<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 1999 Commission file number 1-9967
AMCAST INDUSTRIAL CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 31-0258080
- ---------------------------------- --------------------------------
(State of Incorporation) (I.R.S. employer
identification no.)
7887 Washington Village Drive, Dayton, Ohio 45459
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(937) 291-7000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Shares, without par value New York Stock Exchange
Preferred Share Purchase Rights
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 and 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, 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 the definitive proxy or in information
statements incorporated by reference in Part III of this Form 10K or any
amendment to this Form 10-K. [ X]
Aggregate market value of common shares, no par value, held by
non-affiliates of the registrant (assuming only for the purposes of this
computation that directors and officers may be affiliates) as of October 18,
1999--$116,744,315.
Number of common shares outstanding, no par value, as of October 18, 1999--
8,954,920 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV--Portions of Annual Report to Shareholders for the year
ended August 31, 1999.
Part III--Portions of Proxy Statement for the Annual Meeting of
Shareholders to be held on December 15, 1999 filed November 15, 1999.
<PAGE> 2
PART I
ITEM 1 - BUSINESS
Amcast Industrial Corporation, an Ohio corporation incorporated in 1869,
and its subsidiaries (called collectively "Amcast" or the "Company") are engaged
in the business of producing fabricated metal products and cast and tubular
metal products in a variety of shapes, sizes, and metals for sale to end users
directly, through sales representatives and distributor organizations, and to
original equipment manufacturers. The Company serves three major sectors of the
economy: automotive, construction, and industrial. Manufacturing facilities are
located in five states, primarily in the Midwestern United States and in Italy.
During fiscal 1998, the Company acquired Lee Brass Company, located in
Anniston, Alabama; ceased operations at Flagg Brass, Inc., located in Stowe,
Pennsylvania; and during fiscal 1999, sold Superior Valve Company, located in
Washington, Pennsylvania. See further discussion in "Flow Control Products"
below. During fiscal 1997, the Company acquired all of the outstanding stock of
Speedline S.p.A. and its subsidiaries ("Speedline"), a major European
manufacturer located in Italy and during fiscal 1998, sold Amcast Precision
Products Inc. in Rancho Cucamonga, California. See further discussion in
"Engineered Components" below.
The Company operates in two business segments -- (1) Flow Control
Products and (2) Engineered Components. Information concerning the net sales,
operating profit, and identifiable assets of each segment and sales by product
catagory for years 1997 through 1999 appears under "Business Segments" in the
Notes to Consolidated Financial Statements in the Company's Annual Report to
Shareholders for the year ended August 31, 1999. Such information is
incorporated herein by reference and is included as Exhibit 13.1 of this report.
Domestic export sales were $18.0 million, $33.4 million, and $30.9 million in
fiscal 1999, 1998, and 1997, respectively.
FLOW CONTROL PRODUCTS
The Flow Control Products segment (Flow Control) includes the businesses
of Elkhart Products Corporation (Elkhart), Lee Brass Company (Lee Brass), and
Amcast Industrial Ltd. Elkhart produces a complete line of wrot copper fittings
for use in residential, commercial, and industrial construction and markets
brass pipe fittings. Lee Brass manufactures cast brass products for residential,
commercial, and industrial plumbing systems as well as specific cast brass
components unique to the application of original equipment manufacturers. Amcast
Industrial Ltd. is the Canadian marketing channel for the Company's Flow Control
segment manufacturing units.
The Flow Control Products segment is a leading supplier of copper pipe
fittings for the industrial, commercial, and residential construction markets.
These products are sold through distributors and wholesalers. Shipments are
primarily made by truck from Company locations directly to customers. The
competition is comprised of a number of manufacturers of parts for air
conditioning, refrigeration, and plumbing systems. The Company believes that
competition in this segment is based on a number of factors including product
quality, service, delivery, and value.
The Flow Control Products segment is one of three major suppliers of
copper and brass fittings to the North American industrial, commercial, and
residential plumbing markets. Products are sold primarily through plumbing
wholesalers, retail hardware stores and home centers, and to original equipment
manufacturers and replacement parts distributors in the air
2
<PAGE> 3
FLOW CONTROL PRODUCTS (cont'd)
conditioning and commercial refrigeration business. Competition is based on
service levels, pricing, and breadth of product offering. The Company's prime
competitors are Mueller Industries, Inc., a publicly-owned company listed on the
New York Stock Exchange, and NIBCO Inc., a privately-held company headquartered
in Elkhart, Indiana. Both Mueller Industries, Inc. and NIBCO Inc. may have
greater financial resources than the Company.
On April 9, 1998, the Company acquired Lee Brass Company, a
privately-owned company located in Anniston, Alabama. Lee Brass is a major
manufacturer of cast brass products for residential, commercial, and industrial
plumbing systems. The purchase price was approximately $16.1 million consisting
of cash payments of $11.7 million and debt assumption of $4.4 million.
Following the acquisition of Lee Brass, the Company consolidated its two
brass foundry operations and ceased production at its Flagg Brass plant located
in Stowe, Pennsylvania. The consolidation plan included the transfer of certain
product lines to Lee Brass, the closure of the Flagg Brass facility, and the
termination of approximately 100 salaried and hourly personnel.
On October 16, 1998, the Company sold Superior Valve Company for $35.6
million in cash. The transaction resulted in a pre-tax gain of $9.0 million.
This business, acquired by Amcast in 1986, produces specialty valves and related
products for the compressed gas and commercial refrigeration markets. Fiscal
1998 sales of approximately $42.0 million were included in the Company's Flow
Control Segment.
The majority of the Flow Control Products segment's business is based on
customer purchase orders for their current product requirements. Such orders are
filled from inventory positions maintained in the regional warehouse
distribution network. In certain situations, longer-term supply arrangements are
in place with major customers. Such arrangements are of the type that stipulate
a certain percentage of the customer's requirements to be delivered at a
specific price over a set period of time. Such arrangements are beneficial to
the Company in that they provide firm forecasts of demand that allow for
efficient use of equipment and manpower.
See Properties at Item 2 of this report for information on the Company's
facilities which operate in this segment.
ENGINEERED COMPONENTS
The Engineered Components segment produces cast and fabricated metal
products principally for sale to original equipment manufacturers in the
transportation, construction, air conditioning, and refrigeration industries.
The Company's manufacturing processes involve the melting of raw materials for
casting into metal products having the configuration, flexibility, strength,
weight, and finish required for the customer's end use. The Company also custom
fabricates copper and aluminum tubular parts. The Company manufactures products
on a high-volume, medium-volume, and specialized basis and its metal
capabilities include aluminum, magnesium, and copper. Products manufactured by
the North American operations of this segment include aluminum castings for
suspension, air conditioning and anti-lock braking systems, master cylinders,
differential carriers, brake calipers and cast aluminum wheels for use on
automobiles and light trucks, and parts for use in heating and air conditioning
systems. Delivery is mostly by truck from Amcast locations directly to
customers. Principal products manufactured by Speedline include aluminum wheels
for passenger cars and trucks. Speedline also manufactures aluminum and
magnesium racing wheels, aftermarket wheels, modular wheels and hubcaps.
The Engineered Components segment is not solely dependent on a single
customer; however, a significant portion of the Engineered Components business
is directly or indirectly dependent on the major automobile manufacturers. The
Company's net sales to various divisions of General Motors Corporation were
$136.5 million, $105.7 million, and $105.8 million for fiscal 1999, 1998, and
1997, respectively. No other customer accounted for more than 10% of
consolidated sales.
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<PAGE> 4
ENGINEERED COMPONENTS (cont'd)
The Engineered Components segment is a leading supplier of aluminum
automotive components and aluminum wheels for automotive original equipment
manufacturers in North America and also a leading supplier of light-alloy wheels
for automotive original equipment manufacturers and aftermarket applications in
Europe. Competition in the automotive components industry is global with
numerous competitors. The basis of competition is generally design and
engineering capability, price, product quality, and delivery.
There are approximately 25 competitors in the aluminum automotive
component business serving the North American market. Principal competitors
include Alcoa, Hayes Lemmerz International, Inc., Stahl Specialty Company,
Contech, a subsidiary of SPX Corporation, and Citation Corporation, some of
which have significantly greater financial resources than the Company.
There are approximately 18 producers of aluminum wheels which service the
North American market. The largest of these are Superior Industries
International, Inc. and Hayes Lemmerz International, Inc. The next tier of
suppliers includes the Company, Reynolds Metals Company, Alcoa, and Enkei
America Inc. Some of the Company's competitors in the aluminum wheel business
have significantly greater financial resources than the Company.
There are approximately 15 competitors in the aluminum and magnesium
automotive wheel business serving the European market. Principal competitors
include Hayes Lemmerz International, Inc., Ronal, ATS, and Alloy Wheels
International (AWI), some of which may have significantly greater financial
resources than the Company.
The Company operates on a "blanket" order basis and generally supplies
all of the customer's annual requirements for a particular part. Customers issue
firm releases and shipping schedules each month against their blanket orders
depending on their current needs. As a result, order backlog varies from month
to month and is not considered firm beyond a 30-day period.
Effective March 30, 1998, the Company sold Amcast Precision Products Inc.
(Precision), its Rancho Cucamonga, California investment casting operation, for
$25.4 million. Precision produces ferrous and nonferrous castings for the
aerospace industry. Precision sales were approximately $19.0 million in fiscal
1997. This was Amcast's only operation in the aerospace industry.
See Properties at Item 2 of this report for information on the Company's
facilities which operate in this segment.
GENERAL INFORMATION
Aluminum and copper, the essential raw materials to the business, are
commodity-based metals purchased from worldwide sources of supply. Supplier
selection is based upon quality, delivery, reliability, and price. Availability
of these materials is judged to be adequate. The Company does not anticipate any
material shortage that will alter production schedules during the coming year.
Aluminum and copper are basic commodities traded in international
markets. Changes in aluminum and copper costs are generally passed through to
the customer. In North America, changes in the cost of aluminum are currently
passed through to the customer based on various formulas as is the custom in the
automotive industry sector the Company serves. In Europe, changes in the cost of
aluminum are currently passed through to approximately one-half of the customers
based upon various formulas and through negotiated contracts with the remaining
customers. Copper cost increases and decreases are generally passed through to
the customer in the form of price changes as permitted by prevailing market
conditions. The Company is unable to project whether these costs will increase
or decrease in the future. The Company's ability to pass through any increased
costs to the customer in the future will be determined by market conditions at
that time.
4
<PAGE> 5
GENERAL INFORMATION (cont'd)
The Company owns a number of patents and patent applications relating to
the design of its products. While the Company considers, in the aggregate, these
patents are important to operations, it believes that the successful manufacture
and sale of its products generally depend more on the Company's technological
know-how and manufacturing skills.
Capital expenditures related to compliance with federal, state, and local
environmental protection regulations for fiscal 2000 and 2001 are not expected
to be material. Management believes that operating costs related to
environmental protection will not have a materially adverse effect on future
earnings or the Company's competitive position in the industry.
The Company employed approximately 4,960, 4,500, and 4,040 associates at
August 31, 1999, 1998, and 1997, respectively.
The automotive industry in general is cyclical and varies based on the
timing of consumer purchases of vehicles and overall economic strength.
Production schedules can vary significantly from quarter to quarter to meet
customer demands. The Company normally experiences reduced sales volume in the
fourth and, to a lesser degree, the first quarter due to plant closings by
original equipment manufacturers for vacations and model changeovers.
CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES REFORM ACT OF 1995
Certain statements in this Report, in the Company's press releases, and
in oral statements made by or with the approval of an authorized executive
officer of the Company constitute "forward-looking statements" as that term is
defined under the Private Securities Litigation Reform Act of 1995. These may
include statements projecting, forecasting, or estimating Company performance
and industry trends. The achievement of the projections, forecasts, or estimates
is subject to certain risks and uncertainties. Actual results and events may
differ materially from those projected, forecasted, or estimated. Factors which
may cause actual results to differ materially from those contemplated by the
forward-looking statement include, among others: general economic conditions
less favorable than expected, fluctuating demand in the automotive industry,
less favorable than expected growth in sales and profit margins in the Company's
product lines, increased competitive pressures in the Company's Engineered
Components and Flow Control Products segments, effectiveness of production
improvement plans, inherent uncertainties in connection with international
operations and foreign currency fluctuations and labor relations at the Company
and its customers.
5
<PAGE> 6
ITEM 2 - PROPERTIES
The following table provides certain information relating to the Company's
principal facilities as of October 18, 1999:
<TABLE>
<CAPTION>
SQUARE
FACILITY FOOTAGE USE
- -------------------------------------- ------- ------------------------------------
<S> <C> <C>
Flow Control Products Segment
- -----------------------------
Elkhart, Indiana 222,000 Copper fittings manufacturing
plant, warehouse, and sales
and general offices
Fayetteville, Arkansas 107,800 Copper fittings manufacturing plant
Burlington, Ontario, Canada 20,214 Distribution warehouse and
branch sales office for
Flow Control Products
Anniston, Alabama 425,000 Brass foundry, machining,
warehouse and distribution
Engineered Components Segment
- -----------------------------
Geneva, Indiana 106,153 Custom fabricated copper
and aluminum tubular
products manufacturing plant
Cedarburg, Wisconsin 149,000 High-volume, aluminum alloy
permanent-mold foundry
Richmond, Indiana 97,300 High-volume, aluminum alloy
permanent-mold foundry
Fremont, Indiana 144,500 Cast and machined aluminum
automotive wheels plant
Gas City, Indiana 196,000 Cast and machined aluminum
automotive wheels plant
Wapakoneta, Ohio 206,000 Cast and assembled aluminum
suspension components plant
Southfield, Michigan 10,975 Automotive component sales,
product development, and
engineering center offices
Tabina S. Maria di Sala, Italy 257,142 Aluminum passenger car wheels,
aluminum and magnesium wheels
for OEM racing and aftermarket
plant
</TABLE>
6
<PAGE> 7
ITEM 2 - PROPERTIES (cont'd)
<TABLE>
<CAPTION>
SQUARE
FACILITY FOOTAGE USE
- -------------------------------------- ------- ------------------------------------
<S> <C> <C>
Caselle S. Maria di Sala, Italy 56,855 Light-alloy wheels, aluminum and
magnesium wheels for OEM racing and aftermarket plant
Bolzano, Italy 138,244 Aluminum car wheels,
truck aluminum wheels
plant
Riese Pio X (TV), Italy 24,291 Aluminum passenger car wheels
plant
Corporate
- ---------
Dayton, Ohio 16,281 Executive and general offices
</TABLE>
The land and building in Burlington, Ontario, are leased under a
five-year lease expiring in 2003. The land in Richmond and Gas City, Indiana, is
leased under 99-year leases, expiring in 2091. The Corporate offices are being
leased for five years expiring in 2003. The Amcast Automotive offices in
Southfield, Michigan, are being leased for five years expiring in the year 2004,
with an option for a five year renewal. Five buildings used by Speedline S.r.l.
are leased. Three of the leased buildings are located in Tabina S. Maria di
Sala, Italy. One building of 13,002 square feet and one building of 37,221
square feet are both leased until 2003 and the third building of 21,670 square
feet is leased until 2002, with an option for a six-year renewal. There are two
additional leases for Speedline associates parking lots renewable from year to
year thereafter. The Speedline building located in Caselle S. Maria di Sala,
Italy, is leased in two portions--one is leased until 2001 and the other is
leased until 2006. The land and buildings in Riese Pio X are leased until 2000,
with an option for a six year renewal. The Bolzano land is leased under a 20
year lease, expiring in 2019. All other properties are owned by the Company.
A portion of the land and building at Fayetteville, Arkansas, is subject
to a mortgage in favor of Bank One, Dayton, NA, to secure the payment of a
$5,050,000 bond issue dated December 1, 1991, and maturing December 1, 2004.
The Company's operating facilities are in good condition and are suitable
for the Company's purposes. Utilization of capacity is dependent upon customer
demand. During 1999, total company-wide productive capacity utilization ranged
from 85% to 95%, and averaged 91% of the Company's total capacity.
ITEM 3 - LEGAL PROCEEDINGS
Certain legal matters are described at "Commitments and Contingencies" in
the Notes to Consolidated Financial Statements of the Company's Annual Report to
Shareholders for the year ended August 31, 1999, which is included in Exhibit
13.1 to this Report and incorporated herein by reference.
Allied Signal, Inc. has brought a superfund private cost recovery and
contribution action against the Company in the United States District Court for
the Southern District of Ohio, Western Division, which is captioned
Allied-Signal, Inc. V. Amcast Industrial Corporation (Case No. C-3-92-013). The
action involves the Goldcamp Disposal Site in Ironton, Ohio. Allied-Signal has
taken the lead in remediating the site and has estimated that its total costs
for the
7
<PAGE> 8
ITEM 3 - LEGAL PROCEEDINGS (cont'd)
remediation may reach $30 million. Allied is seeking a contribution from the
Company in an amount equal to 50% of the final remediation costs. A trial in
this proceeding was completed in February 1995. The trial court recently entered
a "short form" opinion on the merits. The Court stated that the Company is
responsible for 2% of Allied's past and future clean-up costs, and that the
Company is responsible for 28% of the costs that Allied incurred to place a
"cap" on the Goldcamp Disposal site. The Court also ordered the Company to pay
pre-judgment interest. Based on the Court's action, the Company estimates that
its maximum liability associated with the action is between $0.5 million and
$1.5 million. The Court has not entered a "final" order and any final order
could be subject to appeal. The Company believes its liability is at the low end
of this range.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
EXECUTIVE OFFICERS OF REGISTRANT
John H. Shuey, age 53, has been Chairman, President and Chief Executive
Officer of the Company since December 1997 and a director since March 1994. Mr.
Shuey was President and Chief Executive Officer from March 1995 to December
1997. Mr. Shuey was President and Chief Operating Officer from December 1993 to
March 1995. Mr. Shuey was Executive Vice President from February 1991 to
December 1993. Mr. Shuey is also a director of Cooper Tire & Rubber Company.
Giovanni Scarlini, age 48, was appointed General Manager and Managing
Director of Speedline S.p.A. upon Amcast's acquisition of Speedline in August
1997. Mr. Scarlini has been with Speedline since November 1996. From 1986 to
March 1996, Mr. Scarlini occupied several management positions with CESAB, the
most recent being General Manager.
Michael N. Powell, age 52, has been President of Amcast Flow Control,
since May 1996. From April 1994 until May 1996, he was Vice President/General
Manager of Superior Valve Company. Mr. Powell was President and Chief Operating
Officer of Versa Technologies, Inc. in Racine, Wisconsin, from May 1991 to
December 1993.
Ronald C. DiLiddo, age 54, has been President of Amcast Automotive since
October 1999. From 1998 to 1999, he was General Manager of the North American
Wiper Systems and Electric Motor group of Valeo S.A. From 1996 to 1998, Mr.
DiLiddo was Vice President of Operations for ITT's automotive electrical systems
group and from 1994 to 1996, he was President and Chief Executive Officer of
Hansford Manufacturing.
Douglas D. Watts, age 54, has been Vice President, Finance since August
1994. From 1987 to August 1994, Mr. Watts held various financial management
positions with General Cable Corporation, of which the most recent post was Vice
President and Controller.
Dean Meridew, age 45, has been Vice President of Amcast Automotive since
September 1999. From September 1997 to September 1999, he was Vice President,
Amcast Europe. From June 1992 to September 1997, he was Division Manager for the
Company's North American wheel operations. Prior to that, Mr. Meridew was
Operations Manager and Engineering Manager within the Company's North American
wheel operations since January 1985.
Denis G. Daly, age 57, has been Vice President, General Counsel and
Secretary since January 1990. From January 1988 to December 1989, he worked in
private practice at the law firm of Thompson, Hine, and Flory.
8
<PAGE> 9
EXECUTIVE OFFICERS OF REGISTRANT (cont'd)
Robert C. Collevechio, age 47, has been Vice President, Human Resources
since September 1996. From 1992 to 1996, he was Director of Human Resources for
the North American operations of Carrier Corporation.
James R. Van Wert, Jr., age 41, has been Vice President, Technology since
June 1997. Prior to that, Mr. Van Wert was with the Aluminum Company of America
(ALCOA), in numerous capacities. His last position was Director of Technology,
Forging & Casting, focusing primarily on the automotive industry.
Michael R. Higgins, age 53, has been Treasurer since January 1987.
Mark D. Mishler, age 41, has been Corporate Controller since April 1998.
From April 1995 to April 1998, he was International Controller for Witco
Corporation. From April 1991 to April 1995, he was a Divisional Controller for
Siemens.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Amcast common stock is listed on the New York Stock Exchange, ticker
symbol AIZ. As of August 31, 1999, there were 8,954,920 of the Company's common
shares outstanding, and there were approximately 8,100 shareholders of Amcast's
common stock, including shareholders of record and the Company's estimate of
beneficial holders.
<TABLE>
<CAPTION>
Range of Stock
Prices
--------------------------------- Dividends
High Low Per Share
---- --- ---------
Fiscal
1999
----
<S> <C> <C> <C>
First Quarter $18 15/16 $13 7/8 $.14
Second Quarter 22 15 5/16 .14
Third Quarter 19 15 1/4 .14
Fourth Quarter 18 7/16 14 1/2 .14
Fiscal
1998
----
First Quarter $25 7/8 $22 1/2 $.14
Second Quarter 24 7/8 20 15/16 .14
Third Quarter 22 9/16 19 5/8 .14
Fourth Quarter 21 11/16 15 1/4 .14
</TABLE>
Certain information concerning provisions affecting the payment of
dividends is located at "Long-Term Debt and Credit Arrangements" in the Notes to
Consolidated Financial Statements of the Company's Annual Report to Shareholders
for the year ended August 31, 1999, Exhibit 13.1 herein.
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference
to "Selected Data" of the Company's Annual Report to Shareholders for the year
ended August 31, 1999, Exhibit 13.1 herein.
9
<PAGE> 10
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is incorporated herein by reference
to "Management's Discussion of Financial Condition and Results of Operations" of
the Company's Annual Report to Shareholders for the year ended August 31, 1999,
Exhibit 13.1 herein.
ITEM 7a - QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by reference
to "Management's Discussion of Financial Condition and Results of Operations" of
the Company's Annual Report to Shareholders for the year ended August 31, 1999,
Exhibit 13.1 herein.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference to
"Consolidated Financial Statements and Notes to Consolidated Financial
Statements," together with the report thereon of Ernst & Young LLP and
"Quarterly Financial Data (Unaudited)" of the Company's Annual Report to
Shareholders for the year ended August 31, 1999, Exhibit 13.1 herein.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item relating to directors and executive
officers of the Company is incorporated herein by reference to that part of the
information under "Election of Directors" on pages 2 and 3, and "Section 16(a)
Beneficial Ownership Reporting Compliance" on page 4 of the Company's Proxy
Statement for its Annual Meeting of Shareholders to be held on December 15,
1999. Certain information concerning executive officers of the Company appears
under "Executive Officers of Registrant" at Part I, pages 8 and 9, of this
Report.
ITEM 11 - EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference
to "Executive Compensation" on pages 6 through 13 of the Company's Proxy
Statement for its Annual Meeting of Shareholders to be held on December 15,
1999.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference
to "Security Ownership of Directors, Nominees, and Officers" on page 5 and
"Security Ownership of Certain Beneficial Owners" on page 15 of the Company's
Proxy Statement for its Annual Meeting of Shareholders to be held on December
15, 1999.
10
<PAGE> 11
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is contained on pages 9 and 13 in
the Company's Proxy Statement for its Annual Meeting of Shareholders to be held
on December 15, 1999, which is incorporated herein by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report.
1. Financial statements:
The following financial statements of Amcast Industrial Corporation
and subsidiaries, included in the Annual Report to Shareholders for
the year ended August 31, 1999, are incorporated by reference at
Item 8 of this report.
Consolidated Statements of Income -
Years Ended August 31, 1999, 1998, and 1997.
Consolidated Statements of Financial Condition -
August 31, 1999 and 1998.
Consolidated Statements of Shareholders' Equity -
Years Ended August 31, 1999, 1998, and 1997.
Consolidated Statements of Cash Flows -
Years Ended August 31, 1999, 1998, and 1997.
Notes to Consolidated Financial Statements
Report of Independent Auditors
2. Consolidated financial statement schedule:
<TABLE>
<CAPTION>
Schedule Page Number
Number Description In This Report
------ ----------- --------------
<S> <C> <C>
II Valuation and Qualifying Accounts and Reserves - August 31,
1999, 1998, and 1997 13
</TABLE>
All other financial statement schedules are omitted because they
are not applicable or because the required information is shown in
the financial statements or in the notes thereto.
3. Exhibits - See Index to Exhibits (page 14 hereof).
4. Reports on Form 8-K - During the fourth quarter ended August 31, 1999,
the Company did not file any reports on Form 8-K.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on the 23rd day of November 1999.
AMCAST INDUSTRIAL CORPORATION
(Registrant)
By /s/ John H. Shuey
------------------------------------
John H. Shuey
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------- ------------------------------- --------------------
<S> <C> <C>
/s/John H. Shuey Chairman, President and
- ------------------- Chief Executive Officer November 23, 1999
John H. Shuey Director
(Principal Executive Officer)
/s/Douglas D. Watts Vice President, Finance November 23, 1999
- ------------------- (Principal Financial Officer)
Douglas D. Watts
/s/Mark D. Mishler Controller November 23, 1999
- ------------------- (Principal Accounting Officer)
Mark D. Mishler
*Leo W. Ladehoff Director November 23, 1999
*James K. Baker Director November 23, 1999
*Walter E. Blankley Director November 23, 1999
*Peter H. Forster Director November 23, 1999
*Earl T. O'Loughlin Director November 23, 1999
*Bernard G. Rethore Director November 23, 1999
*William G. Roth Director November 23, 1999
*R. William Van Sant Director November 23, 1999
</TABLE>
*The undersigned John H. Shuey, by signing his name hereto, does sign and
execute this annual report on Form 10-K on behalf of each of the above-named
directors of the registrant pursuant to powers of attorney executed by each such
director and filed with the Securities and Exchange Commission as an exhibit to
this report.
By /s/John H. Shuey
---------------------------
John H. Shuey
Attorney in Fact
12
<PAGE> 13
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
AMCAST INDUSTRIAL CORPORATION AND SUBSIDIARIES
($ In Thousands)
<TABLE>
<CAPTION>
Additions
-------------------------
Balance Charged to Charged to
Beginning Costs and Other Balance at
Description of Period Expenses Accounts Deductions End of Period
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Deducted From Asset Accounts
Reserves for unrealized
losses on properties and other
assets held for sale:
Year ended August 31, 1999 $2,818 $(2,818) (1) $ --
Year ended August 31, 1998 $2,818 -- $2,818
Year ended August 31, 1997 $3,071 $ (253) (1) $2,818
</TABLE>
(1) Write off of assets against reserve.
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit See Key
Number Description Below
------ -------------------------------------------------------------- -----
<S> <C> <C>
3 ARTICLES OF INCORPORATION AND BY-LAWS:
3.1 Articles of Incorporation of Amcast Industrial
Corporation, incorporated by reference from Form
10-K for the year ended August 31, 1996. I
3.2 Code of Regulations of Amcast Industrial
Corporation, incorporated by reference from Form
10-K for the year ended August 31, 1996. I
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY
HOLDERS, INCLUDING INDENTURES:
4.1 $200,000,000 Credit Agreement between Amcast
Industrial Corporation and KeyBank National Association
dated August 14, 1997, incorporated by reference from Form
8-K filed September 3, 1997. I
4.2 First Amendment Agreement dated October 7, 1997, to the
$200,000,000 Credit Agreement between Amcast Industrial
Corporation and KeyBank National Association dated
August 14, 1997, incorporated by reference from Form 10-K
for the year ended August 31, 1998. I
4.3 Second Amendment Agreement dated August 30, 1998, to the
$200,000,000 Credit Agreement between Amcast Industrial
Corporation and KeyBank National Association dated
August 14, 1997, incorporated by reference from Form 10-K
for the year ended August 31, 1998. I
4.4 Loan Agreement between the City of Elkhart, Indiana,
and Elkhart Products Corporation, dated as of February
1, 1988, for $2,050,000, Economic Development
Revenue Refunding Bonds, Series 1988. +
4.5 $10,000,000 Senior Note Agreement between Amcast
Industrial Corporation and Principal Mutual Life
Insurance Company dated September 1, 1989, as amended,
incorporated by reference from Form 10-K for the year
ended
August 31, 1996. I
4.6 Amendment Agreement, dated July 24, 1995, to the
$10,000,000 Senior Note Agreement between Amcast
Industrial Corporation and Principal Mutual Life
Insurance Company, dated September 1, 1989,
incorporated by reference from Form 10-K for the year
ended August 31,
1995. I
</TABLE>
14
<PAGE> 15
INDEX TO EXHIBITS (cont'd)
<TABLE>
<CAPTION>
Exhibit See Key
Number Description Below
------ -------------------------------------------------------------- -----
<S> <C> <C>
4.7 Amendment Agreement dated as of December 31, 1997, to
the $10,000,000 Senior Note Agreement between Amcast
Industrial Corporation and Principal Mutual Life
Insurance Company, dated September 1, 1989,
incorporated by reference from Form 10-K for the year
ended August 31, 1998. I
4.8 Loan Agreement by and between the City of Fayetteville,
Arkansas, and Amcast Industrial Corporation, dated as
of December 1, 1991, for $5,050,000 City of
Fayetteville, Arkansas, variable/fixed rate demand
Industrial Development Revenue Refunding Bonds, Series
1992. +
4.9 Amcast guarantee of a portion of the $32,100,000
Credit and Intercreditor Agreement between Casting
Technology Company (a joint venture partnership
between Amcast Industrial Corporation and Izumi
Industries, Ltd.) and Bank One , Indiana, National
Association, The Asahi Bank, Ltd., and Bank One,
Indiana, National Association, as Agent, and a copy
of the Credit and Intercreditor Agreement, dated
August 31, 1999. F
4.10 $50,000,000 Note Agreement between Amcast Industrial
Corporation and Principal Mutual Life Insurance Company
and The Northwestern Mutual Life Insurance Company, dated
November 1, 1995, incorporated by reference from Form
10-K for the year ended August 31,1995. I
4.11 Amendment Agreement dated December 31, 1997, to
$50,000,000 Note Agreement between Amcast Industrial
Corporation and Principal Mutual Life Insurance
Company, dated November 1, 1995, incorporated by
reference from Form 10-K for the
year ended August 31, 1998. I
4.12 Lease between ICX Corporation, lessor, and Amcast
Industrial Corporation, lessee, dated July 13, 1999. +
</TABLE>
15
<PAGE> 16
INDEX TO EXHIBITS (cont'd)
<TABLE>
<CAPTION>
Exhibit See Key
Number Description Below
------ -------------------------------------------------------------- -----
<S> <C> <C>
10 MATERIAL CONTRACTS:
10.1 Amcast Industrial Corporation Employee Share- builder
Plan, effective August 26, 1987, incorporated by
reference from Form 10-K for the year ended August 31,
1996. I
10.2 Amcast Industrial Corporation Annual Incentive Plan,
effective September 1, 1982, incorporated by reference
from Form 10-K for the year ended
August 31, 1996. I
10.3 Deferred Compensation Agreement for Directors of Amcast
Industrial Corporation, incorporated by reference from
Form 10-K for the year ended
August 31, 1996. I
10.4 Executive Agreement between Amcast Industrial
Corporation and Leo W. Ladehoff, former Chairman of the
Board and Chief Executive Officer of the Company, dated
March 3, 1995, incorporated by reference from Form 10-Q
for the quarter ended May 28, 1995. I
10.5 Indemnification Agreement for Directors of Amcast
Industrial Corporation, effective October 30, 1987,
incorporated by reference from Form 10-K for the year
ended August 31, 1996. I
10.6 First Master Benefit Trust Agreement between Amcast
Industrial Corporation and Bank One, Dayton, NA,
effective March 11, 1988, incorporated by reference
from Form 10-K for the year ended
August 31, 1996. I
10.7 Amcast Industrial Corporation 1989 Stock Incentive
Plan, effective October 19, 1988, as amended, effective
December 9, 1992, incorporated by reference from Form
10-Q for the quarter ended February 28, 1994. I
10.8 Amcast Industrial Corporation 1989 Director Stock
Option Plan, effective October 19, 1988, incorporated
by reference from Form 10-K for
the year ended August 31, 1996. I
</TABLE>
16
<PAGE> 17
INDEX TO EXHIBITS (cont'd)
<TABLE>
<CAPTION>
Exhibit See Key
Number Description Below
------ -------------------------------------------------------------- -----
<S> <C> <C>
10.9 Amcast Industrial Corporation Change of Control
Agreements, effective September 1, 1996, incorporated
by reference from Form 10-K for the year ended
August 31, 1996. I
10.10 Change of Control Agreement between Amcast Industrial
Corporation and John H. Shuey, Chairman, President and
Chief Executive Officer, effective December 31, 1997,
incorporated by reference from Form 10-K for the year
August 31, 1998. I
10.11 Share Purchase Agreement between Amcast
Industrial Corporation and Speedline International
Holding B.V., Gerance S.A., San Marco Finanziaria
S.p.A., Mr. Antonio Zacchello, Mr. Giancarlo
Zacchello, Mr. Gianni Zacchello, Mr. Franco
Zacchello and Ms. Graziella Zacchello,
effective July 18, 1997, incorporated by reference
from Form 8-K filed September 3, 1997. I
10.12 Amcast Industrial Corporation 1999 Director
Stock Option Plan, effective January 1, 1999. F
10.13 Amcast Industrial Corporation Nonqualified
Supplementary Benefit Plan (June 1, 1999
Restatement), effective June 1, 1999. F
10.14 Amcast Industrial Corporation Amended and Restated
Long-Term Incentive Plan, effective May 26, 1999. F
10.15 Amcast Industrial Corporation 1999 Stock Incentive Plan
adopted August 25, 1999 (subject to shareholder
approval at the 1999 Annual Meeting). F
13 ANNUAL REPORT TO SECURITY HOLDERS:
13.1 Amcast Industrial Corporation Annual Report to
Shareholders for year ended August 31, 1999. Those
portions of the Annual Report as are specifically
referenced under Parts I, II, and IV of this report are
filed herein. F
</TABLE>
17
<PAGE> 18
INDEX TO EXHIBITS (cont'd)
<TABLE>
<CAPTION>
Exhibit See Key
Number Description Below
- ----------- ------------------------------------------------------------- -----
<S> <C> <C>
21 SUBSIDIARIES OF THE REGISTRANT:
Amcast Industrial Corporation has 18 significant wholly-owned
subsidiaries, with the exception of Lee Brass Company, which
is 96% owned by an Amcast wholly owned subsidiary, which are
included in the consolidated financial statements of the
Company. Information regarding these subsidiaries is set forth
below:
Amcast Industrial Limited
Jurisdiction of Incorporation: Ontario, Canada
Name Under Which Business Is Done: Amcast Industrial Limited
Elkhart Products Corporation
Jurisdiction of Incorporation: Indiana
Name Under Which Business Is Done: Elkhart Products Corporation
WheelTek, Inc.
Jurisdiction of Incorporation: Indiana
Name Under Which Business Is Done: Amcast Automotive -Freemont Plant
Amcast Investment Services Corporation
Jurisdiction of Incorporation: Delaware
Name Under Which Business Is Done: Amcast Investment Services
Corporation
Amcast Industrial Financial Services, Inc.
Jurisdiction of Incorporation: Ohio
Name Under Which Business Is Done: Amcast Industrial
Financial Services, Inc.
Amcast Industrial Sales Corporation
Jurisdiction of Incorporation: U.S. Virgin Islands
Name Under Which Business Is Done: Amcast Industrial Sales Corporation
Amcast Automotive, Inc.
Jurisdiction of Incorporation: Michigan
Name Under Which Business Is Done: Amcast Automotive
Amcast Casting Technologies, Inc.
Jurisdiction of Incorporation: Indiana
Name Under Which Business Is Done: Amcast Casting Technologies, Inc.
Lee Brass Company
Jurisdiction of Incorporation: Delaware
Name Under Which Business is Done: Lee Brass Company
</TABLE>
18
<PAGE> 19
INDEX TO EXHIBITS (cont'd)
<TABLE>
<CAPTION>
Exhibit See Key
Number Description Below
- ----------- ------------------------------------------------------------- -----
<S> <C> <C>
Speedline S.r.l.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Speedline S.r.l.
Speedline Engineering S.p.A.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Speedline Engineering S.p.A.
Speedline Competition S.r.l.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Speedline Competition S.r.l.
Alustampi S.r.l.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Alustampi S.r.l.
Speedline UK Limited
Jurisdiction of Incorporation: England
Name Under Which Business Is Done: Speedline UK Limited
Speedline France S.a.r.l.
Jurisdiction of Incorporation: France
Name Under Which Business Is Done: Speedline France S.a.r.l.
Fusione e Lavorazioni Technologiche S.r.l.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: Fusione e Lavorazioni
Technologiche S.r.l.
LA. MEC. S.r.l.
Jurisdiction of Incorporation: Italy
Name Under Which Business Is Done: LA. MEC. S.r.l.
SL Wheels, Inc.
Jurisdiction of Incorporation: Michigan
Name Under Which Business Is Done: SL Wheels, Inc.
</TABLE>
19
<PAGE> 20
INDEX TO EXHIBITS (cont'd)
<TABLE>
<CAPTION>
Exhibit See Key
Number Description Below
- ----------- ------------------------------------------------------------- -----
<S> <C> <C>
23 CONSENTS OF EXPERTS AND COUNSEL:
23.1 Consent of Ernst & Young LLP dated
November 18, 1999, with respect to the
incorporation by reference of their report dated
October 19, 1999, into this Annual Report
(Form 10-K), the inclusion of the financial
statement schedule listed in Item 14(a)(2)
to the financial statements covered by their report
dated October 19, 1999, and material incorporated by
reference into Amcast Industrial Corporation's
Post-Effective Amendment No. 1 to Registration
Statement No. 33-2876 on Form S-8, on
Registration Statements on Form S-8 (Registration
Nos. 33-18690, 33-28080, 33-28084, 33-38176,
33-61290, 333-00133, and 333-89729),
and on Registration Statement No. 33-28075 on Form S-3 F
24 POWER OF ATTORNEY:
24.1 Powers of attorney of persons who are indicated as
having executed this Annual Report Form 10-K
on behalf of another. F
27 FINANCIAL DATA SCHEDULE:
27.1 Article 5 of Regulation S-X Financial Data Schedule
Form 10-K for the year ended August 31, 1999. F
</TABLE>
Key:
"F" Indicates document filed herewith.
"I" Indicates document incorporated from another filing.
+ Indicates that the document relates to a class of indebtedness that does
not exceed 10% of the total consolidated assets of the Company and that
the Company will furnish a copy of the document to the Commission upon its
request.
NOTE: Exhibits have been omitted from the reproduction of this Form 10-K. A copy
of the exhibits can be obtained at a reasonable copying charge by writing to
Investor Relations, Amcast Industrial Corporation, P.O. Box 98, Dayton, Ohio
45401
20
<PAGE> 1
EXHIBIT 4.9
CASTING TECHNOLOGY COMPANY
----------------------------------------
$32,100,000
CREDIT AND INTERCREDITOR AGREEMENT
dated August 26, 1999
-----------------------------------
BANK ONE, INDIANA, NATIONAL ASSOCIATION
THE ASAHI BANK, LTD.,
acting through its Chicago Branch
and
BANK ONE, INDIANA, NATIONAL ASSOCIATION,
as Agent
<PAGE> 2
TABLE OF CONTENTS
-----------------
Article Page
- ------- ----
I. DEFINITIONS
1.1 Certain Definitions..............................................1
1.2 Other Definitions; Rules of
Construction.....................................................9
II. THE COMMITMENTS AND THE LOANS
2.1 Commitment of the Banks.........................................10
2.2 Reduction of Commitments........................................10
2.3 Fees............................................................10
2.4 Disbursement of Loans...........................................10
2.5 Conditions for First Disbursement...............................12
2.6 Further Conditions for Disbursement.............................14
2.7 Subsequent Elections as to Borrowings...........................15
2.8 Limitation of Requests and Elections............................16
2.9 Minimum Amounts; Limitation on
Number of Borrowings............................................17
2.10 Security and Collateral...........................................
III. PAYMENTS AND PREPAYMENTS OF LOANS
3.1 Principal Payments and Prepayments..............................17
3.2 Interest Payments...............................................18
3.3 Payment Method..................................................18
3.4 No Setoff or Deduction..........................................19
3.5 Payment on Non-Business Day; Payment Computations...............19
3.6 Additional Costs................................................19
3.7 Illegality and Impossibility....................................20
3.8 Indemnification.................................................20
IV. REPRESENTATIONS AND WARRANTIES
4.1 Existence and Power.............................................21
4.2 Authority.......................................................21
4.3 Binding Effect..................................................22
4.4 Subsidiaries....................................................22
-i-
<PAGE> 3
4.5 Litigation......................................................22
4.6 Financial Condition.............................................22
4.7 Use of Loans....................................................23
4.8 Consents, Etc...................................................23
4.9 Taxes...........................................................23
4.10 Title to Properties.............................................24
4.11 ERISA...........................................................24
4.12 Disclosure......................................................24
4.13 Environmental and Safety Matters................................24
4.14 Year 2000.......................................................25
V. COVENANTS
5.1 Affirmative Covenants...........................................25
(a) Preservation of Existence, Etc.........................25
(b) Compliance with Laws, Etc..............................26
(c) Maintenance of Properties; Insurance...................26
(d) Reporting Requirements.................................26
(e) Accounting; Access to Records, Books, Etc..............28
(f) Additional Security and Collateral.....................28
(g) Further Assurances.....................................28
(h) Payment of Indebtedness to Others......................29
(i) Year 2000 Issues.......................................29
5.2 Negative Covenants..............................................29
(a) Indebtedness...........................................29
(b) Liens..................................................30
(c) Net Worth..............................................31
(d) Total Equity...........................................31
(e) Merger, Acquisitions, Etc..............................31
(f) Disposition of Assets, Etc.............................31
(g) Nature of Business.....................................32
(h) Transactions with Affiliates...........................32
(i) Negative Pledge Limitation.............................32
(j) Distributions and Other Restricted Payments............32
(k) Investment, Loans, and Advances........................32
(l) Inconsistent Agreements ...............................32
(m) Payments following Guarantor Default...................33
-ii-
<PAGE> 4
VI. DEFAULT
6.1 Events of Default...............................................33
6.2 Remedies........................................................35
6.3 Remedies upon Guarantor Default.................................36
VII. THE AGENT AND THE BANKS
7.1 Appointment and Authorization...................................37
7.2 Agent and Affiliates............................................37
7.3 Scope of Agent's Duties.........................................37
7.4 Reliance by Agent...............................................37
7.5 Default.........................................................38
7.6 Liability of Agent..............................................38
7.7 Nonreliance on Agent and Other Banks............................38
7.8 Indemnification.................................................38
7.9 Resignation of Agent............................................39
7.10 Sharing of Payments.............................................39
VIII. MISCELLANEOUS
8.1 Amendments, Etc.................................................40
8.2 Notices.........................................................41
8.3 No Waiver By Conduct; Remedies
Cumulative......................................................41
8.4 Reliance on and Survival of
Various Provisions..............................................41
8.5 Expenses .......................................................42
8.6 Successors and Assigns..........................................42
8.7 Counterparts....................................................43
8.8 Governing Law...................................................43
8.9 Table of Contents and Headings..................................43
8.10 Construction of Certain Provisions..............................43
8.11 Integration and Severability....................................43
8.12 Independence of Covenants.......................................43
8.13 Intent of the Parties...........................................44
8.14 Interest Rate Limitation........................................44
8.15 Waiver of Jury Trial............................................44
-iii-
<PAGE> 5
EXHIBITS AND SCHEDULES
Exhibit A-1 Revolving Credit Note
Exhibit A-2 Term Note
Exhibit B-1 Request for Borrowing
Exhibit B-2 Request for Term Loan
Exhibit C Request for Continuation or
Conversion of Borrowing
Exhibit D Confirmation of Security Agreement
Exhibit E Amended and Restated Guaranty Agreement - Bank One
Exhibit F Fourth Acknowledgment and Confirmation of
Guaranty Agreement - Asahi
Schedule 4.5 Litigation
Schedule 4.9 Taxes
Schedule 4.13 Environmental Matters
Schedule 5.2(a) Indebtedness
Schedule 5.2(b) Liens
Schedule 5.2(g) Leased Real Property
-iv-
<PAGE> 6
THIS CREDIT AND INTERCREDITOR AGREEMENT, dated August 26, 1999 (this
"Agreement"), is among Casting Technology Company, an Indiana general
partnership (the "Company"), Bank One, Indiana, National Association, a national
banking association ("Bank One"), and The Asahi Bank, Ltd., a Japanese banking
corporation acting through its Chicago Branch ("Asahi") (collectively, the
"Banks" and individually, a "Bank") and Bank One as agent for the Banks (in such
capacity, the "Agent").
INTRODUCTION
The Company, Bank One (as successor by merger to NBD Bank, N.A.), and
Asahi are party to the Credit and Intercreditor Agreement dated July 28, 1995
(as amended, the "Prior Credit Agreement").
As a continuation and refinancing of the Prior Credit Agreement, the
Company desires to obtain a revolving credit facility in the aggregate principal
amount of $7,500,000 and a term loan in the aggregate principal amount of
$24,600,000 in order to provide funds to finance the Company's corporate
purposes, and the Banks are willing to establish such a credit facility in favor
of the Company on the terms herein set forth.
It is a condition precedent to the refinancing contemplated hereby that
the obligations owing hereunder and under the related Revolving Credit Notes and
Term Notes continue to be secured by the Security Documents, as further
described below.
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used herein the following terms shall
have the following respective meanings:
"ACTI" means Amcast Casting Technologies, Inc., an Indiana
corporation and a general partner of the Company.
"AFFILIATE", when used with respect to any person, means any
other person which, directly or indirectly, controls or is controlled by or is
under common control with such person. For purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), with respect to any person, means possession,
directly or
-1-
<PAGE> 7
indirectly, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise.
"AMCAST" means Amcast Industrial Corporation, an Ohio
corporation and parent corporation of ACTI.
"APPLICABLE LENDING OFFICE" means, with respect to any Loan made
by any Bank or, with respect to such Bank's Commitment, the office of such Bank
or of any affiliate of such Bank located at the address set forth next to its
name in the signature pages hereof or any other office or affiliate of such Bank
hereafter selected and notified to the Company and the Agent by such Bank.
"BORROWING" means the aggregation of Loans, or continuations and
conversions of any Loans, made pursuant to Article II on a single date for a
single Interest Period, which Borrowings may be classified for purposes of this
Agreement by referring to the type of Loans comprising the related Borrowing,
E.G., a "Eurodollar Rate Borrowing" is a Borrowing comprised of Eurodollar Rate
Loans.
"BORROWING DATE" means the date of disbursing the first
Borrowing under Section 2.1 made in accordance with Sections 2.5 and 2.6.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day which is a legal holiday or on which banking institutions are
authorized or required by law or other governmental action to close, in
Indianapolis, Indiana, or Chicago, Illinois.
"CAPITAL LEASE" of any person means any lease which, in
accordance with generally accepted accounting principles, is or should be
capitalized on the books of such person.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations thereunder.
"COMMITMENT" means, with respect to each Bank, the commitment of
each such Bank to make Revolving Credit Loans pursuant to Section 2.1(a), in
amounts not exceeding in aggregate principal amount outstanding at any time the
respective commitment amounts for each such Bank set forth next to the name of
each such Bank in the signature pages hereof, as such amounts may be reduced
from time to time pursuant to Section 2.2.
"CONFIRMATION OF GUARANTY-ASAHI" means the Fourth
Acknowledgement and Confirmation of Guaranty-Asahi entered into by Izumi,
confirming the Guaranty-Asahi, in substantially the form of Exhibit F hereto.
"CONFIRMATION OF SECURITY AGREEMENT" means the Confirmation of
Security Agreement entered into by the Company in substantially the form of
Exhibit D hereto.
-2-
<PAGE> 8
"CONSOLIDATED" or "CONSOLIDATED" means, when used with reference
to any financial term in this Agreement, the aggregate for two or more persons
of the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with generally accepted accounting principles.
"CUMULATIVE NET INCOME BEFORE TAXES" of any person means, as of
any date, the net income (before deducting for income and other taxes of the
person, or the Partners in the case of the Company, determined by reference to
the income or profits of the person) for the period commencing on the specified
date through the end of the most recently completed fiscal year of the person
(but without reduction for any net loss incurred for any fiscal year during the
period), taken as one accounting period, all as determined in accordance with
generally accepted accounting principles.
"DEFAULT" means any of the events or conditions described in
Section 6.1 which might become an Event of Default with notice or lapse of time
or both.
"DOLLARS" and "$" means the lawful money of the United States of
America.
"EFFECTIVE DATE" means the effective date specified in the final
paragraph of this Agreement.
"ENVIRONMENTAL LAWS" at any date means all provisions of law,
statute, ordinance, rules, regulations, judgments, writs, injunctions, decrees,
orders, awards and standards promulgated by the government of the United States
of America or any foreign government or by any state, province, municipality or
other political subdivision thereof or therein, or by any court, agency,
instrumentality, regulatory authority or commission of any of the foregoing
concerning the protection of, or regulating the discharge of substances into,
the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which, together with the Company or any Subsidiary of the Company,
would be treated as a single employer under Section 414 of the Code.
"EURODOLLAR BUSINESS DAY" means, with respect to any Eurodollar
Rate Loan, a day which is both a Business Day and a day on which dealings in
Dollar deposits are carried out in London, England.
"EURODOLLAR INTEREST PERIOD" means, with respect to any
Eurodollar Rate Loan, the period commencing on the day such Eurodollar Rate Loan
is made or converted to a Eurodollar Rate Loan and ending on the date one, two,
or three months thereafter, as the Company may elect under Section 2.4 or 2.7,
and each subsequent period commencing on the last day of the immediately
preceding Eurodollar Interest Period and ending on the date one, two, or three
months thereafter, as the Company may elect under Section 2.4 or 2.7, PROVIDED,
HOWEVER, that (a) any
-3-
<PAGE> 9
Eurodollar Interest Period which commences on the last Eurodollar Business Day
of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end on the
last Eurodollar Business Day of the appropriate subsequent calendar month, (b)
each Eurodollar Interest Period which would otherwise end on a day which is not
a Eurodollar Business Day shall end on the next succeeding Eurodollar Business
Day or, if such next succeeding Eurodollar Business Day falls in the next
succeeding calendar month, on the next preceding Eurodollar Business Day, and
(c) if the Eurodollar Interest Period before the Termination Date or the
Maturity Date would otherwise end on a day other than the Termination Date or
the Maturity Date (as the case may be), then such Eurodollar Interest Period
shall end as of the Termination Date or the Maturity Date (as the case may be)
and no Eurodollar Interest Period which would end after the Maturity Date (or
the Termination Date with respect to any Revolving Credit Loans) shall be
permitted.
"EURODOLLAR RATE" means, with respect to any Eurodollar Rate
Loan and the related Eurodollar Interest Period, the per annum rate that is
equal to the sum of:
(a) one and one-quarter percent (1.25%) per annum, plus
(b) the rate per annum obtained by dividing (i) the per annum
rate of interest determined by the Agent in accordance with its usual procedures
to be the average of the London interbank offered rates set forth on the "LIBO"
page of the Reuters Monitor Money Rate Service (or appropriate successor or
comparable replacement) determined by the Agent at approximately 11:00 a.m.
London time on the second Eurodollar Business Day prior to the first day of the
Eurodollar Interest Period for an amount comparable to the amount of such
Eurodollar Rate Loan to be made by the Agent in its capacity as a Bank and
having a borrowing date and a maturity comparable to the Eurodollar Interest
Period, by (ii) an amount equal to one minus the stated maximum rate (expressed
as a decimal) of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) that is specified
on the first day of such Eurodollar Interest Period by the Board of Governors of
the Federal Reserve System (or any successor agency thereto) for determining the
maximum reserve requirement with respect to eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of such Board)
maintained by a member bank of such System;
all as conclusively determined by the Agent, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%).
"EURODOLLAR RATE LOAN" means any Loan which bears interest at
the Eurodollar Rate.
"EVENT OF DEFAULT" means any of the events or conditions
described in Section 6.1.
"FEDERAL FUNDS RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or if such rate is not so published for any day which is a
Business Day,
-4-
<PAGE> 10
the average of the quotations at approximately 10 a.m. (Indianapolis time) on
such day on such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by the Agent in its sole discretion.
"FLOATING RATE" means the per annum rate that is equal to the
greater of (a) the Prime Rate or (b) the Federal Funds Rate plus one and
one-quarter per cent (1.25%) per annum, which Floating Rate shall change
simultaneously with any change in the Prime Rate or the Federal Funds Rate, as
applicable.
"FLOATING RATE INTEREST PERIOD" means, with respect to any
Floating Rate Loan, the period commencing on the day such Floating Rate Loan is
made or converted to a Floating Rate Loan and ending on the date not less than
five (5) days but less than one month thereafter, as the Company may elect under
Section 2.4 or 2.7, and each subsequent period commencing on the last day of the
immediately preceding Floating Rate Interest Period and ending on the date not
less than five (5) days but less than one month thereafter, as the Company may
elect under Section 2.4 or 2.7, PROVIDED, HOWEVER, that (a) each Floating Rate
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day, and (b) if the Floating Rate
Interest Period before the Termination Date would otherwise end on a day other
than the Termination Date, then such Floating Rate Interest Period shall end as
of the Termination Date and no Floating Rate Interest Period which would end
after the Termination Date shall be permitted.
"FLOATING RATE LOAN" means any Loan which bears interest at the
Floating Rate.
"FORBEARANCE PERIOD" shall have the meaning set forth in Section
6.3(b).
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally
accepted accounting principles applied on a basis consistent with that reflected
in the audited financial statements referred to in Section 4.6.
"GUARANTIES" means, collectively, the Guaranty-Bank One and the
Guaranty-Asahi.
"GUARANTOR" means each of Amcast and Izumi and each person
otherwise entering into a guaranty from time to time.
"GUARANTOR DEFAULT" means an Event of Default set forth in
Section 6.1(i).
"GUARANTY-ASAHI" means the Guaranty Agreement-Asahi (Rentai
Hoshosho) dated as of July 28, 1995, entered into by Izumi, for the benefit of
Asahi, as confirmed by the Confirmation of Guaranty-Asahi, and as otherwise as
amended, modified, or confirmed from time to time.
"GUARANTY-BANK ONE" means the means the Amended and Restated
Guaranty Agreement-Bank One of even date herewith, entered into by Amcast for
the benefit of Bank One, in substantially the form of Exhibit E hereto, and as
otherwise amended, modified, or confirmed from time to time.
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"INDEBTEDNESS" of any person means, as of any date, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person as lessee under any Capital Lease, (c) all obligations which are secured
by any Lien existing on any asset or property of such person whether or not the
obligation secured thereby shall have been assumed by such person, (d) the
unpaid purchase price for goods, property or services acquired by such person,
except for trade accounts payable arising in the ordinary course of business
that are not past due, (e) all obligations of such person to purchase goods,
property or services where payment therefor is required regardless of whether
delivery of such goods or property or the performance of such services is ever
made or tendered (generally referred to as "take or pay contracts"), (f) all
liabilities of such person in respect of Unfunded Benefit Liabilities under any
Plan or of any ERISA Affiliate, (g) all obligations of such person in respect of
any interest rate or currency swap, rate cap or other similar transaction
(valued in an amount equal to the highest termination payment, if any, that
would be payable by such person upon termination for any reason on the date of
determination), and (h) all obligations of others similar in character to those
described in clauses (a) through (g) of this definition for which such person is
contingently liable, as obligor, guarantor, surety or in any other capacity, or
in respect of which obligations such person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable instruments for collection in the ordinary course of business),
including without limitation all reimbursement obligations of such person in
respect of letters of credit, surety bonds or similar obligations and all
obligations of such person to advance funds to, or to purchase assets, property
or services from, any other person in order to maintain the financial condition
of such other person.
"INTEREST PAYMENT DATE" means with respect to any Loan, the last
day of each Interest Period with respect to such Loan and, in the case of any
Eurodollar Interest Period exceeding three months, those days that occur during
such Eurodollar Interest Period at intervals of three months after the first day
of such Eurodollar Interest Period.
"INTEREST PERIOD" means any Floating Rate Interest Period and
any Eurodollar Interest Period.
"IZUMI" means Izumi Industries, Ltd., a Japanese corporation and
parent corporation of Izumi U.S.
"IZUMI U.S." means Izumi, Inc., a Delaware corporation and a
general partner of the Company.
"LIEN" means any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, conditional sale or title
retaining contract, sale and leaseback transaction, financing statement filing,
lessor's or lessee's interest under any lease, subordination of any claim or
right, or any other type of lien, charge, encumbrance, preferential arrangement
or other claim or right.
"LOAN" means any Revolving Credit Loan and any Term Loan. Any
such Loan or portion thereof may also be denominated as a Eurodollar Rate Loan
or a Floating Rate Loan and such Eurodollar Rate Loans and Floating Rate Loans
are referred to herein as "types" of Loans.
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"MANAGEMENT COMMITTEE" means the Management Committee of the
Company established under Section 2.02-1 of the Partnership Agreement.
"MATURITY DATE" means the maturity date of the Term Loans issued
under Section 2.1(b), which will be August 3, 2004.
"MULTIEMPLOYER PLAN" means any "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"NET WORTH" of any person means, as of any date, the net worth
of such person (or, in the case of the Company, the net partners capital of the
Company), as defined under generally accepted accounting principles.
"NOTE" means any Revolving Credit Note or Term Note.
"OVERDUE RATE" means (a) in respect of principal of Loans, a
rate per annum that is equal to the sum of two percent (2%) per annum plus the
per annum rate in effect thereon until the end of the then-current Interest
Period for such Loan and, thereafter, a rate per annum that is equal to the sum
of two percent (2%) per annum plus the Floating Rate, and (b) in respect of
other amounts payable by the Company hereunder, a per annum rate that is equal
to the sum of two percent (2%) per annum plus the Floating Rate.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"PARTNERS" means ACTI and Izumi U.S., the general partners of
the Company.
"PARTNERSHIP AGREEMENT" means that certain Joint Venture
Partnership Agreement, dated April 14, 1994, between the Partners, as it may be
amended from time to time.
"PAYMENT DATE" means each February 3, May 3, August 3, and
November 3, commencing on the first such date occurring after the Effective
Date.
"PERMITTED LIENS" means Liens permitted by Section 5.2(b)
hereof.
"PERSON" or "PERSON" shall include an individual, a corporation,
an association, a partnership, a limited liability company, a trust or estate, a
joint stock company, an unincorporated organization, a joint venture, a trade or
business (whether or not incorporated), a government (foreign or domestic) and
any agency or political subdivision thereof, or any other entity.
"PLAN" means any pension plan (other than a Multiemployer Plan)
subject to Title IV of ERISA or to the minimum funding standards of Section 412
of the Code which has been established or maintained by the Company, any
Subsidiary of the Company or any ERISA Affiliate,
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or by any other person if the Company, any Subsidiary of the Company or any
ERISA Affiliate could have liability with respect to such pension plan.
"PRIME RATE" means the per annum rate announced by the Agent
from time to time as its "prime rate" (it being acknowledged that such announced
rate may not necessarily be the lowest rate charged by the Agent to any of its
customers), which Prime Rate shall change simultaneously with any change in such
announced rate.
"PROHIBITED TRANSACTION" means any transaction involving any
Plan which is proscribed by Section 406 of ERISA or Section 4975 of the Code.
"PRO RATA SHARE" means, with respect to any Loans to be issued
by a Bank and payments to be made to a Bank under the Agreement, that portion of
the Loan or payment equal to the Bank's percentage share of the Commitments with
respect to the Revolving Credit Loans, or the Bank's percentage share of the
Term Loans with respect to the Term Loans, originally provided under this
Agreement, I.E., sixty percent for Bank One and forty percent for Asahi,
PROVIDED, HOWEVER, that if this Agreement is amended to change the Banks'
respective Commitment or Term Loan amounts, then this definition shall
thereafter be based on the amended amounts.
"REPORTABLE EVENT" means a reportable event as described in
Section 4043(b) of ERISA including those events as to which the thirty (30) day
notice period is waived under Part 2615 of the regulations promulgated by the
PBGC under ERISA.
"REQUIRED BANKS" means Banks holding not less than one hundred
percent of the aggregate principal amount of the Loans then outstanding (or one
hundred percent of the Commitments if no Loans are then outstanding).
"REVOLVING CREDIT LOAN" means any borrowing under Section 2.4
evidenced by the Revolving Credit Notes and made pursuant to Section 2.1.
"REVOLVING CREDIT NOTE" means any promissory note of the Company
evidencing the Revolving Credit Loans, in substantially the form annexed hereto
as Exhibit A-1, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.
"SECURITY AGREEMENT" means the Security Agreement dated as of
July 28, 1995, entered into by the Company for the benefit of the Agent and the
Banks, as amended or modified from time to time.
"SECURITY DOCUMENTS" means, collectively, the Security
Agreement, the Guaranties and all other related agreements and documents,
including amendments, confirmations, financing statements, and similar
documents, otherwise entered into by any person to secure the Company's
obligations under this Agreement.
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"SUBSIDIARY" of any person means any other person (whether now
existing or hereafter organized or acquired) in which (other than directors'
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof. Unless otherwise specified, reference to
"Subsidiary" means a Subsidiary of the Company.
"TERM LOAN" means any borrowing under Section 2.4 evidenced by
the Term Note and made pursuant to Section 2.1. Term Loans shall be made and
continued only as Eurodollar Rate Loans.
"TERM NOTE" means any promissory note of the Company evidencing
the Term Loans, in substantially the form annexed hereto as Exhibit A-2, as
amended or modified from time to time and together with any promissory note or
notes issued in exchange or replacement therefor.
"TERMINATION DATE" (of the revolver period) means the earlier to
occur of (a) three (3) years from the Borrowing Date, and (b) the date on which
the Commitment shall be terminated pursuant to Section 6.2.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan
as of any date, the amount of the unfunded benefit liabilities determined in
accordance with Section 4001(a)(18) of ERISA.
"YEAR 2000 ISSUES" means anticipated costs, problems, and
uncertainties associated with the inability of certain computer applications to
effectively handle data, including dates prior to, on, and after January 1,
2000, as such inability affects the business, operations, and financial
condition of the Company and its Subsidiaries.
"YEAR 2000 PROGRAM" is defined in Section 4.14.
1.2 OTHER DEFINITIONS; RULES OF CONSTRUCTION. As used herein, the terms
"Agent", "Banks", "Company", "Bank One", "Asahi", "Prior Credit Agreement", and
"this Agreement" shall have the respective meanings ascribed thereto in the
introductory paragraphs of this Agreement. Such terms, together with the other
terms defined in Section 1.1, shall include both the singular and the plural
forms thereof and shall be construed accordingly. All computations required
hereunder and all financial terms used herein shall be made or construed in
accordance with generally accepted accounting principles unless such principles
are inconsistent with the express requirements of this Agreement. Use of the
terms "herein", "hereof", and "hereunder" shall be deemed references to this
Agreement in its entirety and not to the Section or clause in which such term
appears. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
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ARTICLE II
THE COMMITMENTS AND THE LOANS
-----------------------------
2.1 COMMITMENT OF THE BANKS.
(a) REVOLVING CREDIT LOANS. Each Bank agrees, for itself only,
subject to the terms of this Agreement, to make Revolving Credit Loans to the
Company pursuant to Section 2.4, from time to time from and including the
Borrowing Date to but excluding the Termination Date, not to exceed in aggregate
principal amount at any time outstanding the amount of its respective Commitment
as of the date any such Loan is made.
(b) TERM LOAN. Each Bank further agrees, for itself only,
subject to the terms of this Agreement, to make a single Term Loan to the
Company on the Borrowing Date in an amount not to exceed its Pro Rata Share of
$24,600,000.
2.2 REDUCTION OF COMMITMENTS. The Company shall have the right to
reduce the Commitments at any time and from time to time, PROVIDED that (a) the
Company shall give notice of such reduction to the Agent (with sufficient
executed copies for each Bank) specifying the amount and effective date thereof,
(b) each partial reduction of the Commitments shall be in a minimum amount of
$1,000,000 and in an integral multiple of $100,000 and shall reduce the
Commitments of all of the Banks proportionately in accordance with the
respective commitment amounts for each such Bank set forth in the signature
pages hereof next to name of each such Bank, (c) no such reduction shall be
permitted with respect to any portion of the Commitments as to which a request
for a Borrowing pursuant to Section 2.4 is then pending, and (d) the Commitments
may not be reduced below the principal amount of Loans then outstanding. The
Commitments or any portion thereof reduced pursuant to this Section 2.2, whether
optional or mandatory, may not be reinstated.
2.3 FEES. (a) The Company agrees to pay to the Banks a commitment fee
on the daily average unused amount of the Commitments, for the period from the
Effective Date to but excluding the Termination Date, at a rate equal to
three-eighths of one percent (3/8 of 1%) per annum, such fee to be shared pro
rata between the Banks based on their respective Commitments. Accrued commitment
fees shall be payable quarterly in arrears on each Payment Date, and also on the
Termination Date.
(b) The Company agrees to pay to the Banks a facility fee in
the amount of $80,250, such fee to be shared pro rata between the Banks based on
their respective Commitments. The facility fee shall be payable to the Agent on
or prior to the Effective Date.
(c) The Company agrees to pay to the Agent an agency fee for
its services as Agent under this Agreement in the amount of $5,000 per annum,
payable quarterly in advance on the date of this Agreement and thereafter on
each Payment Date.
2.4 DISBURSEMENT OF LOANS. (a) The Company shall give the Agent notice
of its request for each Borrowing of Revolving Credit Loans in substantially the
form of EXHIBIT B-1 hereto (with
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sufficient executed copies for each Bank), in the case of each Eurodollar Rate
Borrowing, not later than 10:00 a.m. Indianapolis time three Eurodollar
Business Days prior to the date such Borrowing is requested to be made and, in
the case of each Floating Rate Borrowing, not later than 10:00 a.m.
Indianapolis time one Business Day prior to the date such Borrowing is
requested to be made, which notice shall specify the Interest Period to be
initially applicable to such Borrowing.
(b) The Company shall give the Agent notice of its request for
the Term Loans in substantially the form of Exhibit B-2 hereto (with sufficient
executed copies for each Bank) not later than 10:00 a.m., Indianapolis time
three Eurodollar Business Days prior to the date the Term Loans are requested to
be made. Such notice shall specify the amount of the Term Loans requested to be
made, which shall be an amount not in excess of $24,600.000, and the Eurodollar
Interest Period to be initially applicable to the Term Loans.
(c) The Agent shall notify each Bank of (i) each requested
Eurodollar Rate Borrowing not later than the Business Day next succeeding the
day such notice is given and (ii) each requested Floating Rate Borrowing not
later than Noon Indianapolis time on the Business Day the Agent receives the
request. Subject to the terms of this Agreement, the proceeds of each such
requested Loan shall be made available to the Company by depositing the proceeds
thereof, in immediately available funds, in an account maintained and designated
by the Company at the principal office of the Agent.
(d) Each Bank, before 1:30 p.m. Indianapolis time on the date
any Borrowing is requested to be made, shall make its Pro Rata Share of such
Borrowing available in immediately available funds at the principal office of
the Agent for disbursement to the Company. Unless the Agent shall have received
notice from any Bank prior to the date such Borrowing is requested to be made
under this Section 2.4 that such Bank will not make available to the Agent such
Bank's Pro Rata Share of such Borrowing, the Agent may assume that such Bank has
made such portion available to the Agent in accordance with this Section 2.4. If
and to the extent such Bank shall not have so made such Pro Rata Share available
to the Agent, the Agent may (but shall not be obligated to) make such amount
available to the Company, and such Bank and the Company severally agree to pay
to the Agent forthwith on demand such amount together with interest thereon, for
each day from the date such amount is made available to the Company by the Agent
until the date such amount is repaid to the Agent, at a rate per annum equal to
the interest rate applicable to such Borrowing during such period. If such Bank
shall pay such amount to the Agent together with interest, such amount so paid
shall constitute a Loan by such Bank as a part of such Borrowing for purposes of
this Agreement. The failure of any Bank to make its Pro Rata Share of any such
Borrowing available to the Agent shall not relieve any other Bank of its
obligations to make available its Pro Rata Share of such Borrowing on the date
such Borrowing is requested to be made, but no Bank shall be responsible for
failure of any other Bank to make such Pro Rata Share available to the Agent on
the date of any such Borrowing.
(e) All Revolving Credit Loans made under this Section 2.4
shall be evidenced by the Revolving Credit Notes and the Term Loans made under
this Section 2.4 shall be evidenced by the Term Notes, and all such Loans shall
be due and payable and bear interest as provided in Article III. The Company
authorizes each Bank to record in its books and records the date, and
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amount and type of each Loan and the duration of the related Interest Period
(if applicable), the amount of each payment or prepayment of principal thereon,
and any other appropriate information which books and records shall constitute
prima facie evidence of the information so recorded, PROVIDED, HOWEVER, that
failure of any Bank to record, or any error in recording, any such information
shall not relieve the Company of its obligation to repay the outstanding
principal amount of the Loan, all accrued interest thereon and other amounts
payable with respect thereto in accordance with the terms of the Notes and this
Agreement. Subject to the terms of this Agreement, the Company may borrow
Revolving Credit Loans under this Section 2.4, prepay Revolving Credit Loans
pursuant to Section 3.1 and reborrow Revolving Credit Loans but not Term Loans
under this Section 2.4.
(f) The Company may enter into any interest rate protection
arrangements with either or both of the Banks with respect to any portion of any
outstanding Loans under procedures to be agreed upon among each of the Company
and the Required Banks. Any Indebtedness incurred thereunder shall constitute
Indebtedness evidenced by the Notes and secured by the Guaranties and the other
Security Documents.
2.5 CONDITIONS FOR FIRST DISBURSEMENT. The obligation of the Banks to
make the first Borrowing hereunder is subject to each Bank and the Agent
receiving the following documents and the following matters being completed, in
form and substance satisfactory to each Bank and the Agent:
(a) CHARTER DOCUMENTS. Certificates of recent date of the
appropriate authority or official of the Company's, Amcast's, and each of the
Partners' respective state of organization or incorporation listing all charter
documents of the Company, Amcast, and the Partners, respectively, on file in
that office and certifying as to the good standing and valid existence of the
Company, Amcast, and the Partners, respectively, together with copies of such
charter documents of the Company, Amcast, and the Partners, respectively,
certified as of a recent date by such authority or official and certified as
true and correct as of the Closing Date by a duly authorized general partner or
officer of the Company, Amcast, or the Partners, as appropriate;
(b) BY-LAWS AND AUTHORIZATIONS. Copies of the by-laws of
Amcast and the Partners, together with all authorizing resolutions and evidence
of other action taken by the Company, Amcast, and the Partners to authorize the
execution, delivery and performance by the Company and Amcast of this Agreement,
the Notes, and the Security Documents to which the Company and Amcast,
respectively, is a party and the consummation by the Company and Amcast,
respectively, of the transactions contemplated hereby and thereby, certified as
true and correct as of the Closing Date by a duly authorized general partner or
officer of the Company, Amcast, or the Partners, as appropriate;
(c) INCUMBENCY CERTIFICATE. Certificates of incumbency of the
Company, Amcast and the Partners containing, and attesting to the genuineness
of, the signatures of those officers authorized to act on behalf of the Company,
Amcast and the Partners in connection with this Agreement, the Notes, and the
Security Documents to which the Company or Amcast is a party and the
consummation by the Company and Amcast of the transactions contemplated hereby,
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certified as true and correct as of the Closing Date by a duly authorized
general partner or officer of the Company, Amcast or the Partners, as
appropriate;
(d) NOTES. The Revolving Credit Notes and Term Notes, duly
executed on behalf of the Company for each Bank;
(e) PARTNER'S GOOD STANDING. Certificates of recent date of
the Indiana Secretary of State certifying as to Izumi U.S.'s qualifications to
do business as a foreign corporation in Indiana.
(f) IZUMI DOCUMENTS; AUTHORIZATION; CERTIFICATES. An
incumbency certificate, dated as of the Effective Date, from the duly elected
Representative Director (Daihyo Torishimariyaku) of Izumi, providing facsimile
signatures of the Persons authorized to execute and deliver on behalf of Izumi
the Guaranty-Asahi and any other documents in connection therewith, and stating
that the signatory is a duly elected and qualified Representative Director
(Daihyo Torishimariyaku) of Izumi, fully authorized to execute such certificate,
and stating that attached to such certificate are true, complete and correct
copies of: (i) the Articles of Incorporation (Teikan) of Izumi; (ii) a certified
copy of corporate register (Shogyotokibotohon) (iii) resolutions duly adopted by
the Board of Directors (Torishimariyakukai) of Izumi which authorize the
execution, delivery and performance of the Confirmation of Guaranty-Asahi, and
(iv) an original of Certificate of Seal (Inkanshomei) of the Representative
Director (Daihyo Torishimariyaku) issued within 3 months of the date hereof by
the appropriate homukyoku.
(g) SECURITY DOCUMENTS. The Confirmation of Security Agreement
duly executed on behalf of the Company, the Guaranty Agreement-Bank One duly
executed on behalf of Amcast, and the Confirmation of Guaranty-Asahi duly
executed on behalf of Izumi, granting to the Banks and the Agent the collateral
and security intended to be provided pursuant to Section 2.10, together with:
(i) RECORDING, FILING, ETC. Evidence of the
recordation, filing and other action (including payment of any applicable taxes
or fees) in such jurisdictions as the Banks and the Agent may deem necessary or
appropriate with respect to the Security Documents, including the filing of
financing statements and similar documents which the Banks and the Agent may
deem necessary or appropriate to create, preserve or perfect the liens,
security interests and other rights intended to be granted to the Banks and the
Agent thereunder, together with Uniform Commercial Code record searches in such
offices as the Banks and the Agent may request;
(ii) LEASED PROPERTY; LANDLORD WAIVERS. A schedule
setting forth all real property leased by the Company, together with copies of
the related leases, certified as true and correct as of the Effective Date by a
duly authorized partner of the Company and an agreement of each landlord under
such leases, in form and substance acceptable to the Banks and the Agent,
waiving its distraint, lien and similar rights with respect to any property
subject to the Security Documents and agreeing to permit the Banks and the
Agent to enter such premises in connection therewith; and
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(iii) CASUALTY AND OTHER INSURANCE. Evidence that
the casualty and other insurance required pursuant to Section 5.1(c) and
paragraph 1(e) of the Security Agreement is in full force and effect;
(h) LEGAL OPINIONS. The favorable written opinion of Thompson,
Hine and Flory, counsel for the Company, ACTI, and Amcast, and of Latham &
Watkins, counsel for Izumi U.S., and of Yutaka Yoshida, counsel for Izumi, which
collectively will address each of the matters set forth in Sections 4.1 (other
than Section 4.1(c)), 4.2, 4.3, and 4.8, in paragraph 1(a) of the Security
Agreement, and paragraphs 5(a), (b), (c), and (g) of the Guaranties, and such
other matters as the Banks and the Agent may reasonably request;
(i) CONSENTS, APPROVALS, ETC. Copies of all governmental and
non-governmental consents, approvals, authorizations, declarations,
registrations or filings, if any, required on the part of the Company or any
Guarantor in connection with the execution, delivery and performance of this
Agreement, the Notes, or the Security Documents or the transactions
contemplated hereby or as a condition to the legality, validity or
enforceability of this Agreement, the Notes or any of the Security Documents,
certified as true and correct and in full force and effect as of the Effective
Date by a duly authorized general partner of the Company, or if none are
required, a certificate of a general partner to that effect;
(j) FEES. The facility fee described in Section 2.3(b) and
the agency fee then due and payable under Section 2.3(c); and
(k) PAYMENT OF INDEBTEDNESS UNDER PRIOR CREDIT AGREEMENT.
Payment in full (which payment shall be made simultaneously with the first Loans
made under this Agreement) of the outstanding principal balance and all interest
accrued through the Effective Date hereof on the loans and all fees accrued
under the Prior Credit Agreement, and it is acknowledged and agreed that this
Agreement refinances the loans outstanding under the Prior Credit Agreement, and
the Commitments replace all commitments to lend under the Prior Credit
Agreement, all of which commitments to lend under the Prior Credit Agreement
shall be terminated and replaced with the Commitments simultaneously upon this
Agreement being executed.
2.6 FURTHER CONDITIONS FOR DISBURSEMENT. The obligation of the Banks to
make any Loan (including the first Loan), or any continuation or conversion
under Section 2.7, is further subject to the following conditions precedent
being satisfied:
(a) The representations and warranties contained in Article IV
and in the Security Documents shall be true and correct on and as of the date
such Loan is made (both before and after such Loan is made) as if such
representations and warranties were made on and as of such date;
(b) No Event of Default or Default shall exist or shall have
occurred and be continuing on the date such Loan is made (whether before or
after such Loan is made);
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(c) The Company shall have executed and delivered all further
documents and taken all further action that the Agent may request in order to
perfect the Banks' security interest in the collateral to be purchased with the
proceeds of the requested Loan.
The Company shall be deemed to have made a representation and warranty to the
Banks at the time of the making of, and the continuation or conversion of, each
Loan to the effect set forth in clauses (a) and (b) of this Section 2.6. For
purposes of this Section 2.6, the representations and warranties contained in
Section 4.6 shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Section 5.1(d)(ii) and (iii).
2.7 SUBSEQUENT ELECTIONS AS TO BORROWINGS. (a) Each Revolving Credit
Loan outstanding as a Floating Rate Loan shall continue as a Floating Rate Loan
until the end of the then-applicable Floating Rate Interest Period therefor, at
which time such Floating Rate Loan shall be automatically converted into a
Floating Rate Loan with a Floating Rate Interest Period of five (5) days unless
the Company shall have given the Agent irrevocable notice substantially in the
form of EXHIBIT C hereto (a "Conversion/Continuation Notice") requesting that,
at the end of such Floating Rate Interest Period, such Floating Rate Loan either
continue as a Floating Rate Loan for the same or another Floating Rate Interest
Period or be converted into a Eurodollar Rate Loan for a specified Eurodollar
Interest Period.
(b) Each Revolving Credit Loan outstanding as a Eurodollar
Rate Loan shall continue as a Eurodollar Rate Loan until the end of the
then-applicable Eurodollar Interest Period therefor, at which time such
Eurodollar Rate Loan shall be automatically converted into a Floating Rate Loan
with a Floating Rate Interest Period of five (5) days unless the Company shall
have given the Agent a Conversion/Continuation Notice requesting that, at the
end of such Eurodollar Interest Period, such Eurodollar Rate Loan either
continue as a Eurodollar Rate Loan for the same or another Eurodollar Interest
Period or be converted into a Floating Rate Loan for a specified Floating Rate
Interest Period.
(c) Subject to the terms of Sections 2.8 and 3.2, the Company
may elect from time to time to convert all or any part of any Revolving Credit
Loan of any type into any other type or types of Loan; provided that any
conversion of any Revolving Credit Loan shall be made only on the last day of
the Interest Period applicable thereto.
(d) Each Term Loan outstanding as a Eurodollar Rate Loan shall
continue as a Eurodollar Rate Loan until the end of the then-applicable
Eurodollar Interest Period therefor, at which time such Eurodollar Rate Loan
shall be automatically converted into a Eurodollar Rate Loan with a Eurodollar
Interest Period of one (1) month unless the Company shall have given the Agent a
Conversion/Continuation Notice requesting that, at the end of such Eurodollar
Interest Period, such Eurodollar Rate Loan continue as a Eurodollar Rate Loan
for the same or another Eurodollar Interest Period.
(e) The Company shall give the Agent a Conversion/Continuation
Notice of each conversion or continuation of a Loan not later than 10:00 a.m.
(Indianapolis time) at least one Business Day, in the case of a conversion into
or continuation of a Floating Rate Loan, or
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<PAGE> 21
three Eurodollar Business Days, in the case of a conversion into or
continuation of a Eurodollar Rate Loan, prior to the date of the requested
conversion or continuation, specifying
(i) the requested date, which shall be a Business Day,
of such conversion or continuation;
(ii) the aggregate amount and type of the Loan which is
to be converted or continued; and
(iii) the amount and type(s) of Loan(s) into which such
Loan is to be converted or continued and the
duration of the Interest Period applicable thereto.
The Agent shall notify each Bank of (i) each requested conversion into or
continuation of a Eurodollar Rate Loan not later than the Business Day next
succeeding the day such notice is given and (ii) each requested conversion into
or continuation of Floating Rate Loan not later than Noon Indianapolis time on
the Business Day the Agent receives the request.
2.8 LIMITATION OF REQUESTS AND ELECTIONS. (a) Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
Eurodollar Rate Borrowing pursuant to Section 2.4, or a request for a
continuation of a Eurodollar Rate Loan pursuant to Section 2.7, (a) deposits in
Dollars for periods comparable to the Eurodollar Interest Period elected by the
Company are not available to any Bank in the relevant interbank or secondary
market, or (b) the applicable interest rate will not adequately and fairly
reflect the cost to any Bank of making, funding or maintaining the related
Borrowing, or (c) by reason of national or international financial, political or
economic conditions or by reason of any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect, or the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Bank
with any guideline, request or directive of such authority (whether or not
having the force of law), including without limitation exchange controls, it is
impracticable, unlawful or impossible for any Bank (i) to make or fund the
relevant Borrowing or (ii) to continue such Borrowing, then the Company shall
not be entitled, so long as such circumstances continue, to request a Eurodollar
Rate Borrowing pursuant to Section 2.4 or a continuation of a Eurodollar Rate
Borrowing pursuant to Section 2.7. In the event that such circumstances no
longer exist, the Banks shall again consider requests for Eurodollar Rate
Borrowings of the affected type pursuant to Section 2.4, and requests for
continuations of Eurodollar Rate Borrowings of the affected type pursuant to
Section 2.7.
(b) Notwithstanding any other provision of this Agreement to
the contrary, and in order to give effect to the provisions of Section 3.1(a),
the Company shall make requests for Borrowings pursuant to Section 2.4, and
requests for continuations of Borrowings pursuant to Section 2.7, such that, on
each date that any scheduled principal payment is due with respect to any Loan
pursuant to Section 3.1(a), Loans having an Interest Period ending on such date
are outstanding on such date in an aggregate principal amount not less than the
amount of such principal payment.
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<PAGE> 22
2.9 MINIMUM AMOUNTS; LIMITATION ON NUMBER OF BORROWINGS. Except for (a)
Borrowings which exhaust the entire remaining amount of the Commitments and (b)
payments required pursuant Section 3.7, each Borrowing and each continuation
pursuant to Section 2.7 and each prepayment thereof shall be in a minimum amount
of $500,000 and in an integral multiple of $100,000 (or, in the case of any Term
Borrowing, in integral multiples of the quarterly installments of principal
thereon). The aggregate number of Eurodollar Rate Borrowings outstanding at any
one time under this Agreement may not exceed ten. No more than five Eurodollar
Interest Periods shall be permitted to exist at any one time with respect to all
Borrowings outstanding hereunder from time to time.
2.10 SECURITY AND COLLATERAL. To secure the payment when due of the
Notes and all other obligations of the Company under this Agreement to the Banks
and the Agent, the Company shall execute and deliver, or cause to be executed
and delivered, to the Banks and the Agent Security Documents granting the
following:
(a) Security interests in all present machinery and equipment
of the Company, and in all future machinery and equipment other than machinery
and equipment purchased solely with proceeds of Indebtedness permitted under
Section 5.2(a)(v).
(b) Guarantees of the Guarantors; PROVIDED, HOWEVER, that the
Guaranty-Bank One shall secure only the obligations of the Company to Bank One
and that the Guaranty-Asahi shall secure only the obligations of the Company to
Asahi.
(c) All other security and collateral described in the
Security Documents.
ARTICLE III
PAYMENTS AND PREPAYMENTS OF LOANS
---------------------------------
3.1 PRINCIPAL PAYMENTS AND PREPAYMENTS. (a) Unless earlier
payment is required under this Agreement (i) the Company shall pay to the Banks
on the Termination Date the entire outstanding principal amount of the Revolving
Credit Loans and (ii) the Company shall pay to the Banks the outstanding
principal amount of the Term Loans in 20 equal quarterly installments payable on
each Payment Date, to and including the Maturity Date, when the entire
outstanding principal amount of the Term Loans shall be due and payable.
(b) The Company may at any time and from time to time prepay all
or a portion of the Borrowings, without premium or penalty, PROVIDED that (i)
the Company may not prepay any portion of any Borrowing as to which an election
for a continuation of a Borrowing is pending pursuant to Section 2.7, (ii)
unless earlier payment is required under this Agreement, any Borrowing may only
be prepaid on the last day of the then-current Interest Period with respect to
such Borrowing and shall have paid to the Banks, together with such prepayment
of principal, all accrued interest to the date of payment on such Loan or
portion thereof so prepaid and all amounts owing to the Banks under Section 3.8
in connection with such prepayment, and (iii) such prepayment of any
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<PAGE> 23
Term Loan shall only be permitted if the Company shall have given not less than
10 days' notice thereof specifying the Term Loan or portion thereof to be so
prepaid. Upon the giving of such notice, the aggregate principal amount of such
Borrowing or portion thereof so specified in such notice, together with such
accrued interest and other amounts, shall become due and payable on the
specified prepayment date.
(c) All prepayments of the Term Loans, whether optional or
mandatory, shall be applied to installments of principal of the Term Loans in
inverse order of their maturities and no partial prepayment of the Term Loans
shall reduce the amount or defer the date of the scheduled installments of
principal required to be paid thereon.
3.2 INTEREST PAYMENTS. The Company shall pay interest to the Banks on
the unpaid principal amount of each Loan, for the period commencing on the date
such Loan is made until such Loan is paid in full, on each Interest Payment Date
and at maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, during such periods that such Loan is a Eurodollar Rate
Loan, at the Eurodollar Rate applicable to such Loan for each related Eurodollar
Interest Period and during such periods that such Loan is a Floating Rate Loan,
at the Floating Rate applicable to such Loan for each related Floating Rate
Interest Period. Term Loans shall only be made and continued as Eurodollar Rate
Loans. Notwithstanding the foregoing, the Company shall pay interest on demand
at the Overdue Rate on the outstanding principal amount of any Loan and any
other amount payable by the Company hereunder which is not paid in full when due
(whether at stated maturity, by acceleration or otherwise) for the period
commencing on the due date thereof until the same is paid in full, PROVIDED,
HOWEVER, that interest shall accrue and be computed on any installment of
interest which has become due and remains unpaid at the lower of the Overdue
Rate and the highest legal rate then permitted on such amounts from the time at
which it becomes due until paid.
3.3 PAYMENT METHOD. (a) All payments to be made by the Company hereunder
will be made in Dollars and in immediately available funds to the Agent for the
account of the Banks at its address set forth in Section 8.2 not later than 1:00
p.m. Indianapolis time on the date on which such payment shall become due.
Payments received after 1:00 p.m. Indianapolis time shall be deemed to be
payments made prior to 1:00 p.m. Indianapolis time on the next succeeding
Business Day. The Company authorizes the Agent to charge its account with Bank
One in order to cause timely payment of amounts due hereunder to be made
(subject to sufficient funds being available in such account for that purpose).
(b) At the time of making each such payment, the Company shall,
subject to the other terms of this Agreement, specify to the Agent that Loan or
other obligation of the Company hereunder to which such payment is to be
applied. In the event that the Company fails to so specify the relevant
obligation or if an Event of Default shall have occurred and be continuing, the
Agent may apply such payments as it may determine in its sole discretion to
obligations of the Company to the Banks arising under this Agreement or
otherwise.
(c) On the day such payments are deemed received, the Agent
shall remit to the Banks their Pro Rata Share of such payments in immediately
available funds (other than the Agent's
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<PAGE> 24
fees payable pursuant to Section 2.3(c) and amounts payable to any Bank under
Sections 3.6, 3.7, and 3.8).
3.4 NO SETOFF OR DEDUCTION. All payments of principal and interest on
the Loans and other amounts payable by the Company hereunder shall be made by
the Company without setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental authority, or by any department, agency or other
political subdivision or taxing authority.
3.5 PAYMENT ON NON-BUSINESS DAY; PAYMENT COMPUTATIONS. Except as
otherwise provided in this Agreement to the contrary, whenever any installment
of principal of, or interest on, any Loan or any other amount due hereunder
becomes due and payable on a day which is not a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, in the case
of any installment of principal, interest shall be payable thereon at the rate
per annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days (or 365 or 366 days as the case may be,
when determining the Floating Rate) for the actual number of days elapsed,
including the first day but excluding the last day of the relevant period.
3.6 ADDITIONAL COSTS. (a) In the event that any applicable law, treaty,
rule or regulation (whether domestic or foreign) now or hereafter in effect and
whether or not presently applicable to any Bank or the Agent, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Bank or
the Agent with any guideline, request or directive of any such authority
(whether or not having the force of law), shall (i) affect the basis of taxation
of payments to any Bank or the Agent of any amounts payable by the Company under
this Agreement (other than taxes imposed on the overall net income of the Bank
or the Agent, by the jurisdiction, or by any political subdivision or taxing
authority of any such jurisdiction, in which any Bank or the Agent, as the case
may be, has its principal office), or (ii) shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by any Bank or the
Agent, or (iii) shall impose any other condition with respect to this Agreement,
the Commitments, the Notes or the Loans, and the result of any of the foregoing
is to increase the cost to any Bank or the Agent, as the case may be, of making,
funding or maintaining any Eurodollar Rate Loan or to reduce the amount of any
sum receivable by any Bank or the Agent, as the case may be, thereon, then the
Company shall pay to such Bank or the Agent, as the case may be, from time to
time, upon request by such Bank (with a copy of such request to be provided to
the Agent) or the Agent, additional amounts sufficient to compensate such Bank
or the Agent for such increased cost or reduced sum receivable to the extent
such Bank or the Agent is not compensated therefor in the computation of the
interest rate applicable to such Eurodollar Rate Loan for the period of up to
200 days after the event resulting in the increased capital requirement and
reduced rate of return. A statement as to the amount of such increased cost or
reduced sum receivable, prepared in good faith and in reasonable detail by such
Bank or the Agent and submitted by such Bank or the Agent to the Company, shall
be conclusive and binding for all purposes absent manifest error in computation.
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<PAGE> 25
(b) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not presently applicable to any Bank or the Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or the Agent
with any guideline, request or directive of any such authority (whether or not
having the force of law), including any risk-based capital guidelines, affects
or would affect the amount of capital required or expected to be maintained by
such Bank or the Agent (or any corporation controlling such Bank or the Agent)
and such Bank or the Agent, as the case may be, determines that the amount of
such capital is increased by or based upon the existence of such Bank's or the
Agent's obligations hereunder and such increase has the effect of reducing the
rate of return on such Bank's or the Agent's (or such controlling corporation's)
capital as a consequence of such obligations hereunder to a level below that
which such Bank or the Agent (or such controlling corporation) could have
achieved but for such circumstances (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Bank or the Agent to be
material, then the Company shall pay to such Bank or the Agent, as the case may
be, from time to time, upon request by such Bank (with a copy of such request to
be provided to the Agent) or the Agent, additional amounts sufficient to
compensate such Bank or the Agent (or such controlling corporation) for any
increase in the amount of capital and reduced rate of return which such Bank or
the Agent reasonably determines to be allocable to the existence of such Bank's
or the Agent's obligations hereunder for the period of up to 200 days after the
event resulting in the increased capital requirement and reduced rate of return.
A statement as to the amount of such compensation, prepared in good faith and in
reasonable detail by such Bank or the Agent, as the case may be, and submitted
by such Bank or the Agent to the Company, shall be conclusive and binding for
all purposes absent manifest error in computation.
3.7 ILLEGALITY AND IMPOSSIBILITY. In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Bank, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Bank
with any guideline, request or directive of such authority (whether or not
having the force of law), including without limitation exchange controls, shall
make it unlawful or impossible for any Bank to maintain any Eurodollar Rate Loan
under this Agreement, the Company shall upon receipt of notice thereof from such
Bank, repay in full the then-outstanding principal amount of each Eurodollar
Rate Loan so affected, together with all accrued interest thereon to the date of
payment and all amounts owing to such Bank under Section 3.8, (a) on the last
day of the then-current Eurodollar Interest Period applicable to such Loan if
such Bank may lawfully continue to maintain such Loan to such day, or (b)
immediately if such Bank may not continue to maintain such Loan to such day.
3.8 INDEMNIFICATION. If the Company makes any payment of principal with
respect to any Loan on any other date than the last day of the Interest Period
applicable thereto (whether pursuant to Section 3.7, Section 6.2 or otherwise),
or if the Company fails to borrow any Loan after notice has been given to the
Banks in accordance with Section 2.4, or if the Company fails to make any
payment of principal or interest in respect of a Loan when due, the Company
shall reimburse each
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<PAGE> 26
Bank on demand for any resulting loss or expense incurred by each such Bank,
including without limitation any loss incurred in obtaining, liquidating or
employing deposits from third parties, whether or not such Bank shall have
funded or committed to fund such Loan. A statement as to the amount of such
loss or expense, prepared in good faith and in reasonable detail by such Bank
and submitted by such Bank to the Company, shall be conclusive and binding for
all purposes absent manifest error in computation. Calculation of all amounts
payable to such Bank under this Section 3.8 shall be made as though such Bank
shall have actually funded or committed to fund the relevant Loan through the
purchase of an underlying deposit in an amount equal to the amount of such Loan
and having a maturity comparable to the related Interest Period and, in the
case of any Eurodollar Rate Loan, through the transfer of such deposit from an
offshore office of such Bank to a domestic office of such Bank in the United
States of America; PROVIDED, HOWEVER, that such Bank may fund any Loan in any
manner it sees fit and the foregoing assumption shall be utilized only for the
purpose of calculation of amounts payable under this Section 3.8.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants that:
4.1 EXISTENCE AND POWER. (a) The Company is a general partnership duly
organized, validly existing and in good standing under the laws of the State of
Indiana, and is duly qualified to do business, and is in good standing, in all
additional jurisdictions where such qualification is necessary under applicable
law. The Company has all requisite partnership power to own or lease the
properties used in its business and to carry on its business as now being
conducted and as proposed to be conducted, and to execute and deliver this
Agreement, the Notes and the Security Documents to which it is a party and to
engage in the transactions contemplated by this Agreement.
(b) Each of the Partners is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and is duly qualified to do business, and is in good standing, in
all additional jurisdictions where such qualification is necessary under
applicable law (including without limitation the State of Indiana). Each of the
Partners has all requisite corporate power to own or lease the properties used
in its business and to carry on its business as now being conducted and as
proposed to be conducted, and to execute and deliver this Agreement on behalf of
the Company.
(c) The ownership interests in the Company are held beneficially
and of record sixty percent (60%) by ACTI and forty percent (40%) by Izumi U.S.
Amcast owns beneficially and of record all of the outstanding equity securities
of ACTI. Izumi owns beneficially and of record all of the outstanding equity
securities of Izumi U.S.
4.2 AUTHORITY. (a) The execution, delivery and performance by the
Company of this Agreement, the Notes, and the Security Documents to which it is
a party are not in contravention of any law, rule or regulation, or any
judgment, decree, writ, injunction, order or award of any
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<PAGE> 27
arbitrator, court or governmental authority, or of the terms of the Company's
charter, or of any contract or undertaking to which the Company is a party or
by which the Company or its property may be bound or affected and will not
result in the imposition of any Lien except for Permitted Liens.
(b) The execution, delivery and performance by the Partners on
behalf of the Company of this Agreement, the Notes, and the Security Documents
to which the Company is a party have been duly authorized by all necessary
corporate action and are not in contravention of any law, rule or regulation, or
any judgment, decree, writ, injunction, order or award of any arbitrator, court
or governmental authority, or of the terms of the charter of either Partner, or
of any contract or undertaking to which either Partner is a party or by which
either Partner or its property may be bound or affected and will not result in
the imposition of any Lien except for Permitted Liens.
4.3 BINDING EFFECT. This Agreement is, and the Notes and the Security
Documents to which the Company is a party when delivered hereunder will be,
legal, valid and binding obligations of the Company and its Partners,
enforceable against the Company and its Partners in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
4.4 SUBSIDIARIES. The Company has no Subsidiaries as of the date hereof,
but each corporation becoming a Subsidiary of the Company after the date hereof
will be a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and will be duly qualified
to do business in each additional jurisdiction where such qualification may be
necessary under applicable law. Each Subsidiary of the Company will have all
requisite corporate power to own or lease the properties used in its business
and to carry on its business as now being conducted and as proposed to be
conducted. All outstanding shares of capital stock of each class of each
Subsidiary of the Company will be validly issued and will be fully paid and
nonassessable and, except as disclosed in writing to the Agent and the Banks
from time to time, will be owned, beneficially and of record, by the Company or
another Subsidiary of the Company free and clear of any Liens.
4.5 LITIGATION. Except as set forth in SCHEDULE 4.5 hereto, there is no
action, suit or proceeding pending or, to the best of the Company's knowledge,
threatened against or affecting the Company or any of its Subsidiaries before or
by any court, governmental authority or arbitrator, which if adversely decided
might result, either individually or collectively, in any material adverse
change in the business, properties, operations or condition, financial or
otherwise, of the Company or any of its Subsidiaries or in any material adverse
effect on the legality, validity or enforceability of this Agreement, the Notes
or any Security Document and, to the best of the Company's knowledge, there is
no basis for any such action, suit or proceeding.
4.6 FINANCIAL CONDITION. The consolidated balance sheet of the Company
and its Subsidiaries and the consolidated statements of income, retained
earnings and cash flow of the
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Company and its Subsidiaries for the fiscal year ended August 31, 1998, as
provided by the Company to the Partners under the Partnership Agreement, and
the interim consolidated balance sheet and interim consolidated statements of
income, retained earnings and cash flow of the Company and its Subsidiaries, as
of or for the 9-month period ended on May 30, 1999, copies of which have been
furnished to the Banks, fairly present, and the financial statements of the
Company and its Subsidiaries delivered pursuant to Section 5.1(d) will fairly
present, the consolidated financial position of the Company and its
Subsidiaries as at the respective dates thereof, and the consolidated results
of operations of the Company and its Subsidiaries for the respective periods
indicated, all in accordance with generally accepted accounting principles
consistently applied (subject, in the case of said interim statements, to
year-end audit adjustments). There has been no material adverse change in the
business, properties, operations or condition, financial or otherwise, of the
Company or any of its Subsidiaries since August 31, 1998, except as has been
previously disclosed to the Agent and the Banks by the Company. There is no
material Contingent Liability of the Company that is not reflected in such
financial statements or in the notes thereto.
4.7 USE OF LOANS. The Company will use the proceeds of the Loans to
finance the Company's business. Neither the Company nor any of its Subsidiaries
extends or maintains, in the ordinary course of business, credit for the
purpose, whether immediate, incidental, or ultimate, of buying or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of any Loan will be
used for the purpose, whether immediate, incidental, or ultimate, of buying or
carrying any such margin stock or maintaining or extending credit to others for
such purpose. After applying the proceeds of each Loan, such margin stock will
not constitute more than 25% of the value of the assets (either of the Company
alone or of the Company and its Subsidiaries on a consolidated basis) that are
subject to any provisions of this Agreement or any Security Document that may
cause any Loan to be deemed secured, directly or indirectly, by margin stock.
4.8 CONSENTS, ETC. Except for such consents, approvals, authorizations,
declarations, registrations or filings delivered by the Company pursuant to
Section 2.5(g), if any, each of which is in full force and effect, no consent,
approval or authorization of or declaration, registration or filing with any
governmental authority or any nongovernmental person or entity, including
without limitation any creditor, lessor or stockholder of the Company or any of
its Subsidiaries, is required on the part of the Company in connection with the
execution, delivery and performance of this Agreement, the Notes, the Security
Documents or the transactions contemplated hereby or thereby or as a condition
to the legality, validity or enforceability of this Agreement, the Notes or any
of the Security Documents.
4.9 TAXES. The Company and its Subsidiaries have filed all tax returns
(federal, state and local) required to be filed and have paid all taxes shown
thereon to be due, including interest and penalties, or have established
adequate financial reserves on their respective books and records for payment
thereof. Except as set forth in SCHEDULE 4.9 hereto, neither the Company nor any
of its Subsidiaries knows of any actual or proposed tax assessment or any basis
therefor, and no extension of time for the assessment of deficiencies in any
federal or state tax has been granted by the Company or any Subsidiary.
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<PAGE> 29
4.10 TITLE TO PROPERTIES. Except as otherwise disclosed in the latest
balance sheet delivered pursuant to Section 4.6 or 5.1(d) of this Agreement, the
Company or one or more of its Subsidiaries have good and marketable fee simple
title to all of the real property, and a valid and indefeasible ownership
interest in all of the other properties and assets (including, without
limitation, the collateral subject to the Security Documents to which any of
them is a party) reflected in said balance sheet or subsequently acquired by the
Company or any Subsidiary. All of such properties and assets are free and clear
of any Lien except for Permitted Liens.
4.11 ERISA. The Company, its Subsidiaries, the ERISA Affiliates and the
Plans are in compliance in all material respects with those provisions of ERISA
and of the Code which are applicable with respect to any Plan. No Prohibited
Transaction and no Reportable Event has occurred with respect to any Plan. None
of the Company, any of its Subsidiaries or any of the ERISA Affiliates is an
employer with respect to any Multiemployer Plan. The Company, its Subsidiaries
and the ERISA Affiliates have met the minimum funding requirements under ERISA
and the Code with respect to each of the respective Plans, if any, and have not
incurred any liability to the PBGC or any Plan. The execution, delivery and
performance of this Agreement, the Notes, and the Security Documents does not
constitute a Prohibited Transaction. There is no material Unfunded Benefit
Liability, determined in accordance with Section 4001(a)(18) of ERISA, with
respect to any Plan.
4.12 DISCLOSURE. No report or other information furnished in writing or
on behalf of the Company, any Partner, or any Guarantor to any Bank or the Agent
in connection with the negotiation or administration of this Agreement or the
Prior Credit Agreement contains any material misstatement of fact or omits to
state any material fact or any fact necessary to make the statements contained
therein not misleading. Neither this Agreement, the Notes, the Security
Documents, nor any other document, certificate, or report or other information
furnished to any Bank or the Agent by or on behalf of the Company in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact known
to the Company which materially and adversely affects, or which in the future
may (so far as the Company can now foresee) materially and adversely affect, the
business, properties, operations or condition, financial or otherwise, of the
Company, any Partner, or any Subsidiary, which has not been set forth in this
Agreement or in the other documents, certificates, statements, reports and other
information furnished in writing to the Banks by or on behalf of the Company,
any Partner, or any Guarantor in connection with the transactions contemplated
hereby.
4.13 ENVIRONMENTAL AND SAFETY MATTERS. The Company and each Subsidiary
is in compliance with all federal, state and local laws, ordinances and
regulations relating to safety and industrial hygiene or to the environmental
condition, including without limitation all Environmental Laws in jurisdictions
in which the Company or any Subsidiary owns or operates, or has owned or
operated, a facility or site, or arranges or has arranged for disposal or
treatment of hazardous substances, solid waste, or other wastes, accepts or has
accepted for transport any hazardous substances, solid wastes or other wastes or
holds or has held any interest in real property or otherwise. No demand, claim,
notice, suit, suit in equity, action, administrative action, investigation or
inquiry whether brought by any governmental authority, private person or entity
or otherwise,
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<PAGE> 30
arising under, relating to or in connection with any Environmental Laws is
pending or threatened against the Company or any of its Subsidiaries, any real
property in which the Company or any such Subsidiary holds or has held an
interest or any past or present operation of the Company or any Subsidiary.
Neither the Company nor any of its Subsidiaries (a) is the subject of any
federal or state investigation evaluating whether any remedial action is needed
to respond to a release of any toxic substances, radioactive materials,
hazardous wastes or related materials into the environment, (b) has received
any notice of any toxic substances, radioactive materials, hazardous waste or
related materials in, or upon any of its properties in violation of any
Environmental Laws, or (c) knows of any basis for any such investigation,
notice or violation, except as disclosed on SCHEDULE 4.13 hereto, and as to
such matters disclosed on such Schedule, none will have a material adverse
effect on the financial condition or business of the Company or any of its
Subsidiaries. No release, threatened release or disposal of hazardous waste,
solid waste or other wastes is occurring or has occurred on, under or to any
real property in which the Company or any of its Subsidiaries holds any
interest or performs any of its operations, in violation of any Environmental
Law.
4.14 YEAR 2000. The Company has made a full and complete assessment of
the Year 2000 Issues and believes it has a realistic and achievable program for
remediating the Year 2000 Issues on a timely basis (the "Year 2000 Program").
Based on this assessment and on the Year 2000 Program, the Borrower does not
reasonably anticipate that Year 2000 Issues will have a material adverse effect
on the financial condition or business of the Company or any of its
Subsidiaries.
ARTICLE V
COVENANTS
---------
5.1 AFFIRMATIVE COVENANTS. The Company covenants and agrees that, until
the Termination Date and thereafter until payment in full of the principal of
and accrued interest on the Notes and the performance of all other obligations
of the Company under this Agreement, unless the Required Banks shall otherwise
consent in writing, it shall, and shall cause each of its Subsidiaries to:
(a) PRESERVATION OF EXISTENCE, ETC. (i) Do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence and its qualification in good standing to do business in each
jurisdiction in which such qualification is necessary under applicable law, and
the rights, licenses, permits (including those required under Environmental
Laws), franchises, patents, copyrights, trademarks and trade names material to
the conduct of its businesses; and defend all of the foregoing against all
claims, actions, demands, suits or proceedings at law or in equity or by or
before any governmental instrumentality or other agency or regulatory authority.
(ii) Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect the legal existence of each
of the Partners and their qualification in good standing to do business in each
jurisdiction in which such qualification is necessary under applicable law, and
the rights, licenses, permits (including those required under Environmental
Laws),
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franchises, patents, copyrights, trademarks and trade names material to the
conduct of their businesses; and defend all of the foregoing against all
claims, actions, demands, suits or proceedings at law or in equity or by or
before any governmental instrumentality or other agency or regulatory
authority.
(b) COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with all applicable laws, rules, regulations and orders of any governmental
authority whether federal, state, local or foreign (including without limitation
ERISA, the Code and Environmental Laws), in effect from time to time; and pay
and discharge promptly when due all taxes, assessments and governmental charges
or levies imposed upon it or upon its income, revenues or property, before the
same shall become delinquent or in default, as well as all lawful claims for
labor, materials and supplies or otherwise, which, if unpaid, might give rise to
Liens upon such properties or any portion thereof, except to the extent that
payment of any of the foregoing is then being contested in good faith by
appropriate legal proceedings and with respect to which adequate financial
reserves have been established on the books and records of the Company or such
Subsidiary.
(c) MAINTENANCE OF PROPERTIES; INSURANCE. Maintain, preserve and
protect all property that is material to the conduct of the business of the
Company or any of its Subsidiaries and keep such property in good repair,
working order and condition and from time to time make, or cause to be made all
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times in accordance with customary and prudent
business practices for similar businesses; and, in addition to that insurance
required under the Security Documents, maintain in full force and effect
insurance with responsible and reputable insurance companies or associations in
such amounts, on such terms and covering such risks, including fire and other
risks insured against by extended coverage, as is usually carried by companies
engaged in similar businesses and owning similar properties similarly situated
and maintain in full force and effect public liability insurance, insurance
against claims for personal injury or death or property damage occurring in
connection with any of its activities or any of any properties owned, occupied
or controlled by it, in such amount as it shall reasonably deem necessary, and
maintain such other insurance as may be required by law or as may be reasonably
requested by the Required Banks for purposes of assuring compliance with this
Section 5.1(c).
(d) REPORTING REQUIREMENTS. Furnish to the Banks and the Agent
the following:
(i) Promptly and in any event within three Business
Days after becoming aware of the occurrence of (A) any Event of Default or
Default, (B) the commencement of any material litigation against, by or
affecting the Company, the Partners, or any of the Subsidiaries, and any
material developments therein, or (C) entering into any material contract or
undertaking that is not entered into in the ordinary course of business or (D)
any development in the business or affairs of the Company or any of its
Subsidiaries which has resulted in or which is likely in the reasonable
judgment of the Company, to result in a material adverse change in the
business, properties, operations or condition, financial or otherwise of the
Company or any of its Subsidiaries, a statement of the chief financial officer
of the Company setting forth details of each such Event of Default or Default
and such litigation, material contract or undertaking or development and the
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action which the Company or such Subsidiary, as the case may be, has taken and
proposes to take with respect thereto;
(ii) As soon as available and in any event within 45
days after the end of each of the first three fiscal quarters of the Company,
the consolidated balance sheet of the Company and its Subsidiaries as of the
end of such quarter, and the related consolidated statements of income,
retained earnings and changes in financial position for the period commencing
at the end of the previous fiscal year and ending with the end of such quarter,
setting forth in each case in comparative form the corresponding figures for
the corresponding date or period of the preceding fiscal year, all in
reasonable detail and duly certified (subject to year-end audit adjustments) by
the chief financial officer of the Company as having been prepared in
accordance with generally accepted accounting principles, together with a
certificate of the chief financial officer of the Company stating that no Event
of Default or Default has occurred and is continuing or, if an Event of Default
or Default has occurred and is continuing, a statement setting forth the
details thereof and the action which the Company has taken and proposes to take
with respect thereto;
(iii) As soon as available and in any event within 90
days after the end of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income, retained
earnings and changes in financial position of the Company and its Subsidiaries
for such fiscal year, as provided by the Company to the Partners under the
Partnership Agreement, with a customary audit report of independent certified
public accountants selected by the Company if required to be delivered to the
Partners under the Partnership Agreement, together with a certificate of the
chief financial officer of the Company stating that no Event of Default or
Default has occurred and is continuing or, if an Event of Default or Default
has occurred and is continuing, a statement setting forth the details thereof
and the action which the Company has taken and proposes to take with respect
thereto;
(iv) Promptly and in any event within 10 calendar days
after receiving or becoming aware thereof, (A) a copy of any notice of intent
to terminate any Plan filed with the PBGC, (B) a statement of the chief
financial officer of the Company setting forth the details of the occurrence of
any Reportable Event with respect to any Plan, (C) a copy of any notice that
the Company, any of its Subsidiaries or any ERISA Affiliate may receive from
the PBGC relating to the intention of the PBGC to terminate any Plan or to
appoint a trustee to administer any Plan, or (D) a copy of any notice of
failure to make a required installment or other payment within the meaning of
Section 412(n) of the Code or Section 302(f) of ERISA with respect to a Plan;
(v) Promptly and in any event within 10 days after
receipt, a copy of any management letter or comparable analysis prepared by the
auditors for the Company or any of its Subsidiaries;
(vi) Annually and concurrently with being delivered to
the Management Committee, the business plan to be reviewed by the Management
Committee, as well as any revisions of the business plan reviewed by the
Management Committee;
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(vii) Annually, on or before the anniversary date of
this Agreement, a certificate of the Company's chief financial officer stating
that he or she has reviewed the Security Documents and that the Company is in
compliance with the terms thereof; and
(viii) Promptly, such other information respecting the
business, properties, operations or condition, financial or otherwise, of the
Company or any of it Subsidiaries as any Bank or the Agent may from time to
time reasonably request.
(e) ACCOUNTING, ACCESS TO RECORDS, BOOKS, ETC. Maintain a system
of accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in accordance with
generally accepted accounting principles and to comply with the requirements of
this Agreement and, at any reasonable time and from time to time, (i) permit any
Bank or the Agent any agents or representatives thereof to examine (and upon the
occurrence and during the continuance of any Event of Default, make copies of
and abstracts from) the records and books of account of, and visit the
properties of, the Company and its Subsidiaries, and to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with their respective
directors, officers, employees and independent auditors, and by this provision
the Company does hereby authorize such persons to discuss such affairs, finances
and accounts with any Bank or the Agent, and (ii) permit the Agent or any of its
agents or representatives to conduct a comprehensive field audit of its books,
records, properties and assets, including without limitation all collateral
subject to the Security Documents.
(f) ADDITIONAL SECURITY AND COLLATERAL. Promptly execute and
deliver, and cause each of the Guarantors to execute and deliver, additional
Security Documents, within 30 days after request therefor by the Banks and the
Agent, sufficient to grant to the Banks and the Agent liens and security
interests in any after acquired property of the type described in Section 2.10.
The Company shall notify the Banks and the Agent, within 10 days after the
occurrence thereof, of any event or condition that may require additional action
of any nature in order to preserve the effectiveness and perfected status of the
liens and security interests of the Banks and the Agent pursuant to the Security
Documents.
(g) FURTHER ASSURANCES. Will, and will cause each Guarantor to,
execute and deliver within 30 days after request therefor by the Banks and the
Agent, all further instruments and documents and take all further action that
may be necessary or desirable, or that the Agent may request, in order to give
effect to, and to aid in the exercise and enforcement of the rights and remedies
of the Banks under, this Agreement, the Notes and the Security Documents,
including without limitation causing each lessor of real property to the Company
or any Subsidiary to execute and deliver to the Agent, prior to or upon the
commencement of any tenancy, an agreement in form and substance acceptable to
the Bank and the Agent duly executed on behalf of such lessor waiving any
distraint, lien and similar rights with respect to any property subject to the
security documents and agreeing to permit the Banks and the Agent to enter such
premises in connection therewith. The Company further agrees to deliver to the
Agent, on or before each anniversary date of the Effective Date, a certificate
of the chief financial officer of the Company stating that he has reviewed the
Security Documents and that the Company and each Guarantor are in compliance
with the terms and conditions thereof. The Company shall take, or cause to be
taken, all action necessary to permit
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such an opinion to be rendered, including filing such financing statements and
continuation statements and executing and delivering such supplements to the
Security Documents and other instruments as may be necessary or desirable in
connection with such opinion.
(h) PAYMENT OF INDEBTEDNESS TO OTHERS. Pay when due (or within
any applicable grace periods) all Indebtedness due to third Persons, except when
the amount thereof is being contested in good faith by appropriate proceedings
and with adequate reserves therefor being set aside on the Company's financial
books and records. If the Company fails to make any such payment, the Company
shall give the Agent proper notice of the failure. The Company further agrees to
make all lease payments when due, and to take no action that could result in any
additional fees or penalties being imposed under any leases, such as late fees,
prepayment penalties, or cancellation penalties.
(i) YEAR 2000 ISSUES. The Company will take reasonable steps to
eliminate all material Year 2000 Issues of which it becomes aware, and will
allocate sufficient reserves or budget to implement appropriate corrective
actions.
5.2 NEGATIVE COVENANTS. Until the Maturity Date and thereafter until
payment in full of the principal of and accrued interest on the Notes and the
performance of all other obligations of the Company under this Agreement, the
Company agrees that, unless the Required Banks shall otherwise consent in
writing, it shall not, and shall not permit any of its Subsidiaries to:
(a) INDEBTEDNESS. Create, incur, assume, or in any manner become
liable in respect of, or suffer to exist, any Indebtedness other than:
(i) The Loans;
(ii) The Indebtedness described on Schedule 5.2(a)
hereto, having the same terms as those existing on the
date of this Agreement, but no extension or renewal
thereof shall be permitted;
(iii) Indebtedness of any Subsidiary of the Company
owing to the Company or to any other Subsidiary of the
Company;
(iv) Liabilities not exceeding $2,000,000 in the
aggregate in respect of Unfunded Benefit Liabilities
under any Plan or of any ERISA Affiliate; and
(v) Indebtedness under Capital Leases and Indebtedness
arising under purchase money obligations incurred solely
to finance the acquisition of equipment, PROVIDED that
the principal amount of such Indebtedness does not
exceed the cost of the equipment purchased and the
aggregate principal amount of all such Indebtedness,
together with the Indebtedness under Capital Leases,
does not exceed $1,500,000 at any time.
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(vi) Other Indebtedness in aggregate principal amount
not exceeding $500,000 outstanding at any one time.
Notwithstanding anything else contained in this Agreement, the Company
may incur Indebtedness to the Partners or the Guarantors, or any of them, in
aggregate principal amount not to exceed Ten Million Dollars ($10,000,000) at
any one time outstanding, and make payments of principal and interest thereon
(irrespective of the limitations contained in Section 5.2(j)) PROVIDED, HOWEVER,
that, upon the occurrence and during the continuance of any Default or Event of
Default, all such Indebtedness to the Partners and to the Guarantors shall be
subordinated to all Indebtedness now or hereafter owing by the Company to the
Banks until all Indebtedness owing by the Company to the Banks has been
irrevocably paid in full.
(b) LIENS. Create, incur or suffer to exist any Lien on any of
the assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired, of the Company or any of
its Subsidiaries, other than:
(i) Liens for taxes not delinquent or for taxes being
contested in good faith by appropriate proceedings and
as to which adequate financial reserves have been
established on its books and records;
(ii) Liens (other than any Lien imposed by ERISA)
created and maintained in the ordinary course of
business which do not secure obligations exceeding
$500,000 in the aggregate and which would not have a
material adverse effect on the business or operations of
the Company or any of its Subsidiaries and which
constitute (A) pledges or deposits under worker's
compensation laws, unemployment insurance laws or
similar legislation, (B) good faith deposits in
connection with bids, tenders, contracts or leases to
which the Company or any of its Subsidiaries is a party
for a purpose other than borrowing money or obtaining
credit, including rent security deposits, (C) liens
imposed by law, such as those of carriers, warehousemen
and mechanics, if payment of the obligation secured
thereby is not yet due, (D) Liens securing taxes,
assessments or other governmental charges or levies not
yet subject to penalties for nonpayment, and (E) pledges
or deposits to secure public or statutory obligations of
the Company or any of its Subsidiaries, or surety,
customs or appeal bonds to which the Company or any of
its Subsidiaries is a party;
(iii) Liens affecting real property which constitute
minor survey exceptions or defects or irregularities in
title, minor encumbrances, easements or reservations of,
or rights of others for, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use
of such real property, PROVIDED that all of the
foregoing, in the aggregate, do not at any time
materially detract from the value of said properties or
materially impair their use in the operation of the
businesses of the Company or any of its Subsidiaries;
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(iv) Liens created pursuant to the Security Documents
and Liens expressly permitted by the Security Documents;
(v) Each Lien described on Schedule 5.2(b) hereto may be
suffered to exist upon the same terms as those existing
on the date hereof, but no extension or renewal thereof
shall be permitted;
(vi) Liens securing purchase money Indebtedness
permitted under Section 5.2(a)(v), PROVIDED that any
such Lien only encumbers the assets purchased with the
proceeds of such Indebtedness; and
(vii) The interest or title of a lessor under any
Capital Lease or other lease otherwise permitted under
this Agreement with respect to the property subject to
such lease to the extent performance of the obligations
of the Company or its Subsidiary thereunder are not
delinquent.
(c) NET WORTH. Permit or suffer the Consolidated Net Worth of
the Company and its Subsidiaries from and after September 1, 1999, to be less
than $12,000,000.
(d) TOTAL EQUITY. Permit or suffer the total capital
contribution to the Company of ACTI as of September 1, 1999, to be less than
$20,567,000, or the total capital contribution to the Company of Izumi U.S.
as of September 1, 1999, to be less than $13,711,000.
(e) MERGER, ACQUISITIONS, ETC. Purchase or otherwise acquire,
whether in one or a series of transactions, all or a substantial portion of the
business assets, rights, revenues or property, real, personal or mixed, tangible
or intangible, of any person, or all or a substantial portion of the capital
stock of or other ownership interest in any other person; nor merge or
consolidate or amalgamate with any other person or take any other action having
a similar effect, nor enter into any joint venture or similar arrangement with
any other person, PROVIDED, HOWEVER, that this subsection shall not prohibit any
merger or acquisition if the Company shall be the surviving or continuing person
and, immediately after such merger or acquisition, no Default or Event of
Default shall exist or shall have occurred and be continuing and, prior to the
consummation of such merger or acquisition, the Company shall have provided to
the Banks an opinion of counsel and a certificate of the chief financial officer
of the Company (attaching computations to demonstrate compliance with all
financial covenants hereunder), each stating that such merger or acquisition
complies with this subsection and that any other conditions under this Agreement
relating to such transaction have been satisfied and PROVIDED, FURTHER, that
this subsection shall not prohibit the incorporation of the Company so long as
the equity interests on the resulting corporation are owned only by the Partners
in the same proportions as the Company is owned by them prior to the
incorporation, and the Company, the Agent, and the Banks shall amend this
Agreement, the Notes, and the Security Documents as necessary to accommodate
such incorporation.
(f) DISPOSITION OF ASSETS; ETC. Sell, lease, license, transfer,
assign or otherwise dispose of all or a substantial portion of its business,
assets, rights, revenues or property, real,
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personal or mixed, tangible or intangible, whether in one or a series of
transactions, other than finished inventory sold in the ordinary course of
business upon customary credit terms and sales of scrap or obsolete material or
equipment, PROVIDED, HOWEVER, that, if no Default or Event of Default is
existing or would result therefrom, this subsection shall not prohibit any such
sale, lease, license, transfer, assignment or other disposition of assets if
the aggregate book value (disregarding any write-downs of such book value other
than ordinary depreciation and amortization) of all of such business, assets,
rights, revenues and property disposed of after the date of this Agreement
shall be less than twenty-five percent of such aggregate book value of the
total assets of the Company or such Subsidiary, as the case may be.
(g) NATURE OF BUSINESS. Make any substantial change in the
nature of its business from that engaged in on the date of this Agreement or
engage in any other businesses other than those in which it is engaged on the
date of this Agreement.
(h) TRANSACTIONS WITH AFFILIATES. Enter into, become a party to,
or become liable in respect of, any contract or undertaking with any Affiliate
except in the ordinary course of business and on terms not less favorable to the
Company or such Subsidiary than those which could be obtained if such contract
or undertaking were an arms length transaction with a person other than an
Affiliate.
(i) NEGATIVE PLEDGE LIMITATION. Enter into any Agreement with
any person other than the Banks pursuant hereto which prohibits or limits the
ability of the Company or any Subsidiary to create, incur, assume or suffer to
exist any Lien upon any of its assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, whether now owned or hereafter
acquired.
(j) DISTRIBUTIONS AND OTHER RESTRICTED PAYMENTS. Except as
permitted under the last paragraph of Section 5.2(a), make, pay, declare, or
authorize any payment or distribution in respect of any partnership interest or
in connection with any redemption, purchase, retirement, or other acquisition,
directly or indirectly, of any partnership interests, or make or authorize any
payments on any loan, advance, or other credit extension made by any of the
Partners, the Guarantors, or their Affiliates, PROVIDED, HOWEVER, that, if no
Default or Event of Default is existing or would result therefrom, the Company
may authorize and make payments and other distributions during or with respect
to any fiscal year which, in the aggregate, do not exceed fifty percent (50%) of
the Consolidated Cumulative Net Income before Taxes of the Company and its
Subsidiaries for such year.
(k) INVESTMENT, LOANS, AND ADVANCES. Make any loan, advance, or
other credit extension to, or purchase or otherwise acquire any capital stock of
or other ownership interest in, or debt security of or other evidences of
Indebtedness of, any of the Partners, the Guarantors, or their Affiliates.
(l) INCONSISTENT AGREEMENTS. Enter into any agreement containing
any provision which would be violated or breached by this Agreement or any of
the transactions contemplated
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hereby or by performance by the Company or any of its Subsidiaries or any
Guarantor of its obligations in connection therewith.
(m) PAYMENTS FOLLOWING GUARANTOR DEFAULT. Following the
occurrence of a Guarantor Default, and during the continuance of a Forbearance
Period, make any payments or prepayments of principal or interest on any
outstanding Indebtedness except for regularly scheduled payments of principal
and interest otherwise due in the absence of the Guarantor Default.
ARTICLE VI
DEFAULT
6.1 EVENTS OF DEFAULT. The occurrence of any one of the following events
or conditions shall be deemed an "Event of Default" hereunder unless waived by
the Required Banks pursuant to Section 8.1:
(a) NONPAYMENT. The Company shall fail to pay when due any
principal of or interest on the Notes or any fees or any other amount payable
hereunder;
(b) MISREPRESENTATION. Any representation or warranty made by
the Company in Article IV hereof or in any Security Document or any other
certificate, report, financial statement or other document furnished by or on
behalf of the Company in connection with this Agreement, shall prove to have
been incorrect in any material respect when made or deemed made;
(c) CERTAIN COVENANTS. The Company shall fail to perform or
observe any term, covenant or agreement contained in Article V hereof, or there
occurs any change in the ownership of the Company or of any of the Partners;
(d) OTHER DEFAULTS. The Company shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement or in any
Security Document, and any such failure shall remain unremedied for 15 calendar
days after notice thereof shall have been given to the Company by the Agent (or
such longer or shorter period of time as may be specified in such Security
Document);
(e) OTHER INDEBTEDNESS. The Company or any of its Subsidiaries
shall fail to pay any part of the principal of, the premium, if any, or the
interest on, or any other payment of money due under any of its Indebtedness
(other than Indebtedness hereunder), beyond any period of grace provided with
respect thereto; or if the Company or any of its Subsidiaries fails to perform
or observe any other term, covenant or agreement contained in any agreement,
document or instrument evidencing or securing any such Indebtedness, or under
which any such Indebtedness was issued or created, beyond any period of grace,
if any, provided with respect thereto if the effect of such failure is either
(i) to cause, or permit the holders of such Indebtedness (or a trustee on behalf
of such holders) to cause, any payment in respect of such Indebtedness to become
due prior to its due date
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or (ii) to permit the holders of such Indebtedness (or a trustee on behalf of
such holders) to assume operational control of the Company;
(f) JUDGMENTS. One or more judgments or orders for the payment
of money in an aggregate amount of $500,000 shall be rendered against the
Company, the Partners or any of its Subsidiaries, or any other judgment or order
(whether or not for the payment of money) shall be rendered against or shall
affect the Company, the Partners or any of its Subsidiaries which causes or
could cause a material adverse change in the business, properties, operations or
condition, financial or otherwise, of the Company, the Partners or any of its
Subsidiaries or which does or could have a material adverse effect on the
legality, validity or enforceability of this Agreement, the Notes or any
Security Document, and either (i) such judgment or order shall have remained
unsatisfied and the Company, such Partner or such Subsidiary shall not have
taken action necessary to stay enforcement thereof by reason of pending appeal
or otherwise, prior to the expiration of the applicable period of limitations
for taking such action or, if such action shall have been taken, a final order
denying such stay shall have been rendered, or (ii) enforcement proceedings
shall have been commenced by any creditor upon any such judgment or order;
(g) ERISA. The occurrence of a Reportable Event that results in
or could result in liability of the Company, any Subsidiary of the Company or
any ERISA Affiliate to the PBGC or to any Plan and such Reportable Event is not
corrected within thirty (30) days after the occurrence thereof; or the
occurrence of any Reportable Event which could constitute grounds for
termination of any Plan by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer any Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the filing by the Company, any Subsidiary of the Company or any
ERISA Affiliate of a notice of intent to terminate a Plan or the institution of
other proceedings to terminate a Plan; or the Company, any Subsidiary of the
Company or any ERISA Affiliate shall fail to pay when due any liability to the
PBGC or to a Plan; or the PBGC shall have instituted proceedings to terminate,
or to cause a trustee to be appointed to administer, any Plan; or any person
engages in a Prohibited Transaction with respect to any Plan which results in or
could result in liability of the Company, any Subsidiary of the Company, any
ERISA Affiliate to make a required installment or other payment to any Plan
within the meaning of Section 302(f) of ERISA or Section 412(n) of the Code that
results in or could result in liability of the Company, any Subsidiary of the
Company or any ERISA Affiliate to the PBGC or any Plan; or the withdrawal of the
Company, any of its Subsidiaries or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(9a)(2) of ERISA; or the Company, any of its Subsidiaries or any ERISA
Affiliate becomes an employer with respect to any Multiemployer Plan without the
prior written consent of the Required Banks;
(h) INSOLVENCY, ETC. The Company or any of the Partners shall be
dissolved or liquidated (or any judgment, order or decree therefor shall be
entered), or shall generally not pay its debts as they become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors, or shall institute, or there
shall be instituted against the Company or any of the Partners any proceeding or
case seeking to adjudicate it a bankrupt or insolvent or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency
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or reorganization or relief or protection of debtors or seeking the entry of an
order for relief, or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its assets, rights,
revenues or property, and, if such proceeding is instituted against the Company
or a Partner and is being contested by the Company or the Partner in good faith
by appropriate proceedings, such proceeding shall remain undismissed or unstayed
for a period of 60 days; or the Company or a Partner shall take any action
(corporate or other) to authorize or further any of the actions described above
in this subsection; or
(i) GUARANTOR DEFAULTS. Any event of default described in any
Guaranty shall have occurred and be continuing, and the holder of the defaulted
Guaranty notifies the Agent, the Guarantors, and the other Bank of such default
and requests in writing that such default be declared an Event of Default under
this Agreement.
6.2 REMEDIES.
(a) Upon the occurrence and during the continuance of any Event
of Default, and subject to the terms of Section 6.3, the Agent may and, upon
being directed to do so by any Bank, shall, within one Business Day, by notice
to the Company and the Guarantors, (i) terminate the Commitments or (ii) declare
the outstanding principal of, and accrued interest on, the Notes and all other
amounts owing under this Agreement to be immediately due and payable, or both of
the foregoing, whereupon the Commitments shall terminate forthwith and all such
amounts shall become immediately due and payable, as the case may be, PROVIDED
that in the case of any event or condition described in Section 6.1(h) with
respect to the Company, the Commitments shall automatically terminate forthwith
and all such amounts shall automatically become immediately due and payable
without notice; in all cases without demand, presentment, protest, diligence,
notice of dishonor or other formality, all of which are hereby expressly waived.
(b) Subject to Section 6.3, the Agent may and, upon being
directed to do so by the Required Banks, shall, in addition to the remedies
provided in Section 6.2(a), exercise and enforce any and all other rights and
remedies available to it or the Banks, whether arising under this Agreement, the
Notes or any Security Document or under applicable law, in any manner deemed
appropriate by the Agent, including suit in equity, action at law, or other
appropriate proceedings, whether for the specific performance (to the extent
permitted by law) of any covenant or agreement contained in this Agreement or in
the Notes or any Security Document or in aid of the exercise of any power
granted in this Agreement, the Notes or any Security Document.
(c) Subject to Section 6.3, upon the occurrence and during the
continuance of any Event of Default, each Bank may at any time and from time to
time, without notice to the Company (any requirement for such notice being
expressly waived by the Company) set off and apply against any and all of the
obligations of the Company now or hereafter existing under this Agreement,
whether owing to such Bank or any other Bank or the Agent, any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank to or for the credit or the
account of the Company and any property of the Company from time to time in
possession of such Bank, irrespective of whether or not such Bank shall have
made any demand hereunder and although such obligations may be contingent and
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<PAGE> 41
unmatured. The Company hereby grants to the Banks and the Agent a lien on and
security interest in all such deposits, indebtedness and property as collateral
security for the payment and performance of the obligations of the Company under
this Agreement. The rights of such Bank under this Section 6.2(c) are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which such Bank may have. Any funds obtained by the Agent or
any Bank under this subsection shall be shared between the Banks under Section
7.10.
(d) In addition to other amounts payable pursuant to this
Agreement, the Company confirms that it shall further pay, together with any
payment of the Loans hereunder after the occurrence and during the continuance
of any Event of Default, all amounts required to be paid pursuant to Section
3.8.
6.3 REMEDIES UPON GUARANTOR DEFAULT. (a) Upon a Guarantor Default
occurring, the Agent shall terminate the Commitments and declare the outstanding
principal of, and accrued interest on, the Notes and all other amounts owing
under this Agreement to be immediately due and payable, whereupon the
Commitments shall terminate and all such amounts shall become immediately due
and payable. Thereafter, each Bank may pursue any and all remedies which it may
have under its respective Guaranty with respect to its portion of the Company's
obligations hereunder, with any proceeds received by the Banks to be applied as
set forth in Section 7.10(a).
(b) During the continuance of a Guarantor Default, the Agent and
the Banks shall not pursue any remedies against the Company other than
terminating the Commitments and accelerating the obligations as permitted under
Section 6.3(a) until one of the following has occurred (such period from the
occurrence of a Guarantor Default until one of the following has occurred being
referred to as the "Forbearance Period"):
(i) A Default or an Event of Default (other than the
Guarantor Default) has occurred; or
(ii) A Guarantor Default exists and is continuing with
respect to each Guarantor; or
(iii) A period of thirty (30) days has passed from the
date the Guarantor Default occurred, and the Guarantor Default
has not been cured or waived in writing by the Banks.
(c) Notwithstanding any other provision of this Agreement to the
contrary, during the Forbearance Period, the Agent and the Banks agree that (i)
there shall be due and payable under this Agreement from the Company only such
amounts as would be due and payable if no Guarantor Default had occurred,
PROVIDED, HOWEVER, that any interest which accrues during the Forbearance Period
shall accrue and be payable at the Overdue Rate, and (ii) no Event of Default
shall occur or be declared under Section 6.1(a) unless and until the Company
fails to pay when due any amounts due and payable under Section 6.3(c)(i).
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<PAGE> 42
ARTICLE VII
THE AGENT AND THE BANKS
-----------------------
7.1 APPOINTMENT AND AUTHORIZATION. Each Bank irrevocably appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement, the Notes and the Security Documents as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto. The provisions of this Article VII
are solely for the benefit of the Agent and the Banks, and the Company shall not
have any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
the Company.
7.2 AGENT AND AFFILIATES. Bank One, in its capacity as a Bank hereunder,
shall have the same rights and powers hereunder as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent.
Bank One and its affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with the Company, any
Guarantor, or any Subsidiary of the Company as if it were not acting as Agent
hereunder, and may accept fees and other consideration therefor without having
to account for the same to the Banks.
7.3 SCOPE OF AGENT'S DUTIES. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement, have a fiduciary relationship with any Bank, and no
implied covenants, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or shall otherwise exist against the Agent. As to any
matters not expressly provided for by this Agreement (including, without
limitation, collection and enforcement action under the Notes and the Security
Documents), the Agent shall not be required to exercise any discretion or take
any action, but may request instructions from the Required Banks. The Agent
shall in all cases be fully protected in acting, or in refraining from acting,
pursuant to the written instructions of the Required Banks, which instructions
and any action or omission pursuant thereto shall be binding upon all of the
Banks; PROVIDED, HOWEVER, that the Agent shall not be required to act or omit to
act if, in the judgment of the Agent, such action or omission may expose the
Agent to personal liability or is contrary to this Agreement, the Notes or the
Security Documents or applicable law.
7.4 RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it to
be genuine and correct and to have been sent or given by or on behalf of a
proper person. The Agent may treat the payee of any Note as the holder thereof
unless and until the Agent receives written notice of the assignment thereof
pursuant to the terms of this Agreement signed by such payee and the Agent
receives the written agreement of the assignee that such assignee is bound
hereby to the same extent as if it had been an original party hereto. The Agent
may employ agents (including, without limitation, collateral agents) and may
consult with legal counsel (who may be counsel for the Company), independent
public accounts and other
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<PAGE> 43
experts selected by it and shall not be liable to the Banks, except as to money
or property received by it or its authorized agents, for the negligence or
misconduct of any such agent selected by it with reasonable care or for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
7.5 DEFAULT. The Agent shall not be deemed to have knowledge of the
occurrence of any Default or Event of Default, unless the Agent has received
written notice from a Bank or the Company specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice, the Agent shall give written notice thereto to
the Banks.
7.6 LIABILITY OF AGENT. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to the Banks for any action taken
or not taken by it or them in connection herewith with the consent or at the
request of the Required Banks or in the absence of its or their own gross
negligence or willful misconduct. Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any recital, statement, warranty or
representation contained in this Agreement, any Note or any Security Document,
or in any certificate, report, financial statement or other document furnished
in connection with this Agreement, (ii) the performance or observance of any of
the covenants or agreements of the Company or any Guarantor, (iii) the
satisfaction of any condition specified in Article II hereof, of (iv) the
validity, effectiveness, legal enforceability, value or genuineness of this
Agreement, the Notes or the Security Documents or any collateral subject thereto
or any other instrument or document furnished in connection herewith.
7.7 NONRELIANCE ON AGENT AND OTHER BANKS. Each Bank acknowledges and
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Company and decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decision in
taking or not taking action under this Agreement. The Agent shall not be
required to keep itself informed as to the performance or observance by the
Company or any Guarantor of this Agreement, the Notes or the Security Documents
or any other documents referred to or provided for herein or to inspect the
properties or books of the Company or any Guarantor and, except for notices,
reports and other documents and information expressly required to be furnished
to the Banks by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any information concerning the affairs,
financial condition or business of the Company or any of its Subsidiaries which
may come into the possession of the Agent or any of its affiliates.
7.8 INDEMNIFICATION. The Banks agree to indemnify the Agent (to the
extent not reimbursed by the Company, but without limiting any obligation of the
Company to make such reimbursement), ratably according to the respective
principal amounts of the Loans then outstanding made by each of them (or if no
Loans are at the time outstanding, ratably according to the respective amounts
of their Commitments), from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever (including,
without limitation, fees and
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disbursements of counsel) which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement or
the transactions contemplated hereby or any action taken or omitted by the
Agent under this Agreement, PROVIDED, HOWEVER, that no Bank shall be liable for
any portion of such claims, damages, losses, liabilities, costs or expenses
resulting from the Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including,
without limitation, fees and expenses of counsel) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Company, but without limiting the
obligation of the Company to make such reimbursement. Each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any amounts
owing to the Agent by the Banks pursuant to this Section. If the indemnity
furnished to the Agent under this Section shall, in the judgment of the Agent,
be insufficient or become impaired, the Agent may call for additional indemnity
from the Banks and cease, or not commence, to take any action until such
additional indemnity is furnished.
7.9 RESIGNATION OF AGENT. The Agent may resign as such at any time upon
thirty days' prior written notice to the Company and the Banks. In the event of
any such resignation, the Required Banks shall, by an instrument in writing
delivered to the Company and the Agent, appoint a successor, which shall be
Asahi, or, if Asahi declines, then a commercial bank acceptable to the Banks. If
a successor is not so appointed or does not accept such appointment before the
Agent's resignation becomes effective, the resigning Agent may appoint a
temporary successor to act until such appointment by the Required Banks is made
and accepted or if no such temporary successor is appointed as provided above by
the resigning Agent, the Required Banks shall thereafter perform all the duties
of the Agent hereunder until such appointment by the Required Banks is made and
accepted. Any successor to the Agent shall execute and deliver to the Company
and the Banks an instrument accepting such appointment and thereupon such
successor Agent, without further act, deed, conveyance or transfer shall become
vested with all of the properties, rights, interests, powers, authorities and
obligations of its predecessor hereunder with like effect as if originally named
as Agent hereunder. Upon request of such successor Agent, the Company and the
resigning Agent shall execute and deliver such instruments of conveyance,
assignment and further assurance and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in such successor
Agent all such properties, rights, interests, powers, authorities and
obligations. The provisions of this Article VII shall thereafter remain
effective for such resigning Agent with respect to any actions taken or omitted
to be taken by such Agent while acting as the Agent hereunder.
7.10 SHARING OF PAYMENTS. (a) The Banks agree among themselves that, in
the event that any Bank shall obtain payment in respect of any Loan or any other
obligation owing to the Banks under this Agreement through the exercise of a
right of set-off, banker's lien, counterclaim or otherwise in excess of its Pro
Rata Share, such Bank shall promptly purchase from the other Banks
participations in such Loans and other obligations in such amounts, and make
such other adjustments from time to time, as shall be equitable to the end that
all of the Banks share such payment in accordance with such ratable shares,
PROVIDED, HOWEVER, that no sharing shall be
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<PAGE> 45
required in respect of any payments received by any Bank from a Guarantor under
its respective Guaranty, or in respect of any sale or assignment of all Notes
held by any Bank under Section 8.6 below, and any amounts so received shall be
applied to pay all amounts owed by the Company or the respective Guarantor to
the receiving Bank and the receiving Bank has no obligation to share any
payments so received with the Agent or the other Bank. This provision shall not
release either Bank from its obligations to the Agent under this Agreement, and
shall not affect the application of funds received from the Company under this
Agreement or under the Security Documents (other than the Guaranties).
(b) The Banks further agree among themselves that if payment to
a Bank obtained by such Bank through the exercise of a right of set-off,
banker's lien, counterclaim or otherwise as aforesaid shall be rescinded or must
otherwise be restored, each Bank which shall have shared the benefit of such
payment shall, by repurchase of participations theretofore sold, return its
share of that benefit to each Bank whose payment shall have been rescinded or
otherwise restored. The Company agrees that any Bank so purchasing such a
participation may, to the fullest extent permitted by law, exercise all rights
of payment, including set-off, banker's lien or counterclaim, with respect to
such participation as fully as if such Bank were a holder of such Loan or other
obligation in the amount of such participation. The Banks further agree among
themselves that, in the event that amounts received by the Banks and the Agent
hereunder are insufficient to pay all such obligations or insufficient to pay
all such obligations when due, the fees and other amounts owing to the Agent in
such capacity shall be paid therefrom before payment of obligations owing to the
Banks under this Agreement. Except as otherwise expressly provided in this
Agreement, if any Bank or the Agent shall fail to remit to the Agent or any
other Bank an amount payable by such Bank or the Agent to the Agent or such
other Bank pursuant to this Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Bank at a rate per annum equal to the rate at which borrowings are
available to the payee in its overnight federal funds market. It is further
understood and agreed among the Banks and the Agent that if the Agent shall
engage in any other transactions with the Company and shall have the benefit of
any collateral or security therefor which does not expressly secure the
obligations arising under this Agreement except by virtue of a so-called dragnet
clause or comparable provision, the Agent shall be entitled to apply any
proceeds of such collateral or security first in respect of the obligations
arising in connection with such other transaction before application to the
obligations arising under this Agreement.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 AMENDMENTS, ETC. (a) No amendment, modification, termination or
waiver of any provision of this Agreement nor any consent to any departure
therefrom shall be effective unless the same shall be in writing and signed by
the Required Banks and, to the extent any rights or duties of the Agent may be
affected thereby, the Agent, PROVIDED, HOWEVER, that either Bank may in its sole
discretion amend or discharge the Guaranty made in its favor.
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<PAGE> 46
(b) Any such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
8.2 NOTICES. (a) All notices and other communications hereunder shall be
in writing and shall be delivered or sent to the Company at 1450 Musicland
Drive, Franklin, Indiana 46131, Attention: Chief Financial Officer, Facsimile
No. (317) 738-0262, with a copy to Amcast at 7887 Washington Village Drive,
Dayton, Ohio 45459-3900, Attention: Chief Financial Officer, Facsimile No. (937)
291-7007, and to the Agent and the Banks at the respective addresses and numbers
for notices set forth on the signature pages hereof, or to such other address as
may be designated by the Company, the Agent or any Bank by notice to the other
parties hereto. All notices and other communications shall be deemed to have
been given at the time of actual delivery thereof to such address, or if sent by
facsimile, at the time of sending, or if sent by certified or registered mail,
postage prepaid, to such address, on the third day after the date of mailing,
PROVIDED, HOWEVER, that notices to the Agent shall not be effective until
received.
(b) Notices by the Company to the Agent with respect to
terminations or reductions of the Commitments pursuant to Section 2.2, requests
for Loans pursuant to Section 2.4, requests for continuations or conversions of
Loans pursuant to Section 2.7, and notices of prepayment pursuant to Section 3.1
shall be irrevocable and binding on the Company.
8.3 NO WAIVER BY CONDUCT; REMEDIES CUMULATIVE. No course of dealing on
the part of the Agent or any Bank, nor any delay or failure on the part of the
Agent or any Bank in exercising any right, power or privilege hereunder shall
operate as a waiver of such right, power or privilege or otherwise prejudice the
Agent's or such Bank's rights and remedies hereunder; nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any other right, power or privilege. No right or remedy conferred upon or
reserved to the Agent or any Bank under this Agreement, the Notes or any
Security Document is intended to be exclusive of any other right or remedy, and
every right and remedy shall be cumulative and in addition to every other right
or remedy granted thereunder or now or hereafter existing under any applicable
law. Every right and remedy granted by this Agreement, the Notes or any Security
Document or by applicable law to the Agent or any Bank may be exercised from
time to time and as often as may be deemed expedient by the Agent or any Bank
and, unless contrary to the express provisions of this Agreement, the Notes or
any Security Document, irrespective of the occurrence or continuance of any
Default or Event of Default.
8.4 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of the Company or any
Guarantor made herein or in any Security Document or in any certificate, report,
financial statement or other document furnished by or on behalf of the Company
or any Guarantor in connection with this Agreement shall be deemed to be
material and to have been relied upon by the Banks, notwithstanding any
investigation heretofore or hereafter made by any Bank or on such Bank's behalf,
and those covenants and agreements of the Company set forth in Section 3.6, 3.8
and 8.5 hereof shall survive the repayment in full of the Loans and the
termination of the Commitments.
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<PAGE> 47
8.5 EXPENSES. The Company agrees to pay, or reimburse the Agent for the
payment of, on demand, (i) the reasonable fees and expenses of Dickinson Wright
PLLC, counsel to the Agent, in the amount of $14,000 in connection with the
preparation, execution, and delivery of this Agreement, the Notes, and the
Security Documents, (ii) the reasonable fees and expenses of counsel to the
Agent in connection with advising the Agent as to its rights and
responsibilities with respect thereto, and in connection with any amendments,
waivers or consents in connection therewith, (iii) reasonable fees and expenses
of counsel to Asahi (not to exceed $7,000) in connection with the preparation,
execution, and delivery of this Agreement, the Notes, and the Security
Documents, (iv) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing or recording of this
Agreement, Notes, the Security Documents and the consummation of the
transactions contemplated hereby, and any and all liabilities with respect to or
resulting from any delay in paying or omitting to pay such taxes or fees, and
(v) all reasonable costs and expenses of the Agent and the Banks (including
reasonable fees and expenses of counsel and whether incurred through
negotiations, legal proceedings or otherwise) in connection with any Default or
Event of Default or the enforcement of, or the exercise or preservation of any
rights under, this Agreement or the Notes or any Security Document or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement.
8.6 SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, PROVIDED that the Company may not, without the prior consent of the
Required Banks, assign its rights or obligations hereunder or under the Notes or
any Security Document and the Banks shall not be obligated to make any Loan
hereunder to any entity other than the Company. With the prior written consent
of the Company, the Partners, the Guarantors, the Agent, and each other Bank,
any Bank may assign to any financial institution or institutions, and such
financial institution or institutions may further assign, all (but not less than
all) of such Bank's rights and benefits under this Agreement and the Notes and
the Security Documents. Notwithstanding the foregoing, each Bank may assign all
of its rights and benefits hereunder to any branch or other affiliate of such
Bank located within the United States upon prior written notice to the Company
and the Agent, without further consent, acknowledgment, or confirmation. To the
extent of any assignment, such assignee or assignees shall have the same rights
and benefits against the Company under Section 6.2(c) as it or they would have
had if such assignee or assignees were the Bank making the Loans to the Company
hereunder.
(b) The Agent from time to time in its sole discretion may
appoint agents for the purpose of servicing and administering this Agreement and
the transactions contemplated hereby and enforcing or exercising any rights or
remedies of the Agent provided under this Agreement, the Notes, any Security
Documents or otherwise. In furtherance of such agency, the Agent may from time
to time direct that the Company and the Guarantors provide notices, reports and
other documents contemplated by this Agreement (or duplicates thereof) to such
agent. The Company and each Guarantor consents to the appointment of such agent
and agrees to provide all such notices, reports and other documents and to
otherwise deal with such agent acting on behalf of the Agent in the same manner
as would be required if dealing with the Agent itself.
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<PAGE> 48
8.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.8 GOVERNING LAW. This Agreement is a contract made under, and shall be
governed by and construed in accordance with, the law of the State of Indiana
applicable to contracts made and to be performed entirely within such State and
without giving effect to choice of law principles of such State. The Company
further agrees that any legal action or proceeding with respect to this
Agreement, the Notes or any Security Document or the transactions contemplated
hereby may be brought in any court of the State of Indiana, or in any court of
the United States of America sitting in Indiana, and the Company submits to and
accepts generally and unconditionally the jurisdiction of those courts with
respect to its person and property, and irrevocably appoints its Chief Financial
Officer, whose address in Indiana is set forth in Section 8.2, as its agent for
service of process and irrevocably consents to the service of process in
connection with any such action or proceeding by personal delivery to such agent
or to the Company or by the mailing thereof by registered or certified mail,
postage prepaid to the Company at its address set forth in Section 8.2. Nothing
in this paragraph shall affect the right of the Banks and the Agent to serve
process in any other manner permitted by law or limit the right of the Banks or
the Agent to bring any such action or proceeding against the Company or its
property in the courts of any other jurisdiction. The Company irrevocably waives
any objection to the laying of venue of any such suit or proceeding in the above
described courts.
8.9 TABLE OF CONTENTS AND HEADINGS. The table of contents and the
headings of the various subdivisions hereof are for the convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
8.10 CONSTRUCTION OF CERTAIN PROVISIONS. If any provision of this
Agreement refers to any action to be taken by any person, or which such person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such person, whether or not expressly
specified in such provision.
8.11 INTEGRATION AND SEVERABILITY. This Agreement embodies the entire
agreement and understanding among the Company, the Agent, and the Banks, and
supersedes all prior agreements and understandings, relating to the subject
matter hereof. In case any one or more of the obligations of the Company under
this Agreement, the Notes or any Security Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining obligations of the Company shall not in any way be affected or
impaired thereby, and such invalidity, illegality or unenforceability in one
jurisdiction shall not affect the validity, legality or enforceability of the
obligations of the Company under this Agreement, the Notes or any Security
Document in any other jurisdiction.
8.12 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default or any event or
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<PAGE> 49
condition which with notice or lapse of time, or both, could become such a
Default or an Event of Default if such action is taken or such condition
exists.
8.13 INTENT OF THE PARTIES. By executing this Agreement and the Notes,
the parties have no intention of extinguishing or terminating the rights,
interests, or obligations of the Borrower under the Prior Credit Agreement and
the promissory notes issued thereunder, except as set forth in Section 2.5(k),
but have executed this Agreement with the intention of replacing the terms of
the Prior Credit Agreement with the terms contained in this Agreement.
8.14 INTEREST RATE LIMITATION. Notwithstanding any provision of this
Agreement, the Notes or any Security Document, in no event shall the amount of
interest paid or agreed to be paid by the Company exceed an amount computed at
the highest rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Agreement, the
Notes or any Security Document at the time performance of such provision shall
be due, shall involve exceeding the interest rate limitation validly prescribed
by law which a court of competent jurisdiction may deem applicable hereto, then,
IPSO FACTO, the obligations to be fulfilled shall be reduced to an amount
computed at the highest rate of interest permissible under applicable law, and
if for any reason whatsoever the Bank shall ever receive as interest an amount
which would be deemed unlawful under such applicable law such interest shall be
automatically applied to the payment of principal of the outstanding hereunder
(whether or not then due and payable) and not to the payment of interest, or
shall be refunded to the Company if such principal and all other obligations of
the Company to the Banks have been paid in full.
8.15 WAIVER OF JURY TRIAL. THE BANKS AND THE COMPANY, AFTER CONSULTING
OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHT EACH OF THEM MAY HAVE TO A TRIAL BY JURY IN
ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED
INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF EITHER OF THEM. NEITHER OF THE BANKS NOR THE COMPANY
SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN
WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY EITHER OF THE BANKS OR THE
COMPANY EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the day and year first above written.
CASTING TECHNOLOGY COMPANY
By: AMCAST CASTING TECHNOLOGIES,
INC., its General Partner
By: /s/ DOUGLAS D WATTS
------------------------------------
Its: Vice President, Finance
------------------------------
And
By: IZUMI, INC., its General Partner
By: /s/ TOMOAKI IZUMI
------------------------------------
Its: President
------------------------------
Address for Notices: BANK ONE, INDIANA, NATIONAL
One Indiana Square ASSOCIATION, Individually and as Agent
IN 1-7034
Indianapolis, Indiana 46266
Attention: Edward C. Hathaway By: /s/ EDWARD C. HATHAWAY
------------------------------------
Facsimile: (317) 266-6042 Its: First Vice President
Commitment Amount: $4,500,000 ------------------------------
Percentage of
Total Commitments: 60%
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<PAGE> 51
Address for Notices: THE ASAHI BANK, LTD.,
190 South LaSalle Street acting through its Chicago Branch
Suite 2350
Chicago, IL 60603
Attention: Noriki Nagase By /s/ Noriki Nagase
----------------------------------
Facsimile No.: (312) 606-1010 Its: Manager
Commitment Amount: $3,000,000
Percentage of
Total Commitments: 40%
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
THIS AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE, dated as of
August 26, 1999 (this "Guaranty"), made by AMCAST INDUSTRIAL CORPORATION, an
Ohio corporation (the "Guarantor"), in favor of BANK ONE, INDIANA, NATIONAL
ASSOCIATION, formerly known as NBD Bank, N.A. ("Bank One").
Casting Technology Company, an Indiana general partnership (the
"Company"), has entered into a Credit and Intercreditor Agreement of even date
herewith (such agreement, as it may be amended from time to time, the "Credit
Agreement"), with Bank One, as a lender, and The Asahi Bank, Ltd., as a lender
(collectively, the "Banks"), and Bank One as agent for the Banks (in such
capacity, the "Agent"), pursuant to which the Banks have agreed to provide
certain credit facilities to the Company in an aggregate principal amount not
to exceed $32,100,000, of which Bank One has committed under the Credit
Agreement to provide sixty percent of the Loans extended to the Company under
the Credit Agreement.
The Credit Agreement is a continuation and refinancing of a Credit and
Intercreditor Agreement dated July 28, 1995 (as amended, the "Prior Credit
Agreement"), among the Company, NBD Bank (which assigned its interest in the
Prior Credit Agreement to Bank One), The Asahi Bank, Ltd., and NBD Bank as
agent. In connection with the Prior Credit Agreement, the Guarantor entered
into a Guaranty Agreement-NBD dated as of July 28, 1995 (as amended, the "Prior
Guaranty"), in favor of NBD Bank.
Amcast Casting Technologies, Inc. ("Casting") is a general partner of
the Company, and the Guarantor is the parent corporation of Casting.
As a condition to the effectiveness of the Bank One's obligations
under the Credit Agreement, the Guarantor is required to enter into this
Guaranty, amending and restating the Prior Guaranty, to guarantee, among other
things, certain obligations of the Company to Bank One under the Credit
Agreement and the Notes held and to be held by Bank One.
The Guarantor has participated in the drafting and negotiation of the
Credit Agreement, the Notes, the Security Documents, and all other documents,
agreements, instruments and certificates furnished by or on behalf of the
Company in connection therewith (all of the foregoing being herein collectively
referred to as the "Operative Documents"), and the Guarantor has determined
that it is in its interest and to its financial benefit that the parties to the
Operative Documents enter into the transactions contemplated thereby.
THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, and as further consideration, and to induce Bank One to enter
into the transactions contemplated by the Operative Documents, the Guarantor
agrees with Bank One as follows:
1. GUARANTEE OF OBLIGATIONS. (a) The Guarantor (i) guarantees to Bank
One the prompt payment of the principal of the loans made to the Company by
Bank One as a lender under the Credit Agreement but in no event more than
$19,260,000 (the "Bank One Share of the Loans") and any and all accrued and
unpaid interest on the Bank One Share of the Loans when due, whether by
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scheduled maturity, acceleration or otherwise, all in accordance with the terms
of the Credit Agreement and the Notes held and to be held by Bank One, and (ii)
agrees to make prompt payment, on demand, of any and all costs and expenses
incurred by Bank One or the Agent in connection with enforcing the obligations
of the Guarantor hereunder, including without limitation, the reasonable fees
and disbursements of counsel (all of the foregoing being collectively referred
to as the "Guaranteed Obligations").
(b) If for any reason any of the Guaranteed Obligations shall not be
paid in full when the same becomes due and payable, the Guarantor undertakes to
pay forthwith each such amount to Bank One regardless of any defense or setoff
or counterclaim which the Company may have or assert, and regardless of any
other condition or contingency. If the Guarantor shall make any payments in
respect of the Guaranteed Obligations, the Guarantor shall be subrogated pro
tanto to the rights of Bank One in connection therewith, PROVIDED, HOWEVER,
that no such rights of subrogation or any other rights of the Guarantor against
the Company in connection with the transactions contemplated hereby shall
accrue or be exercisable by the Guarantor until all principal of and accrued
and unpaid interest on the Loans and other amounts due under the Operative
Documents shall have been paid in full to the Banks and the Agent and not be
subject to any revocation or rescission.
(c) The date and amount of advances of principal made by Bank One in
respect of the Loans and of each payment of principal and interest thereon
received by Bank One, and the aggregate principal amount thereof and accrued
interest thereon shown upon the books and records of Bank One, and in any
certificate delivered by Bank One to the Guarantor in respect thereof, shall be
prima facie evidence of the principal amount and accrued interest owing and
unpaid on the Loans. The failure to record any such information on such books
and records shall not, however, limit or otherwise affect the obligations of
the Company to repay the principal amount of the Loans together with accrued
interest thereon or the obligations of the Guarantor hereunder with respect to
the Guaranteed Obligations.
2. NATURE OF GUARANTY. Subject to paragraph 8(d), this Guaranty is an
absolute and irrevocable guaranty of payment and not a guaranty of collection
and is wholly independent of and in addition to other rights and remedies of
Bank One and is not contingent upon the pursuit by Bank One of any such rights
and remedies, such pursuit being waived by the Guarantor.
3. WAIVERS AND OTHER AGREEMENTS. The Guarantor unconditionally (a)
waives any requirement that Bank One, in the event of any default by the
Company, first make demand upon, or seek to enforce remedies against, the
Company before demanding payment under or seeking to enforce this Guaranty, (b)
covenants that this Guaranty will not be discharged except by full payment of
the Guaranteed Obligations, (c) agrees that this Guaranty shall remain in full
force and effect without regard to, and shall not be affected or impaired,
without limitation, by any invalidity, irregularity or unenforceability in
whole or in part of any of the Operative Documents, or any limitation on the
liability of the Company thereunder, or any limitation on the method or terms
of payment thereunder which may now or hereafter be caused or imposed in any
manner whatsoever, (d) waives diligence, presentment and protest with respect
to, and any notice of default or dishonor
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
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in the payment of any amount at any time payable by the Company under or in
connection with, any of the Operative Documents, and further waives any
requirement of notice of acceptance of, or other formality relating to, this
Guaranty and (e) agrees that the Guaranteed Obligations shall include any
amounts paid by the Company to Bank One which may be required to be returned to
the Company or to its representative or to a trustee, custodian or receiver for
the Company.
4. OBLIGATIONS ABSOLUTE. The obligations, covenants, agreements and
duties of the Guarantor under this Guaranty shall not be released, affected or
impaired by any of the following, whether or not undertaken with notice to or
consent of the Guarantor: (a) any assignment or transfer, in whole or in part,
of the Loans, or any of the Operative Documents, or (b) any waiver by Bank One
or by any other person of the performance or observance by the Company of any
of the agreements, covenants, terms or conditions contained in any of the
Operative Documents, or (c) any indulgence in or the extension of the time for
payment by the Company of any amounts payable under or in connection with any
of the Operative Documents, or of the time for performance by the Company of
any other obligations under or arising out of any of the Operative Documents,
or the extension or renewal thereof, or (d) the modification, amendment or
waiver (whether material or otherwise) of any duty, agreement or obligation of
the Company set forth in any of the Operative Documents (the modification,
amendment or waiver from time to time of the Credit Agreement, the Note or any
of the Security Documents to which the Company is a party being expressly
authorized without further notice to or consent of the Guarantor), or (e) the
voluntary or involuntary liquidation, sale or other disposition of all or
substantially all of the assets of the Company, or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings, affecting
the Company or any of its assets, or (f) the release of any security, if any,
for the obligations of the Company under any of the Operative Documents, or the
impairment of or failure to perfect an interest in any such security, or (g)
the merger or consolidation of the Company or the Guarantor with any other
person, or (h) the release or discharge of the Company or the Guarantor from
the performance or observance of any agreement, covenant, term or condition
contained in any of the Operative Documents, by operation of law, or (i) any
other cause whether similar or dissimilar to the foregoing which would release,
affect or impair the obligations, covenants, agreements or duties of the
Guarantor hereunder.
5. REPRESENTATIONS AND WARRANTIES. As of the date hereof and as of the
date of each Loan made by Bank One to the Company, the Guarantor represents and
warrants that:
(a) CORPORATE EXISTENCE AND POWER. The Guarantor is a
corporation duly organized, validly existing and in good standing under the
laws of State of Ohio and is duly qualified to do business in each additional
jurisdiction where such qualification is necessary under applicable law except
where the failure to so qualify would not have a material adverse effect on the
Guarantor. The Guarantor has all requisite corporate power to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted, and to execute and deliver this Guaranty and to engage in the
transactions contemplated by this Guaranty.
(b) CORPORATE AUTHORITY. The execution, delivery and
performance by the Guarantor of this Guaranty are within its corporate powers,
have been duly authorized by all
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
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necessary corporate action and are not in contravention of any law, rule or
regulation, or of any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of the Guarantor's
articles or code of regulations, or of any contract or undertaking to which the
Guarantor is a party or by which it or its property may be bound or affected.
(c) BINDING EFFECT. This Guaranty is the legal, valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity).
(d) SUBSIDIARIES. Annex I hereto correctly sets forth the
corporate name, jurisdiction of organization, and ownership percentage with
respect to each Subsidiary of the Guarantor. Each such Subsidiary and each
corporation becoming a Subsidiary of the Guarantor after the date hereof is and
will be duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, and is and will be duly qualified to do
business in each additional jurisdiction where such qualification is or may be
necessary under applicable law except where the failure to so qualify would not
have a material adverse effect on the Guarantor. Each Subsidiary of the
Guarantor has and will have all requisite power to own its properties and to
carry on its business as now being conducted and as proposed to be conducted.
All outstanding shares of capital stock of each class of each corporate
Subsidiary of the Guarantor have been and will be validly issued and are and
will be fully paid and nonassessable and, except as otherwise indicated in
Annex I hereto or disclosed in writing to Bank One from time to time, are and
will be owned, beneficially and of record, by the Guarantor or another
Subsidiary of the Guarantor free and clear of any liens, charges, encumbrances
or rights of others whatsoever.
(e) LITIGATION. Except as set forth on Exhibit A, there is no
action, suit or proceeding pending or, to the best of the Guarantor's
knowledge, threatened against or affecting the Guarantor or any of its
Subsidiaries before or by any court, governmental authority or arbitrator,
which if adversely decided might result, either individually or collectively,
in any material adverse change in the business, properties, operations or
conditions, financial or otherwise, of the Guarantor or any of its Subsidiaries
and, to the best of the Guarantor's knowledge, there is no basis for any such
action, suit or proceeding.
(f) FINANCIAL CONDITION. The consolidated balance sheet of
the Guarantor and its Subsidiaries and the consolidated statements of income,
retained earnings and changes in financial position of the Guarantor and its
Subsidiaries for the fiscal year ended August 31, 1998, and certified by Ernst
& Young LLP, independent certified public accountants, and the interim
consolidated balance sheet and interim consolidated statements of income,
retained earnings and changes in financial position of the Guarantor and its
Subsidiaries, as of or for the nine-month period, ended on May 30, 1999, copies
of which have been furnished to Bank One, fairly present the consolidated
financial position of the Guarantor and its Subsidiaries as at the respective
dates thereof, and the consolidated results of operations of the Guarantor and
its Subsidiaries for the respective periods indicated, all in accordance with
generally accepted accounting principles
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
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consistently applied (subject, in the case of said interim statements, to
year-end audit adjustments). There has been no material adverse change in the
business, properties, operations or condition, financial or otherwise, of the
Guarantor or any of its Subsidiaries since August 31, 1998.
(g) CONSENTS, ETC. No consent, approval or authorization of
or declaration, registration or filing with any governmental authority or any
nongovernmental person or entity, including without limitation any creditor or
equity holder of the Guarantor or any of its Subsidiaries, is required on the
part of the Guarantor in connection with the execution, delivery and
performance of this Guaranty or the transactions contemplated hereby or as a
condition to the legality, validity or enforceability of this Guaranty.
(h) TAXES. The Guarantor and its Subsidiaries have filed all
tax returns (federal, state and local) required to be filed and have paid all
taxes shown thereon to be due, including interest and penalties, except for
those that are being contested in good faith by appropriate proceedings as to
which adequate financial reserves have been established on their respective
books and records for payment thereof.
(i) TITLE TO PROPERTIES. Except as set forth in the financial
statements described in paragraph 5(f) or as otherwise disclosed in the
financial statements delivered to Bank One pursuant to paragraph 6(d), the
Guarantor and its Subsidiaries have good and marketable title to, and a valid
indefeasible ownership interest in, all of their respective properties and
assets, free and clear of any lien or security interest, except for (i) liens
for taxes not delinquent or for taxes being contested in good faith by
appropriate proceedings as to which adequate financial reserves have been
established on its books and records, and (ii) liens created in connection with
workers' compensation, unemployment insurance, and social security, or to
secure the performance of bids, tenders or contracts (other than for the
repayment of borrowed money), leases, statutory obligations, surety and appeal
bonds, and other obligations of like nature made in the ordinary course of
business.
6. COVENANTS. The Guarantor agrees that, until the Maturity Date and
thereafter until payment in full of the principal of and accrued interest on
the Notes held by Bank One, and the performance of all other obligations of the
Company to Bank One under the Credit Agreement, unless Bank One shall otherwise
consent in writing:
(1) PRESERVATION OF CORPORATE EXISTENCE, ETC. The Guarantor
shall, and shall cause each of its Subsidiaries to preserve and maintain its
existence and qualify and remain qualified to do business in good standing in
each jurisdiction in which such qualification is necessary under applicable law
except where the failure to so qualify would not have a material adverse effect
on the Guarantor.
(b) COMPLIANCE WITH LAWS, ETC. The Guarantor shall, and shall
cause each of its Subsidiaries to comply in all material respects with all
applicable laws, rules, regulations and orders of any governmental authority,
noncompliance with which could materially and adversely affect the financial
condition or operations of the Guarantor or any of its Subsidiaries or the
legality, validity
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
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or enforceability of this Guaranty (such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property), except to the
extent that compliance with any of the foregoing is being contested in good
faith and by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the
Guarantor or such Subsidiary.
(c) MAINTENANCE OF INSURANCE. The Guarantor shall, and shall
cause each of its Subsidiaries to maintain insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar properties similarly situated.
(d) REPORTING REQUIREMENTS. The Guarantor shall furnish to
Bank One the following:
(i) Within 45 days after the close of each of the
first three quarterly accounting periods in each fiscal year of the
Guarantor, the consolidated statements of financial condition of the
Guarantor as at the end of such quarterly period and the related
consolidated statements of operations, retained earnings and cash
flows for the elapsed portion of the fiscal year ended with the last
day of such quarterly period, all in reasonable detail, prepared in
accordance with generally accepted accounting principles consistently
applied throughout the period involved (except for such changes as are
disclosed in such financial statements or in the notes thereto and
concurred in by the independent certified public accountants) and with
the prior year and certified by the chief financial officer of the
Guarantor subject to customary year-end audit adjustments;
(ii) Within 90 days after the close of each fiscal
year of the Guarantor, the consolidated statements of financial
condition of the Guarantor as at the end of such fiscal year, the
related consolidated statements of operations, shareholders equity and
cash flows for such fiscal year, in each case setting forth
comparative figures of the preceding fiscal year, all in reasonable
detail, prepared in accordance with generally accepted accounting
principles consistently applied throughout the period involved (except
for such changes as are disclosed in such financial statements or in
the notes thereto and concurred in by the independent certified public
accounts) and with the prior year and accompanied by an opinion
relating thereto of independent certified public accountants of
recognized standing selected by the Guarantor;
(iii) At the time of the delivery of the financial
statements required by paragraph 6(d)(ii), a certificate of the
independent public accountants stating that, in making the examination
necessary for expressing an opinion on such financial statements,
nothing came to their attention that caused them to believe that there
is in existence any event of default or, if in the opinion of such
accountants any event of default exists, the certificate shall state
its nature and the length of time it has existed;
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(iv) At the time of delivery of the financial
statements required by paragraphs 6(d)(i) and 6(d)(ii), a certificate
of the chief financial officer of the Guarantor to the effect either
that such officer is aware of no event of default or, if he is aware
that any event of default exists, specifying the nature thereof, its
period of existence and the action that is proposed to be taken with
respect thereto, and also setting forth the calculations required to
establish whether the Guarantor was in compliance with the provisions
of paragraphs 6(f), 6(g) and 6(h) as at the end of such fiscal period;
(v) Promptly and in any event within three Business
Days after the Guarantor obtains knowledge thereof, notice of (i) any
event which constitutes an event of default (such notice to specify
the nature thereof, the period of existence thereof and the action
that is proposed to be taken with respect thereto) and (ii) any
litigation or governmental proceeding pending against the Company or
any Subsidiary as to which there is a reasonable possibility that it
might materially and adversely affect the business, operations or
condition (financial or otherwise) of the Guarantor and its
Subsidiaries taken as a whole;
(vi) Promptly, copies of all regular and periodic
financial and other reports, if any, which the Company or any of its
Subsidiaries shall file with the Securities and Exchange Commission or
any governmental agencies substituted therefor;
(vii) From time to time, and promptly upon each
request, such other information or documents as Bank One may
reasonably request;
PROVIDED, HOWEVER, that, if the Guarantor has provided Bank One with
information under the Amcast Credit Agreement equivalent to that required under
subsections (i) through (iv) above, the Guarantor need not separately provide
such information to Bank One under this Agreement.
(e) ACCESS TO RECORDS, BOOKS, ETC. The Guarantor shall, and
shall cause each of its Subsidiaries to, at any reasonable time and from time
to time, permit Bank One or any agents or representatives thereof to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Guarantor and its Subsidiaries, and to discuss the
affairs, finances and accounts of the Guarantor and its Subsidiaries with their
respective officers and employees.
(f) CONSOLIDATION, MERGER AND SALE OF ASSETS. The Guarantor
shall not nor shall it permit any of its Subsidiaries to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time) assets constituting (in the aggregate) 25% or
more of the value of the Guarantor's Consolidated Total Assets (as determined
in accordance with generally accepted accounting principles consistently
applied), PROVIDED that (i) the Guarantor may enter into a merger transaction
if it is the surviving entity and no event of default would result therefrom,
and (ii) any Subsidiary may merge into, or sell, convey, lease or otherwise
dispose of any or all of its
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property to the Guarantor, another Subsidiary or any Person that after giving
effect to the foregoing shall constitute a Subsidiary, PROVIDED that no event
of default would result therefrom.
(g) CONSOLIDATED NET WORTH. The Guarantor will at all times
keep and maintain Consolidated Net Worth at an amount not less than (i)
$90,000,000 plus (ii) 25% of the Guarantor's Consolidated Net Earnings computed
on a cumulative basis for each of the elapsed fiscal years ending August 31,
1995, through August 31, 1997, plus (iii) 50% of the Guarantor's Consolidated
Net Earnings computed on a cumulative basis for each of the elapsed fiscal
years ending August 31, 1998, through August 31, 1999, plus (iii) 50% of the
Guarantor's Consolidated Net Earnings computed on a cumulative basis for each
of the elapsed fiscal quarters ending after August 31, 1999, such calculation
to be revised at the end of each fiscal quarter, PROVIDED that, notwithstanding
that Consolidated Net Earnings for any such elapsed fiscal quarter may be a
deficit figure, no reductions as a result thereof shall be made in the sum to
be maintained pursuant hereto.
(h) ADDITIONAL INDEBTEDNESS. The Guarantor will not, and will
not permit any Subsidiary to create, assume, incur or guarantee any
Indebtedness except (i) Indebtedness incurred under this Agreement, (ii) any
Indebtedness which is outstanding as of February 26, 1995, as shown on Exhibit
A hereto, and (iii) any other Indebtedness if after giving effect to the
creation, incurrence, assumption or guarantee thereof, Indebtedness would not
exceed 60% of Consolidated Capitalization.
(i) CHANGES IN BUSINESS. The Guarantor and its Subsidiaries
will not enter into any business which is substantially different from that
presently conducted by them. For purposes of this subparagraph, "substantially
different" means "outside of the metal manufacturing or processing business."
(j) ADDITIONAL LIENS. The Guarantor will not, nor will it
permit any of its Subsidiaries to, create, assume or incur, directly or
indirectly, any Lien on any of its properties or assets except as permitted
under the Amcast Credit Agreement as in effect on the date hereof.
7. EVENTS OF DEFAULT. The occurrence of any of the following events or
conditions shall be deemed an "event of default" hereunder unless waived by
Bank One pursuant to paragraph 9:
(a) An event of default under that certain Credit Agreement
dated as of August 14, 1997, among the Guarantor, various Financial
Institutions, and Key Bank, National Association, individually and as agent, as
such agreement may be amended, restated, or refinanced from time to time (the
"Amcast Credit Agreement"); or
(b) The Guarantor shall fail to pay when due any amount
payable under paragraph 1 hereof; or
(c) Any representation or warranty made by the Guarantor in
paragraph 5 hereof or in any other document or certificate furnished by or on
behalf of the Guarantor in connection with this Guaranty shall prove to have
been incorrect in any material respect when made
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or any material provision of this Guaranty shall at any time for any reason
cease to be valid and binding and enforceable against the Guarantor, or the
validity, binding effect or enforceability thereof shall be contested by any
person, or the Guarantor shall deny that it has any or further liability or
obligation under this Guaranty, or this Guaranty shall be terminated,
invalidated or set aside, or be declared ineffective or inoperative or in any
way cease to give or provide to Bank One the benefits purported to be created
thereby; or
(d) The Guarantor shall default in the due performance or
observance by it of any term, covenant or agreement to be performed or observed
pursuant to paragraph 6 (other than paragraph 6(d)), and such default shall
continue for a period of five days after the Company has knowledge or should
have knowledge of such default; or
(e) The Guarantor shall default in any material respect in
the due performance or observance by it of any term, covenant or agreement
(other than those referred to in subparagraphs (a) through (d) of this
paragraph 7, inclusive) contained in this Agreement and such default shall
continue unremedied for a period of 30 days after the Guarantor shall have
become aware of the existence of such default; or
(f) The Company or any of its Subsidiaries (each a
"Designated Party") shall default in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any
Indebtedness (other than under the Credit Agreement), including any and all
interest and fees accrued to the date of default, the aggregate amount of which
was at least $5,000,000 at the time of the default, or any Designated Party
shall default in the performance or observance of any obligation or condition
with respect to any such other Indebtedness if the effect of such default
(after giving effect to any applicable grace period) is to accelerate the
maturity of any such Indebtedness or to permit the holder or holders thereof,
or any trustee or agent for such holders, to cause such Indebtedness to become
due and payable prior to its expressed maturity; or
(g) A judgment or order for the payment of money (if the
aggregate amount involved is at least $1,000,000 in excess of the amount of all
insurance applicable thereto), or any other judgment or order (whether or not
for the payment of money), shall be rendered against or shall affect the
Guarantor or any of its Subsidiaries which causes or could cause a material
adverse change in the business, properties, operations or condition, financial
or otherwise, of the Guarantor or any of its Subsidiaries or which does or
could have a material adverse effect on the legality, validity or
enforceability of this Guaranty, and either (i) such judgement or order shall
have remained unsatisfied for a period of 30 days and the Guarantor or such
Subsidiary shall not have taken action necessary to stay enforce thereof, by
reason of pending appeal or otherwise, prior to the expiration of the
applicable period of limitations for taking such action or, if such action
shall have been taken, a final order denying such stay shall have been
rendered, or (ii) enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order; or
(h) The occurrence of a Reportable Event that results in or
there is a reasonable possibility that it could result in liability of the
Guarantor, any Subsidiary of the Guarantor or any of their ERISA Affiliates to
the PBGC or to any Plan which is material and adverse to any of them and
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such Reportable Event is not corrected within thirty (30) days after the
occurrence thereof; or the occurrence of any Reportable Event which there is a
reasonable possibility that it could constitute grounds for termination of any
Plan of the Guarantor, its Subsidiaries or their ERISA Affiliates by the PBGC
or for the appointment by the appropriate United States District Court of a
trustee to administer any such Plan and such Reportable Event is not corrected
within thirty (30) days after the occurrence thereof; or the filing by the
Guarantor, any Subsidiary of the Guarantor or any of their ERISA Affiliates of
a notice of intent to terminate a Plan or the institution of other proceedings
to terminate a Plan which is material and adverse to any of them; or the
Guarantor, any Subsidiary of the Guarantor or any of their ERISA Affiliates
shall fail to pay when due any liability to the PBGC or to a Plan which is
material and adverse to any of them; or the PBGC shall have instituted
proceedings to terminate, or to cause a trustee to be appointed to administer,
any Plan of the Guarantor, its Subsidiaries or their ERISA Affiliates; or any
person engages in a Prohibited Transaction with respect to any Plan which
results in or there is a reasonable possibility that it could result in
liability of the Guarantor, any Subsidiary of the Guarantor, any of their ERISA
Affiliates, any Plan of the Company, its Subsidiaries or their ERISA
Affiliates, or fiduciary of any such Plan which is material and adverse to any
of them; or failure by the Guarantor, any Subsidiary of the Guarantor or any of
their ERISA Affiliates to make a required installment or other payment to any
Plan within the meaning of Section 302(f) of ERISA or Section 412(n) of the
Code that results in or there is a reasonable possibility that it could result
in liability of the Guarantor, any Subsidiary of the Guarantor or any of their
ERISA Affiliates to the PBGC or any Plan which is material and adverse to any
of them; or the withdrawal of the Guarantor, any of its Subsidiaries or any of
their ERISA Affiliates from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(9a)(2) of ERISA; or the
Guarantor, any of its Subsidiaries or any of their ERISA Affiliates becomes an
employer with respect to any Multiemployer Plan without the prior written
consent of Bank One; or
(i) The Guarantor or any of its Subsidiaries shall be
dissolved or liquidated (or any judgment, order or decree therefor shall be
entered), or shall generally not pay its debts as they become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors, or shall institute, or there
shall be instituted against the Guarantor or any of its Subsidiaries, any
proceeding or case seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtor or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
assets, rights, revenues or property, and, if such proceeding is instituted
against the Guarantor or such Subsidiary and is being contested by the
Guarantor or such Subsidiary, as the case may be, in good faith by appropriate
proceedings, such proceedings shall remain undismissed or unstayed for a period
of 60 days; or the Guarantor or such Subsidiary shall take any action
(corporate or other) to authorize or further any of the actions described above
in this subsection; or
(j) OWNERSHIP. The outstanding capital stock of all classes
of the Guarantor entitled to voting power of 25% or more, in the aggregate, for
the election of the Guarantor's
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
<PAGE> 62
directors is owned, or directly or indirectly controlled, by any one Person or
by an Associate of such Person.
8. REMEDIES. (a) Upon the occurrence and during the continuance of
such event of default, Bank One may, in addition to the remedies provided in
Section 6.2 of the Credit Agreement, enforce its rights either by suit in
equity, or by action at law, or by other appropriate proceedings, whether for
the specific performance (to the extent permitted by law) of any covenant or
agreement contained in this Guaranty or in aid of the exercise of any power
granted in this Guaranty and may enforce payment under this Guaranty and any of
its other rights available at law or in equity.
(b) Upon the occurrence and during the continuance of any
event of default hereunder, Bank One is authorized at any time and from time to
time, without notice to the Guarantor (any requirement for such notice being
expressly waived by the Guarantor) to set off and apply against any and all of
the obligations of the Guarantor now or hereafter existing under this Guaranty
any deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by Bank One to or for the
credit or the account of the Guarantor and any property of the Guarantor from
time to time in possession of Bank One, irrespective of whether or not Bank One
shall have made any demand hereunder and although such obligations may be
contingent and unmatured. The rights of Bank One under this subparagraph (b)
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which it may have.
(c) To the extent that it lawfully may, the Guarantor agrees
that it will not at any time insist upon or plead, or in any manner whatever
claim or take any benefit or advantage of any applicable present or future
stay, extension or moratorium law, which may affect observance or performance
of the provisions of this Guaranty, the Credit Agreement, the Notes or any
Security Document; nor will it claim, take or insist upon any benefit or
advantage of any present or future law providing for the evaluation or
appraisal of any security for its obligations hereunder or the Company under
the Credit Agreement and under the Notes prior to any sale or sales thereof
which may be made under or by virtue of any instrument governing the same; nor
will it, after any such sale or sales, claim or exercise any right, under any
applicable law, to redeem any portion of such security so sold.
(d) Notwithstanding anything to the contrary contained
herein, after an Izumi Guarantor Default has occurred and during the related
Forbearance Period, Bank One shall not seek to collect from the Guarantor any
amounts due with respect to the Notes under paragraph 1, and no event of
default shall be deemed to have occurred under paragraph 7(b) because such
amounts have not been paid.
9. AMENDMENTS, ETC. This Guaranty may be amended from time to time and
any provision hereof may be waived by the parties hereto. No such amendment or
waiver of any provision of this Guaranty nor consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by Bank One, and then such
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
<PAGE> 63
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
10. NOTICES. All notices and other communications hereunder shall be
in writing and shall be delivered or sent to the Guarantor at 7887 Washington
Village Drive, P.O. Box 98, Dayton, Ohio 45401-0098, Attention: Chief Financial
Officer, Facsimile No. 513-291-7005, to Bank One at One Indiana Square,
IN1-7034, Indianapolis, Indiana 46266, Attention: Edward C. Hathaway, or to
such other address as may be designated by the Guarantor and Bank One by notice
to the other party hereto. All notices and other communications shall be deemed
to have been given at the time of actual delivery thereof to such address, or
if sent by certified or registered mail, postage prepaid, to such address, on
the third day after the date of mailing, or in the case of telex notice, upon
receipt of the appropriate answerback, PROVIDED, HOWEVER, that notices to Bank
One shall not be effective until received.
11. CONDUCT NO WAIVER; REMEDIES CUMULATIVE. The obligations of the
Guarantor under this Guaranty are continuing obligations and an additional
cause of action shall arise in respect of each event of default hereunder. No
course of dealing on the part of Bank One, nor any delay or failure on the part
of Bank One in exercising any right, power or privilege hereunder shall operate
as a waiver of such right, power or privilege or otherwise prejudice Bank One's
rights and remedies hereunder; nor shall any single or partial exercise thereof
preclude any further exercise thereof or the exercise of any other right, power
or privilege. No right or remedy conferred upon or reserved to Bank One under
this Agreement is intended to be exclusive of any other right or remedy, and
every right and remedy shall be cumulative and in addition to every other right
or remedy given hereunder or now or hereafter existing under any applicable
law. Every right and remedy given by this Agreement or by applicable law to
Bank One may be exercised from time to time and as often as may be deemed
expedient by Bank One.
12. RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of the Guarantor made
herein or in any certificate or other document delivered pursuant hereto shall
be deemed to be material and to have been relied upon Bank One, notwithstanding
any investigation heretofore or hereafter made by Bank One or on Bank One's
behalf.
13. SUCCESSORS AND ASSIGNS. The rights and remedies of Bank One
hereunder shall inure to the benefit of, and the duties and obligations of the
Guarantor hereunder shall be binding upon, the parties hereto and their
respective successors and assigns.
14. GOVERNING LAW. This Guaranty is a contract made under, and the
rights and obligations of the parties hereunder shall be governed by and
construed in accordance with, the laws of the State of Indiana applicable to
contracts to be made and performed entirely with such State.
15. DEFINITIONS; HEADINGS. As used herein the following terms shall
have the following respective meanings:
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
<PAGE> 64
"AMCAST CREDIT AGREEMENT": shall have the meaning ascribed to
it in paragraph 7(a).
"ASSOCIATE" shall mean any person which, directly or
indirectly, controls or is controlled by or is under common control with
another person and for the purposes of this definition, "control", including
"controlled by" and "under common control with", means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities or
by contract or otherwise.
"CONSOLIDATED CAPITALIZATION" means the sum of Funded
Indebtedness of the Guarantor plus Consolidated Net Worth.
"CONSOLIDATED NET EARNINGS" means for any period the net
income of the Company and its Subsidiaries for such period, determined in
accordance with generally accepted accounting principles consistently applied,
excluding (a) extraordinary items, and (b) any equity interest of the Company
on the unremitted earnings of any corporation which is not a Subsidiary.
"CONSOLIDATED NET WORTH" means, as of the date of any
determination thereof, the amount of the capital stock accounts (net of
treasury stock, at cost), plus (or minus, in the case of a deficit) the surplus
in retained earnings of the Guarantor and its Subsidiaries as determined in
accordance with generally accepted accounting principles consistently applied.
"CONSOLIDATED TOTAL ASSETS" means at any time the total
assets of the Guarantor and its Subsidiaries determined on a consolidated
basis.
"FUNDED INDEBTEDNESS" means all short-term and long-term
interest-bearing Indebtedness, including but not limited to all amounts
outstanding under the Amcast Credit Agreement and the Guarantor's short-term
lines, original issue discount debt and capitalized leases.
"IZUMI GUARANTOR DEFAULT" means a Guarantor Default declared
under the Credit Agreement by reason of any event of default under any Guaranty
other than the Guaranty-Bank One.
"LIEN" shall have the meaning ascribed thereto in the Amcast
Credit Agreement.
"NET WORTH" of the Guarantor means the sum of its capital
stock, capital in excess of par or stated value of shares of its capital stock,
retained earnings, and any other account which, in accordance with generally
accepted account principles, constitutes stockholders' equity, LESS treasury
stock.
Terms used but not defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement. The headings of the various subdivisions
hereof are for convenience of reference only and shall in no way modify any of
its terms or provisions hereof.
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
<PAGE> 65
16. CONSTRUCTION OF CERTAIN PROVISIONS. All computations required
hereunder and all financial terms used herein shall be made or construed in
accordance with generally accepted accounting principles unless such principles
are inconsistent with the express requirements of this Guaranty. If any
provision of this Guaranty refers to any action to be taken by any person, or
which such person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such person, whether or
not expressly specified in such provision.
17. INTEGRATION AND SEVERABILITY. This Guaranty embodies the entire
agreement and understanding between the Guarantor and Bank One and supersedes
all prior all agreements and understandings relating to the subject matter
hereof. In case one or more of the obligations of the Guarantor under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining obligations of the
Guarantor shall not in any way be affected or impaired thereby, and such
invalidity, illegality or unenforceability in one jurisdiction shall not affect
the validity, legality or enforceability of the obligations of the Guarantor
under this Guaranty in any other jurisdiction.
18. WAIVER OF JURY TRIAL. Bank One and the Guarantor, after consulting
or having had the opportunity to consult with counsel, knowingly, voluntarily
and intentionally waive any right any of them may have to a trial by jury in
any litigation based upon or arising out of this Guaranty or any related
instrument or agreement or any of the transactions contemplated by this
Guaranty or any course of conduct, dealing, statements (whether oral or
written) or actions of either of them. Neither Bank One nor the Guarantor shall
seek to consolidate, by counterclaim or otherwise, any such action in which a
jury trial has been waived with any other action in which a jury trial cannot
be or has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either Bank One or the Guarantor
except by a written instrument executed by each of them.
[Remainder of page intentionally left blank.]
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
<PAGE> 66
IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered as of the day and year first above written.
AMCAST INDUSTRIAL CORPORATION
By: /s/ DOUGLAS D. WATTS
-----------------------------
Its: Vice President, Finance
----------------------------
BANK ONE, INDIANA, NATIONAL
ASSOCIATION
By: /s/ EDWARD C. HATHAWAY
-----------------------------
Its: First Vice President
----------------------------
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AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
<PAGE> 67
ANNEX I TO
GUARANTY AGREEMENT - BANK ONE
SUBSIDIARIES
------------
Percentage of
Name of Jurisdiction Ownership by Company
Subsidiary of Organization or Other Subsidiaries
- ---------- --------------- ---------------------
- -------------------------------------------------------------------------------
EXHIBIT A TO
GUARANTY AGREEMENT - BANK ONE
OUTSTANDING INDEBTEDNESS
------------------------
LITIGATION
----------
-16-
AMENDED AND RESTATED GUARANTY AGREEMENT - BANK ONE
<PAGE> 1
EXHIBIT 10.12
AMCAST
INDUSTRIAL CORPORATION
1999 DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1999 Director Stock Option Plan (the "Plan") is to
encourage increased stock ownership of Amcast Industrial Corporation (the
"Company") by members of the Board of directors of the Company who are not
employees of the Company or any of its Subsidiaries and whose continued services
as directors are considered important to the Company's continued progress. The
Plan's additional purpose is to benefit the Company by providing such directors
with a further incentive to continue as directors of the Company and increase
shareholder value.
2. DEFINITIONS
(a) "Board" means the Board of Directors of the Company.
(b) "Company" means Amcast Industrial Corporation, an Ohio corporation.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Fair Market Value" means the mean of the high and low sales prices
of a Share on the date when the value of a Share is to be determined, as
reported on the New York Stock Exchange Composite Transaction Tape; or, if no
sale is reported for such date, then on the next preceding date on which a sale
is reported; or, if the Shares are no longer listed on such exchange, the
determination of such value shall be made by the Board in accordance with
applicable provisions of the Code and related regulations promulgated under the
Code.
(e) "Option" means a nonqualified stock option that is not entitled to
special tax treatment under Section 422A of the Code.
(f) "Outside Director" means a director of the Company who is not
employed by the Company or a Subsidiary of the Company.
(g) "Shares" means the Common Shares of the Company.
(h) "Subsidiary" means any company more than 50 percent of the voting
stock of which is owned or controlled, directly or indirectly, by the Company.
3. SHARES SUBJECT TO THE PLAN
(a) MAXIMUM NUMBER. The maximum number of Shares that may be subject to
Options granted pursuant to the Plan shall be one hundred fifty thousand
(150,000), subject to adjustment in accordance with Subsection 3(b). The Shares
which may be issued pursuant to Options may be authorized and unissued Shares or
Shares held in the Company's treasury. In the event of an expiration,
termination, or cancellation of any Option granted under the Plan without
<PAGE> 2
the issuance of Shares, the Shares subject to such Option shall no longer be
charged against the 150,000 Share maximum and may again be used for new Options.
(b) RECAPITALIZATION ADJUSTMENT. In the event of any change affecting
the Shares by reason of any share dividend or split, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other corporate
change, or any distributions to a holder of Shares other than cash dividends,
the Committee shall make such adjustment, if any, as it may deem appropriate to
avoid dilution in the number and kind of shares authorized for issuance under
the Plan, in the number and kind of shares covered by Options, and in the option
price of outstanding Options.
4. ADMINISTRATION
The Plan shall be administered by the Board. The Board shall have all
the powers vested in it by the terms of the Plan, such powers to include
authority (within the limitations described herein) to prescribe the form of the
agreement embodying awards of Options made under the Plan. Grants of Options
under the Plan shall be automatic as provided in Section 6(a). The Board shall,
subject to the provisions of the Plan, have the power to construe the Plan, to
determine all questions arising thereunder, and to adopt and amend such rules
and regulations for the administration of the Plan as it may deem desirable. Any
decision of the Board in the administration of the Plan, as described herein,
shall be final and conclusive. No member of the Board shall be liable for any
action taken or decision made in good faith relating to the Plan or any Option.
5. ELIGIBILITY
Each Outside Director of the Company shall be eligible to participate
in the Plan.
6. TERMS AND CONDITIONS OF OPTIONS
Each option granted under the Plan shall be evidenced by a signed
written agreement in such form as the Board shall prescribe from time to time in
accordance with the Plan, and shall comply with the following terms and
conditions:
(a) AUTOMATIC GRANT OF OPTIONS. On the first business day of January of
each year, each Outside Director who is a director of the Company on such date
shall automatically be granted an Option for one thousand five hundred (1,500)
Shares. All Options granted under the Plan shall be nonqualified stock options.
The purchase price of a Share under each Option shall be the Fair Market Value
of a Share on the date of grant.
(b) EXERCISABILITY AND PERIOD OF OPTION. Each Option shall become first
exercisable one year after the date upon which it was granted, provided,
however, that any Option granted pursuant to the Plan shall, if not then
exercisable, become exercisable in full upon the retirement of the Outside
Director because of age ("Retirement") or total and permanent disability (as
determined in the sole discretion of the Board), or upon the death of the
Outside Director. No Option shall be exercisable after the expiration of ten
(10) years from the date upon which such Option is granted. Each Option shall be
subject to termination before its date of expiration as provided in Section 7.
<PAGE> 3
(c) NOTICE OF EXERCISE AND PAYMENT. An Option granted under the Plan
may be exercised by the optionee giving written notice of exercise to the
Secretary of the Company. The Option price for Shares purchased shall be paid in
full at the time such notice is given. An Option shall be deemed exercised on
the date the Secretary receives written notice of exercise, together with full
payment for the Shares purchased. The Option price shall be paid to the Company
either in cash, by delivery to the Company of Shares already owned by the
optionee or in any combination of cash and such Shares. In the event
already-owned Shares are used to pay all or a portion of the Option price, the
amount credited to payment of the Option price shall be the Fair Market Value of
the already-owned Shares on the date the Option is exercised.
(d) FRACTIONAL SHARES. No fractional Shares shall be issued pursuant to
the exercise of an Option, nor shall any cash payment be made in lieu of
fractional Shares.
(e) OPTIONS NONTRANSFERABLE. Each Option granted under the Plan shall,
by its terms, be nontransferable otherwise than by will or the laws of descent
and distribution, and an Option may be exercised, during the lifetime of the
Outside Director, only by such Outside Director or, if permissible under
applicable law, by the Outside Director's guardian or legal representative. No
Option or interest therein may be transferred, assigned, pledged, or
hypothecated by the optionee during his or her lifetime whether by operation of
law or otherwise, or be made subject to execution, attachment, or similar
process.
7. TERMINATION OF SERVICE
(a) TERMINATION OF SERVICE OTHER THAN DUE TO RETIREMENT OR DEATH. In
the event that an Outside Director shall cease to be a director, other than by
reason of Retirement or death, then the Outside Director may exercise the Option
during the nine (9)-month period following such termination, but, in no event,
after the expiration of the Option. In the event that the Option is not
exercised during the nine (9)-month period following termination, it shall
expire at the end of such nine (9)-month period. In the event that an Outside
Director ceases to be a director other than by reason of Retirement or death,
and then dies during the nine (9)-month period following such termination of
service as a director, then the Option may be exercised by a legatee or legatees
of the Outside Director under his last will, or by his personal representatives
or distributees, at any time within a period of one year after the Outside
Director's death, but, in no event, after expiration of the Option. In the event
that the Option is not exercised during the one-year period after the Outside
Director's death, then it shall expire at the end of such one-year period.
(b) RETIREMENT. In the event that an Outside Director shall cease to be
a director because of Retirement, then the Outside Director may exercise the
Option at any time during the remaining term of the Option. In the event that an
Outside Director dies following Retirement, then the Option theretofore granted
to the Outside Director may be exercised by a legatee or legatees of the Outside
Director under his last will, or by his personal representatives or
distributees, at any time during the remaining term of the Option.
(c) DEATH. In the event that an Outside Director shall cease to be a
director because of death, then the Option theretofore granted to the Outside
Director may be exercised by a legatee or legatees of the Outside Director under
his last will, or by his personal representatives or distributees, at any time
during the remaining term of the Option.
<PAGE> 4
8. LIMITATION OF RIGHTS
Neither the Plan, nor the granting of an Option nor any other action
taken pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that the Company will retain an Outside
Director for any period of time, or at any particular rate of compensation.
9. COMPLIANCE WITH LAWS AND EXCHANGE REQUIREMENTS
No Option shall be granted and no Shares shall be issued in connection
with any Option unless the Option and the issuance and delivery of Shares upon
exercise of the Option shall comply with all relevant provisions of state and
federal law, including, without limitation, the Securities Act of 1933, the
Securities Exchange Act of 1934, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed.
10. AMENDMENT AND TERMINATION OF PLAN
(a) AMENDMENT. The Board may from time to time amend the Plan, or any
provision thereof, in such respects as the Board may deem advisable.
(b) TERMINATION. The Board may at any time terminate the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any amendment or the
termination of the Plan shall not adversely affect any Option previously granted
and such Option shall remain in full force and effect as if the Plan had not
been amended or terminated.
11. NOTICES
Each notice relating to the Plan shall be in writing and delivered in
person or by certified or registered mail to the proper address. Each notice to
the Board shall be addressed as follows: Amcast Industrial Corporation, 7887
Washington Village Drive, Dayton, Ohio 45459, Attention: Secretary. Each notice
to a participant shall be addressed to the participant at the address of the
participant maintained by the Company on its books and records. Anyone to whom a
notice may be given under this Plan may designate a new address by written
notice to the other party to that effect.
12. BENEFITS OF PLAN
This Plan shall inure to the benefit of and be binding upon each
successor of the Company. All rights and obligations imposed upon a participant
and all rights granted to the Company under this Plan shall be binding upon the
participant's heirs, legal representatives, and successors.
13. PRONOUNS AND PLURALS
All pronouns shall be deemed to refer to the masculine, feminine,
singular or plural, as the identity of the person or persons may require.
<PAGE> 5
14. EFFECTIVE DATE AND TERM OF PLAN
The plan shall become effective January 1, 1999. Unless sooner
terminated under Section 10, the Plan shall be in effect for a period of ten
years and automatically terminate on the tenth anniversary of its Effective
Date.
<PAGE> 1
EXHIBIT 10.13
AMCAST INDUSTRIAL CORPORATION
NONQUALIFIED SUPPLEMENTARY BENEFIT PLAN
Article I. PURPOSE AND DEFINITIONS
1.1 PURPOSE - In order to permit all employees of the Company to
earn equal and full credit for all years of service to the Company and to cause
all employee's pensions to be calculated based on the employee's total Income as
an employee of the Company, the Company has adopted the following supplemental
retirement plan (the "Plan").
1.2 ACTUARIAL EQUIVALENT - A benefit equal in value to the benefit
for which it is substituted as determined actuarially on the basis of such rates
of interest and rates of mortality herein set forth. Actuarial Equivalent under
this Plan will be calculated assuming an investment return based on the PBGC
interest rate in effect on the first day of the year in which the retirement
occurs and the UP-1984 Mortality Table.
1.3 COMPANY - Amcast Industrial Corporation, an Ohio corporation,
and its divisions and subsidiaries.
1.4 EXECUTIVE PARTICIPANT - A Participant who is, as of June 1,
1999, the Chairman of the Board of Directors of the Company or a corporate
officer of the Company who reports directly to the Chairman or is the President
of Elkhart Products Corporation.
1.5 INCOME - The total compensation paid during employment to a
Participant by the Company while he or she is a Participant, including regular
pay, overtime pay, annual incentive payments, bonuses, commissions, and a
Participant's salary deferral contributions to the Company's 401(k) Salary
Deferral Plan and Employees Flexible Compensation Plan, but excluding any other
Employer contributions made to any "employee benefit plan" for the Participant,
such as reimbursed expenses, special awards, gifts or allowances, severance
payments, payments under the Company's Long-Term Incentive Plan and
extraordinary compensation.
1.6 PARTICIPANT - All employees of the Company shall be eligible
to participate in the Plan provided that they are members of the Amcast Merged
Pension Plan, Part "A", f/k/a the Amcast Pension Plan for Salaried Employees and
whose income exceeds the amount specified in 401(a)(17) of the Federal Code.
<PAGE> 2
1.7 PARTICIPANT'S BENEFICIARY - The person or persons entitled to
receive benefits under the Qualified Plan because of a relationship with or
designation by a Participant. The Participant's Beneficiary is entitled to
receive a portion of the Participant's benefits under the Plan equal to the
portion of Participant's benefits that the Participant's Beneficiary is entitled
to receive under the Qualified Plan.
1.8 QUALIFIED PLAN - The Amcast Merged Pension Plan, Part "A",
f/k/a the Amcast Pension Plan for Salaried Employees.
Article II. ADMINISTRATION
2.1 ADMINISTRATOR - The Plan shall be administered by the pension
and benefits department of the Company.
Article III. BENEFITS
3.1 QUALIFIED PLAN PENSION - At the time of retirement, all
Participants shall have their pensions calculated under the provisions of the
Qualified Plan, taking into account the Participant's age and years of service
at retirement, the retirement option selected by Participant, and such other
factors set forth in the Qualified Plan or any provision of federal, state, or
local law, as would affect the calculation of Participant's benefit under the
Qualified Plan. This is the amount of the pension payments payable to
Participant or Participant's Beneficiary under the Qualified Plan.
3.2 BENEFITS UNDER THE PLAN
a. At the time of a Participant's retirement, the
following calculation shall be made:
i. Any Participant who is not an Executive Participant shall
have a calculation made as to the amount their benefits
would be under the Qualified Plan using the same formula
as described in Section 3.1 hereof, but not taking into
account any reduction in benefits or any reduction in the
amount of income or time of service used in calculating
benefits resulting from any provision of federal, state or
local law.
ii. Any Participant who is an Executive Participant shall have a
calculation made as to the amount their benefits would be
under the Qualified Plan using the formula as described in
Section 3.1 hereof, not taking into account any reduction
in benefits or any reduction in the amount of income or
time of service used in calculating benefits resulting from
any provision of federal, state or local law (including,
but not limited to, Section 401 (a)(4) of the Internal
Revenue Code of 1986, as amended, and regulations
thereunder), and further modified as follows:
2
<PAGE> 3
A. In calculating such benefits, 2.5 % shall be
substituted for the percentage used in making the
calculation described in Section 1.1 (a)(ii)(A) of
the Qualified Plan.
B. In calculating such benefits, any such Participant's
Credited Service (as defined in the Qualified Plan)
shall be increased by 3 full years, with the
total of such Credited Service not to exceed 30
years; and
C. In calculating any reduction for early commencement
of such benefits, any such Participant's age shall
be deemed to be 3 years more than his actual age,
with his deemed age not to exceed age 65.
b. In any instance where the benefit payable to a Participant
or the Participant's Beneficiary under the Qualified Plan
is less than the benefit calculated for such Participant
in accordance with the applicable provisions of paragraph
3.2(a) above, the Participant or Participant's
Beneficiary shall be entitled to receive a pension under
the Plan in an amount which when added to the amount the
Participant or Participant's Beneficiary is entitled to
receive under the Qualified Plan, results in a total
amount of pension payments payable to the Participant or
Participant's Beneficiary from the Plan plus the
Qualified Plan equal to the amount calculated with
respect to the Participant or Participant's Beneficiary
in accordance with the applicable provisions of paragraph
3.2(a) above.
3.3 PAYMENT OF PLAN BENEFITS - Benefits shall be payable to
Participants under the terms of any of the following options.
a. Benefits under the Plan shall be payable at the
same times and intervals as benefits payable under
the Qualified Plan.
b. Notwithstanding Section 3.3(a) hereof, at any time
after the end of Participant's employment with the
Company and at the election of the Participant or
Participant's Beneficiary, the Company shall pay
to the Participant or Participant's Beneficiary an
amount equal to the Net Present Value Amount, as
defined in Section 3.5 hereof, less 10 percent of
such amount. After the payment described in this
Section 3.3(b) is made, the Company shall have no
further obligation to Participant or Participant's
Beneficiary under this Plan. In calculating such
Net Present Value Amount, the Determination Date
shall be the date on which Participant exercised
his or her option under this Section.
3
<PAGE> 4
Such Net Present Value Amount shall be paid to
Participant as soon as practical, but not more
than 30 days after the Determination Date.
c. Notwithstanding Section 3.3 (a) hereof, in the
event of a Change of Control of the Company (as
defined in the form of contract approved for
certain executives of the Company by the Board of
Directors of the Company on 12/19/89 ("Change of
Control Agreements"))("Change of Control"), the
Company shall fund the Trust, as hereinafter
defined, in an amount equal to the Net Present
Value Amount (as defined at Section 3.5). In
calculating such Net Present Value Amount, the
Determination Date shall be the date on which the
Change of Control occurred. Funding of the Trust,
either under this Section or voluntarily by the
Company, will not relieve the Company of any of
its payment obligations under this Plan, and such
obligations will be fulfilled only upon actual
payment in accordance with this Plan.
d. Notwithstanding Section 3.3 (a) hereof,
Participant shall be entitled, no later than three
months prior to termination of Participant's
employment with Company, to elect to receive the
Net Present Value Amount at the time payments
begin under the qualified plan. Participant shall
have the option to change such election from time
to time provided that such change is made no later
than three months prior to the commencement of any
payments hereunder to Participant. After the
payment described in this Section is made, the
Company shall have no further obligation to the
Participant under this Plan. In calculating the
Net Present Value Amount in regard to this Section
3.3(d), the Determination Date shall be the first
day of the month preceding Participant's
termination of employment.
e. Notwithstanding Section 3.3 (a) hereof, in the
event the trust has been funded as a result of a
Change of Control and the Participant's employment
with the Company is terminated by the Company for
any reason other than cause (as defined in the
Change of Control Agreements), Employee shall have
the option to elect to receive the Net Present
Value Amount, provided such election is made no
later than one week after Employee's termination
by the Company. Payment shall be made on the date
on which the first payment is due under the
qualified plan. After the payment described in
this Section is made, the Company shall have no
further obligation to the Participant under this
Plan. In calculating the Net Present Value Amount
in
4
<PAGE> 5
regard to this Section 3.3 (e), the Determination
Date shall be the date on which the Participant
exercised his or her option under this Section.
3.4 TRUST - The Company agrees it will establish a "Rabbi" trust
(the "Trust"), and a copy of which will be attached hereto as Annex A.
a. If the Trust is funded at the time a payment is
required under this Agreement, the payment will be
made on behalf of the Company by the Trustee out
of Trust funds to the extent permitted by the
Trust; provided that the making of such payment
shall not reduce the balance in the Trust below
the Net Present Value Amount (as defined in
Section 3.5) of the then remaining payments to all
participants. The Determination Date for each such
calculation of Net Present Value Amount will be
the related payment date.
At any time when it is determined that the
remaining assets of the trust are reduced to an
amount below the Net Present Value Amount of all
remaining payments to all participants the company
shall, within six months of such determination,
deposit an amount in the trust so that the assets
of the trust are at least equal to the Net Present
Value Amount of all remaining payments to all
participants.
b. In the event all required payments are made to all
Participants or their Beneficiaries, all funds
remaining in the Trust shall be immediately
delivered to the Company.
3.5 NET PRESENT VALUE AMOUNT - For the purpose of determining the
amount needed to fund the Trust as described in Section 3.4 or the amount of
payments to be made as described in Section 3.3, the Company's independent
actuaries will calculate the net present value of all payments remaining to be
made to Participant or Participant's Beneficiary under this Plan (herein the
"Net Present Value Amount"). The Net Present Value Amount shall be determined as
of the Determination Date (herein the "Determination Date") in accordance with
the provisions of Annex B attached.
Article IV. GENERAL
4.1 AMENDMENT AND TERMINATION - The Plan may be altered or
terminated only by action of three-fourths (3/4) of the entire Board of
Directors of the Company at a valid meeting. Such termination shall in no way
effect, alter, or reduce any vested right of any Participant existing at the
time of the termination.
5
<PAGE> 6
4.2 VESTING - Participant's rights under the Plan shall vest at
the time when the Participant's Income and time of service are such that
Participant would be entitled to receive a pension under the Plan if Participant
were of retirement age under the terms of the Qualified Plan and retired under
the Qualified Plan or, in the case of an Executive Participant, has completed
five years of service as calculated under the plan.
4.3 EFFECT ON QUALIFIED PLANS - The adoption, administration,
amendment, or termination of the Plan shall have no effect upon the Qualified
Plan or any other of the Company's qualified plans.
4.4 NON-ASSIGNABILITY OF RIGHT TO RECEIVE BENEFITS - The right to
receive benefits under the Plan may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered, or subjected to any charge or
legal process; and if any attempt is made to do so, or a person eligible for
any benefit becomes bankrupt, the interest under the Plan of the person
affected may be terminated by the Company, and the Committee may cause the
same to be held or applied for the benefit of such person or one or more of
his or her dependents in such manner as it deems proper.
4.5 THIS PLAN NOT AN EMPLOYMENT CONTRACT - This Plan does not
give to any Participant the right to be continued in employment or otherwise
enlarge or affect employment status or rights.
4.6 APPLICABLE LAW - All questions pertaining to the
construction, validity, and effect of the provisions hereof are to be
determined in accordance with the laws of the State of Ohio.
4.7 NON-FUNDED PLAN - Except as provided herein, the entire cost
of the Plan will be paid from the general assets of the Company. It is the
intent of the Company to pay benefits under the Plan as they become due under
the provisions of Section 3.3 hereof. No liability for the payment of benefits
under the Plan shall be imposed upon any officer, director, employee, or
stockholder of the Company.
4.8 PLAN NOT A QUALIFIED PLAN - The Plan is not intended to be a
qualified pension plan or to be a benefit or welfare plan subject to ERISA.
4.9 EFFECT ON CONTRACTUAL RIGHTS - The Plan shall not reduce or
otherwise adversely affect any contractual right with respect to retirement of
any person who is a Participant or a Participant's Beneficiary, or relieve the
Company of any contractual obligation with respect to retirement of any person
who is a Participant or Participant's Beneficiary, except to the extent of
payments made under this Plan.
4.10 SEVERABILITY - If any provisions of the Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of the Plan, but this Plan shall be construed and
enforced as if said illegal or invalid provision had never been included herein.
6
<PAGE> 7
4.11 EFFECTIVE DATE - The Plan is effective as of June 1, 1999.
/s/ JOHN H. SHUEY
------------------------------
John H. Shuey, Chairman, President
and Chief Executive Officer
ATTEST:
/s/ DENIS G. DALY
- -------------------------------------
Denis G. Daly, Secretary
7
<PAGE> 8
ANNEX B
In calculating the Net Present Value Amount, the following provisions shall
apply; (i) all remaining payments under the SERP shall be provided for; (ii) the
actuarial principles used in connection with the Qualified Plan shall be used to
establish the life expectancy of Participant, Participant's spouse, or their
combined life expectancy, as the case may be, as of the Determination Date for
purposes of establishing the period over which the payments under Article 3
shall be assumed to be made; and (iii) an annual discount rate equal to the PBGC
Discount Rate shall be used to discount future payments to the Determination
Date, or if applicable to calculate a lump sum amount pursuant to Section 3.3
for any Participant with an agreement that limits certain benefits to avoid the
20% tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as
amended, such other discount rate as is necessary to avoid any payments from
being subject to such additional 20% tax. As used in this Annex B, the PBGC
Discount Rate shall mean the average of the PBGC discount rates used pursuant to
Section 417(e) (3) (B) of the Internal Revenue Code of 1986 as amended, for the
three months immediately preceding the Determination Date.
8
<PAGE> 1
EXHIBIT 10.14
AMCAST INDUSTRIAL CORPORATION
AMENDED AND RESTATED
LONG-TERM INCENTIVE PLAN
<PAGE> 2
Amcast Industrial Corporation
Long-Term Incentive Plan
ARTICLE I. PURPOSE.
1.1. PURPOSE - The Amcast Industrial Corporation Long-Term Incentive
Plan (the "Plan") is designed to link the compensation of senior management with
the long-term performance of the company and to encourage those managers whose
continued employment is significant to the company to continue their employment
with the company. The Plan is also designed to increase the ownership of company
stock of key managers. The Plan is not an agreement by the company of continued
employment or of continued participation in the Plan for any individual Plan
participant.
1.2. INTENT - The purpose of the Plan is to assist the company to
attract, retain, and motivate capable managers during the long term. In order to
achieve this purpose, it is the intent that annually new Awards and targets be
established by the Committee, for employees designated at the time of the Award.
ARTICLE II. AWARDS.
2.1. AWARD - Awards under the Plan shall consist of a Stock Option and
a target Cash Award (together, the "Award").
2.2. STOCK OPTION - The Option is a grant of stock options under the
terms of the 1989 Amcast Stock Option Plan and is governed by the rules of that
plan. Stock options granted as part of the Plan will be granted on the first
working day of September and will expire ten years after the date of the grant.
2.3. CASH AWARDS - Cash Awards under the Plan are based on a percentage
of the participant's salary as established by the Board of Directors and are
earned based on the company's performance over a three-year period beginning
with the start of the fiscal year following the establishment of the award
levels for such period by the board (the "Award Period").
ARTICLE III. STOCK OPTIONS.
3.1. AMOUNT OF STOCK OPTION - The number of shares granted in the
option will be equal to a fraction, the numerator of which is the participant's
salary, multiplied by the participant's percent participation and the
denominator of which is the stock price at the time of the grant.
3.2. PERCENTAGE PARTICIPATION LEVEL - The percent participation level
will be determined by the Compensation Committee of the Board of Directors.
1
<PAGE> 3
3.3. TERMS - Stock Options granted under the Plan are granted under the
1989 Amcast Stock Option Plan and are subject to the rules of that plan. Such
options may be exercised at any time, in the manner and at the terms permitted
under the 1989 Stock Option Plan.
3.4. EXPIRATION - Stock Options granted under the Plan will expire
ten years from the date of the grant.
3.5. EXERCISE REQUIREMENTS - Except as provided in Sections 3.5(a),
4.2(c) and 4.2(d) hereof, participants earning Cash Awards under the Plan are
required to devote such awards to the exercise of Stock Options (unless all
stock options have already been exercised earlier). The full amount of such Cash
Award must be used for such purpose by the exercise of such Stock Options no
later than fourteen (14) days after the receipt of the Cash Award earned under
the Plan.
a. A participant receiving a Cash Award under the provisions
of Section 4.2(c) or 4.2(d) hereof shall not be required to exercise an option
or otherwise purchase company stock.
3.6. STOCK RETENTION - Shares of stock obtained as a result of the
exercise of Stock Options granted under the Plan may not be sold, hypothecated,
pledged, loaned, encumbered, or disposed of in any manner by the participant for
a period of three years following the date of the exercise.
a. Notwithstanding the foregoing, the participant shall have
the right to sell a portion of such shares, not to exceed that percentage of the
total number the participant has obtained by virtue of the exercise, which shall
be sufficient to provide participant with the cash necessary to pay federal and
state income tax incurred as a result of the receipt of a Cash Award or the
exercise of a Stock Option.
b. In the event that any participant shall voluntarily retire
from active employment with the Company or in the event that a Change of
Control, as hereinafter defined shall occur within the three-year period
provided for in this Section 3.6, or in the event participant shall die within
such three-year period, such recipient or his or her heirs or estate shall be
free to sell or otherwise dispose of or encumber such shares at that time.
3.7. MARKET PRICE ALTERNATIVE - In the event that the market price of
the company's stock should be less than the price of the option shares at the
time a Cash Award is earned and paid, the company, at its option, will sell from
the treasury and the participant will purchase, company shares at the then
current market price in a number of shares equal in value to the total of the
participant's Cash Award less any tax incurred as a result of the Award. Amounts
less than the market value of a single share need not be converted to company
stock.
ARTICLE IV. EARNINGS CASH AWARDS.
4.1. AMOUNT OF CASH AWARD - Cash Awards and targets will be established
annually by the Committee.
2
<PAGE> 4
4.2. REQUIREMENTS - In order to earn the Cash Awards under the terms of the
Plan:
a. The participant must be an active employee of the company
at the end of the Award Period.
b. The company's Return on Beginning Equity ("ROE") during the
Award Period must equal or exceed the threshold ROE established by the Board of
Directors at the time of the award.
(i) At the end of each fiscal year, during the Award
Period, the company shall calculate the after-tax ROE based on the company's
equity at the beginning of such fiscal year.
(A) In calculating the ROE, certain material
nonoperating income and expense items may be excluded from the calculations at
the discretion of the Committee.
(B) Such calculation shall be made after all
expense for the plan have been accrued and deducted.
(ii) At the end of the third fiscal year, the ROE for
each of the years of the Award Period shall be averaged. This average shall be
the ROE for the Award Period.
(A) e.g. 1991 - 15% ROE
1992 - 12% ROE
1993 - 18% ROE
---
45% / 3 = 15% ROE
c. Notwithstanding Section 4.2(a) above, a participant who has
voluntarily retired at age 60 or older during the Award Period shall be eligible
for a PRO RATA portion of any award such participant would have earned had such
participant remained in the company's employ during the entire Award Period.
Such Cash Award shall be paid at the same time as payments are made to actively
employed participants for the same Award Period.
(i) Such award shall be equal to a fraction of the
total award, the denominator of which is the total number of months in the Award
Period and the numerator of which is the number of months during the Award
Period in which participant was a full-time company employee.
d. Notwithstanding Section 4.2(a) above, in the event of a
Change of Control, as defined in the form of contract approved for certain of
the executives of the company by the Board of Directors of the company on
December 19, 1989 ("Change of Control"), the participants shall be entitled to a
Cash Award for all Awards outstanding as of the date of the occurrence of the
Change of Control, equal to the amount such participant could have earned had
such participant continued in the company's employ during the entire Award
Period from all then outstanding Cash Awards and assuming ROE for each Award
Period equals 100% of target ROE.
3
<PAGE> 5
ARTICLE V. ADMINISTRATION.
5.1. ADMINISTRATION - The Compensation Committee of the Board of
Directors (the "Committee") shall administer the Plan.
a. The Committee, on the recommendation of the company's Chief
Executive Officer, shall establish:
(i) the participants;
(ii) the award target cash levels;
(iii) the option grants;
(iv) ROE levels required for payment of Cash Awards; and
(v) other rules and guidelines necessary or useful
for the operation of the Plan.
b. The Committee, from time to time during the Award Period,
may in its sole discretion, make an adjustment in the amounts of option grants
so as to enable the participant to maintain the same percentage of equity
ownership of the company, based on the option grant necessitated by material
increases or decreases in the number of shares of company stock outstanding from
time to time.
c. The Committee shall be the sole arbitrator as to whether
participants have successfully earned Cash Awards and the amount of such Cash
Awards.
(i) The Committee shall be entitled to call upon the
services of such company employees and outside professionals as it may deem
proper to assist in making such decisions.
(ii) The decision of the Committee shall be final,
binding, and not subject to appeal.
ARTICLE VI. MISCELLANEOUS.
6.1. EFFECT ON PENSION - No award made or earned under the terms of the
Plan shall be deemed as "Compensation" for the purposes of the calculation of
any pension or other benefit, retirement, or deferred compensation plan
sponsored or participated in by the company.
6.2. SALARY INCREASE RESTRICTION - Any participant in the Plan whose
salary level, at the time of a normal merit adjustment, is at or above the
midpoint range established by the company, may, at the option of the Committee,
have salary reviews deferred from an annual basis to a biannual basis during any
years constituting part of an Award Period.
6.3. AMENDMENT AND TERMINATION - The Plan may be altered or terminated
only by action of three-fourths (3/4) of the entire Board of Directors of the
company at a valid meeting.
4
<PAGE> 6
Such termination shall in no way effect, alter, or reduce any right of any
participant existing at the time of the termination.
6.4. EFFECT ON QUALIFIED PLANS - The adoption, administration,
amendment, or termination of the Plan shall have no effect upon any qualified
retirement plan of the company as defined in ERISA or any other of the company's
pension or benefit plans.
6.5. THIS PLAN NOT AN EMPLOYMENT CONTRACT - This Plan does not give to
any participant the right to be continued in employment or otherwise enlarge or
affect employment status or rights of any participant.
6.6. APPLICABLE LAW - All questions pertaining to the construction,
validity, and effect of the provisions hereof are to be determined in accordance
with the laws of the State of Ohio.
6.7. NON-FUNDED PLAN - The entire cost of the Plan will be paid from
the general assets of the company. It is the intent of the company to pay
benefits under the Plan as they become due. No liability for the payment of
benefits under the Plan shall be imposed upon any officer, director, employee,
or stockholder of the company.
6.8. PLAN NOT A QUALIFIED PLAN - The Plan is not intended to be a
qualified pension plan or to be a benefit or welfare plan subject to ERISA.
6.9. SEVERABILITY - If any provisions of the Plan shall be held illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining parts of the Plan, but this Plan shall be construed and enforced as if
said illegal or invalid provision had never been included herein.
6.10. EFFECTIVE DATE - The Plan shall become effective upon the
approval and adoption of this Plan by the Board of Directors.
/s/ JOHN H. SHUEY
------------------------------
John H. Shuey, Chairman, President
and Chief Executive Officer
ATTEST:
/s/ DENIS G. DALY
- -------------------------------------
Denis G. Daly, Secretary
5
<PAGE> 1
EXHIBIT 10.15
AMCAST INDUSTRIAL CORPORATION
-----------------------------
1999 STOCK INCENTIVE PLAN
-------------------------
PLAN DOCUMENT
-------------
<PAGE> 2
1999 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
- -------------------
The purpose of this 1999 Stock Incentive Plan (the "Plan") is
to promote the long-term success of Amcast Industrial Corporation (the
"Company") by providing financial incentives to key employees of the Company
and its subsidiaries who are in positions to make significant contributions
toward such success. The Plan is designed to attract individuals of outstanding
ability to employment with the Company and its subsidiaries and to encourage
key employees to acquire a proprietary interest in the Company through stock
ownership, to continue employment with the Company and its subsidiaries, and to
render superior performance during such employment. To accomplish the purposes
of the Plan, the Board of Directors of the Company establishes the Plan and
authorizes the Committee referred to in Section 4 to administer the Plan in
such manner and on such conditions as it deems appropriate, subject to the
provisions of the Plan.
SECTION 2. DEFINITIONS
- -----------------------
(a) "Board" means the Board of Directors of the Company.
(b) "Change of Control" means and shall be deemed to have
occurred on (i) the date upon which the Company is provided a copy of a
Schedule 13D, filed pursuant to Section 13(d) of the Securities Exchange Act of
1934 indicating that a group or person, as defined in Rule 13d-3 under said
Act, has become the beneficial owner of 20% or more of the outstanding Voting
Shares of the Company or the date upon which the Company first learns that a
person or group has become the beneficial owner of 20% or more of the
outstanding Voting Shares of the Company if a Schedule 13D is not timely filed
as required under the Securities Exchange Act of 1934 or is not required to be
filed; (ii) the date of a change in the composition of the Board of Directors
of the Company such that individuals who were members of the Board of Directors
on the date two years prior to such change (or who were subsequently elected to
fill a vacancy in the Board, or were subsequently nominated for election by the
Company's shareholders, by the affirmative vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such two
year period) no longer constitute a majority of the Board of Directors of the
Company; (iii) the date the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Shares of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Shares of the surviving
entity) at least 80% of the total voting power represented by the Voting Shares
of the Company or such surviving entity outstanding immediately after such
merger or consolidation; or (iv) the date shareholders of the Company approve a
plan of
-1-
<PAGE> 3
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all the Company's assets.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the committee referred to in Section 4.
(e) "Employee" means any full-time key employee of the
Company or any of its Subsidiaries.
(f) "Fair Market Value" means the mean of the high and low
sales prices of a Share on the date when the value of a Share is to be
determined, as reported on the New York Stock Exchange Composite Transactions
Tape; or, if no sale is reported for such date, then on the next preceding date
for which a sale is reported; or if the Shares are no longer listed on such
exchange, the determination of such value shall be made by the Committee in
accordance with applicable provisions of the Code and related regulations
promulgated under the Code.
(g) "Gross Misconduct" means engaging in any act or acts
involving conduct which violates Company policy or is illegal and which
results, directly or indirectly, in personal gain to the individual involved at
the expense of the Company or a Subsidiary.
(h) "Incentive Award" means an Option, Restricted Share
Award, Performance Award, or Stock Appreciation Right granted under the Plan.
(i) "Incentive Stock Option" means an Option that is an
Incentive Stock Option, as defined in Section 422 of the Code.
(j) "Nonqualified Stock Option" means an Option that is not
an Incentive Stock Option.
(k) "Option" means a right to purchase Shares at a specified
price.
(l) "Optionee" means the holder of an Option.
(m) "Participant" means an Employee selected to receive an
Incentive Award.
(n) "Performance Award" means a right to receive Shares,
cash, or a combination thereof, contingent upon the attainment of performance
objectives determined in the discretion of the Committee as more fully set
forth at Section 8 hereof.
(o) "Restricted Share Award" means a right to receive Shares
that is nontransferable and subject to substantial risk of forfeiture until
specific conditions are met; "Restricted Shares" means Shares which are the
subject of a Restricted Share Award; and "Restricted Period" shall have the
meaning ascribed to it at Section 7(a).
-2-
<PAGE> 4
(p) "Shares" means the Common Shares of the Company.
(q) "Stock Appreciation Right" shall have the meaning set
forth at Section 9.
(r) "Subsidiary" means any company more than 50% of the
voting stock of which is owned or controlled, directly or indirectly, by the
Company.
(s) "Voting Shares" means any securities of the Company which
vote generally in the election of directors.
SECTION 3. SHARES SUBJECT TO THE PLAN
- --------------------------------------
(a) MAXIMUM NUMBER - AGGREGATE. The maximum number of Shares
that may be subject to Incentive Awards granted pursuant to the Plan shall be
Four Hundred Fifty Thousand (425,000), subject to adjustment in accordance with
Section 3(c). The Shares which may be issued pursuant to Incentive Awards may
be authorized and unissued Shares or Shares held in the Company's treasury. In
the event of a lapse, expiration, termination, or cancellation of any Incentive
Award granted under the Plan without the issuance of Shares or the payment of
cash, or if Shares are issued under a Restricted Share Award and are reacquired
by the Company as a result of rights reserved upon the issuance thereof, the
Shares subject to or reserved for such Incentive Award shall no longer be
charged against the 425,000 Share maximum and may again be used for new
Incentive Awards.
(b) MAXIMUM NUMBER-PER EMPLOYEE. The maximum Incentive Awards
that may be granted to each Employee in each fiscal year of the Company is as
follows:
(i) With respect to Options, no more than 50,000 may
be granted;
(ii) With respect to Restricted Shares (not issued
in connection with Performance Awards), no more than $750,000
of such Shares may be issued;
(iii) With respect to Performance Awards, no more
than $750,000 of Performance Shares may be granted (based on
the Fair Market Value of Shares on the date the award is
granted, not the date the award is earned or paid); and
(iv) With respect to Stock Appreciation Rights, no
more than 50,000 may be granted.
-3-
<PAGE> 5
(c) RECAPITALIZATION ADJUSTMENT. In the event of any change
affecting the Shares by reason of any share dividend or split,
recapitalization, merger, consolidation, spin-off, combination or exchange of
shares or other corporate change, or any distribution to a holder of Shares
other than ordinary cash dividends, the Committee shall make such adjustment,
if any, as it may deem appropriate to avoid dilution in the number and kind of
shares authorized for issuance under the Plan, in the number and kind of shares
covered by Incentive Awards and, in the case of Options, in the option price.
SECTION 4. ADMINISTRATION
- --------------------------
(a) COMMITTEE. The Plan shall be administered by a Committee
of the Board, comprised of three or more directors, who shall from time to time
be appointed by, and serve at the pleasure of, the Board. Each director serving
on the Committee shall be a "non-employee director" within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934 and an "outside
director" within the meaning of Section 162(m) of the Code.
(b) AUTHORITY. The Committee shall have and exercise all the
power and authority granted to it under the Plan. Subject to the provisions of
the Plan, the Committee shall have authority in its sole discretion from time
to time (i) to designate from Employees the persons who shall be granted
Incentive Awards; (ii) to prescribe such limitations, restrictions and
conditions upon any such awards as the Committee shall deem appropriate,
including establishing and administering performance goals and certifying
whether the performance goals have been attained; (iii) to interpret the Plan
and to adopt, amend and rescind rules and regulations relating to the Plan; and
(iv) to make all other determinations and take all other actions necessary or
advisable for the implementation and administration of the Plan.
(c) COMMITTEE ACTIONS. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members present at a
meeting at which a quorum is present, or acts reduced to or approved in writing
by all members of the Committee, shall be acts of the Committee. All such
actions shall be final, conclusive, and binding. No member of the Committee
shall be liable for any action taken or decision made in good faith relating to
the Plan or any Incentive Award thereunder.
(d) INTERPRETATION AND CONSTRUCTION. Any provision of this
Plan to the contrary notwithstanding, (i) certain designated Incentive Awards
under this Plan are intended to qualify as performance-based compensation
within the meaning of Code Section 162(m)(4)(C) and (ii) any provision of the
Plan that would prevent a designated Incentive Award from so qualifying shall
be administered, interpreted and construed to carry out such intention and any
provision that cannot be so administered, interpreted and construed shall to
that extent be disregarded.
SECTION 5. ELIGIBILITY AND INCENTIVE AWARDS
- --------------------------------------------
(a) ELIGIBLE EMPLOYEES. The Committee may grant Incentive
Awards to officers and other Employees.
-4-
<PAGE> 6
(b) INCENTIVE AWARDS. Incentive Awards may be granted in any
one or more combinations of (i) Incentive Stock Options, (ii) Nonqualified
Stock Options, (iii) Restricted Share Awards, (iv) Performance Awards, and (v)
Stock Appreciation Rights. All Incentive Awards shall be subject to such other
terms and conditions as may be established by the Committee. Determinations by
the Committee under the Plan, including without limitation, designation of
Participants, the form, amount and timing of Incentive Awards, the terms and
provisions of Incentive Awards, and the written agreements evidencing Incentive
Awards, need not be uniform and may be made selectively among Employees who
receive, or are eligible to receive, Incentive Awards hereunder, whether or not
such Employees are similarly situated.
(c) EMPLOYMENT. The Plan and the Incentive Awards granted
hereunder shall not confer upon any Employee the right to continued employment
with the Company or affect in any way the right of the Company to terminate the
employment of an Employee at any time and for any reason.
SECTION 6. OPTIONS
- -------------------
The Committee may grant Incentive Stock Options and
Nonqualified Stock Options and such Options shall be subject to the following
terms and conditions and such other terms and conditions as the Committee may
prescribe:
(a) OPTION PRICE. The option price per Share with respect to
each Option shall be determined by the Committee but shall not be less than the
Fair Market Value of a Share on the date the Option is granted.
(b) PERIOD OF OPTION. The period of each Option shall be
fixed by the Committee but in no case may an option be exercised more than ten
years after the date of its grant.
(c) EXERCISE OF OPTION. An Option may be exercised with
respect to all Shares covered thereby or may be exercised with respect to a
specified number of Shares over a specified period or periods as determined by
the Committee. Any Shares not purchased during a specified period may be
purchased thereafter at any time prior to the expiration of the Option unless
the Committee determines otherwise. Except as otherwise provided herein, an
Option may be exercised only if the Optionee has been continuously employed by
the Company since the date upon which the Option was granted. Whether
authorized leave of absence or absence for military or governmental service
shall constitute a termination of employment shall be determined by the
Committee.
(d) TERMINATION OF EMPLOYMENT. In the event an Optionee
ceases to be employed by the Company for any reason (other than death or Gross
Misconduct), the Optionee may exercise an Option within three months after such
termination of employment to the extent he was entitled to exercise it on the
date of such termination of employment; provided, however,
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<PAGE> 7
that if such Optionee is an officer or director of the Company, such Optionee
may exercise an Option within seven months after such termination of
employment.
(e) RETIREMENT. In the event an Optionee ceases to be
employed by the Company because he retires under a retirement plan of the
Company or otherwise retires with the consent of the Company, the Optionee may
exercise an Option within three months after the date of his retirement to the
extent the Option was exercisable on the date of his retirement. The Committee,
however, in its discretion, may provide that any outstanding Option which is
not yet exercisable upon the retirement of the Optionee may become exercisable
and may extend the period after retirement during which any Option may be
exercised.
(f) DEATH. In the event an Optionee shall die while employed
by the Company or after his termination of employment with the Company but at a
time that an Option held by him was exercisable, then the Option may be
exercised within one year after the Optionee's death to the extent that the
Optionee was entitled to exercise it on the date of his death, by the person or
persons (including the Optionee's estate) to whom his rights under such an
Option shall have passed by will or by the laws of descent and distribution.
(g) LIMITS ON INCENTIVE STOCK OPTIONS. Except as may be
permitted by the Code, the Fair Market Value of Shares (determined at the time
of grant of Options) as to which Incentive Stock Options held by an Optionee
first become exercisable in any calendar year shall not exceed $100,000. In
addition, no Incentive Stock Option shall be granted to an Employee who
possesses, directly or indirectly (within the meaning of Section 424(d) of the
Code), at the time of grant more than 10% of the combined voting power of all
classes of stock of the Company unless the option price is at least 110% of the
Fair Market Value of the Shares subject to the Option on the date such Option
is granted and such Incentive Stock Option is not exercisable after the
expiration of five years from the date of grant.
(h) NOTICE OF EXERCISE AND PAYMENT. An Option granted under
the Plan may be exercised by the Optionee giving written notice of exercise to
the Committee. The Option price for the Shares purchased shall be paid in full
at the time such notice is given. An Option shall be deemed exercised on the
date the Committee receives written notice of exercise, together with full
payment for the Shares purchased. The Option price shall be paid to the Company
either in cash, by delivery to the Company of Shares already-owned by the
Optionee or any combination of cash and such Shares. The Committee may,
however, at any time and in its discretion, adopt guidelines limiting or
restricting the use of already-owned Shares to pay all or any portion of the
Option price. In the event already-owned Shares are used to pay all or a
portion of the Option price, the amount credited to payment of the Option price
shall be the Fair Market Value of the already-owned Shares on the date the
Option is exercised.
(i) FRACTIONAL SHARES. No fractional shares shall be issued
pursuant to the exercise of an Option, nor shall any cash payment be made in
lieu of fractional shares.
-6-
<PAGE> 8
SECTION 7. RESTRICTED SHARE AWARDS
- -----------------------------------
The Committee may issue Shares to an Employee which Shares
shall be subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe in connection with the grant of a
Restricted Share Award:
(a) GENERAL. With respect to each grant of Restricted Shares,
the Committee, in its sole discretion, shall determine the period during which
the restrictions set forth at Subsection 7(b) shall apply to the Restricted
Shares (the "Restricted Period").
(b) RESTRICTIONS. At the time of grant of Restricted Shares
to an Employee, a certificate representing the number of Shares granted shall
be registered in his name but shall be held by the Company for the account of
the Employee. The Employee shall have the entire beneficial ownership interest
in, and all rights and privileges of a shareholder as to, such Restricted
Shares, including the right to receive dividends and the right to vote such
Restricted Shares, subject to the following restrictions: (i) subject to
Section 7(c), the Employee shall not be entitled to delivery of the Share
certificate until the expiration of the Restricted Period; (ii) none of the
Restricted Shares may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted Period; and (iii) all of the
Restricted Shares shall be forfeited and all rights of the Employee to such
Restricted Shares shall terminate without further obligation on the part of the
Company unless the Employee remains in the continuous employment of the Company
for the entire Restricted Period in relation to which such Restricted Shares
were granted, except as provided by Section 7(c). Any Shares received with
respect to Restricted Shares as a result of a recapitalization adjustment
pursuant to Section 3(c) shall be subject to the same restrictions as such
Restricted Shares.
(c) TERMINATION OF EMPLOYMENT.
(i) RETIREMENT. If an Employee ceases to be employed
by the Company prior to the end of a Restricted Period by
reason of normal retirement under a retirement plan of the
Company or the Employee otherwise retires with the consent of
the Company, the number of Restricted Shares granted to such
Employee for such Restricted Period shall be reduced in
proportion to the Restricted Period (determined on a
quarterly basis) remaining after the Employee ceases to be an
Employee and all restrictions on such reduced number of
Shares shall lapse. A certificate for such Shares shall be
delivered to the Employee in accordance with the provisions
of Section 7(d) hereof. The Committee may, if it deems
appropriate, direct that the Employee receive a greater
number of Shares free of all restrictions but not exceeding
the number of Restricted Shares then subject to the
restrictions of Section 7(b).
(ii) DEATH. If an Employee ceases to be employed by
the Company prior to the end of a Restricted Period by reason
of death, the Restricted Shares granted to such Employee
shall immediately vest in his beneficiary or estate and
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<PAGE> 9
all restrictions applicable to such Shares shall lapse. A
certificate for such Shares shall be delivered to the
Employee's beneficiary or estate in accordance with the
provisions of Subsection 7(d).
(iii) ALL OTHER TERMINATIONS. If an Employee ceases
to be an Employee prior to the end of a Restricted Period for
any reason other than retirement or death, the Employee shall
immediately forfeit all Restricted Shares then subject to the
restrictions of Section 7(b) in accordance with the
provisions thereof, except that the Committee may, if it
finds that the circumstances in the particular case so
warrant, allow an Employee whose employment has so terminated
to retain any or all of the Restricted Shares then subject to
the restrictions of Section 7(b) and all restrictions
applicable to such retained shares shall lapse. A certificate
for such retained shares shall be delivered to the Employee
in accordance with the provisions of Section 7(d).
(d) PAYMENT OF RESTRICTED SHARES. At the end of the
Restricted Period or at such earlier time as provided for in Subsection 7(c),
all restrictions applicable to the Restricted Shares shall lapse and a Share
certificate for a number of Shares equal to the number of Restricted Shares,
free of all restrictions, shall be delivered to the Employee or his beneficiary
or estate, as the case may be. The Company shall not be required to deliver any
fractional Share but will pay, in lieu thereof, the Fair Market Value (measured
as of the date the restrictions lapse) of such fractional Share to the Employee
or his beneficiary or estate, as the case may be.
SECTION 8. PERFORMANCE AWARDS
- -----------------------------
The Committee may grant to Employees Performance Awards which
shall be subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe in connection with the grant of a
Performance Award:
(a) AWARD PERIOD AND PERFORMANCE GOALS. The Committee shall
determine and include in a Performance Award the period of time during which a
Performance Award may be earned ("Award Period"). The Committee may also
establish performance objectives ("Performance Goals") to be met by the
Company, Subsidiary or division during the Award Period as a condition to
payment of the Performance Award. The Performance Goals may include minimum and
optimum objectives or a single set of objectives.
With respect to Performance Awards that are intended to
qualify as "performance based" within the meaning of Code Section 162(m)(4)(C),
the Committee shall (i) select the Employees for such Incentive Awards, (ii)
establish in writing the applicable performance goals no later than 90 days
after the commencement of the period of service to which the performance goals
relate (or such earlier or later date as may be the applicable deadline for
compensation payable hereunder to qualify as "performance based" within the
meaning of Code Section 162(m)(4)(C)), and (iii) designate the Performance
Awards that are to qualify as "performance based" within the meaning of Code
Section 162(m)(4)(C).
-8-
<PAGE> 10
The Committee shall establish in writing the Performance
Goals for each Award Period which shall be based on any of the following
performance criteria, either alone or in any combination, on either a
consolidated or business unit or divisional level, and which shall include or
exclude discontinued operations and acquisition expenses (e.g., pooling of
interests), as the Committee may determine: level of sales, earnings per share,
income before income taxes and cumulative effect of accounting changes, income
before cumulative effect of accounting changes, net income, return on assets,
return on equity, return on capital employed, total stockholder return, market
valuation, cash flow and completion of acquisitions. The foregoing criteria
shall have any reasonable definitions that the Committee may specify, which may
include or exclude any or all of the following items, as the Committee may
specify: extraordinary, unusual or non-recurring items; effects of accounting
changes; effects of currency fluctuations; effects of financing activities
(e.g., effect on earnings per share of issuing convertible debt securities);
expenses for restructuring or productivity initiatives; non-operating items;
acquisition expenses (e.g., pooling of interests); and effects of divestitures.
Any such performance criterion or combination of such criteria may apply to the
participant's award opportunity in its entirety or to any designated portion or
portions of the award opportunity, as the Committee may specify.
(b) NO DISCRETION. With respect to Performance Awards that
are intended to qualify as "performance based" within the meaning of Code
Section 162(m)(4)(C), the Committee has no discretion to increase the amount of
the award due upon attainment of the applicable performance goals. No provision
of this Plan shall preclude the Committee from exercising negative discretion
with respect to any award hereinafter (I.E., to reduce or eliminate the award
payable) within the meaning of Treasury Regulation Section
1.162-27(e)(2)(iii)(A).
(c) PERFORMANCE AWARD EARNED. The Performance Awards shall be
expressed in terms of Shares and referred to as "Performance Shares." With
respect to each Performance Award, the Committee shall fix the number of
allocable Performance Shares. The level of Performance Goals attained will
determine the percentage of Performance Shares earned for an Award Period.
After completion of the Award Period, the Committee shall certify in writing
the extent to which the Performance Goals and other material terms applicable
to such award are attained. Unless and until the Committee so certifies, the
Performance Award shall not be paid.
(d) PERFORMANCE AWARD PAYMENT. The Committee, in its
discretion, may elect to make payment of the Performance Award in Restricted
Shares, Shares, cash or any combination of the foregoing. If the Performance
Award is paid in Shares or Restricted Shares, the Company shall issue one Share
or Restricted Share for each Performance Share earned. If the Performance Award
is paid in cash, the cash payable shall be equal to the Fair Market Value of
the Performance Shares earned as of the last day of the Award Period.
(e) REQUIREMENT OF EMPLOYMENT. A grantee of a Performance
Award must remain in the employment of the Company until the completion of the
Award Period in order to be entitled to payment under the Performance Award;
provided that the Committee may, in its sole discretion, provide for a partial
or full payment of the Performance Award that would have been payable if the
grantee had continued employment for the entire Award Period, which shall
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<PAGE> 11
be paid at the same time as would have been paid if no termination of
employment occurred, but only if and to the extent the exercise of such
discretion does not prevent any designated Incentive Award from qualifying as
"performance based" within the meaning of Code Section 162(m)(4)(C).
(f) DIVIDENDS. The Committee may, in its discretion, at the
time of the granting of a Performance Award, provide that any dividends
declared on Shares during the Award Period, and which would have been paid with
respect to Performance Shares had they been owned by a grantee, be (i) paid to
the grantee, or (ii) accumulated for the benefit of the grantee and used to
increase the number of Performance Shares of the grantee.
SECTION 9. STOCK APPRECIATION RIGHTS
- -------------------------------------
The Committee may, at any time, in its discretion, grant a
right to receive the appreciation in the Fair Market Value of Shares ("Stock
Appreciation Right") either separately or in tandem with Options. Stock
Appreciation Rights shall be subject to the following terms and conditions and
such other terms and conditions as the Committee may prescribe:
(a) TIME AND PERIOD OF GRANT. If a Stock Appreciation Right
is granted in tandem with an Option, it may be granted at the time the Option
is granted or at any time thereafter but prior to the expiration of the Option.
If a Stock Appreciation Right is granted in tandem with an Option, at the time
the Stock Appreciation Right is granted, the Committee may limit the exercise
period for such Stock Appreciation Right, before and after which period no
Stock Appreciation Right shall attach to the related Option. If a Stock
Appreciation Right is granted separately from an Option, the period for
exercise of the Stock Appreciation Right shall not exceed ten years from the
date of grant.
(b) VALUE OF STOCK APPRECIATION RIGHT. If a Stock
Appreciation Right is granted in tandem with an Option, the Optionee will be
entitled to surrender the Option which is then exercisable and receive in
exchange therefor an amount in cash equal to the excess of the Fair Market
Value of a Share on the date the election to surrender is received by the
Committee over the Option price multiplied by the number of Shares covered by
the Option or portion thereof which is surrendered. In the event a Stock
Appreciation Right granted in tandem with an Option is exercised, the right of
the Optionee to exercise the related Option shall be canceled to the extent
Shares covered by such Option are used to calculate cash paid upon exercise of
the related Stock Appreciation Right. If a Stock Appreciation Right is granted
separately from an Option, the Optionee will receive upon exercise of the Stock
Appreciation Right an amount in cash equal to the excess of the Fair Market
Value of a Share on the date the election to exercise such Stock Appreciation
Right is received by the Committee over the Fair Market Value of a Share on the
date of grant multiplied by the number of Shares as to which the Stock
Appreciation Right is being exercised.
(c) EXERCISE OF RIGHTS AND PAYMENT. A Stock Appreciation
Right which is in tandem with an Option may be exercised when the related
Option is exercisable, provided,
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<PAGE> 12
however, such a Stock Appreciation Right may only be exercised on a date or
dates on which the Fair Market Value of a Share exceeds the option price per
Share applicable to the related option. A Stock Appreciation Right which is
granted separate from an Option may be exercised at such times as specified in
the written instrument evidencing such right. Notwithstanding the foregoing, an
officer or director of the Company may only exercise a Stock Appreciation Right
in accordance with the provisions of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934. An Employee may exercise a Stock Appreciation
Right by giving written notice of exercise, specifying the number of Shares as
to which the right is exercised, to the Committee. Provided the exercise is
valid and in accordance with the terms of the Plan, the Company shall promptly,
after the receipt of such a notice, pay to the Employee the cash to which he is
entitled.
SECTION 10. NON-ASSIGNABILITY OF INCENTIVE AWARDS
- --------------------------------------------------
No Incentive Award granted under the Plan shall be assigned,
transferred, pledged, or otherwise encumbered by an Employee, otherwise than by
will, by designation of a beneficiary after death, or by the laws of descent
and distribution, or be made subject to execution, attachment or similar
process. Each Incentive Award shall be exercisable during the Employee's
lifetime only by the Employee or, if permissible under applicable law, by the
Employee's guardian or legal representative.
SECTION 11. CHANGE OF CONTROL
- ------------------------------
(a) GENERAL. In order to maintain all of the Employee's
rights in the event of a Change of Control of the Company, the Committee, in
its sole discretion, may, as to any Incentive Award, either at the time that an
Incentive Award is made or any time thereafter, take any one or more of the
following actions:
(i) provide for the acceleration of any time periods
relating to the exercise or realization of any such award, so
that such award may be exercised or realized in full on or
before a date fixed by the Committee,
(ii) provide for the purchase of any such award by
the Company, upon an Employee's request, for an amount of
cash equal to the amount that could have been attained upon
the exercise of such award or realization of such Employee's
rights had such award been currently exercisable or payable,
(iii) make such adjustment to any such award then
outstanding as the Committee deems appropriate to reflect a
Change of Control, or
(iv) cause any such award then outstanding to be
assumed, or new rights substituted therefor, by the acquiring
or surviving corporation, if any, in connection with a Change
of Control.
-11-
<PAGE> 13
(b) OPTIONS. All outstanding Options which are not yet
exercisable shall become immediately exercisable in full in the event of a
Change of Control of the Company.
SECTION 12. TAXES
- ------------------
(a) WITHHOLDING FOR TAXES. The Company shall be entitled, if
necessary or desirable, to withhold the amount of any tax attributable to any
amounts payable under any Incentive Award and the Company may defer making
payment of any Incentive Award if any such tax, charge, or assessment may be
pending until indemnified to its satisfaction.
(b) USE OF SHARES FOR TAX WITHHOLDING PAYMENTS. With the
approval of the Committee, Shares may be used in lieu of cash to pay all or any
part of the mandatory federal, state or local withholding tax payments to be
made by the Employee in connection with an Incentive Award, as follows:
(i) NONQUALIFIED STOCK OPTIONS. (a) The holder of a
Nonqualified Stock Option may elect to have the Company
retain from the Shares to be issued upon exercise of such
an option Shares having a Fair Market Value equal to the
withholding tax to be paid; or (b) the holder of a
Nonqualified Stock Option may deliver to the Company
already-owned Shares having a Fair Market Value equal to
the withholding tax to be paid and in such case, the
election to use already-owned Shares for such purpose and
the exercise of the Nonqualified Stock Option may occur
at any time.
(ii) RESTRICTED SHARE AWARDS. If withholding taxes
are required to be paid at the time Restricted Shares are
delivered to an Employee or at the expiration of the
Restricted Period, then the Employee may pay such taxes
by delivering to the Company already-owned Shares having
a Fair Market Value equal to the amount of the
withholding tax being paid by the use of already-owned
Shares.
(iii) PERFORMANCE SHARES. If withholding taxes are
required to be paid at the time Shares are delivered to
an Employee as a Performance Award, then the Employee may
pay such taxes by delivering to the Company already-owned
Shares having a Fair Market Value equal to the amount of
the withholding tax being paid by the use of
already-owned Shares.
SECTION 13. COMPLIANCE WITH LAWS AND EXCHANGE REQUIREMENTS
- -----------------------------------------------------------
No Option or Stock Appreciation Right shall be granted and no
Shares shall be issued in connection with any Incentive Award unless the grant
of the Option or the Stock Appreciation Right and the issuance and delivery of
Shares or cash pursuant to the Incentive
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<PAGE> 14
Award shall comply with all relevant provisions of state and federal law,
including, without limitation, the Securities Act of 1933, the Securities
Exchange Act of 1934, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed.
SECTION 14. AMENDMENT AND TERMINATION OF PLAN
- ----------------------------------------------
(a) AMENDMENT. The Board may from time to time amend the
Plan, or any provision thereof, in such respects as the Board may deem
advisable except that it may not amend the Plan without shareholder approval so
as to:
(i) increase the maximum number of Shares that may
be issued under the Plan except in accordance with Section
3(c);
(ii) permit the granting of Options with exercise
prices lower than those specified in Section 6;
(iii) materially modify the requirements as to
eligibility for participation in the Plan; or
(iv) prevent future grant of Incentive Awards to
qualify as "performance based" within the meaning of Section
162(m)(4)(C) of the Code.
(b) TERMINATION. The Board may at any time terminate the
Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any amendment or the
termination of the Plan shall not adversely affect any Incentive Award
previously granted nor disqualify an Incentive Award from being treated as
"performance based" within the meaning of Section 162(m)(4)(C) of the Code.
Incentive Awards outstanding at the time that the Plan is amended or terminated
shall remain in full force and effect as if the Plan had not been amended or
terminated.
SECTION 15. NOTICES
- --------------------
Each notice relating to the Plan shall be in writing and
delivered in person or by certified or registered mail to the proper address.
Each notice to the Committee shall be addressed as follows: Amcast Industrial
Corporation, 7887 Washington Village Drive, Post Office Box 98, Dayton, Ohio
45401-0098, Attention: Compensation Committee. Each notice to a Participant
shall be addressed to the Participant at the address of the Participant
maintained by the Company on its books and records. Anyone to whom a notice may
be given under this Plan may designate a new address by written notice to the
other party to that effect.
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<PAGE> 15
SECTION 16. BENEFITS OF PLAN
- -----------------------------
This Plan shall inure to the benefit of and be binding upon
each successor of the Company. All rights and obligations imposed upon a
Participant and all rights granted to the Company under this Plan shall be
binding upon the Participant's heirs, legal representatives and successors.
SECTION 17. PRONOUNS AND PLURALS
- ---------------------------------
All pronouns shall be deemed to refer to the masculine,
feminine, singular or plural, as the identity of the person or persons may
require.
SECTION 18. SHAREHOLDER APPROVAL AND TERM OF PLAN
- --------------------------------------------------
(a) The Plan shall become effective upon its adoption by the
Board. No payment of cash or Shares in connection with an Incentive Award shall
be made, and no Option shall be exercised, prior to the approval of the Plan by
the affirmative vote of the holders of a majority of the outstanding Shares
present, in person or by proxy, and entitled to vote at an annual meeting of
the shareholders of the Company. Unless the Plan shall be so approved by the
shareholders of the Company at the next annual meeting after its adoption by
the Board, the Plan shall terminate and all Incentive Awards granted under the
Plan shall be canceled.
(b) Unless sooner terminated under Section 14, the Plan shall
be in effect from the date of its adoption by the Board and automatically
terminate on the tenth anniversary of its adoption by the Board.
- ---------------------
(1) The Plan was approved by the Board on August 25, 1999.
-14-
<PAGE> 1
EXHIBIT 13.1
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
($ in thousands except per share amounts)
CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES REFORM ACT OF 1995
Certain statements in this Report, in the Company's press releases, and in oral
statements made by or with the approval of an authorized executive officer of
the Company constitute "forward-looking statements" as that term is defined
under the Private Securities Litigation Reform Act of 1995. These may include
statements projecting, forecasting, or estimating Company performance and
industry trends. The achievement of the projections, forecasts, or estimates is
subject to certain risks and uncertainties. Actual results and events may differ
materially from those projected, forecasted, or estimated. Factors which may
cause actual results to differ materially from those contemplated by the
forward- looking statement, include, among others: general economic conditions
less favorable than expected, fluctuating demand in the automotive industry,
less favorable than expected growth in sales and profit margins in the Company's
product lines, increased competitive pressures in the Company's Engineered
Components and Flow Control Products segments, effectiveness of production
improvement plans, inherent uncertainties in connection with international
operations and foreign currency fluctuations and labor relations at the Company
and its customers. The following discussion and analysis provides information
which management believes is relevant to an understanding of the Company's
consolidated results of operations and financial condition. This discussion
should be read in conjunction with the accompanying consolidated financial
statements and notes thereto.
BUSINESS SEGMENTS
In the fourth quarter of fiscal 1999, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This Statement requires the Company to
report financial and descriptive information about its operating segments on the
same basis that is used internally to assess operating performance and allocate
resources to segments. Operating segments are organized internally primarily by
the type of products produced and markets served, and in accordance with SFAS
No. 131, the Company has aggregated similar operating segments into two
reportable segments: Flow Control Products and Engineered Components. Adoption
of the new standard did not result in a change in the Company's reportable
segments.
The Flow Control Products segment is a supplier of copper and brass plumbing
fittings for the industrial, commercial and residential construction markets,
and in prior years, valves utilized in air conditioning and refrigeration
systems and industrial compressed gas applications. The Engineered Components
segment is a supplier of aluminum wheels and aluminum automotive components for
automotive original equipment manufacturers and cast and fabricated metal
products for sale to original equipment manufacturers in the transportation,
construction, air conditioning, and refrigeration industries.
ACQUISITIONS, DIVESTITURES, AND RESTRUCTURING
At the end of 1997, the Company completed a significant acquisition that impacts
the comparison of financial results of 1997 with 1998 and 1999. On August 19,
1997, the Company acquired all of the outstanding stock of Speedline S.p.A.
(Speedline); a major European manufacturer of light-alloy wheels serving the
automotive original equipment market located near Padova, Italy. Accordingly,
the acquisition was reflected in the August 31, 1997 year-end balance sheet, but
had no material effect on 1997 operating results. Primarily as a result of the
acquisition of Speedline, the percentage of the Company's sales derived from the
Engineered Components segment increased to 73.9% and 68.6% in 1999 and 1998,
respectively, from 58.1% in 1997.
During 1998 and 1999, the Company completed several transactions that impact the
Company's financial results for those years and affect the comparison between
1999, 1998, and 1997. On October 16, 1998, the Company sold Superior Valve
Company (Superior Valve) for $35,604 in cash. The transaction resulted in a
pre-tax gain of $9,023. This business, acquired by Amcast in 1986, produces
specialty valves and related products for the compressed gas and commercial
refrigeration markets. Fiscal 1998 sales of approximately $42,000 were included
in the Company's Flow Control segment.
Effective March 30, 1998, the Company sold its Rancho Cucamonga, California
investment casting operation, Amcast Precision (Precision), for $25,445 in cash.
The transaction resulted in a pre-tax gain of $12,048. The facility, acquired by
Amcast in 1987, produces ferrous and nonferrous castings for the aerospace
industry. Fiscal 1997 sales of approximately $19,000 were included in the
Engineered Components segment. This was the only Amcast operation involved in
the aerospace industry.
14
<PAGE> 2
On April 9, 1998, the Company acquired Lee Brass Company, a privately-owned
company located in Anniston, Alabama. Lee Brass is a major manufacturer of cast
brass products for residential, commercial, and industrial plumbing systems. The
purchase price was approximately $16,100 consisting of cash payments of $11,700
and debt assumption of $4,400. The acquisition resulted in goodwill of $7,500.
Sales of Lee Brass for the twelve months ended December 31, 1997 were
approximately $39,000. Financial results for Lee Brass are included in the Flow
Control Products segment since the date of acquisition.
Following the acquisition of Lee Brass, the Company consolidated its two brass
foundry operations and ceased production at its Flagg Brass plant located in
Stowe, Pennsylvania. The consolidation plan included the transfer of certain
product lines to Lee Brass, the closure of the Flagg Brass facility, and the
termination of approximately 100 salaried and hourly personnel. In connection
with the consolidation plan, during the third quarter of 1998, the Company
recorded a restructuring charge of $5,800 for facility exit costs and a charge
of $2,200, included in cost of sales, primarily for a non-cash write-down of
inventory to its net realizable value. Key components of the $5,800
restructuring charge were $4,900 for a non-cash write-down of assets to their
net realizable value, $500 for severance and other termination benefits, and
$400 for other facility closure costs. As of August 31, 1999, all associates had
been terminated and all of the severance and most of the facility closure costs
had been charged against the liability. During the second quarter of fiscal
1999, the Company wrote off $4,504 of net assets related to the Flagg Brass
operation against the previously established long-term reserve. The majority of
assets had been classified as assets held for sale and were included in Other
Assets in the Company's Consolidated Statements of Financial Condition. The
Company expects that the closure of Flagg Brass will be completed by December
31, 1999. Fiscal 1998 sales of approximately $7,800 were included in the Flow
Control segment.
During the third quarter of fiscal 1998, the Company also re-evaluated its
reserves related to several iron foundries previously closed in the 1980's and
early 1990's. As a result, a $4,000 restructuring charge was recorded to cover
higher than expected medical benefits, workers compensation expenses, and legal
costs related to these previously closed facilities.
The sale of Precision and Superior Valve and the closure of Flagg Brass are
collectively referred to as "divested operations" in this Management's
Discussion and Analysis.
RESULTS OF OPERATIONS
In 1999, consolidated net sales increased to $588,933. Demand for the Company's
copper and brass plumbing fittings, aluminum automobile wheels, and
performance-critical aluminum automotive components was strong. Significant
volume gains and incremental growth from Lee Brass and Speedline increased sales
by 16.0%, more than offsetting a 10.2% decrease in sales volume from divested
operations. As a result, consolidated net sales increased 5.8% due to volume,
partially influenced by a General Motors work stoppage in the last quarter of
fiscal 1998. Market pricing pressures in the Flow Control Products segment and
lower aluminum costs reflected in the Engineered Components segment's pricing
more than offset favorable product mix gains, which when combined, decreased
consolidated net sales by 3.6%. By segment, Engineered Components sales
increased 10.5% primarily due to volume gains related to increased wheel sales.
Flow Control Products sales decreased 14.8% primarily due to divested
operations. In 1998, consolidated net sales increased by 48.4% to $574,414 due
primarily to the acquisitions of Speedline and Lee Brass and to growth in the
aluminum components business. By segment, Engineered Components sales increased
75.1% primarily due to the inclusion of Speedline sales and to the increased
aluminum component sales. Flow Control Products net sales increased 11.4% due to
the inclusion of Lee Brass and increased sales of the Company's copper and brass
plumbing fitting products.
Gross profit was $93,025, $93,004, and $69,040 in 1999, 1998, and 1997,
respectively. As a percentage of sales, gross profit decreased to 15.8% in 1999
from 16.2% in 1998 and 17.8% in 1997. The lower gross profit percentage in 1999
and 1998 compared with 1997 reflects a change in the Company's sales mix to a
higher percentage of Engineered Component product sales, which generally have
lower gross margins than Flow Control Products. Additionally, in the last half
of fiscal 1999, the Company experienced higher than expected costs and
low-product yields due to high turnover of skilled labor in two Indiana wheel
plants, as well as to the launch of new suspension products at the Company's
newest plant in Ohio. The aluminum suspension components are for popular car
models. The launch proved to be very difficult and was accompanied by high
turnover, high scrap, low productivity, and extraordinary costs to ensure an
adequate customer supply. These combined factors reduced gross profit in the
second half of 1999. The Company has made progress, but some negative influence
on the first quarter of fiscal 2000 results is anticipated. The gross profit
percentage for 1998 was hurt by a one-time charge ($2,200) related to closing
the Flagg Brass facility and, to a lesser degree, operating inefficiencies
encountered at one of the Company's automotive component plants in the first
half of the year.
Selling, general, and administrative (SG&A) expenses were $55,938, $57,294, and
$41,798 in 1999, 1998, and 1997, respectively. The dollar amount of SG&A
expenses decreased in 1999 primarily due to divested operations and a reduction
in pension cost and incentive plan expense. The dollar amount of SG&A expenses
increased in 1998 compared with 1997 due to the inclusion of Speedline and Lee
Brass. As a percentage of sales, SG&A expenses decreased to 9.5% in 1999 from
10.0% in 1998 and 10.8% in 1997. This decrease reflects a higher percentage of
sales in 1999 and 1998 contributed by the Engineered Components segment, which
generally has lower SG&A expenses.
The Company's pre-tax share of losses from Casting Technology Company (CTC), a
joint venture with Izumi Industries, was $1,452, $1,000, and $2,416 in 1999,
1998, and 1997, respectively. CTC's results for 1999 were reduced by foreign
exchange losses resulting from the strengthening of the yen, operating
inefficiencies resulting from efforts to meet extremely high customer demand
early in the year, and difficulties hiring and retaining skilled labor which led
to manufacturing
15
<PAGE> 3
inefficiencies and higher scrap. The 1998 results of CTC were hurt by lost sales
resulting from the General Motors work stoppage.
Interest expense was $13,182 in 1999, $15,045 in 1998, and $5,135 in 1997.
Higher interest expense in 1999 and 1998 compared with 1997 is primarily due to
the cost of financing the Speedline operation. Interest expense also increased
in 1998 as a result of the impact of the General Motors work stoppage on the
Company's operating income and working capital. Significant debt reductions in
1999 and, to a lesser degree, lower interest rates, reduced interest expense for
1999.
The effective tax rate for 1999, 1998, and 1997 was 38.8%, 27.0%, and 35.1%,
respectively. Changes in the effective tax rates primarily reflect the level of
federal and state tax credits applicable to U.S. taxes, and a one-time
adjustment of $2,562 in 1998 from a reduction of Italian tax rates. Excluding
this adjustment, the effective tax rate for 1998 was 38.2%. The higher effective
tax rate in 1999 relates primarily to a permanent tax basis difference
associated with the sale of Superior Valve in the first quarter.
Effective September 1, 1997, the Company adopted the provisions of the American
Institute of Certified Public Accountants' Statement of Position (SOP) 98-5,
"Reporting on the Costs of Start-Up Activities." SOP 98-5 provides guidance on
the financial reporting of start-up and organization costs and requires such
costs to be expensed as incurred. The total amount of deferred start-up costs
reported as a cumulative effect of a change in accounting principle in 1998 was
$8,588, net of tax benefits of $5,044. The Company's share of CTC's cumulative
effect of a change in accounting principle was $3,529, net of tax.
FLOW CONTROL PRODUCTS Net sales of the Flow Control Products segment were
$153,903 in 1999, compared with $180,596 in 1998 and $162,150 in 1997. Decreased
sales from divested operations more than offset volume gains resulting in a 9.3%
net reduction in sales volume in 1999. Pricing pressures in the Company's copper
and brass fittings business, net of favorable mix benefits, decreased segment
sales by an additional 5.5%. Operating income was $26,919 in 1999 compared with
$27,931 for 1998. Cost reduction efforts and lower material costs partially
offset the impact of pricing pressures in the Company's copper and brass
fittings business. Increased volumes of copper and brass plumbing fittings in
1998 resulting from the Lee Brass acquisition and higher product sales of the
Company's copper and brass fittings provided a 15.4% increase over 1997. Pricing
pressures which were largely offset by lower material costs reduced sales by
4.1%. As a result of the higher volume, operating income increased to $27,931 in
1998, an increase of 14.7% over the $24,358 operating income achieved in 1997.
ENGINEERED COMPONENTS Net sales of the Engineered Components segment were
$435,030 in 1999, compared with $393,818 in 1998 and $224,901 in 1997. Strong
aluminum wheel sales in North America and Europe contributed to a 16.1% increase
in segment sales in 1999 due to volume, 12.8% net of divested operations.
However, sales decreased by 2.3% from a combination of a favorable product mix
and a stronger Italian lira in 1999 versus 1998, largely offset by lower
aluminum costs which are also reflected in the selling price of the Company's
products. Operating income was $19,708 in 1999 compared with $19,609 in 1998.
Operating income reflects the unfavorable impact of labor turnover and
new-product launch issues previously discussed. The 1998 sales increase was due
primarily to the addition of Speedline. The sales of aluminum brake, suspension,
and chassis components and North American aluminum wheels were running at a rate
nearly 14% higher than in 1997, before the impact of the General Motors work
stoppage, which more than offset those gains in the last quarter of 1998.
Operating income increased over 100% to $19,609 in 1998 compared with the $9,531
achieved in 1997. The increase was due primarily to Speedline and reduced
start-up amortization expense. The improvement in volume at the Company's North
American automotive operations in the first nine months of 1998 added
significantly to operating income but was more than offset by the impact of the
General Motors work stoppage in the fourth quarter and a less favorable product
mix.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations was strong in 1999, totaling $64,770, compared with
$9,580 in 1998 and $30,675 in 1997. In each of the three years, cash was
primarily provided by net income and the non-cash benefits of depreciation.
Changes in the components of working capital, excluding short-term and current
debt and divested operations, provided $18,496 in 1999 compared with $37,753
used in 1998. During 1998 working capital, excluding short-term and current
debt, increased 26% as a result of the Lee Brass acquisition and the Precision
divestiture, coupled with the increased sales volume and inventory build during
the General Motors work stoppage.
Investing activities used net cash of $12,656 in 1999, compared with $33,018 in
1998 and $91,954 in 1997. Proceeds from the sale of Superior Valve in the first
quarter of fiscal 1999 provided $35,604, which was primarily used to reduce
long-term debt. Cash outlays for business acquisitions used $12,247 in 1998
primarily for the Lee Brass acquisition and $48,486 in 1997 for the Speedline
acquisition, both previously discussed. Capital expenditures totaled $47,360,
$46,763, and $40,377, in 1999, 1998, and 1997, respectively. To support business
expansion activities, investments were made in property, plant, and equipment
and in CTC. Capital expenditures are expected to decrease significantly in 2000
from prior levels, as the Company turns its focus from expansion to cost
reduction and improved production efficiencies. At August 31, 1999, the Company
had $6,080 of commitments for capital expenditures to be made in 2000, primarily
for the Engineered Components segment. During the first quarter of fiscal 2000,
the Company increased its investment in CTC with an additional capital
contribution of $7,200, accomplished through conversion of a $3,000 note
receivable and $4,200 of accounts receivable.
Financing activities used $51,466 in cash in 1999, versus net cash provided of
$21,033 and $65,474 in 1998 and 1997, respectively. During 1999, the Company
reduced total debt by $51,904. Additional financing in 1999 includes $36,154
borrowed under the Company's revolving credit agreement and $10,105 from the
sale-leaseback of equipment. Long-term debt repayments were $66,993, financed in
part with the proceeds from the Superior Valve disposition, and net short-term
borrowings declined by $21,065. Cash used by financing activities also includes
$4,594 for repurchases of the Company's common stock and $5,109 for the payment
of dividends. Net cash provided
16
<PAGE> 4
by financing activities in 1998 was used to finance the Lee Brass acquisition,
business expansion, a working capital increase due to the General Motors work
stoppage, and to pay dividends. During 1998, the Company replaced $46,807 of its
Speedline debt with borrowings under its $200 million revolver. Net cash
provided by financing activities in 1997 included $70,000 in borrowings under
the Company's credit agreement, primarily to finance the Speedline acquisition.
On August 14, 1997, the Company replaced its prior credit facility with a new
Credit Agreement (the Agreement) that provides for up to $200,000 in borrowings
through 2002. At August 31, 1999, the Company had unused borrowing capacity of
$12,900 under the most restrictive debt covenant of the Agreement. The Company
also has lines of credit totaling $27,000; at August 31, 1999, there was nothing
outstanding under these lines of credit. In addition, Speedline has short-term
lines of credit totaling $34,300, of which $29,627 was available at July 31,
1999.
The ratio of long-term debt as a percent of capital decreased to 50.5% at
August 31, 1999 from 57.5% at August 31, 1998, reflecting a net reduction in
debt. Book value per common share at August 31, 1999, was $19.07, up from $17.47
for the prior year. One million preferred shares and approximately 5.8 million
common shares are authorized and available for future issuance. On December 17,
1998, the Company announced a plan to repurchase up to 750,000 of its
outstanding common shares. As of August 31, 1999, 250,000 shares have been
repurchased under this plan at an average cost of $16.71 per share. The Company
currently has 8,954,920 shares outstanding. Management believes the Company has
adequate financial resources to meet its future needs.
CONTINGENCIES The Company, as is normal for the industry in which it operates,
is involved in certain legal proceedings and subject to certain claims and site
investigations that arise under the environmental laws and which have not been
finally adjudicated. To the extent possible, with the information available, the
Company regularly evaluates its responsibility with respect to environmental
proceedings. The factors considered in this evaluation are more fully described
in the Commitments and Contingencies note to the consolidated financial
statements. At August 31, 1999, the Company had reserves of $1,758 accrued for
environmental liabilities. Allied-Signal Inc. brought an action against the
Company seeking a contribution from the Company equal to 50% of Allied-Signal's
estimated $30,000 remediation cost in connection with a site in southern Ohio.
The Company believes its responsibility with respect to this site is very
limited due to the nature of the foundry sand waste it disposed of at the site.
The court has rendered its decision on this case; however, the exact amount of
the verdict has not yet been determined by the court. The amount will be
significantly less than the amount sought by the plaintiff and the Company
estimates its liability associated with the action to be between $500 and
$1,500. The Company believes its liability is at the low end of this range. The
Company is of the opinion that, in light of its existing reserves, its liability
in connection with environmental proceedings should not have a material adverse
effect on its financial condition, results of operations, or cash flows. The
Company is presently unaware of the existence of any potential material
environmental costs that are likely to occur in connection with disposition of
any of its property.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS During 1999, the Company adopted
SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The adoption of
these standards had no effect on the Company's consolidated results of
operations, financial position, or cash flows.
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income, which is defined as all changes in shareholders' equity
during a period except those resulting from investments by and distributions to
shareholders. The standard requires reporting certain transactions that result
in a change in shareholders' equity to be included in other comprehensive
income.
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits" revises the disclosure requirements related to pension and other
postretirement benefits. The new standard does not change the measurement or
accounting recognition for such plans.
The new reporting requirements of SFAS Nos. 130 and 132 are included in the
accompanying consolidated financial statements and notes thereto.
The Company also adopted SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," which requires that certain
costs related to developing or obtaining internal use software should be
capitalized. The adoption of this standard did not have a material effect on the
Company's consolidated results of operations, financial position, or cash flows.
New accounting standards issued include SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes a comprehensive standard
for the recognition and measurement of derivatives and hedging activities. The
new standard requires that all derivatives be recognized as assets or
liabilities in the statement of financial position and measured at fair value.
Gains or losses resulting from changes in fair value are required to be
recognized in current earnings unless specific hedge criteria are met. SFAS No.
133 will become effective for the Company beginning in the first quarter of
fiscal year 2001. The Company has not determined the effect of this new
standard; however, due to the Company's limited use of derivatives, the impact
is not expected to be material.
MARKET RISKS
The Company is exposed to market risk from changes in foreign currency exchange
rates and interest rates as part of its normal operations. To manage the
volatility relating to these exposures on a consolidated basis, the Company
takes advantage of natural offsets. The Company has estimated its market risk
exposures using sensitivity analyses assuming a 10% change in market rates.
17
<PAGE> 5
FOREIGN CURRENCY EXCHANGE RATE RISK Due to its foreign operations, the Company
has assets, liabilities, and cash flows in currencies other than the U.S.
dollar. The Company minimizes the impact of foreign currency exchange rate
fluctuations on its Italian net investment with debt borrowings denominated in
Italian lira. Fluctuations in foreign currency exchange rates also impact the
dollar value of non-U.S. cash flows. To illustrate the potential impact of
changes in foreign currency exchange rates on the dollar value of non-U.S. cash
flows, a hypothetical 10% change in the average exchange rates for 1999 and 1998
would change income before taxes by approximately $1,200 and $1,000,
respectively.
The Company's Italian operations also attempt to balance asset and liability
positions that are denominated in non-functional currencies, primarily the U.S.
dollar, Japanese yen, and British pound sterling in 1999 and the U.S. dollar,
German mark, and French franc in 1998. During 1999 and 1998, the net exposure
averaged approximately $2,200 and $6,000, respectively. A hypothetical 10%
change in the average exchange rates would change the exposure by $200 and $600,
respectively, and that change would be reflected in the operating results of the
Company. The analysis assumes a parallel shift in currency exchange rates,
relative to the Italian lira. Exchange rates rarely move in the same direction,
and the assumption that the exchange rates change in parallel may overstate the
impact of the foreign currency exchange rate fluctuations. The decrease in net
exposure between years is primarily due to the introduction of the Euro and
favorable lira exchange rates.
INTEREST RATE RISK To manage its exposure to changes in interest rates, the
Company uses both fixed and variable rate debt. At August 31, 1999 and 1998, the
Company had approximately $127,200 and $172,800 of debt obligations outstanding
with variable interest rates with a weighted-average effective interest rate of
4.5% and 5.73%, respectively. A hypothetical 10% change in the effective
interest rate for these borrowings, using the outstanding debt levels at August
31, 1999 and 1998, would change interest expense by approximately $600 and
$1,000 respectively. The decrease in interest rate exposure is primarily due to
lower effective interest rates.
YEAR 2000
The Year 2000 issue results from the historically widespread practice of
computer programs using only two digits for the year designation in date codes
used in the software that controls the operation and data processing in a
variety of business and office systems as well as computerized equipment used in
the manufacture and distribution of products. The issue is that, in many cases,
affected computers may not be able to distinguish between the year 1900 and the
year 2000. Where that situation occurs, it is possible that the computer and any
process it controls may cease to function, which in turn, could cause a
disruption that could have a significant financial impact on the affected
business, its customers, and its vendors.
During 1999, the Company continued its Year 2000 remediation program. That
program includes developing a complete inventory of potentially affected
systems, an impact analysis, inquiries of systems or component manufacturers,
compliance testing, updating or replacing software or hardware as required, unit
and system testing, and developing work-arounds or contingency plans in the
event remediation is not possible. The program includes business and engineering
systems including Enterprise Resource Planning systems, EDI systems, Local Area
Networks, CAD/CAM systems, production and research equipment, and office and
factory infrastructure and support equipment and systems including HVAC, power,
phone systems, and determination of third party preparedness through inquiries
and visits with key vendors and customers.
The Company's remediation program was executed primarily by internal resources.
As a result, incremental costs to complete the project have been limited. The
Company estimates that it will have spent between $1,300 and $1,500 to complete
its program by December 31, 1999. The Company is also in the process of
installing an enterprise resource system in its North American automotive group.
The intent of this project is to improve business processes. This project has
also remediated Year 2000 issues with the systems formerly used in certain
plants. The entire project is expected to take approximately three years to
complete. Cost of the project is estimated to be between $5,000 and $6,000 for
hardware and software including training and installation. These costs have been
funded through internal cash flow.
As of August 31, 1999, much of the remediation program was completed. All steps
for systems were completed for all locations in the Flow Control segment prior
to August 31, 1999. The program was either completed or expected to be completed
at each of the Company's Engineered Components locations and Corporate
Headquarters, including any necessary work-arounds, by December 31, 1999.
The Company believes its risk is low in the event of Year 2000 issues. Although
there can be no guarantee that there will be no risk of business interruption as
a result of Year 2000 issues which could have a material impact on the Company's
financial results, the Company does not expect significant issues.
The Company engaged an independent third party to evaluate its Year 2000
remediation and preparedness at selected locations in the fourth quarter of
fiscal 1999. All recommendations are being acted on and are expected to be
complete by December 31, 1999. The Company's Year 2000 preparedness team is
continuing to audit all locations in the first quarter of 2000 to ensure the
recommendations have been followed and that contingency plans are fully
developed and in place by December 31, 1999.
In the Company's opinion, the most serious consequence of a Year 2000 issue
would be failure of a gas or electric utility to deliver service to one or more
of the Company's manufacturing operations for an extended period of time. Such
failure would be likely to cause production and shipping to cease for a period
of time which cannot be reasonably estimated by the Company. The Company has
received indications from its gas and electric utility providers that they are
or will be Year 2000 compliant by December 31, 1999. Other less serious risks
involve the possible disruption of delivery of aluminum, copper
18
<PAGE> 6
and other raw material and supplies. Given the ready availability of most of
these items from a variety of alternate sources, the Company does not expect a
significant impact from any failures in its supply chain from Year 2000 issues.
EURO CONVERSION
On January 1, 1999, certain members of the European Union irrevocably fixed the
conversion rates between their national currencies and a common currency, the
"Euro", which became the legal currency on that date. The participating
countries' former national currencies continue to exist as denominations of the
Euro until January 1, 2002. The Company is in various stages of assessments and
implementation and although difficult to predict, any competitive implications
and any impact on existing financial instruments resulting from the Euro
implementation are not expected to be material to the Company's financial
condition, liquidity, or results of operations.
<TABLE>
<CAPTION>
SELECTED DATA
($ in thousands except per share amounts)
FINANCIAL DATA 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net sales ................................. $588,933 $574,414 $387,051 $343,934 $328,231
Operating income .......................... 46,110 37,958 27,242 27,328 26,972
Operating income percent .................. 7.8% 6.6% 7.0% 7.9% 8.2%
Income before income taxes and cumulative
effect of accounting change ........... 31,538 22,975 20,005 24,731 26,098
Income before cumulative effect
of accounting change .................. 19,317 16,765 12,983 15,926 17,171
Net income ................................ 19,317 8,177 12,983 15,926 17,171
Working capital ........................... 68,955 86,929 26,260 57,774 47,845
Total assets .............................. 533,486 563,450 508,918 269,217 229,367
Long-term debt ............................ 174,061 217,199 145,304 58,783 29,687
- ------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
Income before cumulative effect
of accounting change - basic .......... $ 2.11 $ 1.82 $ 1.50 $ 1.85 $ 2.02
Net income - basic ........................ $ 2.11 $ .89 $ 1.50 $ 1.85 $ 2.02
Weighted average number of common shares
outstanding - basic (in thousands) .... 9,144 9,200 8,674 8,606 8,517
Income before cumulative effect
of accounting change - diluted ........ $ 2.11 $ 1.81 $ 1.48 $ 1.84 $ 2.00
Net income - diluted ...................... $ 2.11 $ .88 $ 1.48 $ 1.84 $ 2.00
Weighted average number of common shares
outstanding - diluted (in thousands) .. 9,162 9,250 8,754 8,628 8,598
Dividends declared ........................ $ .56 $ .56 $ .56 $ .56 $ .53
Book value ................................ $ 19.07 $ 17.47 $ 17.24 $ 15.80 $ 14.52
- ------------------------------------------------------------------------------------------------------------------
STATISTICAL DATA
Current ratio ............................. 1.5 1.6 1.1 2.1 1.9
Long-term debt as a percent of capital .... 50.5% 57.5% 47.9% 30.2% 19.3%
Number of associates ...................... 4,960 4,500 4,040 2,600 2,400
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 7
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands except per share amounts)
Year Ended August 31
1999 1998 1997
<S> <C> <C> <C>
Net sales ............................................... $ 588,933 $ 574,414 $ 387,051
Cost of sales ........................................... 495,908 481,410 318,011
- -------------------------------------------------------------------------------------------------------
GROSS PROFIT 93,025 93,004 69,040
Selling, general and administrative expenses ............ 55,938 57,294 41,798
Restructuring charges ................................... -- 9,800 --
Gain on sale of businesses .............................. (9,023) (12,048) --
- -------------------------------------------------------------------------------------------------------
OPERATING INCOME 46,110 37,958 27,242
Equity in loss of joint venture
and other (income) and expense ...................... 1,390 (62) 2,102
Interest expense ........................................ 13,182 15,045 5,135
- -------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 31,538 22,975 20,005
Income taxes ............................................ 12,221 6,210 7,022
- -------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 19,317 16,765 12,983
Cumulative effect of accounting
change, net of tax .................................. -- (8,588) --
- -------------------------------------------------------------------------------------------------------
NET INCOME $ 19,317 $ 8,177 $ 12,983
=======================================================================================================
BASIC EARNINGS PER SHARE
Income before cumulative effect
of accounting change ................................ $ 2.11 $ 1.82 $ 1.50
Cumulative effect of accounting change .................. -- (.93) --
- -------------------------------------------------------------------------------------------------------
Net income .............................................. $ 2.11 $ .89 $ 1.50
=======================================================================================================
DILUTED EARNINGS PER SHARE
Income before cumulative effect of
accounting change ................................... $ 2.11 $ 1.81 $ 1.48
Cumulative effect of accounting change -- (.93) --
- -------------------------------------------------------------------------------------------------------
Net income .............................................. $ 2.11 $ .88 $ 1.48
=======================================================================================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
20
<PAGE> 8
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
($ in thousands)
August 31
1999 1998
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents .......................................... $ 6,928 $ 7,022
Accounts receivable ................................................ 97,819 111,066
Inventories ........................................................ 77,166 84,255
Other current assets ............................................... 21,144 20,308
- --------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 203,057 222,651
PROPERTY, PLANT, AND EQUIPMENT
Land ............................................................... 8,948 8,858
Buildings .......................................................... 59,143 62,902
Machinery and equipment ............................................ 306,228 307,849
Construction in progress ........................................... 26,693 19,269
- --------------------------------------------------------------------------------------------------------
401,012 398,878
Less accumulated depreciation ...................................... 144,254 138,761
- --------------------------------------------------------------------------------------------------------
256,758 260,117
GOODWILL ............................................................... 61,261 62,555
OTHER ASSETS ........................................................... 12,410 18,127
- --------------------------------------------------------------------------------------------------------
$ 533,486 $ 563,450
========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt .................................................... $ 4,673 $ 16,878
Current portion of long-term debt .................................. 6,182 6,370
Accounts payable ................................................... 82,396 72,887
Compensation and related items ..................................... 21,875 19,336
Accrued expenses ................................................... 18,976 20,251
- --------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 134,102 135,722
LONG-TERM DEBT - LESS CURRENT PORTION .................................. 174,061 217,199
DEFERRED INCOME TAXES .................................................. 32,775 25,164
DEFERRED LIABILITIES ................................................... 21,782 24,551
SHAREHOLDERS' EQUITY
Preferred shares, without par value:
Authorized - 1,000,000 shares; Issued - None ................... -- --
Common shares, at stated value
Authorized - 15,000,000 shares
Issued - 9,208,529 and 9,206,529 shares, respectively .......... 9,209 9,207
Capital in excess of stated value .................................. 79,020 78,964
Accumulated other comprehensive losses ............................. (1,018) (945)
Retained earnings .................................................. 87,796 73,588
Cost of 253,609 common shares in treasury .......................... (4,241) --
- --------------------------------------------------------------------------------------------------------
170,766 160,814
- --------------------------------------------------------------------------------------------------------
$ 533,486 $ 563,450
========================================================================================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
21
<PAGE> 9
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
($ in thousands except per share amounts)
Accumulated
Capital in Other
Common Excess of Comprehensive Retained Treasury
Shares Stated Value Losses Earnings Stock Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT AUGUST 31, 1996 ......... $ 8,618 $ 65,003 $ -- $ 62,543 $ -- $ 136,164
Net income ..................... -- -- -- 12,983 -- 12,983
---------
TOTAL COMPREHENSIVE INCOME 12,983
Stock issued for acquisition ... 478 12,022 -- -- -- 12,500
Cash dividends declared,
$.56 per share ............. -- -- -- (4,922) -- (4,922)
Stock options exercised ........ 78 1,356 -- -- -- 1,434
Other .......................... 3 103 -- (39) -- 67
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE AT AUGUST 31, 1997 ......... 9,177 78,484 -- 70,565 -- 158,226
Net income ..................... -- -- -- 8,177 -- 8,177
Foreign currency translation ... -- -- (945) -- -- (945)
---------
TOTAL COMPREHENSIVE INCOME 7,232
Cash dividends declared,
$.56 per share ............. -- -- -- (5,154) -- (5,154)
Stock options exercised ........ 30 480 -- -- -- 510
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE AT AUGUST 31, 1998 ......... 9,207 78,964 (945) 73,588 -- 160,814
NET INCOME ..................... -- -- -- 19,317 -- 19,317
FOREIGN CURRENCY TRANSLATION ... -- -- 169 -- -- 169
MINIMUM PENSION LIABILITY,
NET OF TAX BENEFIT OF $148 .. -- -- (242) -- -- (242)
---------
TOTAL COMPREHENSIVE INCOME 19,244
CASH DIVIDENDS DECLARED,
$.56 PER SHARE .............. -- -- -- (5,109) -- (5,109)
PURCHASE TREASURY STOCK ........ -- -- -- -- (4,594) (4,594)
STOCK OPTIONS EXERCISED ........ 2 34 -- -- -- 36
STOCK AWARDS ................... -- 22 -- -- 353 375
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE AT AUGUST 31, 1999 ......... $ 9,209 $ 79,020 $ (1,018) $ 87,796 $ (4,241) $ 170,766
===========================================================================================================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
22
<PAGE> 10
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Year Ended August 31
1999 1998 1997
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income ............................................... $ 19,317 $ 8,177 $ 12,983
Depreciation and amortization ............................ 31,346 32,113 20,463
Non-cash restructuring and inventory write-down .......... -- 12,000 --
Cumulative effect of accounting change ................... -- 8,588 --
Gain on sale of businesses ............................... (9,023) (12,048) --
Deferred liabilities ..................................... 4,634 (1,497) (801)
Changes in assets and liabilities, net of acquisitions
Accounts receivable .................................. 7,581 (9,667) (5,203)
Inventories .......................................... (5,686) (9,122) (4,323)
Other current assets ................................. (1,421) 1,141 (2,920)
Accounts payable ..................................... 14,445 (11,833) 8,077
Accrued liabilities .................................. 2,156 (9,204) (669)
Other ................................................ 1,421 932 3,068
- --------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATIONS 64,770 9,580 30,675
INVESTING ACTIVITIES
Additions to property, plant, and equipment .............. (47,360) (46,763) (40,377)
Acquisitions, net of cash acquired ....................... (1,200) (12,247) (48,486)
Contributions to joint venture ........................... -- -- (3,226)
Proceeds from sale of businesses ......................... 35,604 25,445 --
Other .................................................... 300 547 135
- --------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (12,656) (33,018) (91,954)
FINANCING ACTIVITIES
Additions to long-term debt .............................. 36,154 85,871 70,000
Reduction in long-term debt .............................. (66,993) (30,216) (1,105)
Short-term borrowings .................................... (21,065) (29,978) --
Purchase of treasury stock ............................... (4,594) -- --
Proceeds from sale leaseback ............................. 10,105 -- --
Dividends ................................................ (5,109) (5,154) (4,922)
Other .................................................... 36 510 1,501
- --------------------------------------------------------------------------------------------------------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (51,466) 21,033 65,474
Effect of exchange rate changes on cash ...................... (742) (181) --
- --------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents ...................... (94) (2,586) 4,195
Cash and cash equivalents at beginning of year ............... 7,022 9,608 5,413
- --------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 6,928 $ 7,022 $ 9,608
========================================================================================================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
23
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands except per share amounts)
ACCOUNTING POLICIES
THE CONSOLIDATED FINANCIAL STATEMENTS include the accounts of Amcast Industrial
Corporation and its domestic and foreign subsidiaries (the Company).
Intercompany accounts and transactions have been eliminated. The Company's
investment in Casting Technology Company (CTC), a joint venture, is included in
the accompanying consolidated financial statements using the equity method of
accounting. The Company's investment in CTC was $2,394 and $3,846 at August 31,
1999 and 1998, respectively, and is included in Other Assets. Operations of the
Company's European subsidiaries are included in the consolidated financial
statements for periods ending one month prior to the Company's fiscal year end
in order to ensure timely preparation of the consolidated financial statements.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
FOR FOREIGN SUBSIDIARIES, the local foreign currency is the functional currency.
Assets and liabilities are translated into U.S. dollars at the rate of exchange
existing at year-end. Translation gains and losses are included as a component
of shareholders' equity. Income statement amounts are translated at the average
monthly exchange rates. Transaction gains and losses are included in the
statement of income and were not material.
REVENUE is recognized at the time products are shipped to customers.
CASH AND CASH EQUIVALENTS include amounts on deposit with financial institutions
and investments with original maturities of 90 days or less.
ACCOUNTS RECEIVABLE are stated net of allowances for doubtful accounts of $217
and $264 at August 31, 1999 and 1998, respectively. The Company held a note
receivable of $3,000 and accounts receivable of $6,498 and $3,962 from CTC at
August 31, 1999 and 1998, respectively. During the first quarter of fiscal 2000,
the Company increased its investment in CTC with an additional capital
contribution of $7,200 accomplished through conversion of a $3,000 note
receivable and $4,200 of the accounts receivable.
INVENTORIES are valued at the lower of cost or market using the last-in,
first-out (LIFO) and the first-in, first-out (FIFO) methods.
PROPERTY, PLANT, AND EQUIPMENT are stated at cost. Expenditures for significant
renewals and improvements are capitalized. Repairs and maintenance are charged
to expense as incurred. Depreciation is computed using the straight-line method
based upon the estimated useful lives of the assets as follows: buildings-20 to
40 years; machinery and equipment-3 to 20 years.
GOODWILL represents the excess of the cost of businesses acquired over the fair
market value of identifiable net assets at the dates of acquisition. Goodwill is
amortized on a straight-line basis over 40 years. Accumulated amortization of
goodwill was $3,494 and $2,259 at August 31, 1999 and 1998, respectively. The
carrying value of goodwill is evaluated periodically in relation to the
operating performance and future undiscounted cash flows of the underlying
businesses.
DEFERRED INCOME TAXES are provided for temporary differences between financial
and tax reporting in accordance with the liability method under the provisions
of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes."
USE OF ESTIMATES and assumptions are made by management in the preparation of
the financial statements in conformity with generally accepted accounting
principles that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. Earnings
per common share are calculated under the provisions of SFAS No. 128, "Earnings
per Share," which established new standards for computing and presenting
earnings per share. Adopted by the Company during 1998, SFAS No. 128 requires
the Company to report both basic earnings per share, which is based on the
weighted-average number of common shares outstanding, and diluted earnings per
share, which is based on the weighted-average number of common shares
outstanding plus all potential dilutive common shares outstanding. Earnings per
share amounts for all periods are presented, and where necessary, restated to
give effect to the adoption of SFAS No. 128.
START-UP AND ORGANIZATION COSTS are accounted for under the provisions of the
American Institute of Certified Public Accountants' Statement of Position (SOP)
98-5, "Reporting on the Costs of Start-Up Activities." Adopted by the Company
effective September 1, 1997, SOP 98-5 provides guidance on the financial
reporting of start-up and organization costs and requires such costs to be
expensed as incurred. The total amount of deferred start-up costs reported as a
cumulative effect of a change in accounting principle was $8,588, net of tax
benefits of $5,044. The Company's share of CTC's cumulative effect of a change
in accounting principle was $3,529, net of tax. Assuming the new accounting
principle was applied retroactively, pro forma earnings per share amounts for
the year ended August 31, 1997, are as follows:
<TABLE>
<CAPTION>
Basic Diluted
<S> <C> <C>
Earnings per Share
Income before cumulative effect of
accounting change-as reported $ 1.50 $ 1.48
Income before cumulative effect
of accounting change-pro forma $ 1.52 $ 1.51
Net income-as reported ........... $ 1.50 $ 1.48
Net income-pro forma ............. $ 1.52 $ 1.51
</TABLE>
24
<PAGE> 12
ACCOUNTING STANDARDS ADOPTED during 1999 include SFAS No. 130, "Reporting
Comprehensive Income," SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," and SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits." The adoption of these
standards had no effect on the Company's consolidated results of operations,
financial position, or cash flows.
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income, which is defined as all changes in shareholders' equity
during a period except those resulting from investments by and distributions to
shareholders. The standard requires reporting certain transactions that result
in a change in shareholders' equity to be included in other comprehensive income
and displayed as a separate component in the consolidated statements of
shareholders' equity.
SFAS No. 131 establishes new standards for determining operating segments and
disclosure requirements for those segments, products, geographic areas, and
major customers. As required by SFAS No. 131, the Company has revised certain
disclosures included in its Business Segments footnote.
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits," revises the disclosure requirements related to pension and other
postretirement benefits. The new standard does not change the measurement or
accounting recognition for such plans. As required by SFAS No. 132, the Company
has revised the disclosures included it its Pension Plans and Postretirement
Health Care and Life Insurance Benefits footnote.
The Company also adopted SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," which requires that certain
costs related to developing or obtaining internal use software should be
capitalized. The adoption of this standard did not have a material effect on the
Company's consolidated results of operations, financial position, or cash flows.
NEW ACCOUNTING STANDARDS issued include SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes a comprehensive standard
for the recognition and measurement of derivatives and hedging activities. The
new standard requires that all derivatives be recognized as assets or
liabilities in the statement of financial position and measured at fair value.
Gains or losses resulting from changes in fair value are required to be
recognized in current earnings unless specific hedge criteria are met. SFAS No.
133 will become effective for the Company beginning in the first quarter of
fiscal year 2001. The Company has not determined the effect of this new
standard; however, due to the Company's limited use of derivatives, the impact
is not expected to be material.
ACQUISITIONS, DIVESTITURES, AND RESTRUCTURING
On October 16, 1998, the Company sold Superior Valve Company for $35,604 in
cash. The transaction resulted in a pre-tax gain of $9,023. The business,
acquired by Amcast in 1986, produces specialty valves and related products for
the compressed gas and commercial refrigeration markets. Fiscal 1998 sales of
approximately $42,000 were included in the Company's Flow Control segment.
Effective March 30, 1998, the Company sold its Rancho Cucamonga, California
investment casting operation, Amcast Precision, for $25,445 in cash. The
transaction resulted in a pre-tax gain of $12,048. The facility, acquired by
Amcast in 1987, produces ferrous and nonferrous castings for the aerospace
industry. Fiscal 1997 sales of approximately $19,000 were included in the
Engineered Components segment. This was the only Amcast operation involved in
the aerospace industry.
On April 9, 1998, the Company acquired Lee Brass Company, a privately-owned
company located in Anniston, Alabama. Lee Brass is a major manufacturer of cast
brass products for residential, commercial, and industrial plumbing systems. The
purchase price was approximately $16,100 consisting of cash payments of $11,700
and debt assumption of $4,400. The acquisition of Lee Brass has been accounted
for by the purchase method. Accordingly, the cost of the acquisition was
allocated on the basis of the estimated fair market value of the assets
acquired, principally inventory and property, plant, and equipment, and
liabilities assumed, resulting in goodwill of $7,500. Sales of Lee Brass for the
twelve months ended December 31, 1997 were approximately $39,000. The pro forma
effect of the acquisition on the results of operations is not presented, as it
is not material.
Following the acquisition of Lee Brass, the Company consolidated its two brass
foundry operations and ceased production at its Flagg Brass plant located in
Stowe, Pennsylvania. The consolidation plan included the transfer of certain
product lines to Lee Brass, the closure of the Flagg Brass facility, and the
termination of approximately 100 salaried and hourly personnel. In connection
with the consolidation plan, during the third quarter of fiscal 1998, the
Company recorded a restructuring charge of $5,800 for facility exit costs and a
charge of $2,200, included in cost of sales, primarily for a non-cash write-down
of inventory to its net realizable value. Key components of the $5,800
restructuring charge were $4,900 for a non-cash write-down of assets to their
net realizable value, $500 for severance and other termination benefits, and
$400 for other facility closure costs. As of August 31, 1999, all associates had
been terminated and all of the severance and most of the facility closure costs
had been charged against the liability. During the second quarter of fiscal
1999, the Company wrote off $4,504 of net assets related to the Flagg Brass
operation against the previously established long-term reserve. The majority of
the assets had been classified as assets held for
25
<PAGE> 13
sale and were included in Other Assets in the Company's Consolidated Statements
of Financial Condition. The Company expects that the closure of Flagg Brass will
be completed by December 31, 1999. Fiscal 1998 sales of approximately $7,800
were included in the Flow Control segment.
During the third quarter of fiscal 1998, the Company also re-evaluated its
reserves related to several iron factories previously closed in the 1980's and
early 1990's. As a result, a $4,000 restructuring charge was recorded to cover
higher than expected medical benefits, workers compensation expenses, and legal
costs for environmental and other matters related to these previously closed
facilities.
At the end of fiscal 1997, the Company acquired all of the outstanding stock of
Speedline S.p.A. and its subsidiaries (Speedline), a major European manufacturer
of light alloy wheels serving the automotive original equipment market. The
purchase agreement contains a provision to protect the seller from stock price
fluctuations. The price protection provides for the Company to pay the
difference between the $26.13 per share value of the stock issued to the seller
of Speedline at closing and the market value of any such shares sold during a
180-day period following the second anniversary of the acquisition. The
liability, if any, on the part of the Company can only be determined during the
relevant 180-day period following the second anniversary of the closing, August
19, 1999. Had the price protection been calculated based on the market value of
all shares at August 31, 1999, the price protection liability would have been
approximately $4,900.
INVENTORIES
<TABLE>
<CAPTION>
The major components of inventories as of August 31 are:
1999 1998
<S> <C> <C>
Finished products ................. $36,979 $37,561
Work in process ................... 21,833 28,760
Raw materials and supplies ........ 20,801 20,610
- -----------------------------------------------------------
79,613 86,931
Less amount to reduce certain
inventories to LIFO value ..... 2,447 2,676
- -----------------------------------------------------------
$77,166 $84,255
===========================================================
</TABLE>
Inventories reported on the FIFO method, primarily in foreign locations, were
$30,802 and $32,412 at August 31, 1999 and 1998, respectively. The estimated
replacement cost of inventories is the amount reported before the LIFO reserve.
LONG-TERM DEBT AND CREDIT ARRANGEMENTS
The following table summarizes the Company's long-term borrowings at August 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Senior notes ...................... $ 50,875 $ 51,750
Revolving credit notes ............ 112,793 141,092
Lines of credit ................... -- 8,900
Industrial revenue bonds .......... 5,750 5,925
Other debt ........................ 4,014 5,372
Capital leases .................... 6,811 10,530
- -------------------------------------------------------------
180,243 223,569
Less current portion .............. 6,182 6,370
- -------------------------------------------------------------
Long-Term Debt .................... $174,061 $217,199
=============================================================
</TABLE>
Senior notes consist of two agreements with interest rates of 7.09% and 9.0%.
The notes call for periodic principal payments and mature November 7, 2005, and
September 15, 1999, respectively.
On August 14, 1997, the Company replaced its prior credit facility with a new
Credit Agreement (the Agreement) that provides for up to $200,000 in borrowings
through August 14, 2002. At August 31, 1999, $112,793 was outstanding under the
Agreement with an interest rate of 4.59%. In addition, a commitment fee is
payable on the unused portion of the credit line. The Company also has lines of
credit totaling $27,000; at August 31, 1999, there was nothing outstanding under
these lines of credit.
Debt covenants require the Company to maintain certain debt-to-equity,
debt-to-earnings, and interest coverage ratios. Other provisions limit tangible
net worth and subsidiary indebtedness. At August 31, 1999, $44,595 of retained
earnings was available for the payment of dividends.
Industrial revenue bonds consist of various issues at variable interest rates,
ranging from 2.61% to 4.15%. These bonds call for periodic principal payments
through 2004. These obligations are collateralized by property, plant, and
equipment with a net book value of $690 at August 31, 1999.
The Company has guaranteed debt totaling $19,260 at August 31, 1999, for Casting
Technology Company.
Other debt consists of various mortgage loans and other loans at fixed and
variable interest rates, ranging from 3.0% to 12.58%, and requires periodic
principal payments through 2011. These obligations are secured by property,
plant, and equipment with a net book value of $10,570 at August 31, 1999.
26
<PAGE> 14
Capitalized lease obligations provide for aggregate payments, including
interest, of approximately $3,600 annually, payable through 2002. At August 31,
1999, future minimum payments for the leases were $7,895, including $1,084
representing interest.
The carrying amounts of the Company's debt instruments approximate fair value as
defined under SFAS No. 107. Fair value is estimated based on discounted cash
flows, as well as other valuation techniques.
Long-term debt maturities for each of the next five years are $6,182 in 2000,
$3,433 in 2001, $114,703 in 2002, $13,256 in 2003, and $12,803 in 2004.
The Company's foreign operations have short-term lines of credit totaling
approximately $34,300 which are subject to annual review by the lending banks.
At August 31, 1999, the average interest rate for the short-term lines of credit
was 3.52%. Amounts outstanding under these lines of credit are payable on demand
and total $4,673 as of August 31, 1999.
Interest paid was $13,044, $14,823, and $5,057 in 1999, 1998, and 1997,
respectively.
LEASES
The Company has a number of operating lease agreements primarily involving
machinery, physical distribution, and computer equipment. Certain of these
leases contain renewal or purchase options that vary by lease. These leases are
noncancelable and expire on dates through 2009.
During 1999, the Company entered into a sale-leaseback transaction whereby the
Company sold new and existing manufacturing equipment and leased it back for a
period of 7 1/2 years. The leaseback is being accounted for as an operating
lease. The gain of $1,274 has been deferred and is being amortized to income
over the lease term.
Rent expense was $3,215, $3,891, and $4,978 for the years ended August 31, 1999,
1998, and 1997, respectively.
The following is a schedule by year of future minimum rental
payments required under the operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of August 31, 1999:
2000 .......................... $ 3,445
2001 .......................... 3,176
2002 .......................... 2,788
2003 .......................... 2,373
2004 .......................... 1,756
2005 and thereafter ........... 2,847
---------------------------------------
Total Minimum Lease Payments .. $16,385
=======================================
PENSION PLANS AND POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
PENSION PLANS: The Company has a noncontributory defined benefit pension plan
covering certain employees. The plan covers salaried employees and provides
pension benefits that are based on years of credited service, employee
compensation during years preceding retirement, and the primary social security
benefit. The plan also covers hourly employees and provides pension benefits of
stated amounts for each year of credited service. The Company's policy is to
fund the annual amount required by the Employee Retirement Income Security Act
of 1974. Plan assets consist of U.S. Treasury bonds and notes, U.S. governmental
agency issues, corporate bonds, and common stocks. The plan held 350,000 common
shares of the Company at August 31, 1999 (4.6% of plan assets) and 1998 (4.7% of
plan assets).
On July 1, 1999, the Company amended its defined benefit pension plan with
respect to certain salaried and hourly employees by establishing a defined
benefit cash balance pension plan. The plan provides pension benefits that are
based on years of credited service and employee compensation during years
preceding retirement. Employees who met certain age and service requirements
were not converted to this cash balance pension plan.
The Company also has an unfunded nonqualified supplementary benefit plan through
which the Company provides supplemental pension payments in excess of qualified
plan limits imposed by federal tax law. The plan covers certain officers and key
employees.
In addition, the Company participates in a multiemployer plan that provides
defined benefits to certain bargaining unit employees. The Company's
contributions to the multiemployer plan totaled $293 for 1999 and $241 for 1998
and 1997.
POSTRETIREMENT HEALTH AND LIFE: The Company provides health care and life
insurance benefits to designated salaried and hourly employees who participate
in a defined benefit pension plan and who retired prior to January 1, 1992. The
plan coordinates with Medicare and requires employee contributions. The Company
also provides similar benefits to certain employees, represented by bargaining
units, who retire before attaining age 65 and meet certain minimum service
requirements. Benefits for the bargaining unit employees terminate when the
retiree attains age 65. The Company funds the postretirement benefits on a cash
basis. On July 1, 1999, the Company discontinued the postretirement life
insurance benefits for all non-organized salaried and hourly employees who
became participants in the defined benefit cash balance pension plan.
In prior years, health care and life insurance benefits for retired employees of
closed facilities were provided for at the time the related facility was closed.
The accrued postretirement benefit obligation for these retirees was $1,100 at
August 31, 1999 and 1998.
27
<PAGE> 15
Effective September 1, 1998, the Company adopted SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." In accordance
with SFAS No. 132, the following tables provide a reconciliation of the change
in the benefit obligation, the change in plan assets, and a statement of the
funded status of the plans.
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
1999 1998 1999 1998
CHANGE IN BENEFIT OBLIGATION
<S> <C> <C> <C> <C>
Benefit obligation at beginning of year ............... $ 106,334 $ 94,404 $ 4,060 $ 4,770
Service cost .......................................... 2,117 1,680 50 41
Interest cost ......................................... 7,104 7,083 273 285
Plan amendments ....................................... (1,367) 1,464 -- --
Actuarial (gain) loss ................................. (6,244) 8,456 (101) (648)
Plan curtailment ...................................... (1,804) -- (559) --
Acquisition of Lee Brass .............................. -- 1,003 -- --
Benefits paid ......................................... (7,558) (7,756) (313) (388)
- ------------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year ..................... $ 98,582 $ 106,334 $ 3,410 $ 4,060
==================================================================================================================
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year ........ $ 114,681 $ 98,692 $ -- $ --
Actual return on plan assets .......................... 12,981 21,995 -- --
Employer contribution ................................. 88 88 313 388
Acquisition of Lee Brass .............................. -- 1,662 -- --
Benefits paid ......................................... (7,558) (7,756) (313) (388)
- ------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year .............. $ 120,192 $ 114,681 $ -- $ --
==================================================================================================================
FUNDED STATUS
Funded status ......................................... $ 21,610 $ 8,347 $ (3,410) $ (4,060)
Unrecognized net actuarial gains ...................... (20,757) (10,580) (623) (456)
Unrecognized prior service cost ....................... 1,070 3,181 -- --
Unrecognized transition asset ......................... (1,394) (1,952) -- --
- ------------------------------------------------------------------------------------------------------------------
Net asset (liability) ................................. $ 529 $ (1,004) $ (4,033) $ (4,516)
==================================================================================================================
AMOUNTS RECOGNIZED IN STATEMENTS OF FINANCIAL CONDITION
Prepaid (accrued) benefit cost ........................ $ 529 $ (1,004) $ (4,033) $ (4,516)
Additional minimum liability .......................... (401) -- -- --
Intangible asset ...................................... 11 -- -- --
Accumulated other comprehensive losses ................ 390 -- -- --
- ------------------------------------------------------------------------------------------------------------------
Net amount recognized ................................. $ 529 $ (1,004) $ (4,033) $ (4,516)
==================================================================================================================
</TABLE>
28
<PAGE> 16
The assumptions used in the measurement of the Company's benefit obligation and
net periodic benefit cost were as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
1999 1998 1999 1998
WEIGHTED-AVERAGE ASSUMPTIONS
<S> <C> <C> <C> <C>
Discount rate .................. 7.3% 7.0% 7.3% 7.0%
Expected return on plan assets . 10.0% 10.0% -- --
Rate of compensation increase .. 4.7% 4.7% -- --
</TABLE>
The assumed rates of future increases in per capita cost of health care benefits
(health care trend rates) are 6.0% in 2000 (5.5% for 65 and older) and 5.5% in
2001 and thereafter. Increasing the health care trend rate by one percentage
point would increase the accumulated postretirement benefit obligation $210 and
would increase the 1999 postretirement benefit cost $22. Decreasing the health
care trend rate by one percentage point would decrease the accumulated
postretirement benefit obligation $185 and would decrease the 1999
postretirement benefit cost $19.
The components of net periodic benefit cost included in results of operations
are as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
NET PERIODIC BENEFIT COST
Service cost ........................... $ 2,117 $ 1,680 $ 1,584 $ 50 $ 41 $ 29
Interest cost .......................... 7,104 7,083 6,491 273 285 336
Expected return on plan assets ......... (9,088) (8,369) (7,320) -- -- --
Amortization of prior service cost ..... 334 235 288 -- -- --
Recognized net actuarial loss .......... 39 59 38 65 53 --
Amortization of transition (asset) ..... (558) (558) (558) -- -- --
Dispositions ........................... (305) -- -- (47) -- --
Curtailment gain ....................... (1,089) -- -- (511) -- --
- --------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost ( benefit) ... $(1,446) $ 130 $ 523 $ (170) $ 379 $ 365
====================================================================================================================
</TABLE>
The Company also sponsors a deferred compensation profit sharing plan for the
benefit of substantially all domestic salaried employees. The Company provides a
15% match (25% effective September 1, 1999) on employee contributions up to 6%
of eligible compensation and a supplemental savings match from 1% to 35% based
on the Company achieving a minimum return on shareholders' equity and subject to
IRS limitations. Matching contributions made by the Company totaled $369, $333,
and $306 for 1999, 1998, and 1997, respectively.
Included in deferred liabilities at August 31, 1999 and 1998, is an accrual
totaling $11,063 and $10,202, respectively, for termination benefits for
Speedline employees. The liability is based on the employee's length of service,
position, and remuneration, and is payable upon separation. There is no vesting
period or funding requirement associated with the liability.
COMMITMENTS AND CONTINGENCIES
At August 31, 1999, the Company has committed to capital expenditures of $6,080
in 2000, primarily for the Engineered Components segment.
The Company, as is normal for the industry in which it operates, is involved in
certain legal proceedings and subject to certain claims and site investigations
which arise under the environmental laws and which have not been finally
adjudicated.
The Company has been identified as a potentially responsible party by various
state agencies and by the United States Environmental Protection Agency (U.S.
EPA) under the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, for costs associated with U.S. EPA-led multi-party
sites and state environmental agency-led remediation sites. The majority of
these claims involve third-party owned disposal sites for which compensation is
sought from the Company as an alleged waste generator for recovery of past
governmental costs or for future investigation or remedial actions at the
multi-party sites. There are two Company-owned properties where state-supervised
cleanups are expected. The designation as a potentially responsible party and
the assertion of such claims against the Company are made without taking into
consideration the extent of the Company's involvement with the particular site.
In each instance, claims have
29
<PAGE> 17
been asserted against a number of other entities for the same recovery or other
relief as was asserted against the Company. These claims are in various stages
of administrative or judicial proceeding. The Company has no reason to believe
that it will have to pay a significantly disproportionate share of clean-up
costs associated with any site. To the extent possible, with the information
available at the time, the Company has evaluated its responsibility for costs
and related liability with respect to the above sites. In making such
evaluation, the Company did not take into consideration any possible cost
reimbursement claims against its insurance carriers. The Company is of the
opinion that its liability with respect to those sites should not have a
material adverse effect on its financial position or results of operations. In
arriving at this conclusion, the principal factors considered by the Company
were ongoing settlement discussions with respect to certain of the sites, the
volume and relative toxicity of waste alleged to have been disposed of by the
Company at certain sites, which factors are often used to allocate investigative
and remedial costs among potentially responsible parties, the probable costs to
be paid by other potentially responsible parties, total projected remedial costs
for a site, if known, and the Company's existing reserve to cover costs
associated with unresolved environmental proceedings. At August 31, 1999, the
Company's accrued undiscounted reserve for such contingencies was $1,758.
Allied-Signal Inc. brought an action against the Company seeking a contribution
from the Company equal to 50% of Allied-Signal's estimated $30,000 remediation
cost in connection with a site in southern Ohio. The Company believes its
responsibility with respect to this site is very limited due to the nature of
the foundry sand waste it disposed of at the site. The court has rendered its
decision on this case, however, the exact amount of the verdict has not yet been
determined by the court. The amount will be significantly less than the amount
sought by the plaintiff and the Company estimates its liability associated with
the action to be between $500 and $1,500. The Company believes its liability is
at the low end of this range.
MAJOR CUSTOMERS AND CREDIT CONCENTRATION
The Company sells products to customers primarily in the United States and
Europe. The Company performs ongoing credit evaluations of customers, and
generally does not require collateral. Allowances are maintained for potential
credit losses and such losses have been within management's expectations. On
August 31, 1999, total trade receivables from the domestic and foreign
automotive industry were $67,931, and $18,720 was due from the construction
industry.
Sales to Engineered Components' largest customer, General Motors, were $136,469,
$105,720, and $105,788 for the years ended August 31, 1999, 1998, and 1997,
respectively. Trade receivables from General Motors on August 31, 1999 and 1998,
were $14,570 and $15,024, respectively, and were current. No other single
customer accounted for a material portion of trade receivables.
INCOME TAXES
For financial reporting purposes, income before income taxes includes the
following components:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
United States ..................... $ 23,005 $ 17,736 $ 20,005
Foreign ........................... 8,533 5,239 --
- ----------------------------------------------------------------------------
$ 31,538 $ 22,975 $ 20,005
============================================================================
The provisions for income taxes on continuing operations are as follows:
Currently payable
State and local ................ $ 1,002 $ 222 $ 31
Foreign ........................ 3,450 2,232 384
Federal ........................ 5,499 5,360 4,016
- ----------------------------------------------------------------------------
9,951 7,814 4,431
Deferred
State and local ................ 133 (4) 367
Foreign ........................ (803) (2,091) --
Federal ........................ 2,940 491 2,224
- ----------------------------------------------------------------------------
2,270 (1,604) 2,591
- ----------------------------------------------------------------------------
$ 12,221 $ 6,210 $ 7,022
============================================================================
Reconciliation of income taxes computed by applying the statutory
federal income tax rate to the provisions for income taxes is as follows:
Federal income tax at
statutory rate ................. $ 11,038 $ 8,041 $ 7,002
Federal tax credits ............... (108) (140) (150)
State income taxes ................ 784 144 259
Goodwill amortization ............. 852 424 --
Higher effective income taxes
of other countries ............. 954 268 --
Foreign tax basis step-up ......... (1,590) -- --
Change in Italian
tax rates ...................... -- (2,562) --
Other ............................. 291 35 (89)
- ----------------------------------------------------------------------------
$ 12,221 $ 6,210 $ 7,022
============================================================================
</TABLE>
Significant components of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
DEFERRED TAX ASSETS RELATED TO
Accrued compensation
and related items .............. $ 2,272 $ 3,659
Tax credit carryforwards .......... 4,272 3,901
Net operating losses .............. 7,115 3,394
Other ............................. 5,516 8,552
- ----------------------------------------------------------------------------
19,175 19,506
Valuation allowance .............. (4,667) (3,824)
- ----------------------------------------------------------------------------
14,508 15,682
DEFERRED TAX LIABILITIES RELATED TO
Depreciation ...................... 32,874 33,138
Other ............................. 8,995 4,793
- ----------------------------------------------------------------------------
41,869 37,931
- ----------------------------------------------------------------------------
Net deferred tax liabilities ...... $ 27,361 $ 22,249
============================================================================
</TABLE>
30
<PAGE> 18
The Company has foreign net operating loss carryforwards totaling $19,232, of
this total, $5,538 expire in years 2000 through 2004 and $13,694 have an
unlimited carryforward. The Company also has foreign tax credits of $1,761 that
expire in years 2003 and 2004. In addition, the Company has alternative minimum
tax credits of $2,511 which have an indefinite carryforward period. For
financial reporting purposes, a valuation allowance of $4,667 has been
recognized to offset the deferred tax assets related to those carryforwards.
Income taxes paid by the Company totaled $7,000, $5,701, and $4,407 in 1999,
1998, and 1997, respectively.
Undistributed earnings of the Company's foreign subsidiaries are considered to
be permanently reinvested and, accordingly, no provisions for U.S. income taxes
have been provided thereon. It is not practical to determine the deferred tax
liability for temporary differences related to these undistributed earnings.
STOCK OPTIONS
The Company has two plans under which stock options for the purchase of common
shares may be granted. The 1989 Stock Incentive Plan provides for the granting
of options for the purchase of a maximum of 1,200,000 shares, stock appreciation
rights, performance awards, and restricted stock awards to key employees of the
Company. Options awarded under the plan may not be granted at an option price
less than the fair market value of a share on the date the option is granted,
and the maximum term of an option may not exceed ten years. All options
currently granted under the plan are exercisable one year after the date of
grant.
The 1989 Director Stock Option Plan provides for the granting of options for the
purchase of a maximum of 120,000 shares. Under the plan, each person serving as
a director of the Company on the first business day of January of each year, who
is not employed by the Company, is automatically granted options for the
purchase of 1,500 shares. All options were granted at an option price equal to
the fair market value of a share on the date of grant. Each option is
exercisable one year after the date of grant and the maximum term of an option
may not exceed ten years.
The Board of Directors has adopted the 1999 Director Stock Option Plan and,
subject to shareholder approval at the Company's annual meeting on December 15,
1999, the 1999 Stock Incentive Plan. These plans provide for the granting of
options for the purchase of a maximum of 150,000 and 425,000 shares
respectively.
Information regarding the Company's stock option plans for the years ended
August 31, 1999, 1998, and 1997 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year .. 571,337 $ 19.94 472,525 $ 18.96 455,822 $ 18.15
Granted ........................... 132,657 $ 16.46 149,601 $ 22.78 135,527 $ 21.49
Exercised ......................... (2,000) $ 18.03 (30,539) $ 18.25 (77,606) $ 18.48
Cancelled ......................... (33,500) $ 20.86 (20,250) $ 20.78 (41,218) $ 19.18
- ---------------------------------------------------------------------------------------------------------------------
Outstanding at end of year ........ 668,494 $ 19.21 571,337 $ 19.94 472,525 $ 18.96
=====================================================================================================================
Options exercisable at end of year 535,837 $ 19.89 421,736 $ 18.93 340,153 $ 17.94
=====================================================================================================================
Weighted-average fair value of
options granted during the year $3.36 $4.95 $4.63
=====================================================================================================================
</TABLE>
Information regarding options outstanding at August 31, 1999, is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ---------------------------------------------------------------------------------------------------------
Weighted Weighted- Weighted-
Remaining Average Average
Contractual Exercise Exercise
Range of Exercise Prices Number Life Price Number Price
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 8.50 - $14.50 .......................... 48,539 1.5 years $11.04 48,539 $11.04
$15.53 - $19.81 .......................... 373,876 7.3 years $17.48 241,219 $18.05
$20.44 - $25.91 .......................... 246,079 6.4 years $23.43 246,079 $23.43
</TABLE>
31
<PAGE> 19
The Company has elected to adopt the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," and continue to apply Accounting
Principles Board Opinion No. 25 and related interpretations in accounting for
its stock option plans. Accordingly, no compensation cost has been recognized
related to the Company's stock option plans. Consistent with the provisions of
SFAS 123, had compensation cost been determined based on the fair value at the
grant date for awards in fiscal 1999, 1998, and 1997 the effect on the Company's
net income and net income per share for such years would not be material. The
fair value of each option grant was estimated as of the grant date using the
Black-Scholes option-pricing model with the following assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Expected volatility .......... 23.0% 23.0% 23.0%
Dividend yield ............... 3.31% 2.26% 2.26%
Expected life of option
in years ................. 5.0 3.5 3.5
Risk-free interest rates ..... 4.4%-5.6% 5.8%-6.6% 5.8%-6.6%
</TABLE>
EARNINGS PER SHARE
During 1998, the Company adopted the provisions of SFAS No. 128, "Earnings per
Share" which replaced the calculation of primary and fully diluted earnings per
share with basic and diluted earnings per share. The following table reflects
the calculations for basic and diluted earnings per share for the three years
ended August 31:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Income before cumulative effect
of accounting change ................ $19,317 $16,765 $12,983
- --------------------------------------------------------------------------------
Net income ............................... $19,317 $ 8,177 $12,983
- --------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE
Basic shares ............................. 9,144 9,200 8,674
- --------------------------------------------------------------------------------
Income before cumulative effect
of accounting change ................. $ 2.11 $ 1.82 $ 1.50
- --------------------------------------------------------------------------------
Net income ............................... $ 2.11 $ .89 $ 1.50
- --------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE
Basic shares ............................. 9,144 9,200 8,674
Stock options ............................ 18 50 80
- --------------------------------------------------------------------------------
Diluted shares ........................... 9,162 9,250 8,754
- --------------------------------------------------------------------------------
Income before cumulative effect
of accounting change ................ $ 2.11 $ 1.81 $ 1.48
- --------------------------------------------------------------------------------
Net income ............................... $ 2.11 $ .88 $ 1.48
- --------------------------------------------------------------------------------
</TABLE>
For each of the three years, there were outstanding stock options excluded from
the computation of diluted earnings per share because the options were
antidilutive.
PREFERRED SHARE PURCHASE RIGHTS
Under the Company's Shareholder Rights Plan, as amended on February 24, 1998,
holders of common shares have one preferred share purchase right (collectively,
the Rights) for each common share held. The Rights contain features which, under
defined circumstances, allow holders to buy common shares at a bargain price.
The Rights are not presently exercisable and trade in tandem with the common
shares. The Rights become exercisable following the close of business on the
earlier of (i) the 20th day after a public announcement that a person or group
has acquired 15% or more of the common shares of the Company or (ii) the date
designated by the Company's board of directors. It is expected that the Rights
will begin to trade independently of the Company's common shares at that time.
Unless renewed, the Rights expire on February 23, 2008.
BUSINESS SEGMENTS
In the fourth quarter of 1999, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information." This Statement
requires the Company to report financial and descriptive information about its
operating segments on the same basis that is used internally to assess operating
performance and allocate resources to segments. Operating segments are organized
internally primarily by the type of products produced and markets served, and in
accordance with SFAS No. 131, the Company has aggregated similar operating
segments into two reportable segments: Flow Control Products and Engineered
Components. Adoption of the new standard did not result in a change in the
Company's reportable segments.
The Flow Control Products segment is a supplier of copper and brass plumbing
fittings for the industrial, commercial and residential construction markets,
and in prior years, valves utilized in air conditioning and refrigeration
systems and industrial compressed gas applications. The Engineered Components
segment is a supplier of aluminum wheels and aluminum automotive components for
automotive original equipment manufacturers and cast and fabricated metal
products for sale to original equipment manufacturers in the transportation,
construction, air conditioning and refrigeration industries.
The Company evaluates segment performance and allocates resources based on
several factors, of which net sales and operating income are the primary
financial measures. The accounting policies of the reportable segments are the
same as those described in Note 1 of the Notes to the Consolidated Financial
Statements. There are no intersegment sales.
32
<PAGE> 20
<TABLE>
<CAPTION>
NET SALES OPERATING INCOME
1999 1998 1997 1999 1998(*) 1997
<S> <C> <C> <C> <C> <C> <C>
Flow Control Products ........................... $ 153,903 $ 180,596 $ 162,150 $ 26,919 $ 27,931 $ 24,358
Engineered Components ........................... 435,030 393,818 224,901 19,708 19,609 9,531
Corporate ....................................... -- -- -- (9,540) (9,630) (6,647)
- -----------------------------------------------------------------------------------------------------------------------------------
588,933 574,414 387,051 37,087 37,910 27,242
Restructuring and Integration charges ........... -- -- -- -- (12,000) --
Disposition of businesses ....................... -- -- -- 9,023 12,048 --
Equity in loss of joint venture and other
income (expense) ............................ -- -- -- (1,390) 62 (2,102)
Interest expense ................................ -- -- -- (13,182) (15,045) (5,135)
- -----------------------------------------------------------------------------------------------------------------------------------
Total net sales and income before taxes ......... $ 588,933 $ 574,414 $ 387,051 $ 31,538 $ 22,975 $ 20,005
===================================================================================================================================
CAPITAL EXPENDITURES DEPRECIATION AND AMORTIZATION
1999 1998 1997 1999 1998 1997
Flow Control Products ........................... $ 6,266 $ 9,085 $ 6,318 $ 5,322 $ 6,114 $ 5,638
Engineered Components ........................... 40,799 37,535 34,042 25,018 24,545 14,665
Corporate ....................................... 295 143 17 1,006 1,454 160
- -----------------------------------------------------------------------------------------------------------------------------------
$ 47,360 $ 46,763 $ 40,377 $ 31,346 $ 32,113 $ 20,463
===================================================================================================================================
TOTAL ASSETS
1999 1998 1997
Flow Control Products ........................... $ 81,673 $ 112,874 $ 100,632
Engineered Components: .......................... 361,753 362,742 336,264
Corporate ....................................... 90,060 87,834 72,022
- -----------------------------------------------------------------------------------------------------------------------------------
$ 533,486 $ 563,450 $ 508,918
===================================================================================================================================
(*) Income before cumulative effect of a change in accounting principle in 1998.
</TABLE>
The Company's manufacturing operations are conducted in the United States and
Europe. Information about the Company's operations in different geographic areas
for the years ended August 31, 1999, 1998, and 1997 is shown below. Net sales
are based on the location of the customer.
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
NET SALES
United States ... $392,960 $377,770 $356,143
Other Europe .... 107,602 101,125 4,710
Germany ......... 70,143 65,229 --
Other ........... 18,228 30,290 26,198
- ---------------------------------------------------------
$588,933 $574,414 $387,051
=========================================================
LONG-LIVED ASSETS
United States ... $158,997 $175,229 $159,482
Europe .......... 97,761 84,888 75,762
- ---------------------------------------------------------
$256,758 $260,117 $235,244
=========================================================
</TABLE>
The Company's sales by product category are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Aluminum wheels $301,490 $266,395 $ 97,380
Brass and copper
fittings ... 167,931 159,603 142,650
Aluminum
automotive
components . 115,297 97,110 91,946
Valves ......... 4,215 38,172 36,287
Other .......... -- 13,134 18,788
- ---------------------------------------------------------
$588,933 $574,414 $387,051
=========================================================
</TABLE>
33
<PAGE> 21
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA (UNAUDITED)
($ in thousands except per share data)
Fiscal Quarter For the Year
- ------------------------------------------------------------------------------------------------------------------
1999 1st 2nd 3rd 4th
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET SALES ............................... $ 146,024 $ 141,734 $ 157,790 $ 143,385 $ 588,933
GROSS PROFIT ............................ 24,847 25,115 23,851 19,212 93,025
NET INCOME .............................. 10,029 4,502 3,739 1,047 19,317
NET INCOME PER SHARE - BASIC ............ $ 1.09 $ .49 $ .41 $ .12 $ 2.11
NET INCOME PER SHARE - DILUTED .......... $ 1.09 $ .49 $ .41 $ .12 $ 2.11
AVERAGE NUMBER OF SHARES
OUTSTANDING - BASIC ................. 9,192 9,200 9,169 9,019 9,144
AVERAGE NUMBER OF SHARES
OUTSTANDING - DILUTED ............... 9,202 9,227 9,188 9,034 9,162
- ------------------------------------------------------------------------------------------------------------------
1998 1st 2nd 3rd 4th
- ------------------------------------------------------------------------------------------------------------------
Net sales ............................... $ 140,979 $ 136,975 $ 159,267 $ 137,193 $ 574,414
Gross profit ............................ 23,596 22,178 26,072 21,158 93,004
Income before cumulative effect
of accounting change ................ 4,560 5,609 5,684 912 16,765
Income per share before cumulative
effect of accounting change - basic . $ .49 $ .61 $ .62 $ .10 $ 1.82
Income per share before cumulative
effect of accounting change - diluted $ .49 $ .61 $ .61 $ .10 $ 1.81
Net income (loss) ....................... (4,028) 5,609 5,684 912 8,177
Net income (loss) per share - basic ..... $ (.44) $ .61 $ .62 $ .10 $ .89
Net income (loss) per share - diluted ... $ (.44) $ .61 $ .61 $ .10 $ .88
Average number of shares
outstanding - basic ................. 9,184 9,202 9,206 9,207 9,200
Average number of shares
outstanding - diluted ............... 9,266 9,262 9,248 9,223 9,250
Results for the third quarter of fiscal 1998 include restructuring charges of
$12,000, of which $2,200 was recorded in cost of sales.
</TABLE>
COMMON STOCK PRICE AND DIVIDENDS DECLARED
<TABLE>
<CAPTION>
FISCAL 1999 Fiscal 1998
- -------------------------------------------------------------------------------------
COMMON STOCK DIVIDENDS Common Stock Dividends
PRICE RANGE DECLARED Price Range Declared
- -------------------------------------------------------------------------------------
Quarter High Low High Low
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $18 15/16 $13 7/8 14(cent) $25 7/8 $22 1/2 14(cent)
Second $22 $15 5/16 14(cent) $24 7/8 $20 15/16 14(cent)
Third $19 $15 1/4 14(cent) $22 9/16 $19 5/8 14(cent)
Fourth $18 7/16 $14 1/2 14(cent) $21 11/16 $15 1/4 14(cent)
</TABLE>
34
<PAGE> 22
AMCAST INDUSTRIAL CORPORATION
STATEMENT OF INTERNAL CONTROL
The management of Amcast Industrial Corporation has the responsibility for
preparing the accompanying financial statements and for their integrity and
objectivity. In fulfilling this responsibility, management maintains accounting
systems and related controls. These controls provide reasonable assurance, at
appropriate costs, that assets are safeguarded against losses and that financial
records are reliable for use in preparing financial statements. The systems are
enhanced by written policies, an organizational structure providing division of
responsibilities, careful selection and training of qualified people, and a
program of financial, operational, and systems review coordinated by the
internal auditors and by management.
Management recognizes its responsibility for conducting the Company's affairs
according to the highest standards of personal and corporate conduct. This
responsibility is characterized by and included in key policy statements.
Management maintains a systematic program to assess compliance with these
policies.
The Company's financial statements have been audited by Ernst & Young LLP,
independent auditors elected by the shareholders. Management has made available
to Ernst & Young LLP all the Company's financial records and related data, as
well as the minutes of shareholders' and directors' meetings. Furthermore,
management believes that all representations made to Ernst & Young LLP during
their audit were valid and appropriate.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets with the independent auditors, management, and internal
auditors periodically to review their work and ensure that they are properly
discharging their responsibilities. The independent auditors and the Company's
internal auditors have free access to this committee, without management
present, to discuss the results of their audit work and their opinion on the
adequacy of internal financial controls and the quality of financial reporting.
/s/ John H. Shuey
John H. Shuey
Chairman, President and Chief Executive Officer
/s/ Douglas D. Watts
Douglas D. Watts
Vice President, Finance (Chief Financial Officer)
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
Shareholders and Board of Directors
Amcast Industrial Corporation
Dayton, Ohio
We have audited the accompanying consolidated statements of financial condition
of Amcast Industrial Corporation and subsidiaries as of August 31, 1999 and
1998, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended August 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Amcast Industrial
Corporation and subsidiaries at August 31, 1999 and 1998, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended August 31, 1999, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Dayton, Ohio
October 19, 1999
35
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Amcast Industrial Corporation and subsidiaries of our report dated October
19, 1999, included in the 1999 Annual Report to Shareholders of Amcast
Industrial Corporation.
Our audits also included the financial statement schedule of Amcast Industrial
Corporation listed in item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
We also consent to the incorporation by reference in Post-Effective Amendment
No. 1 to Registration Statement Number 33-2876 on Form S-8 dated November 27,
1987, in Registration Statement Number 33-18690 on Form S-8 dated December 21,
1987, in Registration Statement Number 33-28080 on Form S-8 dated April 11,
1989, in Registration Statement Number 33-28084 on Form S-8 dated April 11,
1989, in Registration Statement Number 33-38176 on Form S-8 dated December 20,
1990, in Registration Statement Number 33-28075 on Form S-3 dated April 11,
1989, in Registration Statement Number 33-61290 on Form S-8 dated April 19,
1993, Registration Statement Number 333-00133 on Form S-8 dated January 10, 1996
and in Registration Statement Number 333-89729 on Form S-8 dated October 26,
1999, of our report dated October 19, 1999, with respect to the consolidated
financial statements incorporated herein by reference, and our report included
in the preceding paragraph with respect to the financial statement schedule
included in this Annual Report (Form 10-K) of Amcast Industrial Corporation and
subsidiaries.
/s/ ERNST & YOUNG LLP
- ----------------------------
November 18, 1999
Dayton, Ohio
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1999;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1999, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
4th day of November, 1999.
/S/ WALTER E. BLANKLEY
----------------------
Walter E. Blankley
<PAGE> 2
POWER OF ATTORNEY
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1999;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1999, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
4th day of November, 1999.
/S/ PETER H. FORSTER
--------------------
Peter H. Forster
<PAGE> 3
POWER OF ATTORNEY
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1999;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1999, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
4th day of November, 1999.
/S/ BERNARD G. RETHORE
----------------------
Bernard G. Rethore
<PAGE> 4
POWER OF ATTORNEY
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1999;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1999, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
3rd day of November, 1999.
/S/ R. WILLIAM VAN SANT
-----------------------
R. William Van Sant
<PAGE> 5
POWER OF ATTORNEY
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1999;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1999, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
4th day of November, 1999.
/S/ EARL T. O'LOUGHLIN
----------------------
Earl T. O'Loughlin
<PAGE> 6
POWER OF ATTORNEY
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1999;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1999, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
4th day of November, 1999.
/S/ WILLIAM G. ROTH
-------------------
William G. Roth
<PAGE> 7
POWER OF ATTORNEY
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1999;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1999, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
3rd day of November, 1999.
/S/ LEO W. LADEHOFF
-------------------
Leo W. Ladehoff
<PAGE> 8
POWER OF ATTORNEY
WHEREAS, Amcast Industrial Corporation (the "Company") intends to file
with the Securities and Exchange Commission its Annual Report on Form 10-K for
the year ended August 31, 1999;
NOW, THEREFORE, the undersigned in his capacity as a director of the
Company hereby appoints John H. Shuey and Douglas D. Watts, and each of them,
his true and lawful attorneys-in-fact and agent, with full power of substitution
and resubstitution, to execute in his name, place, and stead, the Company's
Annual Report on Form 10-K for the year ended August 31, 1999, (including an
amendment to such report) and any and all other instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in the aforesaid
capacity, every act whatsoever necessary or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person. The
undersigned hereby ratifies and approves the acts of said attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
3rd day of November, 1999.
/S/ JAMES K. BAKER
------------------
James K. Baker
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