<PAGE> 1
================================================================================
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, 1993
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 0-1162
CALMAT CO.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-0645790
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
3200 SAN FERNANDO ROAD, LOS ANGELES, CALIFORNIA 90065
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (213) 258-2777
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- ------------------------------------------
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
NONE REGISTERED
(Title of Class)
Indicate by check mark whether 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 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.
State the aggregate market value of the voting stock held by
non-affiliates of Registrant. The aggregate market value shall be computed by
reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of the filing.
$428,444,573 (COMPUTED ON THE BASIS OF $23.625 PER SHARE), WHICH WAS THE LAST
SALE PRICE ON THE NEW YORK STOCK EXCHANGE ON FEBRUARY 25, 1994.
Indicate the number of shares outstanding of each of Registrant's classes of
common stock, as of the latest practicable date.
23,136,077 SHARES OF COMMON STOCK, $1 PAR VALUE, AS OF FEBRUARY 25, 1994.
LIST OF DOCUMENTS INCORPORATED BY REFERENCE
CALMAT CO.'S DEFINITIVE PROXY STATEMENT, DATED MARCH 17, 1994 IS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM
NUMBER PAGE
- ------ ----
<S> <C>
PART I
Item 1. Business 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . 8
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . 10
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . 12
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . 16
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . 37
PART III
Item 10. Directors and Executive Officers of Registrant . . . . . . . . . . . . . . . . . . . . . . 37
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . 37
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . 37
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . . . . . 37
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
i
<PAGE> 3
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
CalMat Co. (the "Company" or "Registrant") has its corporate
headquarters in Los Angeles, California and has operations throughout the state
of California, and in Phoenix and Tucson, Arizona, and Albuquerque, New Mexico.
The Company was formed in 1984 by the business combination of California
Portland Cement Company ("CPC") and Conrock Co. ("Conrock"). Following its
formation, the Company operated CPC as its Cement Division. CalMat
subsequently disposed of the Cement Division in an exchange transaction with
Onoda California, Inc. in 1990. Two of its business segments involve the
manufacture, production, distribution and sale of construction materials:
hot-mix asphalt, and aggregates (crushed stone, sand and gravel) and ready
mixed concrete. The business segments which supply materials to the
construction industry experience fluctuations with general levels of activity
in the industry and with weather-related construction delays, which normally
occur during the first and fourth quarters each year. A third business segment
is engaged in the ownership, leasing and management of industrial and office
buildings, the ownership and leasing of undeveloped real property and sales of
real property.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information about the Company's business segments for the years ended
December 31, 1993, 1992 and 1991 is incorporated in Note 13 of the "Notes to
Consolidated Financial Statements," located on pages 30 and 31 of this Annual
Report on Form 10-K.
NARRATIVE DESCRIPTION OF BUSINESS
CONCRETE AND AGGREGATES DIVISION
The Concrete and Aggregates Division produces and sells construction
aggregates (sand and gravel and crushed rock) and supplies ready mixed concrete
for use in most types of construction including homes, schools, shopping
centers, office buildings and industrial parks as well as roads, freeways,
bridges, dams and rail-based transit systems. Projects to which the Company is
currently supplying aggregates include a remote aircraft parking facility at
the Los Angeles International Airport, airport runway reconstruction at the
John Wayne International Airport in Orange County, California, State Farm
Insurance's Regional Office in Bakersfield, California, a major Intel
Corporation complex in Albuquerque, New Mexico and several projects related to
the expansion of the Sky Harbor International Airport in Phoenix, Arizona.
The Division operates aggregates processing plants at 34 locations
primarily in Los Angeles, San Francisco, San Diego and Orange County,
California, in Phoenix and Tucson, Arizona, and in Albuquerque, New Mexico.
Plants at three of these locations have been temporarily idled but are expected
to return to operation when demand increases. The Division operates 16 plants in
southern California, and the Company believes it is the largest supplier of
construction aggregates to the greater Los Angeles area. During 1993 the Company
sold 25.4 million tons of aggregates, representing less than half of the
Company's annual maximum production capacity.
1
<PAGE> 4
As of December 31, 1993, the Company had approximately 1.8 billion tons of
estimated aggregates reserves, located near the major urban centers of the
markets it serves. The Company owns (or has long-term leases for) all of the
properties on which its reserves are located, and in all cases the Company
obtains permits from various governmental authorities prior to the commencement
of its mining activities. Approximately 70% of the Company's total reserves are
either fully permitted or in the process of being permitted. As is typical of
major aggregates producers with a number of production facilities, the currently
permitted reserves at the Company's quarries, expressed in terms of years of
production at historical rates, varies widely, in the Company's case from
approximately two to three years at several older facilities to in excess of 20
years at many others. The Company has permitting or alternative production plans
to deal with all of its sites where reserves could be depleted in less than 10
years, and believes that its current reserves position provides it with a
significant long-term competitive advantage.
To further assure sufficient reserves and adequate facilities to meet
future demand, CalMat continues to add new aggregates reserves. In March 1994
the Company added to its strategic aggregates base by acquiring the mining
rights to approximately 17 million tons of permitted rock and sand located at
Irvine Lake in Orange County, California where commercial aggregates production
is expected to commence in 1994. In addition, the Company permitted more than 50
million tons of sand and gravel near San Bernardino, California in 1993 which
should allow the Company to meet its needs in that region for several decades.
In December 1992, the Company acquired substantially all of the assets of
The Jamieson Company, a privately-held aggregates producer located in
Pleasanton, California. This acquisition, which includes approximately 100
million tons of permitted reserves, enabled the Company to expand its aggregates
business into the growing San Francisco Bay area and complemented the Company's
existing asphalt operations in that market.
The Division also operates 28 ready mixed concrete batch plants, generally
at locations adjacent to the Division's aggregates processing plants (with the
exception of the Los Angeles and San Francisco areas, where the Company does not
produce ready mixed concrete). Ready mixed concrete consists by volume of
approximately 80% aggregates and 20% cement, water and other. The Company's
fleet of approximately 375 mixer trucks delivers ready mixed concrete to the
customer's job site. The Company has vertically integrated into the ready
mixed concrete business primarily in those geographic areas where it has been
necessary from a competitive standpoint to provide an outlet for the Company's
aggregates production.
The Division has numerous competitors in each of its markets, but generally
has fewer competitors in the aggregates market than in the ready mixed concrete
market. A majority of the ready mixed concrete business is obtained by
competitive bid. In addition to competitive pricing, the Division's other
methods of meeting competition include providing higher levels of service and
higher quality products to its customers. Most of the Company's aggregates are
delivered to customers by third-party truckers. The Division consumes a portion
of its aggregates production in the manufacturing of ready mixed concrete, and
supplies a portion of its production to the Asphalt Division for use in the
production of hot mix asphalt. Other sources of raw materials, such as cement
used in ready mixed concrete, are readily available.
The Division has labor agreements with various unions at most of the
locations at which it operates. During 1993, new contracts were negotiated with
all union employees at the Company's Bakersfield and Fresno locations which
expire in 1996.
2
<PAGE> 5
ASPHALT DIVISION
CalMat's Asphalt Division is the third largest supplier of hot mix asphalt
to the construction industry nationwide and believes it is the largest such
supplier in California. The Company produces and supplies asphalt and related
specialty products. Unlike some asphalt producers, the Company does not
undertake paving work, and thus does not compete with its customers, which are
principally contractors engaged in the paving business.
The Division's primary source of revenue is from sales of hot mix
asphalt. Hot mix asphalt consists by volume of approximately 95% aggregates and
5% liquid asphalt (a petroleum refining by-product). The Division currently
operates asphalt plants in 36 locations primarily in metropolitan Los Angeles,
San Diego and Orange County and the San Francisco Bay and San Joaquin Valley
areas of California, as well as Phoenix and Tucson, Arizona, and Albuquerque,
New Mexico. Of the 36 locations, 21 are sites which also have aggregates-
processing plants operated by the Concrete and Aggregates Division. This
proximity provides the Company with a competitive advantage in those markets
due to the availability of aggregates and transportation cost savings. At all
other asphalt plants, more than one source of aggregates is available, and at
all asphalt plants, more than one source of liquid asphalt is available.
In addition, the Division operates nine asphalt recycling systems at
its major plants which recover aggregates and oil from asphalt that has been
salvaged from roads and other surfaces. Used in the production of new asphalt
paving, the recovered aggregates and oil offer substantial cost savings,
strengthen the Company's ability to secure public projects, and provide a high
return on investment. Three additional recycling systems are planned for 1994.
The Division manufactures related specialty products including
GUARDTOP(R), a coating material used for sealing asphalt paving to prevent
water damage and surface erosion, and under a license agreement the Division is
the exclusive distributor in metropolitan Los Angeles of a polypropylene
reinforcing fabric used in the resurfacing of pavement. The Division also
maintains a fleet of paving machines and specialty paving equipment which it
rents, along with qualified operators, to contractors. The Division has more
than one competitor in each of its markets and has several competitors in most
of its markets. The Division competes for business through price, quality and
service to customers.
The Division has labor agreements with the Operating Engineers and
Laborers Unions which expire during 1994 for its Fresno and Sacramento
locations and during 1995 for its southern California locations.
In 1987 the Company entered into a ten-year consent decree with the
Justice Department limiting its ability to acquire additional asphalt
operations in Los Angeles, San Diego and other specified areas of southern
California.
3
<PAGE> 6
PROPERTIES DIVISION
The Properties Division manages the Company's extensive holdings of
over 34,000 owned and leased acres and is responsible for land acquisitions,
permitting, reclamation, sales and leasing activities. Due to economies of
scale and the Company's experience and expertise in the permitting process, the
Company believes it has a significant advantage over most of its smaller
competitors in obtaining permits for its mining and other operations. CalMat
maintains substantial property holdings near the major urban centers of the
markets it serves and leases land containing aggregates reserves prior to
commencement of mining activities. During 1993, approximately 120 leases
covering more than 1,200 acres were in effect. These leaseholds were used for
farming, storage locations and other uses.
CalMat's land management cycle includes acquiring property,
developing a master plan, obtaining land use entitlements, extracting
aggregates, and then reclaiming the mined property and preparing it for
development. The Company has generally been able to recycle previously mined
properties due in part to the efforts of its land management professionals.
CalMat reclaims land for a wide variety of uses such as agriculture, native
habitat restoration, water conservation and commercial, residential and
industrial development. Reclaimed property may be subdivided into lots and sold
to developers after obtaining the necessary zoning and permits.
As part of the Company's restructuring in 1988, the Company decided
to discontinue its business of developing industrial and office buildings.
Since that time, the Company has sold 30 industrial buildings (totalling
approximately 1.5 million square feet). As market conditions permit, the
Company intends to dispose of its remaining commercial and industrial
developments except for certain industrial buildings which serve to buffer the
Company's mining and production operations. The Company currently owns
approximately 1.1 million square feet of commercial and industrial buildings,
approximately 550,000 square feet of which are located in close proximity to
aggregates mining sites and buffer the adjacent mining and processing
operations. The Company currently operates 4 landfills and expects to develop 3
additional landfill sites in 1994 and 1995. All of the Company's existing and
planned landfills are designed and have permits to accept only nonhazardous
construction rubble.
During 1993, the Division negotiated a new three-year labor agreement
with the Operating Engineers Union at its Los Angeles landfill facility.
4
<PAGE> 7
REGULATIONS AND EMPLOYEES
A substantial amount of time and resources is expended by CalMat to
comply with local, state and federal regulations for land use, health and
safety, air pollution and other environmental matters. This is essential,
because changes in the enforcement of existing regulations or the addition of
new laws and regulations may require the Company to modify, supplement or
replace equipment or facilities.
During the normal course of its operations, the Company uses and
disposes of materials, such as solvents and lubricants used in equipment
maintenance, which are classified as hazardous by some government agencies.
The Company makes every attempt to minimize the generation of such waste
material and recycles most of it. A small amount of remaining wastes are
disposed of in fully permitted off-site landfills.
Because of the nature of the Company's business, both the
Occupational Safety and Health Administration (OSHA) and the Mine Safety and
Health Administration (MSHA) have jurisdiction over its safety standards and
controls. Considerable effort is expended to train, inspect, report and
enforce according to OSHA and MSHA requirements.
The Company continued to be successful in obtaining zoning approvals
and other required permits from local governing bodies allowing the mining of
aggregates and the conducting of the Company's other businesses. The state,
county and city governing bodies within California, Arizona and New Mexico
continue to adopt new laws and regulations relating to land use. These actions
may, in some instances, reduce or restrict some uses of the Company's
properties.
CalMat had 1,574 full-time employees as of December 31, 1993. Of
these, 451 were salaried and 1,123 were hourly.
The Company is party to 29 collective bargaining agreements covering
884 employees; 16 of these agreements covering an aggregate of 593 employees
are due for renegotiation during 1994. Although no assurance can be given as
to the outcome of these negotiations, the Company believes it has good labor
relations and is not presently anticipating any material work stoppages.
OTHER
In 1990, Onoda California, Inc., ("Onoda") and the Company consummated
a transaction whereby the Company distributed to Onoda all of its shares of
stock in California Portland Cement Company ("CPC") in exchange for certain
shares of stock of the Company that were then held by Onoda. In addition,
prior to 1990, certain other related transactions were accomplished, including
the Company's contribution of certain assets to CPC and CPC's distribution of
all of its shares of stock in one of its subsidiaries to the Company (along
with the Company's distribution of the CPC stock to Onoda, the "Onoda
Transactions"). The Onoda Transactions were reported as tax-free transactions
for federal income tax purposes. Based on an analysis of the tax law in effect
at the time of the Onoda Transactions, the Company believes that this treatment
of the Onoda Transactions is correct, and has not established financial
statement reserves for this matter. The Internal Revenue Services (the "IRS"),
however, has yet to examine the Onoda Transactions. As a result, there can be
no assurance that the IRS will not challenge the Company's position regarding
the proper tax treatment of the Onoda Transactions. If the IRS were ultimately
successful in denying the Company's treatment of the Onoda Transactions, the
resulting tax liability would have a material adverse effect on the Company's
financial position.
5
<PAGE> 8
As is the case with other companies in the same industries, the
Company's products contain varying amounts of crystalline silica, a common
mineral that is a component of most sands. Excessive, prolonged inhalation of
very small particles (principally those less than 10 microns in size) of
crystalline silica has been associated with non-malignant lung disease. In
1987, the carcinogenic potential of crystalline silica was evaluated by the
International Agency for Research on Cancer and later by the National
Toxicology Program. The International Agency found limited evidence of
carcinogenicity in humans but sufficient evidence of carcinogenicity in
animals. The National Toxicology Program concluded in 1991 that crystalline
silica is "reasonably anticipated to be a carcinogen." At present, the State
of California does not require warning notices concerning the carcinogenicity,
if any, of crystalline silica pursuant to California Proposition 65, but this
policy is subject to change in the future. In addition, future research
results could tend to implicate crystalline silica as a carcinogen or could
fail to show any association between crystalline silica and cancer. The
Company is not a party to any litigation regarding crystalline silica.
ITEM 2. PROPERTIES
PLANT FACILITIES
See "Item 1. Business" on page 1 of this Annual Report on Form 10-K
for additional information relating to these properties.
The Company makes a practice of leasing idle land which has been
obtained for its aggregates reserves during periods when the land is not used
for operations. During 1993, approximately 120 leases covering more than 1,200
acres were in effect. These leaseholds were used for farming, storage
locations and other uses. Additionally, the Company owns approximately
1.1 million square feet of commercial and industrial buildings, approximately
550,000 square feet of which are located in close proximity to aggregates
operations and buffer the adjacent mining and processing operations. A total
of 34,011 acres are owned or leased by the Company.
See Schedule V, "CalMat Co. Property, Plant, and Equipment," on
page 32 for additional information relating to these properties.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in various lawsuits and
claims which the Company considers ordinary and routine in view of its size and
the nature of its business. The Company does not believe that any ultimate
liability resulting from any such lawsuits will have a material adverse effect
on the operations or financial position of the Company.
During 1990, the lawsuits which had been pending against the Company
and its directors in connection with actions taken by the Company which
involved Brierley Investments Limited and Onoda U.S.A., Inc. ("Onoda USA")
were settled and dismissed, with the court permitting stockholders not wishing
to participate in the settlement to "opt out". An appeal challenging the
settlement was also dismissed and the time for filing further appeals has
lapsed. In November, 1990, a lawsuit was filed against the Company and its
directors in Delaware Chancery Court by a stockholder who had opted out of the
settlement, purporting to represent a class of similarly situated stockholders
and alleging misrepresentations and breach of fiduciary duty in connection with
the matters which were the subject of the original lawsuits. No specific
damages were stated. During 1991, the Company filed a motion to stay discovery,
which was granted by the Court, and a motion to dismiss the complaint, which
was denied in April 1992. The Company filed a further motion to dismiss the
complaint and a motion for summary judgment. As a result of rulings of the
Court made in October 1993, the stay of discovery has been vacated and the
action will proceed as
6
<PAGE> 9
an individual action against the Company only, and only on the claim of
misrepresentation. While the ultimate outcome of this lawsuit cannot be
predicted with certainty at this time, management does not expect that this
matter will have a material adverse effect on the consolidated financial
position or results of operations of the Company.
During the third quarter of 1992, the Company received a letter from
CPC, Onoda and Onoda USA, purporting to assert a claim for indemnification with
respect to certain environmental matters, pursuant to certain provisions of the
agreement, dated July 19, 1988, under which Onoda acquired the stock of CPC.
The Company has notified these companies that it believes that it has no
liability with respect to the matters identified in the letter. No dollar
amount of damages was specified, but the July 19, 1988 agreement limits any
potential liability with respect to such matters to a maximum of $16,000,000.
Operating Industries, Inc. Landfill Site
The U.S. Environmental Protection Agency ("EPA"), the State of
California and the California Hazardous Substance Account have named the
Company and over 200 other parties defendants in a civil action pursuant to
certain California statutes and the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") in connection with the cleanup of the
former Operating Industries, Inc. landfill site in Monterey Park, California.
The EPA alleges that the Company disposed of hazardous substances representing
0.078 percent of the total volume of waste at the site. The Company believes,
however, that the substances attributed to it at the site were not hazardous.
To date, the Company has contributed approximately $300,000 to fund
certain interim remedial actions at the site, as part of two partial
settlements of this matter (which in part remain subject to court approval).
The EPA will select a final remedy for the site based on a "Remedial
Investigation/Feasibility Study," which is not expected to be released before
early 1994.
Because, among other things, the EPA has yet to select a final remedy
for the site and the Company's share of any liability is undetermined, the
ultimate outcome of this action cannot be predicted with certainty. The
Company believes, however, that this matter will be resolved without a material
adverse effect on its financial position. The Company's belief is based on its
position that the wastes attributed to it at the site were not hazardous, its
extremely small share of the waste at the site and the large number of other
defendants, and its belief that it has recourse to insurance coverage for at
least a substantial portion of any resulting liability.
San Gabriel Valley Superfund Area
The EPA has named the Company and more than 300 other entities as
"potentially responsible parties" ("PRPs") under CERCLA in connection with
alleged groundwater contamination at four sites designated as San Gabriel
Valley Areas 1 to 4 in Los Angeles County, California (the "Sites"). The EPA
has advised the Company and the other PRPs that they may be jointly and
severally liable for releases of hazardous substances, not only from properties
they owned or operated, but also for area-wide groundwater contamination. The
Company's corporate predecessor previously leased property the Company no
longer owns to Aerojet Electrosystem's corporate predecessor, which burned
solid waste propellant on the property.
Because no legal proceedings have been initiated by the EPA and the
investigation of the Sites is ongoing, the amount that may ultimately be
required for investigation and/or remediation with respect to any contamination
at the Sites or in the affected areas is presently unknown and is unlikely to
be determined for some time. In addition, as a result of uncertainty regarding
the source and scope of contamination, the large number of PRPs and the
likelihood of varying degrees of responsibility among various classes of PRPs,
the Company's potential share of liability, if any, cannot be determined at
this time.
7
<PAGE> 10
San Fernando Valley Superfund Area
The EPA has named the Company a PRP under CERCLA in connection with
ongoing containment and remediation being conducted pursuant to an EPA Record
of Decision issued in 1987 for the San Fernando Valley Area 1 Superfund Site,
North Hollywood Operable Unit. The EPA advised the Company that, as an alleged
past owner of a property formerly operated by another party as a landfill and
alleged to be connected with the contamination, the Company may be jointly and
severally liable, with at least fifteen (15) other PRP's, including
Allied-Signal, Inc., Lockheed Corporation and Waste Management Disposal
Services of California, Inc., for $17,213,355 in evaluation and containment
costs incurred by the EPA. Because of, among other things, uncertainty
regarding the scope and source of the contamination and the likelihood of
varying degrees of responsibility among the various PRP's, the Company has not
determined what portion, if any, of these costs it may be liable for, should
these costs be allocated among the various PRP's. The property in question was
sold to a third party in 1988. That party has also been named as a PRP.
No legal proceedings have been initiated by the EPA at this time.
The Company has, at this time, no detailed information concerning actual
contributions to the contamination, if any, from the site in question, has not
yet had an opportunity to make a determination as to possible defenses or
insurance coverage which may be available to it or as to the possibility of
recovery from other PRP's or third parties not named by the EPA as PRP's.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
Executive officers are elected by the Board of Directors annually, and serve at
the pleasure of the Board or until their successors are qualified and elected.
The following is a list of executive officers of the Company:
NAME OFFICE
------ --------
A. FREDERICK GERSTELL Chairman of the Board, President,
Chief Executive Officer and Chief
Operating Officer
Mr. Gerstell, 56, became Chairman of the Board in January 1991. He served as
President and Chief Executive Officer from 1988 through 1990. From 1984 to
1988, he served as President and Chief Operating Officer. Prior to the
formation of CalMat by the merger of Conrock and CPC in 1984, he was President
and Chief Operating Officer of CPC and employed by CPC from 1975.
DELBERT H. TANNER Executive Vice President -
Construction Materials
Mr. Tanner, 42, was elected to his current position in June 1993. From July
1987 to June 1993, he served as Regional Vice President of Apac, Inc., a
division of Ashland Oil, and President of its Florida and Georgia divisions.
Prior to his service at Apac, he was employed for 14 years by the Tanner
Companies, Phoenix, Arizona, a large construction materials producer and
contractor, where he served as President and Chief Executive Officer.
SCOTT J WILCOTT Executive Vice President, Law and Property
Mr. Wilcott, 56, was elected to his current position in August 1990. He was
elected Executive Vice President in 1989. He served as Senior Vice President,
Legal Counsel and Secretary from 1984 to 1989. He has been employed by the
Company since 1968. Prior to his service at Apac, he was employed for 14 years
by the Tanner Companies, Phoenix, Arizona, a large construction materials
producer and contractor, where he served as President and Chief Executive
Officer.
H. JAMES GALLAGHER Executive Vice President - Finance,
Chief Financial Officer
Mr. Gallagher, 47, was elected to his current position in August 1993.
Prior to that he served concurrently as Executive Vice President, Chief
Financial Officer and Director of Pacific Enterprises Oil Co., and Senior
Vice President, Chief Financial Officer and Director of Pacific Interstate
Company. He previously served as Vice President, Controller and Chief Financial
Officer of Pacific Interstate Company from 1979 and Manager of Internal Audits
of Pacific Enterprises, Inc. from 1975.
8
<PAGE> 11
PAUL STANFORD Senior Vice President - Administration,
General Counsel and Secretary
Mr. Stanford, 51, was elected to his current position in June 1993. From
August 1990 until June 1993, he served as Vice President, General Counsel and
Secretary. Before joining the Company, from 1981, he was engaged in the
practice of business law with the firm of Paul, Hastings, Janofsky & Walker.
EDWARD J. KELLY Senior Vice President, Treasurer and Chief
Accounting Officer
Mr. Kelly, 38, was elected to his current position in January 1994. Since
June 1993, he served as Senior Vice President, Controller, and Chief Accounting
Officer. From December 1990 until June 1993, he served as Vice President,
Controller. He was employed by Superior Industries International, Inc., a
manufacturer of automotive products, as Vice President, Corporate Controller
and Secretary from 1985 to 1990.
WALTER Q. LUKKARILA Vice President, Operations
Mr. Lukkarila, 58, was elected to his current position in June 1993. Prior to
that, in February 1991, he served as Vice President - Development, Construction
Materials. He served as Vice President, Operations, Conrock Division from 1984
to 1991, and has been employed by the Company since 1980.
CARLOS S. HERNANDEZ Vice President and General Manager,
Asphalt Division
Mr. Hernandez, 57, was elected to his current position in February 1990. He
served as an Area Manager of Industrial Asphalt (now the Asphalt Division) from
1984 to 1989, then as Managing Director of the Asphalt Division from 1989 to
1990. He has been employed by the Company and Industrial Asphalt since 1968.
9
<PAGE> 12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the New York, Pacific and
Chicago Stock Exchanges under the trading symbol "CZM." The following table
sets forth the high and low sales prices of the Common Stock of the Company as
reported on the New York Stock Exchange Composite Tape for the periods
indicated and the cash dividends declared on the Company's Common Stock during
each quarter presented.
<TABLE>
<CAPTION>
Dividends
Period High Low Declared
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993
First Quarter 22 5/8 18 1/2 $ .10
Second Quarter 21 3/8 17 1/2 .10
Third Quarter 19 16 1/2 .10
Fourth Quarter 22 16 3/8 .10
1992
First Quarter 28 5/8 22 3/4 $ .16
Second Quarter 28 24 .16
Third Quarter 24 1/2 19 3/4 .16
Fourth Quarter 25 19 1/2 .16
</TABLE>
At February 25, 1994, there were 1,375 holders of record of the Company's
Common Stock $1 par value.
10
<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------------------------------------------------
(Amounts in thousands, except per share data) 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales and operating revenue $ 348,413 $ 347,282 $ 364,943 $ 428,916 $ 462,466 $ 436,751
Gains on sale of real estate 2,081 453 9,555 1,109 12,825 29,330
Total revenues 353,506 350,260 378,329 433,339 479,977 469,528
Gains from disposal of assets held for sale -- 1,786 2,929 20,774 39,217 --
Income (loss) from continuing operations
before income taxes and cumulative effect
of change in accounting principle (a) 14,897 (17,506) 31,422 50,564 109,955 73,641
Federal and state income taxes 6,600 (7,002) 12,568 20,118 41,807 27,179
Income (loss) from continuing operations
before cumulative effect of change in
accounting principle 8,297 (10,504) 18,854 30,446 68,148 46,462
Income from discontinued operations
(net of income taxes) -- -- -- 3,089 9,953 9,924
Gain on disposition of CPC to a related party (b) -- -- -- 47,310 -- --
Cumulative effect of change in accounting
principle 919 (6,000) -- -- --
--
Net income (loss) 9,216 (16,504) 18,854 80,845 78,101 56,386
PER SHARE DATA
Income (loss) from continuing operations
before cumulative effect of change in
accounting principle .36 (.45) .81 1.08 2.20 1.50
Income from discontinued operations
(net of income taxes) -- -- -- .11 .32 .32
Gain on disposition of CPC to a related party -- -- -- 1.68 -- --
Cumulative effect of change in accounting
principle .04 (.26) -- -- --
--
Net income (loss) .40 (.71) .81 2.87 2.52 1.82
Weighted average number of shares outstanding
during year 23,117 23,242 23,319 28,128 30,978 31,048
Cash dividends declared 9,244 14,800 14,866 20,892 17,227 14,733
Regular dividends per share .40 .64 .64 .64 .56 .48
Special dividend per share -- -- -- .10 -- --
BALANCE SHEET DATA
Total assets $ 604,895 $ 597,240 $ 597,600 $ 605,660 $ 867,121 $ 828,395
Working capital 39,863 34,003 43,430 36,100 92,346 74,919
Long-term debt 109,635 131,129 92,515 93,320 126,671 142,377
Stockholders' equity 351,046 350,687 383,596 387,189 526,764 481,604
Stockholders' equity per share at year end 15.19 15.19 16.58 16.52 17.43 15.67
</TABLE>
(a) 1992 includes $26.1 million of special charges related to the
consolidation of certain construction materials operations ($11.1 million)
and the write down of the book value of certain developed real estate
($15.0 million). Excluding these charges, income (loss) from continuing
operations before income taxes and cumulative effect of change in
accounting principle would have been $8.6 million.
(b) In 1990, Onoda California, Inc. (Onoda), an indirect, wholly-owned
subsidiary of Onoda Cement Co., Ltd. of Japan, acquired from CalMat all of
the outstanding stock of California Portland Cement Company (CPC), a
wholly-owned subsidiary, in exchange for 5,834,000 shares of CalMat's
common stock held by Onoda.
11
<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion should be read in conjunction with the consolidated
financial statements.
RESULTS OF OPERATIONS
The Arizona and New Mexico markets where the Company operated showed
definite signs of recovery in 1993. California, however, experienced its
fourth straight year of significant decline in residential and non-residential
construction activity. Unit sales volumes for the Company's hot-mix asphalt
increased in 1993, however, the higher cost of purchased liquid asphalt more
than offset the improved sales volumes resulting in lower earnings for the
year. The Concrete and Aggregates Division experienced higher prices and lower
costs resulting in a significant increase in earnings in 1993. The Properties
Division earnings for 1993 were slightly lower than in 1992, largely due to
lower income from landfill operations. The Company reported net income of $9.2
million, or $0.40 per share, for the year ended December 31, 1993, which
includes an after-tax credit of $0.9 million, or $0.04 per share, resulting
from the adoption of the new accounting standard for accounting for income
taxes and a provision to income tax expense of $0.7 million, or $0.03 per
share, to adjust deferred taxes due primarily to the recent increase in the
federal tax rate. Excluding these items, earnings for 1993 would have been
$9.0 million, or $0.39 per share. The net loss reported of $16.5 million, or
$0.71 per share, for the year ended December 31, 1992, includes after-tax
charges totaling $21.8 million, or $0.94 per share. These after-tax charges
consisted of $6.0 million, or $0.26 per share, arising from the adoption of the
new accounting standard for postretirement benefits other than pensions, $9.0
million, or $0.39 per share, to write down the book value of certain developed
real estate and $6.7 million, or $0.29 per share, related to consolidation of
certain construction material operations. Excluding these charges, earnings
for the year would have been $5.3 million, or $0.23 per share.
REVENUES AND EARNINGS
CONSOLIDATED
Total revenues amounted to $353.5 million, $350.3 million and $378.3
million in 1993, 1992 and 1991, respectively. Net sales and operating
revenues, which excludes gains on sale of real estate and other income, of
$348.4 million in 1993 were up slightly from $347.3 million in 1992. Net sales
and operating revenues were down $17.7 million, or 4.8%, in 1992 compared with
1991, the decrease occurring in the Asphalt Division, which was down 13.1%.
Total revenues includes gains from ongoing land sales of $2.1 million, $0.5
million and $9.6 million in 1993, 1992 and 1991, respectively. Cost of goods
sold on a consolidated basis as a percentage of net sales and operating
revenues declined to 82.8% in 1993 compared with 84.0% in 1992, mainly due to
higher average unit prices and a change in product mix in the Concrete and
Aggregates Division offset by higher average costs in the Asphalt Division.
This percentage was 80.1% in 1991.
Income (loss) before incomes taxes and cumulative effect of change in
accounting principle was $14.9 million in 1993, up from a loss of $17.5 million
in 1992, which in turn was down from income of $31.4 million in 1991. The 1992
amount includes special charges of $26.1 million related to the consolidation
of certain construction materials operations ($11.1 million) and to write down
the book value of certain developed real estate ($15.0 million). Excluding
these special charges, income (loss) before income taxes and cumulative effect
of change in accounting principle increased 73.3% to $14.9 million compared
with $8.6 million for 1992. This increase consists primarily of improved
earnings of the Concrete and Aggregates Division of $9.3 million offset by a
$2.2 million decrease in earnings of the Asphalt Division. Excluding special
charges, income (loss) before income taxes and cumulative effect of change in
accounting principle would have been $8.6 million in 1992 compared with $31.4
million in 1991. This drop consists primarily of declines in earnings of the
Asphalt Division and the Concrete and Aggregates Division of $10.1 million and
$6.8 million, respectively, and $9.1 million less in gains from land sales.
Selling, general and administrative expenses decreased $2.8 million, or
6.3%, in 1993 compared with 1992, which in turn was reduced 7.2% from the 1991
level. This reflects management's continuing efforts to reduce these expenses.
During the past three years, the Company has reduced selling, general and
administrative expenses by $6.8 million, or 14.0%.
12
<PAGE> 15
The effective tax rate in 1993 increased with 44.3% compared with 40.0% in
1992 and 1991. Excluding the adjustment to deferred taxes in 1993 to account
for the increase in the federal tax rate, the effective tax rate was 36.7%.
The decrease compared with 1992 and 1991 is due primarily to the benefit of
percentage depletion.
OPERATING DIVISIONS
ASPHALT DIVISION
The Asphalt Division's principal business involves the production and sale
of hot-mix asphalt. Hot-mix asphalt is comprised physically of approximately
95% aggregates (sand and gravel) and 5% liquid asphalt. In 1993, aggregates
and liquid asphalt represented approximately 39% and 36% of the total
production costs, respectively. The division has plants at 36 locations in
metropolitan Los Angeles and San Diego, the San Francisco Bay and San Joaquin
Valley areas of California; Phoenix and Tucson, Arizona; and Albuquerque, New
Mexico. Of the 36 locations, 21 are sites which also have aggregates
processing plants and/or ready mixed concrete plants operated by the Concrete
and Aggregates Division.
Division revenues of $153.9 million were up $7.4 million, or 5.1%, from
1992's revenues of $146.5 million, which in turn were down $22.0 million, or
13.1%, from 1991's revenues of $168.5 million. The increase in 1993 resulted
from higher prices and higher volume, while the reduction in 1992 was due to
lower prices and lower volume. Income from operations dropped to $8.8 million
in 1993 from $11.0 million in 1992, which in turn dropped from $21.1 million in
1991.
Unit sales volume of hot-mix asphalt was 7,830,000 tons in 1993, up 4.8%
from 7,474,000 tons sold in 1992, which in turn was down 9.3% from 1991's
volume of 8,241,000 tons. Substantially all of the volume improvement in 1993
occurred during the fourth quarter and was, in part, a result of less rainfall
during the current year's fourth quarter.
A slight increase in average sales prices and a 4.8% increase in unit
sales volume was more than offset by the higher cost of purchased liquid
asphalt during 1993, resulting in a 9.1% decline in gross profit per ton.
Selling, general and administrative expenses increased 3.6% in 1993 due
primarily to management's decision to further strengthen bad debt reserves.
Competitive pricing in the division's primary markets during 1992 resulted in a
drop in prices in excess of a slight reduction in costs versus 1991. The
resulting gross profit per ton dropped 23.2%. Selling, general and
administrative expenses increased 4.3% in 1992 compared with 1991 due primarily
to wage increases and increased corporate support costs. Between 6.0% and 9.0%
of the division's total gross profit was from the miscellaneous products and
services category during 1993, 1992 and 1991.
CONCRETE AND AGGREGATES DIVISION
The Concrete and Aggregates Division produces and sells construction
aggregates and supplies ready mixed concrete for use in commercial and
residential construction, public construction projects and projects to build,
expand and repair roads and highways. The division operates aggregates
processing plants at 34 locations in the major markets of southern and central
California, the San Francisco Bay area; Phoenix and Tucson, Arizona; and
Albuquerque, New Mexico. Ready mixed concrete batch plants are operated at 28
locations in these markets except for the Los Angeles and San Francisco Bay
areas. Of the 28 ready mixed concrete locations, 15 are sites which also have
aggregates processing plants.
The overall decline in construction activity in southern California in
residential and non-residential building in recent years continues to have a
negative impact on the Concrete and Aggregates Division's volumes compared to
historical levels. However, as shown in the following table, 1993 aggregates
volumes increased slightly from 1992 due primarily to volumes of the San
Francisco Bay Area operations which were acquired in December, 1992. Volumes
in 1992 increased slightly from 1991, due primarily to volume increases at the
New Mexico operation as the local economy strengthened.
13
<PAGE> 16
CONSTRUCTION AGGREGATES - TONS SOLD
<TABLE>
<CAPTION>
(Amounts in thousands) 1993 1992 1991
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to outside customers 17,740 17,126 16,756
Used in ready mixed concrete 2,531 3,180 3,019
Sales to Asphalt Division 5,137 4,960 5,166
-----------------------------
Total 25,408 25,266 24,941
=============================
</TABLE>
Ready mixed concrete sales volume decreased 15% to 1,818,000 cubic
yards in 1993 from 2,146,000 cubic yards in 1992, which in turn had increased
from 1,860,000 cubic yards in 1991.
Overall division revenue of $201.1 million was down 2.2% from 1992's
revenue of $205.7 million, while 1992's revenue was up slightly from 1991's
revenue of $203.6 million. The decrease in 1993's revenue was due to a decline
in ready mixed concrete sales volume offset by higher average sales prices for
both aggregates and ready mixed concrete. Although total division revenue in
1992 was comparable to 1991, aggregates revenue was lower due to lower prices
on similar volume, offset by ready mixed concrete revenue which was higher, due
to higher volume, but at lower prices. The result was similar total revenue
but lower income from operations due to the lower average prices.
In 1993, the average sales price of aggregates increased 4.3% compared
with 1992. Including aggregates used in ready mixed concrete, overall
aggregates gross profit increased $4.0 million in 1993. The average price of
ready mixed concrete increased 4.8% while costs per cubic yard were essentially
unchanged. The higher average sales prices for both aggregates and ready mixed
concrete more than offset the impact of flat aggregates volume and lower ready
mixed volume, resulting in a $7.1 million increase in gross profit from 1992's
gross profit.
The overall average sales price of aggregates fell 7.2% in 1992
compared with 1991, while costs increased 3.2% on a per ton basis. Including
aggregates used in ready mixed concrete, overall aggregates gross profit fell
$7.2 million in 1992. The overall average price of ready mixed concrete also
declined 7.2% while costs per cubic yard were lower by 5.4%. Despite increased
volume, lower prices resulted in a loss at the gross margin level for ready
mixed concrete and a $1.7 million decline from 1991's gross profit.
Selling, general and administrative expenses were reduced 9.9% in 1993
from the 1992 level, which in turn had decreased 11.7% from 1991. Income from
operations recovered to $10.5 million in 1993 from $1.3 million in 1992 after
dropping from 1991's level of $8.1 million.
PROPERTIES DIVISION
The Properties Division manages the Company's real estate and is
responsible for acquisitions, permitting, reclamation, sales and leasing
activities.
Income from operations was $8.8 million compared with $9.0 million in
1992. Included in 1993 are gains from ongoing property sales of $2.1 million
versus gains of $0.5 million in 1992. Also included in 1993 is a charge of
$1.3 million related to anticipated settlements of certain property disputes.
Excluding the gains from ongoing property sales and the $1.3 million charge,
the Properties Division income was $8.0 million in 1993 compared with $8.5
million in 1992. The decline is largely due to lower income from landfill
operations.
Income from operations was $9.0 million in 1992 compared with $15.5
million in 1991. The large decline in income in 1992 is a result of fewer real
estate transactions being completed. Gains from ongoing property sales were
$0.5 million in 1992 compared with gains of $9.6 million in 1991.
14
<PAGE> 17
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local environmental laws
and regulations which require the Company to remove or mitigate the effect on
the environment of the disposal or release of certain chemical, mineral and
petroleum substances at various sites. Generally, the Company's exposure has
been limited to soil contamination from underground fuel tanks rather than
exposure resulting from generation of hazardous waste, although it is a "named
party" or "potentially responsible party" at three federal Superfund sites.
The Company conducts annual environmental assessments of each of its
operating sites. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable, and the costs can be reasonably
estimated. Generally, the timing of these accruals coincides with completion
of a feasibility study or the Company's commitment to a formal plan of action.
As investigation or remediation proceeds, and as the scope of the Company's
obligations become more clearly defined, there may be changes to estimated
costs, which might result in future charges to earnings.
During 1993, the Company charged to income $1.1 million before tax for
environmental remediation costs and made related payments of $0.3 million. At
December 31, 1993, the reserve for environmental remediation costs totaled $3.5
million. The amount reserved represents the estimated undiscounted costs which
the Company will incur to remediate sites with known contamination. No
potential insurance recoveries have been offset against the reserve.
Substantially all amounts accrued in the reserve are expected to be paid out
over the next 5 years.
OTHER
There were no gains or losses on disposition of assets held for sale
in 1993 compared with gains of $1.8 million and $2.9 million in 1992 and 1991,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Cash and cash equivalents increased $10.6 million during 1993 to a
balance at year end of $10.6 million compared with a balance of zero at the end
of 1992, which in turn was a decrease of $12.1 million from 1991.
Operating activities are the principal source of CalMat's cash flows.
Over the past three years, operating activities have provided $115.2 million in
cash. Net cash of $43.9 million generated from operating activities in 1993
was $15.8 million more than 1992's $28.1 million, which was $15.2 million less
than in 1991.
Cash used for investing activities totaled $4.3 million in 1993, a
$58.3 million decrease from the 1992 level. The primary reasons for this
change were $20.7 million less in spending on property, plant and equipment in
1993 and the use of $34.1 million for a business acquisition in 1992. Cash used
for investing activities totaled $62.6 million in 1992, a $52.8 million
increase from the 1991 level. The primary reason for this change was the $34.1
million spent for a business acquisition in 1992. In addition, there was $10.3
million less in proceeds from sales of real estate in 1992 and $9.4 million
less in receipts on installment notes receivable.
Net cash used for financing activities amounted to $29.0 million in
1993, a $51.5 million change from the $22.5 million provided by financing
activities during 1992. The primary reasons for this change were $50.7 million
in net payments on notes payable to banks in 1993, compared with $39.0 million
in net proceeds in 1992; offset by $35.0 million in proceeds from issuance of
senior notes in 1993, $4.2 million less in payments of cash dividends and $2.2
million less in common stock repurchases. Also included in 1993 is $2.1
million in payments for hedge costs and other loan fees. Net cash provided by
financing activities amounted to $22.5 million in 1992, a $47.2 million change
from the $24.8 million used for financing activities in 1991. The primary
reasons for this change were $38.7 million less in principal payments on notes
and bonds payable, $2.5 million more in net proceeds from notes payable to
banks and $5.7 million less in common stock repurchases.
15
<PAGE> 18
During 1993, the Company retricted capital expenditures in order
to conserve cash. Capital expenditures in 1994 are expected to be in excess of
$40 million, due in part to equipment replacements and the commencement of
expansion projects including the construction of mining facilities located at
Irvine Lake in Orange County, California which is scheduled to begin production
by the end of 1994 and Azusa Rock, located near Los Angeles, California.
Management believes that cash provided by operations and existing borrowing
arrangements will provide adequate funds for current commitments
and expected working capital requirements during 1994.
During 1993, the Company expended $10.6 million in cash dividends. In
order to conserve cash, the Company reduced its quarterly dividend from $0.16
per share to $0.10 per share in February 1993.
WORKING CAPITAL
Working capital totaled $39.9 million at December 31, 1993, an
increase of $5.9 million from the 1992 level of $34.0 million. This increase
was primarily due to the $10.6 million increase in cash and cash equivalents.
Working capital totaled $34.0 million at December 31, 1992, a decrease
of $9.4 million from the 1991 level of $43.4 million. This decrease was
primarily due to the $12.1 million decrease in cash and cash equivalents.
Current ratios were 1.7 at December 31, 1993 and 1992.
OTHER
Total consolidated long-term and short-term borrowings at December 31,
1993 and 1992 were $115.5 million and $132.1 million, respectively. This $16.7
million decrease in debt was paid from cash flows from operations. Total
consolidated long-term and short-term borrowings at December 31, 1992 of $132.1
million had increased $39.0 million over 1991 primarily due to $34.1 million
used to finance the Jamieson Co. acquisition in 1992. Debt as a percent of
total capitalization was 24.8% and 27.4%, at December 31, 1993 and 1992,
respectively.
During 1989, the Company announced its intention to repurchase a
significant amount of its common stock using the net proceeds, after taxes and
related debt, from the sale of real estate assets held for sale as the source
of funding. Under this program, the Company repurchased on the open market
approximately 309,000 shares at a cost of $7.5 million during 1991. The
Company's commitment to repurchase shares pursuant to the settlement of
stockholder litigation has been fulfilled. During November 1991, the Company
announced its intention to expend up to $5.0 million over a twelve-month period
to repurchase shares of its common stock. During 1992 and 1991, 91,000 shares
and 17,000 shares, respectively, were acquired at a total cost of $2.4 million
under the program.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements, Financial Statement
Schedules and Selected Quarterly Financial Data are set forth in the "Index" on
page 17 hereof.
16
<PAGE> 19
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . 18
Consolidated Balance Sheets as of December 31, 1993 and 1992 . . 19
Consolidated Statements of Operations for the
three years ended December 31, 1993, 1992 and 1991 . . . . . . . 20
Consolidated Statements of Cash Flow for the
three years ended December 31, 1993, 1992 and 1991 . . . . . . . 21
Consolidated Statements of Stockholders' Equity
for the three years ended December 31, 1993, 1992 and 1991 . . . 22
Notes to Consolidated Financial Statements . . . . . . . . . . . 23
Financial Statement Schedules:
V - Property, Plant and Equipment . . . . . . . . . . . . 32
VI - Accumulated Depreciation, Depletion
and Amortization of Property, Plant and Equipment . . 33
VIII - Valuation and Qualifying Accounts and Reserves . . . . 34
X - Supplementary Income Statement Information . . . . . . 35
Selected Quarterly Financial Data (Unaudited) . . . . . . . . . . . 36
</TABLE>
Schedules other than those listed above are omitted since they are not
applicable, not required, or the information required to be set forth therein
is included in the financial statements, or in notes thereto.
17
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
CalMat Co.
Los Angeles, California
We have audited the accompanying consolidated balance sheets of CalMat
Co. and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1993, and the related
financial statement schedules as listed in the index on page 17 of this Form
10-K. These consolidated financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of CalMat Co. and subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
As discussed in Notes 4 and 9 to the consolidated financial statements,
effective January 1, 1993, the Company changed its method of accounting for
income taxes, and effective January 1, 1992, the Company changed its method of
accounting for postretirement benefits other than pensions.
COOPERS & LYBRAND
Los Angeles, California
February 21, 1994
18
<PAGE> 21
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-----------------------
(Amounts in thousands, except share data) 1993 1992
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,596 $ --
Trade accounts receivable, less allowance for discounts and
doubtful accounts ($4,174 in 1993 and $3,263 in 1992) 63,835 56,639
Income taxes receivable 1,564 4,769
Inventories 5,581 5,567
Prepaid expenses and other 4,152 5,307
Deferred income taxes 7,499 6,653
Installment notes receivable 2,902 1,991
-----------------------
Total current assets 96,129 80,926
Installment notes receivable and other assets 17,260 16,138
Investment in and advances to unconsolidated subsidiaries 14,945 14,421
Costs in excess of net assets of subsidiaries 55,484 57,508
Property, plant and equipment:
Land and deposits 183,754 177,123
Buildings, machinery and equipment 469,185 450,170
Construction in progress 14,493 17,373
-----------------------
667,432 644,666
Less: accumulated depreciation and depletion (246,355) (216,419)
-----------------------
Property, plant and equipment, net 421,077 428,247
-----------------------
Total assets $ 604,895 $ 597,240
=======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,810 $ 15,552
Accrued liabilities 29,293 26,658
Notes and bonds payable - current portion 5,852 1,019
Dividends payable 2,311 3,694
-----------------------
Total current liabilities 56,266 46,923
Notes and bonds payable - long term portion 109,635 131,129
Other liabilities and deferred credits 17,724 15,661
Deferred income taxes 70,224 52,840
-----------------------
Total liabilities 253,849 246,553
-----------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value; authorized 5,000,000 shares;
none issued or outstanding
Common stock, $1 par value; authorized 100,000,000 shares; issued
and outstanding
23,109,292 in 1993 and 23,084,382 in 1992 23,109 23,084
Additional paid-in capital 39,202 38,840
Retained earnings 288,735 288,763
----------------------
Total stockholders' equity 351,046 350,687
----------------------
Total liabilities and stockholders' equity $ 604,895 $ 597,240
=======================
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 22
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended December 31,
-------------------------------------
(Amounts in thousands, except per share data) 1993 1992 1991
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Net sales and operating revenues $ 348,413 $ 347,282 $ 364,943
Gains on sale of real estate 2,081 453 9,555
Other income 3,012 2,525 3,831
-------------------------------------
353,506 350,260 378,329
-------------------------------------
Costs and expenses:
Cost of products sold and operating expenses 288,313 291,680 292,475
Selling, general and administrative expenses 41,492 44,290 47,716
Interest expense 6,465 7,073 8,587
Other expenses 2,339 409 1,058
Special charges -- 26,100 --
------------------------------------
338,609 369,552 349,836
------------------------------------
Gains from disposal of assets held for sale -- 1,786 2,929
------------------------------------
Income (loss) before income taxes and cumulative
effect of change in accounting principle 14,897 (17,506) 31,422
Federal and state income taxes 6,600 (7,002) 12,568
------------------------------------
Income (loss) before cumulative effect
of change in accounting principle 8,297 (10,504) 18,854
Cumulative effect of change in accounting principle 919 (6,000) --
-------------------------------------
Net income (loss) $ 9,216 $ (16,504) $ 18,854
=====================================
PER SHARE DATA
Income (loss) before cumulative effect of
change in accounting principle $ .36 $ (.45) $ .81
Cumulative effect of change in accounting principle .04 (.26) --
-------------------------------------
Net income (loss) $ .40 $ (.71) $ .81
=====================================
Cash dividends per share $ .40 $ .64 $ .64
=====================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE> 23
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
For the years Ended December 31,
---------------------------------------
(Amounts in thousands) 1993 1992 1991
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 9,216 $ (16,504) $ 18,854
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation, cost depletion and amortization 31,953 30,210 28,802
Cumulative effect of change in accounting principle (919) 6,000 --
Special charges -- 26,100 --
Gains from disposal of assets held for sale -- (1,786) (2,929)
Gains from sale of real estate (2,081) (453) (9,555)
(Gain) loss on disposal of property, plant and equipment (379) (3) 475
Deferred tax expense 2,184 (7,144) 2,232
Changes in operating assets and liabilities
Trade accounts, net (9,552) 3,340 10,398
Inventories, prepaid expenses and deferred taxes 2,094 (1,154) 3,703
Accounts payable and accrued liabilities 7,906 (3,368) (8,102)
Federal and state income taxes 3,349 (6,658) (1,762)
Other 111 (499) 1,154
----------------------------------------
Cash provided by operating activities 43,882 28,081 43,270
----------------------------------------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (12,063) (32,732) (34,461)
Proceeds from sale of property, plant and equipment 1,922 640 1,192
Proceeds from sale of real estate 3,188 351 10,607
Proceeds from sale of properties included in assets held for sale -- 2,141 3,480
Receipts on installment notes receivable 1,638 1,777 11,206
Investment in and advances to unconsolidated subsidiaries (214) (189) (1,801)
Business acquired -- (34,111) --
Other investing activities 1,275 (472) --
----------------------------------------
Cash used for investing activities (4,254) (62,595) (9,777)
----------------------------------------
FINANCING ACTIVITIES:
Stock options exercised 335 546 334
Notes payable to banks (50,667) 39,000 36,500
Proceeds from senior notes 35,000 -- --
Principal payments on notes and bonds payable (994) (46) (38,770)
Payment of cash dividends (10,624) (14,833) (14,907)
Common stock repurchases -- (2,214) (7,915)
Hedge costs and other loan fees, net (2,082) -- --
----------------------------------------
(29,932) 22,453 (24,758)
----------------------------------------
Increase (decrease) in cash and cash equivalents 10,596 (12,061) 8,735
Balance, beginning of period -- 12,061 3,326
---------------------------------------
Balance, end of period $ 10,596 $ -- $ 12,061
=======================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 7,103 $ 7,186 $ 8,359
Income taxes $ 3,844 $ 9,910 $ 8,860
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE> 24
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
For the years ended December 31, 1993, 1992 and 1991
---------------------------------------------------------
Additional Total
Common Paid-In Retained Stockholders'
(Amounts in thousands) Stock Capital Earnings Equity
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1990 $ 23,430 $ 37,091 $ 326,668 $ 387,189
Net income for 1991 -- -- 18,854 18,854
Common stock repurchased (366) (579) (7,779) (8,724)
Stock options exercised 73 1,070 -- 1,143
Cash dividends declared -- -- (14,866) (14,866)
- --------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1991 23,137 37,582 322,877 383,596
Net loss for 1992 -- -- (16,504) (16,504)
Common stock repurchased (134) (155) (2,810) (3,099)
Stock options exercised 81 1,413 -- 1,494
Cash dividends declared -- -- (14,800) (14,800)
- --------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1992 23,084 38,840 288,763 350,687
Net income for 1993 -- -- 9,216 9,216
Stock options exercised 25 362 -- 387
Cash dividends declared -- -- (9,244) (9,244)
- --------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 $ 23,109 $ 39,202 $ 288,735 $ 351,046
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 25
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of CalMat Co.
(the Company) and all of its majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The Company uses the equity method of accounting for companies where ownership
is between 20 and 50 percent.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all cash balances and highly liquid
investments with a maturity of three months or less when purchased.
COSTS IN EXCESS OF NET ASSETS OF SUBSIDIARIES
Costs in excess of the fair value of net assets of purchased subsidiaries
are amortized on a straight-line basis over periods not exceeding 40 years.
Accumulated amortization of such costs was $7.7 million and $6.0 million at
December 31, 1993 and 1992, respectively.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is carried at cost. Depreciation is computed
using primarily straight-line rates over estimated useful lives (5 to 35 years
for plant structures and components and 4 to 25 years for machinery and
equipment).
Depletion of rock and sand deposits is computed by the unit-of-production
method based upon estimated recoverable quantities of rock and sand.
Significant expenditures which add materially to the utility or useful
lives of property, plant and equipment are capitalized. All other maintenance
and repair costs are charged to current operations.
The cost and related accumulated depreciation of assets replaced, retired
or otherwise disposed of are eliminated from the property accounts, and any
gain or loss is reflected in income.
ENVIRONMENTAL
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current or
future revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable, and the costs
can be reasonably estimated. Estimated liabilities are not discounted to
present value. Generally, the timing of these accruals coincides with
completion of a feasibility study or the Company's commitment to a formal plan
of action. The reserve for environmental remediation costs was $3.5 million
and $2.7 million at December 31, 1993 and December 31, 1992, respectively.
REVENUE RECOGNITION
Sales and operating revenues are recorded upon shipment of product, net of
discounts, if any, and include revenue earned pursuant to the terms of property
leasing contracts. Gains and losses on real estate are recorded upon
consummation of the transaction. Other income relates primarily to interest
and dividend income, miscellaneous rental income and gains on sale of fixed
assets which are recognized in accordance with the terms of various contractual
arrangements or upon receipt (as applicable).
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform with the
present presentation.
23
<PAGE> 26
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2: ASSETS HELD FOR SALE
During 1988, the Company announced its intention to dispose of a
substantial portion of its developed and developable properties, and these
properties were classified as assets held for sale. Due to the continued
depressed condition of the commercial real estate market in southern
California, combined with the lack of conventional financing available to
buyers, the Company in 1992 conducted a review of the properties included in
assets held for sale. As a result of this review, substantially all the
properties were reclassified to operating assets. During 1993, the remaining
properties were reclassified to operating assets. Prior period information has
been restated to reflect the reclassifications.
NOTE 3: ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31:
<TABLE>
<CAPTION>
(Amounts in thousands) 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Payroll, vacation and other benefits $ 7,687 $ 6,550
Workers compensation 3,229 3,156
Profit sharing 3,825 3,597
Other 14,552 13,355
-----------------------
$ 29,293 $ 26,658
=======================
</TABLE>
NOTE 4: FEDERAL AND STATE TAXES
Income (loss) before income taxes and the related income tax expense (benefit)
are as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $ 14,897 $ (17,506) $ 31,422
======================================
INCOME TAX EXPENSE (BENEFIT) $ 6,600 $ (7,002) $ 12,568
======================================
Income tax expense (benefit) consists of the following:
FEDERAL INCOME TAX:
Currently payable (receivable) $ 3,252 $ (363) $ 7,659
Deferred 2,052 (5,219) 1,934
--------------------------------------
5,304 (5,582) 9,593
--------------------------------------
STATE INCOME TAX:
Currently payable 1,164 505 2,677
Deferred 132 (1,925) 298
--------------------------------------
1,296 (1,420) 2,975
--------------------------------------
$ 6,600 $ (7,002) $ 12,568
======================================
The sources of deferred taxes are as follows:
Accelerated tax depreciation $ 1,656 $ 2,230 $ 2,108
State income tax (279) 1,285 230
Real estate exchanges 152 391 1,440
Tax operating loss and tax credits (759) (1,946) --
Special charges 489 (3,165) --
Real estate impairment 691 (6,106) --
Bad debts (599) (277) 5
Employee benefits (551) (1,173) (256)
Enacted rate change 1,127 -- --
Hedge costs 708 -- --
Other accruals (451) 1,617 (1,295)
--------------------------------------
$ 2,184 $ (7,144) $ 2,232
======================================
</TABLE>
24
<PAGE> 27
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax liabilities (assets) are comprised of the following at December
31, 1993 and January 1, 1993:
<TABLE>
<CAPTION>
December 31, January 1,
1993 1993
--------------------------
<S> <C> <C>
Depreciation $ 31,399 $ 29,080
Real estate exchanges 25,161 24,954
Purchase accounting bases differences 14,958 15,047
Depletion and other land bases adjustments 6,995 6,838
Other 5,117 4,122
--------------------------
Gross deferred tax liabilities 83,630 80,041
--------------------------
Postretirement benefits (4,448) (4,257)
Real estate impairment (7,194) (8,178)
Other (10,524) (8,767)
--------------------------
Gross deferred tax assets (22,166) (21,202)
Valuation allowance 1,261 895
--------------------------
$ 62,725 $ 59,734
==========================
</TABLE>
A reconciliation of the provision for income taxes to the federal statutory
income tax rate is as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax expense (benefit) at statutory rates $ 5,065 $ (5,952) $ 10,683
Less effect of:
Federal tax benefit (expense) of state income tax 392 (577) 1,011
Percentage depletion in excess of cost depletion 1,232 1,071 1,224
Goodwill and other amortization (449) (616) (756)
Enacted rate change (1,127) -- --
Tax credits 267 314 281
Other accruals 31 333 (274)
Miscellaneous (585) (895) (396)
--------------------------------------
Reported federal income tax expense (benefit) 5,304 (5,582) 9,593
State income tax expense (benefit) 1,296 (1,420) 2,975
--------------------------------------
$ 6,600 $ (7,002) $ 12,568
======================================
</TABLE>
In January 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." The adoption of SFAS
109 changes the Company's method of accounting for income taxes from the
deferred method (APB 11) to an asset and liability approach. Previously, the
Company deferred the tax effects of timing differences between financial
reporting and taxable income. The asset and liability approach requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
bases of assets and liabilities.
Under SFAS 109, assets and liabilities acquired in purchase business
combinations are assigned their fair values and deferred taxes are established
for lower or higher tax bases. Under APB 11, values assigned were net of tax.
In adopting SFAS 109, the Company adjusted the carrying amounts of assets
purchased in business acquisitions which increased primarily net property,
plant and equipment and deferred taxes by $13.5 million. Pre-tax income from
operations for the year ended December 31, 1993 was reduced by $0.6 million,
representing primarily the increase in depreciation expense resulting from
these higher carrying amounts.
The adjustments to the January 1, 1993 balance sheet to adopt SFAS 109
netted to a credit of $0.9 million. This amount, recorded in the first
quarter, was reflected in 1993 net income as the cumulative effect of a change
in accounting principle. It primarily represents the impact of adjusting
deferred taxes to reflect the enacted tax rate in effect as of January 1, 1993
of 34.0% as opposed to the higher tax rates that were in effect when the
deferred taxes originated.
The Company increased its deferred tax liability in 1993 as a result of
legislation enacted during 1993 increasing the corporate rate from 34.0% to
35.0%.
25
<PAGE> 28
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 1993, the Company had alternative minimum tax credit
carryforwards of approximately $2.0 million available to offset regular tax in
future years.
The Company's federal consolidated income tax returns have been examined
and settled by the Internal Revenue Service through 1985.
NOTE 5: NOTES AND BONDS PAYABLE
Notes and bonds payable consist of the following at December 31:
<TABLE>
<CAPTION>
(Amounts in thousands) 1993 1992
- -------------------------------------------------------------
<S> <C> <C>
Notes payable to banks $ 62,333 $ 113,000
Senior notes 35,000 --
Municipal improvement bonds 2,647 2,911
Mortgages and other notes payable 15,507 16,237
-----------------------
Total 115,487 132,148
Less current portion 5,852 1,019
-----------------------
Long-term portion $ 109,635 $ 131,129
=======================
</TABLE>
During 1993, the Company replaced $35.0 million of borrowings under its
revolving credit facilities with senior notes. The senior notes bear interest
at 6.7% and require principal payments beginning in 1997 through 2000.
At December 31, 1993, the Company had formal committed revolving credit
facilities with a number of banks totaling $135.0 million which will expire in
1994 and beyond. At December 31, 1993, the Company had various unused lines of
credit totaling approximately $81.0 million on which the Company pays
commitment fees of .375%.
Short-term bank borrowings made under these various credit facilities
and included in notes payable to banks were $54.0 million and $113.0 million at
December 31, 1993 and 1992, respectively, and bore rates equal to or less than
the prime bank lending rate which was 6.0% at December 31, 1993 and 1992.
Committed credit available under the revolving credit facilities provides
management with the ability to refinance the short-term bank borrowings on a
long-term basis and, as it is management's intention to do so, these borrowings
have been classified as long-term debt.
The credit agreements contain restrictions with respect to the
incurring of additional debt, creation of liens and guarantees, and maintenance
of minimum working capital, stockholders' equity and financial ratios. The
Company has complied with all of these restrictions.
Maturities of notes payable during the next five years are as follows:
1994, $5.9 million; 1995, $3.7 million; 1996, $2.0 million; 1997, $63.1
million; and 1998, $9.1 million.
26
<PAGE> 29
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6: STOCK OPTIONS AND RIGHTS
The Company has stock option plans that provide for granting incentive
and non-qualified options on common stock to officers and key employees.
During 1993, the Board of Directors adopted, subject to stockholder approval at
the 1994 Annual Meeting of Stockholders, the 1993 Stock Option Plan for
Executive and Key Employees of CalMat Co. which authorized the issuance of
options covering 900,000 shares of common stock. Certain information relative
to stock options follows:
<TABLE>
<CAPTION>
1993 1992 1991
- -------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES
Outstanding at beginning year 1,771,766 1,565,616 1,388,770
Granted 412,675 307,600 389,875
Exercised (24,912) (81,450) (72,633)
Forfeited (479,933) (20,000) (140,396)
--------------------------------------
Outstanding at end of year 1,679,596 1,771,766 1,565,616
======================================
Available for future options 1,019,834 52,576 340,176
======================================
Exercisable at end of year 882,160 986,650 798,165
======================================
</TABLE>
Prices per share of common stock under option range from $12.75 to
$30.50 at December 31, 1993. Options expire from 1995 to 2003. Prices per
share of options exercised range from $7.095 to $19.375 in 1993, $7.095 to
$22.50 in 1992 and $7.095 to $19.125 in 1991. Stock options may be issued to
executives and certain key employees as determined by the Management
Development and Compensation Committee of the Board of Directors. The price of
the shares subject to each option is set by the Committee but may not be less
than the fair market value of the shares at the date of grant. Options
generally become exercisable in installments beginning one year after the date
of grant and expire 10 years after grant date. No options expired in 1993,
1992 or 1991.
In September 1987, the Company declared a dividend distribution of one
common share purchase right on each outstanding share of common stock. When
exercisable, each right will entitle its holder to buy one share of the
Company's stock at a price of $90 per share until September 1997. The rights
will become exercisable if a person acquires 25.0% or more of the Company's
stock or makes an offer, the consummation of which will result in the person's
owning 30.0% or more of the Company's stock. In the event the Company is
acquired in a merger, each right entitles the holder to purchase common stock
of the surviving company having a market value twice the exercise price of the
right. The rights may be redeemed by the Company at a price of $0.05 per right
at any time prior to a person acquiring 25.0% of the Company's common stock.
NOTE 7: STOCKHOLDERS' EQUITY
Earnings per common equivalent share (common shares adjusted for
dilutive effect of common stock options) have been computed by dividing net
income for each period by the weighted-average shares of common stock
outstanding.
Weighted-average shares used for 1993, 1992 and 1991 totaled
23,117,000, 23,242,000 and 23,319,000, respectively.
NOTE 8: FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
The Company enters into interest rate swap agreements to effectively
convert a portion of its floating-rate borrowings into fixed-rate obligations.
The interest rate differential to be received or paid is recognized over the
lives of the agreements as an adjustment to interest expense. Counterparties
to these agreements are high credit quality financial institutions, and
nonperformance is considered remote. In the unlikely event that a counterparty
fails to meet the terms of an agreement, the Company's exposure is limited to
the interest rate differential.
27
<PAGE> 30
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company had outstanding interest rate swap agreements that
effectively converted $25.0 million and $35.0 million of variable rate debt to
fixed rate borrowings at December 31, 1993 and 1992, respectively.
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and trade receivables. The Company places its temporary cash investments with
high credit quality financial institutions. At times, such investments may be
in excess of the FDIC insurance limit. A significant portion of the Company's
sales are to customers in the construction industry, and, as such, the Company
is directly affected by the well-being of that industry. However, the credit
risk associated with trade receivables is minimal due to the Company's large
customer base and ongoing control procedures which monitor the credit
worthiness of customers. The Company generally obtains lien rights on all
major projects. Historically, the Company has not experienced significant
losses on trade receivables.
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of Statement of
Accounting Financial Standards (SFAS) No. 107, "Disclosures About Fair Value of
Financial Instruments." The estimated fair value amounts have been determined
by the Company using available market information and valuation methodologies
described below. However, considerable judgements are required in interpreting
market data to develop the estimates of fair value. Accordingly, the estimates
presented herein may not be indicative of the amounts that the Company could
realize in a current market exchange. The use of different market assumptions
or valuation methodologies may have a material effect on the estimated fair
value amounts.
The carrying values of cash and cash equivalents, trade receivables
and accounts payable approximate fair values due to the short-term maturities
of these instruments. The carrying amounts and estimated fair values of the
Company's other financial instruments at December 31, 1993 are as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) Carrying Amount Fair Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
Notes receivable $ 6,459 $ 6,285
Notes and bonds payable 115,487 111,619
Interest rate swaps - unrealized loss -- (518)
</TABLE>
The fair value of notes receivable has been estimated using the
expected future cash flows discounted at market interest rates.
The fair value of notes and bonds payable was estimated by discounting
the future cash flows using rates currently available for debt of similar terms
and maturity. The carrying values of short-term bank loans were assumed to
approximate fair values due to their short-term maturities.
Interest rate swaps fair value is the amount at which they could be
settled, based on estimates from dealers.
NOTE 9: RETIREMENT PLANS
The Company has a trusteed thrift and profit-sharing retirement plan
and a money purchase pension plan to provide funds from which retirement
benefits are paid to substantially all salaried employees of the Company and
its wholly-owned subsidiaries, including officers and directors who are also
employees. Annual contributions to these plans made by the Company approximate
15.0% of the aggregate compensation paid or accrued each year to participants
in the plan. The Company also contributes to various union pension plans, as
specified by certain union agreements, and non-union pension plans which cover
substantially all hourly employees. Contributions to all retirement plans
charged to income totaled $8.6 million in 1993, $7.6 million in 1992 and $8.7
million in 1991.
The Company provides certain health care and life insurance benefits
to eligible retired employees. Salaried and non-union hourly participants
generally become eligible after reaching age 62 with 20 years of service or
after reaching age 65 with 15 years of service. The health care plan is
contributory and the life insurance plan is noncontributory. The plans are
unfunded.
28
<PAGE> 31
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the third quarter of 1992, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." These benefits are now accrued
over the period the employee provides services to the Company. Prior to the
change, costs were charged to expense as incurred. The Company elected to
immediately recognize the Accumulated Postretirement Benefit Obligation valued
as of January 1, 1992, as of the beginning of the year and recorded an
after-tax charge of $6.0 million, or $0.26 per share ($10.0 million net of
deferred taxes of $4.0 million), as a change in accounting principle. The
following table sets forth the plans' funded status reconciled with the amount
included in the caption other liabilities and deferred credits in the Company's
balance sheets at December 31, 1993 and 1992:
<TABLE>
<CAPTION>
(Amounts in thousands) 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C>
Accumulated Postretirement Benefit Obligation
Retirees $ 4,904 $ 5,255
Fully eligible active plan participants 894 1,202
Other active plan participants 1,022 1,160
-----------------------
6,820 7,617
Plan assets at fair value -- --
-----------------------
Accumulated Postretirement Benefit Obligation
in excess of plan assets 6,820 7,617
-----------------------
Unrecognized prior service cost 1,888 2,068
Unrecognized net gain 2,038 913
-----------------------
Accrued postretirement benefit cost at December 31 $ 10,746 $ 10,598
=======================
</TABLE>
The net periodic postretirement benefit cost for 1993 and 1992 included the
following components:
<TABLE>
<CAPTION>
(Amounts in thousands) 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C>
Service cost -- benefits attributed to
service during the period $ 289 $ 462
Interest cost on the Accumulated
Postretirement Benefit Obligation 511 597
Net amortization (192) --
Full recognition of transition obligation -- 10,000
----------------------
Net periodic postretirement benefit cost $ 608 $11,059
======================
</TABLE>
For measurement purposes, a 12.0% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1994; the rate was
assumed to decrease gradually to 6.0% by 2012 and remain at that level
thereafter. The weighted-average discount rate used in determining the
Accumulated Postretirement Benefit Obligation in 1993 and 1992 was 7.0%.
The health care cost trend rate assumption has a significant effect on
the amounts reported. To illustrate, increasing the assumed health care cost
trend rates by one percentage point in each year would increase the Accumulated
Postretirement Benefit Obligation as of December 31, 1993 by $0.8 million and
the aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by $0.1 million.
NOTE 10: ACQUISITION
On December 8, 1992, the Company purchased substantially all of the
assets of the Jamieson Company, a major San Francisco Bay area producer of
aggregates. The Company paid $34.1 million for an aggregates production
facility, mining equipment, related real estate and the exclusive right to mine
significant aggregates reserves. The purchase was financed using the Company's
existing lines of credit.
The acquisition has been accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to assets based on
their estimated fair values as of the date of the acquisition. The cost in
excess of net assets acquired was approximately $10.4 million and is being
amortized on a straight-line basis over 28 years, which approximates the
estimated life of the aggregates reserves. The Jamieson Company's results of
operations have been included in the Company's consolidated financial
statements beginning December 8, 1992. The Jamieson Company's operations are
not
29
<PAGE> 32
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
material in relation to the consolidated financial statements, and proforma
financial information has, therefore, not been presented.
NOTE 11: SPECIAL CHARGES
Based upon an evaluation of certain developed real estate and due
primarily to market conditions, the Company recorded a non-cash special charge
of $15.0 million in the third quarter of 1992 representing the excess of net
book value over the estimated fair market value. The net after-tax effect of
this charge was $9.0 million, or $0.39 per share.
Fourth quarter results for 1992 include a non-cash special charge of
$11.1 million, of which $5.4 million is related to write downs of excess plant
and equipment and severance payments related to the consolidation of certain
construction materials operations, and $5.7 million is to write off accumulated
costs incurred in connection with seeking permits for additional aggregates
sources and for other valuation allowances. These costs relate to projects
where completion is uncertain in the near term because of economic conditions
and increased regulation. The Company believes it has adequate aggregates
reserves and productive capacity to serve indicated demand in the Company's
markets. The net after-tax effect of this charge was $6.7 million, or $0.29
per share.
NOTE 12: COMMITMENTS AND CONTINGENCIES
The Company had letters of credit and performance bonds outstanding
totaling approximately $22.0 million at December 31, 1993 which guarantee
various insurance and financing activities.
The Company has been named by the U.S. Environmental Protection Agency
("EPA") as a defendant in a civil action involving one "Superfund" cleanup site
and as a "potentially responsible party ("PRP") with respect to two other such
sites. In each instance the Company is one of many entities so named.
Because, in the case of the site involved in ongoing litigation, no final
remedy has been selected, and with respect to the other two sites,
investigation is ongoing, the Company's share of total liability, if any, is
unable to be quantified at this time. In the case of the site involved in
ongoing litigation, the Company believes that the wastes attributed to it were
not hazardous. In addition, the waste attributed to the Company represents an
extremely small (less than one-tenth of one percent) percentage of the total
volume of waste at this site.
The Company is subject to various legal proceedings, claims and
liabilities, which arise in the ordinary course of its business. In the
opinion of management, the amount of ultimate liability with respect to these
actions will not materially affect the financial position of the Company.
NOTE 13: BUSINESS SEGMENT INFORMATION
The Company operates principally in three business segments: Asphalt,
Concrete and Aggregates, and Properties. Operations in the Asphalt Division
principally involve the manufacture and sale of hot-mix asphalt. In addition
to supplying asphalt to customers at its various plants, the Asphalt Division
maintains a fleet of specialty paving equipment which it rents to customers.
It also markets Guardtop, an asphalt surface sealer, and is a distributor of
paving reinforcement fabric. The division operates asphalt plants at 36
locations in metropolitan Los Angeles and San Diego, the San Francisco Bay and
San Joaquin Valley areas of California; Phoenix and Tucson, Arizona; and
Albuquerque, New Mexico. Of the 36 locations, 21 are sites which also have
aggregates processing plants and/or ready mixed concrete plants operated by the
Concrete and Aggregates Division.
Operations in the Concrete and Aggregates Division include the mining
and sale of aggregates (rock, sand and gravel) and the manufacture and sale of
ready mixed concrete. The division operates aggregates production plants at 34
locations serving the Los Angeles, San Diego, Bakersfield, Fresno, Ventura,
Santa Barbara and San Francisco Bay areas of California; Phoenix and Tucson,
Arizona; and Albuquerque, New Mexico. Ready mixed concrete batch plants are
operated at 28 locations in these markets except for the Los Angeles and San
Francisco Bay areas. Of the 28 ready mixed concrete locations, 15 are sites
which also have aggregates processing plants.
30
<PAGE> 33
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Properties Division manages the Company's real estate and is
responsible for acquisition, permitting, reclamation, sales and leasing
activities. These activities take place principally in Los Angeles and San
Diego, California and Phoenix, Arizona.
Business segment information for the years ended December 31, is as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Asphalt $ 153,862 $ 146,457 $ 168,477
Concrete and Aggregates 201,117 205,650 203,646
Properties 23,641 22,038 29,327
Corporate and other 3,012 2,525 3,831
Intersegment sales (28,126) (26,410) (26,952)
--------------------------------------
Total $ 353,506 $ 350,260 $ 378,329
======================================
INCOME BEFORE TAXES:
Asphalt $ 8,790 $ 10,974 $ 21,081
Concrete and Aggregates 10,524 1,267 8,091
Properties 8,815 8,996 15,527
Corporate and unallocated expenses, net (14,434) (15,626) (18,683)
Other income 1,202 1,197 2,477
Special charges -- (26,100) --
Gains from disposal of assets held for sale -- 1,786 2,929
--------------------------------------
Total $ 14,897 $ 17,506 $ 31,422
======================================
IDENTIFIABLE ASSETS (AS OF DECEMBER 31):
Asphalt $ 148,889 $ 141,180 $ 143,532
Concrete and Aggregates 275,107 290,375 276,424
Properties 131,802 132,477 144,419
Corporate and other 49,097 33,208 33,225
--------------------------------------
Total $ 604,895 $ 597,240 $ 597,600
======================================
DEPRECIATION, COST DEPLETION AND AMORTIZATION:
Asphalt $ 7,435 $ 6,413 $ 6,097
Concrete and Aggregates 19,562 18,890 17,973
Properties 3,993 4,124 4,181
Corporate and other 963 783 551
--------------------------------------
Total $ 31,953 $ 30,210 $ 28,802
======================================
CAPITAL EXPENDITURES AND BUSINESS EXPANSION:
Asphalt $ 3,190 $ 6,991 $ 10,183
Concrete and Aggregates 4,051 51,780 19,125
Properties 4,352 6,763 5,872
Corporate and other 1,161 1,672 1,260
--------------------------------------
Total $ 12,754 $ 67,206 $ 36,440
======================================
</TABLE>
Total revenues by segment include both sales to unaffiliated customers, as
reported in the Company's consolidated statements of operations, and
intersegment sales. Income from operations by segment represents total
revenues less direct operating expenses, segment selling, general and
administrative expenses and certain allocated corporate general and
administrative expenses. Corporate and unallocated expenses include corporate
administrative expenses and support expenses not allocated to business
segments. Assets classified as corporate and other consist primarily of
general office facilities, cash and cash equivalents and other assets.
31
<PAGE> 34
CALMAT CO. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E Col. F
- -------------------------------------------------------------------------------------------------------------
Balance at Balance at
Beginning Additions Other Changes End of
Classification of Period at Cost Retirements Add (Deduct) Period
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1993: (d)
Land and deposits . . . . . . $ 177,123 $ 282 $ 1,700 $ 8,049 (a) $ 183,754
Plant, structures, machinery
and equipment . . . . . . 450,170 54 6,766 25,727 (b) 469,185
Construction in progress . . 17,373 12,204 -- (15,084)(c) 14,493
---------- ---------- ----------- ------------ ------------
$ 644,666 $ 12,540 $ 8,466 $ 18,692 $ 667,432
========== ========== =========== ============ ============
DECEMBER 31, 1992: (d)
Land and deposits . . . . . . $ 168,147 $ 4,569 $ 490 $ 4,897 (a) $ 177,123
Plant, structures, machinery
and equipment . . . . . . 438,108 809 3,095 14,348 (b) 450,170
Construction in progress . . 13,927 27,054 4 (23,604)(c) 17,373
---------- ---------- ----------- ------------ ------------
$ 620,182 $ 32,432 $ 3,589 $ (4,359) $ 644,666
========== ========== =========== ============ ============
DECEMBER 31, 1991: (d)
Land and deposits . . . . . . $ 144,290 $ 3,789 $ 860 $ 20,928 (a) $ 168,147
Plant, structures, machinery,
and equipment . . . . . . 413,931 219 13,166 37,124 (b) 438,108
Construction in progress . . 42,925 30,336 -- (59,334)(c) 13,927
---------- ---------- ----------- ------------ ------------
$ 601,146 $ 34,344 $ 14,026 $ (1,282) $ 620,182
========== ========== =========== ============ ============
</TABLE>
_______________________
Notes:
(a) Includes $2,960, $1,105, and $21,369 related to reclassifications of
completed construction projects for 1993, 1992 and 1991, respectively;
$3,935 related to the adoption of SFAS 109 in 1993; $3,679 related to
assets of acquired company for 1992; and other reclassifications to other
accounts in 1993, 1992 and 1991.
(b) Includes $11,142, $18,573 and $37,753 related to reclassifications of
completed construction projects for 1993, 1992 and 1991, respectively;
$13,085 related to the adoption of SFAS 109 in 1993; $12,662 related to
assets of acquired company for 1992; ($15,000) related to the write down of
the book value of certain developed real estate in 1992; ($1,545) related
to asset write offs for 1992; and other reclassifications to other accounts
in 1993, 1992 and 1991.
(c) Includes $(14,102), ($19,678) and ($59,122) related to reclassifications of
completed construction projects for 1993, 1992 and 1991, respectively;
($3,948) related to asset write offs for 1992; and other reclassifications
to other accounts in 1993, 1992 and 1991.
(d) Certain prior year amounts have been reclassified to conform with the
present presentation.
32
<PAGE> 35
CALMAT CO. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For the Years Ended December 31, 1993, 1992 and 1991
(Amounts in Thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E Col. F
- -------------------------------------------------------------------------------------------------------------
Additions
Balance at Charged to Balance at
Beginning Costs and Other Changes End of
Description of Period Expenses Retirements Add (Deduct) Period
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1993: (b)
Accumulated depletion of land
and deposits . . . . . . . $ 6,643 $ 75 $ -- $ -- $ 6,718
Accumulated depreciation:
Plant, structures, machinery,
and equipment . . . . . . 209,776 29,105 4,831 5,587 (a) 239,637
---------- ---------- ----------- ------------ ------------
$ 216,419 $ 29,180 $ 4,831 $ 5,587 $ 246,355
========== ========== =========== ============ ============
DECEMBER 31, 1992: (b)
Accumulated depletion of land
and deposits . . . . . . . $ 7,004 $ 86 $ -- $ (447)(a) $ 6,643
Accumulated depreciation:
Plant, structures, machinery
and equipment . . . . . . 185,319 28,648 2,653 (1,538)(a) 209,776
---------- ---------- ----------- ------------ ------------
$ 192,323 $ 28,734 $ 2,653 $ (1,985) $ 216,419
========== ========== =========== ============ ============
DECEMBER 31, 1991: (b)
Accumulated depletion of land
and deposits . . . . . . . $ 6,821 $ 183 $ -- $ -- $ 7,004
Accumulated depreciation:
Plant, structures, machinery
and equipment . . . . . . 171,307 26,886 11,983 (891)(a) 185,319
---------- ---------- ----------- ------------ ------------
$ 178,128 $ 27,069 $ 11,983 $ (891) $ 192,323
========== ========== =========== ============ ============
</TABLE>
_______________________
Notes:
(a) Includes $4,505 related to the adoption of SFAS 109 in 1993; ($1,436)
related to asset write offs for 1992; and other reclassifications to other
accounts in 1993, 1992 and 1991.
(b) Certain prior year amounts have been reclassified to conform with the
present presentation.
33
<PAGE> 36
CALMAT CO. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E
- --------------------------------------------------------------------------------------------------------------------
Balance at Additions Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1993: (d)
Reserves deducted from assets to
which they apply:
Allowance for doubtful trade receivables $ 2,656 $ 2,966 $ -- $ 1,768(a) $ 3,854
Allowance for cash discounts . . . . . . 607 2,802 -- 3,089(b) 320
Allowance for doubtful notes receivable . 1,300 161 -- 564(a) 897
Reserves included in liabilities:
Environmental remediation . . . . . . . . 2,739 1,029 -- 268(c) 3,500
------ ------- ------- ------- -------
Total $ 7,302 $ 6,958 $ -- $ 5,689 $ 8,571
======= ======= ======= ======= =======
DECEMBER 31, 1992: (d)
Reserves deducted from assets to
which they apply:
Allowance for doubtful trade receivables $ 2,673 $ 1,814 $ -- $ 1,831(a) $ 2,656
Allowance for cash discounts . . . . . . 567 3,265 -- 3,225(b) 607
Allowance for doubtful notes receivable . -- 1,300 -- -- 1,300
Reserves included in liabilities:
Environmental remediation . . . . . . . . 2,364 1,276 -- 901(c) 2,739
------- ------- ------- ------- -------
Total $ 5,604 $ 7,655 $ -- $ 5,957 $ 7,302
======= ======= ======= ======= =======
DECEMBER 31, 1991: (d)
Reserves deducted from assets to
which they apply:
Allowance for doubtful trade receivables $ 2,413 $ 2,069 $ -- $ 1,809(a) $ 2,673
Allowance for cash discounts . . . . . . 634 3,103 -- 3,170(b) 567
Reserves included in liabilities:
Environmental remediation . . . . . . . . 1,250 1,275 161(c) 2,364
------- ------- ------- ------- -------
Total $ 4,297 $ 6,447 $ -- $ 5,140 $ 5,604
======= ======= ======= ======= =======
</TABLE>
______________________
Notes:
(a) Write offs of uncollectible accounts, less recoveries.
(b) Cash discounts allowed.
(c) Payments made.
(d) Certain prior year amounts have been reclassified to conform with the
present presentation.
34
<PAGE> 37
CALMAT CO. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Col. A Col. B
- ---------------------------------------------------------------------------------------------------
Charged to Costs and Expenses
--------------------------------------
1993 1992 1991
--------------------------------------
<S> <C> <C> <C> <C>
Item:
1. Maintenance and repairs . . . . . . . . . . . . . $ 28,082 $ 30,465 $ 28,964
2. Depreciation and amortization of intangible
assets, pre-operating costs and similar
deferrals . . . . . . . . . . . . . . . . . . . (a) (a) (a)
3. Taxes, other than payroll and income taxes:
Real and personal property . . . . . . . . . . . $ 5,530 $ 5,327 $ 5,437
Business licenses, permits and
miscellaneous . . . . . . . . . . . . . . . . 3,274 3,174 2,726
-------- -------- --------
$ 8,804 $ 8,501 $ 8,163
======== ======== ========
4. Royalties . . . . . . . . . . . . . . . . . . . . $ 4,913 $ 4,532 $ 4,970
5. Advertising costs . . . . . . . . . . . . . . . . (a) (a) (a)
</TABLE>
______________________
Notes:
(a) Amounts do not exceed one percent of total sales and revenue as reported
in the related statements of operation.
35
<PAGE> 38
CALMAT CO. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
<TABLE>
<CAPTION>
1993 Quarter Ended
- -------------------------------------------------------------------------------------------------------------
(Unaudited; Amounts in thousands,
except per share data) March 31 June 30 Sept. 30 Dec. 31 Year
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 62,042(f) $ 96,444 $ 100,432 $ 94,588 $ 353,506
Gross profit 6,600(f) 21,966 21,098 15,529 65,193
Net income (loss) (2,503)(a) 5,620 4,521(e) 1,578(e) 9,216
Net income (loss) per share(g) (.11)(a) .24 .20 0.07(e) .40
</TABLE>
<TABLE>
<CAPTION>
1992 Quarter Ended
- -------------------------------------------------------------------------------------------------------------
(Unaudited; Amounts in thousands,
except per share data) March 31 June 30 Sept. 30 Dec. 31 Year
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 67,344 $ 97,272 $ 102,849 $ 82,795 $ 350,260
Gross profit 8,516 18,563 20,120 11,381 58,580
Net income (loss) (8,425)(b) 4,515 (4,566)(c) (8,028)(d) (16,504)
Net income (loss) per share (g) (.36)(b) .19 (.20)(c) (.35)(d) (.71)
</TABLE>
(a) Reflects the cumulative effect to January 1, 1993, to adopt the new
accounting standard for income taxes of $0.9 million, or $0.04 per share.
(b) Reflects the cumulative effect to January 1, 1992, of the change in
accounting for postretirement benefits of $6.0 million, or $0.26 per share.
(c) Includes charge of $9.0 million, or $0.39 per share, to write down the book
value of certain developed real estate.
(d) Includes charge of $6.7 million, or $0.29 per share, related to the
consolidation of certain construction materials operations.
(e) Includes charge of $0.8 million, or $0.03 per share, related to anticipated
settlements of certain property disputes.
(f) Reflects the restatement for assets held for sale which increased
revenues by $0.9 million and increased gross profit by $0.2 million
from amounts originally reported.
(g) The sum of the quarterly net income per share amounts may not equal the
year because quarterly and annual figures are required to be independently
calculated.
36
<PAGE> 39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Except for information as to identification and business experience of
executive officers which is set forth in Part I of this report, the information
called for by Item 10 is incorporated herein by reference to the information
included under the caption "Election of Directors" on pages 3 through 12 of
the Company's Proxy Statement dated March 17, 1994 for the April 27, 1994
Annual Meeting of Stockholders ("Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information called for by Item 11 is incorporated herein by
reference to the information included under the caption "Management
Remuneration" on pages 6 through 12 in the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information called for by this Item 12 is incorporated herein by
reference to the information included under the captions "Stock Ownership of
Certain Beneficial Owners" and "Election of Directors" on pages 2 through 12
of the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this Item 13 is incorporated herein by
reference to the information included under the caption "Election of Directors"
on pages 3 through 12 of the Company's Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report:
(1) Financial Statements:
See Index to Consolidated Financial Statements and
Financial Statement Schedules on page 17 of this
Annual Report on Form 10-K.
(2) Financial Statement Schedules:
See Index to Consolidated Financial Statements and
Financial Statement Schedules on page 17 of this
Annual Report on Form 10-K.
(3) Exhibits:
The following exhibits are included as part of the
Company's 1993 Annual Report on Form 10-K Report as
required by Item 601 of Regulation S-K. The exhibits
identified by asterisks are the management contracts
and compensatory plans or arrangements required to be
filed as exhibits to this Annual Report on Form 10-K.
Stockholders may obtain copies of the exhibits not
presented herein upon written request to: Secretary,
CalMat Co., 3200 San Fernando Road, Los Angeles, CA
90065.
37
<PAGE> 40
Exhibit 3.1: CalMat Co. Certificate of
Incorporation, as amended,
filed as Exhibit 3.1 to the
Company's 1987 Annual Report
on Form 10-K, is incorporated
herein by reference.
Exhibit 3.2: Certificate of Amendment of
Certificate of Incorporation,
filed May 20, 1992, with
Delaware Secretary of State,
filed as Exhibit 3.2 to the
Company's 1992 Annual Report
on Form 10-K, is incorporated
herein by reference.
Exhibit 3.3: CalMat Co. By-Laws.
Exhibit 4.1: Rights Agreement, dated as
of September 22, 1987,
between CalMat Co. and
Security Pacific National
Bank, filed as Exhibit 1 to
the Company's Form 8-K dated
October 5, 1987, is
incorporated herein by
reference.
Exhibit 4.2: First Amendment to Rights
Agreement, dated as of
October 26, 1992, between
CalMat Co. and Bank of
America, N.T.&S.A., formerly
known as Security Pacific
National Bank, filed as
Exhibit 4.2 to the Company's
1992 Annual Report on Form
10-K, is incorporated herein
by reference.
Exhibit 10.1: Credit Agreement among
CalMat Co. and "The Banks
Listed Herein" and Morgan
Guaranty Trust Company of
New York, as Agent, dated
as of August 1, 1988, filed
as Exhibit E - 10.2 to
Registrant's 1991 Annual
Report on Form 10-K, is
incorporated herein by
reference.
Exhibit 10.2: Credit Agreement among
CalMat Co., "Lenders Parties
Hereto" and the First
National Bank of Chicago, as
Agent, dated as of August 20,
1991, filed as Exhibit F -
10.3 to the Company's 1991
Annual Report on Form 10-K,
is incorporated herein by
reference.
Exhibit 10.3: Amendment No. One dated
October 16, 1992 to Credit
Agreement among CalMat Co.,
"Lenders Parties Hereto" and
the First National Bank of
Chicago, as Agent, dated as
of August 20, 1991.
Exhibit 10.4: Amendment No. Two dated
December 28, 1992 to Credit
Agreement among CalMat Co.,
"Lenders Parties Hereto" and
the First National Bank of
Chicago, as Agent, dated as
of August 20, 1991.
Exhibit 10.5: Waiver/Amendment No. Three
dated February 5, 1993 to
Credit Agreement among CalMat
Co., "Lenders Parties Hereto"
and the First National Bank
of Chicago, as Agent, dated
as of August 20, 1991.
Exhibit 10.6: Amendment No. Four dated
February 26, 1993 to Credit
Agreement among CalMat Co.,
"Lenders Parties Hereto" and
the First National Bank of
Chicago, as Agent, dated as
of August 20, 1991.
Exhibit 10.7: Credit Agreement dated as of
June 30, 1992, among CalMat
Co., as the Borrower, The
Financial Institutions Listed
On The Signature Pages
Hereof, as the Lenders, and
Bank of America National
Trust and Savings
Association, as the Agent,
filed as Exhibit 10.3 to the
Company's 1992 Annual Report
on Form 10-K, is incorporated
herein by reference.
Exhibit 10.8: First Amendment dated
January 14, 1993 to Credit
Agreement dated as of June
30, 1992, among CalMat Co.,
as the Borrower, The
Financial Institutions Listed
on the Signature Pages
Hereof, as the Lenders, and
Bank of America National
Trust and Savings
Association, as the Agent.
Exhibit 10.9: Waiver dated February 5,
1993 to Credit Agreement
dated as of June 30, 1992,
among CalMat Co., as the
Borrower, The Financial
Institutions Listed on the
Signature Pages Hereof, as
the Lenders, and Bank of
America National Trust and
Savings Association, as the
Agent.
Exhibit 10.10: Second Amendment dated
February 26, 1993 to Credit
Agreement dated as of June
30, 1992, among CalMat Co.,
as the Borrower, The
Financial Institutions Listed
on the Signature Pages
Hereof, as the Lenders, and
Bank of America National
Trust and Savings
Association, as the Agent.
Exhibit 10.11: Note Purchase Agreement
dated as of July 23, 1993
between CalMat Co. and
Metropolitan Life Insurance
Company, et al.
38
<PAGE> 41
Exhibit 10.12: Amended Employment Agreement
between the Company and A.
Frederick Gerstell, filed as
Exhibit 10.2 to the Company's
1990 Annual Report on Form
10-K, is incorporated herein
by reference.
Exhibit 10.13: Supplemental Executive
Retirement Plan between the
Company and A. Frederick
Gerstell, filed as Exhibit
10.3 to the Company's 1990
Annual Report on Form 10-K,
is incorporated herein by
reference.
Exhibit 10.14: Amended Employment Agreement
between the Company and Scott
J Wilcott, filed as Exhibit
10.6 to the Company's 1990
Annual Report on Form 10-K,
is incorporated herein by
reference.
Exhibit 10.15: Amended Employment Agreement
between the Company and Paul
Stanford, filed as Exhibit
10.9 to the Company's 1992
Annual Report Form 10-K, is
incorporated herein by
reference.
Exhibit 10.16: Letter Agreement Regarding
Employment between the
Company and Delbert H.
Tanner, executed May 27,
1993.
Exhibit 10.17: Letter Agreement Regarding
Employment between the
Company and H. James
Gallagher, executed August
12, 1993.
39
<PAGE> 42
Exhibit 10.18: Thrift and Profit Sharing
Retirement Plan and Money
Purchase Pension Plan for
Employees of CalMat Co.,
dated January 1, 1989, filed
as Exhibit 10.8 to the
Company's 1989 Annual Report
on Form 10-K, is incorporated
herein by reference.
Exhibit 10.19: Trust Agreement pursuant to
the Thrift and Profit Sharing
Retirement Plan and the Money
Purchase Pension Plan for
Employees of CalMat Co.,
dated October 24, 1989, filed
as Exhibit 10.9 to the
Company's 1989 Annual Report
on Form 10-K, is incorporated
herein by reference.
Exhibit 10.20: Stock Option Plan for
Executive and Key Employees
of CalMat Co., filed as
Exhibit 4 to the Company's
Form S-8 Registration
Statement (#33-8770)
effective October 6, 1986, is
incorporated herein by
reference.
Exhibit 10.21: 1987 Stock Option Plan for
Executive and Key Employees
of CalMat Co., as amended,
filed as Exhibit 4 to the
Company's Form S-8
Registration Statement
(#33-18760) effective
December 19, 1987, is
incorporated herein by
reference.
Exhibit 10.22: Non-qualified Deferred
Compensation Plan for
Selected Executives of CalMat
Co, filed as Exhibit 10.12 to
the Company's 1990 Annual
Report on Form 10-K, is
incorporated herein by
reference.
Exhibit 10.23: 1990 Stock Option Plan for
Executive and Key Employees
of CalMat Co., filed as
Exhibit 4.1 to the Company's
Form S-8 Registration
Statement (#33-43558)
effective October 28, 1991,
is incorporated herein by
reference.
Exhibit 10.24: Amended and Restated 1993
Stock Option Plan for
Officers, Directors and Key
Employees of CalMat Co. filed
as Exhibit A to the Company's
Proxy Statement dated March
17, 1994, is incorporated
herein by reference.
Exhibit 21.1: Subsidiaries of the Company.
Exhibit 22.1: The Company's definitive
Proxy Statement filed with
the Commission on March 16,
1994 and mailed to the
Company's stockholders on
March 17, 1994, is
incorporated herein by
reference.
Exhibit 23.1: Consent of Coopers &
Lybrand, certified public
accountants, to incorporation
by reference in the
Registration Statements on
Form S-8 (#33-8770, #33-18760
and #33-43558) and the
related prospectuses
pertaining to the Stock
Option Plan for Executive and
Key Employees of CalMat Co.,
the 1987 Stock Option Plan
for Executive and Key
Employees of CalMat Co. and
the 1990 Stock Option Plan
for Executive and Key
Employees of CalMat Co.,
respectively, is on page 43
of this Annual Report on Form
10-K.
(b) Reports on Form 8-K:
There were no Form 8-K reports filed by the Company during the
fourth quarter of 1993.
40
<PAGE> 43
CALMAT CO.
PROPERTY OWNED AND LEASED
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
ACREAGE (A)
--------------------------------------------------
JOINT
OWNED LEASED VENTURES TOTAL
--------------------------------------------------
<S> <C> <C> <C> <C>
CONCRETE AND AGGREGATES: (b)
Production and sales property . . . . . . . . . . . . . . . 6,975 6,001 12,976
Reserve property held for future production/not zoned . . . 3,521 1,195 4,716
Fully depleted property . . . . . . . . . . . . . . . . . . 525 525
Reserve property held for future production/zoned . . . . . 377 377
Joint ventures, partnerships, partially owned subsidiaries . 757 757
--------------------------------------------------
Total Concrete and Aggregates Division . . . . . . 11,398 7,196 757 19,351
ASPHALT:
Production and sales property . . . . . . . . . . . . . . . 559 436 995
Property leased to others/miscellaneous property . . . . . . 5 3 8
--------------------------------------------------
Total Asphalt Division . . . . . . . . . . . . . . 564 439 1,003
PROPERTIES:
Developable . . . . . . . . . . . . . . . . . . . . . . . . 1,049 13 1,062
Improved property/finished lots . . . . . . . . . . . . . . 64 3 67
Improved property/fully developed . . . . . . . . . . . . . 83 2 85
Landfill/permitted . . . . . . . . . . . . . . . . . . . . . 141 34 175
Public storage . . . . . . . . . . . . . . . . . . . . . . . 48 48
Property leased to others . . . . . . . . . . . . . . . . . 103 8 111
Miscellaneous properties (c) . . . . . . . . . . . . . . . . 12,109 12,109
-------------------------------------------------
Total Properties Division . . . . . . . . . . . . . 13,597 47 13 13,657
Total All Divisions . . . . . . . . . . . . . . . . 25,559 7,682 770 34,011
======== ========= ======= =========
</TABLE>
______________________
(a) The Company's continuing program of evaluating the best use of property
may result in reclassification of properties between categories from time
to time.
(b) Certain land in the Concrete and Aggregates Division is leased on a
short-term basis as undeveloped property and the revenues generated are
reported in the Properties Division.
(c) Consists of numerous parcels which have limited access and of which
approximately 59% are located in the Mojave Desert, Kern County,
California.
41
<PAGE> 44
CALMAT CO.
SCHEDULE OF ESTIMATED AGGREGATES RESERVES
AS OF DECEMBER 31, 1993
(AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
TONS OWNED TONS LEASED TOTAL TONS
----------------------------------------------------------
<S> <C> <C> <C>
Aggregates Reserves . . . . . . . . . . . . . 1,042.5 736.8 1,779.3
</TABLE>
42
<PAGE> 45
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements of CalMat Co. and subsidiaries on Form S-8 (File Numbers 33-8770,
33-18760 and 33-43558) of our report dated February 21, 1994, on our audits
of the consolidated financial statements and financial statement schedules
of CalMat Co. and subsidiaries as of December 31, 1993 and 1992, and for the
years ended December 31, 1993, 1992 and 1991, which report is included in
this Annual Report on Form 10-K.
COOPERS & LYBRAND
Los Angeles, California
March 17, 1994
43
<PAGE> 46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CalMat Co.
By /s/ A. FREDERICK GERSTELL
--------------------------------------
A. Frederick Gerstell,
Chairman of the Board, President,
Chief Executive Officer and
Chief Operating Officer
February 22, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C> <C>
/s/ A. FREDERICK GERSTELL
- -------------------------------
A. Frederick Gerstell Chairman of the Board, February 22, 1994
President, Chief Executive
Officer and Chief Operating
Officer and Director
/s/ H. JAMES GALLAGHER
------------------------------
H. James Gallagher Executive Vice President- February 22, 1994
Finance and Chief
Financial Officer
/s/ EDWARD J. KELLY
------------------------------
Edward J. Kelly Senior Vice President- February 22, 1994
Treasurer and Chief
Financial Officer
/s/ JOHN C. ARGUE
------------------------------
John C. Argue Director February 22, 1994
/s/ HARRY M. CONGER
------------------------------
Harry M. Conger Director February 22, 1994
</TABLE>
44
<PAGE> 47
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C> <C>
/s/ RAYBURN S. DEZEMBER
-----------------------------
Rayburn S. Dezember Director February 22, 1994
/s/ BERT A. GETZ
- ------------------------------
Bert A. Getz Director February 22, 1994
/s/ RICHARD A. GRANT, JR.
- ------------------------------
Richard A. Grant, Jr. Director February 22, 1994
/s/ GROVER R. HEYLER
- ------------------------------
Grover R. Heyler Director February 22, 1994
/s/ WILLIAM T. HUSTON
- ------------------------------
William T. Huston Director February 22, 1994
/s/ WILLIAM JENKINS
- ------------------------------
William Jenkins Director February 22, 1994
/s/ THOMAS L. LEE
- ------------------------------
Thomas L. Lee Director February 22, 1994
/s/ THOMAS M. LINDEN
- ------------------------------
Thomas M. Linden Director February 22, 1994
/s/ STUART T. PEELER
- ------------------------------
Stuart T. Peeler Director February 22, 1994
</TABLE>
45
<PAGE> 1
BY-LAWS EXHIBIT 3.3
OF
CALMAT CO.
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office shall be at the
office of the United States Corporation Company, at 306 South State Street, in
the City of Dover, in the County of Kent, State of Delaware.
Section 2. OTHER OFFICES. The corporation may also have an office in
the City of Los Angeles, State of California and also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE OF MEETINGS. All meetings of the stockholders shall
be held in the City of Los Angeles, State of California, at such place as may
be fixed from time to time by the Board of Directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting.
Section 2. ANNUAL MEETING OF STOCKHOLDERS. An annual meeting of
stockholders shall be held on the fourth Wednesday in April in each year, if
not a legal holiday, and if a legal holiday, then on the next legal business
day following, at 10:00 a.m., or at such
<PAGE> 2
other date and time as may be determined from time to time by resolution
adopted by the Board of Directors. At each annual meeting, directors shall be
elected and any other proper business may be transacted.
Section 3. QUORUM, ADJOURNED MEETINGS AND NOTICE THEREOF. A majority
of the stock issued and outstanding and entitled to vote at any meeting of
stockholders, the holders of which are present in person or represented by
proxy, shall constitute a quorum for the transaction of business except as
otherwise provided by law, by the Certificate of Incorporation, or by these
By-Laws. A quorum, once established, shall not be broken by the withdrawal of
enough votes to leave less than a quorum, and the votes present may continue to
transact business until adjournment. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, a majority of the
voting stock represented in person or by proxy may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote thereat.
Section 4. VOTING. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes, or
the Certificate of Incorporation, or these By-Laws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
2
<PAGE> 3
Section 5. PROXIES. At each meeting of the stockholders, each
stockholder having the right to vote may vote in person or may authorize
another person or persons to act for him by proxy appointed by an instrument in
writing subscribed by such stockholder and bearing a date not more than three
years prior to said meeting, unless said instrument provides for a longer
period. All proxies must be filed with the Secretary of the corporation at the
beginning of each meeting in order to be counted in any vote at the meeting.
Except as provided by the Certificate of Incorporation and these By-Laws, each
stockholder shall have one vote for each share of stock having voting power,
registered in his name on the books of the corporation on the record date set
by the Board of Directors as provided in Article V, Section 6 hereof. At all
elections of directors of this corporation, each holder of Common Stock of this
corporation shall be entitled to as many votes as shall equal the number of
votes which, except for this Section 5, he would be entitled to cast for the
election of directors with respect to his shares of Common Stock multiplied by
the number of directors to be elected, and he may cast all of such votes for a
single director or may distribute them among the number to be voted for, or for
any two or more of them as he may see fit. All elections shall be had and all
questions decided by a plurality vote.
Section 6. SPECIAL MEETINGS. Special meetings of the stockholders,
for any purpose, or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board or the
President or the Secretary and shall be called by the Chairman of the Board or
the President or the Secretary at the request in writing of a majority of the
Board of Directors, or at the request in writing of stockholders owning a
majority of the entire capital stock of the corporation issued and outstanding,
and entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
3
<PAGE> 4
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice.
Section 7. NOTICE OF STOCKHOLDER'S MEETINGS. Whenever stockholders
are required or permitted to take any action at a meeting, a written notice of
the meeting shall be given. Such notice shall state the place, date and hour
of the meeting, and, in the case of a special meeting, the purpose or purposes
for which the meeting is called. The written notice of a meeting shall be
given to each stockholder entitled to vote at such meeting not less than ten
nor more than sixty days before the date of the meeting, except that written
notice of any special meeting shall be given to each stockholder entitled to
vote at such meeting not less than two weeks before the date of the meeting.
If mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.
Section 8. MAINTENANCE AND INSPECTION OF STOCKHOLDER LIST. The
officer who has charge of the stock ledger of the corporation shall prepare and
make, at least ten days before every meeting of stockholders, a complete list
of the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
4
<PAGE> 5
ARTICLE III
DIRECTORS
Section 1. NUMBER AND QUALIFICATION OF DIRECTORS. The number of
directors which shall constitute the whole Board shall be not less than eleven
nor more than fifteen, the exact number to be determined by the Board. The
directors need not be stockholders. The directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his successor is
elected and qualified or until the earlier of his death, resignation,
retirement or removal. No person over the age of 70 years shall be nominated
or elected a director, directors shall not stand for re-election upon
attainment of age 70, except those over the age of 70 years and serving as
directors at the time of adoption of this By-Law amendment.
Section 2. VACANCIES. Vacancies on the Board of Directors by reason
of death, resignation, retirement, disqualification, removal from office, or
otherwise, and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director.
The director so chosen shall hold office until the next annual election of
directors and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute.
Section 3. POWERS. The property and business of the corporation
shall be managed by or under the direction of its Board of Directors. In
addition to the powers and authorities by these By-Laws expressly conferred
upon them, the Board may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the
5
<PAGE> 6
Certificate of Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders.
Section 4. PLACE OF DIRECTORS' MEETING. The directors may hold their
meetings and have one or more offices, and keep the books of the corporation
outside of the State of Delaware.
Section 5. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice on the fourth Tuesday of each month at
10:00 o'clock a.m., at 3200 San Fernando Road, Los Angeles, California, or at
such time and place as shall from time to time be determined by the Board.
Section 6. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the President on
forty-eight hours' notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the Chairman of the Board or the
President or the Secretary in like manner and on like notice on the written
request of a majority of the directors unless the Board consists of only one
director, in which case special meetings shall be called by the President or
Secretary in like manner or on like notice on the written request of the sole
director.
Section 7. QUORUM. At all meetings of the Board of Directors a
majority of the authorized number of directors shall be necessary and
sufficient to constitute a quorum for the transaction of business, and the vote
of a majority of the directors present at any meeting at which there is a
quorum, shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, by the Certificate of Incorporation or by
these By-Laws. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at
6
<PAGE> 7
the meeting, until a quorum shall be present. If only one director is
authorized, such sole director shall constitute a quorum.
Section 8. ACTION WITHOUT MEETING. Unless otherwise restricted by
the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of proceedings of the Board or
committee.
Section 9. TELEPHONE CONFERENCES. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such meeting.
Section 10. COMMITTEES OF DIRECTORS. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each such committee to consist of one or more of the directors of
the corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member
of a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the
7
<PAGE> 8
resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation (except as permitted by Section 141 of the
Delaware General Corporation Law and as authorized by resolution), adopting an
agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the corporation's
property and assets, recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution, or amending the By-Laws of the
corporation; and, unless the resolution or the Certificate of Incorporation
expressly so provides, no such committee shall have the power or authority to
declare a dividend, to authorize the issuance of stock or to adopt a
certificate of ownership and merger.
Section 11. MINUTES OF COMMITTEE MEETINGS. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
Section 12. COMPENSATION OF DIRECTORS. Unless otherwise restricted
by the Certificate of Incorporation or these By-Laws, the Board of Directors
shall have the authority to fix the compensation of directors. The directors
may be paid their expenses, if any, of attendance at each meeting of the Board
of Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
8
<PAGE> 9
ARTICLE IV
OFFICERS
Section 1. OFFICERS. The officers of this corporation shall be
chosen by the Board of Directors and shall include a Chairman of the Board, a
President, a Vice-President, a Secretary and a Treasurer. The corporation may
also have, at the discretion of the Board of Directors, such other officers as
are desired, including a Vice-Chairman of the Board, additional
Vice-Presidents, and one or more Assistant Secretaries and Assistant
Treasurers. In the event there are two or more Vice Presidents, then one or
more may be designated as Executive Vice President, Senior Vice-President or
other similar or dissimilar title. At the time of the election of officers,
the directors may by resolution determine the order of their rank. All
officers shall hold office at the pleasure of the Board of Directors. No
officer except the President and the Chairman of the Board need be members of
the Board of Directors. Any number of offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The Board of Directors, at its
first meeting after each annual meeting of stockholders, shall choose the
officers of the corporation.
Section 3. SUBORDINATE OFFICERS. The Board of Directors may appoint
such other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties
as shall be determined from time to time by the Board.
Section 4. COMPENSATION OF OFFICERS. The salaries of all officers
and agents of the corporation shall be fixed by the Board of Directors.
Section 5. TERM OF OFFICE; REMOVAL AND VACANCIES. The officers of
the corporation shall hold office until their successors are chosen and qualify
in their stead. Any
9
<PAGE> 10
officer elected or appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. If the
office of any officer or officers becomes vacant for any reason, the vacancy
shall be filled by the Board of Directors.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board of Directors and shall be Chairman of the
Executive and Long-Range Planning Committee. He shall be ex officio a member
of all other committees, and shall exercise and perform such other powers and
duties as may be prescribed by the Board of Directors or these By-Laws.
Section 7. PRESIDENT. The President shall be the Chief Executive
Officer of the Corporation. As such he shall, subject to the general control
of the Board of Directors, have general supervision, direction, and control of
the business and offices of the corporation. He shall preside at all meetings
of stockholders and, in the absence of the Chairman of the Board, at all
meetings of the Board of Directors. He shall be ex officio a member of all
committees and shall have the general powers and duties of management usually
vested in the office of the Chief Executive Officer, together with such other
powers and duties as may be prescribed by the Board of Directors or these
By-laws.
Section 8. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the
Board shall, in the absence of the Chairman of the Board and of the President,
preside at meetings of the stockholders and of the Board of Directors, and
shall have such other powers and duties as may be prescribed by the Board of
Directors.
Section 9. VICE-PRESIDENTS. In the absence of the President, the
Vice-Presidents in order of their rank as fixed by the Board of Directors, or
if not ranked, the Vice-President designated by the Board of Directors, shall
perform all the duties of the President
10
<PAGE> 11
except those specifically assigned to the Vice-Chairman by the Board of
Directors or these By-Laws, and when so acting shall have all the powers of and
be subject to all the restrictions upon the President. The Vice-Presidents
shall have such other duties as from time to time may be prescribed for them,
respectively, by the Board of Directors.
Section 10. SECRETARY. The Secretary shall attend all sessions of
the Board of Directors and all meetings of the stockholders and record all
votes and the minutes of all proceedings in a book to be kept for that purpose;
and shall perform like duties for the standing committees when required by the
Board of Directors. He shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or these
By-laws. He shall keep in safe custody the seal of the corporation, and when
authorized by the Board, affix the same to any instrument requiring it, and
when so affixed it shall be attested by his signature or by the signature of an
Assistant Secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing
by his signature.
Section 11. ASSISTANT SECRETARY. The Assistant Secretary or, if
there be more than one, the Assistant Secretaries in the order determined by
the Board of Directors, or if there be no such determination, the Assistant
Secretary designated by the Board of Directors, shall, in the absence or
disability of the Secretary, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 12. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys, and other valuable effects in
11
<PAGE> 12
the name and to the credit of the corporation, in such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements.
Section 13. ASSISTANT TREASURER. The Assistant Treasurer or, if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors, or if there be no such determination, the Assistant
Treasurer designated by the Board of Directors, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. CERTIFICATES AND UNCERTIFICATED STOCK. The shares of the
corporation shall be represented by certificates, provided that the Board of
Directors of the corporation may provide by resolution or resolutions that some
or all of any or all classes or series of its stock shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until such certificate is surrendered to the corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate signed by, or
in the name of the corporation by the Chairman of the Board or Vice-Chairman of
the Board of Directors, or the President or Vice-President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of such corporation representing the number of shares registered in certificate
form. Except as otherwise
12
<PAGE> 13
expressly provided by law, the rights and obligations of the holders of
uncertificated stock and the rights and obligations of the holders of
certificates representing stock of the same class and series shall be identical.
Section 2. SIGNATURES ON CERTIFICATES. Any or all the signatures on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as is he were such officer, transfer agent or registrar at the date
of issue.
Section 3. STATEMENT OF STOCK RIGHTS, PREFERENCES, PRIVILEGES. If
the corporation shall be authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualification, limitations or restrictions of
such preferences and/or rights shall be set forth in full or summarized on the
face or back of the certificate which the corporation shall issue to represent
such class or series of stock, provided that, except as otherwise provided in
Section 202 of the General Corporation Law of Delaware, in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the
13
<PAGE> 14
corporation shall send to the registered owner thereof a written notice
containing the information required to be set forth or stated on certificates
pursuant to this Section 3 or Sections 156, 202(a) or 218(a) of the General
Corporation Law of Delaware, or a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 4. LOST CERTIFICATES. The Board of Directors may direct a
new certificate of stock or uncertificated shares to be issued in place of any
certificate theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate of stock or uncertificated shares,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate of stock, or his legal representative, to give the corporation a
bond in such sum sufficient to indemnify the corporation against any claim that
may be made against the corporation on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate or
uncertificated shares.
Section 5. TRANSFER OF STOCK. Upon surrender to the corporation, or
the transfer agent of the corporation, of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 6. FIXING RECORD DATE. In order that the corporation may
determine
14
<PAGE> 15
the stockholders entitled to notice of or to vote any meeting of the
stockholders, or any adjournment thereof, or to express consent to corporate
action in writing without a meeting or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix a
record date which shall not be more than sixty (60) days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 7. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and accordingly shall not be bound to recognize any
equitable or other claim or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of the State of Delaware.
ARTICLE VI
GENERAL PROVISIONS
Sections 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
15
<PAGE> 16
Section 2. PAYMENT OF DIVIDENDS; DIRECTORS' DUTIES. Before payment
of any dividend there may be set aside out of any funds of the corporation
available for dividends such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the directors shall
think conducive to the interests of the corporation, and the directors may
abolish any such reserve.
Section 3. CHECKS. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers as the Board of
Directors may from time to time designate.
Section 4. FISCAL YEAR. The fiscal year of the corporation shall be
the calendar year unless otherwise fixed by resolution of the Board of
Directors.
Section 5. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware." Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
Section 6. MANNER OF GIVING NOTICE. Whenever, under the provisions
of the statutes or of the Certificate of Incorporation or of these By-Laws,
notice is required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, addressed to such director or stockholder, at his address as it appears
on the records of the corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall be deposited
in the United States mail. Notice to directors may also be given by telegram.
16
<PAGE> 17
Section 7. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
Section 8. ANNUAL STATEMENT. The Board of Directors shall present at
each annual meeting, and at any special meeting of the stockholders when called
for by vote of the stockholders, a full clear statement of the business and
condition of the corporation.
ARTICLE VII
INDEMNIFICATION
Section 1. RIGHT OF INDEMNIFICATION. To the maximum extent permitted
by the General Corporation Law of Delaware, the corporation shall indemnify
each director and officer and may indemnify each employee or agent of the
corporation against expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any action, suit or
proceeding arising by reason of the fact that any such person is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.
Section 2. ADVANCE OF COSTS. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding shall be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified by
the corporation
17
<PAGE> 18
as authorized in this Article. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate. The Board of Directors may, in the manner set
forth above, and upon approval of such director, officer, employee or agent of
the corporation, authorize the corporation's counsel to represent such person,
in any action, suit or proceeding, whether or not the corporation is a party to
such action, suit or proceeding.
Section 3. PROCEDURE FOR INDEMNIFICATION. Any indemnification or
advance of expenses hereunder shall be made promptly, and in any event within
sixty (60) days, upon the written request of the director or officer. The
right to indemnification or advances as granted by this Article shall be
enforceable by the director or officer in any court of competent jurisdiction,
if the corporation denies such request, in whole or in part, or if no
disposition thereof is made within sixty (60) days. The director's or
officer's expenses incurred in connection with successfully establishing his
right to indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of expenses
where the required undertaking, if any, has been received by the corporation)
that the claimant has not met the standard of conduct required by law, but the
failure of the corporation (including its Board of Directors, its independent
legal counsel, and its stockholders) to have made a determination as to whether
indemnification of the claimant is proper in the circumstances because he has
met the applicable standard of conduct shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
Section 4. OTHER RIGHTS. The indemnification and advancement of
expenses provided by or granted pursuant to this Article shall not be deemed
exclusive of any other rights
18
<PAGE> 19
to which a person seeking indemnification may be entitled under any law (common
or statutory), agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office. All rights to indemnification under
this Article shall be deemed to be a contract between the corporation and each
director and officer who serves or served in such capacity at any time while
this Article is in effect, and any repeal or modification of this Article or
relevant provisions of the Delaware General Corporation Law or any other
applicable law shall not in any way diminish any rights to indemnification of
such director or officer, or the obligations of the corporation arising
hereunder prior to such modification or repeal.
Section 5. INSURANCE. The corporation shall purchase and maintain
insurance on behalf of any person who is or was a director or officer against
any liability asserted against him and incurred by him or on his behalf in such
capacity or as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article,
provided that such insurance is determined by the Board of Directors to be
available on acceptable terms.
Section 6. DEFINITIONS. For purposes of this Article:
a) service as a director, officer, employee or agent of any
corporation, partnership, joint venture, trust or other enterprise controlled
by this corporation shall be deemed to be service at the request of this
corporation;
b) "the corporation" shall include in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation
19
<PAGE> 20
or merger which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued;
c) "other enterprise" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves services by,
such director, officer, employee or agent with respect to an employee benefit
plan, its participants, or beneficiaries;
d) the indemnification and advancement of expenses provided by, or
granted pursuant to this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person;
e) "expenses" shall include all costs, charges and attorneys' fees;
and
f) "action, suit or proceeding" shall include any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, and any appeal therefrom.
20
<PAGE> 21
Section 7. SAVINGS CLAUSE. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify each director, officer, employee
and agent of the corporation as to expenses, judgments, fines and amounts paid
in settlement with respect to any action, suit or proceeding to the full extent
permitted by any applicable portion of this Article that shall not have been
invalidated and to the full extent permitted by applicable law.
ARTICLE VIII
AMENDMENTS
Section 1. AMENDMENTS BY DIRECTORS OR STOCKHOLDERS. These By-Laws
may be altered, amended or repealed or new By-Laws may be adopted by the
stockholders or by the Board of Directors, when such power is conferred upon
the Board of Directors by the Certificate of Incorporation, at any regular
meeting of the stockholders or of the Board of Directors or at any special
meeting of the stockholders or of the Board of Directors if notice of such
alteration, amendment, repeal or adoption of new By-Laws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal By-Laws
is conferred upon the Board of Directors by the Certificate of Incorporation,
it shall not divest or limit the power of the stockholders to adopt, amend or
repeal By-Laws.
21
<PAGE> 1
EXHIBIT 10.3
AMENDMENT NUMBER ONE
TO CALMAT CO.
CREDIT AGREEMENT
DATED AS OF AUGUST 20, 1991
This Amendment to the Credit Agreement described below is entered into as of
October 16, 1992.
1. Preliminary Statement. Reference is made to a Credit
Agreement dated as of August 20, 1991 (which, as it may be amended, extended or
supplemented from time to time, is herein called the "Credit Agreement") among
CalMat Co. (the "Borrower"), the lenders which are a party thereto (the
"Lenders") and The First National Bank of Chicago, as agent for the Lenders
(the "Agent"). On August 26, 1992 the Borrower announced a charge of
$15,000,000 relating to certain real estate assets of the Borrower and a charge
of $10,000,000 relating to the implementation of Statement of Accounting
Standards No. 106 concerning post-retirement benefits other than pensions. The
Borrower has requested that the Lenders amend the Credit Agreement in certain
respects to take into account these charges.
2. Amendments. The Borrower, the Required Lenders and the Agent
hereby amend the Credit Agreement as follows:
A. Section 6.10(iii) of the Credit Agreement is hereby amended by
adding at the end thereof:
The after-tax amount of the charge taken by the
Borrower in August, 1992 relating to certain real estate
assets, in an after-tax amount not exceeding $9,000,000
together with the after-tax amount of the charge taken by the
Borrower in August, 1992 relating to implementation of
Statement of Accounting Standards No. 106 concerning
post-retirement benefits other than pensions, in an after-tax
amount not exceeding $6,000,000, shall be added back to
Consolidated Net Income, measured on a cumulative basis from
January 1, 1992, (but only to the extent previously deducted)
for the purpose of computing compliance with the permitted
amount of the restricted payments as described in this Section
6.10(iii).
B. Section 6.17 of the Credit Agreement is hereby amended by
adding at the end thereof:
The amount of the pre-tax charge taken by the
Borrower in August, 1992 relating to certain real estate
assets, in an amount not exceeding $15,000,000, shall be added
back to Consolidated Income Before Interest and Taxes (but
only to the extent previously deducted) for the fiscal quarter
ending September 30,
LWLA3\22499.1
<PAGE> 2
1992 in computing compliance with this Section for each four-
quarter period which includes such quarter.
C. Section 6.18 of the Credit Agreement is hereby amended by
adding at the end thereof:
The amount of the pre-tax charge taken by the
Borrower in August, 1992 relating to certain real estate
assets, in an amount not exceeding $15,000,000, shall be added
back to Consolidated Income Before Interest and Taxes (but
only to the extent previously deducted) for the fiscal quarter
ending September 30, 1992 in computing compliance with this
Section for each four-quarter period which includes such
quarter.
D. Section 6.19 of the Credit Agreement is hereby-amended by
adding at the end thereof:
The after-tax amount of the charge taken by the
Borrower in August, 1992 relating to implementation of
Statement of Accounting Standards No. 106 concerning
post-retirement benefits other than pensions, in an after-tax
amount not exceeding $6,000,000, shall be added to
Consolidated Tangible Net Worth (but only to the extent that
Consolidated Tangible Net Worth was reduced by such charge) in
computing compliance with this Section.
3. Representations. In order to induce the Lenders to enter into
this Amendment the Borrower represents and warrants that:
A. The representations and warranties set forth in
Section 5 of the Credit Agreement, as hereby amended, are true,
correct and complete on the date hereof as if made on and as of the
date hereof and that there exists no Default or Unmatured Default on
the date hereof;
B. The execution and delivery by the Borrower of this
Amendment have been duly authorized by proper corporate proceedings
and this Amendment, and the Credit Agreement, as amended by this
Amendment, constitute valid and binding obligations of the Borrower;
and
C. Neither the execution and delivery by the Borrower of
this Amendment, the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree
or award binding on the Borrower or the Borrower's articles of
incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Borrower is a party or is
subject, or by which it or its property, is bound, or conflict with or
constitute a default thereunder.
LWLA3\22499.1 Page 2
<PAGE> 3
4. Closing Conditions. This Amendment shall be effective upon
Receipt by the Agent from the Required Lenders and the Borrower of executed
counterparts of this Amendment or of telex or telecopied confirmation of their
execution and mailing of this Amendment.
5. Definitions. Unless the context shall otherwise require, all
terms used herein which are defined in the Credit Agreement shall have the
meanings assigned to them therein.
6. Counterparts. This Amendment may be executed by the parties
hereto individually, or in any combinations of the parties hereto in several
counterparts, all of which taken together shall constitute one and the same
amendment.
7. Ratification. Except as expressly amended hereby, all of the
representations, warranties, provisions, covenants, terms and conditions of the
Credit Agreement shall remain unaltered and in full force and effect and, as
amended hereby, the Credit Agreement is in all respects agreed to, ratified and
confirmed by the Borrower and the Lenders.
8. Expenses. The Borrower shall pay all expenses of the Agent
(including reasonable charges for in-house counsel) incurred by the Agent in
the preparation of this Amendment.
9. Reference to and Effect on the Loan Documents. Upon the
effectiveness of this Amendment, each reference in the Credit Agreement and the
other Loan Documents to "this Credit Agreement," "hereunder," "hereof,"
"herein" or words of like import referring to the Credit Agreement, and each
reference in the Notes and the other Loan Documents to the "Agreement,"
"thereunder," "thereof," or words of like import referring to the Agreement,
shall mean and be a reference to the Credit Agreement, as amended hereby.
CALMAT CO.
By:/s/ Frederick T. Sauer By:/s/ Ronald C. Hadfield
------------------------------- --------------------------
Its: Vice President Its: Executive VP/CFO
- Treasurer
THE FIRST NATIONAL BANK OF CHICAGO
Individually and as Agent
By:/s/ Gene Benke
-------------------------------
Its: Senior Vice President
LWLA3\22499.1 Page 3
<PAGE> 1
EXHIBIT 10.4
AMENDMENT NUMBER TWO
TO CALMAT CO.
CREDIT AGREEMENT
DATED AS OF August 20, 1991
This Amendment to the Credit Agreement described below is entered into as of
December 28, 1992.
1. Preliminary Statement. Reference is made to a Credit
Agreement dated as of August 20, 1991 (which, as it may be amended, extended or
supplemented from time to time, is herein called the "Credit Agreement") among
CalMat Co. (the "Borrower"), the lenders which are a party thereto (the
"Lenders") and The First National Bank of Chicago, as agent for the Lenders
(the "Agent"). In December, 1992 the Borrower announced a charge of
approximately $10,000,000 relating to certain of its operations in Arizona, San
Diego and Los Angeles. The Borrower has requested that the Lenders amend the
Credit Agreement in certain respects to take into account these charges. The
Borrower has also requested that the Lenders amend the Credit Agreement to
extend the Revolving Credit Termination Date by one year.
2. Amendments. The Borrower, the Required Lenders and the Agent
hereby amend the Credit Agreement as follows:
A. Article I of the Credit Agreement is hereby amending the
definition of Revolving Credit Termination Date to read:
"Revolving Credit Termination Date" means August 20,
1994.
B. Section 6.17 of the Credit Agreement is hereby amended by
adding at the end thereof:
In addition to the adjustment described in
the preceding sentence, the amount of the pre-tax
charge taken by the Borrower in December, 1992
relating to certain operations in Arizona, San Diego
and Los Angeles, in an amount not exceeding
$10,000,000, shall be added back to Consolidated Net
Income Before Interest and Taxes (but only to the
extent previously deducted) for the fiscal quarter
ending December 31, 1992 in computing compliance with
this Section for each four-quarter period which
includes such quarter.
C. Section 6.18 of the Credit Agreement is hereby amended by
adding at the end thereof:
In addition to the adjustment described in
the preceding sentence, the amount of the pre-tax
charge taken by the Borrower in December, 1992
LWLA3\22501.1
<PAGE> 2
relating to certain operations in Arizona, San Diego
and Los Angeles, in an amount not exceeding
$10,000,000, shall be added back to Consolidated
Income Before Interest and Taxes (but only to the
extent previously deducted) for the fiscal quarter
ending December 31, 1992 in computing compliance
with this Section for each four-quarter period which
includes such quarter.
D. Section 6.19 of the Credit Agreement is hereby amended in its
entirety to read as follows:
6.19. Tangible Net Worth. The Borrower will maintain
Consolidated Tangible Net Worth at all times equal to
(i) $280,000,000 plus (ii) 50% of Consolidated Net
Income for each fiscal quarter, commencing with the
fiscal quarter ending March 31, 1993, but without
deduction for any quarter in which there is a loss.
3. Representations. In order to induce the Lenders to enter into
this Amendment the Borrower represents and warrants that:
A. The representations and warranties set forth in
Section 5 of the Credit Agreement, as hereby amended, are true,
correct and complete on the date hereof as if made on and as of the
date hereof and that there exists no Default or Unmatured Default on
the date hereof;
B. The execution and delivery by the Borrower of this
Amendment have been duly authorized by proper corporate proceedings
and this Amendment, and the Credit Agreement, as amended by this
Amendment, constitute valid and binding obligations of the Borrower;
and
C. Neither the execution and delivery by the Borrower of
this Amendment, the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree
or award binding on the Borrower or the Borrower's articles of
incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Borrower is a party or is
subject, or by which it or its property, is bound, or conflict with or
constitute a default thereunder.
4. Closing Conditions. This Amendment shall be effective upon
Receipt by the Agent from the Required Lenders and the Borrower of executed
counterparts of this Amendment or of telex or telecopied confirmation of their
execution and mailing of this Amendment.
LWLA3\22501.1 2
<PAGE> 3
5. Definitions. Unless the context shall otherwise require, all
terms used herein which are defined in the Credit Agreement shall have the
meanings assigned to them therein.
6. Counterparts. This Amendment may be executed by the parties
hereto individually, or in any combinations of the parties hereto in several
counterparts, all of which taken together shall constitute one and the same
amendment.
7. Ratification. Except as expressly amended hereby, all of the
representations, warranties, provisions, covenants, terms and conditions of the
Credit Agreement shall remain unaltered and in full force and effect and, as
amended hereby, the Credit Agreement is in all respects agreed to, ratified and
confirmed by the Borrower and the Lenders.
8. Expenses. The Borrower shall pay all expenses of the Agent
(including reasonable charges for in-house counsel) incurred by the Agent in
the preparation of this Amendment.
9. Reference to and Effect on the Loan Documents. Upon the
effectiveness of this Amendment, each reference in the Credit Agreement and the
other Loan Documents to "this Credit Agreement," "hereunder," "hereof,"
"herein" or words of like import referring to the Credit Agreement, and each
reference in the Notes and the other Loan Documents to the "Agreement,"
"thereunder," "thereof," or words of like import referring to the Agreement,
shall mean and be a reference to the Credit Agreement, as amended hereby.
CALMAT CO.
By: /s/ Frederick T. Sauer
-----------------------------------
Its: Vice President-Treasurer
By: /s/ Ronald C. Hadfield
-----------------------------------
Its: Executive Vice-President
THE FIRST NATIONAL BANK OF CHICAGO
Individually and as Agent
By: /s/ L. Gene Benke
-----------------------------------
Its: Senior Vice President
LWLA3\22501.1
<PAGE> 1
EXHIBIT 10.5
WAIVER/AMENDMENT NUMBER THREE
TO CALMAT CO.
CREDIT AGREEMENT
DATED AS OF AUGUST 20, 1991
This Waiver to the Credit Agreement described below is entered into as
of February 5, 1993.
1. Preliminary Statement. Reference is made to a Credit
Agreement dated as of August 20, 1991 (which, as it may be amended, extended or
supplemented from time to time, is herein called the "Credit Agreement") among
CalMat Co. (the "Borrower"), the lenders which are a party thereto (the
"Lenders") and The First National Bank of Chicago, as agent for the Lenders
(the "Agent"). Section 6.18 of the Credit Agreement requires the Borrower to
meet a minimum fixed charge coverage ratio at the end of each fiscal quarter
for the four-quarter period then ended. The Borrower has informed the Agent
that it is in violation of Section 6.18 for the period ending December 31, 1992
and has requested that this violation be waived.
2. Waiver. The Required Lenders hereby waive until March 31,
1993 any violation of Section 6.18 of the Credit Agreement for the
four-quarter period ended December 31, 1992. On and after March 31, 1993 the
Borrower shall be required to be in compliance with Section 6.18 as written
without giving effect to this Waiver, including, without limitation, compliance
with the minimum fixed charge ratio required under section 6.18 for the
four-quarter period ending March 31, 1993.
3. Definitions. Unless the context shall otherwise require, all
terms used herein which are defined in the Credit Agreement shall have the
meanings assigned to them therein.
4. Expenses. The Borrower shall pay all expenses of the Agent
(including reasonable charges for in-house counsel) incurred by the Agent in
the preparation of this Amendment.
5. Reference to and Effect on the Loan Documents. Upon the
effectiveness hereof, each reference in the Credit Agreement and the other Loan
Documents to "this Credit Agreement", "hereunder", "hereof", "herein" or words
of like import referring to the Credit Agreement, and each reference in the
Notes and the other Loan Documents to the "Agreement", "thereunder", "thereof",
or words of like import referring to the Agreement, shall mean and be a
reference to the Credit Agreement, as modified hereby. Except as expressly
waived hereby, all of the representations, warranties, provisions, covenants,
terms and conditions of the Credit Agreement shall remain unaltered and in full
force and effect.
THE FIRST NATIONAL BANK OF CHICAGO
Individually and as Agent
By: /s/ Gene Benke
------------------------------------------
Its: Senior Vice President
----------------------------------
<PAGE> 1
EXHIBIT 10.6
AMENDMENT NUMBER FOUR
TO CALMAT CO.
CREDIT AGREEMENT
DATED AS OF AUGUST 20, 1991
This Amendment to the Credit Agreement described below is entered into
as of February 26, 1993.
1. Preliminary Statement. Reference is made to a Credit Agreement
dated as of August 20, 1991 (which, as it may be amended, extended or
supplemented from time to time, is herein called the "Credit Agreement") among
CalMat Co. (the "Borrower"), the lenders which are a party thereto (the
"Lenders") and The First National Bank of Chicago, as agent for the Lenders
(the "Agent"). The Borrower, the Lenders and the Agent wish to amend the Credit
Agreement as set forth below.
2. Amendments. The Borrower, the Lenders and the Agent hereby
amend the Credit Agreement as follows:
A. Article I of the Credit Agreement is hereby amended by inserting
the following definitions in alphabetical order:
"Applicable Eurodollar Rate Margin" is defined in Section 2.4(A).
"Applicable Fixed CD Rate Margin" is defined in Section 2.4(A).
"Consolidated Income Available for Interest Expense" for any
period means Consolidated Net Income plus the sum of (i)
Consolidated Taxes, (ii) Consolidated Interest Expense and (iii)
Off Balance Sheet Interest, but, in each case, only to the
extent deducted in arriving at Consolidated Net Income for the
period, all determined on a consolidated basis for the Borrower
and its Subsidiaries in accordance with Agreement Accounting
Principles.
"Consolidated Off Balance Sheet Interest Expense" means, for any
period, total interest, finance charges and similar amounts
payable in connection with Off Balance Sheet Obligations of the
Borrower and its Subsidiaries on a consolidated basis.
"Level I Status" exists if neither Level II Status or Level III
Status exists.
"Level II Status" exists if Level III Status does not exist and
the Borrower has long term debt ratings from both S & P and
Moody's and the lower of the two ratings is no lower than BBB+
from S & P or Baa1 from Moody's.
<PAGE> 2
"Level III Status" exists if the Borrower has long term debt ratings
from both S & P and Moody's and the lower of the two ratings is no
lower than A- from S & P or A3 from Moody's.
"Moody's" means Moody's Investors Service, Inc.
"S & P" means Standard and Poor's Corporation.
B. Article I of the Credit Agreement is hereby amended by amending the certain
definitions as follows:
Amend the definition of "Consolidated Income Available for Fixed
Charges" to read as follows:
"Consolidated Income Available for Fixed Charges" for any period means
Consolidated Income Available for Interest Expense plus Consolidated
Rentals, but only to the extent deducted in arriving at Consolidated
Net Income for the period, all determined on a consolidated basis for
the Borrower and its Subsidiaries in accordance with Agreement
Accounting Principles.
Delete the definition of "Consolidated Income Before Interest and
Taxes."
Amend the definition of "Consolidated Liabilities" to read as follows:
"Consolidated Liabilities" means all amounts appearing on the
liability side of the Borrower's balance sheet, except for amounts
appearing as shareholders' equity, determined on a consolidated basis
for the Borrower and its Subsidiaries in accordance with Agreement
Accounting Principles.
"Consolidated Taxes" for any period means the payment of or
provisions for taxes in respect of, or measured by, income or excess
profits for the period, all determined on a consolidated basis for the
Borrower and its Subsidiaries in accordance with Agreement Accounting
Principles.
Amend the definition of "Eurodollar Rate" by deleting "3/4% per
annum" and substituting "the Applicable Eurodollar Rate Margin."
Amend the definition of "Fixed CD Rate" by deleting "7/8% per annum"
and substituting "the Applicable Fixed CD Rate Margin."
Page 2
<PAGE> 3
C. Article II of the Credit Agreement is hereby amended by adding a new
Section 2.4(A) as follows:
Section 2.4(A). Applicable Rates. The Applicable Eurodollar Rate
Margin and Applicable Fixed CD Rate Margin shall be determined from
the following table:
<TABLE>
<CAPTION>
Level I Status Level II Status Level III Status
-------------- --------------- ----------------
<S> <C> <C> <C>
Applicable Eurodollar
Rate Margin 1.0% .75% .625%
Applicable Fixed CD
Rate Margin 1.125% .875% .75%
</TABLE>
The Applicable Eurodollar Rate Margin and Applicable Fixed CD Rate
Margin for any given day shall be the rate set forth in the table
above corresponding to the status which exists on that day.
D. Section 2.5 of the Credit Agreement is hereby amended by deleting "of .25%
per annum" and substituting "of .375% per annum."
E. Section 6.17 of the Credit Agreement is hereby amended to read as follows:
6.17. Interest Coverage Ratio. The Borrower will maintain a ratio of
(i) Consolidated Income Available for Interest Expense to (ii)
Consolidated Interest Expense plus Consolidated Off Balance Sheet
Interest Expense, as of the end of each fiscal quarter of the
Borrower, such that the weighted average of each such quarter - end
ratio for such fiscal quarter and the preceding three fiscal quarters
is at least:
<TABLE>
<CAPTION>
Period Ending Minimum Ratio
------------- -------------
<S> <C>
December 31, 1992 1.75:1:00
March 31, 1993 1.15:1.00
June 30, 1993 .90:1.00
September 30, 1993 .80:1.00
December 31, 1993 1.50:1.00
March 31, 1994 1.50:1.00
June 30, 1994 2.00:1.00
September 30, 1994 2.00:1.00
each quarter end thereafter 2.50:1.00.
</TABLE>
Page 3
<PAGE> 4
F. Section 6.18 of the Credit Agreement is hereby amended to read as follows:
Section 6.18. Fixed Change Coverage Ratio. The Borrower will
maintain a ratio of Consolidated Income Available for Fixed Charges to
Consolidated Fixed Charges, as of the end of each fiscal quarter of
the Borrower, such that the weighted average of each such quarter -
end ratio for such fiscal quarter and the preceding three fiscal
quarters is at least:
<TABLE>
<CAPTION>
Period Ending Minimum Ratio
------------- -------------
<S> <C>
December 31, 1992 1.50:1:00
March 31, 1993 1.00:1.00
June 30, 1993 .80:1.00
September 30, 1993 .70:1.00
December 31, 1993 1.00:1.00
March 31, 1994 1.00:1.00
June 30, 1994 1.50:1.00
September 30, 1994 1.50:1.00
each quarter end thereafter 1.75:1.00
</TABLE>
G. Section 6.19 of the Credit Agreement is hereby amended in its entirety to
read as follows:
6.19. Tangible Net Worth. The Borrower will maintain
Consolidated Tangible Net Worth at all times equal to (i)
$270,000,000 plus (ii) 50% of Consolidated Net Income for each
fiscal quarter during fiscal 1993 and 60% of Consolidated Net
Income for each fiscal quarter during each fiscal year thereafter,
but without deduction for any fiscal quarter in which there is a
loss.
H. Section 6.20 of the Credit Agreement is hereby amended in its entirety to
read as follows:
6.20. Leverage Ratio. The Borrower will maintain a ratio of
Consolidated Liabilities to Consolidated Tangible Net Worth of not
more than 1.0 to 1.0 at all times.
I. Article VI of the Credit Agreement is hereby amended by inserting a new
Section 6.23 as follows:
6.23. Off Balance Sheet Obligations. The Borrower will not, and
will not permit its Subsidiaries to, incur or remain liable upon
any Off Balance Sheet Obligations which constitute indebtedness
for borrowed money relating to assets which constitute "Assets
Held for Sale" on the Borrower's consolidated balance sheet in an
aggregate amount exceeding $20,000,000 at any one time outstanding
on a consolidated basis for the Borrower and its Subsidiaries.
Page 4
<PAGE> 5
J. Article VI of the Credit Agreement is hereby amended by inserting a new
Section 6.24 as follows:
6.24. Contingent Liabilities. The Borrower will not, and will
not permit its Subsidiaries to incur or remain liable upon any
Contingent Liabilities in an aggregate amount in excess of
$40,000,000 at any one time outstanding on a consolidated basis
for the Borrower and its Subsidiaries.
K. Section 9.9 is amended by adding the following at the end thereof:
The four-quarter weighted average ratio set forth in Section 6.17
shall be determined by adding, for the four-quarter period in
question, the aggregate sum of Consolidated Income Available for
Interest Expense and dividing by the four-quarter aggregate
Consolidated Interest Expense and Off Balance Sheet Interest
expense. The four-quarter weighted average ratio set forth in
Section 6.18 shall be determined by adding for the four quarter
period in question, the aggregate Consolidated Income Available
for Fixed Charges and dividing the four-quarter aggregate amount
of Consolidated Fixed Charges.
3. Representations. In order to induce the Lenders to enter into this
Amendment the Borrower represents and warrants that:
A. The representations and warranties set forth in Section 5 of the
Credit Agreement, as hereby amended, are true, correct and complete on the
date hereof as if made on and as of the date hereof and that there exists
no Default or Unmatured Default on the date hereof;
B. The execution and delivery by the Borrower of this Amendment have
been duly authorized by proper corporate proceedings and this Amendment,
and the Credit Agreement, as amended by this Amendment, constitute valid
and binding obligations of the Borrower; and
C. Neither the execution and delivery by the Borrower of this
Amendment, the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on
the Borrower or the Borrower's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Borrower
is a party or is subject, or by which it or its property, is bound, or
conflict with or constitute a default thereunder.
4. Amendment Fee. The Borrower will pay an amendment fee of $43,750 as a
condition to the effectiveness of this Amendment.
Page 5
<PAGE> 6
5. Closing Conditions. This Amendment shall be effective upon receipt by
the Agent from the Required Lenders and the Borrower of:
A. Executed counterparts of this Amendment or of telex or telecopied
confirmation of their execution and mailing of this Amendment.
B. The amendment fee described in Section 4 of this Amendment.
6. Effective Date. The change in rates provided in this Amendment shall
be effective and begin to accrue as of February 26, 1993 upon satisfaction of
the conditions to effectiveness set forth above.
7. Definitions. Unless the context shall otherwise require, all terms
used herein which are defined in the Credit Agreement shall have the meanings
assigned to them therein.
8. Counterparts. This Amendment may be executed by the parties hereto
individually, or in any combinations of the parties hereto in several
counterparts, all of which taken together shall constitute one and the same
amendment.
9. Ratification. Except as expressly amended hereby, all of the
representations, warranties, provisions, covenants, terms and conditions of the
Credit Agreement shall remain unaltered and in full force and effect and, as
amended hereby, the Credit Agreement is in all respects agreed to, ratified and
confirmed by the Borrower and the Lenders.
10. Expenses. The Borrower shall pay all expenses of the Agent (including
reasonable charges for in-house counsel) incurred by the Agent in the
preparation of this Amendment.
11. Reference to and Effect on the Loan Documents. Upon the effectiveness
of this Amendment, each reference in the Credit Agreement and the other Loan
Documents to "this Credit Agreement", "hereunder", "hereof", "herein" or words
of like import referring to the Credit Agreement, and each reference in the
Notes and the other Loan Documents to the "Agreement", "thereunder", "thereof",
or words of like import referring to the Agreement, shall mean and be a
reference to the Credit Agreement, as amended hereby.
CALMAT CO.
By: /s/ Frederick T. Sauer
-------------------------------------
Its: Vice President - Treasurer
---------------------------
By: /s/ Ronald Hadfield
-------------------------------------
Its: Executive Vice President
---------------------------
THE FIRST NATIONAL BANK OF CHICAGO
Individually and as Agent
By: /s/ L. Gene Benke
-------------------------------------
Its: Senior Vice President
---------------------------
Page 6
<PAGE> 1
EXHIBIT 10.8
FIRST AMENDMENT TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "First Amendment") is
made and dated as of January 14, 1993 among CALMAT CO., a Delaware corporation
(the "Borrower"), the lenders (the "Lenders") party to the Credit Agreement
referred to below and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(the "Agent") and amends that certain Credit Agreement dated as of June 30,
1992 among Borrower, the Lenders and the Agent (the "Agreement").
RECITAL
The Borrower has requested the Lenders and the Agent, and the Lenders
and Agent are willing, to amend the Agreement on the terms and conditions set
forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Terms. All terms used herein shall have the same meanings as in
the Agreement unless otherwise defined herein. All references to the Agreement
shall mean the Agreement as hereby amended.
2. Amendments. The Borrower, the Lenders and the Agent hereby
agree to amend the Agreement as follows:
2.1 The definition of "Consolidated Net Income" in Section 1.1 of
the Agreement is amended by adding the following sentence at the end thereof:
"For purposes of computing compliance with Sections 6.6B and 6.6D,
Consolidated Net Income shall be increased (i) by $6,000,000 for the
fiscal quarter ending March 31, 1992 to offset the effect of the
Borrower taking a charge of such amount against Consolidated Net
Income in such quarter in connection with the Borrower implementing
the Financial Accounting Standard Board's Statement of Financial
Accounting Standards No. 106, (ii) by $15,000,000 for the fiscal
quarter ending September 30, 1992 to offset the effect of Borrower
taking a charge of such amount against Consolidated Net Income in
such quarter in connection
- 1 -
<PAGE> 2
with writing off the excess of book value over the estimated net sale
proceeds of certain properties held for sale, and (iii) by $9,900,000
for the fiscal quarter ending December 31, 1992 to offset the effect
of Borrower taking a non-cash charge of such amount against
Consolidated Net Income in such quarter in connection with writing
off excess plant and equipment and certain accumulated costs."
2.2 Section 2.5A(i) of the Agreement is amended by deleting "two
Business Days" and inserting "one Business Day" in lieu thereof.
2.3 Section 2.5B of the Agreement is amended by inserting a new
subsection (iii) immediately after subsection (ii) as follows:
"(iii) Prepayments of Loans. If the Borrower or any of its
Subsidiaries shall at any time or from time to time make, or agree to
make, any Asset Sales of any property listed on Schedule H-1 hereto
under "Net Assets Held for Sale as of September 30, 1992," then (A)
the Borrower shall promptly notify the Agent thereof (including the
amount of the estimated Net Cash Proceeds of Asset Sales (excluding
deductions of the type described in clause (ii) thereof) to be
received by the Borrower in respect of such Asset Sale) and (B) on
the date that the Borrower or its Subsidiary receives any of such Net
Cash Proceeds of Asset Sales from such Asset Sale (the "Required
Prepayment Date"), the Borrower shall prepay the Loans in an
aggregate amount equal to such Net Cash Proceeds of Asset Sales
(excluding deductions of the type described in clause (ii) thereof);
provided, however, that if a prepayment on such Required Prepayment
Date would require the Borrower to prepay any Eurodollar Rate Loan,
CD Rate Loan or Bid Loan prior to the end of the Interest Period
therefor, then Borrower may instead prepay such Loans on the last day
of such Interest Periods to the extent such Interest Periods end
within 30 days of the Required Prepayment Date. To the extent any
Interest Periods for such Loans end more than 30 days after the
Required Prepayment Date, Borrower must prepay such Loans on the
Required Prepayment Date."
2.4 Section 5.1(iii) of the Agreement is amended by deleting "and"
before the (b) inserting a new clause (c) at the end thereof as follows:
"and (c) an accounts receivable aging report in form and substance
satisfactory to the Requisite Lenders;"
- 2 -
<PAGE> 3
2.5 Section 6.6A of the Agreement is amended and restated in
entirety as follows:
"A. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrower will
not permit Consolidated Tangible Net Worth on the last day of any
fiscal quarter of the Borrower to be less than the sum of (i)
$280,000,000 plus (ii) an amount equal to fifty percent (50%) of
positive Consolidated Net Income, measured on a cumulative basis from
January 1, 1992 through and including December 31, 1993 plus (iii)
commencing on January 1, 1994, in addition to the amounts added
pursuant to clauses (i) and (ii) above, an amount equal to sixty
percent (60%) of positive Consolidated Net Income, measured on a
cumulative basis from January 1, 1994.
2.6 Section 6.6C of the Agreement is amended and restated in
entirety as follows:
"C. MAXIMUM CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED
TANGIBLE NET WORTH RATIO. The Borrower will not permit the ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth on
the last day of each fiscal quarter of the Borrower to exceed 0.95 to
1.00.
2.7 Section 6.6D of the Agreement is amended and restated in
entirety as follows, effective as of June 30, 1992:
"D. MINIMUM CONSOLIDATED INTEREST COVERAGE RATIO. The Borrower
will not permit the ratio of Consolidated EBIT to Consolidated
Interest Expense for the four consecutive fiscal quarters ending on
the last day of any fiscal quarter of the Borrower to be less than
(i) 2.50 to 1.00 for the fiscal quarters ending June 30, 1992,
September 30, 1992 and December 31, 1992 and for fiscal quarters
ending in 1993 and (ii) 2.75 to 1.00 thereafter."
2.8 The Agreement is amended by inserting a new Schedule H-1 in the
form of Schedule H-1 hereto.
3. Representations and Warranties. Borrower represents and
warrants to the Lenders and Agent:
3.1 Authorization. The execution, delivery and performance of this
First Amendment have been duly authorized by all necessary corporate action by
the Borrower and has been duly executed and delivered by the Borrower.
- 3 -
<PAGE> 4
3.2 Binding Obligation. This First Amendment is the legally valid
and binding obligation of Borrower, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors
rights generally or by equitable principals relating to enforceability.
3.3 No Legal Obstacle to Agreement. Neither the execution of this
First Amendment, the making by the Borrower of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Borrower is a party, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to Borrower, or result in the
creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Borrower. No approval or
authorization of any governmental authority is required to permit the
execution, delivery or performance by the Borrower of this First Amendment, the
Agreement, or the transactions contemplated hereby or thereby, or the making of
any borrowing by Borrower under the Agreement.
3.4 Incorporation of Certain Representations. The representations
and warranties set forth in Section 4 of the Agreement are true and correct in
all respects on and as of the date hereof as though made on and as of the date
hereof.
3.5 Default. No Event of Default under the Agreement has occurred
and is continuing or would result from this First Amendment.
4. Conditions, Effectiveness. The effectiveness of this First
Amendment shall be subject to the compliance by the Borrower with its
agreements herein contained, and to the delivery of the following to the Agent
in form and substance satisfactory to the Requisite Lenders:
4.1 Authorized Signatories. A certificate, signed by the Secretary
or an Assistant Secretary of Borrower and dated the date of this First
Amendment, as to the incumbency of the person or persons authorized to execute
and deliver this First Amendment and any instrument or agreement required
hereunder on behalf of Borrower.
4.2 Amendment Fee. An amendment fee equal to 0.125% of the
Commitments, for distribution to each Bank in accordance with its Pro Rata
Share.
4.3 Other Evidence. Such other evidence with respect to the
Borrower or any other person as the Agent or any Lender
- 4 -
<PAGE> 5
may reasonably request to establish the consummation of the transactions
contemplated hereby, the taking of all corporate action in connection with this
First Amendment and the Agreement and the compliance with the conditions set
forth herein.
5. Miscellaneous.
5.1 Corporate Resolution. No later than January 29, 1993, the
Borrower shall deliver to the Agent a copy of a resolution or resolutions
passed by the Board of Directors of the Borrower, certified by the Secretary or
an Assistant Secretary of the Borrower as being in full force and effect on
such date, authorizing or ratifying the amendments to the Agreement herein
provided for and the execution, delivery and performance of this First
Amendment and any note or other instrument or agreement required hereunder.
5.2 Effectiveness of the Agreement. Except as hereby amended, the
Agreement shall remain in full force and effect.
5.3 Waivers. This First Amendment is specific in time and in intent
and does not constitute, nor should it be construed as, a waiver of any other
right, power or privilege under the Agreement, or under any agreement,
contract, indenture, document or instrument mentioned in the Agreement; nor
does it preclude any exercise thereof or the exercise of any other right, power
or privilege, nor shall any future waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture, document or
instrument mentioned in the Agreement, constitute a waiver of any other default
of the same or of any other term or provision.
5.4 Counterparts. This First Amendment may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This First Amendment shall
not become effective until the Borrower, the Lenders and the Agent shall have
signed a copy hereof, whether the same or counterparts, and the same shall have
been delivered to the Agent.
5.5 Jurisdiction. This First Amendment, and any instrument or
agreement required hereunder, shall be governed by
- 5 -
<PAGE> 6
and construed under the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed and delivered as of the date first written above.
CALMAT CO., a Delaware corporation
By: /s/ Ronald C. Hadfield
------------------------------------
Ronald C.Hadfield
Executive Vice President, CFO
By: /s/ Frederick T. Sauer
------------------------------------
Frederick T. Sauer
Vice President-Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By: /s/ Jouni Korhonen
------------------------------------
Jouni Korhonen
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Lender
By: /s/ Valerie Milner
------------------------------------
Valerie Milner
Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Dwight L. Bush
------------------------------------
Name: Dwight L. Bush
----------------------------
Title: Managing Director
----------------------------
CHEMICAL BANK
By: /s/ Alan J. Gordon
------------------------------------
Name: Alan J. Gordon
---------------------------
Title: Managing Director
---------------------------
- 6 -
<PAGE> 7
THE VALLEY NATIONAL BANK OF ARIZONA
By: /s/ Robert W. Bouve
------------------------------------
Name: Robert W. Bouve
----------------------------
Title: Senior Vice President
----------------------------
- 7 -
<PAGE> 8
SCHEDULE H-1
NET ASSETS HELD FOR SALE AS OF SEPTEMBER 30, 1992
<TABLE>
<CAPTION>
Property Sq. Ft. Percent Net Bk Cash Flow Secured Unsecured Total
and Type (Actual) Occupied Value 1993 Budget Debt Debt Debt
- -------- -------- -------- ----- ----------- ------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Rio Vista
Tower (Office) 210,636 78.3% $25,357 $811 $ 0 $17,000 $17,000
2. Carrol Canyon
Plaza (Office) 47,230 70.0% 3,599 170 0 0 0
3. Beyer Pacific
Building
(Industrial) 41,940 50.0% 1,919 (96) 0 0 0
-------- -------- ------- ----------- ------- --------- --------
299,806 $30,875 $885 $ 0 $17,000 $17,000
</TABLE>
<TABLE>
<S> <C>
Property & Improvements $ 30,875
Other Assets 920
--------
Total Assets $ 31,795
--------
Notes & Bonds Payable 17,000
Other Liabilities 12,210
--------
Total Liabilities $ 29,210
--------
Net Assets Held for Sale $ 2,585
========
</TABLE>
- 7 -
<PAGE> 1
EXHIBIT 10.9
[BANK OF AMERICA LOGO]
February 5, 1993
CalMat Co.
P.O. Box 2950
3200 San Fernando Road
Los Angeles, CA 90065
Attention: Frederick T. Sauer
Vice President & Treasurer
Re: Credit Agreement dated as of June 30, 1992, as amended
Gentlemen:
We refer to the Credit Agreement dated as of June 30, 1992, as
amended, (the "Credit Agreement") among CalMat Co. (the "Borrower"), the banks
parties thereto (the "Lenders"), and Bank of America National Trust and Savings
Association, as agent (the "Agent"). Capitalized terms not otherwise defined
herein shall have the meanings specified in the Credit Agreement.
You notified the Agent that the Borrower will be in default under
Sections 6.6B and 6.6D of the Credit Agreement. The Borrower has requested the
Lenders and the Agent, and the Lenders and Agent are willing, on the terms and
conditions set forth below, to waive the foregoing defaults and to also
temporarily modify Section 6.1(v) of the Credit Agreement.
1. Subject to paragraph 4 hereof, the Lenders and the Agent agree
to waive, through and including March 30, 1993, any default under Sections 6.6B
and 6.6D of the Credit Agreement for the period ending December 31, 1992, and
further agree to temporarily modify Section 6.1(v) of the Credit Agreement
through and including March 30, 1993 by increasing the limit on the aggregate
principal amount of Indebtedness which has any scheduled payment on or prior to
the Maturity Date from $42,500,000 to $47,500,000.
2. As an inducement to the Agent and the Lenders to grant these
waivers and make this modification, the Company hereby represents and warrants
that: (a) except as waived
Bank of America National Trust and Savings Association
<PAGE> 2
CalMat Co.
February 5, 1993
Page 2
herein, the representations and warranties set forth in Section 4 of the
Agreement are true and correct in all respects on and as of the date hereof as
though made on and as of the date hereof; (b) except as waived herein, no
Potential Event of Default or Event of Default exists; (c) no default or event
of default exists under the Credit Agreement dated as of August 1, 1988, as
amended, among the Borrower, the banks listed therein and Morgan Guaranty Trust
Company of New York, as agent (the "Morgan Agreement"); and (d) no default or
event of default exists under the Credit Agreement dated as of August 20, 1991,
as amended, among the Borrower, the lenders listed therein and The First
National Bank of Chicago, as agent (the "First Chicago Agreement"). The
effectiveness of these waivers and modification is expressly conditioned upon
the foregoing being true and correct.
3. If a default or event of default exists under the Morgan
Agreement or the First Chicago Agreement, the effectiveness of these waivers
and modification is expressly further conditioned upon the Agent receiving
evidence satisfactory to it that any such default or event of default
thereunder has been cured or waived through at least March 30, 1993.
4. If a default or event of default occurs under the Morgan
Agreement or the First Chicago Agreement after the date hereof, the waivers and
modification made hereunder shall thereupon expire. The Company agrees to give
immediate notice to Agent of any such default or event of default.
5. The waivers and modification set forth in this letter are
specific in time and in intent and do not constitute, nor should they be
construed as constituting, a waiver or modification of any other term of, or
right, power or privilege under, the Loan Documents or under any agreement,
contract, indenture, document or instrument mentioned in the Loan Documents.
Such waivers and modification do not preclude any or further exercise of any
other right, power or privilege under any Loan Document or under any agreement,
contract, indenture, document or instrument mentioned therein, including
without limitation the taking of any action based upon an Event of Default
occurring under Section 7.4 of the Credit Agreement, whether or not based upon
a default under any provisions similar
<PAGE> 3
CalMat Co.
February 5, 1993
Page 3
to those waived or modified herein which are contained in other agreements
relating to Indebtedness or Contingent Obligations.
6. Upon the expiration of these waivers and modification, the
Lenders and Agent may exercise any of their rights, remedies, powers or
privileges under the Credit Agreement with respect to the defaults waived
herein or the section modified hereby, including without limitation, declaring
an Event of Default based upon such defaults and/or based upon the Borrower's
failure to thereafter be in compliance with Section 6.1(v) as it existed prior
to the modification set forth herein.
If the foregoing accurately sets forth our agreement please sign and
return a copy of this letter where indicated below.
Very truly yours,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Agent
By: /s/ Jouni Korhonen
----------------------
Jouni Korhonen
Vice President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as a Bank
By: /s/ Valerie Milner
----------------------
Valerie Milner
Vice President
(Signatures continue)
<PAGE> 4
CalMat Co.
February 5, 1993
Page 4
THE VALLEY NATIONAL BANK OF ARIZONA
By: /s/ John Abbott
----------------------
Name: JOHN ABBOTT
----------------------
Title: VICE PRESIDENT
----------------------
CHEMICAL BANK
By: /s/ Alan J. Cyron
----------------------
Name: ALAN J. CYRON
----------------------
Title: MANAGING DIRECTOR
----------------------
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Alexander S. Rapetski II
--------------------------
Name: ALEXANDER S. RAPETSKI II
--------------------------
Title: VICE PRESIDENT
--------------------------
AGREED AND ACCEPTED:
CALMAT CO.
By: /s/ Ronald C. Hadfield
----------------------
Ronald C. Hadfield, Exec VP/Fin & Admin
Date:
-------------------
By: /s/ Frederick T. Sauer
----------------------
Frederick T. Sauer, VP & Treasurer
<PAGE> 1
EXHIBIT 10.10
SECOND AMENDMENT TO
CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second Amendment") is
made and dated as of February 26, 1993 among CALMAT CO., a Delaware corporation
(the "Borrower"), the lenders (the "Lenders") party to the Credit Agreement
referred to below and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(the "Agent"), and amends that certain Credit Agreement dated as of June 30,
1992 among Borrower, the Lenders and the Agent, as amended by a First Amendment
to Credit Agreement dated as of January 14, 1993 (as amended, the "Agreement").
RECITAL
The Borrower has requested the Lenders and the Agent, and the Lenders
and Agent are willing, to amend the Agreement on the terms and conditions set
forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Terms. All terms used herein shall have the same meanings as
in the Agreement unless otherwise defined herein. All references to the
Agreement shall mean the Agreement as hereby amended.
2. Amendments. The Borrower, the Lenders and the Agent hereby
agree to amend the Agreement as follows:
2.1 Section 1.1 of the Agreement is amended by inserting a new
definition of "Annual Consolidated Capital Expenditures Limit" in proper
alphabetical order as follows:
"ANNUAL CONSOLIDATED CAPITAL EXPENDITURES LIMIT" means the
limit on Consolidated Capital Expenditures set forth in subsection
6.6E, as it may be increased from time to time pursuant to such
subsection."
2.2 Section 2.6B of the Agreement is amended by deleting "0.875 of 1%
per annum" and inserting "1.125 of 1% per annum" in lieu thereof.
- 1 -
<PAGE> 2
2.3 Section 2.6C of the Agreement is amended by deleting "0.75 of 1%
per annum" and inserting "1% per annum" in lieu thereof.
2.4 Section 2.6D of the Agreement is amended and restated in its
entirety as follows:
"D. PRICING ADJUSTMENTS. Upon delivery by the Borrower to
the Agent and Lenders of evidence, in form and substance satisfactory
to the Agent, that the Borrower has obtained both a Baa2 or higher
rating from Moody's Investors Service Inc. ("Moody's") and a BBB or
higher rating from Standard & Poor's Corporation ("S&P"), the
interest rates set forth in subsections 2.6B and 2.6C shall be reduced
by .250 of 1%, effective as of the first Business Day of the
succeeding month; provided, however, that if the Borrower has obtained
both an A3 or higher rating from Moody's and an A- or higher rating
from S&P, the interest rates set forth in subsections 2.6B and 2.6C
shall be reduced by 0.375 of 1% per anum, effective as of the first
Business Day of the succeeding month; provided, further, that if the
Borrower thereafter fails to maintain any one of the foregoing
required ratings, as applicable, the rates of interest on the Loans
shall automatically revert, as applicable, to the interest rate
indicated by the ratings it does maintain or the interest rate set
forth in subsections 2.6B and 2.6C effective as of the first day of
the succeeding month."
2.5 The proviso to Section 6.1(v) of the Agreement is amended by
deleting "$42,500,000" and inserting "$47,500,000" in lieu thereof.
2.6 Clause (b) in the proviso to Section 6.3(iii) of the Agreement is
amended and restated in its entirety as follows:
"(b) the sum of (x) the aggregate consideration paid (including,
without limitation, liabilities incurred, but excluding any
consideration paid in the form of stock) for acquisitions permitted
pursuant to subsection 6.7(i), plus (y) the aggregate amount of all
other Investments permitted pursuant to this subsection 6.3(iii) plus
(z) the aggregate amount of all Consolidated Capital Expenditures
permitted pursuant to subsection 6.6E made in any fiscal year shall
not exceed in the aggregate the Annual Consolidated Capital
Expenditures Limit."
- 2 -
<PAGE> 3
2.7 Section 6.6 of the Agreement is amended and restated in entirety
as follows:
"A. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrower
will not permit Consolidated Tangible Net Worth on the last day of any
fiscal quarter of the Borrower to be less than the sum of (i)
$270,000,000 plus (ii) an amount equal to fifty percent (50%) of
positive Consolidated Net Income, measured on a cumulative basis from
January 1, 1992 through and including December 31, 1993 plus (iii)
commencing on January 1, 1994, in addition to the amounts added
pursuant to clauses (i) and (ii) above, an amount equal to sixty
percent (60%) of positive Consolidated Net Income, measured on a
cumulative basis from January 1, 1994.
"B. MINIMUM CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The
Borrower will not permit the ratio of Consolidated Income Available
For Consolidated Fixed Charges to Consolidated Fixed Charges for the
four consecutive fiscal quarters ending on the last day of any fiscal
quarter of the Borrower to be less than the ratio for each period
indicated below:
<TABLE>
<CAPTION>
"Four fiscal Minimum
quarters ending Ratio
--------------- -----
<S> <C>
December 31, 1992 1.50:1.00
March 31, 1993 1.00:1.00
June 30, 1993 0.80:1.00
September 30, 1993 0.70:1.00
December 31, 1993 1.00:1.00
March 31, 1994 1.00:1.00
June 30, 1994 1.50:1.00
September 30, 1994 1.50:1.00
December 31, 1994 and
thereafter 1.75:1.00
</TABLE>
"C. MAXIMUM CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED
TANGIBLE NET WORTH RATIO. The Borrower will not permit the ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth on
the last day of each fiscal quarter of the Borrower to exceed 1.00 to
1.00.
"D. MINIMUM CONSOLIDATED INTEREST COVERAGE RATIO. The
Borrower will not permit the ratio of Consolidated EBIT to
Consolidated Interest Expense for the four consecutive fiscal quarters
ending on the last day of
- 3 -
<PAGE> 4
any fiscal quarter of the Borrower to be less than the ratio for each
period indicated below:
<TABLE>
<CAPTION>
"Four fiscal Minimum
quarters ending Ratio
--------------- -----
<S> <C>
December 31, 1992 1.75:1.00
March 31, 1993 1.15:1.00
June 30, 1993 0.90:1.00
September 30, 1993 0.80:1.00
December 31, 1993 1.50:1.00
March 31, 1994 1.50:1.00
June 30, 1994 2.00:1.00
September 30, 1994 2.00:1.00
December 31, 1994 and
thereafter 2.50:1.00"
</TABLE>
"E. MAXIMUM CAPITAL EXPENDITURES. The Borrower will not
permit (i) Consolidated Capital Expenditures plus (ii) the aggregate
amount of all other Investments permitted pursuant to subsection
6.3(ii) plus (iii) the aggregate consideration paid (including,
without limitation, liabilities incurred, but excluding any
consideration paid in the form of stock) for any acquisition permitted
pursuant to subsection 6.7(i) to exceed $30,000,000 in the fiscal year
1993 and $75,000,000 per fiscal year thereafter (the "Annual
Consolidated Capital Expenditures Limit"); provided, however, that the
Annual Consolidated Capital Expenditures Limit shall be permanently
increased as set forth below, by an maximum aggregate amount of
$45,000,000 per fiscal year, if the ratio of Consolidated Income
Available For Consolidated Fixed Charges (excluding, for purposes of
this subsection 6.6E only, gains on sale of real estate and Net Assets
Held For Sale, as presented in Borrower's financial statements as
presented historically) to Consolidated Fixed Charges, computed on a
trailing four- quarter basis, is 2.00 to 1.00 or more at the end of
the following number of consecutive fiscal quarters:
<TABLE>
<CAPTION>
Number of Increase in Annual
Consecutive Fiscal Consolidated Capital
Quarters Expenditure Limit
------------------ --------------------
<S> <C>
2* $15,000,000
3 15,000,000
4 15,000,000
</TABLE>
-------------------
"* Excluding any fiscal quarters used in computing any fiscal period
of three or four consecutive fiscal quarters.
- 4 -
<PAGE> 5
"Any such increase shall be effective as of the first Business Day of
the succeeding fiscal quarter."
2.8 Clause (c) in the proviso to Section 6.7(i) of the Agreement is
amended and restated in its entirety as follows:
"(c) the sum of (x) the aggregate consideration paid (including,
without limitation, liabilities incurred, but excluding any
consideration paid in the form of stock) for acquisitions permitted
pursuant to this subsection 6.7(i), plus (y) the aggregate amount of
all other Investments permitted pursuant to subseciton 6.3(iii) plus
(z) the aggregate amount of all Consolidated Capital Expenditures
permitted pursuant to subsection 6.6E made in any fiscal year shall
not exceed in the aggregate the Annual Consolidated Capital
Expenditures Limit."
3. Representations and Warranties. Borrower represents and warrants
to the Lenders and Agent:
3.1 Authorization. The execution, delivery and performance of this
Second Amendment have been duly authorized by all necessary corporate action by
the Borrower and has been duly executed and delivered by the Borrower.
3.2 Binding Obligation. This Second Amendment is the legally valid
and binding obligation of Borrower, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors
rights generally or by equitable principals relating to enforceability.
3.3 No Legal Obstacle to Agreement. Neither the execution of this
Second Amendment, the making by the Borrower of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Borrower is a party, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to Borrower, or result in the
creation under any agreement or instrument of any security interest, lien,
charge, or encumbrance upon any of the assets of the Borrower. No approval or
authorization of any governmental authority is required to permit the
execution, delivery or performance by the Borrower of this Second Amendment,
the Agreement, or the transactions contemplated hereby or thereby, or the
making of any borrowing by Borrower under the Agreement.
- 5 -
<PAGE> 6
3.4 Incorporation of Certain Representations. The representations
and warranties set forth in Section 4 of the Agreement are true and correct in
all respects on and as of the date hereof as though made on and as of the date
hereof.
3.5 Default. No Event of Default under the Agreement has occurred
and is continuing or would result from this Second Amendment.
4. Conditions, Effectiveness. The effectiveness of this Second
Amendment shall be subject to the compliance by the Borrower with its
agreements herein contained, and to the delivery on the effective date hereof
of the following to the Agent in form and substance satisfactory to the Agent:
4.1 Corporate Resolution. The Borrower shall deliver to the Agent a
copy of a standing resolution or resolutions passed by the Board of Directors
of the Borrower, certified by the Secretary or an Assistant Secretary of the
Borrower as being in full force and effect on such date, authorizing or
ratifying the amendments to the Agreement herein provided for and the
execution, delivery and performance of this Second Amendment and any note or
other instrument or agreement required hereunder.
4.2 Authorized Signatories. A certificate, signed by the Secretary
or an Assistant Secretary of Borrower and dated the date of this Second
Amendment, as to the incumbency of the person or persons authorized to execute
and deliver this Second Amendment and any instrument or agreement required
hereunder on behalf of Borrower.
4.3 Amendment Fee. An amendment fee equal to (a) 0.250% of the
Commitments, for distribution to each Lender in accordance with its Pro Rata
Share plus, (b) if this Second Amendment is approved by the Requisite Lenders
no later than February 26, 1993, an additional 0.125% of the Commitments, for
distribution to each Lender in accordance with its Pro Rata Share.
4.4 Advisory Fee. An advisory fee payable to BofA for its own
account in an amount set forth in a letter agreement dated February 23, 1993
between the Borrower and BofA.
4.5 Amendment to First Chicago Agreement. The Credit Agreement dated
as of August 20, 1991, as amended, among the Borrower, the lenders listed
therein and The First National Bank of Chicago, as agent (the "First Chicago
Agreement") shall have been amended, or concurrently herewith is being amended,
such that any Defaults or Events of Default (as defined therein) that may exist
thereunder, or would exist thereunder upon the expiration or termination of any
existing waivers, forbearances
- 6 -
<PAGE> 7
or amendments, are permanently cured or waived, all in form and substance
satisfactory to the Requisite Lenders.
4.6 Other Evidence. Such other evidence with respect to the Borrower
or any other person as the Agent or any Lender may reasonably request to
establish the consummation of the transactions contemplated hereby, the taking
of all corporate action in connection with this Second Amendment and the
Agreement and the compliance with the conditions set forth herein.
5. Miscellaneous.
5.1 Effectiveness of the Agreement. Except as hereby amended, the
Agreement shall remain in full force and effect.
5.2 Waivers. This Second Amendment is specific in time and in intent
and does not constitute, nor should it be construed as, a waiver of any other
right, power or privilege under the Agreement, or under any agreement,
contract, indenture, document or instrument mentioned in the Agreement; nor
does it preclude any exercise thereof or the exercise of any other right, power
or privilege, nor shall any future waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture, document or
instrument mentioned in the Agreement, constitute a waiver of any other default
of the same or of any other term or provision.
5.3 Counterparts. This Second Amendment may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This Second Amendment shall
not become effective until the Borrower, the Requisite Lenders and the Agent
shall have signed a copy hereof, whether the same or counterparts, and the same
shall have been delivered to the Agent.
5.4 Jurisdiction. This Second Amendment, and any instrument or
agreement required hereunder, shall be governed by
- 7 -
<PAGE> 8
and construed under the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed and delivered as of the date first written above.
CALMAT CO., a Delaware corporation
By: /s/ Ronald C. Hadfield
-----------------------------------
Ronald C. Hadfield
Title: EVP - Chief Financial Officer
--------------------------------
By: /s/ Frederick T. Sauer
-----------------------------------
Frederick T. Sauer
Title: Vice President-Treasurer
--------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By: /s/ Jouni Korhonen
-----------------------------------
Jouni Korhonen
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Lender
By: /s/ Valerie Milner
-----------------------------------
Valerie Milner
Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Dwight L. Bush
-----------------------------------
Name: Dwight L. Bush
------------------------------
Title: Managing Director
-----------------------------
CHEMICAL BANK
By: /s/ Jeffrey C. Howe
-----------------------------------
Name: Jeffrey C. Howe
------------------------------
Title: Vice President
-----------------------------
(Signatures continue)
- 8 -
<PAGE> 9
THE VALLEY NATIONAL BANK OF ARIZONA
By: /s/ John Abbott
-----------------------------------
Name: JOHN ABBOTT
------------------------------
Title: VICE PRESIDENT
-----------------------------
- 9 -
<PAGE> 1
EXHIBIT 10.11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALMAT CO.
$35,000,000
-----------------------
NOTE PURCHASE AGREEMENT
-----------------------
DATED AS OF JULY 23, 1993
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. ISSUE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Sale of Notes; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Opinion of Purchaser's Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Opinion of Company's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Representations and Warranties; No
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Purchase Permitted By Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Documents and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Completion of Audit and Investigation . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Payment of Fees and Expenses of Your
Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Delivery of Letter Regarding ERISA
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Other Corporate Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Change of Control Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Notice of Prepayment and Other Notices . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 General Provisions Concerning Prepayments . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Surrender of Notes; Notation Thereon . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 Interest After Date Fixed for Prepayment . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Organization, Authority and Good
Standing; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Authorization of Agreement, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
A. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
B. No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
C. Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
D. Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 No Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
4.7 Leases and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.8 Outstanding Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 No Burdensome Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.11 Compliance with Other Instruments; Laws . . . . . . . . . . . . . . . . . . . . . . . . 11
4.12 Trading with the Enemy Act, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.14 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.15 Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.16 Regulation G; Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.17 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.18 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.19 Patents, Trademarks and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.20 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.21 Offering of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5. REPRESENTATIONS AND WARRANTIES OF EACH
NOTE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Nature of Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1 Financial Statements and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Information Required by Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Preservation of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Payment of Taxes and Other Potential
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Equal Security for Notes; No Further
Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.8 Inspection of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 Compliance With Agreements, Duties and
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Environmental Notice and Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Limitations on Consolidated Total
Liabilities and Indebtedness of
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3 Dividends; Stock Retirements; and
Restricted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
7.5 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
A. Minimum Consolidated Tangible Net
Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
B. Minimum Consolidated Fixed Charge
Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.6 Restriction on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.7 Restriction on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.8 Sales and Lease-Backs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.9 Transactions with Stockholders and
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.10 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.12 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.13 Purchase of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2 Accounting Terms; Financial Covenant
Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.3 Miscellaneous Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.1 Note Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.3 Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.4 Form, Registration, Transfer and Exchange
of Notes; Lost Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.5 Persons Deemed Owners; Participations . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.6 Survival of Representations and
Warranties; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.9 Payments Due on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.10 Satisfaction Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.11 Governing Law; Choice of Forum; Waiver of
Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.13 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
iii
<PAGE> 5
EXHIBITS AND SCHEDULES
Exhibits
A Form of Promissory Note
B Compliance Certificate
C Form of Opinion of Company's Counsel
D Form of ERISA Letter
E Legality Under Delaware State Insurance
Law
F Officer's Certificate Relating to
Contingent Obligations
Schedules
1 Subsidiaries
2 Liens
3 Environmental Protection
4 Indebtedness
5 Net Assets Held for Sale
6 Pending Litigation
7 Unpaid Taxes
iv
<PAGE> 6
CALMAT CO.
NOTE PURCHASE AGREEMENT
July 23, 1993
To The Purchasers Named
On Annex I Hereto
Ladies and Gentlemen:
CALMAT CO., a Delaware corporation (the "Company"), and the
undersigned purchasers of the Notes ("you" or the "Purchasers") hereby agree as
follows:
SECTION 1. ISSUE OF NOTES.
1.1 Authorization. The Company has duly authorized an issue of
$35,000,000 aggregate principal amount of its 6.70% Senior Unsecured Notes due
July 23, 2000 (the "Notes"), such Notes to have terms and provisions
substantially as set forth in Exhibit A hereto. The term "Notes" as used
herein shall include all promissory notes delivered pursuant to the provisions
of this Agreement and all promissory notes delivered in substitution or
exchange therefor or in lieu thereof, and, where applicable, shall include the
singular number as well as the plural. The term "Note" shall mean one of the
Notes.
1.2 Sale of Notes; Closing. The Company hereby agrees to sell to each of
you, and each of you, subject to the terms and conditions herein set forth,
hereby severally agrees to purchase from the Company, Notes in the aggregate
principal amount set forth opposite your respective name in Annex I hereto.
Delivery of the Notes so to be purchased by each of you hereunder
shall be made at the offices of Morrison & Foerster, 555 West Fifth Street,
Suite 3500, Los Angeles, California 90013 at 10:00 a.m. Los Angeles time on
July 23, 1993 (the "Closing Date"), by the Company's delivery to each of you of
one or more Notes (as specified by each of you prior to the Closing Date)
payable to each of you (or your respective nominees) or registered assigns,
dated the Closing Date, in the aggregate principal amount set forth opposite
your respective name in Annex I hereto and duly executed by the Company.
Delivery of the Notes hereunder shall be made against your payment to the
Company by wire transfer of immediately available funds to Bank of America,
Concord, California, ABA No. 1210 00358, Re: CalMat Co.,
1
<PAGE> 7
Account No. 12577 00731 in the aggregate principal amount of such Notes to be
purchased by you on the Closing Date.
SECTION 2. CONDITIONS OF CLOSING.
Your obligation to purchase and pay for the Notes to be purchased by
you hereunder is subject to the satisfaction, on or before the Closing Date, of
the following conditions:
2.1 Opinion of Purchaser's Special Counsel. You shall have received from
Morrison & Foerster, special counsel for you in connection with this
transaction, a favorable opinion satisfactory to you as to such matters
incident to the matters herein contemplated as you may reasonably request.
2.2 Opinion of Company's Counsel. You shall have received from Paul
Stanford, general counsel for the Company, a favorable opinion satisfactory to
you and substantially in the form of Exhibit C attached hereto.
2.3 Representations and Warranties; No Default. The representations and
warranties contained in Section 4 shall be true on and as of the Closing Date,
except to the extent of changes caused by the transactions herein contemplated;
there shall exist on the Closing Date no Default or Event of Default; and the
Company shall have delivered to you an Officer's Certificate, dated the Closing
Date, to both such effects.
2.4 Purchase Permitted By Applicable Laws. The purchase of and payment
for the Notes to be purchased by you on the Closing Date on the terms and
conditions herein provided (including the use of the proceeds of such Notes by
the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, section 5 of the Securities Act or Regulation
G, T or X of the Board of Governors of the Federal Reserve System) and shall
not subject you to any tax, penalty, liability or other onerous condition under
or pursuant to any applicable law or governmental regulation, and you shall
have received such certificates or other evidence as you may request to
establish compliance with this condition.
2.5 Legality. Each Purchaser shall have satisfied itself that (a) the
Notes being purchased by such Purchaser on the Closing Date shall qualify on
such Closing Date as a legal investment for life insurance companies under the
(x) New York Insurance Law (without resort to any provision of such law, such
as Section 1405(a)(8)), (y) Delaware Insurance Law (without resort to any
provision of such law, such as Section 1320) or (z) Texas Insurance Code
(without resort to any provision of such law, such as Section 4(o) of
2
<PAGE> 8
Article 3.3 thereof), permitting limited investments by each such Purchaser
without restriction as to the character of the particular investment and (b)
such purchase shall not subject such Purchaser or any Holder to any penalty or
other onerous condition under or pursuant to any applicable law or governmental
regulation. The Company shall complete Exhibit E hereto with respect to legal
investments under Delaware law.
2.6 Documents and Proceedings. The Company shall deliver each of the
following instruments, agreements and documents to you, in each case in form
and substance satisfactory to you and your special counsel:
(i) Certified copies of the Certificate of Incorporation of the
Company, together with good standing certificates (including verification
of tax status) and telegrams, if available, from the Secretary of State of
Delaware, and good standing certificates (including verification of tax
status) from each State in which the Company is required to be qualified
to transact business as a foreign corporation, each to be dated a recent
date prior to the Closing Date and, in the case of the Certificate of
Incorporation, to be certified as of the Closing Date by the Company's
corporate secretary or an assistant secretary;
(ii) Copies of the Company's Bylaws certified by its corporate
secretary or an assistant secretary;
(iii) Resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement, the
Notes and any other documents, instruments and certificates required to be
executed by the Company in connection herewith or therewith, each
certified by its corporate secretary or an assistant secretary;
(iv) Signature and incumbency certificates of the Company's officers
executing this Agreement, the Notes and any other documents, instruments
and certificates required to be executed by the Company in connection
herewith or therewith;
(v) Executed originals of this Agreement and an executed original of
your Note;
(vi) A copy of the Credit Agreement and each other agreement
evidencing the indebtedness identified with an asterisk (*) on Schedule 4
and
3
<PAGE> 9
all agreements, instruments or other documents creating any lien relating
thereto, together in each case with all amendments, and in each case
certified as a true, correct and complete copy of such agreement,
instrument or document by an Authorized Officer; and
(vii) Such other documents as you may reasonably request, including,
without limitation an Officer's Certificate describing the agreements
relating to the contingent obligations of the Company which are
indemnified by Onoda Cement Co., Ltd.
2.7 Completion of Audit and Investigation. You shall have completed such
legal and business due diligence, including, without limitation, such
investigations, reviews of financial controls and reporting, review of
appraisals or summaries thereof, and audits of the Company and its operations,
assets, litigation (pending or threatened) and loss contingencies, legal,
regulatory and environmental matters, insurance coverage and reserves, and
other matters as you may deem appropriate, and these investigations, reviews
and audits shall have provided you with results and information which, in your
sole opinion but in good faith, are satisfactory to warrant you purchasing a
Note.
2.8 Liens. You shall have received evidence, in form and substance
satisfactory to you, that (i) the property of the Company (including all of the
Company's real, personal and mixed property) is free and clear of all Liens
other than Liens permitted by Section 7.2 and (ii) the Company has no
agreement, contract or other obligation (written or otherwise) to create or
grant any Lien, other than a Lien permitted by Section 7.2, in such property.
2.9 Payment of Fees and Expenses of Your Counsel. The fees of Morrison &
Foerster, and costs and expenses incurred by Morrison & Foerster or you in
connection with the transactions contemplated herein, shall be paid by the
Company to the extent such costs and expenses have been billed.
2.10 Delivery of Letter Regarding ERISA Affiliates. Each of the Company
and Metropolitan Life Insurance Company shall execute the letter regarding
purchases of the Notes by the Purchasers for separate accounts, the form of
which is attached hereto as Exhibit D.
2.11 Other Corporate Actions. On or before the Closing Date, all
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by you and your counsel shall be reasonably
satisfactory in form and substance to you and your counsel,
4
<PAGE> 10
and you and your counsel shall have received all such counterpart originals or
certified copies of such documents as you may reasonably request.
SECTION 3. PREPAYMENTS.
3.1 Mandatory Prepayments. The Company covenants and agrees that it will
prepay on the following dates, subject to the last paragraph of this Section
3.1, the aggregate principal amount of Notes (or such lesser amount of Notes as
shall then be unpaid) set forth opposite such date, and such principal amount
shall become due and payable on such dates:
<TABLE>
<CAPTION>
Principal Amount to
Prepayment Date be Prepaid
--------------- -------------------
<S> <C>
July 23, 1997 $8,750,000
July 23, 1998 $8,750,000
July 23, 1999 $8,750,000
</TABLE>
Each prepayment pursuant to this Section 3.1 shall be made at the
principal amount so to be prepaid, together with accrued interest thereon to
the date fixed for such prepayment, without premium. The Company shall pay the
outstanding principal balance of each Note, together with accrued interest
thereon, on July 23, 2000.
The mandatory prepayments of principal on the Notes set forth in this
Section 3.1 shall be reduced pro rata by the amount of each such optional
prepayment pursuant to Section 3.2 and by the amount of any prepayment upon a
Change of Control pursuant to Section 3.3.
3.2 Optional Prepayments. Upon notice given as provided in Section 3.4,
the Company at its option may prepay the Notes as a whole or in part from time
to time (in multiples of $500,000 principal amount) at the Yield Maintenance
Price. Each such notice shall specify the date on which such prepayment is to
be made (an "Optional Prepayment Date"), the principal amount of the Notes of
each Holder so to be prepaid and the interest accrued thereon to the Optional
Prepayment Date.
On the Calculation Date, the Computing Holder shall give written
notice to the Company of the amount of the Yield Maintenance Price of the
principal amount of the Notes so to be prepaid, which notice shall set forth in
reasonable detail the computation thereof; provided, however, that the failure
of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes and the Computing Holder shall have no
5
<PAGE> 11
liability to the Company or any other Holder for its failure to make such
determination. The Yield Maintenance Price set forth in such notice shall be
binding on the Company and all of the Holders, absent manifest error.
Promptly after each such Calculation Date, the Company shall deliver
to each Holder of Notes on or before such Optional Prepayment Date a
certificate signed by a principal financial officer of the Company setting
forth the Yield Maintenance Price of the principal amount of the Notes held by
such Holder so to be prepaid, accompanied by a copy of the written notice by
the Computing Holder referred to above (which sets forth the computation of the
Yield Maintenance Price of the Notes held by the Computing Holder).
3.3 Change of Control Prepayment. The Company covenants and agrees to
give written notice to each Holder of Notes promptly after the occurrence of a
Change of Control, but in any event within 5 days thereafter. Such notice
shall (a) describe in reasonable detail the facts and circumstances giving rise
to such Change of Control and the effect thereof on the Company, (b) offer to
prepay, on a date (the "Change of Control Prepayment Date") which shall be not
less than 30 days nor more than 60 days after the date of such notice, all the
Notes held by such Holder, (c) request such Holder to notify the Company in
writing, not less than 10 days prior to the Change of Control Prepayment Date,
of its acceptance or rejection of such offer and (d) inform the Holder that,
upon its receipt of such notice by the Company, failure to accept such offer in
writing on or before the 10th day prior to the Change of Control Prepayment
Date shall be deemed rejection of such offer.
On the Calculation Date, the Computing Holder shall give written
notice to the Company of the amount of the Yield Maintenance Price of the
principal amount of the Notes so to be prepaid, which notice shall set forth in
reasonable detail the computation thereof; provided, however, that the failure
of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes and the Computing Holder shall have no
liability to the Company or any other Holder for its failure to make such
determination. The Yield Maintenance Price set forth in such notice shall be
binding on the Company and the Computing Holder, absent manifest error.
Promptly after each such Calculation Date, the Company shall deliver
to each Holder on or before such Change of Control Prepayment Date a
certificate signed by a principal financial officer of the Company setting
forth the Yield Maintenance Price of the principal amount of the Notes
6
<PAGE> 12
held by such Holder so to be prepaid, accompanied by a copy of the written
notice by the Computing Holder referred to above (which sets forth the
computation of the Yield Maintenance Price of the Notes held by the Computing
Holder).
3.4 Notice of Prepayment and Other Notices. The Company shall give
written notice of any prepayment of the Notes or any portion thereof pursuant
to Section 3.2 not less than 30 nor more than 60 days prior to the date fixed
for such prepayment in such notice, which notice shall specify the amount so to
be prepaid, together with the interest to be paid thereon and the date fixed
for such prepayment. Any notice of prepayment, Change of Control and all other
notices to be given to any Holder of the Notes shall be given by registered or
certified mail or by telecopy (and if by telecopy followed by overnight
delivery of an original notice by a nationally recognized courier service) to
such Holder at its address designated on the date of such notice on the
register or other record maintained by the Company.
Upon notice of any prepayment pursuant to Section 3.2 being given as
provided in this Section 3.4, the Company covenants and agrees that it will
prepay on the date therein fixed for prepayment the principal amount of the
Notes so to be prepaid as specified in such notice at the Yield Maintenance
Price together with interest accrued thereon to such date fixed for prepayment
and the amounts so to be paid shall become due on such date fixed for
prepayment.
3.5 General Provisions Concerning Prepayments. In the event of any
optional prepayment of less than all the outstanding Notes pursuant to Section
3.2 the Company will allocate the principal amount so to be prepaid (but only
in units of $1,000) among the Holders of Notes in proportion, as nearly as may
be, to the respective principal amounts of such Notes not theretofore called
for prepayment, of which they shall be Holders.
3.6 Surrender of Notes; Notation Thereon. The Company may, as a
condition of payment of all or any of the principal of, premium, if any, or
interest on the Notes, require the Holder to present its Note for notation of
such payment and, if the Notes be paid in full, require the surrender thereof.
3.7 Interest After Date Fixed for Prepayment. The Notes or any portion
thereof to be prepaid pursuant to Sections 3.1, 3.2 or 3.3 shall cease to bear
interest on and after the date fixed for such prepayment, unless, upon
presentation for such purpose, the Company shall fail to pay any such Note or
such portion, as the case may be, on or
7
<PAGE> 13
before the date fixed for such prepayment, in which event any such Note or such
portion, as the case may be, shall bear interest on the principal amount
thereof or the Yield Maintenance Price, as the case may be, at the Overdue
Interest Rate from and after such date until paid and, so far as may be lawful,
any overdue installment of interest shall bear interest at the Overdue Interest
Rate.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of you that:
4.1 Organization, Authority and Good Standing; Subsidiaries. Schedule 1
hereto correctly sets forth (i) the name and jurisdiction of incorporation of
each Subsidiary of the Company, and (ii) a statement of the capitalization of
each such Subsidiary and the ownership of its stock. The shares of stock
listed in Schedule 1 as owned by the Company or any of the Subsidiaries are so
owned as of the date of this Agreement, free and clear of all Liens, and all
such shares of stock have been duly issued and are fully paid and
non-assessable. Each of the Company and its Subsidiaries is a duly organized
and validly existing corporation in good standing under the laws of its
respective jurisdiction of incorporation and has full power and authority to
own the properties and assets and to carry on the business which it now owns
and carries on. Each of the Company and its Subsidiaries is duly qualified and
in good standing as a foreign corporation in each jurisdiction wherein the
nature of the property owned or leased by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure
to so qualify would not have a Material Adverse Effect.
4.2 Authorization of Agreement, Etc.
A. Authorization. The execution, delivery and performance by the
Company of this Agreement, the Notes and each of the other Documents are within
the Company's corporate powers and have been authorized by all necessary
corporate action.
B. No Conflict. The execution, delivery and performance by the
Company of this Agreement, the Notes and each of the other Documents, the
application of the proceeds of the Notes and the consummation of any other
transactions contemplated by this Agreement, the Notes and each of the other
Documents do not and will not (i) violate any provision of law applicable to
the Company, the Certificate of Incorporation or Bylaws (or other charter
documents) of, or any order, judgment or decree of any court or other agency of
government binding on the Company, (ii) conflict with, result in a breach of or
constitute (with due notice
8
<PAGE> 14
or lapse of time or both) a default under any contractual obligation of the
Company, (iii) result in or require the creation or imposition of any Lien,
charge or encumbrance of any nature whatsoever upon any of the properties or
assets of the Company or (iv) require any approval of stockholders or any
approval or consent of any Person under any contractual obligation of the
Company.
C. Governmental Consents. The execution, delivery and performance
by the Company of this Agreement, the Notes and each of the other Documents,
and the application of the proceeds of the Notes and the consummation of any
other transactions contemplated by this Agreement, the Notes and each of the
other Documents do not and will not require any registration with, consent or
approval of, or notice to, or other action with or by, any federal, state or
other governmental authority or regulatory body or other Person.
D. Binding Obligation. This Agreement, the Notes and each of the
other Documents are the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally and subject
to the availability of equitable remedies.
4.3 Financial Statements. You have been furnished with copies of
consolidated balance sheets of the Company and its Subsidiaries as at December
31 in the years 1988 to 1992, inclusive, the related consolidated statements of
income, stockholders' equity and cash flows of the Company and its Subsidiaries
for the fiscal periods ended on said dates, accompanied in each case by the
opinion of its independent certified public accountants. You have also been
furnished with copies of such unaudited reports as at March 31, 1993.
Said financial statements, including the related schedules and notes,
are complete and correct and fairly present (i) the Consolidated financial
condition of the Company and its Subsidiaries as at the respective dates of
said balance sheets and (ii) the Consolidated results of the operations of the
Company and its Subsidiaries for the fiscal periods ended on said dates, all in
conformity with GAAP applied on a consistent basis (except as otherwise stated
therein or in the notes thereto) throughout the period involved. As of the
date of such financial statements the Company and its Subsidiaries had no
material Contingent Obligation, contingent liability or liability for taxes,
long term lease or unusual forward or long term commitments, which is not
reflected in the foregoing financial statements or the notes thereto.
9
<PAGE> 15
4.4 No Material Changes. There has been no material adverse change in
the business, operations, properties, prospects, assets or condition, financial
or other, of the Company and its Subsidiaries, taken as a whole, subsequent to
December 31, 1992.
4.5 Liens. Schedule 2 hereto correctly sets forth all Liens securing
Indebtedness for money borrowed of the Company or its Subsidiaries existing on
the date hereof.
4.6 Title to Properties. Except for such defects of title or Liens which
are immaterial in the aggregate to the Company and its Subsidiaries, taken as a
whole, the Company and its Subsidiaries have good and marketable fee title to
all the real properties and good and marketable title to all other property
reflected on the Consolidated balance sheet of the Company and its Subsidiaries
as at December 31, 1992 referred to in Section 4.3, or purported to have been
acquired by the Company or any of its Subsidiaries after said date, excepting,
however, property sold or otherwise disposed of subsequent to said date in the
ordinary course of business.
4.7 Leases and Liens. None of the properties or assets reflected in the
consolidated balance sheet of the Company and its Subsidiaries as at December
31, 1992 referred to in Section 4.3, or acquired by the Company or its
Subsidiaries after said date, is held by the Company or any of its Subsidiaries
subject to any Lien which would not be permitted by Section 7.2. The Company
and its Subsidiaries enjoy peaceful and undisturbed possession under all of the
material leases under which they are operating and all such leases are valid
and subsisting and in full force and effect.
4.8 Outstanding Indebtedness. The Company and its Subsidiaries have no
outstanding Indebtedness except as set forth on Schedule 4. There exists no
default or event of default under the provisions of any instrument evidencing
such Indebtedness or of any agreement relating thereto.
4.9 Litigation. Except as described on Schedule 6, there are no actions,
suits or proceedings (whether or not purportedly on behalf of the Company or
any Subsidiary) pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind, which involve any of the transactions herein
contemplated or is reasonably likely to result in a Material Adverse Effect;
and neither the Company nor any Subsidiary is in default or violation of
10
<PAGE> 16
any judgment, order, writ, injunction, decree or award or in violation in any
way which would have a Material Adverse Effect of any statute, rule or
regulation of any court, arbitrator or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign.
4.10 No Burdensome Provisions. Neither the Company nor any Subsidiary is
a party to any agreement or instrument or subject to any charter or other
corporate or legislative restriction or any judgment, order, writ, injunction,
decree, award, rule or regulation which materially and adversely affects or in
the future may (so far as the Company can now foresee) materially and adversely
affect the business, operations, properties, prospects, assets or condition,
financial or other, of the Company and its Subsidiaries, taken as a whole.
4.11 Compliance with Other Instruments; Laws. Neither the Company nor any
Subsidiary is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any bond, debenture,
note or other evidence of Indebtedness of the Company or such Subsidiary or
contained in any instrument under or pursuant to which any thereof has been
issued or made and delivered. Neither the execution and delivery of this
Agreement by the Company, the consummation by the Company of the transactions
herein contemplated nor compliance by the Company with the terms, conditions
and provisions hereof and of the Notes will violate any provision of law or
rule or regulation thereunder or any order, injunction or decree of any court
or other governmental body to which the Company or any Subsidiary is a party or
by which any thereof is bound or conflict with or result in a breach of any of
the terms, conditions or provisions of the corporate charter or by-laws of the
Company or any Subsidiary or of any agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or any such
Subsidiary is bound, or constitute a default thereunder, or result in the
creation or imposition of any Lien of any nature whatsoever upon any of the
properties or assets of the Company or any Subsidiary. The Company and each
Subsidiary is in compliance in all material respects with all applicable laws,
statutes, rules and regulations, if non-compliance therewith could have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
4.12 Trading with the Enemy Act, etc. Neither this Agreement nor any of
the transactions contemplated hereby will result in a violation of any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended), or any ruling
11
<PAGE> 17
issued thereunder or any enabling legislation or Presidential Executive Order
granting authority therefor. The proceeds from issuance of the Notes will not
be used by the Company in a manner which will violate any such regulations,
rulings or legislation.
4.13 ERISA. The Company and its Subsidiaries are in compliance in all
material respects with all applicable provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") and the regulations and published
interpretations thereunder. No Reportable Event, for which the 30 day notice
requirement under 29 CFR Part 2615 is not waived, has occurred and is
continuing with respect to any Plan and neither the Company nor any Subsidiary
has incurred any liability to the Pension Benefit Guaranty Corporation under
Section 4062 of ERISA. As used in this Section 4.13, the term "Reportable
Event" means any of the events set forth in Section 4043(b) of ERISA, and the
term "Plan" means any plan defined in Section 4021(a) of ERISA in respect of
which the Company or any Subsidiary is an "employer" or a "substantial
employer" as said terms are defined in Sections 3(5) and 4001(a)(2),
respectively, of ERISA. The Company has not incurred any material accumulated
funding deficiency within the meaning of ERISA. Based on the representations
set forth in Section 5, the execution and delivery to each Holder by the
Company of the Notes and the consummation of the transactions contemplated by
this Agreement will not involve any "prohibited transaction" within the meaning
of ERISA or of Section 4975 of the Internal Revenue Code of 1986, as amended.
4.14 Environmental Protection. Except as disclosed on Schedule 3 annexed
hereto:
(i) the operations of the Company and its Subsidiaries comply in all
material respects with all Hazardous Materials Laws;
(ii) the Company and its Subsidiaries have obtained all material
permits, licenses and approvals under all Hazardous Materials Laws
necessary for their respective operations, and all such permits, licenses
and approvals are in good standing and the Company and its Subsidiaries
are in compliance with all material terms and conditions of such permits,
licenses and approvals;
(iii) the Company and its Subsidiaries and all of their present
property or operations, and to the best of the Company's knowledge, their
past property or operations, are not subject to any outstanding written
order from or agreement with
12
<PAGE> 18
any governmental authority or other Person and are not subject to any
judicial or docketed administrative proceeding or investigation,
respecting (a) any Hazardous Materials Laws, (b) any Remedial Action or
(c) any material Environmental Liabilities and Costs;
(iv) none of the Company or any of its Subsidiaries has ever been or
is now a treatment, storage or disposal facility requiring a permit under
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.,
related regulations or any other state equivalent;
(v) none of the Company or any of its Subsidiaries has filed or
should have filed any notice required under any Hazardous Materials Laws
reporting a Release into the environment which Release has or would have
any reasonable likelihood of having a Material Adverse Effect and none of
the Company or any of its Subsidiaries has filed or should have filed any
notice pursuant to Section 103(a) or (c) of the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA");
(vi) there is not now on or in any property of the Company or any of
its Subsidiaries;
(a) any underground storage tanks or surface impoundments,
(b) any Hazardous Materials, or
(c) any polychlorinated biphenyls (PCBs) used in electrical or
other equipment,
the presence of which has any reasonable likelihood of having a Material
Adverse Effect;
(vii) none of the Company or any of its Subsidiaries has received
(a) any notice or claim to the effect that it is or may be liable to any
Person as a result of a Release or threatened Release which Release or
threatened Release has any reasonable likelihood of having a Material
Adverse Effect, or (b) any letter or request for information under Section
104 of CERCLA or comparable State laws;
(viii) there are no past or present conditions or circumstances which
may give rise to any Environmental Liabilities or Costs arising from the
13
<PAGE> 19
operations of the Company or any of its Subsidiaries, including but not
limited to off-site disposal of any Hazardous Materials by or on behalf of
the Company or any of its Subsidiaries, which in the aggregate is
reasonably likely to have a Material Adverse Effect;
(ix) no Environmental Lien (whether recorded or unrecorded) has
attached to any real or personal property owned, used or operated by the
Company or any of its Subsidiaries; and
(x) the Company and each of its Subsidiaries is in material
compliance with any applicable financial responsibility requirements of
all Hazardous Materials Laws, including without limitation those contained
in 40 C.F.R., parts 264 and 265, subpart H, and any state equivalents.
4.15 Tax Liability. Except as disclosed on Schedule 7, the Company and
its Subsidiaries have filed all tax returns which are required to be filed (or
have been granted an extension of time to file such returns) and have paid all
taxes which have become due pursuant to such returns and all other taxes,
assessments, fees and other governmental charges upon the Company and its
Subsidiaries and upon their respective properties, assets, income and
franchises which have become due and payable by the Company or any of its
Subsidiaries, except those wherein the amount, applicability or validity are
being contested by the Company or any such Subsidiary by appropriate
proceedings in good faith and in respect of which adequate reserves have been
established. In the opinion of the Company, all tax liabilities of the Company
and its Subsidiaries were adequately provided for as of March 31, 1993 and are
now so provided for on the books of the Company and its Subsidiaries.
4.16 Regulation G; Use of Proceeds. The proceeds from the sale of the
Notes will be applied by the Company to repay short term indebtedness. None of
the proceeds of the issuance of the Notes will be used, directly or indirectly,
for the purpose of purchasing or carrying any "margin stock" as defined in
Regulation G (12 C.F.R., Chapter II, Part 207) of the Board of Governors of the
Federal Reserve System (herein called "margin stock") or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry margin stock or for any other purpose which might constitute any such
extension of credit a "purpose credit" within the meaning of said Regulation G.
Neither the Company nor any agent acting on its behalf has taken or will take
any action which might cause the transactions contemplated herein to violate
said Regulation
14
<PAGE> 20
G, Regulation T (12 C.F.R., Chapter II, Part 220) or Regulation X (12 C.F.R.,
Chapter II, Part 224) or any other regulation of the Board of Governors of the
Federal Reserve System or to violate the Securities Exchange Act of 1934, in
each case as now in effect or as the same may hereafter be in effect.
4.17 Investment Company Act. Neither the Company nor any Subsidiary is an
"investment company," or a Person "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
4.18 Labor Matters. There are no strikes or other labor disputes or
grievances pending or, to the knowledge of the Company, threatened against the
Company or its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
4.19 Patents, Trademarks and Licenses. The Company possesses all of the
licenses, patents, patent applications, copyrights, service marks, trademarks
and trade names necessary to continue to conduct its business as heretofore
conducted by it.
4.20 Disclosure. Neither this Agreement, nor any of the exhibits or
schedules hereto, nor any certificate or other data furnished to the Holders in
writing by or on behalf of the Company in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits a material fact necessary to make the statements contained herein or
therein not misleading. There is no fact which materially and adversely
affects or in the future may (so far the Company can now foresee) materially
and adversely affect the business, operations, properties, prospects, assets or
condition, financial or other, of the Company and its Subsidiaries, taken as a
whole, which has not been disclosed to the Holders in writing.
4.21 Offering of Notes. Neither the Company nor any agent acting in its
behalf has, either directly or indirectly, sold or offered for sale or disposed
of, or attempted or offered to dispose of, the Notes or any part thereof, or
any similar obligation of the Company, to, or has solicited any offers to buy
any thereof from, or has otherwise approached or negotiated in respect thereof
with, any Person or Persons other than the Holders and not more than ten other
Persons, all of whom were institutional investors; and the Company agrees that
neither it nor any agent acting on its behalf will sell or offer for sale or
dispose of, or attempt or offer to dispose of, any thereof to, or solicit any
offers to buy any thereof from, or
15
<PAGE> 21
otherwise approach or negotiate in respect thereof with, any Persons or Persons
so as thereby to bring the issuance or delivery of the Notes within the
provisions of Section 5 of the Securities Act of 1933, as amended.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF EACH NOTE
PURCHASER.
Each of you severally represents and warrants that:
5.1 Nature of Purchase. You are not acquiring the Notes to be purchased
by you hereunder with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act, provided that the disposition
of your property shall at all times be and remain within your control. You
understand that the Notes, unless agreed by the Company and the Holder thereof,
shall bear a legend substantially to the following effect:
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM."
5.2 Source of Funds. No part of the funds being used by you to pay the
purchase price of the Notes being purchased by you hereunder constitute assets
allocated to any separate account maintained by you in which any employee
benefit plan, other than employee benefit plans identified on Exhibit D,
participates (or will, while any of the Notes remain outstanding, participate)
to the extent of 10% or more, and you will, with respect to your purchase of
the Notes, comply with the conditions of Section III of Prohibited Transactions
Class Exemption 90-1 issued by the United States Department of Labor. For the
purpose of this Section 5.2, the terms "separate account" and "employee benefit
plan" shall have the respective meanings specified in section 3 of ERISA.
SECTION 6. AFFIRMATIVE COVENANTS.
6.1 Financial Statements and Other Reports. The Company will maintain a
system of accounting established and administered in accordance with sound
business practices to permit the preparation of financial statements in
conformity with GAAP applied on a consistent basis. The Company covenants that
it will deliver to each Holder of the Notes:
16
<PAGE> 22
(i) as soon as practicable and in any event within fifty (50) days
after the end of the first three fiscal quarters in each fiscal year of
the Company, the Consolidated balance sheet of the Company as at the end
of such period and the related Consolidated statements of income and
retained earnings of the Company for such fiscal quarter and the related
statement of cash flows for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter, setting forth in
comparative form the corresponding figures for the corresponding periods
of the previous fiscal year, all in reasonable detail (including, without
limitation on divisional operations) and certified by the chief financial
officer, the controller or the treasurer of the Company, that they fairly
present the financial condition of the Company and its Subsidiaries, as at
the dates indicated and the results of their operations and cash flows for
the periods indicated, subject only to changes resulting from audit and
normal year-end adjustment;
(ii) as soon as practicable and in any event within one hundred
(100) days after the end of each fiscal year of the Company, the
Consolidated balance sheet of the Company as at the end of such fiscal
year and the related Consolidated statements of income, retained earnings
and cash flows of the Company for such fiscal year, setting forth in
comparative form the corresponding figures from the audited financial
statements from the previous fiscal year, all in reasonable detail,
accompanied by a report thereon of an independent certified public
accounting firm of recognized national standing selected by the Company,
which report shall be unqualified as to going concern and scope of audit
and shall state that such Consolidated financial statements present fairly
the financial position of the Company and its Subsidiaries as at the dates
indicated and the results of their operations and cash flows for the
periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise stated therein) and that the
examination by such accountants in connection with such Consolidated
financial statements has been made in accordance with generally accepted
auditing standards;
(iii) together with each delivery of financial statements of the
Company and its Subsidiaries
17
<PAGE> 23
pursuant to paragraphs (i) and (ii) above, (a) an Officer's Certificate of
the Company stating that the signers have reviewed the terms of this
Agreement and have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and condition of the
Company and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signers do
not have knowledge of the existence as at the date of the Officers'
Certificate, of any condition or event that constitutes a Default or Event
of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action the
Company has taken, is taking and proposes to take with respect thereto;
and (b) a Compliance Certificate demonstrating in reasonable detail
compliance by the Company at the end of such accounting periods with the
covenants contained in Sections 7.1 through 7.7, inclusive.
(iv) together with each delivery of audited financial statements of
the Company and its Subsidiaries, pursuant to paragraph (ii) above, an
Officer's Certificate certifying that the auditors have reviewed the terms
of this Agreement as they relate to accounting matters and tested
compliance with the covenants during the course of their audit and that
they are not aware of any condition or event that constitutes a Default or
Event of Default; provided that nothing in this paragraph (iv) shall
require the auditors to expand or otherwise change the scope of their
audit examination;
(v) promptly upon receipt thereof, copies of all significant reports
submitted to any of the Company and its Subsidiaries by independent public
accountants in connection with each annual, interim or special audit or
review of the financial statements or practices of the Company and its
Subsidiaries, made by such accountants, including, without limitation, the
comment letter submitted by such accountants to management in connection
with their annual audit;
(vi) promptly upon their becoming available, copies of (a) all
financial statements, reports, notices and proxy statements sent or made
available generally by any of the Company and its Subsidiaries to their
security holders (excluding
18
<PAGE> 24
internal reports from any Subsidiary to the Company), (b) all regular and
periodic reports and all registration statements and prospectuses, if any,
filed by any of the Company and its Subsidiaries with any securities
exchange or with the SEC or any governmental or private regulatory
authority and (c) all press releases and other statements regarding
management or financial matters made available generally by any of the
Company and its Subsidiaries to the public concerning material
developments in the business of the Company and its Subsidiaries taken as
a whole;
(vii) promptly upon any officer of the Company obtaining knowledge
(a) that a condition or event has occurred and is continuing that
constitutes a Default or Event of Default, or becoming aware that any
Holder has given any notice or taken any other action with respect to a
claimed Default or Event of Default under this Agreement, (b) that any
Person has given any notice to the Company or any of its Subsidiaries or
taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 8.1(v), or (c) of a material
adverse change in the business, operations, properties, prospects, assets
or condition, financial or other, of the Company and its Subsidiaries
taken as whole, an Officer's Certificate specifying the nature and period
of existence of such condition or event, or specifying the notice given or
action taken by such Holder or Person and the nature of such claimed
default, Default or Event of Default, event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
(viii) promptly upon any officer of the Company obtaining knowledge
of (a) the institution of, or nonfrivolous threat of, any action, suit,
proceeding, governmental investigation or arbitration against or affecting
the Company or any of its Subsidiaries or any property of the Company or
any of its Subsidiaries not previously disclosed by the Company to the
Holders, or (b) any material development in any such action, suit,
proceeding, governmental investigation or arbitration, that, in either
case:
(y) creates a reasonable possibility of a Material Adverse
Effect; or
19
<PAGE> 25
(z) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages in excess of $1,000,000 or obtain relief as
a result of, the issuance of the Notes;
the Company shall promptly give notice thereof to each Holder and provide
such other information as may be reasonably available to it to enable each
Holder and its counsel to evaluate such matters;
(ix) promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action the Company or any of its ERISA Affiliates has
taken, is taking or proposes to take with respect thereto, and when known,
any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(x) to the extent provided to the lenders under the Credit
Agreement, as soon as practicable and in any event within forty-five (45)
days after the beginning of each fiscal year, a consolidated financial
budget with reasonable detail on divisional operations for the then
current fiscal year and within seventy-five (75) days after the beginning
of each fiscal year, a Consolidated long range plan and financial forecast
for the Company and its Subsidiaries for the then current fiscal year and
each subsequent fiscal year through the end of the fifth fiscal year,
including, without limitation, a forecasted Consolidated balance sheet and
Consolidated statements of income and cash flow for each such fiscal year;
and
(xi) with reasonable promptness, such other information and data
with respect to any of the Company and its Subsidiaries as from time to
time may be reasonably requested by any Holder.
With respect to the reporting obligations described in clauses (viii) and (ix),
the Company and each of you agree that the Company shall not be required to
deliver any such notice unless (a) the Company is required to disclose such
information to the public pursuant to the Securities Act or the Exchange Act
(as long as the Company is subject to the reporting obligations of Section 13
of the Exchange Act as an issuer of a security), or (b) the Company provides
notice of any such threat, action, suit, proceeding, governmental
investigation, arbitration, ERISA Event or action threatened
20
<PAGE> 26
or taken by the Internal Revenue Service, Department of Labor or PBGC to any
other holder of Indebtedness of the Company or any of its Subsidiaries.
6.2 Information Required by Rule 144A. The Company covenants that it
will, upon the request of the Holder of any Note, provide such Holder, and any
qualified institutional buyer designated by such Holder, such financial and
other information as such Holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes. For the purpose of
this Section 6.2, the term "qualified institutional buyer" shall have the
meaning specified in Rule 144A under the Securities Act.
6.3 Preservation of Existence. The Company covenants that it will, and
will cause each of its Subsidiaries to, preserve and maintain its existence,
and all material licenses, rights, franchises and privileges in the
jurisdiction of its formation and all authorizations, consents, approvals,
orders, licenses, permits, or exemptions from, or registrations with, any
governmental agency that are necessary for the transaction of its business,
including, without limitation, all notices, permits or licenses, if any, filed
or obtained with regard to compliance with environmental laws, and qualify and
remain qualified to transact business in each jurisdiction in which such
qualification is necessary in view of its business or the ownership or leasing
of its properties, except where the failure to do any of the foregoing would
not have a Material Adverse Effect and except that the Company may dispose of
Subsidiaries, if not prohibited by any other provision of this Agreement, and
may merge Subsidiaries with other Subsidiaries or into the Company.
6.4 Payment of Taxes and Other Potential Liens. The Company covenants
that it will, and will cause each of its Subsidiaries to, pay and discharge
promptly or cause to be paid and discharged promptly all taxes, assessments and
governmental charges or levies imposed upon it or its property or any part
thereof, upon its income or profits or any part thereof or upon any right or
interest of any party under this Agreement, any Note, or any Document, except
that (i) the Company shall not be required to pay or cause to be paid any tax,
assessment, charge or levy that is not yet delinquent if such items are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made therefor
and (ii) any failure by the Company to pay or cause to be paid any tax,
assessment, charge or levy that is immaterial in amount and is a state or local
tax, assessment, charge or levy
21
<PAGE> 27
which the Authorized Officers of the Company were not aware was due shall not
constitute a default under this Section 6.4.
6.5 Maintenance of Properties. The Company will maintain or cause to be
maintained in good repair, working order and condition all material properties
used or useful in the business of the Company and its Subsidiaries and from
time to time will make or cause to be made all appropriate repairs, renewals
and replacements thereof consistent with past practices.
6.6 Maintenance of Insurance. The Company will maintain or cause to be
maintained, with financially sound and reputable insurers (or self-insurance
consistent with the Company's past practices), insurance with respect to its
properties and business and the properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations.
6.7 Equal Security for Notes; No Further Negative Pledges.
A. If the Company or any of its Subsidiaries shall create or assume
or suffer to exist any Lien upon any of its property or assets, whether now
owned or hereafter acquired, other than Liens excepted by the provisions of
Section 7.2, it shall make or cause to be made effective provision whereby the
Notes will be secured by such Lien equally and ratably with any and all other
Indebtedness thereby secured as long as any such Indebtedness shall be secured;
provided that, notwithstanding the foregoing, this covenant shall not be
construed as a consent by any Holder to any creation or assumption of any such
Lien not permitted by the provisions of Section 7.2.
B. The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any agreement prohibiting the creation or
assumption of any Lien in favor of any Holder upon its properties or assets,
whether now owned or hereafter acquired; provided, however, that the Company
may incur Indebtedness otherwise permitted under this Agreement which provides
that if the Notes are at any time secured by a Lien on the property or assets
of the Company or any of its Subsidiaries, such Indebtedness shall be secured
by such Lien equally and ratably with the Notes.
6.8 Inspection of Property. The Company covenants that it will permit
any Person designated by any Holder in writing at such Holder's expense or, if
following any Event
22
<PAGE> 28
of Default or Default which is continuing, at the expense of the Company, to
visit and inspect any of the properties of the Company or any of its
Subsidiaries, to examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom and
to discuss the affairs, finances and accounts of any of such corporations with
the principal officers of the Company and its independent public accountants,
all at such reasonable times and as often as any such Holder may reasonably
request.
6.9 Compliance With Laws. The Company covenants that it will, and will
cause each of its Subsidiaries to, comply with the requirements of all
applicable laws and orders of any governmental agency, noncompliance with which
could reasonably be expected to have a Material Adverse Effect.
6.10 Compliance With Agreements, Duties and Obligations. The Company
covenants that it will, and will cause each of its Subsidiaries to, promptly
and fully comply with all of its agreements, duties and obligations under this
Agreement, the Notes, and the Documents, and under any other material
agreements, indentures, leases and/or instruments to which it is a party,
whether such other agreements, indentures, leases or instruments are with you
or any other Person, except that the Company and its Subsidiaries need not
comply with any such other agreements, indentures, leases or instruments then
being contested by it in good faith by appropriate proceedings or if the
failure to comply with such other agreements, indentures, leases or instruments
would not have a Material Adverse Effect in either case so long as no material
interest of any Holder would be materially impaired thereby.
6.11 Environmental Notice and Inspection. The Company shall:
(i) comply and shall cause each of its Subsidiaries to comply, and
shall use its best efforts in order to cause (a) all tenants under any
lease or occupancy agreement affecting any portion of any property owned,
used, leased or operated by the Company or any of its Subsidiaries and (b)
all other Persons on or occupying such property to comply, with all
Hazardous Materials Laws;
(ii) notify each Holder in writing and in reasonable detail,
promptly, and in any event within thirty days of the Company or any of its
Subsidiaries receiving any of the following:
23
<PAGE> 29
(a) written notice or claim to the effect that the Company or
any of its Subsidiaries is or may be liable to any Person as a result
of the Release or threatened Release or has or is in violation of any
Hazardous Materials Laws, in each case if the same has any reasonable
likelihood of having a Material Adverse Effect;
(b) written notice that any real or personal property of the
Company or any of its Subsidiaries is subject to an Environmental
Lien; and
(c) written notice of the commencement of any judicial or
administrative proceeding or investigation alleging a violation of
any Hazardous Materials Laws or subjecting the Company or any of its
Subsidiaries to Environmental Liabilities and Costs, in each case if
the same has any reasonable likelihood of having a Material Adverse
Effect;
(iii) notify each Holder promptly and in any event within thirty
days, of:
(a) any Release which has any reasonable likelihood of having
a Material Adverse Effect and which is required to be reported to any
federal, state or local governmental or regulatory agency under any
applicable Hazardous Materials Laws;
(b) any and all written communications with respect to any
Environmental Liabilities and Costs that are reasonably likely to
have a Material Adverse Effect or any Release required to be reported
to any federal, state or local governmental or regulatory agency;
(c) any Remedial Action taken by the Company, any of its
Subsidiaries or any other Person in response to (1) any Hazardous
Materials on, under or about any property owned, used or operated by
the Company or any of its Subsidiaries, the existence of which is
reasonably likely to result in a Material Adverse Effect or (2) any
Environmental Liabilities and Costs that are reasonably likely to
result in a Material Adverse Effect;
(d) the Company's or any of its Subsidiary's discovery of any
occurrence or
24
<PAGE> 30
condition on any real property adjoining or in the vicinity of any
material facility owned, used or operated by the Company or any of
its Subsidiaries that could reasonably be expected to cause such
property to be subject to any restrictions on the ownership,
occupancy, transferability or use thereof under any Hazardous
Materials Laws;
(e) any request for information from any governmental agency
that suggests that such agency is investigating whether the Company
or any of its Subsidiaries may be potentially responsible for a
Release which Release has any reasonable likelihood of having a
Material Adverse Effect;
(f) any proposed acquisition of stock, assets, real estate, or
leasing of property by the Company or any of its Subsidiaries that
could reasonably be expected to subject the Company or any of its
Subsidiaries to a Material Adverse Effect resulting from
Environmental Liabilities and Costs; and
(g) any proposed action taken by the Company or any of its
Subsidiaries to commence manufacturing, industrial, or other
operations that could reasonably be expected to subject the Company
or any of its Subsidiaries to additional laws, rules or regulations,
including but not limited to the obtaining of environmental, health
or safety permits, licenses or approvals or Environmental Liabilities
and Costs, that could reasonably be expected to have a Material
Adverse Effect; and
(iv) submit, upon written request by any Holder, a report providing
an update of the status of any environmental, health or safety compliance,
hazard or liability issue identified in any notice or report required
pursuant to this Section 6.11 and any other environmental, health or
safety compliance obligation, remedial obligation or liability that could
have a Material Adverse Effect.
6.12 Further Assurances. At any time or from time to time upon the
request of any Holder, the Company shall, and shall cause its Subsidiaries to,
execute and deliver such
25
<PAGE> 31
further documents and do such other acts and things as any Holder may
reasonably request in order to effect fully the purposes of this Agreement and
each of the other Documents and to provide for payment of the Notes and
interest thereon, in accordance with the terms of this Agreement.
SECTION 7. NEGATIVE COVENANTS.
7.1 Limitations on Consolidated Total Liabilities and Indebtedness of
Subsidiaries.
A. The Company will not permit the ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth on the last day of each fiscal
quarter of the Company to exceed 1.00 to 1.00; provided, however, that for
purposes of this Section 7.1A, until the date on which the Company sells the
Rio Vista Tower (as more fully described on Schedule 5) (i) the Indebtedness of
the Company relating to the Rio Vista Tower in an amount not in excess of
$15,000,000 shall be excluded from the definition of Indebtedness, and (ii) a
corresponding amount shall be excluded from Consolidated Tangible Assets; and,
provided, further, that for purposes of this Section 7.1A, on and after the
date that the Company sells the Rio Vista Tower an amount (but not less than 0)
equal to the Indebtedness of the Company (but not in excess of $15,000,000)
relating to the Rio Vista Tower on the date of such sale minus the aggregate
cash proceeds received by the Company (whether in a lump sum or installments,
and including any interest received thereon) from such sale (x) shall be
excluded from the definition of Indebtedness, and (y) a corresponding amount
shall be excluded from Consolidated Tangible Assets.
B. The Company will not permit any Subsidiary, and the Subsidiaries
as a whole, to have, at any one time, Indebtedness in an amount in excess of
5.0% of Consolidated Tangible Net Worth, excluding for purposes of this Section
7.1B Indebtedness of Subsidiaries on the Closing Date and identified on
Schedule 4.
C. Any Indebtedness owed by the Company to any of its Subsidiaries
shall be subordinated in right of payment to the payment in full of the Notes
by the Company.
7.2 Liens. The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of the Company or
any of its Subsidiaries, whether now owned or hereafter acquired, or any income
or profits therefrom, except:
26
<PAGE> 32
(i) Permitted Liens;
(ii) Liens in existence on the Closing Date and set forth on
Schedule 2; and
(iii) Liens on property used in the conduct of the Company's
business to secure Indebtedness permitted pursuant to Section 7.1 which
was incurred to purchase, or to finance or refinance the purchase price
of, the property encumbered by such Lien;
provided, however, that the aggregate value of the property encumbered by the
Liens permitted pursuant to this Section 7.2 shall at no time exceed 10% of
Consolidated Tangible Net Worth.
7.3 Dividends; Stock Retirements; and Restricted Investments. The
Company will not declare or pay any dividends (other than dividends payable
solely in capital stock of the Company) on any shares of any class of its
capital stock or apply any of its property or assets to the purchase,
redemption or other retirement of, or set apart any sum for the payment of any
dividends on, or for the purchase, redemption or other retirement of, or make
any other distribution, by reduction of capital or otherwise, in respect of, or
permit any Subsidiary to purchase any shares of any class of stock of the
Company, or make, or permit any Subsidiary to make, any Restricted Investment,
unless, immediately after giving effect to such action, there exists no Default
or Event of Default, and the sum of
(i) the amounts declared and paid or payable as, or set apart for,
dividends (other than dividends paid or payable in capital stock of the
Company) on all shares of stock of all classes of the Company or
distributed in respect of such shares of stock subsequent to December 31,
1992, and
(ii) the amounts applied to, or set apart for, the purchase
(including purchases by Subsidiaries), redemption or retirement of shares
of stock of all classes of the Company subsequent to December 31, 1992,
and
(iii) the Aggregate Amount of Restricted Investments
will not exceed the sum of $20,000,000 plus 50% of cumulative Consolidated Net
Income (or, in the case of a negative cumulative Consolidated Net Income, minus
50% of such deficit) accrued for each fiscal year subsequent to December 31,
1992 plus the net cash proceeds received by the
27
<PAGE> 33
Company from the sale of its common stock after the Closing Date, excluding
common stock sold to any Subsidiary of the Company.
Except as provided herein, the Company will not and will not permit
any of its Subsidiaries to create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to: (a) pay dividends or make any other
distribution on any of such Subsidiary's capital stock owned by the Company or
any Subsidiary of the Company; (b) make loans or advances to the Company or any
other Subsidiary; or (c) transfer any of its property or assets to the Company
or any other Subsidiary.
7.4 Contingent Obligations. The Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create or become or be liable
with respect to any Contingent Obligation, except:
(i) the Company may become and remain liable with respect to
guaranties resulting from endorsement of negotiable instruments for
collection in the ordinary course of business; and
(ii) the Company may become and remain liable with respect to
Contingent Obligations; provided that the maximum aggregate liability of
the Company in respect of all such Contingent Obligations shall not exceed
$40,000,000 at any time.
7.5 Financial Covenants.
A. Minimum Consolidated Tangible Net Worth. The Company will not
permit Consolidated Tangible Net Worth on the last day of any fiscal quarter to
be less than the sum of (i) $250,000,000 plus (ii) an amount equal to fifty
percent (50%) of the Company's Consolidated Net Income (or 0% should
Consolidated Net Income be negative) for each fiscal year, measured on a
cumulative basis for each fiscal year ending on or after the date of this
Agreement.
B. Minimum Consolidated Fixed Charge Coverage Ratio. The Company
will not permit the ratio of Consolidated Income Available For Consolidated
Fixed Charges to Consolidated Fixed Charges for the four consecutive fiscal
quarters ending on the last day of any fiscal quarter of the Company to be less
than the ratio for each period indicated below:
28
<PAGE> 34
<TABLE>
<CAPTION>
Four Fiscal Minimum
Quarters Ending Ratio
--------------- -----
<S> <C>
June 30, 1993 0.75:1.00
September 30, 1993 0.65:1.00
December 31, 1993 1.35:1.00
March 31, 1994 1.35:1.00
June 30, 1994 1.85:1.00
September 30, 1994 1.85:1.00
December 31, 1994 and
each quarter thereafter 2.25:1.00
</TABLE>
7.6 Restriction on Fundamental Changes. The Company will not, and will
not permit any of its Subsidiaries to, enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or acquire by purchase or otherwise a division,
business unit or all or substantially all of the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any Person,
except:
(i) the Company may acquire by purchase or otherwise a division,
business unit or all or substantially all of the business, property or
fixed assets of, or acquire stock or other evidence of beneficial ownership
of, any Person; provided that: (a) no Default or Event of Default has
occurred and is continuing, or would occur as a result of such acquisition,
and (b) the acquisition is of a Person engaged in, or assets utilized in, a
similar, or vertically integrated, line of business as that of the Company;
and
(ii) a wholly-owned Subsidiary of the Company or a Subsidiary of the
Company acquired pursuant to Section 7.6(i) may be merged or consolidated
with the Company or any other wholly-owned Subsidiary; provided, that (a)
if the merger or consolidation involves the Company, the Company shall be
the continuing or surviving corporation, and (b) no Default or Event of
Default has occurred and is continuing, or would occur as a result of such
merger or consolidation.
7.7 Restriction on Asset Sales. Neither the Company nor any of its
Subsidiaries will convey, sell, lease, sublease, transfer or otherwise dispose
of, any of its assets, whether now owned or hereafter acquired, except that the
Company and its Subsidiaries may:
29
<PAGE> 35
(i) sell or dispose of inventory and worn-out or obsolete equipment
in the ordinary course of business; and
(ii) in addition to Asset Sales permitted pursuant to Section 7.7(i),
convey, sell, transfer or otherwise dispose of their respective assets if
the aggregate Book Value of Assets Sold of all such Asset Sales (excluding
sales of any Net Assets Held For Sale listed on Schedule 5 as of the date
hereof) in any consecutive twelve-month period of the Company does not
exceed fifteen percent (15%) of Consolidated Tangible Net Worth as
determined as of the last day of the immediately preceding fiscal year;
provided, however, that the Company and its Subsidiaries shall not make any
such Asset Sales if the aggregate Book Value of Assets Sold of all such
Asset Sales (excluding sales of any Net Assets Held For Sale listed on
Schedule 5 as of the date hereof), measured on a cumulative basis from the
Closing Date, exceeds forty percent (40%) of Consolidated Tangible Net
Worth as determined as of the last day of the immediately preceding fiscal
year.
7.8 Sales and Lease-Backs. The Company will not, and will not permit any
of its Subsidiaries, directly or indirectly, to become or remain liable as
lessee or as guarantor or other surety with respect to any lease with any
Person, whether an operating lease or a capital lease, of any property (whether
real or personal or mixed) whether now owned or hereafter acquired, (i) which
the Company or any of its Subsidiaries has sold or transferred or is to sell or
transfer to such Person or such Person's Affiliate, or (ii) which the Company
or any such Subsidiary intends to use for substantially the same purpose as any
other property which has been or is to be sold or transferred by the Company or
any such Subsidiary to such Person or such Person's Affiliate in connection
with such lease.
7.9 Transactions with Stockholders and Affiliates. The Company will not,
and will not permit any of its Subsidiaries to, enter into any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity securities of the Company or with any Affiliate of the Company
or any such holder on terms that are less favorable to the Company or any such
Subsidiary than those which might be obtained at the time from Persons who are
not such a holder or Affiliate; provided, however, that the Company may engage
in transactions with its wholly-owned Subsidiaries on a basis
30
<PAGE> 36
consistent with past practices; provided, further, that the Company may enter
into such transactions with non-wholly-owned Subsidiaries as long as the
transactions are not, either individually or in the aggregate, material to the
Company.
7.10 Conduct of Business. The Company will not, and will not permit any
of its Subsidiaries to, engage in any business other than the business engaged
in by it on the date hereof and any businesses or activities substantially
similar to, vertically integrated with, or related thereto.
7.11 Use of Proceeds. The Company will not use all or any portion of the
Proceeds from the issuance of any Note for any purpose other than as set forth
in Section 4.16.
7.12 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or Event of Default if such action is taken or
condition exists.
7.13 Purchase of Notes. The Company will not, and will not permit any of
its Subsidiaries or Affiliates to, purchase, redeem or otherwise acquire any
Note, directly or indirectly, except upon the payment or prepayment thereof in
accordance with the terms of this Agreement and such Note or pursuant to an
offer made pro rata and on the same terms to the Holders of all Notes. In case
the Company, any Subsidiary or any Affiliate acquires any Note or Notes
pursuant to any such offer, such Note or Notes shall thereafter be cancelled
and shall not be reissued, and no Note shall be issued in substitution
therefor.
SECTION 8. DEFAULTS AND REMEDIES.
8.1 Events of Default. If one or more of the following events (herein
called "Events of Default") shall occur for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest upon any Note when such
interest becomes due and payable, and such default shall have continued for
a period of five (5) days; or
31
<PAGE> 37
(ii) default in the payment of principal of (or premium, if any, on)
any Note when and as the same shall become due and payable, whether at
maturity or at a date fixed for prepayment (including, without limitation,
a prepayment as provided in Section 3.1) or by acceleration or otherwise;
or
(iii) default in the performance or observance of any covenant,
agreement or condition contained in Section 7; or
(iv) default in the performance or observance of any other covenant,
agreement or condition contained in the Notes or in this Agreement and
continuance of such default for a period of 30 days after any Authorized
Officer has obtained knowledge of such default; or
(v) the Company or a Subsidiary shall not pay when due, whether by
acceleration or otherwise, any evidence of indebtedness of the Company or
such Subsidiary (other than the Notes) or any condition or default shall
exist under any such evidence of indebtedness or under any agreement under
which the same may have been issued permitting (or, with the giving of
notice or lapse of time or both, would permit) such evidence of
indebtedness to become or be declared due prior to the stated maturity
thereof or by which the holder thereof may cause or require the Company or
any Subsidiary to purchase such indebtedness prior to the stated maturity
thereof; provided that the aggregate outstanding principal amount of all
such indebtedness (including any indebtedness that may be or is declared
due by reason of the same nonpayment, condition or default) is in excess of
$5,000,000;
(vi) the Company or any Subsidiary shall file a petition seeking
relief for itself under Title 11 of the United States Code, as now
constituted or hereafter amended, or an answer consenting to, admitting the
material allegations of or otherwise not controverting, or shall fail to
timely controvert, a petition filed against the Company or such Subsidiary
seeking relief under Title 11 of the United States Code, as now constituted
or hereafter amended; or the Company or any Subsidiary shall file such a
petition or answer with respect to relief under the provisions of any other
now
32
<PAGE> 38
existing or future bankruptcy, insolvency or other similar law of the
United States of America or any State thereof or of any other country or
jurisdiction providing for the reorganization, winding-up or liquidation of
corporations or an arrangement, composition, extension or adjustment with
creditors; or
(vii) a court of competent jurisdiction shall enter an order for relief
which is not stayed within 60 days from the date of entry thereof against
the Company or any Subsidiary under Title 11 of the United States Code, as
now constituted or hereafter amended; or there shall be entered an order,
judgment or decree by operation of law or by a court having jurisdiction in
the premises which is not stayed within 60 days from the date of entry
thereof adjudging the Company or any Subsidiary a bankrupt or insolvent, or
ordering relief against the Company or any Subsidiary, or approving as
properly filed a petition seeking relief against the Company or any
Subsidiary, under the provisions of any other now existing or future
bankruptcy, insolvency or other similar law of the United States of America
or any State thereof or of any other country or jurisdiction providing for
the reorganization, winding-up or liquidation of corporations or an
arrangement, composition, extension or adjustment with creditors, or
appointing a receiver, liquidator, assignee, sequestrator, trustee,
custodian or similar official of the Company or any Subsidiary or of any
substantial part of its property, or ordering the reorganization,
winding-up or liquidation of its affairs; or any involuntary petition
against the Company or any Subsidiary seeking any of the relief specified
in this clause shall not be dismissed within 60 days of its filing; or
(viii) the Company or any Subsidiary shall make a general assignment for
the benefit of its creditors; or the Company or any Subsidiary shall
consent to the appointment of or taking possession by a receiver,
liquidator, assignee, sequestrator, trustee, custodian or similar official
of the Company or such Subsidiary or of all or any substantial part of its
property; or the Company or any Subsidiaries shall have admitted to its
insolvency or inability to pay, or shall have failed to pay, its debts
generally as such debts become due; or the Company or any Subsidiary or its
33
<PAGE> 39
directors or majority stockholders shall take any action looking to the
dissolution or liquidation of the Company or such Subsidiary (other than as
contemplated by Sections 7.6 and 7.7); or
(ix) the rendering against the Company or a Subsidiary of a final
judgment, decree or order for the payment of money in excess of $500,000
and the continuance of such judgment, decree or order unsatisfied and in
effect for any period of 60 consecutive days without a stay of execution;
or
(x) the Company or any Subsidiary shall (1) engage in any nonexempted
"prohibited transaction," as defined in Sections 406 and 408 of ERISA and
Section 4975 of the Internal Revenue Code of 1986, as amended, (2) incur
any "accumulated funding deficiency," as defined in Section 302 of ERISA,
whether or not waived, or (3) terminate or permit the termination of any
"employee pension benefit plan," as defined in Section 3 of ERISA, in a
manner which could result in the imposition of a Lien on the property of
the Company or such Subsidiary pursuant to Section 4068 of ERISA; or
(xi) any representation by or on behalf of the Company in this
Agreement or any certificate or instrument furnished in connection herewith
or with the Notes proves to have been false or misleading in any material
respect as of the date given or made;
then (a) upon the occurrence of any Event of Default described in Sections
8.1(vi), 8.1(vii) or 8.1(viii) with respect to the Company (each a "Bankruptcy
Default"), all of the Notes shall automatically become immediately due and
payable, (b) upon the occurrence of any Event of Default described in Section
8.1(i) or Section 8.1(ii), the Holder of any Note may at any time during its
continuance, by written notice to the Company, declare such Note to be due and
payable, whereupon such Note shall forthwith mature and become due and payable
or (c) upon the occurrence of any Event of Default other than a Bankruptcy
Default, the Holder or Holders of at least a majority in principal amount of
the Notes then outstanding (exclusive of any Notes held by the Company, any
Subsidiary or any Affiliate of the Company) may at any time during its
continuance, by written notice to the Company, declare all of the Notes to be
due and payable, whereupon in each case all of the Notes shall forthwith mature
and become due and payable.
34
<PAGE> 40
Notwithstanding anything contained in the preceding paragraph, at any
time within 60 days after an acceleration of the Notes pursuant to such
paragraph, the Requisite Holders by notice to the Company may rescind the
acceleration and its consequences if all existing Events of Default have been
cured or waived (except nonpayment of principal, interest or premium that has
become due solely because of the acceleration) and such rescission would not
conflict with any judgment or decree entered by any court of competent
jurisdiction.
The amount payable upon the occurrence of a Bankruptcy Default shall
be the entire unpaid principal amount of the Notes, together with interest
accrued thereon, to the extent permitted by law, to the date of payment, and
such amount shall be payable without presentment, demand, protest or other
requirement of any kind, all of which are expressly waived by the Company. The
amount payable upon an acceleration based on any other Event of Default shall
be, to the extent permitted by law, the Yield Maintenance Price of the Notes so
accelerated, together with interest accrued on the unpaid principal amount of
the Notes so accelerated to the date of payment, and such amount shall be
payable without presentment, demand, protest or further notice, all of which
are expressly waived by the Company.
On the Calculation Date, the Computing Holder shall give written
notice to the Company and all the Holders of the amount of the Yield
Maintenance Price of the Notes so accelerated, which notice shall set forth in
reasonable detail the computation thereof; provided, however, that the failure
of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes and the Computing Holder shall have no
liability to the Company or any other Holder for its failure to make such
determination. The Yield Maintenance Price set forth in such notice shall be
binding on the Company and all of the Holders of the Notes, absent manifest
error.
SECTION 9.
9.1 CERTAIN DEFINITIONS.
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under control with, that Person.
For the purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power
35
<PAGE> 41
to direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise.
"Aggregate Amount" when used with respect to Restricted Investments at
any particular time means and shall be calculated by adding together the amount
of each such Restricted Investment, determined, with respect to each such
Restricted Investment, at the greater of:
(a) with respect to each Restricted Investment (other than guarantees
of Indebtedness), the amount originally entered on the books of the Company
or any Subsidiary with respect thereto or the cost thereof to the Company
or such Subsidiary, whichever shall be greater, minus in each case any net
return of capital (after income taxes applicable thereto) upon such
Restricted Investment through the sale or liquidation of such Restricted
Investment or any part thereof, or otherwise; and
(b) with respect to guarantees of Indebtedness, the amount of such
Indebtedness at the time outstanding.
"Asset Sale" means the sale, transfer or other disposition by the
Company or any of its Subsidiaries to any Person of any asset of the Company or
any such Subsidiary.
"Authorized Officer" means the Chief Executive Officer, Chief
Financial Officer, General Counsel, Controller or Treasurer of the Company.
"Book Value of Assets Sold" means, with respect to any Asset Sale, the
net book value of the assets sold pursuant to such Asset Sale calculated in
conformity with GAAP.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of California and the
State of New York or is a day on which banking institutions located in such
states are authorized by law or other governmental action to close.
"Calculation Date" means the date on which the Yield Maintenance Price
on the Notes being prepaid pursuant to Section 3.2 or Section 3.3 hereof or
accelerated pursuant to Section 8 hereof, as the case may be, is to be
determined by the Computing Holder with respect to such Notes. If the Notes
are being prepaid pursuant to Section 3.2, the Calculation Date shall be the
fifth Business Day prior to
36
<PAGE> 42
the Optional Prepayment Date established pursuant to Section 3.2. If the Notes
are being prepaid pursuant to Section 3.3, the Calculation Date shall be the
fifth Business Day prior to the Change of Control Prepayment Date. If the
Notes are being accelerated pursuant to Section 8 hereof, the Calculation Date
shall be the date of acceleration of such Notes.
"Change of Control" shall occur when any Person or two or more Persons
acting in concert shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the SEC under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of the Company (or other
securities convertible into such securities) representing 20% or more of the
combined voting power of all securities of the Company entitled to vote in the
election of directors, other than securities having such power only by reason
of the happening of a contingency; provided, however, that The Dan Murphy
Foundation may acquire an aggregate beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended), directly or indirectly, of the Company (or
other securities convertible into such securities) representing up to 49% of
the combined voting power of all securities of the Company entitled to vote in
the election of directors, other than securities having such power only by
reason of the happening of a contingency.
"Change of Control Prepayment Date" shall have the meaning assigned to
such term in Section 3.3.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit B hereto, delivered to each Holder by the Company pursuant to
Section 6.1(iii).
"Computing Holder" means as of a Calculation Date with respect to (i)
the prepayment of Notes pursuant to Section 3.2 or acceleration of the Notes
pursuant to clause (c) of the first paragraph of Section 8.1, as the case may
be, the Holder at such date of the largest aggregate principal amount of the
outstanding Notes or (ii) the prepayment of the Notes pursuant to Section 3.3
or acceleration pursuant to clause (b) of the first paragraph of Section 8.1,
as the case may be, the Holder of the Notes at such date so being prepaid or
accelerated. For purposes of such determination, the Holder of any Note and
any of its Affiliates or Subsidiaries that are Holders of any Notes shall be
treated as one Holder.
37
<PAGE> 43
"Consolidated", when used with respect to any of the terms defined
herein, refers to such terms as reflected in a consolidation of the accounts of
the Company and its Subsidiaries in conformity with GAAP (including giving
effect to the elimination of all intercompany items in conformity with GAAP).
"Consolidated Assets" means, as at any date of determination, the
total assets of the Company and its Subsidiaries on a Consolidated basis
determined in conformity with GAAP.
"Consolidated EBIT" means, for any period, the sum (without
duplication) of (i) Consolidated Net Income for such period (ii) provision for
taxes in respect of, or measured by, income or excess profits, calculated on a
Consolidated basis for such period; and (iii) Consolidated Interest Expense for
such period.
"Consolidated Fixed Charges" means, for any period and without
duplication, the sum of (i) Consolidated Interest Expense for such period, and
(ii) Consolidated Rent Payments paid or payable during such period.
"Consolidated Income Available For Consolidated Fixed Charges" means,
for any period, the sum (without duplication) of (i) Consolidated EBIT for such
period, and (ii) Consolidated Rent Payments for such period.
"Consolidated Interest Expense" means, for any period, the sum,
without duplication, of (i) total interest expense (including that portion
attributable to capital leases and interest capitalized in conformity with
GAAP) of the Company and its Subsidiaries for such period on a Consolidated
basis, including, without limitation, fees payable to the agent and the banks
in connection with the Credit Agreement and (ii) the aggregate amount of all
interest and finance charges on Consolidated Off Balance Sheet Obligations for
such period.
"Consolidated Net Income" means, for any period, the net income (or
loss) of the Company and its Subsidiaries on a Consolidated basis determined in
conformity with GAAP for such period taken as a single accounting period;
provided that there shall be excluded (i) the income (or loss) of any Person
(other than a Subsidiary of the Company) in which any other Person (other than
the Company or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Company or any of its Subsidiaries by such Person during such period, but net
of any additional
38
<PAGE> 44
Investment made by the Company or any of its Subsidiaries in such Person during
such period, (ii) the income (or loss) of any Person accrued prior to the date
it becomes a Subsidiary of the Company or is merged into or Consolidated with
the Company or any of its Subsidiaries or that Person's assets are acquired by
the Company or any of its Subsidiaries, and (iii) the income of any Subsidiary
of the Company to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary.
"Consolidated Off Balance Sheet Obligations" means, as at any date of
determination, the sum (without duplication) of (i) any indebtedness or
obligation of an Affiliate or a Subsidiary of the Company or any of their
respective Subsidiaries or any partnership in which the Company or any of its
Subsidiaries or any of their respective Affiliates is a general or limited
partner, (ii) any outstanding amount of accounts receivable or notes sold by
the Company or any of its Subsidiaries, (iii) any non-recourse financing of
real property, equipment or other asset by the Company or any of its
Subsidiaries or Affiliates, (iv) any liabilities, whether recourse or
non-recourse, associated with or secured by "assets held for sale" of the
Company or any of its Subsidiaries, (v) any obligations under a sale and lease
back transaction entered into by the Company or any of its Subsidiaries as
lessee, and (vi) any other transaction, regardless of form, which is the
functional equivalent of borrowing by the Company or any of its Subsidiaries;
provided that (a) such indebtedness or obligation shall be included only to the
extent that it does not appear on the Consolidated financial statements of the
Company and (b) if such indebtedness or other obligation is owed by an entity
other than the Company or one of its wholly-owned Subsidiaries, it shall be
reduced by the amount attributable to other ownership interests.
"Consolidated Rent Payments" means, for any period, the aggregate
amount of the rental payments and other amounts incurred by the Company and its
Subsidiaries as lessees under all leases of the Company or its Subsidiaries
during such period, including, without limitation, minimum royalty payments,
and excluding any amounts incurred in connection with capital leases to the
extent such amounts are included in the calculation of Consolidated Interest
Expense.
39
<PAGE> 45
"Consolidated Tangible Assets" means, at any date of determination,
(i) Consolidated Assets minus (ii) goodwill, patents, trademarks and other
intellectual property, organizational expenses, deferred research and
developments costs, deferred marketing expenses and other intangible assets of
the Company and its Subsidiaries (determined on a Consolidated basis in
conformity with GAAP).
"Consolidated Tangible Net Worth" means, at any date of determination,
Consolidated Tangible Assets minus Consolidated Total Liabilities.
"Consolidated Total Liabilities" means, as at any date of
determination, the total liabilities of the Company and its Subsidiaries on a
Consolidated basis which may properly be classified as liabilities in
conformity with GAAP (including, without limitation, (i) any balance sheet
liability with respect to any pension plan recognized pursuant to Financial
Accounting Standards Board Statements 87 or 88, and (ii) any withdrawal
liability under Section 4201 of ERISA with respect to a withdrawal from a
"multiemployer plan" (as defined in Section 3(37) of ERISA) as such liability
may be set forth in a notice of withdrawal liability under Section 4219 of
ERISA, and as adjusted from time to time subsequent to the date of such
notice).
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation and without duplication, any such obligation
directly or indirectly guarantied, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made, or discounted or sold
with recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including, without limitation, any such
obligation for which that Person is in effect liable through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet item, level of income or other financial condition of the
obligor of such obligation, or to make payment for any products, materials or
supplies or for any transportation, services or lease regardless of the
non-delivery or non-furnishing thereof, in any case if the purpose or intent of
such agreement is to provide assurance that such obligation
40
<PAGE> 46
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will be protected (in
whole or in part) against loss in respect thereof; provided, however, that
excluded from this definition shall be contingent obligations to the extent
such obligations are indemnified by Onoda Cement Co., Ltd. ("Onoda") pursuant
to the agreement among the Company, California Portland Cement Co., and Onoda
U.S.A., Inc., dated July 19, 1988, in an aggregate amount not in excess of
$47,500,000, on the Closing Date, minus an amount equal to each reduction of
such contingent obligations after the Closing Date with each such reduction
made on the earlier of (i) the date the applicable payment (or reduction in the
contingent obligation) is made by the principal obligor, Onoda or the Company,
or (ii) the due date of such payment, but in no event shall the aggregate
amount of such reductions be less than $6,170,000 per annum. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guarantied or otherwise supported.
"Credit Agreement" means that certain Credit Agreement dated as of
June 30, 1992, among the Company, Bank of America National Trust and Savings
Association, as agent, and the lenders party thereto, as it has been and may be
amended, supplemented, restated or otherwise modified from time to time.
"Default" means a condition or event which, after notice or lapse of
time or both, would constitute an Event of Default if that condition or event
were not cured or waived within any applicable grace or cure period.
"Documents" shall mean this Agreement, including all exhibits and
schedules hereto, the Notes, and all other documents executed in connection
with the consummation of the transactions contemplated herein and therein.
"Employee Benefit Plan" means any "employee benefit plan" which is
defined in Section 3(3) of ERISA and which is or was maintained or contributed
to by the Company or any ERISA Affiliate of the Company.
"Environmental Liabilities and Costs" means all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, expert and
consulting fees and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest, incurred as a result of any claim or demand,
by any Person, whether based in contract, tort, implied or
41
<PAGE> 47
express warranty, strict liability, criminal or civil statute, including any
Hazardous Materials Law, permit, law, rule, regulation, order or agreement with
a governmental authority or other Person, arising from environmental, health or
safety conditions related to, or the Release or threatened Release by reason
of, the past, present or future operations of the Company or any of its
Subsidiaries.
"Environmental Lien" means any Lien in favor of any governmental
authority for Environmental Liabilities and Costs.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" as applied to any Person, means (i) any corporation
which is or was a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is
or was a member; (ii) any trade or business (whether or not incorporated) which
is or was a member of a group of trades or businesses under common control
within the meaning of Section 414(c) of the Internal Revenue Code for which
that Person is or was a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Internal Revenue Code
of which that Person, any corporation described in clause (i) above or any
trade or business described in clause (ii) above is or was a member.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to
any Pension Plan (whether or not waived in accordance with Section 412(d) of
the Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate
such plan in a distress termination described in Section 4041(c) of ERISA; (iv)
the withdrawal by the Company or any of its ERISA Affiliates from any Pension
Plan with two or more contributing sponsors or the termination of any such
Pension Plan resulting in liability pursuant to Sections 4063 or 4064 of ERISA;
42
<PAGE> 48
(v) the institution by the PBGC of proceedings to terminate any Pension Plan,
or the occurrence of any event or condition which might constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on the Company
or any of its ERISA Affiliates pursuant to Sections 4062(e) or 4069 of ERISA or
by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal
of the Company or any of its ERISA Affiliates in a complete or partial
withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any
Multiemployer Plan if there is any potential liability therefor, or the receipt
by the Company or any of its ERISA Affiliates of notice from any Multiemployer
Plan that it is in reorganization or insolvency pursuant to Sections 4241 or
4245 of ERISA, or that it intends to terminate or has terminated under Sections
4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could
give rise to the imposition on the Company or any of its ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Sections 409, 502(c), (i) or (1) or 4071 of ERISA in
respect of any Employee Benefit Plan; (ix) the assertion of a material claim
(other than routine claims for benefits) against any Employee Benefit Plan
other than a Multiemployer Plan or the assets thereof, or against the Company
or any of its ERISA Affiliates in connection with any such plan; or (x) receipt
from the Internal Revenue Service or any successor thereto of notice of the
failure of any Pension Plan (or any other Employee Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to qualify under
Section 401(a) of the Internal Revenue Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption from taxation under
Section 401(a) of the Internal Revenue Code; or (xi) the imposition of a lien
pursuant to Sections 401(A)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession.
43
<PAGE> 49
"Hazardous Materials" means (i) any chemical, material or substance
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous waste," "restricted
hazardous waste," or "toxic substances" or words of similar import under any
applicable local, state or federal law or under the regulations adopted or
promulgated pursuant thereto, including, without limitation, Hazardous
Materials Laws, (ii) any oil, petroleum or petroleum derived substance, any
drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, any flammable substances
or explosives, any radioactive materials, (iii) asbestos in any form which is
or could become friable, urea formaldehyde foam insulation, electrical
equipment which contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per million, and (iv) any
other chemical, material or substance, exposure to which may or could pose a
hazard to the health and safety of the owners or occupants or any Persons
surrounding any of the properties owned or occupied by the Company or any of
its Subsidiaries.
"Hazardous Materials Laws" means all statutes, ordinances, orders,
rules, regulations, plans or decrees and the like relating to health or welfare
or protection of the environment, including, without limitation, those relating
to fines, orders, injunctions, penalties, damages, contribution, costs recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Materials and to the generation, use, storage,
transportation, or disposal of Hazardous Materials, in any manner applicable to
the Company or any of its Subsidiaries or any of their respective properties,
each as in effect as of the date of determination.
"Holders" means the holders of the Notes from time to time, and shall
include the Purchasers and the Transferees.
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to capital
leases which is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money, (iv) any obligation owed for all or any part of the deferred purchase
price of property or services which purchase price is due more than six months
from the date of incurrence of the obligation in respect thereof or evidenced
by a note or
44
<PAGE> 50
similar written instrument and (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtednesses secured thereby shall have been assumed by that Person or is
non-recourse to the credit of that Person.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
"Investments" means and includes all investments made, whether by
acquisition of stock or Indebtedness, or by loan, guaranty, advance (other than
an advance to an employee and other than endorsements for purposes of
collection, in each case in the ordinary course of business), transfer of
property, capital contribution, or otherwise, by the Company in any Person
which at the time is not a Subsidiary (or a Person which by reason of such
investment becomes a Subsidiary) or by any Subsidiary in any Person other than
the Company or another Subsidiary (or a Person which by reason of such
investment becomes a Subsidiary).
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"Material Adverse Effect" means a material and adverse effect on the
business, operations, properties, prospects, assets or condition, financial or
other, of the Company and its Subsidiaries, taken as a whole.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 3(37) of ERISA to which the Company or any of its ERISA Affiliates is
contributing or ever has contributed or to which the Company or any of its
ERISA Affiliates has, or ever has had, an obligation to contribute.
"Net Assets Held For Sale" means the assets and corresponding
liabilities listed on Schedule 5 hereto as of the date hereof and held for sale
by the Company, as such schedule may be amended from time to time with the
consent of the Requisite Holders; provided that the aggregate amount of assets
(without giving effect to any reductions based on corresponding liabilities)
added to Schedule 5 as a result of amendments subsequent to the date hereof
shall not exceed five million dollars ($5,000,000).
45
<PAGE> 51
"Officer's Certificate" means a certificate signed in the name of the
Company by an Authorized Officer.
"Overdue Interest Rate" means the greater of (i) 8.70 percent (8.70%)
per annum and (ii) two percent (2%) over the rate of interest publicly
announced by The Chase Manhattan Bank, N.A., from time to time as its corporate
base rate of interest.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
"Permitted Liens" means the following types of Liens (other than any
Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue
Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by Section 6.4;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Persons and other Liens imposed by
law incurred in the ordinary course of business for sums not yet delinquent
or being contested in good faith, if such reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made
therefor;
(iii) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(iv) any attachment or judgment Lien, unless the judgment it secures
(a) shall not, within thirty days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have
been discharged within
46
<PAGE> 52
thirty days after the expiration of any such stay or (b) shall be in effect
and a period of ten days or less remains prior to any proposed sale
thereunder; and
(v) easements, rights of way, servitudes or zoning or building
restrictions and other minor encumbrances on real property which do not in
the aggregate materially interfere with or impair the operation of such
property for the purposes for which it is or may reasonably be expected to
be used.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, unlawful disposal, discharge, dispersal, leaching or
migration of any Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials) or
into or out of any property owned, used or operated by the Company or any of
its Subsidiaries, including the movement of any Hazardous Materials through or
in the air, soil, surface water, groundwater or property.
"Remedial Action" means all actions required to (i) clean up, remove,
treat or in any other way address Hazardous Materials in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; or (iii) perform preremedial studies and investigations and
post-remedial monitoring and care.
"Requisite Holders" means Persons holding at any time more than
sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding
principal amount of the Notes.
"Restricted Investments" shall mean Investments other than
47
<PAGE> 53
(i) in any direct obligations of the United States or fully
guaranteed by the United States;
(ii) deposit accounts to the extent insured by the Federal Deposit
Insurance Corporation (the "FDIC", including any successor to the functions
of the FDIC) up to $2,500,000 in the aggregate at any time;
(iii) in any commercial paper, maturing within 270 days, having a
rating of A-1 or P-1 by Moody's Investors Services, Inc. ("Moody's") or
Standard & Poor's Corporation ("S&P"), respectively;
(iv) in certificates of deposit, savings or time deposits, capital
notes or other evidences of indebtedness of, or guaranteed by, any member
bank of the Federal Reserve System (a) having maturities of one year or
less and (b) which bank (x) has a combined capital and surplus of at least
$500,000,000 as shown on its most recent published balance sheet
immediately prior to the date of the making of such investment and (y) is
rated (or the senior debt securities of the holding company of such bank
are rated) A3 or better or A- or better by Moody's or S&P, respectively;
(v) in money market preferred stocks rated in one of the top two
rating classifications by Moody's or S&P;
(vi) in repurchase agreements and similar commercial undertakings for
terms of less than one year, provided that such repurchase agreements or
undertakings are secured and collateralized by obligations of the United
States of America or any agency thereof in an aggregate face amount equal
to or greater than the obligations so secured; and
(vii) money market funds, rated in one of the top two rating
classifications by Moody's or S&P, substantially all of the assets of which
are comprised of securities of the types described in clauses (i), (iii),
(iv), or (v) immediately above.
"SEC" means the Securities and Exchange Commission, and any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
48
<PAGE> 54
"Subsidiary", with respect to any person, means any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock entitled to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Transferee" shall mean any Person who shall acquire an interest in
any Note as a result of an assignment, sale or other transfer by the Holder of
such Note.
"Weighted Average Life to Final Maturity" of any Indebtedness
(including the Notes) as of the time of determination thereof means the number
of years (rounded to the nearest one-twelfth) obtained by dividing the then
Remaining Dollar-Years of such Indebtedness by the then outstanding principal
amount of such Indebtedness. For the purposes of this definition, "Remaining
Dollar-Years" means the sum of the amounts obtained by multiplying the amount
of each then remaining sinking fund, serial maturity or other required
repayment, including repayment at final maturity, by the number of years
(calculated to the nearest one-twelfth) which will elapse between the time of
such determination and the date such repayment is scheduled to be made.
"Yield Maintenance Price" means, with respect to any principal amount
of Notes being prepaid pursuant to Section 3.2 or Section 3.3 or accelerated
pursuant to Section 8.1, as the case may be, the greater of (1) the sum of the
respective Payment Values of each prospective interest payment (excluding from
the first prospective interest payment any amount of interest accrued to the
applicable date of prepayment or acceleration), prospective mandatory principal
prepayment and the principal payment at maturity in respect of such Notes (the
amount of each such payment being herein referred to as a "Payment"), or (2)
the unpaid principal amount of such Notes. The "Payment Value" of each Payment
shall be determined by discounting such Payment at the Reinvestment Rate for
the period from the scheduled date of such Payment (such scheduled date or
dates of Payments of principal, in the case of Notes being partially prepaid,
to be the date or dates as of which the principal amount being prepaid is to be
applied against payment at maturity or mandatory prepayments under the relevant
provisions of the Notes) to the applicable date of prepayment or acceleration,
as the case may be. The "Reinvestment Rate" is the sum of (a) .50% and (b) the
yield to maturity implied by (i) the yields reported on the
49
<PAGE> 55
display designated as "Page 7677" on the Telerate Service (or such other
display as may replace Page 7677 on the Telerate Service) for actively traded
"On The Run" United States Treasury securities having a maturity equal (or as
close as practicable) to the Weighted Average Life To Final Maturity of the
principal amount of the Notes so to be prepaid or accelerated, as the case may
be, or if such yields shall not be reported as of such time or the yields
reported as of such time shall not be ascertainable, (ii) the Treasury Constant
Maturity Series yields reported as of the Calculation Date with respect to such
prepayment or acceleration, as the case may be, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for actively
traded "On The Run" United States Treasury Securities having a constant
maturity equal (or as close as practicable) to the Weighted Average Life To
Final Maturity of the principal amount of the Notes so to be prepaid or
accelerated, as the case may be. Such implied yield shall be determined, if
necessary, by (a) converting United States Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between yields reported for various maturities. The
yields of such United States Treasury securities shall be determined as of 10
A.M. Eastern Time, on the applicable Calculation Date.
9.2 Accounting Terms; Financial Covenant Calculations. All accounting
terms not specifically defined in this Agreement shall be construed, and all
financial data required to be submitted by this Agreement shall be prepared, in
conformity with GAAP, except as otherwise specifically provided herein.
Compliance with financial covenants and other covenants compliance with which
requires reference to the Company's financial statements shall be determined in
accordance with GAAP as in effect on the Closing Date.
9.3 Miscellaneous Terms. All terms defined in this Agreement shall be
applicable to both the singular and plural forms thereof, as the context
requires. The term "or" is disjunctive; the term "and" is conjunctive. The
term "shall" is mandatory; the term "may" is permissive. The term "including"
is by way of example and not a limitation.
SECTION 10. MISCELLANEOUS.
10.1 Note Payments. The Company agrees that it will make payments of
principal of and interest on each Note in accordance with the terms of this
Agreement, by wire transfer of immediately available funds for credit to the
50
<PAGE> 56
account numbers and Holders as set forth in Annex I hereto, or such other
account or accounts in the United States as you or any Transferee may designate
in writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. You agree that, before disposing of any Note,
you will make a notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
Section 10.1 to any Transferee which shall have made the same agreement as you
have made in this Section 10.1.
10.2 Expenses. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save you, each Holder and
any Transferee harmless against liability for the payment of, all out-of-pocket
expenses arising in connection with such transactions, including (i) all
document production and duplication charges and the fees and expenses of any
special counsel engaged by you in connection with this Agreement and the
related documents and the transactions contemplated hereby, (ii) all document
production and duplication charges and the fees and expenses of any special
counsel engaged by you or any Transferee in connection with any subsequent
proposed modification of, or proposed consent under, this Agreement and the
Documents, whether or not such proposed modification shall be effected or
proposed consent granted, and (iii) the costs and expenses, including
attorneys' fees, incurred by you, each Holder or such Transferee in enforcing
(or determining whether or how to enforce) any rights under this Agreement and
the Documents or in responding to any subpoena or other legal process or
informal investigative demand issued in connection with this Agreement or any
Document or the transactions contemplated hereby or by reason of your, such
Holder's or such Transferee's having acquired any Note, including without
limitation, costs and expenses incurred in any bankruptcy case, provided, that
the Company shall only be obligated to pay the attorneys' fees of one counsel
representing the Holders unless there is a conflict of interest which results
in any Holder engaging separate counsel. The obligations of the Company under
this Section 10.2 shall survive the transfer of any Note or portion thereof or
interest therein by you, any Holder or any Transferee and the payment of any
Note.
10.3 Consent to Amendments. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the written
consent to such amendment, action or omission to act, of the
51
<PAGE> 57
Requisite Holders of all Notes except that, without the written consent of the
Holder or Holders of all Notes at the time outstanding, no amendment to this
Agreement shall change the maturity of any Note (except with the written
consent of all Holders of all of the Notes), or change the principal of, or the
rate or time of payment of interest on any Note (except with the written
consent of all Holders of all of the Notes), or affect the time, amount or
allocation of any prepayments, or change the proportion of the principal amount
of the Notes required with respect to any consent, amendment, waiver or
declaration. Each Holder of any Note at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 10.3, whether or not
such Note shall have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent. No course of
dealing between the Company and the Holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a waiver of
any rights of any Holder of such Note. As used herein and in the Notes, the
term "Agreement" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.
10.4 Form, Registration, Transfer and Exchange of Notes; Lost Notes. The
Notes are issuable as registered notes without coupons in denominations of at
least $500,000, except as may be necessary to reflect any principal amount not
evenly divisible by $500,000. The Company shall keep at its principal office a
register in which the Company shall provide for the registration of Notes and
of transfers of Notes. Upon surrender for registration of transfer of any Note
at the principal office of the Company, the Company shall, at its expense,
execute and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees. At
the option of the Holder of any Note, such Note may be exchanged for other
Notes of like tenor and of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Note to be exchanged at the principal
office of the Company. Whenever any Notes are so surrendered for exchange, the
Company shall, at its expense, execute and deliver the Notes which the Holder
making the exchange is entitled to receive. Every Note surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer duly executed, by the Holder of such Note
or such Holder's attorney duly authorized in writing. Any Note or Notes issued
in exchange for any Note or upon transfer thereof shall carry the rights to
unpaid interest and interest to accrue which were carried by the Note so
exchanged or transferred, so that neither gain nor loss of interest shall
52
<PAGE> 58
result from any such transfer or exchange. Upon receipt of written notice from
the Holder of any Note of the loss, theft or destruction of such Note or, in
the case of any mutilation, upon surrender and cancellation of such Note, the
Company will make and deliver a new Note, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Note, and upon receipt of such Holder's
indemnity agreement in the case of stolen, lost or destroyed Notes, which shall
be an unsecured indemnity if the indemnitor is a domestic bank, insurance
company, financial institution, pension fund, mutual fund or similar fund.
Any new Note issued pursuant to the preceding paragraph shall bear a
legend substantially similar to the legend described in Section 5.1.
10.5 Persons Deemed Owners; Participations. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and Holder of such Note for the purpose of
receiving payment of principal of, premium, if any, and interest on such Note
and for all other purposes whatsoever, whether or not such Note shall be
overdue, and the Company shall not be affected by notice to the contrary.
Subject to the preceding sentence, the Holder of any Note may from time to time
grant participations in such Note to any Person on such terms and conditions as
may be determined by such Holder in its sole and absolute discretion, provided
that any such participation shall be in a principal amount of at least
$500,000.
10.6 Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement, the Notes and the other Documents, the transfer by
you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any Transferee, regardless of any investigation
made at any time by or on behalf of you or any Transferee. Subject to the
preceding sentence, this Agreement, the Notes and the other Documents embody
the entire agreement and understanding between each of you and the Company and
supersede all prior agreements and understandings relating to the subject
matter hereof, including without limitation, the term sheet dated May 24, 1993
and any correspondence and oral discussions relating thereto.
10.7 Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the
53
<PAGE> 59
benefit of the respective successors and assigns of the parties hereto
(including, without limitation, any Transferee) whether so expressed or not.
10.8 Notices. All written communications provided for hereunder must be
in writing and shall be effectively served upon receipt or delivery, or if
mailed, upon the first to occur of receipt or the expiration of forty-eight
hours after being deposited in certified United States mail, postage prepaid,
and (i) if to the Holders addressed to each of you at your respective addresses
on Annex I to this Agreement or at such other address as each of you shall have
specified to the Company in writing (or at such telefacsimile number as you
shall from time to time designate in writing), (ii) if to any other Holder of
any Note, addressed to such other Holder at such address (or at such
telefacsimile number) as such other Holder shall have specified to the Company
in writing or, if any such other Holder shall not have so specified an address
(or telefacsimile number) to the Company, then addressed to such other Holder
in care of the last Holder of such Note which shall have so specified an
address to the Company, and (iii) if to the Company, addressed to it at 3200
San Fernando Road, Los Angeles, California 90065, Attention: Frederick Sauer,
Treasurer, or at such other address as the Company shall have specified to the
Holder of each Note in writing (or at such telefacsimile number as the Company
shall from time to time designate in writing); provided, however, that any such
communication to the Company may also, at the option of the Holder of any Note,
be delivered by any other means either to the Company at its address specified
above or to any officer of the Company.
10.9 Payments Due on Non-Business Days. Anything in this Agreement or the
Notes to the contrary notwithstanding, any payment in respect of any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day. If the date for any payment is extended to the next succeeding
Business Day by reason of the preceding sentence, the period of such extension
shall be included in the computation of the interest payable on such Business
Day.
10.10 Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to you or to the Requisite Holders, the
determination of such satisfaction shall be made by you or the Requisite
Holders, as the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
54
<PAGE> 60
10.11 Governing Law; Choice of Forum; Waiver of Jury Trial. This
Agreement shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of California, without
regard to principles of conflicts of laws. The Company hereby submits to the
nonexclusive jurisdiction of the United States District Courts for the Central
District of California and of any California State Court sitting in Los Angeles
for purposes of all legal proceedings arising out of or relating to the
Documents or the transactions contemplated hereby or thereby. The Company
irrevocably waives to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum. THE COMPANY AND EACH OF YOU
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THE DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
10.12 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.13 Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
10.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one instrument.
10.15 Confidentiality. Each of you agree that you will not, and will not
permit your respective officers, directors, employees or agents to, disclose to
any other Person any non-public information furnished to you by the Company or
any Subsidiary of the Company which has been identified as confidential or
non-public, except (i) as required by law or legal process or by any
governmental authority, (ii) such information that has become or is generally
available to the public other than as a result of a disclosure prohibited
hereby, (iii) such information that is or becomes available to you on a
nonconfidential basis from a source not bound by this or another
confidentiality
55
<PAGE> 61
agreement with the Company or any Subsidiary of the Company, or (iv) such
information that you disclose to a Person who is a prospective transferee of
some or all Notes, provided that (x) such Person has first signed a
confidentiality agreement substantially identical to that set forth in this
Section 10.15, and (y) if such Person or any Affiliate of such Person is a
competitor of the Company, including for purposes of this clause (y) only any
Affiliate of a competitor which is a pension fund, the Company has consented
thereto. For purposes of this Section 10.15, in no event shall any bank,
insurance company, financial institution, pension fund, mutual fund or similar
fund be interpreted to be a competitor of the Company except as otherwise
provided in clause (y) above.
If you are in agreement with the foregoing, please sign the
acceptance on the enclosed counterpart of this
56
<PAGE> 62
letter and return the same to the Company, whereupon this letter shall become a
binding agreement between the Company and you.
Very truly yours,
CALMAT CO.,
a Delaware corporation
By: /s/ Frederick T. Sauer
------------------------------------
Name: Frederick T. Sauer
----------------------------------
Title: Vice President, Treasurer
---------------------------------
By: /s/ Paul Stanford
------------------------------------
Name: Paul Stanford
----------------------------------
Title: Senior Vice President-
---------------------------------
Administration,
General Counsel and Secretary
The foregoing Agreement is
hereby accepted as of the
date first above written.
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Thomas R. Lenihan
-------------------------------
Name: Thomas R. Lenihan
-----------------------------
Title: Vice-President
----------------------------
By: /s/ Leland C. Launer
-------------------------------
Name: Leland C. Launer
-----------------------------
Title: Vice-President
----------------------------
METROPOLITAN INSURANCE AND
ANNUITY COMPANY
By: /s/ Andrew T. Aoyama
-------------------------------
Name: ANDREW T. AOYAMA
-----------------------------
Title: ASSISTANT VICE PRESIDENT
----------------------------
57
<PAGE> 63
METROPOLITAN PROPERTY AND CASUALTY
INSURANCE COMPANY
By: /s/ Anthony J. Williamson
-------------------------------
Name: Anthony J. Williamson
-----------------------------
Title: Vice-President and Treasurer
-----------------------------
TEXAS LIFE INSURANCE COMPANY
[Registered as TNB STOCK COMPANY]
By: /s/ Leland C. Launer
-------------------------------
Name: Leland C. Launer
-----------------------------
Title: Authorized Signatory
----------------------------
58
<PAGE> 64
ANNEX I
<TABLE>
<CAPTION>
Aggregate Principal
Amount of Notes To
Purchaser Be Purchased
- --------- -------------------
<S> <C>
METROPOLITAN LIFE INSURANCE COMPANY $25,000,000 (to be broken
up into the following
denominations):
$18,000,000
$ 5,000,000 (SA #137)
$ 2,000,000 (SA #50)
</TABLE>
All payments on account of the Notes
held by such purchaser shall be made
by wire transfer of immediately available
funds not later than 12:00 noon New York
time on the date payment is due for credit to:
Metropolitan Life Insurance Company -
Corporate Investments
Account No. 002-2-410591
The Chase Manhattan Bank, N.A.
Metropolitan Branch
33 East 23rd Street
New York, New York 10010
ABA # 021000021
Each such wire transfer shall set forth
the name of the Company, the coupon rate
of the Notes, a reference to "PPN 131271B#4"
and shall request the bank to send a credit
advice to Metropolitan Life Insurance Company.
Addresses for all communications
and notices:
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Treasurer
Facsimile: (714) 474-1630
ANNEX I
Page 1
<PAGE> 65
with a copy to:
Metropolitan Life Insurance Company
Corporate Investments-Western Territory
2601 Main Street, Suite 1210
Irvine, California 92714
Attention: Vice President
Facsimile: (714) 474-1630
ANNEX I
Page 2
<PAGE> 66
ANNEX I
<TABLE>
<CAPTION>
Aggregate Principal
Amount of Notes To
Purchaser Be Purchased
- --------- -------------------
<S> <C>
METROPOLITAN INSURANCE
AND ANNUITY COMPANY $5,000,000
</TABLE>
All payments on account of the Notes
held by such purchaser shall be made
by wire transfer of immediately available
funds not later than 12:00 noon New York
time on the date payment is due for credit to:
Metropolitan Insurance and Annuity Company
Account No. 002-1-072301
The Chase Manhattan Bank, N.A.
Metropolitan Branch
33 East 23rd Street
New York, New York 10010
ABA # 021000021
Each such wire transfer shall set forth
the name of the Company, the coupon rate
of the Notes, a reference to "PPN 131271B#4"
and shall request the bank to send a credit
advice to Metropolitan Insurance and Annuity Company.
Addresses for all communications
and notices:
Metropolitan Insurance and Annuity Company
c/o Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Treasurer
Facsimile: (714) 474-1630
with a copy to:
Metropolitan Insurance and Annuity Company
c/o Metropolitan Life Insurance Company
Corporate Investments-Western Territory
2601 Main Street, Suite 1210
Irvine, California 92714
Attention: Vice President
Facsimile: (714) 474-1630
ANNEX I
Page 3
<PAGE> 67
ANNEX I
<TABLE>
<CAPTION>
Aggregate Principal
Amount of Notes To
Purchaser Be Purchased
- --------- -------------------
<S> <C>
METROPOLITAN PROPERTY AND
CASUALTY INSURANCE COMPANY $4,000,000
</TABLE>
All payments on account of the Notes
held by such purchaser shall be made
by wire transfer of immediately available
funds not later than 12:00 noon New York
time on the date payment is due for credit to:
Metropolitan Property and Casualty Insurance Company
Account No. 002-1-025432
The Chase Manhattan Bank, N.A.
Metropolitan Branch
33 East 23rd Street
New York, New York 10010
ABA # 021000021
Each such wire transfer shall set forth
the name of the Company, the coupon rate
of the Notes, a reference to "PPN 131271B#4"
and shall request the bank to send a credit
advice to Metropolitan Property and Casualty
Insurance Company.
Addresses for all communications
and notices:
Metropolitan Property and Casualty Insurance Company
c/o Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Treasurer
Facsimile: (714) 474-1630
with a copy to:
Metropolitan Property and Casualty Insurance Company
c/o Metropolitan Life Insurance Company
Corporate Investments-Western Territory
2601 Main Street, Suite 1210
Irvine, California 92714
Attention: Vice President
Facsimile: (714) 474-1630
ANNEX I
Page 4
<PAGE> 68
ANNEX I
<TABLE>
<CAPTION>
Aggregate Principal
Amount of Notes To
Purchaser Be Purchased
- --------- -------------------
<S> <C>
TEXAS LIFE INSURANCE COMPANY $1,000,000
(Registered in the following manner:
TNB STOCK COMPANY)
</TABLE>
All payments on account of the Notes held by such
purchaser shall be made by wire transfer of
immediately available funds not later than
12:00 noon, Waco, Texas time on
the date payment is due for credit to
Texas Life Insurance Company
Account No. 80022, at the
Texas National Bank
900 Washington Avenue
Waco, Texas 76701
ABA # 111900523
Attn: Sarah Marten, Trust Dept
Each such wire transfer shall set forth
the name of the Company, the coupon rate
of the Notes, a reference to "PPN 131271B#4"
and shall request the bank to send a credit advice
to Texas Life Insurance Company
Address for all communications and notices:
Texas Life Insurance Company
c/o Metropolitan Life Insurance
Company
One Madison Avenue
New York, New York 10010
Attention: Treasurer
Facsimile: (714) 474-1630
with a copy to:
Texas Life Insurance Company
c/o Metropolitan Life Insurance
Company
Metropolitan Life Insurance Company
Corporate Investments-Western Territory
2601 Main Street, Suite 1210
Irvine, California 92714
Attention: Vice President
Facsimile: (714) 474-1630
ANNEX I
Page 5
<PAGE> 69
SCHEDULE 1
ACTIVE SUBSIDIARIES OF CALMAT CO.
(100% owned and California corporation, unless otherwise indicated)
<TABLE>
<CAPTION>
Total Assets at
5/31/93
(000's)
---------------
<S> <C>
Allied Concrete & Materials Co. (Arizona) (2)
Allied Concrete, Inc. (Arizona) (2)
CalMat Co. of Arizona (Arizona) (2)
CalMat Co. of New Mexico (New Mexico) 8,393
CalMat Land Co. (2)
CalMat of Central California 27,780
CalMat Properties Co. 136,138 (1)
CC Plaza Co. (2)
Mission Valley Development Co. (2)
River Vista Development Co. (2)
Coast Asphalt, Inc. (Delaware) 120,691 (1)
Hidden Valley Coal Company (Utah) (2)
Huntmix, Inc. 70,009 (1)
Kirst Construction Co., Inc. (50% owned through Crystal partnership) (2)
Azusa Rock, Inc. (50% owned through Crystal partnership) 28,159
Moreno Valley Sand & Gravel, Inc. 2,567
Palomar Transit Mix Co. 3,485
Reliance Transport Co. 394
Rio Norte Este Co. (2)
River Bend Corp. 11,688 (1)
Sanger Rock and Sand 2,427 (1)
Sloan Canyon Sand Co. 432
Western Thermal Soils Co. 1,600
</TABLE>
(1) For financial reporting purposes these subsidiaries do not have
separate accounting records. These amounts represent the tax basis
per the 12/31/91 tax return.
(2) Separate accounting records are not maintained for these companies.
LWLA3\22509.1
<PAGE> 70
SCHEDULE 1 (continued)
INACTIVE SUBSIDIARIES OF CALMAT CO.
(California corporation unless otherwise indicated)
Albuquerque Gravel Products Co. (New Mexico)
Bakersfield Ready Mix, Inc.
California Materials Company
Carroll Canyon Centre Co. (CalMat Properties Co.'s Subsidiary)
Coast Asphalt, Inc.
Conrock Co.
Conrock Co. (Delaware)
Conrock Property Development Corp.
Consolidated Rock Products Co.
Consolidated Rock Products Co. (Delaware)
Corona Ready Mix Co.
Industrial Asphalt, Inc. (Coast Asphalt, Inc.'s Subsidiary)
Oceanside Ready Mix Co.
Reliance Land Co.
Rio Vista Hotel Co. (CalMat Properties Co.'s Subsidiary)
San Diego Consolidated Co.
San Diego Rock Products Co.
San Diego Transit Mixed Concrete Co.
Sweetwater Aggregates Co.
Triangle Rock Products, Inc.
LWLA3\22509.1 2
<PAGE> 71
SCHEDULE 2
CalMat Co. -- Existing Liens and Encumbrances
as of June 30, 1993
<TABLE>
<CAPTION>
PRINCIPAL
BALANCE PARENT
MORTGAGE NOTES: OUTSTANDING RATE COLLATERAL GUARANTEE?
<S> <C> <C> <C> <C>
Principal Mutual Life:
1. Durbin Business Park -- lot 10 2,400,149 13.25% 12901, 12921, 12941, 12961 No
Date -- June 3, 1981 12981, 13001 Ramona Blvd.
Original amount -- $2,600,000
Metmor Financial:
1. La Cantera -- North 1,927,587 9.25% 16011, 16037, 16057 Foothill No
Date -- April 1, 1987 Blvd.
Original amount -- $6,440,000
Aetna Life Ins. Co.:
1. Rio Vista Building -- San Diego 10,997,467 10.07% 8885 Rio San Diego Dr. No
Date -- October 20, 1987
Original amount -- $11,300,000
Total Mortgage Notes $15,305,203
MUNICIPAL IMPROVEMENT BONDS:
City of San Diego:
1. Carroll Canyon -- Lots 3-5 $0 5.5 - 7.7% Lien on property
Date -- Sept 25, 1981 whentax bill issued- No
Original amount -- $1,875,061 amount of taxes only
2. Rio Vista -- Lots 2 - 7 5.5 - 7.7% Same as above No
Date -- May 1, 1982
Original amount -- $2,580,000
Lots 2-4 and 7 189,796
Lot 6 (RVT Consolidated) 39,369
3. Rio Vista West (FSDRIP) 2,354,955 6.5 - 7.7% Same as above No
Date -- Aug 3, 1987
Original amount -- $4,235,675
4. Rio Vista ASMT 14 (FSDRIP)
Date -- 1988
Original amount -- $174,728.58 148,292 5.5 - 7.7% Same as above No
Total Bonds $2,732,412
</TABLE>
LWLA3\22509.1
<PAGE> 72
SCHEDULE 3
CalMat CO. & Subsidiaries
Disclosure of Environmental Matters
None other than those disclosed in Securities and Exchange Commission - Form
10K for the year ended December 31, 1993, Item 3, Pages 3 & 4 (incorporated by
reference).
As of the Closing Date, the Authorized Officers do not believe that any such
environmental problems is reasonably likely to result in any Material Adverse
Effect.
(a) Underground Tanks
CalMat maintains underground tanks for fuel storage and for storage of waste
oil at numerous facilities in California, Arizona and New Mexico. Tanks are
monitored to detect any leakage.
(b) Hazardous material used by CalMat are mostly petroleum products such
as diesel fuel, gasoline, grease and solvents used for company vehicles and
machinery. Hazardous waste generated is mostly confined to waste oil
(hazardous waste in California only) and waste solvents. These are removed for
recycling under state and federal procedures.
LWLA3\22509.1
<PAGE> 73
SCHEDULE 3
Page 2
CALMAT CO & SUBSIDIARIES
DISCLOSURE OF ENVIRONMENTAL MATTERS
CONFIDENTIAL
The EPA has named the Company and approximately 15 other entities as
"Potentially Responsible Parties" ("PRP's") under CERCLA in connection with
alleged groundwater contamination at a site designated as the North Hollywood
Operable Unit of the San Fernando Valley Area 1 Superfund Site. The EPA has
advised the Company and the other PRP's that they may be jointly and severally
liable for releases of hazardous substances, not only from properties they
owned or operated, but also for area-wide groundwater contamination. One of
the Company's corporate predecessors is in the chain of title of a property
operated in the past as a landfill and alleged to be connected with the
contamination. The property was sold to a third party in 1988. That party has
also been named as a PRP.
No legal proceedings have been initiated by the EPA at this time, although
proceedings are threatened at an early date unless settlement is reached. The
EPA has demanded payment of $17,213,355 for costs incurred in evaluation and
containment of the contamination. Because of uncertainty regarding the scope
and source of the contamination and the likelihood of varying degrees of
responsibility among various PRP's, the Company has not determined what portion
of this amount it may be liable for should a settlement and allocation among
the PRP's be negotiated. The Company has, at this time, no detailed factual
information concerning actual contributions to the contamination, if any, from
the site in question, has not yet had an opportunity to investigate possible
defenses or insurance coverage which may be available to it, and has not
investigated the possibility of recovery from other PRP's or third parties not
named by the EPA as PRP's.
LWLA3\22509.1
<PAGE> 74
DETNEEDS
SCHEDULE 4
CalMat Co. & Subsidiaries Outside Indebtedness
30-Jun-93
BANK CREDIT FACILITIES:----CalMat Co. Obligations
<TABLE>
<CAPTION>
Final
TYPE OF AMOUNT AMOUNT CONVERSION Maturity
FACILITY COMMITTED OUTSTANDING DATE DATE
<S> <C> <C> <C> <C> <C>
Bank of America (as Agent) Revolver $100,000,000 $77,000,000 N/A 30-Jun-97
Morgan Bank** Revolver -- (Term Out) 10,000,000 10,000,000 30-Apr-93 30-Apr-96
First Chicago Revolver 35,000,000 30,000,000 20-Aug-94 20-Aug-96
Sanwa Bank, Ltd. of CAQ. L/C Facility 25,000,000 12,431,800
Bank of America L/C Facility 1,000,000 251,127
Valley Bank -- Arizona L/C Facility 2,000,000 1,967,042
TOTAL: $173,000,000 TOTAL: $131,649,969
</TABLE>
MORTGAGES:--Cal Matt Properties Co. Obligations
<TABLE>
<CAPTION>
OUTSTANDING
MATURITY RATE PROPERTY BALANCE
<S> <C> <C> <C> <C>
Aetna 11/01/2002 10.07% Rio Vista Bldg -- San Diego $10,977.467
Principal Mutual 09/01/1999 13.25% Durbin Business Park -- Lot 10 2,400,149
Metmor Financial 04/01/1994 9.25% La Cantera North 1,0927,587
TOTAL: $15,305,203
</TABLE>
IMPROVEMENTS BONDS:(Liens on property payments part of tax bill) -- CalMat
Properties Co. Obligations
<TABLE>
<CAPTION>
OUTSTANDING
MATURITY RATE PROPERTY BALANCE
<S> <C> <C> <C> <C>
City of San Diego N/A Various Carroll Canyon -- Lots 3 -- 5 $ 0
City of San Diego N/A Various Rio Vista -- Lots 2 -- 7 189,796
City of San Diego N/A Various Rio Vista -- Lots 6 (RVTConsolidated) 39,369
FSDRIP N/A Various Rio Vista West (FSDRIP) 2,354,955
FSDRIP N/A Various Rio Vista ASMT14 (FSDRIP) 148,292
TOTAL: $2,732,412
</TABLE>
MISCELLANEOUS NOTES PAYABLES:--CalMat Co. Obligations
<TABLE>
<CAPTION>
OUTSTANDING
MATURITY RATE PROPERTY BALANCE
<S> <C> <C> <C> <C>
Chase Property 08/01/1994 10.00% N/A $ 0
Peterson Note 12/01/1995 13.25% N/A 42,320
Padre Buy-Out Note Due on Call Prime N/A 250,000
TOTAL: $292,320
</TABLE>
** The Morgan Bank Revolver is in its "Term Out" period. Principal
amortization of $333.000 per quarter.
LWLA3\22509.1
<PAGE> 75
SCHEDULE 5
NET ASSETS HELD FOR SALE -- MAJOR PROPERTIES AND ASSOCIATED DEBT AS OF 6/30/93
<TABLE>
<CAPTION>
SQ FT OR NET BOOK CASH FLOW ASSOCIATED
TYPE ACREAGE % OCCUPIED VALUE 1992 BUDGET DEBT
<S> <C> <C> <C> <C> <C> <C>
RIO VISTA TOWER Office 192,147 70.8% $24,406,000 (A) $2,967,000 $15,000,000 *
CARROLL CANYON PLAZA Office 47,230 52.9% $ 3,501,000 (B) $ 134,000 $0
BEYER PACIFIC Industrial 41,940 74.6% $ 1,925,000 (C) $ 18,000 $0
------- ----------- ----------
281,317 $29,832,000 $3,119,000
======= =========== ==========
</TABLE>
(A) -- A write-down reserve of $9,406,000 has not been subtracted.
(B) -- A write-down reserve of $1,501,000 has not been subtracted.
(C) -- A write-down reserve of $125,000 has not been subtracted.
* -- This is an allocation of corporate debt, not a mortgage.
LWLA3\22509.1
<PAGE> 76
SCHEDULE 6
CalMat CO. & Subsidiaries
Disclosure of Pending Litigation
None other than that disclosed in Securities and Exchange Commission - Form
10K, dated December 31, 1992, Item 3, Pages 3 & 4, (incorporated here by
reference).
As of the Closing Date, the Authorized Officers do not believe that any such
actions, suits or proceedings is reasonably likely to result in any Material
Adverse Effect.
LWLA3\22509.1
<PAGE> 77
SCHEDULE 7
CalMat CO. & Subsidiaries
Disclosure of Unpaid Taxes
ARIZONA:
1. Proposed income tax assessment for CalMat Co. and Subsidiary
Companies in the amount of $270,488 for the period January 1, 1984 through
December 31, 1988.
CalMat Co. has appealed this proposed assessment, and expects that a refund
will be due as a result of the review process.
2. Arizona consolidated income tax return for CalMat Co. and
Subsidiary Companies for the tax year ended December 31, 1992.
The 1992 Arizona income tax return is on extension, and will be filed by the
extended due date of September 15, 1993. All taxes expected to be due for the
year were paid with the "Application for Extension of Time to File", Form
120EXT.
NEW MEXICO:
1. New Mexico state income tax returns for CalMat Co. for the
period January 1, 1989 through December 31, 1992.
CalMat Co. qualified to do business in New Mexico during 1989, and is required
to file separate company returns for this period. The combined tax liability
for these separate company returns is less than $500.
UTAH:
1. Utah Corporation Franchise Tax Liability for the tax period
1991 through 1992.
The expected tax liability is less than $500.
LWLA3\22509.1
<PAGE> 78
EXHIBIT A
[FORM OF PROMISSORY NOTE]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AND THIS NOTE
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
CALMAT CO.
6.70% SENIOR UNSECURED NOTE DUE JULY 23, 2000
No. __________ July 23, 1993
$ ____________ Los Angeles, California
FOR VALUE RECEIVED, the undersigned, CALMAT CO., a Delaware
corporation (the "Company"), hereby promises to pay to _____________________
_________________________________________________, or registered assigns, the
principal sum of __________________________________________________ DOLLARS
on July 23, 2000, with interest (computed on the basis of a 360-day
year consisting of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 6.70% per annum from the date hereof, payable semiannually on the
23rd day of January and July in each year, commencing with the January 23 or
July 23 next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of premium, payable as aforesaid (or, at the option of the Holder
hereof, on demand) at a rate per annum from time to time equal to the Overdue
Interest Rate (as such term and all other capitalized terms used but not
defined herein are defined in the Agreement defined more fully below).
Payments of principal of, interest on and any premium payable
with respect to this Note are to be made at the main office of The Chase
Manhattan Bank, N.A. in New York City or at such other place as the Holder
shall designate to the Company in writing, in lawful money of the United States
of America.
This Note is one of the senior promissory notes (the "Notes")
issued pursuant to a Note Purchase Agreement, dated as of July 23, 1993 (the
"Agreement"), among the Company, Metropolitan Life Insurance Company,
Metropolitan Insurance and Annuity Company, Metropolitan Property and Casualty
Insurance Company and Texas Life Insurance Company and is entitled to the
benefits thereof.
This Note is a registered Note and, as provided in the
Agreement, upon surrender of this Note for registration of
LWLA3\22509.1
<PAGE> 79
transfer, duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the Holder hereof or such Holder's attorney duly authorized
in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the Transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
This Note is subject to (i) mandatory prepayments of principal
by the Company as specified in Section 3.1 of the Agreement, (ii) optional
prepayments by the Company, in whole or in part, at the Yield Maintenance Price
as specified in Section 3.2 of the Agreement and (iii) prepayment at the option
of the Holder upon a Change of Control at the Yield Maintenance Price as
specified in Section 3.3 of the Agreement.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement.
This Note shall be governed by, and construed in accordance
with, the laws of the State of California.
CALMAT CO.
By: ________________________________
Title: _____________________________
LWLA3\22509.1 2
<PAGE> 80
EXHIBIT B
COMPLIANCE CERTIFICATE
[Pursuant to Section 9.3 of the Note Purchase Agreement, compliance with
financial covenants and other covenants compliance with which requires
reference to the Company's financial statements shall be determined in
accordance with GAAP as in effect on the Closing Date. Any and all differences
between amounts included in the financial statements delivered pursuant to
Section 6.1 of the Note Purchase Agreement and amounts reflected in this
Compliance Certificate shall be identified in a separate line item identified
as "Increase (Decrease) Due to Change In GAAP".]
<TABLE>
<S> <C> <C>
7.1 Indebtedness
------------
1. Ratio of Consolidated Total Liabilities to
------------------------------------------
Consolidated Tangible Net Worth
-------------------------------
(a) Consolidated Total Liabilities on the
last day of the current fiscal quarter $__________
(b) Adjustment for Rio Vista Tower $__________
(c) Consolidated Total Liabilities for
purposes of Section 7.1A $__________
(d) Consolidated Total Assets on the last
day of the current fiscal quarter $__________
(e) Adjustment for Rio Vista Tower $__________
(f) Consolidated Total Assets for purposes
of Section 7.1A $__________
(g) Consolidated Tangible Net Worth, as
adjusted on the last day of the current
fiscal quarter $__________
(h) Ratio of Consolidated Total Liabilities
to Consolidated Tangible Net Worth, each
as adjusted (item 1(c) divided by
------- --
item 1(g)) ____ to 1.00
(i) Maximum ratio of adjusted Consolidated
Total Liabilities to adjusted
Consolidated Tangible Net Worth
permitted by Section 7.1B 1.00 to 1.00
</TABLE>
LWLA3\22509.1 1
<PAGE> 81
<TABLE>
<S> <C> <C>
(j) Indebtedness of Subsidiaries on the last
day of the current fiscal quarter,
excluding Indebtedness of Subsidiaries
as of July 23, 1993 and identified on
Schedule 4 to the Note Purchase
Agreement $__________
(k) Consolidated Tangible Net Worth (without
adjustment) on the last day of the
current fiscal quarter $__________
(l) Maximum Indebtedness of Subsidiaries
permitted by Section 7.1C (item 1(k)
multiplied by 5%) $__________
---------- --
7.2 Liens
-----
1. (a) Aggregate value of property encumbered
by Liens pursuant to Section 7.2 on the
last day of the fiscal quarter $__________
(b) Consolidated Tangible Net Worth on the
last day of the fiscal quarter
(c) Maximum aggregate value of property
permitted to be encumbered by Liens
pursuant to Section 7.2 (10% multiplied
----------
by item 1(b)) $__________
--
7.3 Restricted Investments, Dividends, Etc.
--------------------------------------
1. (a) Aggregate amount of dividends paid or
payable subsequent to December 31, 1992
pursuant to Section 7.3(i) $__________
(b) Aggregate amount applied to purchase,
redemption or retirement of stock since
December 31, 1992 pursuant to
Section 7.3(ii) $___________
(c) Aggregate Amount of Restricted
Investments on the last day of the
fiscal quarter $___________
(d) Total of (a), (b) and (c) $___________
(e) Maximum aggregate amount of Restricted
Investments and distributions permitted
pursuant to Section 7.3 ($20,000,000
plus 50% of positive cumulative
----
Consolidated Net Income or minus 50% of
-----
negative cumulative Consolidated Net
Income plus the net cash proceeds
----
received by the Company from the sale of
</TABLE>
LWLA3\22509.1 2
<PAGE> 82
<TABLE>
<S> <C> <C>
its common stock after the Closing Date,
other than for common stock sold to a
Subsidiary) $__________
7.4 Contingent Obligations
----------------------
1. (a) Aggregate amount of Contingent
Obligations of the Company outstanding
on the last day of the fiscal quarter
pursuant to Section 7.4 $__________
(b) Maximum aggregate amount of Contingent
Obligations permitted pursuant to
Section 7.4 $40,000,000
7.5 Financial Covenants
-------------------
1. Minimum Consolidated Tangible Net Worth
---------------------------------------
(a) Consolidated Tangible Assets on the last
day of the fiscal quarter $__________
(b) Consolidated Total Liabilities on the
last day of the fiscal quarter $__________
(c) Cumulative Consolidated Tangible Net
Worth on the last day of the fiscal
quarter (item 1(a) minus item 1(b)) $__________
-----
(d) Cumulative Consolidated Net Income for
each fiscal year ending on December 31,
1993 and thereafter (without reduction
for any negative Consolidated Net Income
in any fiscal year) $__________
(e) Minimum Consolidated Tangible Net Worth
($250,000,000 plus an amount equal to
----
50% of item 1(d)) $__________
2. Minimum Consolidated Fixed Charge Coverage
------------------------------------------
Ratio
-----
(a) Consolidated EBIT for the current and 3
preceding fiscal quarters $__________
(b) Consolidated Rent Payments for the
current and 3 preceding fiscal quarters $__________
(c) Aggregate amount of all interest and
finance charges on Consolidated Off
Balance Sheet Obligations for the
current and 3 preceding fiscal quarters $__________
</TABLE>
LWLA3\22509.1 3
<PAGE> 83
<TABLE>
<S> <C> <C>
(d) Consolidated Income Available For
Consolidated Fixed Charges for the
current and 3 preceding fiscal quarters
(item 2(a) plus item 2(b) plus
---- ----
item 2(c)) $__________
(e) Consolidated Interest Expense for the
current and 3 preceding fiscal quarters $__________
(f) Consolidated Fixed Charges for the
current and 3 preceding fiscal quarters
(item 2(e) plus item 2(b)) $__________
----
(g) Consolidated Fixed Charge Coverage Ratio
for the current and 3 preceding fiscal
quarters (item 2(d) divided by
------- --
item 2(f)) ____ to 1.00
(h) Minimum Fixed Charge Coverage Ratio
required pursuant to Section 7.5B ____ to 1.00
7.7 Asset Sales
-----------
1. (a) Aggregate Book Value of Assets Sold in
the current and preceding eleven
calendar months $__________
(b) Aggregate Book Value of Assets Sold from
sales in the current and preceding
eleven calendar months of Net Assets
Held for Sale listed on Schedule 5 on
the Closing Date $__________
(c) Aggregate amount of Asset Sales pursuant
to Section 7.7(ii) (item 1(a) minus
-----
item 1(b)) $__________
(d) Consolidated Tangible Net Worth as of
the last day of the immediately
preceding fiscal year $__________
(e) Maximum aggregate amount of Asset Sales
permitted pursuant to Section 7.7(ii)
(15% multiplied by item 1(d)) $__________
---------- --
(f) Book Value of Assets Sold since the
Closing Date $__________
(g) Maximum aggregate Book Value of Assets
Sold since the Closing Date (40% of
Consolidated Tangible Net Worth as of
the last day of the immediately
preceding fiscal year) $__________
</TABLE>
LWLA3\22509.1 4
<PAGE> 84
EXHIBIT C
FORM OF COMPANY COUNSEL'S CLOSING OPINION
July 23, 1993
To the Persons Listed on
Annex 1 hereto
Re: CalMat Co. (the "Company") Issuance of 6.70%
Senior Unsecured Notes Due July 23, 2000
--------------------------------------------
Ladies and Gentlemen:
Reference is made to the Note Purchase Agreement, dated as of
July 23, 1993 (the "Note Purchase Agreement"), among the Company, and each of
the purchasers listed on Annex 1 attached thereto (the "Purchasers"), which
provide, inter alia, for the issuance and sale by the Company of its 6.70%
Senior Unsecured Notes due July 23, 2000, in the aggregate principal amount of
Thirty-Five Million Dollars ($35,000,000). The capitalized terms used herein
and not defined have the meanings specified in the Note Purchase Agreement.
I am General Counsel to the Company and have acted in such
capacity in connection with the transactions contemplated by the Note Purchase
Agreement. This opinion is delivered to you pursuant to Section 2.2 of the
Note Purchase Agreement. In acting as such counsel, I have examined:
(a) the Note Purchase Agreement;
(b) the Company's 6.70% Senior Unsecured Notes
due July 23, 2000, dated the date hereof, in the form, principal
amount, and with the registration numbers set forth on Annex 1 to the
Note Purchase Agreement (the "Notes");
(c) the documents executed and delivered by the
Company in connection with the transactions contemplated by the Note
Purchase Agreement;
(d) the bylaws and records of proceedings of the
Board of Directors of the Company, and a certified copy of the
Certificate of Incorporation of the Company, as in effect on the date
hereof;
(e) a long-form good standing certificate from
the Secretary of State of Delaware, good standing certificates from
the states of incorporation of each of its Subsidiaries, and foreign
good standing certificates for each of such corporations from each of
the states set forth on Annex 2 hereto; and
LWLA3\22509.1
<PAGE> 85
(f) originals, or copies certified or otherwise
identified to my satisfaction, of such other documents, records,
instruments and certificates of public officials as I have deemed
necessary or appropriate to enable me to render this opinion.
In rendering this opinion, I have relied, to the extent I deem necessary and
proper, on warranties and representations as to factual matters not requiring
legal conclusions contained in the Note Purchase Agreement.
This opinion is based upon the laws of the State of
California, the Delaware General Corporation Law and federal law.
Based on the foregoing, I am of the following opinions:
1. Each of the Company and the Subsidiaries is a
corporation duly incorporated, validly existing and in good standing under the
laws of its state of incorporation and has all requisite corporate power and
authority to carry on its business and own its property.
2. Each of the Company and the Subsidiaries is duly
qualified and is in good standing as a foreign corporation in each jurisdiction
where the character of its properties or the nature of its activities makes
such qualification necessary, except where the failure to so qualify and be in
good standing would not have a material adverse effect on the ability of the
Company to perform its obligations under the Note Purchase Agreement and the
Notes.
3. I am aware of no judgment, order, writ, injunction,
decree, award, action, suit, proceeding, inquiry or investigation, at law or in
equity, before any court or governmental authority, arbitration board or
tribunal, pending or threatened against the Company or any Subsidiary, except
for any such judgment, order, writ, injunction, decree, award, action, suit,
proceeding, inquiry or investigation that would not have a material adverse
effect on the ability of the Company to perform its obligations under the Note
Purchase Agreement and the Notes.
4. The Company has the requisite corporate power and
authority to execute and deliver the Note Purchase Agreement, to issue and sell
the Notes, and to perform its obligations set forth in each of the Note
Purchase Agreement and the Notes.
5. Each of the Note Purchase Agreement and the Notes has
been duly authorized by all necessary corporate action on the part of the
Company (no action on the part of the stockholders of the Company being
required in respect thereto), has been executed and delivered by duly
authorized officers of the Company, and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
LWLA3\22509.1 2
<PAGE> 86
6. The execution and delivery of the Note Purchase
Agreement and the Notes by the Company, and the performance by the Company of
its obligations thereunder, and the issue and sale of the Notes by the Company,
will not conflict with, constitute a violation of, result in a breach of any
provision of, constitute a default under, or result in the creation or
imposition of any Lien or encumbrances upon any of the property of the Company
or any Subsidiary, respectively, pursuant to the certificate of incorporation
or bylaws of the Company or any Subsidiary, any applicable law, statute, rule
or regulation to which the Company or any Subsidiary is subject, or any
agreement or instrument to which the Company or any Subsidiary is a party or by
which its respective properties may be bound.
7. All consents, approvals and authorizations of, and
all designations, declarations, filings, registrations, qualifications and
recordations with, governmental authorities required on the party of the
Company and the Subsidiaries have been obtained in connection with the
execution and delivery of each of the Note Purchase Agreement and the Notes and
the issue and sale of the Notes and the use of the proceeds thereof.
8. Under existing law, the offering, issuance, sale and
delivery of the Notes under the circumstances contemplated by the Note Purchase
Agreement and the Notes are exempted transactions under the Securities Act of
1933, as amended, and neither the registration of the Notes under said
Securities Act, the registration of the Notes under the "Blue Sky" laws of the
State of California, nor the qualification of an indenture with respect thereto
under the Trust Indenture Act of 1939, as amended, is required in connection
with such transactions.
9. Neither the issuance of the Notes nor the intended
use of the proceeds of the Notes (as set forth in Section 4.16 of the Note
Purchase Agreement) will violate Regulations G, T or X of the Federal Reserve
Board.
10. The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
11. Each of the Company and the Subsidiaries is the owner
of record of all of the shares it purports to own of the capital stock of each
of its Subsidiaries, free and clear in each case of any perfected security
interest, and any other Lien. All such shares have been duly issued and are
fully paid and nonassessable.
My opinion herein as to the enforceability of documents and
instruments referred to herein are subject to:
(a) applicable bankruptcy, reorganization, arrangement,
insolvency, moratorium or similar laws affecting the enforcement of creditors'
rights generally,
LWLA3\22509.1 3
<PAGE> 87
(b) general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair
dealing and the discretion of a court in granting equitable remedies
(regardless of whether enforceability is considered in a proceeding at law or
in equity), and
(c) the unenforceability under certain circumstances of
any provisions which impose penalties or forfeiture.
In rendering my opinions above, I have assumed the accuracy
of, and have relied upon, the representations contained in Section 5.1 of the
Note Purchase Agreement and have further assumed that each of the Purchasers is
knowledgeable, sophisticated and experienced in business and financial matters,
has previously invested in securities similar to the Notes in transactions not
registered under the Securities Act, is able to bear the economic risk of its
investment in the Notes and is a "qualified institutional buyer," as defined in
Rule 144A under the Securities Act, and/or an "accredited investor," as defined
in Regulation D under the Securities Act.
I am admitted to the Bar of the State of California. In
addition, I am generally familiar with the General Corporation Law as in effect
in the State of Delaware and have made such investigation thereof as I deemed
necessary for the purpose of rendering the opinions expressed herein. This
opinion is limited to the present laws of the aforementioned jurisdictions and
the United States of America, to present judicial interpretations thereof and
to the facts as they exist at the date hereof. I assume no obligation to
revise or supplement this opinion should the present laws of such jurisdictions
be changed by legislative action, judicial decision or otherwise. This opinion
is rendered as of the date hereof, and I express no opinion as to, and disclaim
any undertaking or obligation to update this opinion in respect of, changes or
circumstances or events which occur subsequent to this date.
This opinion is rendered solely for your benefit in connection
with the execution and delivery of the Note Purchase Agreement and the Notes
and may not be relied upon by any other person or by you in any other context
or for any other purpose without my prior written consent. At your request, I
hereby consent to reliance hereon by any future participants or transferees of
all or any part of your interest in the Note Purchase Agreement or the Notes;
provided that you have notified such participant or transferee that this
opinion speaks only as of the date hereof and that I have no responsibility or
obligation to update this opinion, to consider its applicability or correctness
to other than its addressee, or to take into account changes in law, facts or
any other development of which I may later become aware.
Very truly yours,
LWLA3\22509.1 4
<PAGE> 88
EXHIBIT D
July 23, 1993
CalMat Co.
3200 San Fernando Road
Los Angeles, CA 90065
Attention: Chief Financial Officer
Ladies and Gentlemen:
In connection with the sale to us today of $35,000,000
aggregate principal amount of your 6.70% Senior Unsecured Notes due July 23,
2000 (the "Notes") issued pursuant to the Note Purchase Agreement among CalMat
Co., Metropolitan Life Insurance Company, Metropolitan Insurance and Annuity
Company, Metropolitan Property and Casualty Insurance Company and Texas Life
Insurance Company, dated as of July 23, 1993, (the "Note Agreement"), we hereby
advise you pursuant to Section 2.10 of the Note Agreement that $7,000,000
aggregate principal amount of the Notes to be purchased by us are being
acquired for two separate accounts (as defined in ERISA (as defined in the Note
Agreement)) maintained by us. These separate accounts are identified on
Schedule A hereto. Also set forth on Schedule A hereto are the employee
benefit plans (as defined in ERISA) whose assets in such separate accounts
constitute more than 10% of the total assets of such separate accounts on the
date hereof.
Please verify and confirm to us by your signature at the foot
hereof that neither you nor any corporation, trade or business that is, along
with you, a member of a controlled group of corporations or a controlled group
of trades or businesses, as defined in sections 414(b) and 414(c),
respectively, of the Internal Revenue Code of 1986, as amended (an "ERISA
Affiliate") is a party in interest (as defined in ERISA) with respect to such
employee benefit plans.
Very truly yours,
METROPOLITAN LIFE INSURANCE COMPANY
By ________________________________
CALMAT CO. hereby verifies and confirms to
Metropolitan Life Insurance Company that
neither CALMAT CO. nor any Erisa Affiliate
(as above defined) is a party in interest
(as above defined) with respect to the
employee benefit plans (as above defined)
set forth on Schedule A hereto.
CALMAT CO.
By _____________________________________
LWLA3\22509.1 1
<PAGE> 89
SCHEDULE A TO EXHIBIT D
<TABLE>
<CAPTION>
Metropolitan Employee Benefit Plan Having Amount of Notes
Separate Account Greater Than 10% Interest Purchased by
Acquiring Notes in the Separate Account Separate Account
---------------- ---------------------------- ----------------
<S> <C> <C>
Separate Acct. American Home Products $2,000,000
No. 50
Separate Acct. General Dynamics $5,000,000
No. 137 Retirement Plan
</TABLE>
LWLA3\22509.1 1
<PAGE> 90
EXHIBIT E
CalMat Co. -- Consolidated
LEGALITY UNDER DELAWARE STATE INSURANCE LAW
Bond of Note Issue
(Amounts in Thousands)
<TABLE>
<CAPTION>
Fiscal Year Ending
------------------
<S> <C>
Net Income Available for Dividends
Add:
Federal & State Income Taxes
Extraordinary Non-Recurring Expenses _______________
Total:
Deduct:
Extraordinary Non-Recurring Income _______________
A. Balance
Add:
B. Interest on Funded & Unfunded Debt
(1). Consolidated Interest Expense
(2). Interest Expense on Net Assets Held For Sale
C. Amortization of Debt Discount
D. Preferred Dividends of Subsidiaries Payable to Others
E. Gross Rentals for Leased Land, Bldgs & Equip.
F. Gross Rentals for all Leased Machinery & Equip. _______________
G. TOTAL FIXED CHARGES (B TO F) _______________
H. Total Net Earnings Available for Fixed Charges (A plus G) _______________
I. Times Earned (H divided by G) _______________
</TABLE>
** Lease and Rental Expense not tracked separately prior to 1991 -- not
material.
Prepared by Frederick T. Sauer
Title Vice President & Treasurer - CalMat Co.
Date July 15, 1993
LWLA3\22509.1 1
<PAGE> 91
EXHIBIT F
FORM OF CALMAT CO.
OFFICER'S CERTIFICATE
RELATING TO CONTINGENT OBLIGATIONS
Reference is made to that certain Note Purchase Agreement
dated as of July 23, 1993 (the "Note Purchase Agreement") among Metropolitan
Life Insurance Company, certain of its affiliates and CalMat Co. (the
"Company"). Capitalized terms used herein without definition have the meanings
assigned thereto in the Note Purchase Agreement. This Officer's Certificate is
delivered pursuant to Section 2.6(vii) of the Note Purchase Agreement.
The undersigned hereby certifies as follows:
1. The Company guaranteed certain obligations of
California Portland Cement Company ("CPC") under a certain sale-leaseback
arrangement by and between Mercantile Safe Deposit and Trust Company, as
Owner-Trustee, Trust Company Bank, as Owner-Participant, CPC, as Lessee, and
four insurance companies, as Lenders, dated as of June 1, 1985, relating to the
Colton cogeneration facility. The Company guaranteed annual lease payments on
the facility of approximately $5,300,000 until January, 2000. As of the date
hereof, the aggregate contingent obligation of the Company with respect thereto
is approximately $37,100,000.
2. The Company guaranteed the obligations of Allied
Cement Company ("ACC") pursuant to that certain Guaranty dated December 10,
1987 in favor of Wilmington Liquid Bulk Terminals, Inc. The Company guaranteed
annual lease payments of approximately $870,000 until December, 2005. As of
the date hereof, the aggregate contingent obligation of the Company with
respect thereto is approximately $10,400,000.
3. Such guarantees were entered into by the Company
prior to the transfer of CPC and ACC by the Company.
4. Pursuant to an agreement dated July 19, 1988 (the
"Indemnity") among the Company, CPC and Onoda U.S.A., Inc. ("Onoda") by which
the Company transferred its cement division and other related assets to Onoda,
Onoda indemnified the Company in full with respect to the Company's guarantees
of the obligations of CPC and ACC described in paragraphs 1 and 2 above.
F-1
LWLA3\22509.1
<PAGE> 92
5. The Indemnity is in full force and effect as of the
date hereof, there are no pending disputes between the parties thereto and
Onoda has not challenged the validly, binding effect or enforceability of the
Indemnity.
IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day
of July, 1993.
______________________________
Frederick T. Sauer
Vice President & Treasurer
F-2
<PAGE> 1
EXHIBIT 10.16
[CALMAT CO. LETTERHEAD] [CALMAT LOGO]
May 25, 1993
Mr. Delbert H. Tanner
1023 Abingdon Lane
Alpharetta, GA 30201
Dear Del:
It is with a great deal of pleasure that I am extending to you an
offer to join CalMat in the position of Executive Vice President, Construction
Materials. This letter will outline the terms of CalMat's offer. We ask that
you signify your acceptance of employment on these terms by signing the
duplicate copy of this letter that is enclosed and returning it to me as soon
as possible.
I. BASE SALARY
Your base salary will be $20,833 a month (which annualizes to
$250,000 a year). This salary is to be reviewed in accordance with the CalMat
Executive Compensation Program as of January 1, 1994.
II. BONUS
You will be paid a hiring bonus in the gross amount of $40,000
(less legally required deductions and withholdings). In addition, you will be
eligible for bonus consideration for fiscal year 1993 in accordance with the
Company's program for senior executive bonuses. The amount, of course, would
be prorated for your time with CalMat.
III. STOCK OPTIONS
You will receive 10,000 shares as an initial grant. Any future
grants would be in accordance with the CalMat Executive Compensation & Stock
Option program.
IV. COMPANY CAR
A company car will not be provided, but business mileage will be
reimbursed at 28c. per mile.
V. PENSION/401-K
You will be eligible to participate in the CalMat Salaried
Employees Thrift and Profit Sharing Retirement Plan. Please note that this
plan has a one-year waiting period which cannot be waived. You may elect to
roll over any 401-K monies you currently have into the CalMat plan.
<PAGE> 2
[CALMAT LOGO] Mr. Delbert H. Tanner
May 25, 1993
Page 2
VI. NONQUALIFIED DEFERRED COMPENSATION PLAN
The Company will make an immediate contribution on your behalf of
$37,500 to the Company's Nonqualified Deferred Compensation Plan, which will
vest on the same schedule as the CalMat Salaried Employees Retirement Plan.
After the first year waiting period, you will have the option under the
Nonqualified Deferred Compensation Plan of deferring 1% to 4% of base salary,
in accordance with plan rules.
VII. COUNTRY CLUB
With the prior approval of the chief executive officer, membership
will be purchased and dues will be paid in one country club. Any equity
membership is to be assigned to the Company, with you having an option to
purchase the equity upon termination.
VIII. HEALTH AND WELFARE
You will participate in the CalMat Health and Welfare Plan for
salaried employees, following a 60-day waiting period. The Company will
reimburse your current employee COBRA cost through the duration of the waiting
period. Once you are covered by the CalMat Health and Welfare Plan, you will
receive medical and dental benefits in accordance with the plan. In addition,
the Company will provide Company-paid life insurance of two times annual base
salary; accidental death and dismemberment insurance at two times annual base
salary; travel accident insurance at $300,000; and long-term disability
insurance providing for 60% of base salary after a 90-day waiting period. You
may purchase supplemental accident insurance up to $500,000.
IX. VACATIONS
For purposes of vacation eligibility, you will be credited with
twenty-two years service on your starting date. For the remainder of calendar
1993, you will be entitled to two weeks' vacation.
X. RELOCATION
With respect to the sale of your home, you will try on your own to
sell it for sixty days. Thereafter, the Company will use a relocation
management company, which will agree to purchase the home at the average of two
independent appraisals. In either event, the Company will pay closing costs
and the realtor's commission, and will gross up these reimbursements to
compensate for your having to pay taxes on these payments. In addition, the
Company will pay up to $1,750 per month (less legally required withholdings and
deductions) for the first three years of employment to compensate for any
additional interest required to amortize a 30-year fixed-rate loan, to the
extent that the monthly payment of interest on a home which you purchase in Los
Angeles exceeds the interest paid under your existing home loan.
<PAGE> 3
[CALMAT LOGO] Mr. Delbert H. Tanner
May 25, 1993
Page 3
The Company will pay moving expenses of normal household goods
only (no boats, or the like). You will be responsible for making moving
arrangements, which the Company will need to approve in advance.
Temporary living expenses will be reimbursed for up to thirty
days, with the reimbursement grossed up to compensate for your having to pay
taxes on the reimbursement.
In addition, you will receive reimbursement for your and your
wife's expenses for house hunting to the limit of two trips, five days each.
Finally, you will receive a flat $10,000 payment, less legally
required withholdings and deductions, to cover miscellaneous expenses in
connection with the relocation.
XI. AT-WILL EMPLOYMENT AND SEVERANCE ARRANGEMENTS
By accepting employment on the terms set forth in this offer
letter, you agree that your employment and compensation are at-will and
therefore can be terminated, with or without cause, at any time, and without
prior notice, at your option or the Company's option. This at-will employment
relationship will remain in effect throughout your employment with the Company,
unless it is specifically modified by an express written employment agreement,
authorized by the Company's Board of Directors.
No CalMat employment policy, nor any written or oral statement or
promise, nor any course of conduct, practice, award, promotion, transfer, or
length of service creates an express or implied contract modifying this at-will
relationship. Your acceptance of at-will employment with CalMat is a material
part of this offer of employment and is an express condition of your
employment.
In the event that CalMat at any time chooses to exercise its right
to terminate you without cause, you will be paid one year's base salary, less
legally required deductions and withholdings, as severance pay. In addition,
CalMat will waive payment of costs of continued health coverage under COBRA for
one year. These will be the only payments to which you will be entitled in the
event of termination without cause.
* * * * *
Enclosed for your information and consideration are materials
describing CalMat's benefit programs and personnel policies, and copies of the
Company's latest Annual Report and related documents, as listed on the
attachment to this letter.
<PAGE> 4
[CALMAT LOGO] Mr. Delbert H. Tanner
May 25, 1993
Page 4
Del, we are very excited about your joining CalMat, and we look
forward to having you on board.
Very truly yours,
/s/ A. Frederick Gerstell
A. Frederick Gerstell
Chairman of the Board
President and Chief Executive Officer
Acceptance of offer of employment:
I hereby accept employment with CalMat
on the terms and conditions stated above.
Dated: May 27, 1993
/s/ Delbert H. Tanner
- --------------------------
Delbert H. Tanner
<PAGE> 5
[CALMAT LOGO] Mr. Delbert H. Tanner
May 25, 1993
Page 5
ATTACHMENTS TO LETTER OF MAY 25, 1993
TO MR. DELBERT H. TANNER
1. 1992 Annual Report and Form 10-K
2. Proxy Statement for 1993 Annual Meeting
3. Form 10-Q dated March 31, 1993
4. CalMat Employee Benefits Package
5. CalMat Employee Health and Disability Insurance Information
6. CalMat Personnel Policies Manual for Salaried Employees in California
dated January 1992
<PAGE> 1
EXHIBIT 10.17
[LETTERHEAD] [LOGO]
August 10, 1993
Mr. H. James Gallagher
2416 Paseo Del Mar
Palos Verdes Estates, CA 92714
Dear Jim:
It is with a great deal of pleasure that I am extending to
you an offer to join CalMat in the position of Executive Vice President,
Finance. This letter will outline the terms of CalMat's offer. We ask that
you signify your acceptance of employment on these terms by signing the
duplicate copy of this letter that is enclosed and returning it to me as soon
as possible.
I. BASE SALARY
From the time you begin work at CalMat (which we understand
will be in early September) until December 31, 1993, your base salary will be
$2,000 per month. Beginning January 1, 1994, your base salary will be $16,667
a month (which annualizes to $200,000 a year). This salary is to be reviewed
in accordance with the CalMat Executive Compensation Program as of January 1,
1995.
II. BONUS
You will be eligible for bonus consideration for fiscal year
1993 and future years in accordance with the Company's program for senior
executive bonuses.
III. STOCK OPTIONS
You will receive 22,000 shares as an initial grant, pursuant
to the terms of the Company's existing stock option plans. Any future grants
would be in accordance with the CalMat Executive Compensation & Stock Option
program.
IV. COMPANY CAR
A company car will not be provided, but business mileage will
be reimbursed at 28c. per mile.
V. PENSION/401-K
You will be eligible to participate in the CalMat Salaried
Employees Thrift and Profit Sharing Retirement Plan. Please note that this
plan has a one-year waiting period which cannot be waived. You may elect to
roll over any 401-K monies you currently have into the CalMat plan.
<PAGE> 2
[LOGO] Mr. H. James Gallagher
August 10, 1993
Page 2
VI. NONQUALIFIED DEFERRED COMPENSATION PLAN
After the first year waiting period, you will be eligible to
participate in the Nonqualified Deferred Compensation Plan and have the option
of deferring 1% to 4% of base salary, in accordance with plan rules.
VII. HEALTH AND WELFARE
You will participate in the CalMat Health and Welfare Plan
for salaried employees, following a 60-day waiting period. To the extent not
paid by your former employer, the Company will reimburse your current employee
COBRA cost through the duration of the waiting period. Once you are covered by
the CalMat Health and Welfare Plan, you will receive medical and dental
benefits in accordance with the plan. In addition, the Company will provide
Company-paid life insurance of two times annual base salary; accidental death
and dismemberment insurance at two times annual base salary; travel accident
insurance at $300,000; and long-term disability insurance providing for 60% of
base salary after a 90-day waiting period. You may purchase supplemental
accident insurance up to $500,000.
VIII. VACATIONS
For purposes of vacation eligibility, you will be credited
with eighteen years service on your starting date. For the remainder of
calendar 1993, you will be entitled to seven days vacation time.
IX. AT-WILL EMPLOYMENT AND SEVERANCE ARRANGEMENTS
By accepting employment on the terms set forth in this offer
letter, you agree that your employment and compensation are at-will and
therefore can be terminated, with or without cause, at any time, and without
prior notice, at your option or the Company's option. This at-will employment
relationship will remain in effect throughout your employment with the Company,
unless it is specifically modified by an express written employment agreement,
authorized by the Company's Board of Directors.
No CalMat employment policy, nor any written or oral
statement or promise, nor any course of conduct, practice, award, promotion,
transfer, or length of service creates an express or implied contract modifying
this at-will relationship. Your acceptance of at-will employment with CalMat
is a material part of this offer of employment and is an express condition of
your employment.
In the event that CalMat at any time chooses to exercise its
right to terminate you without cause, your base salary will be continued on a
month-to-month basis, for a maximum period of twelve months, or until you
accept other employment, whichever is less, less legally required deductions
and withholdings, as severance pay. In addition, CalMat will waive payment of
costs of continued health coverage under COBRA for up to twelve months. These
will be the only payments to which you will be entitled in the event of
termination without cause.
<PAGE> 3
[LOGO] Mr. H. James Gallagher
August 10, 1993
Page 3
Enclosed for your information and consideration are materials
describing CalMat's benefit programs and personnel policies, and copies of the
Company's latest Annual Report and related documents, as listed on the
attachment to this letter.
Jim, we are very excited about your joining CalMat, and we
look forward to having you on board.
Very truly yours,
/s/ A. Frederick Gerstell
A. Frederick Gerstell
Chairman of the Board
President and Chief Executive Officer
Acceptance of offer of employment:
I hereby accept employment with CalMat
on the terms and conditions stated above.
Dated: 8/12, 1993
/s/ H. James Gallagher
- -----------------------
H. James Gallagher
<PAGE> 4
[LOGO] Mr. H. James Gallagher
August 10, 1993
Page 4
ATTACHMENTS TO LETTER OF AUGUST 10, 1993
TO MR. H. JAMES GALLAGHER
1. 1992 Annual Report, Form 10-K and Form 10-K/A
2. Proxy Statement for 1993 Annual Meeting
3. Forms 10-Q dated March 31, 1993 and June 30, 1993
4. CalMat Employee Benefits Package (sent previously under separate
cover)
5. CalMat Employee Health and Disability Insurance Information (sent
previously under separate cover)
6. CalMat Personnel Policies Manual for Salaried Employees in California
dated January 1992
<PAGE> 1
EXHIBIT 21.1
CALMAT CO.
SUBSIDIARIES OF REGISTRANT
DECEMBER 31, 1993
<TABLE>
<CAPTION>
PERCENTAGE OF
STOCK OR
NAME OF COMPANY ORGANIZED UNDER INTEREST OWNED
THE LAWS OF BY REGISTRANT
<S> <C> <C>
CalMat Co of Arizona . . . . . . . . . . . . . . . . . . Arizona 100%
CalMat Co of New Mexico . . . . . . . . . . . . . . . . . New Mexico 100%
CalMat of Central California . . . . . . . . . . . . . . California 100%
CalMat Land Co . . . . . . . . . . . . . . . . . . . . . California 100%
CalMat Properties Co . . . . . . . . . . . . . . . . . . California 100%
Coast Asphalt, Inc . . . . . . . . . . . . . . . . . . . Delaware 100%
Huntmix, Inc . . . . . . . . . . . . . . . . . . . . . . California 100%
</TABLE>
