
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE OR WERE ISSUED TO, OR BENEFICIALLY OWNED BY, A PERSON
WHO IS OR WAS AN ACQUIRING PERSON OR AN AUTHORIZED SHAREHOLDER OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR AN AUTHORIZED SHAREHOLDER
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 11(a)(ii) OR SECTION 11(d) OF THE RIGHTS
AGREEMENT.*]
Right Certificate
BRUSH WELLMAN INC.
This certifies that _____________________ , or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of January 26, 1988 and amended on February 28,
1989 (the "Rights Agreement") between Brush Wellman Inc., an Ohio corporation
(the "Company"), and Ameritrust Company National Association (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is
- -------------------
* The portion of the legend in brackets shall be inserted only if applicable.
B-1
<PAGE> 84
defined in the Rights Agreement) and prior to 5:00 P.M. (New York time) on
January 26, 1998 at the principal office of the Rights Agent designated for such
purpose, one one-hundredth of a fully paid nonassessable share of Serial
Preferred Stock, Series A, without par value (the "Preferred Shares"), of the
Company, at a purchase price of $100 per one one-hundredth of a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price per
one one-hundredth of a Preferred Share set forth above, are the number and
Purchase Price as of January 26, 1988, based on the Preferred Shares as
constituted at such date.
Upon the occurrence of certain events specified in Sections 11(a)(ii) and
11(d) of the Rights Agreement, if any of the Rights evidenced by this Right
Certificate are or were at any time beneficially owned by an Acquiring Person or
an Authorized Shareholder or any Affiliate or Associate of an Acquiring Person
or Authorized Shareholder (as such terms are defined in the Rights Agreement)
after the date upon which such Acquiring Person or Authorized Shareholder became
such, such Rights shall become null and void and no holder shall have any
B-2
<PAGE> 85
right to exercise such Rights from and after the occurrence of such specified
events.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of capital shares or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are available from the Company upon request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights
B-3
<PAGE> 86
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.03 per Right.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter
B-4
<PAGE> 87
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of , 19 .
ATTEST: BRUSH WELLMAN INC.
By
- ----------------------------- ----------------------------
Secretary Title:
Countersigned:
By
---------------------------
Authorized Signature
B-5
<PAGE> 88
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED, ____________________________________________________
hereby sells, assigns and transfers unto ____________________________________
_____________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _____________________ , 19______
___________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a person who
B-6
<PAGE> 89
is or was an Acquiring Person or an Authorized Shareholder or an Affiliate or
Associate of any such Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Authorized
Shareholder or an Affiliate or Associate of any such Person.
Dated: , 19
----------------- -- ------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
B-7
<PAGE> 90
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right
Certificate.)
To Brush Wellman Inc.:
The undersigned hereby irrevocably elects to exercise ______________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: , 19
----------------- --
------------------------------
Signature
B-8
<PAGE> 91
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate)
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Authorized Shareholder or an Affiliate or Associate of any such Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
person who is, was or became an Acquiring Person or an Authorized Shareholder or
an Affiliate or Associate of any such Person.
Dated: , 19
---------------- -- ------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-9
<PAGE> 92
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On January 26, 1988, the Board of Directors of Brush Wellman Inc. (the
"Company") declared a dividend distribution of one right (a "Right") for each
outstanding share of Common Stock, $1.00 par value, of the Company (the "Common
Shares"). The distribution was paid on February 8, 1988 (the "Record Date") to
the stockholders of record as of the close of business on the Record Date. Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Serial Preferred Stock, Series A, without par value,
of the Company (the "Preferred Shares"), at a price of $100 (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement dated as of January 26, 1988, as amended, (the
"Rights Agreement") between the Company and Ameritrust Company National
Association, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days (or such later date as may be
specified by a majority of the Directors then in office) following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20 percent or more of the outstanding Common Shares without
obtaining shareholder authorization pursuant to and otherwise complying in full
with Section 1701.831 of the Ohio Revised Code, as it may be amended from time
to time (the "Authorization Statute"), (ii) 10 days (or such later date as may
be specified by a majority of the Directors then in office) following the
commencement of a tender offer or exchange offer for 20 percent or more of such
outstanding Common Shares or (iii) the first occurrence of certain events
described below which would result in the Rights becoming exercisable to
purchase Common Shares or common stock of another person (the earlier of such
dates being hereinafter called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a copy of this Summary
of Rights attached thereto. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the Common
Shares. Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of Common Shares will contain a notation
<PAGE> 93
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for Common Shares outstanding as of the Record Date, even
without a copy of this Summary of Rights attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on January 26, 1998, unless earlier redeemed by the Company as described
below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares or the Common
Shares of certain rights, options or warrants to subscribe for Preferred Shares
or Common Shares, as the case may be, or convertible securities at less than the
current market price of the Preferred Shares or the Common Shares, as the case
may be, or (iii) upon the distribution to holders of the Preferred Shares or the
Common Shares of evidences of indebtedness, cash (excluding periodic cash
dividends at a rate not in excess of 125 percent of the rate of the last cash
dividend theretofore paid), assets, stock (excluding dividends payable in
Preferred Shares or Common Shares, as the case may be) or of subscription
rights, options or warrants (other than those referred to above).
In the event that (i) an Acquiring Person or an Authorized Shareholder
(which is a person or group of affiliates or associated persons that have
acquired 20% or more of the Common Shares of the Company and has complied in
full with the requirements of the Authorization Statute) merges into the Company
and the Company's Common Shares are not changed or exchanged or engages in one
of a number of self-dealing transactions specified in the Rights Agreement, (ii)
during such time as there is an Acquiring Person or Authorized Shareholder,
there is a reclassification of securities or other transaction which increases
by more than one percent the proportionate amount of Company securities owned by
the Acquiring Person or Authorized Shareholder, or (iii) if a person or group of
affiliated or associated persons becomes the beneficial owner of 20 percent or
more of the
C-2
<PAGE> 94
Company's Common Shares the acquisition of which requires compliance with the
Authorization Statute, (excluding however, any case where both (a) the
Authorization Statute is in full force and effect and applies to the acquisition
of Common Shares by such person and (b) such person obtains the prior
authorization (or authorizations) of the Company's shareholders pursuant to, and
otherwise complies in full with, the Authorization Statute), proper provision
shall be made so that each holder of a Right, other than Rights that are or were
beneficially owned by such person after the date upon which the Acquiring Person
or Authorized Shareholder became such (which will thereafter be void), will
thereafter have the right to receive upon exercise thereof at the then current
exercise price of the Right, that number of Common Shares having a market value
of two times the exercise price of the Right (or, under certain circumstances,
an amount of cash equal to the Purchase Price).
In the event that the Company is acquired by an Acquiring Person or an
Authorized Shareholder in a merger or other business combination transaction or
50 percent or more of its assets or earning power are sold to an Acquiring
Person or an Authorized Shareholder, proper provision shall be made so that each
holder of a Right, other than Rights that are or were beneficially owned by the
Acquiring Person or Authorized Shareholder after the date upon which the
Acquiring Person or Authorized Shareholder became such (which will thereafter be
void), shall thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price, that number of shares of common stock (or,
under certain circumstances, an economically equivalent security or securities)
of the surviving, resulting or acquiring person which at the time of such
transaction would have a market value of two times the Purchase Price (or, under
certain circumstances, an amount of cash equal to the Purchase Price).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1
percent in such Purchase Price. No fractional Preferred Shares will be issued
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share or smaller fractions, which may, at the election of the Company,
be evidenced by depositary receipts), and in lieu thereof, a payment in cash
will be made based on the market price of the Preferred Shares on the last
trading day prior to the date of exercise.
The Company may redeem the Rights in whole, but not in part, at a price of
$.03 per Right (the "Redemption Price"), at any time prior to the close of
business on the earlier of (i) the first occurrence of certain events described
above
C-3
<PAGE> 95
which would result in the Rights becoming exercisable to purchase Common Shares
or common stock of another person or (ii) January 26, 1998. In addition, the
Directors are required to redeem the Rights in whole in connection with the
consummation of a transaction in which a person or group makes a fully-financed
cash offer for all outstanding Common Shares which is lawful in every material
respect and such transaction is authorized by the shareholders of the Company
pursuant to the Authorization Statute. Immediately upon the effective date of
the action of the Board of Directors of the Company electing to redeem the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price. The Company will
give notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
on the Registry Books of the Rights Agent.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Prior to the Distribution Date, the Rights Agreement may be amended or
supplemented by the Company and the Rights Agent, without the approval of any
holders of Rights, in any manner, except for an amendment or supplement which
would change the Redemption Price or the Final Expiration Date, the Purchase
Price, or reduce the number of one one-hundredths of a Preferred Share for which
a Right is then exercisable. After the Distribution Date, the Rights Agreement
may be so amended or supplemented to cure ambiguity, correct or supplement
defective or inconsistent provisions or otherwise as the Company may deem
necessary or desirable and shall not adversely affect the interests of the
Rights holders.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
January 26, 1988. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
C-4
<PAGE> 1
EXHIBIT (4c)
EXECUTION COPY
ISSUING AND PAYING AGENCY AGREEMENT
THIS AGREEMENT, dated as of February 1, 1990 by and between BRUSH
WELLMAN INC., an Ohio corporation, (the "Company") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, a New York banking corporation (the "Issuing and Paying
Agent"), in connection with the issuance and payment of the Notes referred to in
this Agreement.
W I T N E S S E T H :
SECTION 1
Appointment of Paying Agent
The Company hereby designates the Issuing and Paying Agent as
depository for the safekeeping of its Notes deposited with the Issuing and
Paying Agent by the Company, and to act as agent of the Company in respect to
the preparation, delivery and payment of such Notes. Attached hereto as Exhibit
A is a copy of the corporate resolutions of the Company authorizing this
Agreement.
SECTION 2
Issuance of Notes
The Company proposes to issue and sell, from time to time, Medium-Term
Notes (the "Notes") having maturities of 9 months to 30 years from their dates
of issue as selected by
<PAGE> 2
2
the purchaser and agreed to by the Company up to an aggregate principal amount
outstanding of $75,000,000. The Company has appointed Shearson Lehman Hutton
Inc. and McDonald & Company Securities, Inc. its agents for offering such Notes
(the "Agents").
SECTION 3
Description of Notes
Each Note will be signed manually by any two officers of the Company
who shall be any two of the chief financial officer, any assistant treasurer and
any other officer of the Company designated in writing by the chief financial
officer of the Company to the Issuing and Paying Agent (an "Authorized
Representative"). The Notes shall be substantially in the forms set forth in
Exhibit B hereto and shall have a maturity of not less than 9 months from date
of issue and not more than 30 years from date of issue, and shall be issued in
denominations of $500,000.00 and larger denominations in integral multiples of
$1,000.
<PAGE> 3
3
SECTION 4
Completion, Authentication and Delivery of Notes
a. The procedures for completion, authorization, delivery and settlement of
the Notes will be as set forth herein and in the Administrative Procedures
attached as Exhibit C hereto.
b. From time to time, the Issuing and Paying Agent shall receive instructions
by telecopy (or other acceptable written means) from an Authorized
Representative regarding the completion and delivery of some, or all of
the Notes. Such instructions shall include:
(i) the name of the person in whose name a Note is to be registered (such
person shall be sometimes hereinafter referred to as the "Registered
Owner");
(ii) the address of the Registered Owner;
(iii) the address of the Registered Owner for interest payments, if
different from (ii) above;
(iv) the taxpayer identification number of the Registered Owner;
(v) the principal amount of such Note;
(vi) the interest rate to be borne by such Note;
(vii) the date of maturity of such Note;
(viii) the issue date ("Settlement Date") of such Note;
and
(ix) delivery instructions.
At such time the Company shall also deliver to the Issuing and Paying Agent
Notes complying with such instructions executed by any two Authorized
Representatives.
<PAGE> 4
4
c. Upon receipt of such instructions, the Issuing and
Paying Agent shall:
(i) cause each Note to be manually authenticated by any
one of the officers of the Issuing and Paying Agent
duly authorized for such purpose; and
(ii) deliver each Note to the presenting Agent or its designee, which
delivery shall be against a signed, time stamped receipt on the
Settlement Date as herein provided or as otherwise provided in such
instructions.
d. Instructions regarding the Note and the completed Note must be received by
the Issuing and Paying Agent not later than 3:00 p.m., New York City time,
on the business day next preceding the date on which delivery for the Note
is to occur.
SECTION 5
Delivery of the Notes
The Issuing and Paying Agent shall deliver Notes to the Agent or its
designees only against a signed, time stamped receipt. A Note shall be deemed to
have been delivered if the Issuing and Paying Agent delivers such Note to the
presenting Agent and receives such Agent's signed, timed stamped receipt for the
delivery. Once the Issuing and Paying Agent has delivered a Note to an Agent
against receipt, the Company shall bear the risk that such Agent fails to remit
payment therefor or return same to the Issuing and Paying Agent.
<PAGE> 5
5
SECTION 6
Calculation and Payment of Interest
Interest payments on each Note will be made on the date specified in
each Note and at maturity or redemption to the Registered Owner thereof.
The procedures to be followed by each party hereto are set forth
below:
a. The Issuing and Paying Agent shall arithmetically determine the amount
of interest due on each outstanding Note on each Interest Payment Date
as set forth herein and shall notify the Company at least five days
prior to any Interest Payment Date of the amount of interest payable
on each of said Notes and the total amount of interest payable.
b. The Company shall remit funds to the Issuing and Paying Agent in an
amount sufficient to pay all interest due on the Notes in the manner
hereinafter set forth in Section 8 hereof.
c. Interest payments on each Note shall be made on each February 1 and
August 1 and at maturity (each an "Interest Payment Date"), commencing
with the Interest Payment Date next following the date of such Note;
provided, however, that if any Note is dated between the Record Date
(as hereinafter defined) next preceding an Interest Payment Date and
such Interest Payment Date, the first payment of interest on such Note
will be the next succeeding Interest Payment Date. Whenever any
payment to be made under a Note is stated to be due on a date on which
banks are not open for business in New York, New York, such payment
shall be made on the next succeeding day on which banks are open for
business in New York, New York. Interest on each Note will accrue from
its original issue date as it appears on such Note or from the most
recent Interest Payment Date to which interest has been paid. Interest
(including payments for partial periods) will be calculated on the
basis of a 360- day year of twelve 30-day months. All interest
payments on any Note (other than interest due at maturity or upon
redemption on a date other than an Interest Payment Date) will be
payable by check of the Issuing and Paying Agent mailed on the
Interest Payment Date to the person in whose name the Note is
registered at the close of business on January
<PAGE> 6
6
15 or July 15 as applicable, next preceding such February 1 or August
1 (the "Record Date") at such holder's address as shown in the
register referred to in Section 9, or at such other place in the
United States as such holder shall designate to the Issuing and Paying
Agent from time to time in writing; provided, however, that upon the
written request of a registered holder of Notes of any series in an
aggregate principal amount exceeding $1,000,000 received by the
Issuing and Paying Agent prior to the Record Date for the applicable
Interest Payment Date, payment of interest shall be made by wire
transfer in immediately available funds into an account specified by
such registered holder. Interest payable at maturity or early
redemption, however, will be payable to the person to whom principal
shall be payable. If the Issuing and Paying Agent mails or sends by
wire transfer the interest payable on any Note to any address or
account other than the one required hereunder, the Issuing and Paying
Agent shall indemnify the Company from any loss, liability or expense
arising therefrom.
d. The Issuing and Paying Agent shall, at the expense of the Company, be
responsible for withholding taxes, if any, on interest only to the
extent that the Issuing and Paying Agent has been instructed by the
Company or any governmental agency that any taxes should be withheld.
The Issuing and Paying Agent shall, at the expense of the Company,
solicit from Registered Owners information or other reports or returns
necessary or required by law or regulation in connection with any
federal or state requirements to report information or withhold for
taxes.
SECTION 7
Payment of Principal
Subject to receipt of funds as provided in Section 8 hereof and upon
presentation of an appropriate Note, payment of principal and interest due at
maturity or upon redemption for each Note will be made upon surrender of such
Note at the office of the Issuing and Paying Agent located at 30 West Broadway,
New York, New York 10015 (or at such other location as the Company shall have
previously notified the
<PAGE> 7
7
registered holder of such Note) in immediately available funds. The Issuing and
Paying Agent will mark the Note "CANCELLED" and remit it directly to the
Company. Interest will cease to accrue upon a Note after the date on which it is
stated to mature or on which it has been called for redemption (so long as funds
sufficient for the payment thereof have been deposited with the Issuing and
Paying Agent).
The Issuing and Paying Agent shall provide the Company by the 15th
of each month with a list of the principal and interest to be paid on Notes
maturing or being redeemed in the next succeeding month. At the request of the
Company, the Issuing and Paying Agent shall render to the Company semi-annual
and annual statements (or more frequently at the reasonable request of the
Company) of receipt and disbursement of the funds received by the Issuing and
Paying Agent.
SECTION 8
Deposit of Funds
The Company shall, on or prior to each Interest Payment Date, pay to
the Issuing and Paying Agent an amount in immediately available funds sufficient
to pay all interest due on outstanding Notes on such Interest Payment Date and
shall, on or prior to each maturity or redemption date of any Note, pay to the
Issuing and Paying Agent an amount in immediately available funds sufficient to
pay the principal
<PAGE> 8
8
of any such Note and interest accruing thereon to the maturity date or
redemption date.
Defeasance
At the Company's option, the Company shall be deemed to have been
discharged from its obligations with respect to the Notes upon satisfaction of
the applicable conditions set forth below:
(1) the Company shall have deposited or caused to be deposited
irrevocably with the Issuing and Paying Agent as trust funds in trust,
specifically pledged as security for, and dedicated solely to the benefit of the
holders of the Notes (i) money in an amount, or (ii) U.S. Government Obligations
(as defined below) which through the payment of interest and principal in
respect thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount, or (iii) a
combination of (i) and (ii), sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Issuing and Paying Agent, to pay and
discharge each installment of principal of and premium, if any, and interest on,
the outstanding Notes on such dates that such installments of interest or
principal and premium are due;
(2) such deposit will not result in a breach or violation of or
constitute a default under this Agreement or any other agreement or instrument
to which the Company is a party or by which it is bound;
(3) no Event of Default or event (including such deposit) which, with
notice or lapse of time or both, would become an Event of Default with respect
to the Notes shall have occurred and be continuing on the date of such deposit
and no Event of Default under Section 18 (1) (e) or Section 18 (1) (f) shall
have occurred and be continuing on the 91st day after such date; and
(4) the Company shall have delivered to the Issuing and Paying Agent
an opinion of counsel to the effect that the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or similar IRS
pronouncement or that there has been a change in law in either case with the
result that the holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance or
discharge.
<PAGE> 9
9
"U.S. Government Obligations" means (i) direct obligations of the
United States for which its full faith and credit are pledged for the full and
timely payment thereof, (ii) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States, the full and
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation of the United States, or (iii) certificates or receipts representing
direct ownership interests in obligations or specified portions (such as
principal or interest) of obligations described in (i) or (ii), which
obligations are held by a custodian in safekeeping on behalf of such
certificates or receipts.
SECTION 9
Registration; Transfer
a. The Issuing and Paying Agent shall maintain a register in which it shall
register the names, addresses and taxpayer identification numbers of the
holders of the Notes and shall register the transfer of Notes. Such
register shall be open to the Company for inspection and copying upon
request.
b. A Note may be transferred only by surrender of the Note for registration
of transfer at the office of the Issuing and Paying Agent referred to
below (or at such other location as the Company shall have previously
notified the registered holder of the Note), duly endorsed or accompanied
by a written instrument of
<PAGE> 10
10
transfer in form satisfactory to the Issuing and Payment Agent duly
executed by the registered holder, and thereafter a new Note in the same
principal amount will be issued to the designated transferee. No service
charge shall be made for any such registration of transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge in connection therewith. No transfer of any Note shall
be made if such transfer would not comply with the restrictions on
transfer contained in such Note.
c. Each Note shall bear an original issue date which, with respect to any
Note (or portion hereof), shall remain the same for all Notes subsequently
issued upon transfer, exchange or substitution of such original Note
regardless of the date of issuance of any such subsequently issued Note.
d. Each Note is exchangeable for a like aggregate principal amount of Notes
of a different authorized denominations, each with a minimum denomination
of $500,000 and larger denominations in integral multiples of $1000, as
requested by the Holder surrendering the same at the Issuing and Payment
Agent's offices.
SECTION 10
Persons Deemed Owners
Prior to due presentment of a Note for registration of transfer, the
Company, and any agent of the Company may treat the person in whose name such
Note is registered as the
<PAGE> 11
11
owner of such Note for the purpose of receiving payments of principal and
interest, if any, on such Note and for all other purposes whatsoever, whether or
not such Note be overdue, and neither the Company, nor the Issuing and Payment
Agent (nor any agent of the Company) shall be affected by notice to the
contrary.
SECTION 11
Mutilated, Lost, Stolen or Destroyed Notes
In case any Note shall become mutilated or destroyed, lost or stolen,
the Company shall execute and upon its request the Issuing and Payment Agent
shall authenticate and deliver, a new Note of like tenor and principal amount
having a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Note or in lieu of and substitution for the Note destroyed,
lost or stolen. In every case the applicant for a substituted Note shall furnish
to the Company and to the Issuing and Payment Agent such security or indemnity
as may be required by them to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
to the Issuing and Payment Agent evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof. The
Issuing and Payment Agent may authenticate any such substituted Note and deliver
the same upon the written request or authorization of an officer of the Company.
Upon the issuance of any substituted Note, the Company may require the holder
thereof to pay a sum
<PAGE> 12
12
sufficient to cover any expense connected therewith. In case any Note which has
matured or has been redeemed or is about to mature or to be redeemed shall
become mutilated or be destroyed, lost or stolen, the Company may, instead of
issuing a substitute Note, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Note if the applicant for
such payment shall furnish the Issuing and Paying Agent with such mutilated
Note) if the applicant for such payment shall furnish the Company and the
Issuing and Payment Agent with such security or indemnity as may be required by
them to save each of them harmless, and, in the case of destruction, loss or
theft, evidence to the satisfaction of the Company of the destruction, loss or
theft of such Note and of the ownership thereof. All applications under this
Section shall be processed by the Issuing and Paying Agent.
SECTION 12
Return of Unclaimed Funds
Any money deposited with the Issuing and Paying Agent and remaining
unclaimed for two years after the date upon which the last payment of principal
or interest on any Note to which such deposit relates shall have become due and
payable, shall be repaid to the Company by the Issuing and Paying Agent on
demand, and the holder of any Note to which such deposit is related who is
entitled to receive payment shall thereafter look only to the Company for the
payment
<PAGE> 13
13
thereof and all liability of the Issuing and Paying Agent with respect to such
money shall thereupon cease.
The Issuing and Paying Agent shall not invest any money deposited by
the Company with the Issuing and Paying Agent.
SECTION 13
Resignation or Removal of Paying Agent
The Issuing and Paying Agent may at any time resign from its duties
hereunder by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective;
provided, however, that such date shall not be less than sixty days after the
giving of such notice to the Company. The Issuing and Paying Agent may be
removed at any time by the filing with it of an instrument in writing signed on
behalf of the Company and specifying such removal and the date when it is
intended to become effective. Upon such resignation or removal, the Issuing and
Paying Agent shall transfer to the successor Issuing and Paying Agent all moneys
held by it hereunder and unissued Notes. If such successor agent has not been
appointed by that time, the Issuing and Paying Agent shall hold such money and
any unissued Notes until such successor Issuing and Paying Agent is appointed
but that shall be the sole surviving responsibility of the Issuing and Paying
Agent under this Agreement. Any termination or resignation hereunder shall not
affect the Issuing and Paying Agent's rights to the payment of fees
<PAGE> 14
14
earned or charges incurred through the effective date of such resignation or
termination, as the case may be.
Until the principal of, and interest on, the Notes shall have been
paid in full to the Registered Owners thereof, the Company shall take the
necessary action so that there shall at all times be an Issuing and Paying Agent
having offices in New York City. In case the Issuing and Paying Agent shall
resign or be removed, the Company shall appoint a successor Issuing and Paying
Agent, effective as of the date of such resignation or removal, which successor
Issuing and Paying Agent shall be a bank or trust company organized and doing
business under the laws of any state or the United States of America, authorized
under applicable laws to exercise corporate trust powers, and having a combined
capital and surplus of at least $50,000,000 as of its most recent fiscal year
end.
SECTION 14
Reliance on Instructions; Opinion of Counsel
Telephone instructions given by an Authorized Representative to the
Issuing and Paying Agent will be electronically voice-recorded by the Issuing
and Paying Agent and the Company hereby consents to such recording. Should any
discrepancy develop with respect to such telephone instructions, the
instructions as repeated by the Issuing and Paying Agent will be deemed the
controlling and proper instructions. The Issuing and Paying Agent shall incur no
liability to the Company in acting hereunder upon telephonic
<PAGE> 15
15
or other instructions contemplated hereby which the recipient thereof believed
in good faith to have been given by an Authorized Representative. Should the
Issuing and Paying Agent at any time request or receive an opinion of its
counsel (which includes in-house counsel) concerning its duties hereunder, it
shall be free to rely in good faith upon the advice contained in such opinion
and shall be relieved of any liability under this Agreement in so relying.
SECTION 15
Cancellation of Unissued Notes
Promptly upon the written request of the Company, the Issuing and
Paying Agent shall cancel and return to the Company all unissued Notes in its
possession.
SECTION 16
Representation and Warranties of the Company
Each instruction given to the Issuing and Paying Agent in accordance
with Section 4 hereof with respect to any Note shall constitute a representation
and warranty to the Issuing and Paying Agent by the Company that the issuance
and delivery of such Note have been duly and validly authorized by the Company
and that once completed, authenticated, delivered and paid for pursuant hereto,
the Notes will constitute the valid and legally binding obligations of the
Company. The Company further warrants that it is free to enter into this
Agreement and to perform the terms hereof.
<PAGE> 16
16
SECTION 17
Maintenance of Corporate Existence
The Company covenants, for benefit of the Registered Owners from time
to time of the Notes, that it will maintain its corporate existence, will not
dissolve or otherwise dispose of all or substantially all of its assets and will
not consolidate with or merge into another corporation or permit one or more
corporations to consolidate with or merge into it, except that the Company may
(i) sell or otherwise transfer all or substantially all of its assets to, or
consolidate with or merge into, another corporation, or (ii) permit one or more
corporations or any other organizations to consolidate with or merge into it, or
(iii) acquire all or substantially all of the assets of one or more corporations
or any other organization; provided, that (a) the surviving, resulting or
transferee corporation, as the case may be, is incorporated under the laws of
the United States of America or any state thereof and assumes in writing all of
the obligations of and restrictions on the Company hereunder and under the
Notes, and (b) after giving effect to such sale, transfer, consolidation or
merger, no Event of Default (as defined in Section 18) or event which, with the
giving of notice, the passage of time or both would constitute an Event of
Default, shall have occurred and be continuing.
<PAGE> 17
17
Limitation Upon Mortgages and Liens
The Company will not at any time directly or indirectly create or
assume and will not cause or permit any Subsidiary directly or indirectly to
create or assume, otherwise than in favor of the Company or any Subsidiary, any
mortgage, pledge or other lien or encumbrance upon any receivable or other asset
or any interest it may have therein or of or upon any stock of any Subsidiary,
whether now owned or hereafter acquired, without making effective provision (and
the Company covenants that in such case it will make or cause to be made
effective provision) whereby the Notes and any other indebtedness of the Company
then entitled thereto shall be secured by such mortgage, pledge, lien or
encumbrance equally and ratably with any and all other obligations and
indebtedness thereby secured, so as any such other obligations and indebtedness
shall be so secured,; provided, however, that the foregoing covenant shall not
be applicable to the following:
(a) (i) any mortgage, pledge, inventory consignment or other lien or
encumbrance on any receivable or other asset hereafter acquired or constructed
by the Company or a Subsidiary, or any property on which any asset so
constructed is located, and created prior to, contemporaneously with or within
180 days after, such acquisition or construction or the commencement of
commercial operation of such asset to secure or provide for the payment of any
part of the purchase price of such receivable or other asset or construction
cost
<PAGE> 18
18
of such asset, or (ii) the acquisition by the Company or a Subsidiary of any
receivable or other asset subject to any mortgage, pledge, or other lien or
encumbrance upon such receivable or other asset, (iii) any mortgage, pledge or
other lien or encumbrance on any receivable or asset owned by any corporation or
other entity which existed on or prior to the date such corporation or entity
was acquired by the Company, or (iv) any conditional sales agreement or other
title retention or security agreement with respect to any receivable or other
asset hereafter acquired or any asset hereafter constructed; provided that the
lien of any such mortgage, pledge or other lien does not spread to any
receivable or other asset owned prior to such acquisition or construction or to
any receivable or other asset thereafter acquired or constructed other than
additions or substitutions to such acquired or constructed receivable or other
asset and other than property on which any asset so constructed is located, and
provided, further, that if a firm commitment from a bank, insurance company or
other lender or investor (not including the Company, a Subsidiary or an
affiliate of the Company) for the financing of the acquisition or construction
of any asset is made prior to, contemporaneously with or within the 180 day
period hereinabove referred to, the applicable mortgage, pledge, lien or
encumbrance shall be deemed to be permitted by this subsection (a) whether or
not created or assumed within such period;
<PAGE> 19
19
(b) any mortgage pledge or other lien or encumbrance created for the
sole purpose of extending, renewing or refunding any mortgage, pledge, lien or
encumbrance permitted by subsection (a) of this Section; provided, however, that
the principal amount of indebtedness secured thereby shall not exceed the
principal amount of indebtedness so secured at the time of such extension,
renewal or refunding and that such extension, renewal or refunding mortgage,
pledge, lien or encumbrance shall be limited to all or any part of the same
receivable or other asset that secured the mortgage, pledge or other lien or
encumbrance extended, renewed or refunded;
(c) liens for taxes or other assessments or governmental charges or
levies not then due and delinquent or the validity of which is being contested
in good faith and, in the latter case, against which an adequate reserve has
been established; pledges or deposits to secure public or statutory obligations
or to secure performance in connection with bids or contracts; materialmen's,
mechanics', carrier's, workmen's, repairmen's or other like liens, or deposits
to obtain the release of such liens; deposits to secure surety, stay, appeal or
custom bonds; liens created by or resulting from any litigation or legal
proceeding which is currently being contested in good faith by appropriate
proceedings; licenses or leases or patents, trademarks or trade names; leases
and liens, rights of reverter and other possessory rights of the lessor
thereunder; zoning
<PAGE> 20
20
restrictions, easements, right-of-way or other restrictions on the use of real
property or minor irregularities in the title thereto; and any other liens and
encumbrances similar to those described in this subsection, the existence of
which does not, in the opinion of the Company, materially impair the use by the
Company or a Subsidiary of the affected receivable or other asset in the
operation of the business of the Company or a Subsidiary, or the value of such
receivable or other asset for the purposes of such business;
(d) any mortgage, pledge or other lien or encumbrance on any
receivable or other asset leased to or purchased by the Company or a Subsidiary
securing, directly or indirectly, obligations issued by a State, a territory or
a possession of the United States, or any political subdivision of any of the
foregoing, or the District of Columbia, to finance the cost of acquisition or
cost of construction of such receivable or other asset, provided that the
interest paid on such obligations is entitled to be excluded from gross income
of the recipient pursuant to Section 103(a)(1) of the Internal Revenue Code of
1986, as amended, and as in effect of the date hereof (or any successor to such
provision as in effect at the time of the issuance of such obligations);
(e) any mortgage, pledge or other lien or encumbrance not otherwise
permitted under this Section, provided, however, the aggregate amount of
indebtedness secured by all such mortgages, pledges, liens or
<PAGE> 21
21
encumbrances, together with the aggregate sale price of receivables and other
assets involved in sale and leaseback transactions not otherwise permitted
except under subsection (a) of Limitations Upon Sale and Leaseback Transactions
does not exceed $25,000,000;
(f) any consignment arrangement, mortgage, pledge or other lien or
encumbrance upon or relating only to Precious Metals used or usable by the
Company or any Subsidiary in its business (as used herein, the term "Precious
Metals" shall include gold, silver, platinum and palladium, but shall not
include beryllium); and
(g) any pledge or other lien or encumbrance upon any receivable of
any Subsidiary, the domicile of which is not located in the United States, which
was created in connection with a factoring or similar arrangement.
Limitations Upon Sale and Leaseback Transactions.
The Company will not, and will not permit any Subsidiary to, sell or
transfer (except to the Company or one or more Subsidiaries, or both) any
receivable or other asset owned by it with the intention of taking back a lease
of such receivable or other asset other than a lease for a temporary period (not
exceeding 36 months) with the intent that the use by the Company or such
Subsidiary of such receivable or other asset will be discontinued on or before
the expiration of such period unless either:
(a) the sum of the aggregate sale price of receivables and other
assets involved in sale and leaseback
<PAGE> 22
22
transactions not otherwise permitted under this Section plus the aggregate
amount of indebtedness secured by all mortgages, pledges, liens and encumbrances
not otherwise permitted except under subsection (e) of Limitation upon Mortgages
and Liens does not exceed $25,000,000; or
(b) the Company within 120 days after the sale or transfer shall have
been made by the Company or by any such Subsidiary applies an amount equal to
the greater of (i) the net proceeds of the sale of the receivable or other asset
sold and leased back pursuant to such arrangement or (ii) the fair market value
of the receivable or other asset sold and leased back at the time of entering
into such arrangement (which may be conclusively determined by the directors of
the Company) to the retirement of the Notes or other indebtedness maturing more
than one year, or extendible at the option of the obligor to a date more than
one year after the date of determination thereof ("Funded Debt"') of the Company
ranking on a parity with the Notes; provided, however, that the amount required
to be applied to the retirement of outstanding Notes or other Funded Debt of the
Company pursuant to this clause (b) shall be reduced by (1) the principal amount
of any Notes delivered within 120 days after such sale to the Issuing and Paying
Agent for retirement and cancellation, and (2) the principal amount of any other
Funded Debt of the Company ranking on a parity with the Notes voluntarily
retired by the Company within 120 days after such sale, whether or not any such
retirement of Funded Debt shall
<PAGE> 23
23
be specified as being made pursuant to this clause (b). Notwithstanding the
foregoing, no retirement referred to in this clause (b) may be effected by
payment at maturity or pursuant to any mandatory sinking fund payment or any
mandatory prepayment provision;
(c) the net proceeds of the sale of the property leased pursuant to
such arrangement are applied to the purchase of properties, facilities or
equipment to be used for general operating purposes; or
(d) such transaction was effected in conjunction with the issuance of
bonds or notes the interest on which is excluded from gross income pursuant to
Section 103(a)(1) of the Internal Revenue Code of 1986, as amended, and as in
effect on the date hereof (or any successor to such provision as in effect at
the time of the issuance of such obligations).
For purposes of the foregoing, "Subsidiary" means a corporation more
than 50% of the outstanding voting stock of which is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries. For the
purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
<PAGE> 24
24
SECTION 18
1. Events of Default. The occurrence of any of the following events
shall constitute an Event of Default with respect to the Notes:
a. a default in the timely payment of any principal due on any Note,
either at maturity, upon any redemption, by declaration or otherwise;
b. a default for thirty days in the payment of any interest due on
any Note;
c. the Company shall default in the due and punctual performance of
any other covenant contained herein or in the Notes and such default
continues for thirty days after written notice requiring the same to be
remedied shall have been given to the Company by the Holder of any Note;
provided that if such default is correctable but cannot be corrected within
such thirty day period, it shall not constitute an Event of Default if (i)
corrective action is instituted by the Company within such period and is
diligently pursued until the default is corrected and (ii) such default is
corrected within 180 days;
d. (i) the Company shall fail to pay any portion of principal of or
interest on any indebtedness for borrowed money of the Company having a
principal amount in excess of $5,000,000 (other than the Notes) when due
and payable (after giving effect to any applicable grace period) and such
failure shall continue for a period of
<PAGE> 25
25
five days after written notice thereof to the Company by the holder of any Note,
or (ii) any other event shall occur (other than by reason of prepayment of such
indebtedness at the option of the Company) or condition shall exist and the
effect of such other event or condition is to cause indebtedness for borrowed
money having a principal amount of $5,000,000 of the Company to become due prior
to its stated maturity and such indebtedness for borrowed money is not
discharged or such acceleration is not otherwise cured, waived, rescinded or
annulled for a period of thirty days after written notice thereof to the Company
by the holder of any Note;
e. the Company shall:
(A) admit in writing its inability to pay its debts generally
as they become due, or
(B) file a petition to be adjudicated a voluntary bankrupt in
bankruptcy or a petition to otherwise take advantage of any State or
Federal bankruptcy or insolvency law, or
(C) make an assignment for the benefit of its creditors or seek
a composition with its creditors, or
(D) consent to the appointment of a receiver of itself, or its
fees or charges, or of all or any substantial part of its property;
f. the Company shall, upon an involuntary petition under any section or
chapter of the Federal bankruptcy laws filed against it, be adjudicated a
bankrupt or a court of competent jurisdiction shall
<PAGE> 26
26
enter an order or decree (which order or decree shall continue unstayed and
in effect for a period of 60 consecutive days) appointing a trustee or
receiver (interim or permanent) or appointing the Company a
debtor-in-possession, with or without its consent, or approving a petition
filed against it seeking its reorganization or arrangement under the
Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state thereof; or
g. a final judgment for the payment of money in excess of $5,000,000
shall be rendered against the Company and at any time after forty-five days
from the entry thereof, (A) such judgment shall not have been discharged,
or (B) the Company shall not have taken and be diligently prosecuting an
appeal therefrom or from the order, decree or process upon which or
pursuant to which such judgment shall have been granted or entered, and
shall not have caused, within forty-five days, the execution of or levy
under such judgment, order, decree or process or the enforcement thereof to
have been stayed pending determination of such appeal.
2. Acceleration of Maturity; Rescission of Declaration of
Acceleration. If an Event of Default with respect to the Notes occurs and is
continuing, then in every such case, the Holder of any Note then outstanding, by
notice in writing to the Company, may declare the principal of such Note and the
interest accrued thereon to be due and payable
<PAGE> 27
27
immediately. Upon any such declaration and notice, such principal amount shall
become immediately due and payable.
At any time after such a declaration of acceleration with respect to a
Note has been made and before judgment or decree for payment of the money due
has been obtained, the Holder of such Note may, by written notice to the Company
and the Issuing and Paying Agent, rescind such declaration, and its consequences
shall be rescinded and annulled with respect to such Note if:
a. the Company has paid or deposited with the Issuing and Paying
Agent a sum sufficient to pay:
(i) all overdue interest on all Notes with respect to which an
Event of Default has been declared; and
(ii) the principal of any Notes with respect to which an Event of
Default has been declared which have become due otherwise than by such
declaration of acceleration and the interest accrued thereon;
b. all Events of Default with respect to the Notes with respect to
which an Event of Default has been declared, other than the nonpayment of
the principal of such Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Clause (3) of this Section.
The Issuing and Paying Agent shall, at the request
<PAGE> 28
28
of the Company, notify the Registered Owners of the Notes of
such rescission.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
3. Waiver of Past Defaults. A Registered Owner of any Note may
waive any past default hereunder and its consequences with respect to such Note.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Agreement and such Note. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 19
Fees
For its services under this Agreement, the Company shall pay the
Issuing and Paying Agent compensation as shall be mutually agreed upon.
SECTION 20
Notices
Notices and other communications hereunder shall (except to the extent
otherwise expressly provided) be in writing and shall be addressed as follows,
or to such other address as the party receiving such notice shall have
previously specified:
If to the Company:
<PAGE> 29
29
BRUSH WELLMAN INC.
1200 Hanna Building
Cleveland, Ohio 44115
Attn: Chief Financial Officer
Telephone: (216) 443-1000
Facsimile: (216) 443-1161
If to the Issuing and Paying Agent:
Morgan Guaranty Trust Company of New York
30 West Broadway
New York, NY 10015
Attn: Corporate Trust Department
Telephone: (212) 587-6028
Facsimile: (212) 693-0534
SECTION 21
Information Furnished by the Issuing and Paying Agent
Upon the reasonable request of the Company, given in writing at any
time and from time to time, the Issuing and Paying Agent shall promptly provide
the Company with information with respect to Notes issued hereunder to the
extent such information is reasonably available.
SECTION 22
Liability
Neither the Issuing and Paying Agent nor its officers or employees
shall be liable to the Company for any act or omission hereunder except in the
case of the Issuing and Paying Agent's gross negligence or willful misconduct or
as described in the last sentence of Section 6 hereof. The duties and
obligations of the Issuing and Paying Agent, its officers and employees shall be
determined by the express provisions of this Agreement, and they shall not be
liable
<PAGE> 30
30
except for the performance of such duties and obligations as are specifically
set forth herein and no implied covenants shall be read into this Agreement
against them. Neither the Issuing and Paying Agent nor its officers shall be
required to ascertain whether any issuance or sale of Notes (or any amendment or
termination of this Agreement) is in compliance with any other agreement (other
than this Agreement) to which the Company is a party (whether or not the Issuing
and Paying Agent is also a party to such other agreement).
SECTION 23
Indemnification
The Company agrees to indemnify and hold harmless the Issuing and
Paying Agent, its directors, officers and employees and agents from and against
any and all liabilities, (including liability for penalties), losses, claims,
damages, actions, suits, judgments, demands, costs and expenses (including legal
fees and expenses) relating to or arising out of or in connection with its or
their performance under this Agreement, except to the extent that they are
caused by the gross negligence or willful misconduct of the Issuing and Paying
Agent. The foregoing indemnity includes, but is not limited to, any action taken
or omitted in good faith within the scope of this Agreement upon telephone,
telecopier or other electronically transmitted instructions, if authorized
herein, received from or believed by the Agent in good faith to have been given
by, an Authorized Representative. This indemnity shall survive the
<PAGE> 31
31
resignation or removal of the Agent and the satisfaction or termination of this
Agreement.
SECTION 24
Benefit of Agreement
This Agreement is solely for the benefit of the parties hereto and
their successors and assigns and no other person shall acquire or have any
rights under or by virtue hereof.
SECTION 25
Governing Law
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York without giving effect to its principles of
conflict of laws.
SECTION 26
Severability Clause
In case any provision in this Agreement or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 27
Effect of Headings
The Section headings herein are for convenience of reference only and
shall not affect the construction hereof.
<PAGE> 32
32
SECTION 28
Amendments Without Consent of the Holders of the Notes
(a) The Company and the Issuing and Paying Agent may from time to time
and at any time enter into an amendment hereof for one or more of the following
purposes:
(1) to make such provision in regard to matters or questions arising
under this Agreement as may be necessary or desirable, and not inconsistent
with this Agreement or prejudicial to the interests of the holders of the
Notes for the purpose of supplying any omission, curing any ambiguity, or
curing, correcting or supplementing any defective or inconsistent
provision;
(2) to change or eliminate any of the provisions of this Agreement,
provided that any such change or elimination shall become effective only
when there is no Note outstanding created prior to the execution of such
amendment which is entitled to the benefit of such provision;
(3) to evidence the succession of another corporation to the Company,
and the assumption by any such successor of the covenants of the Company
herein and in the Notes;
(4) to grant to or confer upon the Issuing and Paying Agent for the
benefit of the holders of the Notes any additional rights, remedies, powers
or authority;
(5) to permit the Issuing and Paying Agent to comply with any duties
imposed upon it by law; and
<PAGE> 33
33
(6) to make any other change that is not prejudicial to the Issuing
and Paying Agent or the holders of the Notes, in the judgment of the
Issuing and Paying Agent.
(b) The Issuing and Paying Agent is hereby authorized to join with the
Company in the execution of any such amendments to this Agreement, to make any
further appropriate agreements and stipulations which may be therein contained,
but the Issuing and Paying Agent shall not be obligated to enter into any such
amendment which affects the Issuing and Paying Agent's own rights, duties or
immunities under this Agreement or otherwise.
(c) Any amendment to this Agreement authorized by this Section may be
executed by the Company and the Issuing and Paying Agent without the consent of
the holders of any of the Notes at the time outstanding, notwithstanding any of
the provisions of Section 29.
(d) The Issuing and Paying Agent shall be fully protected in relying
upon any opinion of counsel delivered to and approved by it as conclusive
evidence that (i) any amendment to this Agreement complies with the provisions
of this Agreement and (ii) the Issuing and Paying Agent is authorized to execute
such amendment.
Section 29
Amendments With the Consent of the Holders of the Notes
(a) With the consent of the holders of 66 2/3% in aggregate principal
amount of the Notes at the time
<PAGE> 34
34
outstanding, the Company and the Issuing and Paying Agent may from time to time
and at any time enter into an amendment to this Agreement for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
holders of the Notes; provided, however, that no such amendment shall:
(1) change the maturity date of any Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount
thereof or any premium thereon, or change the coin or currency in which the
principal of any Note or any premium or interest thereon is payable, or
change the date on which any Note may be redeemed or adversely affect the
rights of the holders of the Notes to institute suit for the enforcement of
any payment of principal of or any premium or interest on any Note, in each
case without the consent of the holder of each Note so affected; or
(2) modify this section or reduce the aforesaid percentage of Notes,
the holders of which are required to consent to any such amendment to this
Agreement, without the consent of the holders of all of the Notes then
outstanding.
(b) Upon the request of the Company authorizing the execution of any
such amendment to this Agreement, and upon providing of evidence satisfactory to
the Issuing and Paying Agent of the requisite consent of Noteholders, the
<PAGE> 35
35
Issuing and Paying Agent shall join with the Company in the execution of such
amendment unless such amendment affects the Issuing and Paying Agent's own
rights, duties or immunities under this Agreement or otherwise, in which case
the Issuing and Paying Agent may in its discretion, but shall not be obligated
to, enter into such amendment to this Agreement.
(c) It shall not be necessary for the consent of the holders of Notes
under this section to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.
(d) The Issuing and Paying Agent shall be fully protected in relying
upon any opinion of counsel delivered to and approved by it as conclusive
evidence that (i) any amendment to this Agreement complies with the provisions
of this Agreement and (ii) the Issuing and Paying Agent is authorized to execute
such amendment.
SECTION 30
Notice of Redemption and Payment of Notes on Redemption
(1) Notice of redemption to each holder of Notes to be redeemed as a
whole or in part shall be given by the Company no less than 30 nor more than 60
days prior to the date fixed for redemption at the address of the Registered
Owner on the register maintained by the Issuing and Paying Agent. Any notice
which is given in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the holder of the Note receives the
<PAGE> 36
36
notice. In any case, failure duly to give such notice, or any defect in such
notice, to the holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.
(2) Each such notice shall specify the date fixed for redemption, the
places of redemption and the redemption price at which such Notes are to be
redeemed, and shall state that payment of the redemption price of such Notes or
portion thereof to be redeemed will be made on surrender of such Notes at such
places of redemption, that interest accrued to the date fixed for redemption
will be paid as specified in such notice, and that from and after such date
interest thereon will cease to accrue. If less than all the Notes are to be
redeemed, the notice shall specify the Notes or portions thereof to be redeemed.
In case any Note is to be redeemed in part only, the notice which relates to
such Note shall state the portion of the principal amount thereof to be
redeemed, and shall state that, upon surrender of such Note, a new Note or Notes
having the same terms in aggregate principal amount equal to the unredeemed
portion thereof will be issued.
(3) If at the time of the mailing of any notice of redemption the
Company shall not have irrevocably directed the Issuing and Paying Agent to
apply funds deposited with the Issuing and Paying Agent or held by it and
available to be used for the redemption of Notes to redeem all the Notes
<PAGE> 37
37
called for redemption, such notice shall state that it is subject to the receipt
of the redemption moneys by the Issuing and Paying Agent before the date fixed
for redemption and that such notice shall be of no effect unless such moneys are
so received before such date.
(4) If notice of redemption shall have been given as provided in
Section (1) above and the Company has deposited with the Issuing and Paying
Agent prior to the redemption date an amount sufficient to pay the redemption
price together with interest accrued to the date fixed for redemption, such
Notes or portions of Notes called for redemption shall become due and payable on
the date and at the places stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption of such
Notes and interest on the Notes or portions thereof so called for redemption
shall cease to accrue and such Notes or portions thereof shall thereafter be
deemed not to be entitled to any benefit under this Agreement except to receive
payment of the redemption price together with interest accrued thereon to the
date fixed for redemption. On presentation and surrender of such Notes at such a
place of payment in such notice specified, such Notes or the specified portions
thereof shall be paid and redeemed at the applicable redemption price, together
with interest accrued thereon to the date fixed for redemption.
(5) If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, or if the
<PAGE> 38
38
Company shall not have deposited with the Issuing and Paying Agent prior to the
redemption date an amount sufficient to pay the redemption price of all Notes
called for redemption, together with the interest accrued to the redemption
date, the notice of redemption shall be ineffective and the principal on such
Note shall continue to bear interest as if the notice of redemption had not been
given.
(6) Upon surrender of any Note redeemed in part only, the Company
shall execute, and the Issuing and Paying Agent shall authenticate, deliver and
register, a new Note or Notes of authorized denominations in aggregate principal
amount equal to, and having the same terms, original issue date and the
unredeemed portion of the Note so surrendered.
SECTION 31
Notice to Rating Agencies
So long as any Notes are rated by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, the Company agrees to give to such rating agency
or agencies, as the case may be, prompt written notice of the appointment of any
successor Issuing and Paying Agent and any material amendment
to this Agreement.
SECTION 32
Counterparts
This Agreement may be executed in several counterparts, each of
which shall be an original and all of
<PAGE> 39
39
which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on their behalf by their officers duly authorized thereunto, as of
the day and year first above written.
BRUSH WELLMAN INC.
By:/s/ Clark G. Waite
---------------------------------
Title: Senior Vice President
and Chief Financial Officer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:/s/
---------------------------------
Title: Assistant Vice President
<PAGE> 40
Exhibit A
Resolutions
<PAGE> 41
Exhibit B
Form of Notes
<PAGE> 42
Exhibit C
Administrative Procedures
<PAGE> 43
RESOLVED, that the Corporation be and hereby is authorized to issue and sell
unsecured Medium-Term Notes (the "Notes") in the aggregate principal amount of
up to $75,000,000 pursuant to the terms of the proposed Private Placement
Agreement between the Corporation, Shearson Lehman Hutton Inc. and McDonald &
Company Securities, Inc. (the "Private Placement Agreement"); and
RESOLVED, that the actions of the officers of the Corporation in selecting
Shearson Lehman Hutton Inc. and McDonald & Company Securities, Inc. as agents
("Agents") to solicit or receive offers to purchase the Notes be, and they
hereby are, ratified, confirmed and approved as the acts and deeds of the
Corporation; and
RESOLVED, that the Corporation be and hereby is authorized to enter into the
Private Placement Agreement and that the form of the Private Placement Agreement
presented to the Board at this meeting identified as STB Draft 10/20/89 (and
hereby ordered filed with the records of this meeting) be, and it hereby is,
authorized, approved and adopted, and that the Chairman, President and Chief
Executive Officer or any Vice President (including any Senior vice President) of
the Corporation be, and each of them hereby is, authorized, in the name and on
behalf of the Corporation, to execute and deliver the Private Placement
Agreement with such additions, deletions and modifications therein as any of
them may approve, such execution and delivery conclusively to evidence the due
authorization, execution and delivery thereof by the Corporation; and
RESOLVED, that the officers of the Corporation be, and each of them hereby is,
authorized in the name and on behalf of the Corporation, to do any and all
things required to be done by the Corporation under the terms and provisions of
the Private Placement Agreement; and
RESOLVED, that the form of Note attached as Exhibit B to the Issuing and Paying
Agency Agreement (as hereinafter defined) be, and it hereby is, authorized,
approved and adopted and that the Chief Financial Officer, any Assistant
Treasurer and any officer of the Company designated in writing by the Chief
Financial Officer, be, and each of them hereby is, authorized, in the name and
on behalf of the Corporation, from time to time to offer, sell, execute and
deliver the Notes at such times, in such amounts, with such maturities, interest
rates, redemption provisions and other terms, and to such persons, as they deem
appropriate or desirable, such execution and delivery conclusively to evidence
the due
<PAGE> 44
authorization, execution and delivery thereof by the Corporation; and
RESOLVED, that the actions of the officers of the Corporation in arranging for
the creation, issuance and sale of the Notes, including the preparation,
execution and delivery of documents in connection therewith, be, and they hereby
are, ratified, confirmed and approved as the acts and deeds of the Corporation;
and
RESOLVED, that the officers of the Corporation be authorized to select an
issuing and paying agent (the "Issuing and Paying Agent") to act as depository
for the safekeeping of the Notes and as agent to the Corporation in connection
with the preparation, delivery and payment of the Notes; and
RESOLVED, that the Corporation be and hereby is authorized to enter into an
Issuing and Paying Agency Agreement between the Corporation and the Issuing and
Paying Agent (the "Issuing and Paying Agency Agreement") and that the form of
the Issuing and Paying Agency Agreement presented to the Board at this meeting
identified as STB Draft 10/20/89 (and hereby ordered filed with the records of
this meeting) be, and it hereby is, authorized, approved and adopted, and that
the Chairman, President and Chief Executive Officer or any Vice President
(including any Senior Vice President) of the Corporation be, and each of them
hereby is, authorized, in the name and on behalf of the Corporation, to execute
and deliver the Issuing and Paying Agency Agreement with such additions,
deletions and modifications therein as any of them may approve, such execution
and delivery conclusively to evidence the due authorization, execution and
delivery thereof by the Corporations and
RESOLVED, that the officers of the Corporation be, and each of them hereby is,
authorized, for and on behalf of the Corporation, to do any and all things
required to be done by the Corporation under the terms and provisions of the
Issuing and Paying Agency Agreement; and
RESOLVED, that the Corporation be and hereby is authorized to prepare a Private
Placement Memorandum (the "Private Placement Memorandum") to be distributed by
the Agents in connection with the solicitation of offers to purchase the Notes
and that the draft of the Private Placement Memorandum presented to the Board at
this meeting identified as STB Draft 10/20/89 (and hereby ordered filed with the
records of this meeting) be, and it hereby is, authorized, approved and adopted,
and the
2
<PAGE> 45
Chairman, President and Chief Executive Officer and any Vice President
(including any Senior Vice President) of the Corporation be, and each of them
hereby is, authorized, in the name and on behalf of the Corporation, to deliver
the Private Placement Memorandum to the Agents for distribution by them to
potential purchasers of Notes with such additions, deletions and modifications
therein as any of them may approve, such delivery conclusively to evidence the
due authorization and approval thereof by the Corporation, and from time to time
to amend the Private Placement Memorandum as they determine to be necessary and
appropriate and to deliver the Private Placement Memorandum, as amended, to the
Agents for distribution by them to potential purchasers of Notes, such delivery
conclusively to evidence the due authorization and approval thereof by the
Corporation; and
RESOLVED, that the Agents be, and each of them hereby is, authorized to (until
their authority is revoked by an officer of the Company) use and distribute the
Private Placement Memorandum, as the same may be amended or supplemented from
time to time, to potential purchasers of Notes in connection with the
solicitation of offers to purchase the Notes; and
RESOLVED, that the officers of the Corporation be, and each of them hereby is,
authorized, in the name and on behalf of the Corporation, to do all acts that
they deem necessary or appropriate, including, without limitation, the
execution, acknowledgment, verification, delivery, filing and publishing of
consents to, and appointments of statutory agents for, service of process,
applications, reports, resolutions, and other documents in order to comply with
the applicable blue sky or securities laws of all states of the United States of
America and other jurisdictions in order to permit the offer and sale of the
Notes, to register or qualify, or to have registered and qualified, the Notes
and any of them for sale in such jurisdictions, and to maintain such
registrations or qualifications in effect for as long as such officers deem to
be in the best interests of the Corporation; and
RESOLVED, that if in any jurisdiction in which any application or statement
regarding the sale of the Notes is filed, a prescribed form of resolution or
resolutions is required, such resolution shall be deemed to have been, and
hereby is, adopted; and the Secretary and any Assistant Secretary of the
Corporation be, and each of them hereby is, authorized to certify the adoption
of all such resolutions as though such resolutions were now
3
<PAGE> 46
adopted, all such resolutions to be inserted in the minute book of the
Corporation and to be appropriately marked by one of such officers; and
RESOLVED, that the Chairman, President and Chief Executive Officer and any Vice
President (including any Senior Vice President) of the Corporation be, and each
of them hereby is, authorized to execute, deliver and file any and all such
other notices or documents, and to do or cause to be done any and all such other
acts and things, as they or any of them may deem necessary or appropriate in
order to enable the Corporation to carry out the purposes and intent of the
foregoing resolutions; and
RESOLVED, that notwithstanding anything herein to the contrary the authority of
the officers of the Corporation to execute any of the Notes shall be conditioned
upon the obtaining by the Company of an investment grade rating of the Notes
from Standard & Poor's Corporation or Moody's Investors Service, Inc.
satisfactory to each of the Chairman and President of the Corporation and the
Chief Financial Officer of the Corporation.
4
<PAGE> 47
RESOLVED, that each of the resolutions adopted by this Board of Directors on
October 24, 1989 concerning the proposed issuance and sale of unsecured
Medium-Term Notes is hereby amended so that each reference therein to the
"Chairman, President and Chief Executive Officer" or to the "Chairman and
President" be deleted and that in the place of such references the phrase
"President and Chief Executive Officer" be inserted, all other provision of such
resolutions remaining unchanged.
<PAGE> 48
FORM OF NOTE
Registered Principal Amount
Note Number: $_______________
BRUSH WELLMAN INC.
Medium-Term Note
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION
UNDER THAT ACT UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. BY ITS
PURCHASE OF THIS NOTE, THE PURCHASER AGREES THAT IT IS ACQUIRING THIS NOTE
FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, THE
PUBLIC DISTRIBUTION THEREOF, AND THAT ANY RESALE OF THIS NOTE MAY BE MADE
ONLY (A) TO A PLACEMENT AGENT OR THE COMPANY, (B) THROUGH A PLACEMENT AGENT
TO AN INSTITUTIONAL INVESTOR APPROVED AS AN ACCREDITED INVESTOR BY SUCH
PLACEMENT AGENT, (C) DIRECTLY TO AN INSTITUTIONAL INVESTOR APPROVED AS AN
ACCREDITED INVESTOR BY A PLACEMENT AGENT OR THE COMPANY OR (D) THROUGH A
DEALER TO AN INSTITUTIONAL INVESTOR APPROVED AS AN ACCREDITED INVESTOR BY
THE COMPANY IN A TRANSACTION APPROVED BY THE COMPANY; PROVIDED, HOWEVER,
THAT SUCH RESTRICTIONS ARE SUBJECT TO ANY REQUIREMENT OF LAW THAT THE
DISPOSITION OF THE PROPERTY OF ANY PURCHASER SHALL AT ALL TIMES BE AND
REMAIN WITHIN ITS CONTROL.
<PAGE> 49
2
Original
Issue Price Issue Date Interest Rate Maturity Date
% %
Initial Redemption Date:
IF APPLICABLE AS INDICATED ABOVE, THE REDEMPTION PRICE INITIALLY SHALL BE
___% OF THE PRINCIPAL AMOUNT OF THIS NOTE AND SHALL DECLINE AT EACH ANNIVERSARY
OF THE INITIAL REDEMPTION DATE BY ___% OF SUCH PRINCIPAL AMOUNT UNTIL THE
REDEMPTION PRICE IS 100% OF SUCH PRINCIPAL AMOUNT.
On the Maturity Date specified above (the "Maturity Date") (except to
the extent redeemed or repaid prior to the Maturity Date), for value received,
Brush Wellman Inc., an Ohio corporation (the "Company"), promises to pay to
______________, or registered assigns, the principal amount of ______________
DOLLARS, and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) at the rate per annum set forth above on the unpaid principal
amount hereof, from the Original Issue Date specified above (the "Original
Issue Date") until the Principal Amount specified on the face hereof (the
"Principal Amount") has been paid in full, in consecutive semi-annual payments
on February 1 and August 1 in each year ("Interest Payment Dates") and on the
Maturity Date, commencing with the first Interest Payment Date next succeeding
the date hereof; provided, however, that if an Interest Payment Date is not a
Business Day (as hereinafter defined), such Interest Payment Date shall be the
following day that is a Business Day and provided further that if the Original
Issue Date of this Note is after the Record Date (as hereinafter defined)
pertaining to the first Interest Payment Date, interest accruing on this Note
for the period beginning on the Original Issue Date and ending on, but
excluding the first Interest Payment Date will be paid on the Interest Payment
Date following the next succeeding Record Date to the registered owner of this
Note on such next succeeding Record Date. Interest payable on any Interest
Payment Date other than on the Maturity Date or upon redemption shall be
payable to the person in whose name this Note is registered at the close of
business on the fifteenth day (whether or not a Business Day (as hereinafter
defined)) of the calendar month next preceding the calendar month in which an
Interest Payment Date falls (each a "Record Date"). Interest payable on the
Maturity Date or upon redemption shall be payable to the person to whom the
principal of this Note shall be payable. This Note shall not bear interest
after the Maturity Date.
Payments of principal and interest shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts. Payments of interest other
than interest
<PAGE> 50
3
payable on the Maturity Date or upon redemption will be made by check mailed on
the applicable Interest Payment Date to the person entitled thereto as provided
above at such person's address shown in the register maintained by the Company
at the offices of Morgan Guaranty Trust Company of New York, a New York banking
corporation at 30 West Broadway, New York, New York 10015 or its successor as
issuing and paying agent (the "Issuing and Paying Agent"), or, at the option of
the registered holder hereof, at such other place in the United States of
America as the registered holder hereof shall designate to the Issuing and
Paying Agent in writing. Notices regarding changes of address shall be effective
upon recordation in such register. Holders of Notes the aggregate principal
amount of which exceeds $1,000,000 shall be entitled to receive payments of
interest, other than interest payable on the Maturity Date or on redemption, in
immediately available funds via wire transfer provided arrangements for such
payment have been made with the Issuing and Paying Agent on or prior to the
Record Date for the applicable Interest Payment Date. For purposes of this Note,
"Business Day" shall mean any day that is not a Saturday or Sunday and that in
New York, New York is not a day on which banking institutions are generally
authorized or obligated by law to close. If the Maturity Date specified above is
not a Business Day, the Maturity Date will be deemed to be the next succeeding
Business Day.
Reference is hereby made to the provisions of this Note set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth on the face hereof.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
Any action by the holder of this Note shall bind all future holders of
this Note, and of any Note issued in
<PAGE> 51
4
exchange or substitution herefor or in place hereof, in respect of anything done
or permitted by the Company.
BRUSH WELLMAN INC.
By:
-----------------------------
Title:
By:
-----------------------------
Title:
This Note is not valid for any purpose unless the certificate of authentication
hereon shall have been manually signed by Morgan Guaranty Trust Company of New
York, as Issuing and Paying Agent.
Date:
Certificate of Authentication
Morgan Guaranty Trust Company of New York
as Issuing and Paying Agent
By:
--------------------------
Authorized Officer
<PAGE> 52
5
[REVERSE SIDE OF NOTE]
The principal amount hereof and interest hereon due at maturity or
upon redemption will be paid upon maturity or redemption in immediately
available funds against presentation and surrender of this Note at the office of
the Issuing and Paying Agent set forth on the face hereof, or at such other
office or agency of the Company in New York City as the Company shall designate
by written notice to the registered holder of this Note. Prior to due
presentment of this Note for registration or transfer, the Company may treat the
person in whose name this Note is registered as the owner of such Note for the
purpose of receiving payments of principal and interest on this Note and for all
other purposes whatsoever. The Company shall not be obligated to register any
transfer made without compliance with the restrictions on transfer set forth on
the face hereof.
This Note is one of the Medium-Term Notes issued by the Company (the
"Notes") and is authenticated pursuant to an Issuing and Paying Agency Agreement
dated as of February 1, 1990 (the "Issuing and Paying Agency Agreement") between
the Company and the Issuing and Paying Agent. Copies of the Issuing and Paying
Agency Agreement are on file at the offices of the Issuing and Paying Agent.
The interest payable hereon on each Interest Payment Date will include
accrued interest from and including the Original Issue Date or from and
including the last date to which interest has been paid, as the case may be, to,
but excluding such Interest Payment Date.
Unless specified on the face hereof, this Note is not redeemable or
subject to prepayment. If specified on the face hereof, this Note may be
redeemed in whole or in part at the option of the Company on any Business Day on
or after the Initial Redemption Date specified on the face hereof, at the
Redemption Price specified on the face hereof, together with interest accrued to
the date of redemption. The Company shall give notice to the holder hereof of
any redemption of this Note not less than 30 nor more than 60 days prior to the
date fixed for such redemption by the Company. Such notice shall be mailed to
the holder of this Note at its address last appearing in the register maintained
by the Company with the Issuing and Paying Agent.
The maturity of this Note may be accelerated in accordance with the
provisions of the Issuing and Paying Agency Agreement upon the occurrence of any
Event of Default (as defined in the Issuing and Paying Agency Agreement).
Modification and amendment of the Issuing and Paying Agency Agreement may be
effected by the Company and the Issuing and Paying Agent with the consent of the
holders of 66 2/3% in
<PAGE> 53
6
principal amount of the outstanding Notes affected thereby, provided that no
such modification or amendment may, without the consent of the holder of each
outstanding Note affected thereby, (a) change the stated maturity of any
installment of principal of, or interest on, any Note or any premium payable on
the redemption thereof, or change the redemption price; (b) reduce the principal
amount of, or the interest or premium payable on, any Note or reduce the amount
of principal that could be declared due and payable prior to the stated
maturity; (c) change the place or currency of any payment of principal of, or
any premium or interest on, any Note; (d) impair the right of a holder to
institute suit for the enforcement of any payment on or with respect to any
Note; (e) reduce the percentage in principal amount of outstanding Notes, the
consent of the holders of which is required to modify or amend the Issuing and
Paying Agency Agreement or to waive compliance with certain provisions of the
Issuing and Paying Agency Agreement; or (f) modify the foregoing requirements.
Modification and amendment of the Issuing and Paying Agency Agreement may be
effected by the Company and the Issuing and Paying Agent without the consent of
the holders to make other modifications, generally of a ministerial or
immaterial nature.
The Issuing and Paying Agency Agreement sets forth certain covenants
relating to the maintenance of the Company's corporate existence and certain
other covenants, the provisions of which are by this reference deemed
incorporated herein as if set forth in full at this place.
The Company covenants that until the principal of, and interest on,
this Note shall have been paid in full to the registered owner hereof, there
shall at all times be an Issuing and Paying Agent having offices in The City of
New York. In case the Issuing and Paying Agent shall resign or be removed, the
Company shall appoint a successor Issuing and Paying Agent, effective as of the
date of such resignation or removal, which successor Issuing and Paying Agent
shall be a bank or trust company organized and doing business under the laws of
any state or the United States of America, authorized under applicable laws to
exercise corporate trust powers, and having a combined capital and surplus of at
least $50,000,000 as of its most recent fiscal year end.
At the Company's option, the Company shall be deemed to have been
discharged from its obligations with respect to this Note upon the satisfaction
of the applicable conditions set forth below:
(1) the Company shall have deposited or caused to be deposited
irrevocably with the Issuing and Paying Agent as trust funds in trust,
specifically pledged as security for, and dedicated solely to the benefit of the
holders of the Notes (i) money in an amount, or (ii) U.S. Government
<PAGE> 54
7
Obligations (as defined below) which through the payment of interest and
principal in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(iii) a combination of (i) and (ii), sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Issuing and Paying Agent, to pay and
discharge each installment of principal of and premium, if any, and interest on,
the outstanding Notes on such dates such installments of interest or principal
and premium are due;
(2) such deposit will not result in a breach or violation of or
constitute a default under the Issuing and Paying Agency Agreement or any other
agreement or instrument to which the Company is a party or by which it is bound;
(3) no Event of Default or event (including such deposit) which, with
notice or lapse of time or both, would become an Event of Default with respect
to the Notes shall have occurred and be continuing on the date of such deposit
and no Event of Default under Section 18 (1) (e) or Section 18 (1) (f) of the
Issuing and Paying Agency Agreement shall have occurred and be continuing on the
91st day after such date; and
(4) the Company shall have delivered to the Issuing and Paying Agent
an opinion of counsel to the effect that the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or similar IRS
pronouncement or that there has been a change in law in either case with the
effect that the holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance or
discharge.
"U.S. Government Obligations" means (i) direct obligations of the
United States for which its full faith and credit are pledged for the full and
timely payment thereof, (ii) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States, the full and
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation of the United States, or (iii) certificates or receipts representing
direct ownership interests in obligations or specified portions (such as
principal or interest) of obligations described in (i) or (ii), which
obligations are held by a custodian in safekeeping on behalf of such
certificates or receipts.
Any money or U.S. Government Obligations deposited with the Issuing
and Paying Agent and remaining unclaimed for two years after the date upon which
the last payment of principal or interest on this Note shall have become due and
<PAGE> 55
8
payable, shall be repaid to the Company by the Issuing and Paying Agent on
demand and the holder of this Note entitled to receive payment shall thereafter
look only to the Company for the payment thereof and all liability of the
Issuing and Paying Agent with respect to such money or U.S. Government
Obligations shall thereupon cease.
In the event that a Repurchase Event shall occur, each holder of Notes
outstanding at the time of the occurrence of the applicable event described in
(A) of the definition of Repurchase Event shall have the right to require the
Company to purchase such holder's Notes on the date (the "Date of Repurchase")
that is 45 days after the occurrence of such Repurchase Event at a price equal
to the Repurchase Price. The "Repurchase Price" means the aggregate principal
amount of the Notes to be so purchased, together with accrued interest to the
Date of Repurchase. A holder of Notes shall have the right to require the
purchase of all or only a portion of such holder's Notes, provided that a holder
shall have the right to require the purchase of less than all of such holder's
Notes only if the Notes designated for purchase by such holder are in aggregate
principal amounts of $1,000 (or any whole multiple thereof) and the aggregate
principal amount of Notes to be held by such holder after the purchase by the
Company is not less than $500,000.
Within ten days after the occurrence of a Repurchase Event, the
Company shall mail a notice of the occurrence of such Repurchase Event to all
holders of Notes and the Issuing and Paying Agent. The notice shall state that a
Repurchase Event has occurred, shall specify the date and nature thereof and
shall set forth the Repurchase Price and the date before which a holder must
notify the Company of such holder's intention to exercise the repurchase right,
and the procedure which such holder must follow to exercise such right. To
exercise the repurchase right the holder of Notes must deliver on or before the
30th day after the date of the Repurchase Event written notice to the Company
(or an agent designated by the Company for such purpose) of the holder's
exercise of such right and the principal amount of Notes as to which the holder
is exercising such right, together with the Notes with respect to which the
right is being exercised, duly endorsed for transfer. Once a holder has
exercised his repurchase right in the manner provided above, such exercise is
irrevocable.
For purposes of this Note, the following terms shall have the
following meanings:
The term "Applicable Percentage" shall mean, (1) in the case of each
distribution referred to in clause (A)(4) of the definition of Repurchase Event,
the percentage determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
<PAGE> 56
9
good faith by the directors of the Company, whose determination shall be
conclusive and binding upon all holders of Notes) of such distribution, by the
Current Market Price of all of the common shares of the Company outstanding on
the day immediately prior to such Calculation Date and (2) in the case of each
purchase or acquisition referred to in clause (A)(4) of the definition of
Repurchase Event, the percentage determined as of the Calculation Date of each
such purchase or acquisition by dividing all amounts expended by the Company,
any Subsidiary or any ESOP (the amount expended, if other than in cash, to be
determined in good faith by the directors of the Company, whose determination
shall be conclusive and binding upon all holders of Notes) for the purchase or
acquisition of any common shares of the Company, by the Current Market Price of
all of the common shares of the Company outstanding on the day immediately prior
to such Calculation Date.
The term "Continuing Director" shall mean, with respect to any Note, a
director of the Company who either (a) was director of the Company on the date
of issuance of such Note or (b) became a director of the Company subsequent to
the issuance of such Note and whose election or nomination for election by the
shareholders of the Company was duly approved by the Continuing Directors who
were at that time directors of the Company, either by a specific vote or by
approval of the proxy statement issued by the Company on behalf of the directors
of the Company, in which such individual was named as a nominee for director of
the Company.
The term "Current Market Price" shall mean the average of the daily
closing prices (or, if none, the average of the last daily bid and asked prices)
of the common shares of the Company as quoted by the primary securities exchange
on which such shares are traded, or, if none, the primary inter-dealer quotation
system which reports quotations for such shares, for the trading days during the
period of 90 consecutive calendar days ending on the day immediately prior to
the Calculation Date.
The term "ESOP" means an Employee Stock Ownership Plan of the Company,
as such term is defined in Section 4975(e)(7) of the Internal Revenue Code of
1986, as amended.
The term "Investment Grade Rating" means a rating of BBB- or higher by
S&P or a rating of Baa3 or higher by Moody's or, upon any change in the rating
categories of S&P or Moody's, the equivalent of such respective ratings by S&P
or Moody's.
The term "Moody's" means Moody's Investors Services, Inc. and its
successors and assigns.
<PAGE> 57
10
The term "Repurchase Event" shall mean
(A) the occurrence of any one or more of the following events:
(1) the Company shall consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its
assets to any person (other than to a Subsidiary of the Company);
(2) any person (other than the Company, a Subsidiary or an employee
benefit plan of the Company) shall purchase or otherwise acquire, directly
or indirectly, beneficial ownership of securities of the Company and, as a
result of such purchase or acquisition, such person (together with its
associates and affiliates) shall directly or indirectly beneficially own
in the aggregate (a) thirty percent (30%) or more of the common shares of
the Company or (b) securities representing thirty percent (30%) or more of
the combined voting power of the Company's voting securities then entitled
to vote in elections of the directors of the Company, in each case
outstanding on the date immediately prior to the date of such purchase or
acquisition (or, if there be more than one, the last such purchase or
acquisition);
(3) the Company purchases or otherwise acquires common shares of the
Company, if, after giving effect to such purchase or acquisition, during
the 365 day period immediately preceding such purchase or acquisition, the
Company has acquired thirty percent (30%) or more of the common shares of
the Company outstanding on the date of the first such purchase or
acquisition during such period;
(4) on any day (a "Calculation Date") (a) the Company shall make any
distribution or distributions of cash, securities or other property (other
than regular periodic cash dividends at a rate which is substantially
consistent with past practice and other than any distribution of common
shares or rights to acquire common shares to holders of common shares)
whether by means of dividend, reclassification, recapitalization or
otherwise, or (b) the Company, a Subsidiary or an ESOP shall purchase or
otherwise acquire, directly or indirectly, beneficial ownership of common
shares of the Company, such that the sum of the Applicable Percentages of
all such distributions, purchases and acquisitions contemplated by clauses
<PAGE> 58
11
(a) and (b) which have occurred on the Calculation Date and during the
365-day period immediately preceding the Calculation Date shall equal or
exceed thirty percent (30%); or
(5) Continuing Directors cease to constitute at least a majority of
the directors of the Company;
if, but only if;
(B) during the period commencing with the first public announcement
of the occurrence of such event or the intention to cause such event to occur
and ending 90 days after the later of (a) such public announcement and (b) the
occurrence of such event (which period shall, in either case, be extended for so
long as the rating of the Notes is under publicly announced consideration for
possible downgrading by Moody's or S&P), the rating assigned to the Notes is
reduced by either Moody's or S&P from an Investment Grade Rating to a rating
that is not an Investment Grade Rating.
In the event that the Company becomes a Subsidiary of any other
corporation, these provisions shall continue to be applied to the Company and
shall also be applied to such other corporation, in the same manner, to the same
extent and with the same effect as would be the case had they been applied to
the Company.
The term "S&P" shall mean Standard & Poor's Corporation and its
successors and assigns.
A corporation shall be a "Subsidiary" of another corporation if more
than 50% of the outstanding stock of such corporation then entitled to vote in
elections for its directors is owned, directly or indirectly, by such other
corporation or by one or more Subsidiaries of such other corporation, or by such
other corporation and by one or more Subsidiaries of such other corporation.
<PAGE> 59
BRUSH WELLMAN INC.
as Issuer
$75,000,000
Medium-Term Notes
ADMINISTRATIVE PROCEDURES
The administrative procedures and the specific terms of the offering of
Medium-Term Notes (the "Notes") on a continuing basis by Brush Wellman Inc. (the
"Company") pursuant to the Private Placement Agreement dated February 9, 1990
(the "Agreement") among the Company and Shearson Lehman Hutton Inc. and McDonald
& Company Securities, Inc., as agents (each an "Agent" and collectively, the
"Agents") are explained below. The Notes will be authenticated by Morgan
Guaranty Trust Company of New York, as authenticating agent (the "Paying
Agent"). The Paying Agent, as issuing and paying agent will make payments of
semiannual interest on the Notes and payments of principal, premium, if any, and
interest, if any, due at maturity or upon redemption of the Notes, and will act
as transfer agent and registrar.
Maturities: Maturities will be from 9 months
to 30 years from the date of
issue, as agreed upon in each case
by the purchaser and the Company.
Price to Public: Each Note will be sold at 100% of
the principal amount, unless
otherwise agreed between the
purchaser and the Company.
Denominations: The Notes will be issued in
denominations of $500,000 or any
amount in excess thereof which is
an integral multiple of $1,000.
B-1
<PAGE> 60
Registration: Notes will be issued only in fully
registered form.
Acceptance and Unless otherwise agreed by the Company and the
Rejection of Agents, the Company will have the sole right
Offers: to accept offers to purchase Notes and may reject any
offer in whole or in part. Unless otherwise
instructed by the Company, the Agents will promptly
advise the Company by telephone of all offers to
purchase Notes received by it, other than those
rejected by it. The Company may reject any offer in
whole or in part. Each Agent may reject any offer
received by it in whole or in part in its discretion
reasonably exercised.
Settlement: The receipt of immediately
available funds by the Company in
payment for a Note shall, with
respect to such Note, constitute
"Settlement." All offers accepted
by the Company will be settled not
later than the fifth business day
next succeeding the date of
acceptance unless the Company and
any purchaser agree to settlement
on an earlier or later date.
Procedures for The Company and the Agents will confer from time to
Pricing: time on the interest rates to be paid on the Notes.
If the Company should notify the Agents that it has
determined to change such interest rates, the Agents
will suspend their solicitation of offers until such
time as the Company has advised the Agents of new
interest rates. Upon receipt by the Agents of
notification of the new interest rates, the Agents
may resume their solicitation efforts.
Such notifications will be given by the Company by
telephone, confirmed in writing, to the Agents at:
Shearson Lehman Hutton Inc. American Express Tower
World Financial Center
B-2
<PAGE> 61
New York, New York 10285
Attention: Medium Term Note
Department, 9th Floor
Telephone: (212) 640-8400
Telecopy: (212) 528-7035; and
McDonald & Company Securities,
Inc.,
2100 Society National Building
Cleveland, Ohio 44114
Attention: Corporate Finance
Department
Telephone: (216) 443-2791
Telecopy: (216) 443-2688.
Settlement Settlement procedures with regard
Procedures: to each Note sold by the Agents,
as agents, shall be as follows:
The Agent that has solicited the offer to
purchase the Note will advise the Treasurer of
the Company by facsimile (or other acceptable
written means) of the following settlement
information:
1. Exact name of registered
owner.
2. Exact address of
registered owner for
interest payments and
notices.
3. Taxpayer identification
number of registered
owner.
4. Principal amount of the
Note.
5. Interest rate.
6. Sale date.
7. Settlement date.
8. Maturity date.
9. The Agent's commission to
be paid in the form of a
discount upon settlement.
10. Proceeds to Company.
B-3
<PAGE> 62
11. Redemption provisions and
other economic provisions
of the Notes, if any.
A. The Company will advise the Paying Agent of the foregoing
information by facsimile (or other acceptable written
means) for each such offer received by it, and will
deliver to the Paying Agent completed and executed Notes,
in time for the Paying Agent to authenticate and deliver
the required Notes. If the Company rejects an offer, the
Company will promptly notify the applicable Agent.
B. Upon receipt of the manually signed Notes, the Paying
Agent will distribute a preprinted 4- ply Note packet
containing the following documents (or a 1-ply Note and 3
appropriately designated photocopies thereof) in forms
approved by the Company, the Agents and the Paying Agent:
1. Note with form of customer confirmation attached.
2. Stub 1 -- For Paying Agent.
3. Stub 2 -- For applicable Agent.
4. Stub 3 -- For Company.
In the event the Agent refuses to accept and pay for such
Note because the Note was incorrectly prepared, the Agent
shall not be required to credit the Company's account as
provided below.
C. Upon instructions from the Company, the Paying Agent will
deliver the Note (with the confirmation) and Stubs 1 and 2
B-4
<PAGE> 63
to the Agent or to its representative designated in
writing by the respective Agent (each a "Representative")
at an office of the Agent or the Representative located in
the borough of Manhattan and south of Chambers Street, and
such Agent or its Representative will acknowledge receipt
of the Note by stamping the delivery receipt (Stub 1) with
the date and time received and returning it to the Paying
Agent. Such delivery will be made upon confirmation to the
Paying Agent from the Company of receipt by the Company of
funds available for immediate use, in an amount equal to
the principal amount of the Note, less the applicable
commission or discount determined as provided in Exhibit A
of the Agreement. In the event that the instructions given
by any Agent for payment to the account of the Company are
revoked pursuant to the provisions of these proceedings,
the Company will as promptly as possible credit the
account of such Agent designated by such Agent for such
purpose in an amount of immediately available funds equal
to the amount of such payment and will debit the account
of the Company in like amount of funds.
D. An Agent or its representative will deliver the Note
(with confirmation) to the customer against payment in
immediately available funds. In all cases, receipt by the
customer of the Private Placement Memorandum,
appropriately amended or supplemented, must accompany or
precede any written offer to purchase the Note, delivery
of the Note and confirmation and payment by the purchaser
for the Note.
B-5
<PAGE> 64
If an Agent is instructed by the purchaser to deliver
the Note and confirmation to
different locations, the Note and the confirmation
will each be accompanied or preceded by the Private
Placement Memorandum, appropriately amended or
supplemented.
E. An Agent or its Representative will obtain the
acknowledgement of receipt of the Note by the customer
through completion of Stub 2.
F. The Paying Agent will send by first class mail Stub 3
to the Company. Periodically, the Paying Agent will
also send to the Company a statement setting forth the
principal amount of the Notes outstanding as of that
date after giving effect to such transaction.
Settlement Procedures For offers accepted by the Company (or as provided
Timetable: above, an Agent on behalf of the Company), Settlement
Procedures "A" through "F" set forth above shall be
completed on or before the respective times (New York
City time) set forth below.
Settlement A 3:00 P.M. on the business day immediately
Procedure preceding the day of settlement
B-C 2:15 P.M. on day of settlement
D-E 3:00 P.M. on day of settlement
F 5:00 P.M. on day of settlement
B-6
<PAGE> 65
Date of Issuance: Each Note shall bear an original
issue date, which, with respect to
any Note (or any portion thereof),
shall remain the same for all
Notes subsequently issued upon
transfer, exchange or substitution
of such original Note regardless
of the date of issuance of any
such subsequently issued Note.
Interest: Each Note will bear interest from
the original issue date of a Note,
or from the most recent interest
payment date to which interest has
been paid, at an annual rate
stated on the face thereof. Each
payment of interest shall include
interest accrued through the
previous day. Interest payments
will be made semiannually on
February 1 and August 1 (each an
"Interest Payment Date") of each
year and at maturity or upon
redemption, subject to certain
exceptions. Interest, other than
interest due at maturity or upon
redemption, will be payable to the
person in whose name the Note is
registered at the close of
business on the fifteenth day of
the calendar month next preceding
the Interest Payment Date falls
(each a "Record Date"). However,
the first payment of interest on
any Note originally issued between
a Record Date and an Interest
Payment Date will be made on the
Interest Payment Date following
the next succeeding Record Date.
Interest at maturity or upon
redemption will be payable to such
person to whom the payment of
principal is payable. The date of
original issue of each Note will
be the date of its authentication.
The date of authentication of each
Note will be the settlement date.
Interest (including payments for
partial periods) will be
calculated on the basis of a 360-
day year of twelve 30-day months.
B-7
<PAGE> 66
Payments of Principal The Paying Agent will pay the principal amount of
and Interest: each Note at maturity or upon redemption upon
presentment of the Note. Such payment, together with
payment of interest due at maturity or upon
redemption for such Note, will be made in funds
available for immediate use by the Noteholder. Notes
presented to the Paying Agent will be marked as
cancelled. All interest payments (other than interest
due at maturity or upon redemption) will be made by
check mailed to the person entitled thereto as
provided above; provided that a holder of $1,000,000
or more in aggregate principal amount of Notes shall
be entitled to receive payments of interest by wire
transfer of immediately available funds upon written
request to the Paying Agent received not later than
the Record Date prior to the Interest Payment Date.
The Paying Agent will be responsible for withholding
taxes on interest paid if it is required by
applicable law to so withhold.
Failure to Settle: If a purchaser shall fail to accept delivery of and
make payment for any Note, the Agent will notify the
Paying Agent and the Company by telephone confirmed
in writing, and return the Note to the Paying Agent.
Upon the Paying Agent's receipt of the Note from such
Agent, the Company will promptly return to such Agent
an amount of immediately available funds equal to any
amount previously transferred to the Company in
respect of the Note pursuant to advances made by such
Agent. Such return will be made on the settlement
date if possible, and in any event not later than the
business day following the settlement date. An Agent
shall use its best efforts
B-8
<PAGE> 67
to deliver such Note to the Paying Agent forthwith.
The Company agrees to reimburse such Agent on an
equitable basis for its loss of the use of funds
during the period when such funds were credited to
the account of the Company. An Agent will not be
entitled to any commission with respect to any Note
that the purchaser does not accept or pay for.
Immediately upon receipt of the Note in respect of
which the failure occurred, the Paying Agent will
make appropriate entries in its records and mark the
Note as cancelled and destroy the Note.
Suspension of The Company may instruct each Agent to suspend
Solicitation: solicitation of offers to purchase Notes at any
time. Upon receipt of at least one business day"s
prior notice from the Company, the Agents will
forthwith suspend solicitation until such time as
the Company has advised it that solicitation of
such offers may be resumed.
In the event that at the time the Company suspends
solicitation of offers there shall be any offers
outstanding for settlement, the Company will promptly
advise each Agent and the Paying Agent whether such
offers may be accepted and settled and whether copies
of the Private Placement Memorandum as in effect at
the time of the suspension may be delivered in
connection with the settlement of such offers. The
Company will have the sole responsibility for such
decision and for any arrangements which be made in
the event that the Company determines that such
offers may not be accepted and settled or that copies
of such Private Placement Memorandum may not be so
delivered.
B-9
<PAGE> 68
Authenticity of The Company will cause the Paying Agent to furnish
Signatures: the Agents from time to time with the specimen
signatures of each of the Paying Agent's officers,
employees or agents who have been authorized by the
Paying Agent to authenticate Notes, but the Agents
will have no obligation or liability to the Company
or the Paying Agent in respect of the authenticity of
the signature of any officer, employee or agent of
the Company or the Paying Agent on any Note.
Payment of Selling The Company agrees to pay each Agent a commission in
Commissions and the form of a discount equal to a percentage (set
Expenses: forth as Exhibit A to the Private Placement
Agreement) of the principal of each Note sold
by the Company as a result of a solicitation made by
such Agent and, to the extent described in the
Private Placement Agreement the Agent's expenses in
connection therewith.
B-10
<PAGE> 1
EXHIBIT (10b)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), entered into this ____ day of
__________, 1989, by BRUSH WELLMAN INC., an Ohio corporation (the "Company"),
and ______________(the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company (the "Board") has made the
following determinations:
A. The Executive is a senior executive of the Company and has made and is
expected to continue to make major contributions to the growth, profitability,
and financial strength of the Company;
B. The Board wishes to assure the Company's continuity of management;
C. The Board recognizes that, as is the case with many publicly held
companies, the possibility of a Change in Control (as defined in Section IV) may
exist and wishes to ensure that the Company's senior executives are not
practically disabled from discharging their duties upon the occurrence of any
actual or threatened Change in Control; and
D. This Agreement shall not alter materially the remuneration and benefits
which the Executive could reasonably
<PAGE> 2
2
expect to receive from the Company in the absence of a Change in Control and,
accordingly, although effective as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change in Control during the Term
(as defined in Section II).
NOW, THEREFORE, the Company and the Executive agree as follows:
I. Employment; Position and Responsibilities
(A) Subject to the terms and conditions of this Agreement, upon the
occurrence of a Change in Control during the Term, the Company, if the Executive
is then an employee of the Company, shall continue the Executive in its employ
(and the Executive shall remain in the employ of the Company) for the Window
Period (as defined in Section III), whether or not the Term ends before the end
of the Window Period, in the position which he holds at the time of such Change
in Control (or such enhanced position to which he may from time to time
thereafter be elected by the Board) and with substantially the same duties,
responsibilities, and reporting relationships as he has at the time of such
Change in Control (or such enhanced duties, responsibilities, and reporting
relationships as the Board may from time to time thereafter designate in writing
or to which the Company and the Executive may from time to time thereafter agree
in writing).
(B) During the Window Period, the Executive shall, while he is an employee
of the Company, devote substantially all of
<PAGE> 3
3
his time during normal business hours to the business and affairs of the
Company, but nothing in this Agreement shall preclude the Executive during the
Window Period from devoting reasonable periods of time during normal business
hours to serving as a director, trustee, or member of any committee of any
organization or business so long as such activity would not constitute
Competitive Activity (as defined in Section XIII) if conducted by the Executive
after any termination of the Executive's employment with the Company pursuant to
Section VII(A).
II. Effectiveness of this Agreement; Term In determining whether the Window
Period commences, this Agreement shall be effective immediately upon execution
and shall continue in force for a period of five years (the "Term") from the
date of such execution; provided, however, that on the date five years after
this Agreement is executed, and on each second anniversary of such date
thereafter, the Term shall be automatically extended for two additional years
unless either the Company or the Executive has given written notice to the
other, as provided in Section X, prior to the date which is two years before the
date on which the Term would end if not automatically extended.
III. Operation of this Agreement; Window Period This Agreement shall become
operative only upon the occurrence of a Change in Control and then only if such
Change
<PAGE> 4
4
in Control occurs prior to the end of the Term while the Executive is an
employee of the Company. If the Executive is employed by the Company at the time
of any such Change in Control, this Agreement shall remain operative for a
period (the "Window Period") of four years after the occurrence of such Change
in Control or, if shorter, until the Executive reaches age 65.
IV. Definition of Change in Control
A "Change in Control" of the Company shall have occurred if at any time
during the Term any of the following events shall occur:
(A) The Board at any time shall fail to include a majority of Directors who
are either "Original Directors" or "Approved Directors". An Original Director is
a Director who is serving on the date of this Agreement. An Approved Director is
a Director who, after such date, is elected, or is nominated for election by the
shareholders, by a vote of at least two-thirds of the Original Directors and the
previously elected Approved Directors, if any.
(B) Any person (as the term "person" is defined in Section 1701.01(G) of the
Ohio Revised Code) shall have made a "control share acquisition" (as the term
"control share acquisition" is defined in Section 1701.01(Z) of the Ohio Revised
Code) of shares of the Company without having first complied with Section
1701.831 of the Ohio Revised Code (dealing with control share acquisitions).
<PAGE> 5
5
(C) The Board shall at any time during the Term determine in the good faith
exercise of its judgment that (1) any particular actual or proposed accumulation
of shares of the Company, tender offer for shares of the Company, merger,
consolidation, sale of assets, proxy contest, or other transaction or event or
series of transactions or events will, or is likely to, if carried out, result
in a Change in Control falling within Section IV(A) or IV(B) and (2) it is in
the best interests of the Company and its shareholders, and will serve the
intended purposes of this Agreement, if this Agreement shall thereupon become
immediately operative.
V. Compensation While Employed During Window Period
(A) No compensation shall be payable under this Section V unless and until
there shall have been a Change in Control while the Executive is an employee of
the Company during the Term (at which time the Window Period shall begin).
(B) If such a Change in Control so occurs (at which time the Window Period
shall begin), the Executive, while an employee of the Company, will be entitled
to receive compensation, for the Window Period, in the following forms, rates,
and amounts:
(1) Base Salary: salary payments (semi-monthly in arrears) at an annual
rate which will be the highest of:
(a) the annual rate in effect at the time of the
Change in Control;
<PAGE> 6
6
(b) the annual rate in effect at any time during the 24 months prior
to the Change in Control; or
(c) the annual rate approved by the Board from time to time after the
Change in Control.
(2) Annual Bonus: annual bonus amounts (payable on February 10, or, if
February 10 is not a business day in any year, then on the business day next
preceding such February 10) with respect to the previous calendar year equal to
the higher of:
(a) the highest annual bonus awarded to the Executive in the
36 month prior to the Change in Control; or
(b) the highest annual bonus approved by the Board from time to time
after the Change in Control.
(3) Benefit Plans - The Executive shall continue, as if there had been no
Change in Control, to participate, throughout the Window Period, in all benefit
plans, policies, or arrangements of the Company in which the Executive
participates immediately prior to the Change in Control, including, without
limitation, any incentive, retirement income, savings or thrift, stock option,
stock purchase, stock appreciation, stock grant, group insurance (health, life,
and others, if any), disability, salary continuation, and other employee benefit
plans, policies, or arrangements, or any successor plans, policies, or
arrangements that may thereafter be adopted by the Company
<PAGE> 7
7
and provide the Executive at least the same reward opportunities that were
provided to him immediately prior to the Change in Control as if there had
been no Change in Control.
(4) Executive Perquisites - The Executive shall continue to receive,
throughout the Window Period, all executive perquisites (including, without
limitation, a Company automobile, club dues, and secretarial services)
provided by the Company immediately prior to the Change in Control and any
improvements therein which are thereafter approved by the Board from time to
time.
(5) Nothing in this Agreement shall preclude improvement of the plans,
policies, or arrangements contemplated by the foregoing paragraphs (1)-(4)
of this Section V(B), but no such improvements shall in any way diminish any
other obligation of the Company under this Agreement. If the Company shall
change or terminate any such plans, policies, or arrangements during the
Window Period, it shall nevertheless continue to provide to the Executive
other arrangements which are substantially comparable thereto.
VI. Termination While Employed During Window Period
(A) If a Change in Control shall occur while the Executive is an employee of
the Company during the Term (and the Window Period therefore commences), the
Executive shall be entitled to
<PAGE> 8
8
the compensation provided in Section VII if his employment with the Company
is thereafter terminated during the Window Period unless such termination
results from the Executive's
(1) death;
(2) disability (on the terms described in Section
VI(B));
(3) retirement (as defined in Section VI(C));
(4) termination by the Company for Cause (as defined
in Section VI(D)); or
(5) decision to terminate his employment other than
for Good Reason (as defined in Section VI(E)).
(B) If, as a result of the Executive's incapacity due to physical or mental
illness, the Executive shall qualify for benefits under the long-term disability
plan, policy, or arrangement (if any) of the Company in effect at the time when
the Change in Control occurs and shall have been absent from his duties with the
Company on a full-time basis during the Window Period for a continuous period of
one year, then the Company may terminate the Executive's employment for
disability without the Executive being entitled to the compensation provided in
Section VII.
(C) "Retirement" means the attainment by the Executive of age 65 or his
earlier voluntary retirement in accordance with any applicable retirement plan
of the Company. Voluntary retirement for this purpose does not include any
retirement
<PAGE> 9
9
decision made by the Executive as a consequence of a termination by the
Executive of his employment for Good Reason.
(D) "Cause" means commission by the Executive of an act which constitutes a
felony.
(E) The Executive may terminate his employment for Good Reason during the
Window Period and, if he does so, he shall be entitled to the compensation
provided in Section VII. "Good Reason" shall mean any of the following:
(1) any reduction in the Executive's base salary provided in Section
V(B)(1) or his annual bonus provided in Section V(B)(2);
(2) any significant reduction in the Executive's benefits provided in
Section V(B)(3) or his perquisites provided in Section V(B)(4);
(3) any significant reduction in the Executive's title, status,
position, responsibilities, duties, or reporting relationships as herein
provided;
(4) any determination made by the Executive in good faith that, as a
consequence of the circumstances giving rise to a Change in Control or
resulting therefrom, he is unable to carry out the responsibilities,
duties, or reporting relationships associated with his title, status, or
position as herein provided;
(5) the Company shall require the Executive to have as his principal
location of work any location which is in excess of 50 miles from the
Executive's principal residence
<PAGE> 10
10
as of the date immediately prior to the Change in Control; or
(6) any failure of any successor of or to the Company following a
Change in Control to comply with Section IX(A).
VII. Compensation Upon Termination During Window Period
(A) If the Executive's employment by the Company is terminated during the
Window Period:
(1) by the Company other than by reason of death, disability, or Cause,
or
(2) by the Executive for Good Reason,
then the Company shall pay to the Executive, within the time specified in
Section VII(D), a lump sum in cash equal to the present value (determined as
provided in Section VII(B)) of his base salary and annual bonus at the rates
provided in Sections V(B)(1) and V(B)(2), respectively, for the remainder of the
Window Period.
(B) In determining present value for purposes of Section VII(A), there
shall be applied a discount factor equal to the coupon rate on general
full-faith-and-credit obligations of the U.S. Treasury having a maturity of five
years and issued on the date of such termination (or, if no such obligations are
issued on that date, then on such obligations issued on the most recent day
prior to that date); provided, however, that if the Executive should die on or
after the date of such termination but before full payment is made to him
pursuant to Section VII(D), such payment shall be made to such person(s) as the
<PAGE> 11
11
Executive shall have designated in a writing filed with the Secretary of the
Company or, if he shall not have filed such a designation, then to his executor
or administrator within ten days after appointment of the same.
(C) To secure, fund, or otherwise assure to the maximum practicable extent
the payment to be made by the Company to the Executive pursuant to Sections
VII(A) and VII(B), the Company will enter into a trust agreement in
substantially the form attached hereto as Exhibit A. Should a Change in Control
occur during the Term while the Executive is an employee of the Company, the
Company shall, at or prior to the time of such Change in Control, cause there to
be on deposit with the trustee under such trust agreement an amount of funds
equal to one-twelfth of the sum of the amounts referred to in Section V(B)(1)
and Section V(B)(2) (disregarding the application of the discount factor
provided in Section VII(B)) multiplied by the lesser of 48 or the number of
months (rounded to the next higher number) between the date of such Change in
Control and the date the Executive reaches age 65. Should the Executive's
employment by the Company be terminated (i) for any reason prior to the
occurrence of a Change in Control or (ii) by reason by death, disability (on the
terms described in Section VI(B)), retirement, by the Company for Cause, or by
the Executive's decision to terminate it other than for Good Reason after the
occurrence of a Change in Control, the Executive will consent to the revocation
of the trust under the trust
<PAGE> 12
12
agreement and the payment to the Company of all the assets then held in such
trust.
(D) The compensation provided for in Sections VII(A) and VII(B) shall be
paid not later than the 40th day following the date of any such termination of
employment pursuant to Section VII(A).
(E) The Company shall arrange to provide the Executive, following the date
of any termination of employment of the type described in Section VII(A), for
the remainder of the Window Period, with continued coverage and participation in
the benefit plans, policies, arrangements, and perquisites referred to in
Sections V(B)(3) and V(B)(4) as if there had been no such termination of
employment (or with such improved coverage and participation, if any, as may be
implemented during the Window Period), except that participation will not
continue in any stock option, stock purchase, stock appreciation, or stock grant
plans and except that no benefits shall accrue for any period after such
termination of employment pursuant to any benefit plan qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or the
Supplemental Retirement Benefit Plan effective as of January 1, 1984, as the
same has been, or may be, amended (the "Supplemental Retirement Benefit Plan")
by reason of any provision included in this Agreement. For purposes of applying
the immediately preceding sentence with respect to any benefit plan, policy, or
arrangement the level of benefits under which
<PAGE> 13
13
depends in whole or in part on years of service, the Executive shall be
treated as having continued in the employment of the Company for the remainder
of the Window Period. To the extent that the Executive's coverage or
participation in any such plan, policy, or arrangement is terminated by reason
of the Executive's no longer being an employee of the Company during the Window
Period, the Company shall (i) pay from time to time to the Executive cash in
amounts equal to what would have been provided pursuant to such plan, policy, or
arrangement at any such time had the Executive's coverage or participation not
been terminated and as if the Executive's employment with the Company continued
for the remainder of the Window Period or (ii) arrange, with the Executive's
prior written consent, to provide him with coverage and participation in a
substantially similar plan, policy, or arrangement. If, under any plan, policy,
or arrangement in effect immediately prior to the Change in Control, the
Executive would have been eligible for post-retirement health or medical
benefits with respect to himself or others if his retirement had occurred on the
last day of the Window Period, the Company shall provide him with
post-retirement health or medical benefits that are substantially similar to
those provided under such plan, policy, or arrangement (or with such improved
benefits, if any, as may be implemented during the Window Period). In addition,
the Company shall pay to the Executive, within the time specified in Section
VII(D), a lump sum (calculated as
<PAGE> 14
14
provided in Section VII(B)) in cash equal to (i) the number of months (rounded
to the next higher number) between the date of termination of the Executive's
employment with the Company pursuant to Section VII(A) and the last day of the
Window Period multiplied by (ii) one-twelfth of the annual benefit (expressed
as a single life annuity commencing at age 65) that the Executive would have
accrued under the Brush Wellman Inc. Pension Plan for Salaried Employees (the
"Pension Plan") during the calendar year ending prior to the date of such
termination of employment if the Pension Plan did not contain the limitations
on benefits imposed by the Code, including, without limitation, Sections 415
and 401(a)(17) of the Code (the "Constructive Supplemental Amount"). The
Company and the Executive intend that the benefits payable under this Section
VII(E) shall not constitute a "supplemental retirement or other similar
benefit" for purposes of Section 2(ii)(c), or any comparable successor
provision, of the Supplemental Retirement Benefit Plan. The obligation of the
Company to make any payments under this Section VII(E) constitutes the
unsecured promise of the Company to make such payments from its general assets,
and the Executive shall have no interest in, or lien or prior claim upon, any
property of the Company in connection therewith.
(F) If the compensation and other payments under this Section VII, either
alone or together with other receipts of the Executive from the Company, would,
after taking into account Section VIII, constitute a "parachute payment" (as
<PAGE> 15
15
defined in Section 280G of the Code), such compensation, other payments, and
other receipts shall be reduced to the largest amount as will result in no
portion of the such compensation, other payments, or other receipts being
subject to the excise tax imposed by Section 4999 of the Code. The determination
of any reduction under this Section VII(F) in such compensation, other payments,
and other receipts (including the selection of the specific types of such
compensation, other payments, or other receipts to be reduced) shall be made by
the Executive in good faith (and upon the advice of a nationally recognized
expert in compensation matters engaged and paid for by the Executive) after
consultation with the Company. The Executive shall deliver such determination to
the Company by the 25th day following any termination of the Executive pursuant
to Section VII(A). His duty to consult with the Company under this Section
VII(F) shall expire on the 30th day following such termination. Such
determination shall be conclusive and binding on the Company. The Company shall
cooperate in good faith with the Executive in making such determination and in
providing the necessary information for this purpose.
(G) The Company shall have no right of set-off or counterclaim in respect
of any of its obligations to the Executive under this Agreement.
VIII. Mitigation
If the Executive's employment by the Company is terminated during the
Window Period pursuant to Section VII(A), the
<PAGE> 16
16
Company shall acknowledge by written notice to the Executive that the Executive
offered to continue employment with the Company in accordance with the terms of
this Agreement but that such offer was rejected. Thereafter, the Executive shall
use his best efforts to mitigate his damages by seeking other comparable
employment for the remainder of the Window Period; provided, however, that in no
event shall the Executive be required to accept a position of substantially less
importance or status or of substantially different character than the position
he held immediately prior to the date of such termination, be required to accept
a position other than in a location within 50 miles of his principal residence
immediately prior to such termination, or be required to engage in any
Competitive Activity. The Executive shall pay over to the Company 100% of any
employment income received and earned by him from other employers with respect
to any portion of the remainder of the Window Period (but not more than the sum
of (i) the entire amount paid by the Company to the Executive pursuant to
Section VII(A), disregarding the application of the discount factor provided in
Section VII(B), and (ii) the Constructive Supplemental Amount), and any benefits
or perquisites provided by any other employers with respect to any portion of
the remainder of the Window Period shall reduce pro tanto the Company's
obligation to furnish benefits or perquisites pursuant to Section VII(E).
<PAGE> 17
17
IX. Successors and Binding Agreement
(A) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business or assets of the Company by agreement in form and substance
satisfactory to the Executive to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to perform
if no such succession had taken place. If, at any time during the Window Period
following a Change in Control, there shall not be in full force and effect an
agreement between any such successor and the Executive to the effect
contemplated by the preceding sentence, the absence of such agreement shall
constitute a material breach of this Agreement by such successor and shall
entitle the Executive to terminate his employment for Good Reason. This
Agreement shall be binding upon and inure to the benefit of the Company and any
successor of or to the Company, including, without limitation, any persons
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale, or otherwise (and such successor
shall thereafter be deemed the "Company" for the purpose of this Agreement), but
shall not otherwise be assignable or delegable by the Company.
(B) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal
<PAGE> 18
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representatives, executors, administrators, assigns, heirs,
distributees and legatees.
(C) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other,
assign, transfer, or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in Section
IX(A). Without limiting the generality of the foregoing, the
Executive's right to receive payments hereunder shall not be
assignable or transferable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by
his will (or other testamentary instrument) or by the laws of
descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section IX(C), the
Company shall have no liability to pay any amount so attempted
to be assigned or transferred.
X. Notices
All communications provided for herein or pursuant hereto
shall be in writing and shall be deemed to have been duly given
when delivered:
If to the Company to:
Brush Wellman Inc.
1200 Hanna Building
Cleveland, Ohio 44115
Attention: Secretary
If to the Executive to:
----------------------
----------------------
----------------------
----------------------
<PAGE> 19
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or to such other address as either party may have furnished to
the other in writing in accordance herewith.
XI. Employment Rights
Nothing expressed or implied in this Agreement shall create any right or
duty on the part of the Company or the Executive to have the Executive remain in
the employment of the Company prior to a Change in Control; provided, however,
that any termination of employment of the Executive following the commencement
of any discussions with a third party that ultimately result in a Change in
Control shall (unless such termination is wholly unrelated to such discussions)
be deemed to be a termination by the Executive for Good Reason after a Change in
Control.
XII. Withholding of Taxes
The Company may withhold from any amounts payable under this Agreement all
federal, state, city, or other taxes as shall be required to be withheld
pursuant to any law or governmental regulation or ruling.
XIII. Competitive Activity
Following the Executive's termination of employment pursuant to Section
VII(A) and for the duration of the Window Period, if the Company shall have
complied and be complying with this Agreement, the Executive shall not engage in
any Competitive Activity. The term "Competitive Activity" means the Executive's
participation, without the written consent of
<PAGE> 20
20
an officer of the Company, in the management of any business enterprise if such
enterprise engages in substantial and direct competition with the Company.
Competitive Activity shall not include the mere ownership of securities in any
enterprise and exercise of rights appurtenant thereto.
XIV. Legal Fees and Expenses
The Company shall pay and be solely responsible for any and all attorneys'
and related fees and expenses incurred by the Executive as a result of (A) the
Company's failure to perform this Agreement or any provision hereof; (B) the
Company, any shareholder of the Company, or any other person contesting the
validity or enforceability of this Agreement or any provision hereof; or (C) the
Company, any shareholder of the Company, or any other person contesting the
performance by the Executive of his obligations under this Agreement.
Performance of the Company's obligations under this Section XIV shall be secured
by one or more policies of insurance or as the Board may otherwise determine.
XV. Supercession
If the Executive has heretofore entered into an Employment Agreement dated
July 1, 1983 with the Company, this Agreement shall supercede such Employment
Agreement, which Employment Agreement is hereby cancelled with neither party
thereunder having any liability to the other.
<PAGE> 21
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XVI. Governing Law
The validity, interpretation, construction, and performance of this
Agreement shall be governed by the internal substantive laws of the State of
Ohio, disregarding principles of conflicts of law and the like.
XVII. Miscellaneous
No provision of this Agreement may be modified, waived, or discharged
unless such modification, waiver or, discharge is agreed to in a writing signed
by the Executive and the Company. No waiver by either party hereto at any time
of any breach by the other party hereto or compliance with any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
XVIII. Validity
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
XIX. Counterparts
This Agreement may be executed in one or more counterparts,
<PAGE> 22
22
each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered on the date set forth above.
BRUSH WELLMAN INC.
By:
------------------------------
Title:
---------------------------
THE EXECUTIVE
---------------------------------
<PAGE> 1
EXHIBIT (10e)
TRUST AGREEMENT
This Trust Agreement (this "Agreement") made this __day of ___________,
1989 by and between Brush Wellman Inc., an Ohio corporation (the "Company"), and
______________, a national banking association (the "Trustee"). This Agreement
may be referred to and described as the Brush Wellman Inc.-______________ Trust.
WITNESSETH:
WHEREAS,_________(the "Executive") and the Company are parties to an
agreement (the "Employment Agreement"), as such Employment Agreement may
hereafter be supplemented, amended, or restated. A current copy of the
Employment Agreement is attached as Exhibit A hereto;
WHEREAS, the Employment Agreement provides for, among other benefits, a
lump-sum cash payment to the Executive based in part on certain base salary and
bonuses of the Executive (the "Benefit") if the Executive's employment by the
Company is terminated under certain circumstances and within a certain period of
time after the occurrence of a Change in Control (as such term is defined in
Section IV of the Employment Agreement) of the Company;
WHEREAS, the Company wishes specifically to assure to the extent
practicable the payment to the Executive of the
<PAGE> 2
2
Benefit if the Benefit becomes payable to the Executive;
WHEREAS, the Company wishes to establish a trust (the "Trust") and to
transfer to the Trust assets which shall be held therein subject to the claims
of the creditors of the Company to the extent set forth in Section 3 hereof
unless and until paid to the Executive or the Company in such amounts, in such
manner, and at such times as specified herein; and
WHEREAS, the Company shall be considered "Insolvent" for purposes of
this Agreement at such time or times as the Company (i) is subject to a pending
voluntary or involuntary proceeding as a debtor under the United States
Bankruptcy Code, as now in force or as hereafter amended, or (ii) is unable for
more than twenty consecutive calendar days to pay its debts in the ordinary
course.
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held, and disposed of as follows:
1. Trust Fund: (a) Subject to the claims of its creditors to the extent
set forth in Section 3 hereof, the company hereby deposits with the Trustee in
trust One Hundred Dollars ($100), which shall become the principal of this
Trust. The Company, as required by Section VII(C) of the Employment Agreement,
or otherwise, may from time to time make additional deposits of cash or other
property to the Trust to augment such principal. The Trustee shall promptly
notify the Executive in writing of any such additional deposits. The
<PAGE> 3
3
assets of the Trust shall be held, administered, and disposed of by the Trustee
as herein provided, but no payment of all or any portion of the principal of the
Trust or earnings thereon shall be made to the Executive or the Company or any
other person or entity on behalf of either except as herein expressly provided.
(b) The Trust hereby established may be revoked (pursuant to Section
VII(C) of the Employment Agreement or otherwise), and this Agreement may be
amended, from time to time but only by delivery to the Trustee of an instrument
authorized by the Compensation Committee (the "Committee") of the Board of
Directors of the Company which is signed by an officer of the Company (other
than the Executive) and signed also by the Executive. Any amendment shall be
effective only upon the Trustee's written acceptance of such amendment, which
acceptance shall not be unreasonably withheld unless such amendment would affect
the powers, duties, liabilities, or compensation of the Trustee. If the Trust is
revoked pursuant to this Section 1(b), the Trustee shall distribute the assets
of the Trust as directed in the written instrument of revocation referred to in
this Section 1(b).
(c) If a Change in Control occurs (i) there shall forthwith be
delivered to the Trustee (with a copy to the Executive) a written notice to that
effect authorized by the Committee and signed by an officer of the Company
(other than the Executive) or (ii) the Executive may (with a copy to the
<PAGE> 4
4
Company) notify the Trustee in writing to that effect. The Trustee may
conclusively rely on any such notification or the absence thereof. The day the
Trustee receives any such notification is the "Notification Date." The Trustee
shall have no independent obligation to make a determination as to the
occurrence of a Change in Control.
(d) The principal of the Trust and any earnings thereon shall be held
in trust separate and apart from other funds of the Company, exclusively for the
uses and purposes set forth herein. The Executive shall have no preferred claim
on, or any beneficial ownership or security interest in, any assets of the Trust
prior to the time, if any, that such assets are paid to the Executive as
specified herein.
(e) The Trust is intended to be a grantor trust, within the meaning of
section 671 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision thereto, with the Company as grantor, and this Agreement
shall be construed accordingly.
2. Payment to the Executive: (a) After the Notification Date, if any,
and provided that the Company is not then Insolvent, the Trustee, five business
days after the Trustee receives both (i) a certificate signed by the Executive
substantially in the form of Exhibit B attached hereto and (ii) an affidavit
executed by the Executive stating that a copy of such certificate has been
delivered to the Company, shall make a payment to the Executive in an amount
equal to the lesser of the amount specified in such certificate or the amount of
assets then held in the Trust. The Trustee shall make such
<PAGE> 5
5
provision as it considers necessary or appropriate for the withholding of any
federal, state, and local taxes that may be required to be withheld by the
Trustee in connection with any such payment.
(b) If the amount of assets then held in the Trust is not sufficient to
provide for full payment to the Executive of the amount specified in the
certificate referred to in Section 2(a) hereof, the Company shall make the
balance of such payment as provided in the applicable provisions of the
Employment Agreement. However, the Trustee shall have no obligation with respect
thereto.
(c) If any payment to the Executive referred to in Section 2(a) hereof
exceeds the amount to which the Executive is entitled pursuant to Sections
VII(A), (B), and (F) of the Employment Agreement, no such payment to the
Executive by the Trustee shall relieve the Executive of any obligation to the
Company with respect to such excess. However, the Trustee shall have no
obligation with respect thereto.
3. The Trustee's Responsibility Regarding Payment to the Executive When
the Company is Insolvent: (a) At all times during the continuance of this Trust,
the principal and income of the Trust shall be subject to the claims of
creditors of the Company. The Board of Directors of the Company (the "Board")
shall promptly inform the Trustee in writing whenever it believes that the
Company is Insolvent. If the Trustee receives such a notice in writing from the
Board, or if the
<PAGE> 6
6
Trustee shall learn that the Company is then subject to a pending voluntary or
involuntary proceeding as a debtor under the United States Bankruptcy Code, as
now in force or as hereafter amended, then, unless the Trustee independently
determines that the Company is not Insolvent, the Trustee shall (i) make no
payment to the Executive pursuant to Section 2(a) hereof, (ii) hold the Trust
assets for the benefit of the creditors of the Company, and (iii) promptly seek
the determination of a court of competent jurisdiction regarding the Insolvency
of the Company. The Trustee shall deliver any undistributed principal and income
in the Trust to the extent necessary to satisfy the claims of the creditors of
the Company as the final, unappealable order of a court of competent
jurisdiction may direct. If the Trustee has not made payment to the Executive
pursuant to Section 2(a) hereof by reason of this Section 3(a), the Trustee
shall make such payment to the Executive after the Trustee has determined that
the Company is not Insolvent (or is no longer Insolvent) or pursuant to the
final, unappealable order of a court of competent jurisdiction. The Trustee
shall have no independent duty to inquire as to whether the Company is Insolvent
and may rely on information concerning the Insolvency of the Company which has
been furnished to the Trustee by any person.
(b) If the Trustee has not made payment to the Executive pursuant to
Section 2(a) hereof by reason of Section 3(a) hereof and subsequently becomes
required to make such
<PAGE> 7
7
payment, such payment shall include interest from the day referred to in Section
2(a) hereof at a rate equal to the Trustee's base rate as in effect from time to
time; provided, however, that no such payment, in the aggregate, shall exceed
the assets then held in the Trust.
4. Payments to the Company: (a) Except as provided in Sections 1(b),
4(b), 4(c), 4(d), or 11(b) hereof, the Company shall have no right or power to
direct the Trustee to pay any of the Trust assets to the Company.
(b) Upon the written request of the Company authorized by the Committee
which is signed by an officer of the Company and delivered to the Trustee prior
to the Notification Date, the Trustee shall pay to the Company such portion of
any assets then in the Trust in excess of One Hundred Dollars ($100) as may be
specified in such request.
(c) Ten business days after payment, if any, in full by the Trustee to
the Executive pursuant to Section 2 or Section 3 hereof, the Trustee shall
distribute to the Company all of the assets, if any, then held by the Trust.
(d) Fourteen calendar months after the Notification Date, the Trustee,
but only if it shall not by then have received the certificate and affidavit
referred to in Section 2(a) hereof, shall distribute to the Company twenty-five
percent of the assets, if any, then held by the Trust. Twenty-six calendar
months after the Notification Date, the Trustee, but only if it shall not by
then have received the
<PAGE> 8
8
certificate and affidavit referred to in Section 2(a) hereof, shall distribute
to the Company thirty-three and one-third percent of the assets, if any, then
held by the Trust. Thirty-eight calendar months after the Notification Date, the
Trustee, but only if it shall not by then have received the certificate and
affidavit referred to in Section 2(a) hereof, shall distribute to the Company
fifty percent of the assets, if any, then held by the Trust. Fifty calendar
months after the Notification Date, the Trustee, but only if it shall not by
then have received the certificate and affidavit referred to in Section 2(a)
hereof, shall distribute to the Company one hundred percent of the assets, if
any, then held by the Trust.
5. Investment of Trust Fund: The Trustee shall have sole power to
invest assets held in the Trust; provided, however, that the Trustee shall
invest the assets in the Trust in accordance with the investment policy
contained in Exhibit C attached hereto. However, the Trustee shall at all times
act with the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent corporate trustee, acting in a like capacity and
familiar with such matters, would use in the conduct of an enterprise of a like
character and with like aims.
6. Income of the Trust: Except as specified herein, during the
continuance of this Trust all net income of the Trust shall be retained and held
as assets of the Trust.
7. Accounting by Trustee: (a) The Trustee shall maintain such books,
records, and accounts as may be necessary
<PAGE> 9
9
for the proper administration of the Trust assets. All such accounts, books, and
records shall be open to inspection and audit at all reasonable times by the
Committee and the Executive and by any agent, representative, or successor of
either. Within 60 days following the end of each calendar quarter after the
Notification Date (and within 60 days after the removal or resignation of the
Trustee), the Trustee shall deliver to the Company and the Executive a written
account of its administration of the Trust assets (for the period since the end
of the period covered by the most recent such account, if any) setting forth all
investments, receipts, disbursements, and other transactions effected by it,
including a description of all securities purchased and sold with the cost or
net proceeds of such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities, and other property
held in the Trust at the end of such calendar quarter (or as of the date of such
removal or resignation).
(b) Nothing in this Agreement shall preclude the commingling of Trust
assets for investment.
8. Responsibility of Trustee: (a) The Trustee shall act with the care,
skill, prudence, and diligence under the circumstances then prevailing that a
prudent corporate trustee, acting in a like capacity and familiar with such
matters, would use in the conduct of an enterprise of a like character and with
like aims; provided, however, that the Trustee shall incur
<PAGE> 10
10
no liability to any person for any action taken pursuant to a direction,
request, or approval, contemplated by and complying with the terms of this Trust
Agreement, given in writing by or on behalf of the Company or by the Executive;
and provided further, that, except as otherwise provided in Section 8(i) hereof,
the Trustee shall have no duty to seek additional deposits of principal from the
Company.
(b) The Trustee may register securities and other property held in the
Trust in its own name or in the name of a nominee, combine certificates
representing securities with certificates of the same issue held by the Trustee
in other fiduciary capacities, and deposit or arrange for the deposit of
property with any depository; provided that the books and records of the Trustee
shall at all times show that all such securities and other property are assets
of the Trust.
(c) If the Trustee shall undertake or defend any litigation arising in
connection with this Agreement, it shall be indemnified by the Company against
its costs, expenses, and liabilities (including, without limitation, attorneys'
fees and expenses) relating thereto.
(d) The Trustee may consult with legal counsel (who may be counsel for
the Company or for the Executive) with respect to any of its duties or
obligations hereunder and shall be fully protected in acting or refraining from
acting in accordance with the advice of such counsel.
<PAGE> 11
11
(e) The Trustee may rely on and shall be protected in acting or
refraining from acting within the authority granted by the terms of this
Agreement upon any written notice, instruction, or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper person or persons.
(f) The Trustee is empowered to take all actions necessary or advisable
in order to collect any benefits or payments to which the Trustee is entitled.
(g) The Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law unless expressly provided otherwise herein.
(h) Nothing in this Agreement shall be construed as relieving the
Trustee from any liability resulting, directly or indirectly, from its own
fraud, bad faith, negligence, or willful misconduct.
(i) The Trustee shall be entitled to receive such reasonable
compensation for its services as is set forth in Exhibit D attached hereto. The
Trustee shall also be entitled to reimbursement of its reasonable expenses
incurred with respect to the administration of the Trust, including fees and
expenses incurred pursuant to Sections 8(c), 8(d), and 8(f) hereof. Such
compensation and expenses shall in all events be payable either directly by the
Company or, in the event that the Company shall refuse, from the assets of the
Trust. In the event that payment is made hereunder to the Trustee from the
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Trust assets, the Trustee shall promptly notify the Company and the Executive in
writing of the amount of such payment. The Company agrees that, upon receipt of
such notice, it will deliver to the Trustee to be held as assets of the Trust an
amount in cash equal to any payments made from the Trust assets to the Trustee
pursuant to this Section 8(i).
9. Amendments, Etc. to Employment Agreements: (a) The Company shall,
and the Executive may, promptly furnish the Trustee with copies of any
modification, amendment, restatement, or change in the Employment Agreement.
(b) Notwithstanding the foregoing provision of this Section 9, any
modification, amendment, restatement, or change in the Employment Agreement that
would increase the responsibilities or liabilities of the Trustee or change its
duties shall also require the consent of the Trustee.
10. Replacement of the Trustee: The Trustee may resign after providing
not less than 90 days' notice in writing to the Company and the Executive. If
the Executive shall agree in writing, the Trustee may be removed at any time
upon a written notice to the Trustee authorized by the Committee which is signed
by an officer of the Company (other than the Executive). In case of removal or
resignation, a new trustee shall be appointed by the Committee; provided,
however, that such appointment shall also require the written consent of the
Executive. No such removal or resignation shall become effective until the
acceptance of the trust by a successor
<PAGE> 13
13
trustee designated in accordance with this Section 10. If the Trustee should
resign, and within 45 days of the notice of such resignation the Committee and
the Executive shall not have notified the Trustee of a replacement trustee, the
Trustee shall appoint as a successor trustee a bank or trust company (A) that
the Trustee in its discretion considers an appropriate trustee for the Trust,
having due regard for the objectives, magnitude, and expected duration of the
Trust; (B) (x) whose trust assets under investment would place it among the 100
largest trust companies in the United States or (y) which is a national banking
association or established under the laws of one of the states of the United
States and which has gross assets in excess of $1 billion; and (C) which is
independent and not subject to the control of either the Company or the
Executive. The preceding determinations shall be made as of the time of
appointment of the successor trustee. Upon the acceptance of the trust by a
successor trustee, the Trustee shall release all of the assets then held in the
Trust to its successor, which shall thereafter for all purposes of this
Agreement be considered to be the "Trustee."
11. Termination: (a) Unless earlier revoked pursuant to Section 1(b)
hereof, this Trust shall not terminate until the earliest to occur of (i) the
date on which the Trust no longer contains any assets or any claim against the
Company pursuant to Section 8(i) hereof, (ii) the day which is ten business days
after payment, if any, in full by the Trustee to
<PAGE> 14
14
the Executive pursuant to Section 2 or Section 3 hereof, and (iii)___________,
Executive's 66th birthday. Notwithstanding any other provision of this
Agreement, if the Trustee's duties and obligations hereunder are the subject of
litigation, the Trust shall not terminate and the assets then held in the Trust
shall continue to be so held until the final, unappealable resolution of such
litigation.
(b) Upon termination of the Trust as provided in Section 11(a) hereof,
any assets then held in the Trust shall be paid to the Company.
12. Special Distribution: (a) It is intended that (i) the creation of,
transfer of assets to, and the terms of, the Trust will not cause any portion of
the Benefit to be other than "unfunded" for purposes of title I of the Employee
Retirement Income Security Act of 1974, as amended, or any successor provision
thereto; (ii) transfers of assets to the Trust or the terms of the Trust will
not be transfers of property for purposes of section 83 of the Code, or any
successor provision thereto, nor will such transfers or terms cause a currently
taxable benefit to be realized by an Executive pursuant to the "economic
benefit" doctrine or otherwise; and (iii) pursuant to section 451 of the Code,
or any successor provision thereto, no amounts hereunder will be includible in
the gross income of an Executive prior to his taxable year in which such amounts
are actually distributed or made available to the Executive by the Trustee.
<PAGE> 15
15
(b) Notwithstanding anything to the contrary contained in this
Agreement, if, based upon a change in federal tax or revenue laws, a published
ruling or similar announcement issued by the Internal Revenue Service, a
regulation issued by the Secretary of the Treasury, a decision by a court of
competent jurisdiction involving the Executive, or a closing agreement made
under section 7121 of the Code that is approved by the Internal Revenue Service
and involves the Executive, the Trustee determines in its sole judgment that any
portion of such amounts are includible in the gross income of an Executive prior
to the taxable year in which such amounts would, but for this Section 12,
otherwise actually be distributed or made available to such Executive by the
Trustee, then the Trustee shall promptly make a distribution to the Executive
which, after taking into account any federal, state, and local income tax
consequences of the special distribution itself, is equal to the sum of any
federal, state, and local income taxes, interest due thereon, and penalties
assessed with respect thereto which are attributable to amounts that are so
includible in the gross income of the Executive; provided, however, that no such
special distribution from the Trust to any Executive shall exceed the amount of
assets then held in the Trust.
13. General Provisions: (a) Each of the Company and the Executive
shall, at any time and from time to time, upon the reasonable request of the
Trustee, provide information,
<PAGE> 16
16
execute and deliver such further instruments, and do such further acts as may be
necessary or proper to effectuate the purposes of this Trust.
(b) This Agreement sets forth the entire understanding of the Trustee
with respect to the subject matter hereof and supersedes any and all prior
agreements, arrangements and understandings relating thereto. This Trust shall
be binding upon and inure to the benefit of the Trustee, the Company, and the
Executive and their respective successors and legal representatives.
(c) This Trust shall be governed by and construed in accordance with
the laws of the State of Ohio, other than and without reference to any
provisions of such laws regarding choice of laws or conflict of laws.
(d) In the event that any provision of this Trust or the application
thereof to any person or circumstances shall be determined by a court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Trust, or the application of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each provision of this Trust shall be valid
and enforced to the maximum extent permitted by law.
(e) The headings contained in this Agreement are solely for the purpose
of reference and shall not in any way affect the meaning or interpretation of
this Agreement.
<PAGE> 17
17
(f) Except to the extent required by law, benefits of the Executive
under this Agreement may not be anticipated, assigned (either at law or in
equity), alienated, or subject to attachment, garnishment, levy, execution or
other legal or equitable process.
(g) The Executive is an intended beneficiary under this Trust, and, as
an intended beneficiary, shall be entitled to enforce all terms and provisions
hereof.
(h) Nothing in this Agreement shall in any way diminish any rights of
the Executive to pursue his rights as a general creditor of the Company with
respect to the Benefit or otherwise, and the rights or obligations of the
Executive and the Company under the Employment Agreement shall in no way be
affected or diminished by any provision of this Agreement or action taken
pursuant to this Agreement except that any payment actually received by the
Executive hereunder shall reduce dollar-per-dollar amounts otherwise due to the
Executive pursuant to the Employment Agreement.
(i) If at any relevant time the Company shall not have a Compensation
Committee, then any action contemplated herein to be taken by that Committee
shall be taken by the Board of Directors of the Company.
(j) This Agreement may be executed in two or more counterparts, each of
which shall be considered an original agreement. This Agreement shall become
effective immediately upon the execution by the Company and the Executive of at
least
<PAGE> 18
18
one counterpart, it being understood that all parties need not sign the same
counterpart, but shall not bind the Trustee until the Trustee has executed at
least one counterpart.
14. Notices: All notices, requests, consents, and other communications
hereunder shall be in writing and shall be effective when received:
If to the Company, to: Brush Wellman Inc.
1200 Hanna Building
Cleveland, Ohio 44115
Attention: Secretary
If to the Trustee, to:
-----------------------
-----------------------
-----------------------
-----------------------
If to the Executive, to: -----------------------
-----------------------
-----------------------
-----------------------
; provided, however, that if any of the foregoing persons or
its or his successors shall have designated a different address
by written notice, then to the last address so designated.
IN WITNESS WHEREOF, the Company and the Executive have
caused counterparts of this Agreement to be executed
on ___________, 1989, each of which shall be an original
agreement, intending that the Trust shall be effective
immediately, and the Trustee has caused counterparts of this
Agreement to be executed on ____________, 1989.
BRUSH WELLMAN INC.
By:
---------------------------------
Its:
-----------------------------
<PAGE> 19
19
--------------------------------
By:
-----------------------------
Its:
------------------------
Accepted and agreed to on _________, 1989 by the Executive, who hereby
acknowledges that the foregoing Trust Agreement complies with Section VII(C) of
the Employment Agreement.
--------------------------------
<PAGE> 20
EXHIBIT A
[Copy of Executive's Employment Agreement]
<PAGE> 21
EXHIBIT B
EXECUTIVE'S CERTIFICATE IN CONNECTION
WITH PAYMENT UNDER SECTION 2(a) OF
THE BRUSH WELLMAN INC.-______ TRUST
The undersigned hereby certifies to____________, Trustee (the
"Trustee") under the Brush Wellman Inc.-_____________ Trust established pursuant
to a Trust Agreement dated____________, 1989 (the "Trust Agreement"), that:
(1) The undersigned is the Executive, as defined in the first WHEREAS
clause of the Trust Agreement;
(2) A Change in Control, as defined in Section IV of the Employment
Agreement, as defined in the first WHEREAS clause of the Trust Agreement, of
Brush Wellman Inc. has occurred during the Term, as defined in Section II of
the Employment Agreement, while the undersigned was an employee of Brush
Wellman Inc.;
(3) The undersigned's employment by Brush Wellman Inc. has been
terminated during the Window Period, as defined in Section III of the
Employment Agreement, pursuant to Section VII(A) of the Employment
Agreement;
(4) The undersigned has complied with Section VII(F) of the Employment
Agreement;
(5) The Trustee is hereby instructed to pay the undersigned $ ________
pursuant to Section 2(a) of the Trust Agreement; and
(6) Attached hereto is an affidavit certifying that a copy of this
Certificate has been delivered to Brush Wellman Inc.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate this ____day of_______, 1989.
_______________________
<PAGE> 22
EXHIBIT C
BRUSH WELLMAN INC.
INVESTMENT POLICY
I. Purpose
The primary criteria for investments made under the Brush
Wellman Inc.-___________________ Trust shall be
preservation of principal and liquidity. The rate of
return on investments, while important, shall not take
precedence over safety of principal.
II. Policy
A. Acceptable Securities
1. With the exception of original issue discount
securities such as T-Bills and commercial
paper, only money market tax free, tax
advantaged, and taxable securities purchased
and sold/put at par (100) are allowable
portfolio holdings. Investments which by
nature fluctuate in price and do not have a one
month or less maturity or put at 100 are not
acceptable. Examples of acceptable securities
are lower floaters, unit priced demand
adjustable tax exempt securities, put bonds,
certificates of deposit, repurchase agreements,
and U.S. Treasury Securities.
a. When purchasing lower floaters and put
bonds, those issued prior to 1986 should
be given preference. Issues dated on or
within 3 months before 8-7-86 should be
given extra scrutiny with regard to actual
dated date so as to insure federally tax
free status.
2. The _________ Ohio Tax-Free Money Fund may
be utilized for investment of income cash
flow as a temporary investment.
B. Investment Limits and Liquidity Requirements
1. A minimum of 75% of portfolio par value
shall be invested in securities saleable
<PAGE> 23
2
with 7 day settlement at price of par. No
more than 25% may be invested in
securities with actual or effective
maturities of a maximum of one month.
2. No more than 10% of portfolio par value
may be invested in securities subject to
alternative minimum tax.
3. Except for U.S. Treasury Securities, no
more than 20% of the total market
portfolio shall be invested in securities
with the same entity supplying the
underlying credit or same issuer.
4. The total par value of each security shall
be considered in applying each of the
preceding II. B. Subsections 1, 2 and 3.
C. Credit Standards
Securities purchased should have a credit
rating by Moodys of Aaa/MIG-1 or VMIG-1 or
their equivalent by Standard and Poors or
alternatively:
1. The issue is backed by a credit enhancer
of a bank rated AA or better and/or
insurance company which provides for
payment of principal and interest to cover
a put and issuer default.
2. If the issue is unrated, having never
applied, it must have an Aaa equivalent
rating as determined by the Trustee.
III. Safekeeping
The Trustee will provide safe housing of all securities
purchased for the Brush Wellman Inc.-________________ Trust.
BRUSH WELLMAN INC.
<PAGE> 24
EXHIBIT D
[Schedule of Trustee's reasonable compensation]
<PAGE> 1
EXHIBIT (10f)
BRUSH WELLMAN INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement"') is made as of the 27th
day of June, 1989, by and between BRUSH WELLMAN INC., an Ohio corporation (the
"Company"), and ____________ (the "Indemnitee"), a Director of the Company.
RECITALS
A. The Indemnitee is presently serving as a Director of the Company and the
Company desires the Indemnitee to continue in that capacity. The Indemnitee is
willing, subject to certain conditions (including, without limitation, the
execution and performance of this Agreement by the Company), to continue in that
capacity.
B. In addition to the indemnification to which the Indemnitee is entitled to
under the Code of Regulations of the Company (the "Regulations") or otherwise,
the Company has obtained, at its sole expense, insurance protecting the Company
and its Directors and officers including the Indemnitee against certain losses
arising out of actual or threatened actions, suits, or proceedings to which such
persons may be made or threatened to be made parties. However, as a result of
circumstances having no relation to, and beyond the control of, the Company and
the Indemnitee, there can be no assurance of the continua- tion or renewal of
that insurance.
Accordingly, and in order to induce the Indemnitee to continue to serve in
his present capacity, the Company and the Indemnitee agree as follows:
1. Continued Service. The Indemnitee shall continue to serve at the will of
the Company as a Director of the Company so long as he is duly elected and
qualified in accordance with the Regulations or until he resigns in writing in
accordance with applicable law.
2. Initial Indemnity. (a) The Company shall indemnify the Indem- nitee, if
or when he is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of the
Company), by reason of the fact that he is or was a Director of the Company or
is or was serving at the request of the Company as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise, or by reason of
any action alleged to have been taken or omitted in any such capacity, against
any and all costs, charges, expenses (including, without limitation, fees and
expenses of attorneys and/or others; all such costs, charges and expenses being
herein jointly referred to as "Expenses"), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by the Indemnitee in connection
therewith including any appeal of or from any judgment or decision, unless it is
<PAGE> 2
Brush Wellman Inc.
Indemnification Agreement
proved by clear and convincing evidence in a court of competent jurisdiction
that the Indemnitee's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company. In addition, with
respect to any criminal action or proceeding, indemnification hereunder shall be
made only if the Indemnitee had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not satisfy
the foregoing standard of conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee, if or when he is a party or
is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding by or in the right of the Company to procure a
judgment in its favor, by reason of the fact that the Indemnitee is or was a
Director of the Company or is or was serving at the request of the Company as a
director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, against any and all Expenses actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement thereof or any appeal of
or from any judgment or decision, unless it is proved by clear and convincing
evidence in a court of competent jurisdiction that the Indemnitee's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the best
interests of the Company, except that no indemnification shall be made in
respect of any action or suit in which the only liability asserted against the
Indemnitee is pursuant to Section 1701.95 of the Ohio Revised Code.
(c) Any indemnification under Section 2(a) or 2(b) (unless ordered by a
court) shall be made by the Company only as authorized in a specific case upon a
determination that indemnification of the Indemnitee is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 2(a) or 2(b). Such authorization shall be made (i) by the Directors of
the Company (the "Board") by a majority vote of a quorum consisting of Directors
who were not and are not parties to or threatened with such action, suit, or
proceeding, or (ii) if such a quorum of disinterested Directors is not
obtainable or if a majority of such quorum so directs, in a written opinion by
independent legal counsel (designated by such purpose by the Board) which shall
not be an attorney, or a firm having associated with it an attorney, who has
been retained by or who has performed services for the Company, or any person to
be indemnified, within the five years preceding such deter- mination, or (iii)
by the shareholders of the Company (the
2
<PAGE> 3
Brush Wellman Inc.
Indemnification Agreement
"Shareholders"), or (iv) by the court in which such action, suit, or proceeding
was brought.
(d) To the extent that the Indemnitee has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit, or proceeding referred to in Section
2(a) or 2(b), or in defense of any claim, issue, or matter therein, he shall be
indemnified against Expenses actually and reasonably incurred by him in
connection therewith. Expenses actually and reasonably incurred by the
Indemnitee in defending any such action, suit, or proceeding shall be paid by
the Company as they are incurred in advance of the final disposition of such
action, suit, or proceeding under the procedure set forth in Section 4(b).
(e) For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on the Indemnitee with respect to any employee benefit plan;
references to "serving at the request of the Company" shall include any service
which imposes duties on, or involves services by, the Indemnitee with respect to
an employee benefit plan, its participants or beneficiaries; references to the
masculine shall include the feminine; and references to the singular shall
include the plural and vice versa.
3. Additional Indemnification. Pursuant to Section 1701.13(E)(6) of the Ohio
Revised Code (the "ORC"), without limiting any right which the Indemnitee may
have pursuant to Section 2 hereof or any other provision of this Agreement or
the Articles of Incorporation of the Company (the "Articles"), the Regulations,
the ORC, any policy of insurance, or otherwise, but subject to any limitation on
the maximum permissible indemnity which may exist under applicable law at the
time of any request for indemnity hereunder and subject to the following
provisions of this Section 3, the Company shall indemnify the Indemnitee against
any amount which he is or becomes obligated to pay relating to or arising out of
any claim (including any pending, threatened or completed action, suit or
proceeding to which he is or is threatened to be made a party) made against him
because of any action alleged to have been taken or omitted to be taken,
including any actual or alleged error, misstatement, or misleading statement,
which he commits, suffers, permits, or acquiesces in while acting in his
capacity as a Director of the Company. The payments which the Company is
obligated to make pursuant to this Section 3 shall include, without limitation,
judgments, fines, and amounts paid in settlement and any and all Expenses
actually and reasonably incurred by the Indemnitee in connection therewith
including any appeal of or from any judgment or decision; provided, however,
that the Company shall not be obligated under this Section 3 to make any payment
in connection with any claim against the Indemnitee:
3
<PAGE> 4
Brush Wellman Inc.
Indemnification Agreement
(a) to the extent of any fine or similar governmental imposition which the
Company is prohibited by applicable law from paying which results from a final,
nonappealable order; or
(b) to the extent based upon or attributable to the Indemnitee having
actually realized a personal gain or profit to which he was not legally
entitled, including, without limitation, profit from the purchase and sale by
the Indemnitee of equity securities of the Company which is recoverable by the
Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, or
profit arising from transactions in publicly traded securities of the Company
which were effected by the Indemnitee in violation of Section 10(b) of the
Securities Exchange Act of 1934, or Rule 10b-5 promulgated thereunder.
A determination as to whether the Indemnitee shall be entitled to
indemnification under this Section 3 shall be made in accordance with Section
4(a). Expenses incurred by the Indemnitee in defending any claim to which this
Section 3 applies shall be paid by the Company as they are actually and
reasonably incurred in advance of the final disposition of such claim under the
procedure set forth in Section 4(b).
4. Certain Procedures Relating to Indemnification. (a) For purposes of
pursuing his rights to indemnification under Section 3, the Indem- nitee shall
(i) submit to the Board a sworn statement of request for indemnification
substantially in the form of Exhibit 1 attached hereto and made a part hereof
(the "Indemnification Statement") stating that he is entitled to indemnification
hereunder; and (ii) present to the Board reasonable evidence of all amounts for
which indemnification is requested. Submission of an Indemnification Statement
to the Board shall create a presumption that the Indemnitee is entitled to
indem- nification hereunder, and the Company shall, within 60 calendar days
after submission of the Indemnification Statement, make the payments requested
in the Indemnification Statement to or for the benefit of the Indemnitee, unless
(i) within such 60-calendar-day period the Board shall resolve by vote of a
majority of the Directors at a meeting at which a quorum is present that the
Indemnitee is not entitled to indemnification under Section 3, (ii) such vote
shall be based upon clear and convincing evidence (sufficient to rebut the
foregoing presumption), and (iii) the Indemnitee shall have received within such
period notice in writing of such vote, which notice shall disclose with
particularity the evidence upon which the vote is based. The foregoing notice
shall be sworn to by all persons who participated in the vote and voted to deny
indemnification. The provisions of this Section 4(a) are intended to be
procedural only and shall not affect the right of any Indemnitee to
indemnification under Section 3 so long as the Indemnitee follows the prescribed
procedure and any determination by the Board that an Indemnitee is not entitled
to indemnification and any failure to make
4
<PAGE> 5
Brush Wellman Inc.
Indemnification Agreement
the payments requested in the Indemnification Statement shall be subject to
judicial review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance of final
disposition pursuant to the second sentence of Section 2(d) or the last sentence
of Section 3, the Indemnitee shall submit to the Company a sworn request for
advancement of Expenses substantially in the form of Exhibit 2 attached hereto
and made a part hereof (the "Undertaking"), stating that he has reasonably
incurred actual Expenses in defending an action, suit or proceeding referred to
in Section 2(a) or 2(b) or any claim referred to in Section 3. Unless at the
time of the Indemnitee's act or omission at issue, the Articles or Regulations
prohibit such advances by specific reference to ORC Section 1701.13(E)(5)(a) and
unless the only liability asserted against the Indemnitee in the subject action,
suit, or proceeding is pursuant to ORC Section 1701.95, the Indemnitee shall be
eligible to execute Part A of the Undertaking by which he undertakes to (a)
repay such amount if it is proved by clear and convincing evidence in a court of
competent jurisdiction that the Indemnitee's action or failure to act involved
an act or omission undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best interests of the
Company and (b) reasonably cooperate with the Company concerning the action,
suit, proceeding or claim. In all cases, the Indemnitee shall be eligible to
execute Part B of the Undertaking by which he undertakes to repay such amount if
it ultimately is determined that he is not entitled to be indemnified by the
Company under this Agreement or otherwise. If the Indemnitee is eligible to and
does execute both Part A and Part B of the Undertaking, the Expenses which are
paid by the Company pursuant thereto shall be required to be repaid by the
Indemnitee only if he is required to do so under the terms of both Part A and
Part B of the Undertaking. Upon receipt of the Undertaking, the Company shall
thereafter promptly pay such Expenses of the Indemnitee as are noticed to the
Company in writing and in reasonable detail arising out of the matter described
in the Undertaking. No security shall be required in connection with any
Undertaking.
5. Limitation on Indemnity. Notwithstanding anything contained herein to the
contrary, the Company shall not be required hereby to indemnify the Indemnitee
with respect to any action, suit, or proceeding that was initiated by the
Indemnitee unless (i) such action, suit, or proceeding was initiated by the
Indemnitee to enforce any rights to indemnification arising hereunder and such
person shall have been formally adjudged to be entitled to indemnity by reason
hereof, (ii) authorized by another agreement to which the Company is a party
whether heretofore or hereafter entered, or (iii) otherwise ordered by the court
in which the suit was brought.
5
<PAGE> 6
Brush Wellman Inc.
Indemnification Agreement
6. Subrogation; Duplication of Payments. (a) In the event of payment under
this Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of the Indem- nitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to make any payment
in connection with any claim made against an Indemnitee to the extent that the
Indemnitee has actually received payment (under any insurance policy, the
Regulations or otherwise) of amounts otherwise payable hereunder.
7. Fees and Expenses of Enforcement. It is the intent of the Company that
the Indemnitee not be required to incur expenses associated with the enforcement
of his rights under this Agreement by litigation or other legal action because
such expenses would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or if the Company or any other person takes any action to
declare this Agreement void or unenforceable, or institutes any action, suit, or
proceeding to deny, or to recover from, the Indemnitee the benefits intended to
be provided to the Indemnitee hereunder, the Company irrevocably authorizes the
Indemnitee from time to time to retain counsel of his choice, at the expense of
the Company as hereafter provided, to represent the Indemnitee in connection
with the initiation or defense of any litigation or other legal action, whether
by or against the Company or any director, officer, shareholder, or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any and all
expenses, including, without limitation, fees and expenses of attorneys and
others, reasonably incurred by the Indemnitee pursuant to this Section 7.
8. Merger or Consolidation. If the Company shall be a constituent
corporation in a consolidation, merger, or other reorganization, the Company, if
it shall not be the surviving, resulting, or acquiring corporation therein,
shall require as a condition thereto that the surviving, resulting, or acquiring
corporation agree to assume all of the obligations of the Company hereunder and
to indemnify the Indemnitee to the full extent provided herein. Whether or not
the Company is the resulting, surviving, or acquiring corporation in any such
transaction, the Indemnitee shall also stand in the same position under this
Agreement with respect to the resulting, surviving, or acquiring corporation in
which he would have stood with respect to the Company if its separate existence
had continued.
6
<PAGE> 7
Brush Wellman Inc.
Indemnification Agreement
9. Nonexclusively and Severability. (a) The rights to indemnifica- tion
provided by this Agreement shall not be exclusive of any other rights of
indemnification to which the Indemnitee may be entitled under the Articles, the
Regulations, the ORC or any other statute, any insurance policy, agreement, or
vote of shareholders or directors or otherwise, as to any actions or failures to
act by the Indemnitee, and shall continue after he has ceased to be a Director,
officer, employee, or agent of the Company or other entity for which his service
gives rise to a right hereunder, and shall inure to the benefit of his heirs,
ex- ecutors, and administrators. In the event of any payment under this
Agreement, the Company shall be subrogated to the extent thereof to all rights
of recovery previously vested in the Indemnitee, who shall execute all
instruments and take all other actions as shall be reasonably necessary for the
Company to enforce such right.
(b) If any provision of this Agreement or the application of any provision
hereof to any person or circumstances is held invalid, unenforceable, or
otherwise illegal, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable, or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid, and legal.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to
principles of conflicts of law and the like.
11. Modification. This Agreement and the rights and duties of the Indemnitee
and the Company hereunder may be modified only by an instrument in writing
signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
BRUSH WELLMAN INC.
By
-----------------------------
Raymond A. Foos, Chairman,
President and Chief Executive
Officer
-----------------------------
Director
Indemnitee
7
<PAGE> 8
Brush Wellman Inc.
Indemnification Agreement
Exhibit 1
INDEMNIFICATION STATEMENT
State of )
County of )
I, , being first duly sworn, do depose and say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement made as of , 19 between BRUSH WELLMAN INC. (the
"Company"), an Ohio corporation, and the undersigned.
2. I am requesting indemnification against costs, charges, expenses (which
may include fees and expenses of attorneys and/or others), judgments, fines, and
amounts paid in settlement (collectively, "Liabilities"), which have been
actually and reasonably incurred by me in connection with a claim referred to in
Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am entitled to
be indemnified as herein contemplated pursuant to the aforesaid Indemnification
Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out of
- -----------------------------------.
-------------------------------------
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for said County
and State, this _______day of 19___ .
(Seal)
My commission expires the day of 19 .
----- -------------- --
8
<PAGE> 9
Brush Wellman Inc.
Indemnification Agreement
Exhibit 2
UNDERTAKING
State of )
ss.:
County of )
I, _________, being first duly sworn, do depose and say as follows:
1. This Undertaking is submitted pursuant to the Indemnification Agreement
made as of ___________, 19__ between BRUSH WELLMAN INC. (the "Company"), an
Ohio corporation, and the undersigned.
2. I am requesting payment of costs, charges, and expenses which I have
reasonably incurred or will reasonably incur in defending an action, suit or
proceeding referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3 of the aforesaid Indemnification Agreement.
3. The costs, charges, and expenses for which payment is requested are, in
general, all expenses related to ______________.
4. Part A
I hereby undertake to (a) repay all amounts paid pursuant hereto if it is
proved by clear and convincing evidence in a court of competent jurisdiction
that my action or failure to act which is the subject of the matter described
herein involved an act or omission undertaken with deliberate intent to cause
injury to the Company or undertaken with reckless disregard for the best
interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
_______________________________
(Signature of Indemnitee)
4. Part B
I hereby undertake to repay all amounts paid pursuant hereto if it
ultimately is determined that I am not entitled to be indemnified by the Company
under the aforesaid Indemnification Agreement or otherwise.
______________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for said County
and State, this _____ day of 19__.
(Seal) My commission expires the __________ day of________19__.
9
<PAGE> 1
EXHIBIT 10g
BRUSH WELLMAN INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of the 27th
day of June, 1989, by and between BRUSH WELLMAN INC., an Ohio corporation (the
"Company"), and a ________(the "Indemnitee"), a senior executive of the Company.
RECITALS
A. The Indemnitee is presently serving as a senior executive of the Company
and the Company desires the Indemnitee to continue in that capacity. The
Indemnitee is willing, subject to certain conditions (including, without
limitation, the execution and performance of this Agreement by the Company), to
continue in that capacity.
B. In addition to the indemnification to which the Indemnitee is or may be
entitled under the Code of Regulations of the Company (the "Regulations") or
otherwise, the Company has obtained, at its sole expense, insurance protecting
the Company and its Directors, officers and certain other persons, including the
Indemnitee, against certain losses arising out of actual or threatened actions,
suits, or proceedings to which such persons may be made or threatened to be made
parties. However, as a result of circumstances having no relation to, and beyond
the control of, the Company and the Indemnitee, there can be no assurance of the
continuation or renewal of that insurance.
Accordingly, and in order to induce the Indemnitee to continue to serve in
his present capacity, the Company and the Indemnitee agree as follows:
1. Continued Service. The Indemnitee shall continue to serve at the will of
the Company as a senior executive of the Company or until such time he resigns
in writing to the President of the Company.
2. Initial Indemnity. (a) The Company shall indemnify the Indemnitee, if or
when he is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of the
Company), by reason of the fact that he is or was a senior executive of the
Company or is or was serving at the request of the Company as a director,
trustee, officer, employee, or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, or by reason of any action alleged to have been taken or omitted in
any such capacity, against any and all costs, charges, expenses (including,
without limitation, fees and expenses of attorneys and/or others; all such
costs, charges and expenses being herein jointly
<PAGE> 2
referred to as "Expenses"), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by the Indemnitee in connection therewith
including any appeal of or from any judgment or decision, unless it is proved by
clear and convincing evidence in a court of competent jurisdiction that the
Indemnitee's action or failure to act involved an act or omission undertaken
with deliberate intent to cause injury to the Company or undertaken with
reckless disregard for the best interests of the Company. In addition, with
respect to any criminal action or proceeding, indemnification hereunder shall be
made only if the Indemnitee had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not satisfy
the foregoing standard of conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee, if or when he is a party or
is threatened to made a party to any threatened, pending, or completed action,
suit, or proceeding by or in the right of the Company to procure a judgment in
its favor, by reason of the fact that the Indemnitee is or was a senior
executive of the Company or is or was serving at the request of the Company as a
director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, against any and all Expenses actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement thereof or any appeal of
or from any judgment or decision, unless it is proved by clear and convincing
evidence in a court of competent jurisdiction that the Indemnitee's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the best
interests of the Company, except that no indemnification shall be made in
respect of any action or suit in which the only liability asserted against the
Indemnitee is pursuant to Section 1701.95 of the Ohio Revised Code.
(c) Any indemnification under Section 2(a) or 2(b) (unless ordered by a
court) shall be made by the Company only as authorized in the specific case upon
a determination that indemnification of the Indemnitee is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 2(a) or 2(b). Such authorization shall be made (i) by the Directors of
the Company (the "Board") by a majority vote of a quorum consisting of Directors
who were not and are not parties to or threatened with such action, suit, or
proceeding, or (ii) if such a quorum of disinterested Directors is not
obtainable or if a majority of such quorum so directs, in a written opinion by
independent legal counsel (designated for such purpose by the Board) which shall
not be an attorney, or a firm having associated with it an attorney, who has
been retained by or who has performed services for the
2
<PAGE> 3
Company, or any person to be indemnified, within the five years preceding such
determination, or (iii) by the shareholders of the Company (the "Shareholders"),
or (iv) by the court in which such action, suit, or proceeding was brought.
(d) To the extent that the Indemnitee has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit, or proceeding referred to in Section
2(a) or 2(b), or in defense of any claim, issue, or matter therein, he shall be
indemnified against Expenses actually and reasonably incurred by him in
connection therewith. Expenses actually and reasonably incurred by the
Indemnitee in defending any such action, suit, or proceeding under the procedure
set forth in Section 4(b).
(e) For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on the Indemnitee with respect to any employee benefit plan;
references to "serving at the request of the Company" shall include any service
which imposes duties on, or involves services by, the Indemnitee with respect to
an employee benefit plan, its participants or beneficiaries; references to the
masculine shall include the feminine; and references to the singular shall
include the plural and vice versa.
3. Additional Indemnification. Pursuant to Section 1701.13(E)(6) of the
Ohio Revised Code (the "ORC"), without limiting any right which the Indemnitee
may have pursuant to Section 2 hereof or any other provision of this Agreement
or the Articles of Incorporation of the Company (the "Articles"), the
Regulations, the ORC, any policy of insurance, or otherwise, but subject to any
limitation on the maximum permissible indemnity which may exist under applicable
law at the time of any request for indemnity hereunder and subject to the
following provisions of this Section 3, the Company shall indemnify the
Indemnitee against any amount which he is or becomes obligated to pay relating
to or arising out of any claim (including any pending, threatened or completed
action, suit or proceeding to which he is or is threatened to be made a party)
made against him because of any action alleged to have been taken or omitted to
be taken, including any actual or alleged error, misstatement, or misleading
statement, which he commits, suffers, permits, or acquiesces in while acting in
his capacity as a senior executive of the Company. The payments which the
Company is obligated to make pursuant to this Section 3 shall include, without
limitation, judgments, fines, and amounts paid in settlement and any and all
Expenses actually and reasonably incurred by the Indemnitee in connection
therewith including any appeal of or from any judgment or decision; provided,
however, that the Company shall not be obligated under this Section 3 to make
any payment in connection with any claim against the Indemnitee:
3
<PAGE> 4
(a) to the extent of any fine or similar governmental imposition which the
Company is prohibited by applicable law from paying which results from a final,
nonappealable order; or
(b) to the extent based upon or attributable to the Indemnitee having
actually realized a personal gain or profit to which he was not legally
entitled, including, without limitation, profit from the purchase and sale by
the Indemnitee of equity securities of the Company which is recoverable by the
Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, or
profit arising from transactions in publicly traded securities of the Company
which were effected by the Indemnitee in violation of Section 10(b) of the
Securities Exchange Act of 1934, or Rule 10b-5 promulgated thereunder.
A determination as to whether the Indemnitee shall be entitled to
indemnification under this Section 3 shall be made in accordance with Section
4(a). Expenses incurred by the Indemnitee in defending any claim to which this
Section 3 applies shall be paid by the Company as they are actually and
reasonably incurred in advance of the final disposition of such claim under the
procedure set forth in Section 4(b).
4. Certain Procedures Relating to Indemnification. (a) For purposes of
pursuing his rights to indemnification under Section 3, the Indemnitee shall (i)
submit to the Board a sworn statement of request for indemnification
substantially in the form of Exhibit 1 attached hereto and made a part hereof
(the "Indemnification Statement") stating that he is entitled to indemnification
hereunder; and (ii) present to the Board reasonable evidence of all amounts for
which indemnification is requested. Submission of an Indemnification Statement
to the Board shall create a presumption that the Indemnitee is entitled to
indemnification hereunder, and the Company shall, within 60 calendar days after
submission of the Indemnification Statement, make the payments requested in the
Indemnification Statement to or for the benefit of the Indemnitee, unless (i)
within such 60-calendar-day period the Board shall resolve by vote of a majority
of the Directors at a meeting at which a quorum is present that the Indemnitee
is not entitled to indemnification under Section 3, (ii) such vote shall be
based upon clear and convincing evidence (sufficient to rebut the foregoing
presumption), and (iii) the Indemnitee shall have received within such period
notice in writing of such vote, which notice shall disclose with particularity
the evidence upon which the vote is based. The foregoing notice shall be sworn
to by all persons who participated in the vote and voted to deny
indemnification. The provisions of this Section 4(a) are intended to be
procedural only and shall not affect the right of any Indemnitee to
indemnification under Section 3 so long as the Indemnitee follows the prescribed
procedure and any determination by the Board that an Indemnitee is not entitled
to indemnification and any failure to make the
4
<PAGE> 5
payments requested in the Indemnification Statement shall be subject to judicial
review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance of final
disposition pursuant to the second sentence of Section 2(d) or the last sentence
of Section 3, the Indemnitee shall submit to the Company a sworn request for
advancement of Expenses substantially in the form of Exhibit 2 attached hereto
and made a part hereof (the "Undertaking"), stating that he has reasonably
incurred actual Expenses in defending an action, suit or proceeding referred to
in Section 2(a) or 2(b) or any claim referred to in Section 3. Unless at the
time of the Indemnitee's act or omission at issue, the Articles or Regulations
prohibit such advances by specific reference to ORC Section 1701.13(E)(5)(a) and
unless the only liability asserted against the Indemnitee in the subject action,
suit, or proceeding is pursuant to ORC Section 1701.95, the Indemnitee shall be
eligible to execute Part A of the Undertaking by which he undertakes to (a)
repay such amount if it is proved by clear and convincing evidence in a court of
competent jurisdiction that the Indemnitee's action or failure to act involved
an act or omission undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best interests of the
Company and (b) reasonably cooperate with the Company concerning the action,
suit, proceeding or claim. In all cases, the Indemnitee shall be eligible to
execute Part B of the Undertaking by which he undertakes to repay such amount if
it ultimately is determined that he is not entitled to be indemnified by the
Company under this Agreement or otherwise. If the Indemnitee is eligible to and
does execute both Part A and Part B of the Undertaking, the Expenses which are
paid by the Company pursuant thereto shall be required to be repaid by the
Indemnitee only if he is required to do so under the terms of both Part A and
Part B of the Undertaking. Upon receipt of the Undertaking, the Company shall
thereafter promptly pay such Expenses of the Indemnitee as are noticed to the
Company in writing and in reasonable detail arising out of the matter described
in the Undertaking. No security shall be required in connection with any
Undertaking.
5. Limitation on Indemnity. Notwithstanding anything contained herein to
the contrary, the Company shall not be required hereby to indemnify the
Indemnitee with respect to any action, suit, or proceeding that was initiated by
the Indemnitee unless (i) such action, suit, or proceeding was initiated by the
Indemnitee to enforce any rights to indemnification arising hereunder and such
person shall have been formally adjudged to be entitled to indemnity by reason
hereof, (ii) authorized by another agreement to which the Company is a party
whether heretofore or hereafter entered, or (iii) otherwise ordered by the court
in which the suit was brought.
5
<PAGE> 6
6. Subrogation; Duplication of Payments. (a) In the event of payment under
this Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of the Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to make any
payment in connection with any claim made against an Indemnitee to the extent
that the Indemnitee has actually received payment (under any insurance policy,
the Regulations or otherwise) of amounts otherwise payable hereunder.
7. Fees and Expenses of Enforcement. It is the intent of the Company that
the Indemnitee not be required to incur expenses associated with the enforcement
of his rights under this Agreement by litigation or other legal action because
such expenses would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or if the Company or any other person takes any action to
declare this Agreement void or unenforceable, or institutes any action, suit, or
proceeding to deny, or to recover from, the Indemnitee the benefits intended to
be provided to the Indemnitee hereunder, the Company irrevocably authorizes the
Indemnitee from time to time to retain counsel of his choice, at the expense of
the Company as hereafter provided, to represent the Indemnitee in connection
with the initiation or defense of any litigation or other legal action, whether
by or against the Company or any director, officer, shareholder, or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any and all
expenses, including, without limitation, fees and expenses of attorneys and
others, reasonably incurred by the Indemnitee pursuant to this Section 7.
8. Merger or Consolidation. If the Company shall be a constituent
corporation in a consolidation, merger, or other reorganization, the Company, if
it shall not be the surviving, resulting, or acquiring corporation therein,
shall require as a condition thereto that the surviving, resulting, or acquiring
corporation agree to assume all of the obligations of the Company hereunder and
to indemnify the Indemnitee to the full extent provided herein. Whether or not
the Company is the resulting, surviving, or acquiring corporation in any such
transaction, the Indemnitee shall also stand in the same position under this
Agreement with respect to the resulting, surviving, or acquiring corporation in
which he would have stood with respect to the Company if its separate existence
had continued.
6
<PAGE> 7
9. Nonexclusivity and Severability. (a) The rights to indemnification
provided by this Agreement shall not be exclusive of any other rights of
indemnification to which the Indemnitee may be entitled under the Articles, the
Regulations, the ORC or any other statute, any insurance policy, agreement, or
vote of shareholders or directors or otherwise, as to any actions or failures to
act by the Indemnitee, and shall continue after he has ceased to be a Director,
officer, senior executive, employee, or agent of the Company or other entity for
which his service gives rise to a right hereunder, and shall inure to the
benefit of his heirs, executors, and administrators. In the event of any payment
under this Agreement, the Company shall be subrogated to the extent thereof to
all rights of recovery previously vested in the Indemnitee, who shall execute
all instruments and take all other actions as shall be reasonably necessary for
the Company to enforce such right.
(b) If any provision of this Agreement or the application of any provision
hereof to any person or circumstances is held invalid, unenforceable, or
otherwise illegal, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable, or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid, and legal.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to
principles of conflicts of law and the like.
11. Modification. This Agreement and the rights and duties of the
Indemnitee and the Company hereunder may be modified only by an instrument in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
BRUSH WELLMAN INC.
By
------------------------------
(Title)
---------------------------------
Indemnitee
7
<PAGE> 8
EXHIBIT 1
INDEMNIFICATION STATEMENT
State of )ss.:
County of )
I, _____________, being first duly sworn, do depose and say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement made as of________, 19__ between BRUSH WELLMAN INC.
(the "Company"), an Ohio corporation, and the undersigned.
2. I am requesting indemnification against costs, charges, expenses (which
may include fees and expenses of attorneys and/or others), judgments, fines, and
amounts paid in settlement (collectively, "Liabilities"), which have been
actually and reasonably incurred by me in connection with a claim referred to in
Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am entitled to
be indemnified as herein contemplated pursuant to the aforesaid Indemnification
Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out of
______________________.
_____________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for said County
and State, this ______ day of 19__.
(Seal)
My commission expires the ___ day of 19__.
8
<PAGE> 9
EXHIBIT 2
UNDERTAKING
State of )ss.:
County of )
I, _____________, being first duly sworn, do depose and say as follows:
1. This Undertaking is submitted pursuant to the Indemnification Agreement
made as of_______, 19__ between BRUSH WELLMAN INC. (the "Company"), an Ohio
corporation, and the undersigned.
2. I am requesting payment of costs, charges, and expenses which I have
reasonably incurred or will reasonably incur in defending an action, suit or
proceeding referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3 of the aforesaid Indemnification Agreement.
3. The costs, charges, and expenses for which payment is requested are, in
general, all expenses related to _______________.
4. Part A
I hereby undertake to (a) repay all amounts paid pursuant hereto if it is
proved by clear and convincing evidence in a court of competent jurisdiction
that my action or failure to act which is the subject of the matter described
herein involved an act or omission undertaken with deliberate intent to cause
injury to the Company or undertaken with reckless disregard for the best
interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
__________________________
(Signature of Indemnitee)
4. Part B
I hereby undertake to repay all amounts paid pursuant hereto if it
ultimately is determined that I am not entitled to be indemnified by the Company
under the aforesaid Indemnification Agreement or otherwise.
__________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for said County
and State, this ______ day of 19__.
(Seal)
My commission expires the ______day of 19__.
9
<PAGE> 1
EXHIBIT 10h
BRUSH WELLMAN INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of the 27th
day of June, 1989, by and between BRUSH WELLMAN INC., an Ohio corporation (the
"Company"), and ___________ (the "Indemnitee"), a Director and senior executive
of the Company.
RECITALS
A. The Indemnitee is presently serving as a Director and senior executive
of the Company and the Company desires the Indemnitee to continue in that
capacity. The Indemnitee is willing, subject to certain conditions (including,
without limitation, the execution and performance of this Agreement by the
Company), to continue in that capacity.
B. In addition to the indemnification to which the Indemnitee is entitled
to under the Code of Regulations of the Company (the "Regulations") or
otherwise, the Company has obtained, at its sole expense, insurance protecting
the Company and its Directors and officers including the Indemnitee against
certain losses arising out of actual or threatened actions, suits, or
proceedings to which such persons may be made or threatened to be made parties.
However, as a result of circumstances having no relation to, and beyond the
control of, the Company and the Indemnitee, there can be no assurance of the
continuation or renewal of that insurance.
Accordingly, and in order to induce the Indemnitee to continue to serve in
his present capacity, the Company and the Indemnitee agree as follows:
1. CONTINUED SERVICE. The Indemnitee shall continue to serve at the will of
the Company as a Director and/or senior executive of the Company so long as he
is duly elected and qualified in accordance with the Regulations or until he
resigns in writing in accordance with applicable law.
2. INITIAL INDEMNITY. (a) The Company shall indemnify the Indemnitee, if or
when he is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of the
Company), by reason of the fact that he is or was a Director and/or senior
executive of the Company or is or was serving at the request of the Company as a
director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, or by reason of any action alleged to have been taken or omitted in
any such capacity, against any and all costs, charges, expenses (including,
without limitation, fees and expenses of attorneys and/or others; all such
costs, charges and expenses being herein jointly referred to as "Expenses"),
judgments, fines and amounts paid in
<PAGE> 2
Brush Wellman Inc.
Indemnification Agreement
settlement, actually and reasonably incurred by the Indemnitee in connection
therewith including any appeal of or from any judgment or decision, unless it is
proved by clear and convincing evidence in a court of competent jurisdiction
that the Indemnitee's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company. In addition, with
respect to any criminal action or proceeding, indemnification hereunder shall be
made only if the Indemnitee had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not satisfy
the foregoing standard of conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee, if or when he is a party or
is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding by or in the right of the Company to procure a
judgment in its favor, by reason of the fact that the Indemnitee is or was a
Director and/or senior executive of the Company or is or was serving at the
request of the Company as a director, trustee, officer, employee, or agent of
another corporation, domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust, or other enterprise, against any and all Expenses actually
and reasonably incurred by the Indemnitee in connection with the defense or
settlement thereof or any appeal of or from any judgment or decision, unless it
is proved by clear and convincing evidence in a court of competent jurisdiction
that the Indemnitee's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company, except that no
indemnification shall be made in respect of any action or suit in which the only
liability asserted against the Indemnitee is pursuant to Section 1701.95 of the
Ohio Revised Code.
(c) Any indemnification under Section 2(a) or 2(b) (unless ordered by a
court) shall be made by the Company only as authorized in a specific case upon a
determination that indemnification of the Indemnitee is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 2(a) or 2(b). Such authorization shall be made (i) by the Directors of
the Company (the "Board") by a majority vote of a quorum consisting of Directors
who were not and are not parties to or threatened with such action, suit, or
proceeding, or (ii) if such a quorum of disinterested Directors is not
obtainable or if a majority of such quorum so directs, in a written opinion by
independent legal counsel (designated by such purpose by the Board) which shall
not be an attorney, or a firm having associated with it an attorney, who has
been retained by or who has performed services for the Company, or any
2
<PAGE> 3
Brush Wellman Inc.
Indemnification Agreement
person to be indemnified, within the five years preceding such determination, or
(iii) by the shareholders of the Company (the "Shareholders"), or (iv) by the
court in which such action, suit, or proceeding was brought.
(d) To the extent that the Indemnitee has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit, or proceeding referred to in Section
2(a) or 2(b), or in defense of any claim, issue, or matter therein, he shall be
indemnified against Expenses actually and reasonably incurred by him in
connection therewith. Expenses actually and reasonably incurred by the
Indemnitee in defending any such action, suit, or proceeding shall be paid by
the Company as they are incurred in advance of the final disposition of such
action, suit, or proceeding under the procedure set forth in Section 4(b).
(e) For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on the Indemnitee with respect to any employee benefit plan;
references to "serving at the request of the Company" shall include any service
which imposes duties on, or involves services by, the Indemnitee with respect to
an employee benefit plan, its participants or beneficiaries; references to the
masculine shall include the feminine; and references to the singular shall
include the plural and vice versa.
3. ADDITIONAL INDEMNIFICATION. Pursuant to Section 1701.13(E)(6) of the
Ohio Revised Code (the "ORC"), without limiting any right which the Indemnitee
may have pursuant to Section 2 hereof or any other provision of this Agreement
or the Articles of Incorporation of the Company (the "Articles"), the
Regulations, the ORC, any policy of insurance, or otherwise, but subject to any
limitation on the maximum permissible indemnity which may exist under applicable
law at the time of any request for indemnity hereunder and subject to the
following provisions of this Section 3, the Company shall indemnify the
Indemnitee against any amount which he is or becomes obligated to pay relating
to or arising out of any claim (including any pending, threatened or completed
action, suit or proceeding to which he is or is threatened to be made a party)
made against him because of any action alleged to have been taken or omitted to
be taken, including any actual or alleged error, misstatement, or misleading
statement, which he commits, suffers, permits, or acquiesces in while acting in
his capacity as a Director and/or senior executive of the Company. The payments
which the Company is obligated to make pursuant to this Section 3 shall include,
without limitation, judgments, fines, and amounts paid in settlement and any and
all Expenses actually and reasonably incurred by the Indemnitee in connection
therewith including any appeal of or from any judgment or decision; provided,
however, that the Company shall not be obligated
3
<PAGE> 4
Brush Wellman Inc.
Indemnification Agreement
under this Section 3 to make any payment in connection with any claim against
the Indemnitee:
(a) to the extent of any fine or similar governmental imposition which the
Company is prohibited by applicable law from paying which results from a final,
nonappealable order; or
(b) to the extent based upon or attributable to the Indemnitee having
actually realized a personal gain or profit to which he was not legally
entitled, including, without limitation, profit from the purchase and sale by
the Indemnitee of equity securities of the Company which is recoverable by the
Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, or
profit arising from transactions in publicly traded securities of the Company
which were effected by the Indemnitee in violation of Section 10(b) of the
Securities Exchange Act of 1934, or Rule 10b-5 promulgated thereunder.
A determination as to whether the Indemnitee shall be entitled to
indemnification under this Section 3 shall be made in accordance with Section
4(a). Expenses incurred by the Indemnitee in defending any claim to which this
Section 3 applies shall be paid by the Company as they are actually and
reasonably incurred in advance of the final disposition of such claim under the
procedure set forth in Section 4(b).
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION. (a) For purposes of
pursuing his rights to indemnification under Section 3, the Indemnitee shall (i)
submit to the Board a sworn statement of request for indemnification
substantially in the form of Exhibit 1 attached hereto and made a part hereof
(the "Indemnification Statement") stating that he is entitled to indemnification
hereunder; and (ii) present to the Board reasonable evidence of all amounts for
which indemnification is requested. Submission of an Indemnification Statement
to the Board shall create a presumption that the Indemnitee is entitled to
indemnification hereunder, and the Company shall, within 60 calendar days after
submission of the Indemnification Statement, make the payments requested in the
Indemnification Statement to or for the benefit of the Indemnitee, unless (i)
within such 60-calendar-day period the Board shall resolve by vote of a majority
of the Directors at a meeting at which a quorum is present that the Indemnitee
is not entitled to indemnification under Section 3, (ii) such vote shall be
based upon clear and convincing evidence (sufficient to rebut the foregoing
presumption), and (iii) the Indemnitee shall have received within such period
notice in writing of such vote, which notice shall disclose with particularity
the evidence upon which the vote is based. The foregoing notice shall be sworn
to by all persons who participated in the vote and voted to deny
indemnification. The provisions of this Section 4(a) are intended to be
procedural only and shall not affect the right of any Indemnitee to
indemnification under Section 3 so long as the Indemnitee
4
<PAGE> 5
Brush Wellman Inc.
Indemnification Agreement
follows the prescribed procedure and any determination by the Board that an
Indemnitee is not entitled to indemnification and any failure to make the
payments requested in the Indemnification Statement shall be subject to judicial
review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance of final
disposition pursuant to the second sentence of Section 2(d) or the last sentence
of Section 3, the Indemnitee shall submit to the Company a sworn request for
advancement of Expenses substantially in the form of Exhibit 2 attached hereto
and made a part hereof (the "Undertaking"), stating that he has reasonably
incurred actual Expenses in defending an action, suit or proceeding referred to
in Section 2(a) or 2(b) or any claim referred to in Section 3. Unless at the
time of the Indemnitee"s act or omission at issue, the Articles or Regulations
prohibit such advances by specific reference to ORC Section 1701.13(E)(5)(a) and
unless the only liability asserted against the Indemnitee in the subject action,
suit, or proceeding is pursuant to ORC Section 1701.95, the Indemnitee shall be
eligible to execute Part A of the Undertaking by which he undertakes to (a)
repay such amount if it is proved by clear and convincing evidence in a court of
competent jurisdiction that the Indemnitee's action or failure to act involved
an act or omission undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best interests of the
Company and (b) reasonably cooperate with the Company concerning the action,
suit, proceeding or claim. In all cases, the Indemnitee shall be eligible to
execute Part B of the Undertaking by which he undertakes to repay such amount if
it ultimately is determined that he is not entitled to be indemnified by the
Company under this Agreement or otherwise. If the Indemnitee is eligible to and
does execute both Part A and Part B of the Undertaking, the Expenses which are
paid by the Company pursuant thereto shall be required to be repaid by the
Indemnitee only if he is required to do so under the terms of both Part A and
Part B of the Undertaking. Upon receipt of the Undertaking, the Company shall
thereafter promptly pay such Expenses of the Indemnitee as are noticed to the
Company in writing and in reasonable detail arising out of the matter described
in the Undertaking. No security shall be required in connection with any
Undertaking.
5. LIMITATION ON INDEMNITY. Notwithstanding anything contained herein to
the contrary, the Company shall not be required hereby to indemnify the
Indemnitee with respect to any action, suit, or proceeding that was initiated by
the Indemnitee unless (i) such action, suit, or proceeding was initiated by the
Indemnitee to enforce any rights to indemnification arising hereunder and such
person shall have been formally adjudged to be entitled to indemnity by reason
hereof, (ii) authorized by another agreement to which the Company is a party
whether heretofore or hereafter entered, or (iii) otherwise ordered by the court
in which the suit was brought.
5
<PAGE> 6
Brush Wellman Inc.
Indemnification Agreement
6. SUBROGATION; DUPLICATION OF PAYMENTS. (a) In the event of payment under
this Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of the Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to make any
payment in connection with any claim made against an Indemnitee to the extent
that the Indemnitee has actually received payment (under any insurance policy,
the Regulations or otherwise) of amounts otherwise payable hereunder.
7. FEES AND EXPENSES OF ENFORCEMENT. It is the intent of the Company that
the Indemnitee not be required to incur expenses associated with the enforcement
of his rights under this Agreement by litigation or other legal action because
such expenses would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or if the Company or any other person takes any action to
declare this Agreement void or unenforceable, or institutes any action, suit, or
proceeding to deny, or to recover from, the Indemnitee the benefits intended to
be provided to the Indemnitee hereunder, the Company irrevocably authorizes the
Indemnitee from time to time to retain counsel of his choice, at the expense of
the Company as hereafter provided, to represent the Indemnitee in connection
with the initiation or defense of any litigation or other legal action, whether
by or against the Company or any director, officer, shareholder, or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any and all
expenses, including, without limitation, fees and expenses of attorneys and
others, reasonably incurred by the Indemnitee pursuant to this Section 7.
8. MERGER OR CONSOLIDATION. If the Company shall be a constituent
corporation in a consolidation, merger, or other reorganization, the Company, if
it shall not be the surviving, resulting, or acquiring corporation therein,
shall require as a condition thereto that the surviving, resulting, or acquiring
corporation agree to assume all of the obligations of the Company hereunder and
to indemnify the Indemnitee to the full extent provided herein. Whether or not
the Company is the resulting, surviving, or acquiring corporation in any such
transaction, the Indemnitee shall also stand in the same position under this
Agreement with respect to the resulting, surviving, or acquiring
6
<PAGE> 7
Brush Wellman Inc.
Indemnification Agreement
corporation in which he would have stood with respect to the Company if its
separate existence had continued.
9. NONEXCLUSIVELY AND SEVERABILITY. (a) The rights to indemnification
provided by this Agreement shall not be exclusive of any other rights of
indemnification to which the Indemnitee may be entitled under the Articles, the
Regulations, the ORC or any other statute, any insurance policy, agreement, or
vote of shareholders or directors or otherwise, as to any actions or failures to
act by the Indemnitee, and shall continue after he has ceased to be a Director,
officer, employee, or agent of the Company or other entity for which his service
gives rise to a right hereunder, and shall inure to the benefit of his heirs,
executors, and administrators. In the event of any payment under this Agreement,
the Company shall be subrogated to the extent thereof to all rights of recovery
previously vested in the Indemnitee, who shall execute all instruments and take
all other actions as shall be reasonably necessary for the Company to enforce
such right.
(b) If any provision of this Agreement or the application of any provision
hereof to any person or circumstances is held invalid, unenforceable, or
otherwise illegal, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable, or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid, and legal.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to
principles of conflicts of law and the like.
11. MODIFICATION. This Agreement and the rights and duties of the
Indemnitee and the Company hereunder may be modified only by an instrument in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
BRUSH WELLMAN INC.
By
----------------------------
Clark G. Waite, Vice President,
Chief Financial Officer,
Treasurer and Secretary
----------------------------
Director
Indemnitee
7
<PAGE> 8
Brush Wellman Inc.
Indemnification Agreement
Exhibit 1
INDEMNIFICATION STATEMENT
State of )
ss.:
County of )
I, _______________, being first duly sworn, do depose and say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement made as of ____________, 19__ between BRUSH WELLMAN
INC. (the "Company"), an Ohio corporation, and the undersigned.
2. I am requesting indemnification against costs, charges, expenses (which
may include fees and expenses of attorneys and/or others), judgments, fines, and
amounts paid in settlement (collectively, "Liabilities"), which have been
actually and reasonably incurred by me in connection with a claim referred to in
Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am entitled to
be indemnified as herein contemplated pursuant to the aforesaid Indemnification
Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out
of______________________.
-----------------------------------------
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for said County
and State, this _____ day of____________ 19__.
(Seal)
My commission expires the _______ day of_____________ 19__.
8
<PAGE> 9
Brush Wellman Inc.
Indemnification Agreement
Exhibit 2
UNDERTAKING
State of )
ss.:
County of )
I, ________________, being first duly sworn, do depose and say as follows:
1. This Undertaking is submitted pursuant to the Indemnification
Agreement made as of ______________, 19__ between BRUSH WELLMAN INC. (the
"Company"), an Ohio corporation, and the undersigned.
2. I am requesting payment of costs, charges, and expenses which I have
reasonably incurred or will reasonably incur in defending an action, suit or
proceeding referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3 of the aforesaid Indemnification Agreement.
3. The costs, charges, and expenses for which payment is requested are, in
general, all expenses related to _____________________________________________.
4. PART A
I hereby undertake to (a) repay all amounts paid pursuant hereto if it is
proved by clear and convincing evidence in a court of competent jurisdiction
that my action or failure to act which is the subject of the matter described
herein involved an act or omission undertaken with deliberate intent to cause
injury to the Company or undertaken with reckless disregard for the best
interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
------------------------------
(Signature of Indemnitee)
4. PART B
I hereby undertake to repay all amounts paid pursuant hereto if it
ultimately is determined that I am not entitled to be indemnified by the Company
under the aforesaid Indemnification Agreement or otherwise.
------------------------------
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for said County
and State, this ___ day of _______________ 19__.
(Seal) My commission expires the ____ day of ____________ 19__.
9
<PAGE> 1
EXHIBIT 10(o)
AMENDMENT NO. 3
TO
BRUSH WELLMAN INC. SUPPLEMENTAL
RETIREMENT BENEFIT PLAN
-----------------------
Brush Wellman Inc., an Ohio corporation, pursuant to the order of its
Board of Directors, hereby adopts this Amendment No. 3 to the Brush Wellman
Inc. Supplemental Retirement Benefit Plan (as in effect prior to the December
1, 1992 Restatement) (the "Plan").
I.
Paragraph 4 of the Plan is amended by adding the following at the end
thereof.
C. Special Provision Applicable to Clark G. Waite:
Notwithstanding the foregoing provisions of this paragraph 4, the
following shall apply with respect to Clark G. Waite: If Clark G.
Waite receives a portion of his benefit under the Salaried Plan in the
form of a 100% joint and survivor annuity with his spouse, Barbara N.
Waite, as contingent annuitant, and if for any limitation year of the
Salaried Plan beginning after May 31, 1995, during which Mr. Waite or
his spouse, Barbara N. Waite, is alive, the total of the monthly
payments for such limitation year under the Salaried Plan to Mr. Waite
and/or his spouse, Barbara N. Waite, are less than the applicable
annual amount set forth below, the Employer shall, as soon as
practicable during such limitation year but not later than the last day
of such limitation year, pay to Mr. Waite or his spouse, Barbara N.
Waite, as applicable, the difference between the amount of the total of
the monthly payments for such limitation year under the Salaried Plan
to Mr. Waite and/or his spouse, Barbara N. Waite, and the applicable
annual amount for such limitation year set forth below. The applicable
annual amount set forth below shall be prorated for the limitation year
in which the death of the survivor of Mr. Waite, or his spouse, Barbara
N. Waite, occurs (unless such death of the survivor occurs during the
last month of such limitation year), based on the number of months in
such limitation year for which monthly payments under the Salaried Plan
were made to Mr. Waite and/or
<PAGE> 2
his spouse, Barbara N. Waite, and twelve (12) months (or such other
proration as shall be appropriate if such limitation year contains
fewer than twelve months). In the event of any change in the
limitation year of the Salaried Plan or in the event of any qualified
domestic relations order affecting Mr. Waite's benefits under the
Salaried Plan, appropriate adjustment(s) to prevent omission or
duplication shall be made to any amount(s) payable by the Employer
under this subparagraph (C).
<TABLE>
<CAPTION>
Annual Amount from
Limitation Year the Salaried Plan
--------------- ------------------
<S> <C>
June, 1995 through May 1996 $ 3,484.80
June, 1996 through May 1997 $ 3,484.80
June, 1997 through May 1998 $ 6,969.72
June, 1998 through May 1999 $10,454.52
June, 1999 through May 2000 $13,939.32
June, 2000 through May 2001 $13,939.32
June, 2001 through May 2002 $17,424.12
June, 2002 through May 2003 $20,908.92
June, 2003 through May 2004 $24,393.72
Beginning After May 2004 $38,847.36
</TABLE>
II.
The foregoing amendment to the Plan shall be effective on an after the
date of execution entered below.
EXECUTED at Cleveland, Ohio, this 8th day of February, 1995
BRUSH WELLMAN INC.
By /s/ Carl Cramer
-----------------------------
Title: Vice President Finance
And /s/ Michael C. Hasychak
-----------------------------
Title: Treasurer
<PAGE> 1
Exhibit 10q
BRUSH WELLMAN INC. AND SUBSIDIARIES
MANAGEMENT PERFORMANCE COMPENSATION PLAN
(as adopted December 16, 1991, effective January 1, 1992 and as amended
February 24, 1992, December 15, 1992 and February 22, 1993 and February 7,
1995)
I. INTRODUCTION
------------
The Management Performance Compensation Plan provides compensation
opportunity to eligible employees based principally on the Company's
annual financial performance. Any Plan awards for members of the
Operations Team are linked exclusively to Company performance.
Opportunity for other participants is also predicated upon Company
performance and includes recognition of individual and combined
contributions toward personal/team objectives.
II. DEFINITIONS
-----------
PLAN YEAR:
The fiscal year for which the Company's pre-tax income and any Plan
awards are calculated
PRE-TAX INCOME:
The Plan's measure of Company performance in Income before Income
Taxes as presented in the Audited Financial Statement
Pre-tax Income will include the effects of any special charge,
write-off or accounting change and accrued performance or incentive
compensation.
OPERATING INCOME:
The Plan's measure of a subsidiary's (Technical Materials Inc. and
Williams Advanced Materials Inc.) performance in Income before Income
Taxes and Interest expenses.
Operating Income will include any special write-off or accounting
charge and accrued performance or incentive compensation.
<PAGE> 2
Management Performance Compensation Plan
Page 2 of 5
PERSONAL/TEAM PERFORMANCE:
For participants in grades C through E, an assessment of an
individual's achievements and his or her contributions to work and
project teams during the Plan Year
For purposes of the Plan, the evaluation is expressed as a percentage
of base compensation.
BASE COMPENSATION:
The participant's annual base salary in effect on September 30 of the
Plan Year
III. PARTICIPATION
-------------
At the beginning of the Plan Year, the Operations Team will consider
the candidacy of exempt, salaried employees whose responsibilities
affect progress on critical issues facing the Company. Those
individuals selected by the Operations Team will be notified of their
participation, performance compensation grade and performance
compensation opportunity.
Following the beginning of the Plan Year, the Operations Team may
admit new hires or individuals who are promoted or assigned additional
and significant responsibilities. The Operations Team may also
alter performance compensation grade assignments to reflect changed
responsibilities of participants during the first half of the Plan
Year.
Participation of an individual who replaces a former participant must
be approved.
Employees who are designated as participants before April 1 of the
Plan year are eligible for full participation.
Participants who are newly employed on or after April 1 and before
July 1 are eligible for half of any award available for Personal/Team
and Company performance.
Participants who transfer from the Exempt Salaried Performance
Compensation Plan to the Management Performance Compensation Plan on
or after April 1 and before July 1 are eligible for full participation
in the Personal/Team performance component and for half participation
in the Company performance component. Their eligibility under the
Exempt Salaried Performance Compensation Plan ceases for the Plan
Year.
<PAGE> 3
Management Performance Compensation Plan
Page 3 of 5
Changes in performance compensation grade assignments from April 1 to
July 1 will also result in pro-rated participation in awards for
Company performance.
The eligibility of employees hired or with changed job
responsibilities after June 30 will not be considered until the
subsequent Plan Year.
Normally, employees who are participants in any other incentive,
commission or performance compensation plan are not eligible. The
Operations Team may consider pro-rated participation under special
circumstances.
Generally, participants must be employed on the last day of the Plan
Year in order to be eligible for any performance compensation award.
The eligibility and award for any participant who terminates before
year-end is at the discretion of the Operations Team.
IV. PERFORMANCE COMPENSATION OPPORTUNITY FOR COMPANY PERFORMANCE
------------------------------------------------------------
The Organization and Compensation Committee of the Board of Directors
will establish Minimum, Target and Maximum Pre-tax Income levels under
the Plan for the Company and Minimum, Target and Maximum levels for
Operating Income at the subsidiaries by February 28 of the Plan Year.
Performance compensation opportunity by grade for achievement of the
Pre-tax Income or Operating Income Target for the respective unit is
expressed as a percentage of base compensation below:
<TABLE>
<CAPTION>
Achieve
Pre-tax/Operating
Grade Income Target
----- -------------
<S> <C>
A 52%
B 37%
C 17%
D 16%
E 10%
</TABLE>
No award relating to Company performance will be paid for Pre-tax
Income or Operating Income below the Minimum value. Pre-tax Income or
Operating Income which reaches or exceeds the Maximum value will
result in awards at 150 percent of target opportunity for Company
performance. Amounts for Pre-tax Income or Operating Income between
Minimum and Target, or between Target and Maximum, will be pro- rated
according to level of achievement.
<PAGE> 4
Management Performance Compensation Plan
Page 4 of 5
V. PERFORMANCE COMPENSATION OPPORTUNITY FOR PERSONAL/TEAM PERFORMANCE
------------------------------------------------------------------
The Organization and Compensation Committee of the Board of Directors
will establish a Threshold for Pre-tax Income under the Plan for the
Company and Thresholds for Operating Income for its subsidiaries by
February 28 of the Plan Year. The Threshold will be less than the
Minimum value for the Company Performance component. No awards for
Personal/Team performance will be paid for Pre-tax Income or Operating
Income below the Threshold that pertains to the respective unit.
Upon the attainment of the Threshold, participants in grades C, D and
E, may be eligible for a percentage of base compensation for
Personal/Team performance according to the scale below:
<TABLE>
<CAPTION>
Personal/Team
Performance Range
----------- -----
<S> <C>
Outstanding 9 - 10%
Very Good 6 - 8%
Good 4 - 5%
Satisfactory 1 - 3%
Unsatisfactory 0%
</TABLE>
During the first quarter of the Plan Year, or upon eligibility if
later, the supervisor and employee will establish goals and
objectives. Based upon performance relative to the goals and
objectives, the supervisor will recommend a percentage from 0 to 10
percent for the employee's Personal/Team component. Although the
evaluation process may include peer review and other feedback, it will
be coordinated through the supervisor and must be supported by a
written appraisal and discussion with the employee. Personal/Team
performance determinations are subject to Operations Team review and
approval.
VI. PAYMENT
-------
Distribution of any performance compensation awards under the Plan to
participants will be no later than March 15 of the year following the
Plan Year.
In the event of death, any award due a participant will be made to the
employee's estate or, at the discretion of the Operations Team, to the
employee's spouse.
<PAGE> 5
Management Performance Compensation Plan
Page 5 of 5
VII. GENERAL PROVISIONS
------------------
The Operations Team has authority to make administrative decisions in
the interests of the Plan.
The Board of Directors, through its Organization and Compensation
Committee, shall have final and conclusive authority for
interpretation and application of this Plan. Subject to the preceding
sentence, any determination by the Company's independent accountants
shall be final and conclusive.
The Chief Executive Officer will submit to the Committee prior to its
regularly scheduled meeting in December of each year, any changes in
the Plan due to changes in organization structure, acquisitions or
other factors which are deemed to be significant in the effective
Operation of the Plan.
The Board of Directors shall have full authority to terminate the Plan
other than with respect to the current Plan Year. The Board of
Directors may change the Plan for a future Plan Year at any time and
may make changes for the current Plan Year prior to February 28.
This Plan is not a contract of employment.
<PAGE> 1
<TABLE>
EXHIBIT 11
BRUSH WELLMAN INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Primary:
Average shares outstanding 16,102,350 16,087,250 16,080,554
Dillutive stock options based
on the treasury stock method
using average market price 80,484 9,442 45,233
---------- ---------- ----------
TOTALS 16,182,834 16,096,692 16,125,787
=========== ========== ===========
Net Income $18,550,000 $6,458,000 $10,500,000
Per share amount $1.15 $0.40 $0.65
=========== ========== ===========
Fully diluted:
Average shares outstanding 16,102,350 16,087,250 16,080,554
Dillutive stock options based
on the treasury stock method
using average market price 140,983 20,603 45,233
---------- ---------- ----------
TOTALS 16,243,333 16,107,853 16,125,787
=========== ========== ===========
Net Income $18,550,000 $6,458,000 $10,500,000
Per share amount $1.14 $0.40 $0.65
=========== ========== ===========
</TABLE>
<PAGE> 1
Exhibit 13
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Brush Wellman Inc. and Subsidiaries
Years ended December 31, 1994, 1993 and 1992
(Dollars in thousands except per share amounts)
<S> <C> <C> <C>
1994 1993 1992
---------- ---------- ----------
Net Sales $ 345,878 $ 295,478 $ 265,034
Costs and expenses:
Cost of sales 253,938 227,686 192,944
Selling, administrative and general expenses 55,502 47,814 46,576
Research and development expenses 8,754 7,121 7,294
Interest expense 2,071 2,952 3,206
Other - net 2,586 2,199 1,271
---------- ---------- ----------
322,851 287,772 251,291
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 23,027 7,706 13,743
Income taxes:
Currently payable 6,270 3,597 3,407
Deferred (1,793) (2,349) (164)
---------- ---------- ----------
4,477 1,248 3,243
---------- ---------- ----------
NET INCOME $ 18,550 $ 6,458 $ 10,500
========== ========== ==========
Net income per share of Common Stock $ 1.14 $ 0.40 $ O.65
========== ========== ==========
Average number of shares of Common Stock outstanding 16,243,333 16,107,853 16,125,787
<FN>
See notes to consolidated financial statements.
</TABLE>
8
<PAGE> 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
Brush Wellman Inc. and Subsidiaries
Years ended December 31, 1994, 1993 and 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
NET INCOME $18,550 $ 6,458 $10,500
Adjustments to Reconcile Net Income to Net Cash
Provided From Operating Activities:
Depreciation, depletion and amortization 17,588 18,642 17,851
Amortization of mine development 2,031 3,078 2,329
Decrease (Increase) in accounts receivable (4,610) (9,941) 1,403
Decrease (Increase) in inventory (7,058) 6,416 (1,586)
Decrease (Increase) in prepaid and other current assets 565 (112) 559
Increase (Decrease) in accounts payable and accrued expenses 7,941 (4,721) (3,651)
Increase (Decrease) in interest and taxes payable 809 (408) 3,018
Increase (Decrease) in defeffed income tax (1,879) (1,554) (149)
Increase (Decrease) in other long-term liabilities 1,152 332 1,805
Other - net 80 144 (1,216)
------- ------- -------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 35,169 18,334 30,863
Cash Flows From Investing Activities:
Payments for purchase of property, plant and equipment (17,214) (11,901) (13,604)
Payments for mine development (543) (814) (848)
Payments for acquisition of business (720) - (2,296)
Other Investments - net (24) 645 (4,000)
Borrowing from Company-owned life insurance policy - 14,885 -
------- ------- -------
NET CASH PROVIDED FROM (USED IN) INVESTING ACTIVITIES (18,501) 2,815 (20,748)
Cash Flows From Financing Activities:
Proceeds from (repayment of) short-term debt - net (1,962) (5,101) (3,138)
Proceeds from issuance of long-term debt - - 428
Repayment of long-term debt (704) (9,000) (1,574)
Issuance of Common Stock under stock option plans 502 10 244
Payments of dividends (3,702) (4,183) (3,218)
------- ------- -------
NET CASH USED IN FINANCING ACTIVITIES (5,866) (18,274) (7,258)
Effects of Exchange Rate Changes 1,949 625 (321)
------- ------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS 12,751 3,500 2,536
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,690 4,190 1,654
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $20,441 $ 7,690 $ 4,190
</TABLE>
See notes to consolidated financial statements.
9
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
Brush Wellman Inc. and Subsidiaries
December 31, 1994 and 1993
(Dollars in thousands)
<TABLE>
1994 1993
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 20,441 $ 7,690
Accounts receivable (less allowance of $1,037 for 1994 and $905 for 1993) 52,272 46,462
Inventories 93,601 86,477
Prepaid expenses and deferred income taxes 14,903 15,595
-------- --------
TOTAL CURRENT ASSETS 181,217 156,224
OTHER ASSETS 19,153 18,222
PROPERTY, PLANT AND EQUIPMENT
Land 4,399 4,399
Buildings 71,624 67,570
Machinery and equipment 247,182 238,265
Construction in progress 7,661 7,720
Allowances for depreciation (224,242) (210,681)
-------- --------
106,624 107,273
Mineral resources 5,512 5,498
Mine development 14,433 13,890
Allowances for amortization and depletion (9,806) (7,735)
-------- --------
10,139 11,653
-------- --------
PROPERTY, PLANT AND EQUIPMENT - NET 116,763 118,926
-------- --------
$317,133 $293,372
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 20,643 $ 16,263
Accounts payable 8,861 5,427
Salaries and wages 9,031 5,438
Taxes other than income taxes 1,843 2,209
Other liabilities and accrued items 15,775 13,175
Dividends payable 1,288 804
Income taxes 8,482 7,636
-------- --------
TOTAL CURRENT LIABILITIES 65,923 50,952
OTHER LONG-TERM LIABILITIES 41,940 40,663
LONG-TERM DEBT 18,527 24,000
DEFERRED INCOME TAXES 3,803 5,682
SHAREHOLDERS' EQUITY
Common Stock, $1 par value
Authorized 45,000,000 shares; issued 21,215,210 shares (21,180,710 for 1993) 21,215 21,181
Additional paid-in capital 44,258 43,790
Retained income 203,341 188,978
-------- --------
268,814 253,949
Less Common Stock in treasury, 5,093,295 shares 81,874 81,874
-------- --------
TOTAL SHAREHOLDERS' EQUITY 186,940 172,075
-------- --------
$317,133 $293,372
======== ========
</TABLE>
See notes to consolidated financial statements.
10
<PAGE> 4
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Brush Wellman Inc. and Subsidiaries
Years ended December 31, 1994, 1993 and 1992
(Dollars in thousands except per share amounts)
Additional Common
Common Paid-In Retained Stock In
Stock Capital Income Treasury
---------------------------------------------
<S> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1992 $ 21,163 $ 43,554 $179,421 $ 81,874
Net Income 10,500
Declared dividends $.26 per share (4,184)
Proceeds from sale of 16,900 shares under option plans 17 202
Income tax benefit from employees' stock options 25
-------- -------- -------- --------
BALANCES AT DECEMBER 31, 1992 21,180 43,781 185,737 81,874
Net Income 6,458
Declared dividends $.20 per share (3,217)
Proceeds from sale of 900 shares under option plans 1 9
-------- -------- -------- --------
BALANCES AT DECEMBER 31, 1993 21,181 43,790 188,978 81,874
Net Income 18,550
Declared dividends $.26 per share (4,187)
Proceeds from sale of 34,500 shares under option plans 34 427
Income tax benefit from employees' stock options 41
-------- -------- -------- --------
BALANCES AT DECEMBER 31, 1994 $ 21,215 $ 44,258 $203,341 $ 81,874
======== ======== ======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
11
<PAGE> 5
NOTES TO CONSOLIDATED STATEMENTS
Brush Wellman Inc. and Subsidiaries
December 31, 1994
NOTE A - ACCOUNTING POLICIES
CONSOLIDATION: The consolidated financial statements include the accounts of
Brush Wellman Inc. and its subsidiaries, all of which are wholly owned.
CASH EQUIVALENTS: All highly liquid investments with a put option or maturity
of three months or less when purchased are considered to be cash equivalents.
INVENTORIES: Inventories are stated at the lower of cost or market. The cost
of domestic inventories except ore and supplies is principally determined
using the last-in, first-out (LIFO) method. The remaining inventories are
stated principally at average cost.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is stated on the
basis of cost. Depreciation is computed principally by the straight-line
method, except certain facilities for which depreciation is computed by the
sum-of-the-years digits or units-of-production method. An impairment reserve
is provided when a determination is made that the carrying value of an asset
will not be realized based on estimated future cash flows.
INTANGIBLE ASSETS: The cost of intangible assets is amortized by the straight-
line method over the periods estimated to be benefitted, which is generally
ten years or less.
DERIVATIVES: Forward foreign exchange currency contracts are marked-to-market
using the period end exchange rates and any unrealized losses are
taken to income. Realized gains and losses on forward contracts and
realized gains on foreign currency options are taken to income when the
financial instrument matures. Option premiums are classified as prepaid
expenses and amortized over the term of the option.
INCOME TAXES: Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." This
statement requires that deferred income taxes reflect the tax consequences of
currently enacted rates for differences between the tax bases of assets and
liabilities and their financial reporting amounts.
OTHER POSTEMPLOYMENT BENEFITS: Effective January 1, 1994, the Company adopted
Statement of Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits." This Standard requires accrual accounting for
benefits to former or inactive employees after employment but before
retirement. The adoption of this standard did not have a significant effect
on the consolidated financial statements at the time of adoption nor was one
anticipated thereafter.
RECLASSIFICATION: Certain amounts in prior years have been reclassified
to conform with the 1994 consolidated financial statement presentation.
NET INCOME PER SHARE: Net income per share is based on the weighted
average number of outstanding shares of Common Stock including common stock
equivalents (stock options) as appropriate under the treasury stock method.
NOTE B - ACQUISITIONS
In October 1994, the Company acquired the assets, including net working
capital, of Hydrostatics Inc. In January 1992, the Company acquired for cash
and notes the remaining common stock of Tegmen Corporation. These
transactions were accounted for as purchases and did not have a material
impact on operations.
<TABLE>
NOTE C - INVENTORIES
Inventories in the consolidated balance sheets are summarized as follows:
<CAPTION>
DECEMBER 31
(Dollars in thousands) 1994 1993
-------- --------
<S> <C> <C>
Principally average cost:
Raw materials and supplies $ 21,020 $ 19,431
In process 55,008 50,349
Finished 39,530 33,720
-------- --------
115,558 103,500
Excess of average cost over LIFO
inventory value 21,957 17,023
-------- --------
$ 93,601 $ 86,477
======== ========
</TABLE>
Inventories aggregating $63,502,000 and $59,404,000 are stated at LIFO at
December 31, 1994 and 1993, respectively.
<TABLE>
NOTE D - INTEREST
Interest expense associated with active construction and mine development
projects is capitalized and amortized over the future useful lives of the
related assets. Interest paid was $2,518,000, $3,184,000 and $3,861,000 in
1994, 1993 and 1992, respectively. Interest costs capitalized and the
amounts amortized are as follows:
<CAPTION>
(Dollars in thousands) 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Interest incurred $2,407 $3,177 $3,837
Less capitalized interest 336 225 631
------ ------ ------
$2,071 $2,952 $3,206
====== ====== ======
Amortization, included principally
in cost of sales $ 525 $ 639 $ 583
====== ====== ======
</TABLE>
In 1986, the Company purchased company-owned life insurance policies
insuring the lives of certain United States employees. The contracts are
recorded at cash surrender value, net of policy loans, in Other Assets. The
net contract expense (income), including interest expense recorded in Selling,
Administrative and General expenses, was $598,000, $184,000 and ($137,000) in
1994, 1993 and 1992, respectively. The related interest expense was
$4,091,000, $1,820,000 and $1,236,000, respectively.
12
<PAGE> 6
<TABLE>
NOTE E - DEBT
A summary of long-term debt follows:
<CAPTION>
DECEMBER 31
(Dollars in thousands) 1994 1993
------- -------
<S> <C> <C>
9.53% - 9.68% medium term notes,
$5,000,000 payable in each of
1995, 1997 and 2000 $15,000 $15,000
Variable rate industrial development revenue bonds
payable in installments beginning in 2005 3,000 3,000
5.45% - 6.45% industrial development revenue
bonds payable in equal installments in
1996 through 2000 4,000 4,000
4.90% note payable in yen in equal
installments through 1997 1,527 2,000
------- -------
23,527 24,000
Current portion of long-term debt (5,000) -
------- -------
$18,527 $24,000
======= =======
</TABLE>
The Company has a revolving credit agreement with four banks which provides
a maximum availability of $50,000,000 through April 30, 1998. At December
31, 1994, there were no borrowings outstanding against this agreement.
The Company has a private placement agreement whereby the Company can issue
up to an aggregate of $75,000,000 of medium-term notes ($15,000,000
outstanding at December 31, 1994). The notes bear a fixed interest rate and
may have maturities from nine months to thirty years from date of issue as
agreed upon in each case by the purchaser and the Company.
Included in short-term debt is $15,643,000 outstanding under lines of
credit totaling $75,443,000. Of the amount outstanding, $5,870,000 is
payable in foreign currencies and $9,773,000 is denominated in precious
metal, primarily gold. The remaining $5,000,000 represents the current
maturity of a medium-term note. The average rate on short-term debt was 2.0%
and 2.7% as of December 31, 1994 and 1993, respectively.
During 1994, the Company refunded its $3,000,000 industrial development
revenue bonds. The 7.25% bonds were re-funded into variable rate demand
bonds. The variable rate ranged from 2.15% to 5.70% during 1994.
The loan agreements include certain restrictive covenants covering the
incurrence of additional debt, interest coverage, and maintenance of working
capital and tangible net worth (as defined).
NOTE F - DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE INFORMATION
DERIVATIVE FINANCIAL INSTRUMENTS
The Company has a program in place to manage foreign currency risk. As part
of that program, the Company has entered into forward contracts and purchased
foreign currency options to hedge anticipated foreign currency transactions,
primarily foreign sales during the next twelve months. The purpose of the
program is to protect against the reduction in value of the foreign currency
transactions from adverse exchange rate movements. Should the dollar
strengthen significantly, the decrease in the value of the foreign currency
transactions will be partially offset by the gains on the hedge contracts and
options.
All hedge contracts mature in one year or less. The options were
generally several percent out-of-the-money at the time of purchase and
continued to be as of December 31, 1994. At year end, the Company was in a
net unrealized gain position on its forward contracts that was immaterial to
the Company as a whole. Therefore, the fair market value of the forward
contracts approximates their nominal value as of the balance sheet date. The
contracted amounts of the Company's outstanding forward contracts and
purchased option contracts as of December 31, 1994 were as follows:
<TABLE>
<CAPTION>
PURCHASED
FORWARD OPTION TOTAL
(Dollars in thousands) CONTRACTS CONTRACTS CONTRACTS
--------- --------- ---------
<S> <C> <C> <C>
Currency:
Deutschemark $2,900 $4,200 $ 7,100
Yen 4,300 4,200 8,500
Sterling 1,246 1,350 2,596
------ ------ -------
Total $8,446 $9,750 $18,196
</TABLE> ====== ====== =======
CASH AND CASH EQUIVALENTS
Included in cash equivalents are $10.5 million in variable rate demand notes
which are investments in debt securities that are revalued every seven days
and can be put back to the remarketing agent with seven days' notice. The
notes are guaranteed by letter of credit from highly rated financial
institutions. The carrying amounts reported in the balance sheet for cash
and cash equivalents approximate fair value.
LONG- AND SHORT-TERM DEBT
The carrying amounts of the Company's long- and short-term borrowings
approximate their fair value. The fair value is determined using discounted
cash flow analysis based on the Company's current incremental borrowing
rates for similar types of borrowing arrangements.
NOTE G - CAPITAL STOCK
The Company has 5,000,000 shares of Serial Preferred Stock authorized (no
par value), none of which has been issued. Certain terms of the Serial
Preferred Stock, including dividends, redemption and conversion, will be
determined by the Board of Directors prior to issuance.
On January 26, 1988, the Company's Board of Directors declared a dividend
of one preferred stock purchase right for each outstanding share of Common
Stock. Each right entitles the shareholder to buy one one-hundredth of a
share of Serial Preferred Stock, Series A, at an initial exercise price of
$100. 450,000 unissued shares of Serial Preferred Stock have been designated
as Series A Preferred Stock. Each share of Series A Preferred Stock will be
entitled to participate in dividends on an equivalent basis with one hundred
shares of Brush Wellman Common Stock. Each share of Series A Preferred
Stock will be entitled to one vote. The rights are not exercisable and will
not be evidenced by separate right certificates until a specified time after
13
<PAGE> 7
any person or group acquires beneficial ownership of 20% or more (or
announces a tender offer for 20% or more) of Brush Wellman Common Stock. The
rights expire on January 26, 1998, and can be redeemed for 3 cents per right
under certain circumstances.
The 1989 Stock Option plan authorizes the granting of options for shares
of Common Stock at not less than the fair market value of the shares at the
date of grant. Options may be qualified or non-qualified, or a combination
thereof. Options outstanding under the 1989 plan and previous plans
generally become exercisable over a four-year period and expire ten years
from the date of the grant.
The 1990 Stock Option Plan for Non-Employee Directors provides for a
one-time grant of 5,000 options to each non-employee director at not less
than the fair market value of the shares at the date of the grant. Options
are non-qualified and become exercisable six months after the date of grant.
The options generally expire ten years after the date they were granted.
The Company has a plan authorizing the granting of stock appreciation
rights related to options granted under any stock option plan. Such rights
permit an optionee, by surrendering all or a portion of an option, to
receive an amount equal to 100% (or such lesser percentage as the
Organization and Compensation Committee of the Board of Directors may
determine) of the excess at date of exercise of the market price of the
Common Stock over the option price. Such amount may be paid in cash, Common
Stock or in such a manner as the Committee may determine. During 1994, 1993
and 1992, no stock appreciation rights were granted nor were exercised. At
December 31, 1994 no stock appreciation rights were outstanding and 694,050
stock appreciation rights were available for future grants.
A summary of option activity during the years 1994, 1993 and 1992 follows:
<TABLE>
<CAPTION>
Shares Option Prices
--------- ----------------
<S> <C> <C>
Outstanding at January 1, 1992 1,550,115 $12.00 to $38.94
Granted 252,000 $14.00 to $17.63
Exercised (16,900) $12.00 to $14.50
Cancelled (17,400) $12.00 to $38.94
---------
Outstanding at December 31, 1992 1,767,815 $12.00 to $38.94
Granted 257,250 $11.81 to $13.56
Exercised (900) $12.00 to $14.50
Cancelled (280,075) $12.00 to $38.94
---------
Outstanding at December 31, 1993 1,744,090 $11.81 to $38.94
Granted 215,700 $15.19 to $15.75
Exercised (34,500) $12.00 to $15.31
Cancelled (346,990) $12.00 to $38.94
---------
Outstanding at December 31, 1994 1,578,300 $11.81 to $38.94
=========
</TABLE>
At December 31, 1994, options for 1,235,560 shares (1,377,160 shares at
December 31, 1993) were exercisable, and there were 243,565 shares
(112,275 at December 31, 1993) available for future grants.
NOTE H - INCOME TAXES
Income before taxes and income taxes are made up of the following
components, respectively:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Income before income taxes:
Domestic $17,570 $ 7,316 $13,372
Foreign 5,457 390 371
------- ------- -------
Total before income taxes $23,027 $ 7,706 $13,743
======= ======= =======
Income taxes:
Current Income taxes:
Domestic $ 5,374 $ 3,326 $ 3,024
Foreign 1,968 271 383
Benefit of foreign loss carryforward (1,072) - -
------- ------- -------
Total current 6,270 3,597 3,407
Deferred Income taxes:
Principally domestic (1,793) (2,349) (164)
------- ------- -------
Total income taxes $ 4,477 $ 1,248 $ 3,243
======= ======= =======
</TABLE>
A reconciliation of the federal statutory and effective income tax rates
(benefits) follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate 34.0% 34.0% 34.0%
State and local income taxes, net of
federal tax effect 3.2 2.7 3.2
Effect of excess of percentage depletion
over cost depletion (6.1) (15.3) (9.5)
Company-owned life insurance (5.1) (7.2) (3.4)
Difference due to book and tax basis
of assets of acquired businesses 0.4 1.1 2.6
Taxes on foreign income - net (3.5) (1.9) (4.1)
Reduction of valuation allowance (4.7) - -
Other items 1.2 2.8 0.8
---- ---- ----
Effective tax rate 19.4% 16.2% 23.6%
==== ==== ====
</TABLE>
Included in income taxes currently payable, as shown in the Consolidated
Statements of Income, are $1,116,000, $312,000, and $658,000 of state and
local income taxes in 1994, 1993 and 1992, respectively.
The Company made domestic and foreign income tax payments, net of
refunds, of $5,353,000, $4,082,000, and $510,000 in 1994, 1993 and 1992,
respectively.
Substantially all net operating loss carryforwards which had a valuation
allowance at December 31, 1993 were utilized or expired in 1994.
Under Statement 109, deferred tax assets and liabilities are determined
based on temporary differences between the financial reporting bases and the
tax bases of assets and liabilities. Deferred tax assets and (liabilities)
recorded in the Consolidated balance sheets consist of the following at
December 31:
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993
------- -------
<S> <C> <C>
Postretirement benefits other than pensions $11,957 $11,758
Alternative minimum tax credit 5,704 5,825
Other deferred assets and reserves 5,000 4,676
Restructuring accrual 1,950 1,987
Net operating loss carry forward - 1,540
Other 64 -
------- -------
24,675 25,786
Valuation allowance - (1,540)
------- -------
Total deferred tax assets 24,675 24,246
------- -------
Depreciation (10,370) (11,709)
Pensions (3,721) (3,547)
Mine development (2,479) (2,814)
Capitalized interest expense (1,392) (1,514)
Inventory (1,064) (740)
Other - (66)
------- -------
Total deferred tax liabilities (19,026) (20,390)
------- -------
Net deferred tax asset $ 5,649 $ 3,856
======= =======
</TABLE>
14
<PAGE> 8
During 1992, deferred federal income taxes were provided for
timing differences. These items consisted of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) 1992
------
<S> <C>
Alternative minimum tax liability $ (876)
Accelerated depreciation (626)
Mine development (381)
Employee benefits (328)
Restructuring accrual 1,036
Difference due to book and tax basis
of inventory 397
Difference due to book and tax basis
of other assets 416
Other items 198
------
Total deferred tax $ (164)
======
</TABLE>
NOTE I - PENSIONS
The Company and its subsidiaries have noncontributory pension plans covering
substantially all U.S. employees. Plans provide benefits based on the
participants' years of service and compensation or stated amounts for each
year of service. The Company's funding policy is to make the minimum
actuarially computed annual contributions required by applicable
regulations. No contributions were made in 1994, 1993 or 1992.
A summary of the components of net periodic pension cost for pension
plans follows (in thousands):
<TABLE>
<CAPTION>
Defined benefit plans: 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits earned
during the period $2,125 $1,846 $1,603
Interest cost on projected
benefit obligation 4,247 4,035 3,932
Actual return on plan assets 897 (5,744) (3,692)
Net amortization and deferral (7,684) (669) (2,472)
------ ------ ------
Total (credit) expense $ (415) $ (532) $ (629)
====== ====== ======
</TABLE>
The following table sets forth the funded status of the Company's plans and
the amounts recognized in the consolidated balance sheets at December 31 (in
thousands):
<TABLE>
<CAPTION>
Plans Whose Assets
Exceed Accumulated
Bneefits
-------------------
1994 1993
------ -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $41,130 $42,986
======= =======
Accumulated benefit obligation $44,828 $46,763
======= =======
Plan assets at fair value $68,192 $72,652
Projected benefit obligation (53,323) (56,860)
------- -------
Plan assets in excess of projected
benefit obligation 14,869 15,792
Unrecognized net gain (1,283) (1,579)
Unrecognized net assets, at date of
adopting FAS 87, net of amortization (5,430) (6,137)
Unrecognized prior service cost 2,788 2,356
------- -------
Net pension asset recognized at December 31 $10,944 $10,432
======= =======
</TABLE>
Assumptions used in accounting for the pension plans were:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Weighted-average discount rate 8.25% 7.5% 8.5%
Rate of increase in compensation levels 5% 5% 5%
Expected long-term rate of return on assets 9% 9% 9%
</TABLE>
Plan assets consist primarily of listed common stocks, corporate and
government bonds and short-term investments.
The Company also has accrued unfunded retirement arrangements for certain
U.S. employees and directors. At December 31, 1994, the projected benefit
obligation was $1,312,000 ($1,213,000 in 1993) and is included in other
long-term liabilities. Certain foreign subsidiaries have funded and accrued
unfunded retirement arrangements which are not material to the consolidated
financial statements.
The Company also sponsors a defined contribution plan available to
substantially all U.S. employees. Company contributions to the plan are
based on matching a percentage of employee savings up to a specified
savings level. The Company's contribution was $1,596,000 in 1994,
$1,529,000 in 1993 and $1,447,000 in 1992.
NOTE J - OTHER POSTRETIREMENT BENEFIT PLANS
In addition to the Company's defined benefit pension plans, the Company
currently provides postretirement medical and death benefits to certain
full-time employees and spouses, excluding those of subsidiaries. The
Company also provides medical benefits to certain retired employees and
spouses from an operation that was divested in 1985.
Employees become eligible at age 55 with 10 years of service. Certain
employees, excluding those of subsidiaries, who retired after June 30,
1992 receive credits, based on years of service up to 30, to be used
toward the purchase of medical benefits. Contributions toward the cost
of medical benefits are required from retirees with less than 30 years of
service and also for increases in the cost of medical benefits due to
inflation. Employees who retired prior to July 1, 1992 generally had
less stringent eligibility criteria and contribution rates, and account
for the majority of the postretirement benefit obligation.
The following table presents the plan's funded status and the amounts
recognized in the Company's consolidated balance sheets (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $26,350 $28,388
Fully eligible active plan participants 3,917 3,816
Other active plan participants 3,368 3.816
------- -------
33,635 36,020
Plan assets 0 0
Unrecognized net gain/(loss) 1,533 (1,437)
------- -------
Accrued postretirement benefit obligation $35,168 $34,583
======= =======
</TABLE>
Net periodic postretirement benefit cost includes the following
components (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Service cost . . . . . . . . . . . . . . . . $ 341 $ 282 $ 320
Interest cost . . . . . . . . . . . . . . . 2,612 2,826 3,061
Adjustment to benefit obligation . . . . . . - (1,227) -
----- ----- ------
Net periodic postretirement
benefit cost . . . . . . . . . . . . . . . $2,953 $1,881 $3,381
====== ====== ======
</TABLE>
The weighted-average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., health care cost trend rate) used in determining
the accumulated postretirement benefit obligation as of December 31, 1994 is
7.0% for retirees age 65 and over and 9.5% for retirees under age 65 in 1995,
and both are assumed to decrease gradually to 5.5% until 2003 and remain at
that level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rates by one
15
<PAGE> 9
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1994 by $2,235,000 and the aggregate
of the service and interest cost components of net periodic postretirement
benefit cost for 1994 by $201,000. This increase would apply only to
employees who retired prior to July 1, 1992.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 8.25% at December 31, 1994, 7.5% at
December 31, 1993 and 8.5% at December 31, 1992.
NOTE K - CONTINGENCIES
The Company is from time to time involved in various legal and other
proceedings that relate to the ordinary course of operating its business,
including, but not limited to: employment-related actions; product liability
claims; and workers' compensation claims.
While the Company is unable to predict the outcome of current
proceedings, based upon the facts currently known to it, the Company does
not believe that resolution of these proceedings will have a material
adverse effect on the operations of the Company.
The Company has an active program for environmental compliance which
includes the identification of environmental projects and estimating their
impact on the Company's financial performance and available resources.
Environmental expenditures that relate to current operations, such as
wastewater treatment and control of airborne emissions, are either expensed
or capitalized as appropriate. For projects involving remediation,
estimates of the probable costs are made and the Company has set aside a
reserve of $3.8 million at December 31, 1994 ($4.4 million at December 31,
1993). This reserve covers existing or currently foreseen projects.
Expenditures are charged to the reserve which is adjusted from time to time
as additional projects are identified and for which probable costs of
remediation can be estimated. This reserve is included in the balance sheet
as current other liabilities and accrued items.
<TABLE>
NOTE L - OPERATIONS BY GEOGRAPHIC AREA
<CAPTION>
1994
--------------------------------------------------------------
Operations International
in the Distribution Adjustments &
Years ended December 31, 1994, 1993 and 1992 United States Subsidiaries Eliminations Consolidated
(Dollars in thousands) ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $262,358 $83,520 $345,878
Transfers between operations 47,239 ($47,239)
-------- ------- -------- --------
Net Sales $309,597 $83,520 ($47,239) $345,878
======== ======= ======== ========
Operating profit (loss) $ 30,990 $ 5,841 ($2,263) $34,568
======== ======= ========
Corporate expense (9,470)
Interest expense (2,071)
--------
Income before income taxes $23,027
=======
Identifiable assets at December 31, 1994 $274,376 $41,687 ($ 5,538) $310,525
======== ======= ========
Corporate assets 6,608
--------
Total assets at December 31, 1994 $317,133
========
<CAPTION>
1993
--------------------------------------------------------------
Sales to unaffiliated customers $244,394 $51,084 $295,478
Transfers between operations 32,339 ($32,339)
-------- ------- -------- --------
Net Sales $276,733 $51,084 ($32,339) $295,478
======== ======= ======== ========
Operating profit $ 15,986 $ 1,034 $ 369 $ 17,389
======== ======= ========
Corporate expense (6,731)
Interest expense (2,952)
-------
Income before income taxes $ 7,706
=======
Identifiable assets at December 31, 1993 $259,839 $30,894 ($2,927) $287,806
======== ======= ========
Corporate assets 5,566
-------
Total assets at December 31, 1993 $293,372
=======
<CAPTION>
1992
--------------------------------------------------------------
Sales to unaffiliated customers $219,443 $45,591 $265,034
Transfers between operations 28,550 ($28,550)
-------- ------ --------- --------
Net Sales $247,993 $45,591 ($28,550) $265,034
======== ======= ========= ========
Operating profit $ 21,992 $ 1,496 $ 587 $24,075
======== ======= ========
Corporate expense (7,126)
Interest expense (3,206)
------
Income before income taxes $13,743
=======
Identifiable assets at December 31, 1992 $258,316 $30,081 ($2,126) $286,271
Corporate assets ======== ======= ======= 23,768
-------
Total assets at December 31, 1992 $310,039
========
</TABLE>
16
<PAGE> 10
Transfers between operations are accounted for in the same manner as sales to
unaffiliated customers. Corporate assets are principally cash and cash
equivalents and investments.
Total international sales were $114,911,000 in 1994, $86,334,000 in 1993,
and $70,922,000 in 1992. These are comprised of exports from United States
operations and direct sales by international distribution subsidiaries,
primarily in Europe. Most of these sales represent products manufactured in
the United States.
Export sales from United States operations amounted to $31,391,000 in 1994,
$35,101,000 in 1993, and $25,331,000 in 1992.
NOTE M - QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
Years ended December 31, 1994 and 1993
(Dollars in thousands except per share amounts)
1994
----------------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net Sales $84,794 $86,560 $86,730 $87,794 $345,878
Gross Margin 23,194 24,992 20,100 23,654 91,940
Percent of Sales 27.4% 28.9% 23.2% 26.9% 26.6%
Net Income 5,594 5,893 2,432 4,631 18,550
Per Share of Common Stock:
Net Income 0.35 0.36 0.15 0.28 1.14
Dividends 0.05 0.05 0.08 0.08 0.26
Stock price range
High 17.25 18.63 17.88 17.88
Low 13.38 15.00 13.50 14.38
</TABLE>
Charges related to the transfer of the direct-bond copper production from New
York to Massachusetts reduced second quarter net income by approximately
$450,000 ($0.03 per share). Third quarter net income was reduced by
approximately $1,500,000 ($0.09 per share) due to the partial closure of the
Applications Development Center.
<TABLE>
<CAPTION>
1993
----------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $69,380 $70,852 $76,816 $78,430 $295,478
Gross Margin 15,846 15,589 16,831 19,526 67,792
Percent of Sales 22.8% 22.0% 21.9% 24.9% 22.9%
Net Income 1,154 158 1,663 3,483 6,458
Per Share of Common Stock:
Net Income 0.07 0.01 0.10 0.22 0.40
Dividends 0.05 0.05 0.05 0.05 0.20
Stock price range
High 17.50 13.63 12.38 14.38
Low 13.25 11.38 11.38 11.88
</TABLE>
17
<PAGE> 11
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
Board of Directors and Shareholders
Brush Wellman Inc.
We have audited the accompanying consolidated balance sheets of Brush Wellman
Inc. and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of income, shareholders'equity, and cash flows for each
of the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Brush Wellman
Inc. and subsidiaries at December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994 in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
January 25, 1995
- -------------------------------------------------------------------------------
REPORT OF MANAGEMENT
The management of Brush Wellman Inc. is responsible for the contents of the
financial statements which are prepared in conformity with generally accepted
accounting principles. The financial statements necessarily include amounts
based on judgments and estimates. Financial information elsewhere in the
annual report is consistent with that in the financial statements.
The Company maintains a comprehensive accounting system which includes
controls designed to provide reasonable assurance as to the integrity and
reliability of the financial records and the protection of assets. However,
there are inherent limitations in the effectiveness of any system of internal
controls and, therefore, it provides only reasonable assurance with respect to
financial statement preparation. An internal audit staff is employed to
regularly test and evaluate both internal accounting controls and operating
procedures, including compliance with the Company's statement of policy
regarding ethical and lawful conduct. The role of the independent auditors is
to provide an objective review of the financial statements and the underlying
transactions in accordance with generally accepted auditing standards.
The Audit Committee of the Board of Directors, comprised of directors who
are not members of management, meets regularly with management, the independent
auditors and the internal auditors to ensure that their respective
responsibilities are properly discharged. The independent auditors and the
internal audit staff have full and free access to the Audit Committee.
/s/ Carl Cramer
Carl Cramer
Vice President and Chief Financial Officer
18
<PAGE> 12
SELECTED FINANCIAL DATA
Brush Wellman Inc. and Subsidiaries
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR
Net Sales $345,878 $295,478 $265,034 $267,473 $297,390
Cost of sales 253,938 227,686 192,944 202,080 212,841
Interest expense 2,071 2,952 3,206 3,755 3,359
Income (loss) from continuing operations
before income taxes 23,027 7,706 13,743 (61,109) 24,773
Income taxes (benefit) 4,477 1,248 3,243 (17,091) 7,214
Income (loss) from continuing operations 18,550 6,458 10,500 (44,018) 17,559
Net income (loss) 18,550 6,458 10,500 (44,018) 17,559
Per share of Common Stock:
Income (loss) from continuing operations 1.14 0.40 0.65 (2.74) 1.09
Net income (loss) 1.14 0.40 0.65 (2.74) 1.09
Cash dividends declared 0.26 0.20 0.26 0.59 0.71
Depreciation and amortization 19,619 21,720 20,180 22,759 24,070
Capital expenditures 17,214 11,901 13,604 13,605 16,160
Mine development expenditures 543 814 848 6,389 5,699
YEAR-END POSITION
Working Capital 115,294 105,272 88,616 80,427 87,570
Ratio of current assets to current liabilities 2.8 to 1 3.1 to 1 2.5 to 1 2.2 to 1 2.4 to 1
Property and equipment:
At Cost 350,811 337,342 332,971 321,981 307,088
Cost less depreciation and impairment 116,763 118,926 127,991 132,579 143,635
Total assets 317,133 293,372 310,039 307,296 338,982
Other long-term liabilities 41,940 40,663 40,332 38,029 9,356
Long-term debt 18,527 24,000 33,808 34,946 26,673
Shareholders' equity 186,940 172,075 168,824 162,264 215,891
Book value per share 11.59 10.70 10.49 10.10 13.43
Number of shares of stock outstanding 16,121,915 16,087,415 16,086,515 16,069,615 16,077,723
Shareholders of record 2,521 2,566 2,762 3,116 3,446
Number of employees 1,833 1,803 1,831 1,943 2,079
</TABLE>
See Notes to consolidated financial statements.
Impairment and restructuring charges reduced net income by $30,751,000 in
1991 and $8,400,000 in 1989.
The cumulative effect of a change in accounting for postretirement benefits
reduced net income by $16,471,000 in 1991.
In December 1986, a business acquisition was made; the pro forma effect
would have increased 1986 net sales by $35,000,000.
Share and per share amounts have been adjusted to reflect a 2-for-1 stock
split in June 1984.
Provisions for the discontinuance of the friction products and quartz
businesses reduced net income by $10,025,000 in 1985.
22
<PAGE> 13
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985 1984
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$317,828 $345,838 $307,571 $241,428 $242,902 $281,142
233,165 239,554 211,885 161,392 158,216 176,264
2,860 2,843 2,965 2,148 1,176 2,795
26,335 51,861 45,823 40,253 48,160 69,088
7,793 19,344 19,658 17,578 20,248 27,856
18,542 32,517 26,165 22,675 27,912 41,232
18,542 32,517 26,165 22,675 17,887 41,539
1.10 1.79 1.38 1.20 1.48 2.19
1.10 1.79 1.38 1.20 0.95 2.20
0.67 0.63 0.59 0.55 0.51 0.47
24,077 23,405 22,098 17,903 15,710 15,292
19,946 22,645 18,464 25,239 44,211 29,626
259 503 581 3,451 7,548 215
78,346 92,530 109,063 103,416 96,480 107,506
2.1 to 1 2.4 to 1 2.6 to 1 2.9 to 1 3.6 to 1 3.4 to 1
292,708 279,927 266,543 254,276 222,617 208,459
141,639 143,180 144,829 144,107 125,643 110,925
338,279 357,751 367,473 341,210 299,049 294,196
9,087 9,547 10,333 8,270
21,076 29,908 25,481 26,563 26,263 27,627
211,769 232,840 242,673 234,725 220,453 210,550
13.10 13.49 13.17 12.48 11.77 11.31
16,166,611 17,262,311 18,431,703 18,815,799 18,723,013 18,623,780
3,820 4,014 4,212 4,522 4,916 4,739
2,160 2,602 2,564 2,266 1,860 2,190
</TABLE>
23
<PAGE> 1
EXHIBIT 21
Subsidiaries of Registrant
--------------------------
The Company has the following subsidiaries, all of which are wholly
owned and included in the consolidated financial statements.
<TABLE>
State or Country
Name of Subsidiary of Incorporation
- ------------------ ----------------
<S> <C>
Brush Wellman GmbH Germany
Brush Wellman (Japan), Ltd. Japan
Brush Wellman Limited England
Brush Wellman (Singapore) Pte Ltd. Singapore*
Technical Materials, Inc. Ohio
Williams Advanced Materials Inc. New York
Williams Advanced Materials Pte Ltd. Singapore
</TABLE>
*Incorporated February 24, 1995
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Brush Wellman Inc. of our report dated January 25, 1995, included in the
1994 Annual Report to Shareholders of Brush Wellman Inc.
Our audits also included the financial statement schedule listed in Item 14(a).
This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
the financial statement schedule, referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
We also consent to the incorporation by reference in the following Registration
Statements and Post-Effective Amendments of our report dated January 25, 1995,
with respect to the consolidated financial statements and schedule of Brush
Wellman Inc. included or incorporated by reference in the Annual Report (Form
10-K) for the year ended December 31, 1994:
Registration Statement Number 33-488866 on Form S-8 dated June 27,
1992;
Registration Statement Number 33-45323 on Form S-8 dated
February 3, 1992;
Post-Effective Amendment Number 1 to Registration Statement
Number 33-28950 on Form S-8 dated February 3, 1992;
Registration Statement Number 33-35979 on Form S-8 dated
July 20, 1990;
Registration Statement Number 33-28605 on Form S-8 dated
May 5, 1989;
Registration Statement Number 2-90724 on Form S-8 dated
April 27, 1984;
Post-Effective Amendment Number 3 to Registration Statement
Number 2-64080 on Form S-8 dated April 22, 1983.
ERNST & YOUNG LLP
Cleveland, Ohio
March 20, 1995
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
directors and officers of BRUSH WELLMAN INC., an Ohio corporation (the
"Corporation"), hereby constitutes and appoints Gordon D. Harnett, Clark G.
Waite, Michael C. Hasychak, Leigh B. Trevor and Louis Rorimer, and each of
them, their true and lawful attorney or attorneys-in-fact, with full power of
substitution and revocation, for them and in their names, place and stead, to
sign on their behalf as a director or officer, or both, as the case may be, of
the Corporation, an Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December
31, 1993, and to sign any and all amendments to such Annual Report, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission granting unto said
attorney or attorneys-in-fact, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all that said attorney or
attorneys-in-fact or any of them or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
as of the 7th day of February, 1995.
<TABLE>
<S> <C>
/s/ Gordon D. Harnett /s/ Gerald C. McDonough
- --------------------------------------------- ------------------------------------------
Gordon D. Harnett, Chairman, President, Gerald C. McDonough, Director
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Albert C. Bersticker /s/ Robert M. McInnes
- --------------------------------------------- -------------------------------------------
Albert C. Bersticker, Director Robert M. McInnes, Director
/s/ Charles F. Brush, III /s/ Henry G. Piper
- --------------------------------------------- ---------------------------------------------
Charles F. Brush, III, Director Henry G. Piper, Director
/s/ Frank B. Carr /s/ John Sherwin, Jr.
- --------------------------------------------- ------------------------------------------
Frank B. Carr, Director John Sherwin, Jr., Director
/s/ William P. Madar /s/ Clark G. Waite
- --------------------------------------------- ---------------------------------------------
William P. Madar, Director Clark G. Waite, Director
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
/s/ Julien L. McCall /s/ Carl Cramer
- --------------------------------------------- --------------------------------------------
Julien L. McCall, Director Carl Cramer, Vice President
Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 20,441
<SECURITIES> 0
<RECEIVABLES> 52,272
<ALLOWANCES> 1,037
<INVENTORY> 93,601
<CURRENT-ASSETS> 181,217
<PP&E> 350,811
<DEPRECIATION> 234,048
<TOTAL-ASSETS> 317,133
<CURRENT-LIABILITIES> 65,923
<BONDS> 18,527
<COMMON> 21,215
0
0
<OTHER-SE> 165,725
<TOTAL-LIABILITY-AND-EQUITY> 317,133
<SALES> 345,878
<TOTAL-REVENUES> 345,878
<CGS> 253,938
<TOTAL-COSTS> 318,194
<OTHER-EXPENSES> 2,332
<LOSS-PROVISION> 254
<INTEREST-EXPENSE> 2,071
<INCOME-PRETAX> 23,027
<INCOME-TAX> 4,477
<INCOME-CONTINUING> 18,550
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,550
<EPS-PRIMARY> $1.15
<EPS-DILUTED> $1.14
</TABLE>
