UNITED STATES 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 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 1-5112
ETHYL CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0118820
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 SOUTH FOURTH STREET
P. O. Box 2189
RICHMOND, VIRGINIA 23217
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: 804-788-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
COMMON STOCK, $1 Par NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for at least the past 90 days.
Yes X No
(i)
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Aggregate market value of voting stock held by non-affiliates of the
registrant as of January 31, 1994: $1,787,879,360.*
Number of shares of Common Stock outstanding as of January 31, 1994:
118,406,665.
*In determining this figure, an aggregate of 21,107,108 shares of Common
Stock reported in the registrant's Proxy Statement for the 1994 Annual
Meeting of Shareholders as beneficially owned by Floyd D. Gottwald, Jr.,
Bruce C. Gottwald, and the members of their immediate families have been
excluded because the shares are held by affiliates. See Item 12 herein.
The aggregate market value has been computed on the basis of the closing
price in the New York Stock Exchange Composite Transactions on January 31,
1994, as reported by The Wall Street Journal.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Ethyl Corporation's Annual Report to Shareholders for
the year ended December 31, 1993 (the "Annual Report"), are
incorporated by reference into Parts I, II and IV of this Form
10-K.
2. Portions of Ethyl Corporation's definitive Proxy Statement for its
1994 Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934 (the "Proxy Statement") are
incorporated by reference into Part III of this Form 10-K.
(ii)
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PART I
Recent Developments
At the close of business on February 28, 1994, Ethyl Corporation
("Ethyl" or "the Company") distributed to its common stock shareholders all
of the outstanding shares of its wholly-owned subsidiary, Albemarle
Corporation ("Albemarle"), a Virginia Corporation. Albemarle owns,
directly or indirectly, the Chemicals Businesses, which include the Olefins
and Derivatives, the Bromine Chemicals and the Specialty Chemicals
divisions, all of which were formerly owned directly or indirectly by the
Company.
The U.S. Internal Revenue Service ("IRS") issued a favorable tax
ruling that the spin-off was tax-free to Ethyl and its shareholders. One
share of Albemarle common stock was distributed to Ethyl's common
shareholders for every two shares of Ethyl's common stock held.
The impact of the spin-off has not been reflected in this report,
or in Ethyl's 1993 Annual Report. Pro forma financial information, which
is important for the reader to obtain a meaningful understanding of Ethyl's
financial position and results of operations after the spin-off, is shown
in the footnotes to the annual report, and is incorporated by reference.
The pro forma financial statements are for information purposes only and
illustrate the estimated effects of the spin-off of Albemarle Corporation.
The pro forma condensed balance sheet of Ethyl as of December 31, 1993,
presents the financial position of Ethyl assuming that the Distribution, the
split of the Ethyl credit facility and the reduction of Ethyl's shareholders'
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equity as a result of such transfer had occurred as of that date. The pro
forma condensed statements of income for 1993 and 1992 present the results of
operations of Ethyl assuming that the Distribution had occurred as of January
1, 1992. The pro forma information may not necessarily reflect the future
results of operations or financial position of Ethyl or what the results of
operations or financial position of Ethyl would have been if Ethyl had operated
without Albemarle.
Continuity of management is viewed as particularly important in the
period immediately following the spin-off of Albemarle's shares due to the
interrelationship of the operations of the Ethyl Businesses and the
Albemarle Businesses. Because Ethyl and Albemarle desire to maintain
continuity of the management philosophy of both companies, a very limited
number of executive officers will have positions in both companies. The
executive officers and directors listed in this report are the executive
officers and directors of the Company on an ongoing basis as of March 25,
1994.
Information on the ongoing Ethyl Businesses was provided in a
report on Form 8-K, included as an Exhibit to this Form 10-K.
Information on the operation of the Albemarle Businesses was
provided in an Information Statement which was included as an Exhibit to
the Form 8-K.
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Item 1. BUSINESS
DESCRIPTION OF BUSINESS
Ethyl Corporation (the "Company") is a major producer of per-
formance chemicals including fuel and lubricant additives, brominated flame
retardants, polymer intermediates and catalysts, detergent intermediates,
agricultural chemical intermediates, pharmaceutical intermediates,
electronic materials, and bromine chemicals. The Company also owns Whitby,
Inc. ("Whitby"), which in turn owns Whitby Pharmaceuticals, Inc. ("Whitby
Pharmaceuticals"), which markets pharmaceutical products that are contract
manufactured for it.
Incorporated in Virginia in 1887, the Company employs approximately
5,500 people.
The following discussion of the Company's businesses as of December
31, 1993, should be read in conjunction with the information contained in
the "1993 Financial Review" section of Ethyl's Annual Report as of December
31, 1993, referred to in Item 7 below.
Chemicals
The Company conducts its worldwide chemicals operations through the
Petroleum Additives Division, which includes fuel additives and lubricant
additives, and the Chemicals Businesses, which consist of three divisions
- -- Olefins and Derivatives, Bromine Chemicals and Specialty Chemicals,
which includes Electronic Materials.
The Chemicals Businesses manufacture a broad range of chemicals,
most of which are additives to or intermediates for detergents, plastics
and elastomers, agricultural pesticides and herbicides, pharmaceuticals and
electronic semiconductors. Most sales of the Chemicals Businesses products
are made directly to manufacturers of such products, including chemical and
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polymer companies, pharmaceutical companies, and detergent manufacturers in
the United States and throughout the world.
The Petroleum Additives Division manufactures a broad range of
additives for motor fuels and lubricating oils. Most sales of fuel
additives for gasoline, diesel fuels and heating oils are sold directly to
petroleum refiners and marketers, terminals and blenders, while lubricant
additive packages are sold directly to companies producing finished oils
and fluids in the United States and throughout the world.
The Company produces a majority of its products in the United
States and also has major production facilities in Belgium, Canada and
France. The processes and technology for most of these products were
developed in the Company's research and development laboratories.
The Company's divisions operate in a highly competitive
environment. Some market areas involve a significant number of
competitors, while others involve only a few. The competitors are both
larger and smaller than the Company in terms of resources and market
shares. Competition in connection with all of the Company's products
requires continuing investments in research and development of new products
or leading technologies, in continuing product and process improvements and
in providing specialized customer services.
Principal Olefins and Derivatives products include linear alpha
olefins and synthetic primary alcohols used as intermediates in the
manufacture of detergents, plasticizers, polymers, synthetic
lubricants and lubricant additives; poly alpha olefins used in the
formulation of synthetic lubricants and personal-care products; and zeolite
A, which is used as a builder in detergent formulations. Also produced are
tertiary amines for disinfectants and sanitizers and alkenyl succinic
anhydride for paper sizing.
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Bromine Chemicals products include brominated flame retardants for
use in polymers, clear brine fluids for use in oil and gas well drilling
and completion, and bromine-containing chemicals used in water
purification, in soil fumigation and as chemical intermediates; and organic
and inorganic brominated compounds used as pharmaceutical, photographic and
agrichemical intermediates; and also high-purity caustic potash and
potassium carbonate used in the glass, chemical and food industries.
Specialty Chemicals include the active ingredient in ibuprofen pain
relievers; aluminum alkyl polymerization co-catalysts,
high-molecular-weight phenolic antioxidants for polymers, ortho-alkylated
phenols, diamines and anilines used as polymer additive intermediates;
polymer modifiers; herbicide intermediates; organophosphorus intermediates
used in insecticides; and Electronic Materials. Electronic materials
primarily include polycrystalline silicon, which is produced in the
Company's polysilicon production facility by a unique process developed by
the Company. The same polysilicon plant also produces silane gas. These
products are used in the semiconductor industry.
Products of the Petroleum Additives Division include additives for
gasoline and diesel fuels, additives for passenger-car and diesel crankcase
lubricants, gear lubricants, transmission fluids and hydraulic fluids, as
well as railroad-engine oil additives.
Gasoline fuel additive products include lead and manganese
antiknock compounds to increase octane and prevent power loss due to early
or late combustion (engine knock); hindered phenolic antioxidants to
prevent thermal degradation during storage and transport; corrosion
inhibitors to prevent fuel storage and pumping system failures; detergent
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packages to keep carbon deposits from forming on fuel injectors,
intake valves or carburetors and in combustion chambers; and dyes to
provide color differentiation.
Lead antiknock compounds, which are sold worldwide by the Petroleum
Additives Division to petroleum refiners, remain one of the Company's
largest product lines. The Company estimates that it accounts for
approximately one-third of the total worldwide sales of lead antiknock
compounds.
For a number of years, lead antiknock compounds have been subject
to regulations restricting the amount of the product that can be used in
gasoline in the United States. Similar restrictions have been in effect in
Canada since 1990. The North American market for these products in motor
vehicles has effectively been eliminated, but the market for their use in
piston aircraft and certain other applications has remained at about the
same level for years and is expected to remain stable. As the Company has
forecasted and planned, the market for these products in other major
markets, particularly Western Europe, continues to decline as the use of
unleaded gasoline grows.
The contribution of lead antiknock compounds to the Company's net
sales has declined to about 13% in 1993 from about 16% in 1992 and about
19% in 1991. The lead antiknock profit contribution to the Company's
operating profit, excluding allocation of corporate expenses, is
estimated to have been 49% in 1993, 50% in 1992 and 44% in 1991. Excluding
the costs related to the planned cessation of lead antiknock compound
production at the Company's Canadian plant, the 1993 lead antiknock profit
contribution would have been about 52%. In recent years, the Company has
been able to offset a continuing decline in shipments of lead antiknock
compounds with higher margins due primarily to significant increases in selling
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prices. Any further decline in the use of lead antiknocks would adversely
affect such sales and profit contributions unless the Company can offset such
declines with increased market share and/or higher selling prices.
The Company currently produces some of its lead antiknock compounds
in its subsidiary's Canadian plant and obtains additional quantities under
a supply agreement with E.I. DuPont de Nemours & Company. On January 11,
1994, the Company announced an agreement with The Associated Octel Company
Limited ("Octel") of London under which Octel has agreed to allocate a
portion of its production capacity of lead antiknock compounds to the
Company for sale and distribution through the Company's worldwide network.
Ethyl also announced that its Canadian subsidiary would cease production of
lead antiknock compounds by March 31, 1994. The agreement continues so
long as the Company determines that a market continues to exist for lead
antiknock compounds. Under the agreement with Octel, the Company has the
right to purchase from Octel antiknock compounds which the Company
estimates will be sufficient to cover its needs in any contract year.
Purchases are at a fixed initial price per pound with periodic escalations
and adjustments.
In addition to the supply agreement, Octel and the Company have
agreed that the Company will assume the distribution for Octel of any of
its lead antiknock compounds that are shipped in bulk.
The Company believes the agreements with Octel will assure it of an
ongoing efficient source of supply for lead antiknock compounds as the
worldwide demand for these products continues to decline. It does not
anticipate that the cessation of its Canadian antiknock operations and the
entry into the Octel supply agreement will adversely affect its relations
with its customers, nor will these changes have a material effect on its future
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results of operations. The Company and Octel will continue to compete
vigorously in sales and marketing of lead antiknock compounds.
The Company also sells manganese-based antiknock compounds, HiTEC(R)
3000 (MMT), which are used in unleaded gasoline in Canada. The Company
conducted extensive testing of this product prior to filing a request in
1990 for a fuel-additive waiver from the United States Environmental
Protection Agency (the "EPA") required to begin marketing the additive for
use in unleaded gasoline in the United States. The Company voluntarily
withdrew its waiver application in November 1990 after public hearings and
detailed exchanges of information with the EPA, when the EPA raised several
health and environmental questions near the end of the 180-day statutory
review period. The Company continued testing and filed a new waiver
request in July 1991, followed by additional public hearings and detailed
exchanges of information with the EPA.
In January 1992, the EPA denied the Company's application for a
waiver. An appeal was filed with the United States Court of Appeals for
the District of Columbia Circuit contesting the EPA's denial of the
application for a waiver for the use of the additive in unleaded gasoline.
In April 1993, the Court remanded the case to the EPA for reconsideration
within 180 days of its denial of the Company's waiver application,
directing the EPA to consider new evidence and make a new decision.
On November 30, 1993, the EPA determined that emissions data
contained in the Company's application satisfy all Clean Air Act standards,
but reported that it was not able to complete its assessment of the overall
public health implications of manganese. The Company and the EPA mutually
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agreed to an 180-day extension, until May 29, 1994, to resolve this last
remaining issue.
The Petroleum Additives Division also produces diesel fuel additive
products, including cetane improvers for consistent combustion and power
delivery; amine stabilizers and hindered phenolic antioxidants to prevent
degradation during storage and transport; cold flow improvers to enhance
fuel pumping under cold-weather conditions; detergent packages to keep
carbon deposits from forming on fuel injectors and in combustion chambers;
dyes for fuel identification and leak detection; lubricity agents; and a
conductivity modifier to neutralize static charge build-up in fuel and
products for home heating oils.
The division's lubricant additive products include (i) engine oil
additive packages for passenger car motor oils for gasoline engines, heavy-
duty diesel oils for diesel powered vehicles, diesel oils for locomotive,
marine and stationary power engines and oils for two-cycle engines, (ii)
specialty additive packages for automatic transmission fluids, automotive
and industrial gear oils, hydraulic fluids and industrial oils, and (iii)
components for engine oil and specialty additive packages such as
antioxidants to resist high-temperature degradation, antiwear agents to
protect metal surfaces from abrasion, detergents to prevent carbon and
varnish deposits from forming on engine parts, dispersants to keep engine
parts clean by suspending insoluble products of fuel combustion and oil
oxidation, friction reducers to facilitate movement, pour point depressants
to enable oils to flow at cold temperatures, corrosion inhibitors to
protect metal parts, and viscosity-index improvers to control oils' rate of
flow at low and high temperatures.
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Major raw materials used by the Company's operating chemical divisions include
ethylene, polybutene, process oil, aluminum and sodium and lead metals, 2-ethyl-
1-hexanol, isobutylene, and phenol and bisphenol-A, as well as electricity and
natural gas as fuels, which are purchased or provided under contracts at prices
the Company believes are competitive. The Company also produces bromine from
extensive brine reserves in Arkansas.
With separate, sharpened focus on two distinctly different
businesses the Chemicals Businesses and Petroleum Additives--Ethyl took
steps in 1993 to reorganize the Baton Rouge-based Chemicals Businesses
while continuing to consolidate the Petroleum Additives Division's
administrative, sales and research activities in Richmond, Virginia.
The February 8, 1993, acquisition of Potasse et Produits Chimiques
added organic and inorganic brominated compounds and high-purity caustic
potash and potassium carbonate product lines to the Company's existing
businesses.
Recent developments include economic recovery for Ethyl's poly
alpha olefins businesses which began in late 1993, supported by the recent
introduction by several major U.S. oil companies of full or partially
synthetic passenger car motor oils requiring the use of poly alpha olefins.
In 1993, new zeolite A capacity was added at the Houston Plant to support
the product's continued market penetration as an environmentally accepted
replacement for phosphate builders in laundry detergents. A line of
polydecene emollients developed for nonoily personal-care end uses was
commercialized and R&D developed new applications in detergents,
stabilizers and cleansers for Ethyl's patented ADMOX(R) brand of low-water
amine oxide.
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Commercialization of SAYTEX(R) 8010 flame retardant was accomplished in early
1993 followed by the successful start-up later in the year of a new production
facility in Magnolia, Arkansas. The first commercial plant for SAYTEX(R) BT-93W
flame retardant is scheduled for start-up in early 1994 in Magnolia. Also, in
response to worldwide market demand for SAYTEX RB-100(R) flame retardant, used
primarily in printed circuit boards, a multimillion-dollar investment program to
increase capacity and improve quality has been completed at Magnolia.
The Company is actively targeting the development of S(+)-ibuprofen
(an enhanced version of ibuprofen). Construction of a new facility was
completed in the fourth quarter of 1993 and is in the start-up phase. A
plant expansion to increase production capability of ibuprofen also is in
progress. All of these facilities are located at the Orangeburg, South
Carolina plant.
The late December 1992 acquisition of the marketing and sales
activities of a lubricant additives business in Japan following the June
1992 acquisition of the petroleum additives products and technologies of
Amoco Petroleum Additives Company and their subsequent integration into the
Company's product lines also were part of a major ongoing effort to expand
and improve the product lines and geographic coverage of the Petroleum
Additives Division.
As part of the consolidation of the Petroleum Additives Division,
construction continues on a major Petroleum Additives research complex in
Richmond, scheduled for completion in mid-1994. The market for lubricant
additives has been experiencing significant changes as a result of market
and regulatory demands. The demands for better fuel economy, reduced
emissions and cleaner oils have led to new equipment design and more
stringent performance requirements. Such requirements mean reformulation of
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many products, new product development and more product qualification tests.
To maintain and enhance a responsive worldwide product supply
network for its petroleum additives, Ethyl is partially replacing the
manufacturing capacity of products produced under contract for Ethyl by
Amoco Petroleum Additives Company through June of 1995, and expanding
capacity for other products. Ethyl has had a supply arrangement with Amoco
since mid-1992, when it acquired Amoco's petroleum additives business. The
new, more efficient facilities are scheduled for start-up, primarily in
1995, at Houston, Texas; Sauget, Illinois; Feluy, Belgium; and Natchez,
Mississippi.
Pharmaceuticals
Whitby offers a complete line of hydrocodone-based analgesic
products, including LORTAB(R) products; VICON(R) products, which include
prescription and over-the-counter vitamin and mineral products; and THEO-
24(R) products, which consist of a series of varying dosage
bronchodilators. Other products include WINSOR(R) brand prescription
dosage ibuprofen and over-the-counter products.
Third-party manufacturers inspected by the United States Food and
Drug Administration formulate and produce Whitby's products according to
Whitby's specifications.
Whitby sells its products to wholesalers, large pharmacy chains and
institutional purchasers such as hospital chains and health maintenance
organizations.
In 1993, Whitby launched three new products: Duratuss(TM)
prescription tablets for coughs and colds, Duratuss HD Elixir(TM) for the
same indications, and a 400 mg product extension to its Theo-24 series of
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respiratory products. In December 1993, Ethyl decided to discontinue
pharmaceutical research projects previously conducted by Whitby Research,
Inc., a subsidiary of Whitby. This will allow Whitby to focus on the
acquisition of new products through purchase, license or strategic
alliance. Whitby will also conduct, through a network of outside contract
organizations, drug-development work on projects driven by the marketing
group.
Research and Patents
The Company spent approximately $76 million, $74 million and $69
million in 1993, 1992 and 1991, respectively, on research and development,
which amounts qualified under the technical accounting definition of
research and development. Total R&D and technical services support
spending for 1993 was some $126 million, including $50 million related to
technical services support to customers, testing of existing products, cost
reduction, quality improvement and environmental studies. Substantially
all of such activities were sponsored by the Company. Most research and
development was related to the Company's chemical operations, but a portion
was related to design and development of new drug molecules by Whitby
Research prior to the decision to discontinue pharmaceutical research in
December 1993.
The Company owns more than 2200 active United States and foreign
patents, including 113 U.S. patents and 178 foreign patents issued in 1993.
Some of these patents are licensed to others. In addition, rights under
the patents and inventions of others have been acquired by the Company
through licenses. The Company's patent position is actively being managed
and is deemed by it to be adequate for the conduct of its business.
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Environmental Requirements
The Company is subject to Federal, state and local requirements
regulating the handling, manufacture or use of materials (some of which are
classified as hazardous or toxic by one or more regulatory agencies), the
discharge of materials into the environment and the protection of the
environment. It is the Company's policy to comply with these requirements
and to provide workplaces for employees that are safe, healthy and
environmentally sound and that will not adversely affect the safety, health
or environment of communities in which the Company does business. The
Company believes that as a general matter its policies, practices and
procedures are properly designed to prevent any unreasonable risk of
environmental damage, and of resulting financial liability, in connection
with its business.
The Clean Air Act Amendments of 1990 ("the Amendments") became
Federal law on November 15, 1990. Because the EPA and the states are still
in the process of completing and implementing definitive regulations,
interpreting the Amendments and establishing detailed requirements, the
Company is unable at this time to make any detailed assessment of the
effect of the Amendments on its earnings or operations.
Among other environmental requirements, the Company is subject to
the Federal Comprehensive Environmental Response, Compensation and
Liability Act ("Superfund"), and similar state laws, under which the
Company has been designated as a potentially responsible party ("PRP")
which may be liable for a share of the costs associated with cleaning up
various hazardous waste sites, some of which are on the EPA's Superfund
national priority list. Although, under some court interpretations of
these laws, a PRP might have to bear more than its proportional share of the
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cleanup costs if appropriate contributions from other PRPs are not able
to be obtained, the Company has been able to demonstrate it is only a de
minimis participant at all but a few of the sites. Also, the Company has
settled or resolved actions related to certain sites and generally has not
had to bear significantly more than its proportional share in multiparty
situations. Further, almost all of the sites represent environmental
issues that are quite mature and that have been investigated, studied and
in many cases settled. In de minimis PRP matters, the Company's policy
generally is to negotiate a consent decree and to pay any apportioned
settlement, enabling the Company to be effectively relieved of any further
liability as a PRP, except for remote contingencies. In other than de
minimis PRP matters, the Company's records indicate that unresolved
exposures are expected to be immaterial. Because the Company's management
has been actively involved in evaluating environmental matters, the Company
is able to conclude that the outstanding environmental liabilities for
unresolved PRP sites for which the Company would not be a de minimis
participant should not be material.
Compliance with government pollution-abatement and safety
regulations usually increases operating costs and requires remediation
costs and investment of capital that in some cases produces no monetary
return. Operating and remediation costs charged to expense were $61
million in 1993 versus $51 million in 1992 and $38 million in 1991
(excluding depreciation of previous capital expenditures) and are expected
to be somewhat higher in the next few years than in the past. Capital
expenditures for pollution-abatement and safety projects, including such
costs that are included in other projects, were about $30 million, $29
million and $25 million in 1993, 1992 and 1991, respectively. For each of
the next few years, capital expenditures for these types of projects are likely
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to increase somewhat from current levels. Management's estimates of the effects
of compliance with governmental pollution-abatement and safety regulations are
subject to (i) the possibility of changes in the applicable statutes and
regulations or in judicial or administrative construction of such statutes and
regulations, and (ii) uncertainty as to whether anticipated solutions to
pollution problems will be successful, or whether additional expenditures may
prove necessary.
FINANCIAL INFORMATION AS TO INDUSTRY SEGMENTS AND GEOGRAPHIC AREAS
The Company's remaining operations are substantially all in the
Chemicals Industry. Geographic area information for the Company's
operations for the three years ended December 31, 1993, is presented in the
Annual Report on pages 26 and 27 (and the related notes on page 28) and is
incorporated herein by reference.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
Financial information about the Company's foreign and domestic
operations and export sales for the three years ended December 31, 1993, is
set forth in the Annual Report on pages 26 and 27 and in Notes 1, 3, 12, 14
and 15 of the Notes to the Financial Statements on pages 35, 36, 38, 39,
40, 41 and 42 and is incorporated herein by reference. See also
information as to the Company's foreign lead antiknock compounds business
under "DESCRIPTION OF BUSINESS - Chemicals" above.
Domestic export sales to non-affiliates may be made worldwide but
are made primarily in the Far East, Latin America and Europe. Foreign
unaffiliated sales are made primarily in Europe, Canada, the Far East and
the Middle East.
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Item 2. PROPERTIES
The following is a brief description of the principal plants and
related facilities of the Company, all of which are owned except as stated
below.
LOCATION PRINCIPAL OPERATIONS
Baton Rouge, Louisiana Research and product-development
(2 facilities) activities
Bracknell, Berkshire, Research and testing activities
England
Deer Park, Texas (leased land) Production of poly alpha olefins
Elk Grove Village, Illinois Research and product-development
(leased) activities
Feluy, Belgium Production of aluminum alkyls,
orthoalkylated anilines and phenols,
lubricant additives, poly alpha olefins
and linear alpha olefins
Houston, Texas Production of aluminum alkyls, synthetic
primary alcohols, linear alpha olefins,
lubricant additive dispersants and
blends, alkenyl succinic anhydride,
orthoalkylated anilines and phenols,
polycrystalline silicon, high-purity
silane, zeolite A and other chemicals;
research activities
Louvain-la-Neuve, Belgium Research and customer technical service
activities
Magnolia, Arkansas Production of flame retardants, bromine,
(2 facilities) ethylene dibromide, vinyl bromide,
several inorganic bromides, agricultural
chemical intermediates, tertiary amines,
and polyimide foam; research activities
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Natchez, Mississippi Production of lubricant additives
including mainly detergents
Orangeburg, South Carolina Production of specialty chemicals,
including pharmaceutical intermediates;
and fuel additives, including
antioxidants, diesel fuel cetane
improver and manganese antiknocks; and
orthoalkylated phenols, polymer
modifiers and performance polymers;
research activities
St. Louis, Missouri Research and product-development
activities
Sarnia, Ontario, Canada Production of lead antiknock compounds1,
lubricant additives, cold flow improvers
and diesel fuel cetane improver
Sauget, Illinois Production of lubricant additives,
including detergents, dispersants,
antioxidants, antiwear agents, crankcase
packages, transmission and gear packages
and friction reducers
Thann, France Production of organic and inorganic
brominated pharmaceutical, photographic
and agrochemical intermediates, high-
purity caustic potash and potassium
carbonate; product development
activities
1 The Company will cease production of lead antiknock compounds by March 31,
1994.
The Company believes that its plants, including approved expansions,
are more than adequate at projected sales levels. The Company currently
has excess capacity in linear and poly alpha olefins and polysilicon.
Operating rates of certain other plants vary with product mix and normal
seasonal sales swings. The Company believes that its plants generally are
well maintained and in good operating condition.
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The Company owns its corporate headquarters offices in Richmond, Virginia, and
its regional offices in Bracknell, Berkshire, England. The Company leases its
executive offices in New York, New York, and Baton Rouge, Louisiana, and its
regional offices in Brussels, Belgium; Mississauga, Ontario, Canada; Singapore;
and Tokyo, Japan, as well as various sales and other offices. Whitby leases
office space in Richmond, Virginia.
The Company's research laboratory at Louvain-la-Neuve, Belgium, was
completed in mid-1993.
The Company also began construction in late 1992 of a $70-million
lubricant and fuel additives research and product-development facility in
Richmond, Virginia, scheduled for start-up in the summer of 1994. At that
time, research and product-development activities at St. Louis, Missouri,
will be phased out. All expenses in connection with the discontinuance of
the St. Louis operations have been fully provided for.
The Company is partially replacing the manufacturing capacity of
Amoco's Wood River, Illinois, lubricant and fuel additives plant from which
the Company currently is receiving product under a supply agreement. The
new, more efficient facilities are scheduled for start-up in 1995 at
Houston, Texas; Sauget, Illinois; Feluy, Belgium; and Natchez, Mississippi.
The Company is obtaining lubricant additives, including crankcase
packages and certain components, under a long-term supply agreement with a
subsidiary of Mitsubishi Kasei Corporation from its petroleum additives
plant in Yokkaichi, Japan. The Company also has a long-term services
agreement for research and product development and customer technical
services activities at the research facility associated with the petroleum
additives plant in Yokkaichi, Japan.
-19-
<PAGE>
Item 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved from time to time in
legal proceedings of types regarded as common in the Company's businesses,
particularly administrative or judicial proceedings seeking remediation
under environmental laws, such as Superfund, and products liability
litigation.
A 1992 products liability suit is pending in a Minnesota state court
against the Company, another chemical company, and the owner and leasing
agent of a residence in Minneapolis at which two children are claimed to
have been injured by ingesting soil and dust containing lead from peeling
paint and automotive emissions. In recent years, many suits have been
brought against paint manufacturers and landlords alleging personal injury
caused by ingesting lead from paint found in paint chips, dirt and dust.
Like these suits, the Minnesota suit just mentioned involves alleged injury
from paint lead in chips, dirt and dust, but also involves alleged injury
from gasoline lead in dirt and dust, as well. The Company believes the
Minnesota suit is without merit with respect to the Company, but since the
suit partially rests on a theory of harm to children from eating dirt
containing automotive lead emissions, the Company is vigorously defending
it.
While it is not possible to predict or determine the outcome of the
proceedings presently pending, in the Company's opinion they will not
ultimately result in any liability that would have a material adverse
effect upon the results of operations or financial condition of the Company
and its subsidiaries on a consolidated basis.
-20-
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company will be requesting that shareholders approve increasing the
number of shares issuable pursuant to the stock option plan by 5.9 million
shares.
-21-
<PAGE>
ADDITIONAL INFORMATION - EXECUTIVE OFFICERS OF THE COMPANY
The names and ages of all executive officers of the Company, as of
March 25, 1994, are set forth on the following pages. The term of office
of each such officer is until the meeting of the Board of Directors
following the next annual shareholders meeting (April 28, 1994). All of
such officers have been employed by the Company for at least the last five
years, with the exception of Thomas E. Gottwald, who rejoined the Company
August 1, 1991, following two years as General Manager of Tredegar Film
Products, a division of Tredegar Industries, Inc., which was spun off to
Ethyl shareholders in mid-1989, following assignments with Ethyl in
Corporate Business Development and Strategic Planning.
-22-
<PAGE>
Name Age Office
*Bruce C. Gottwald 60 Chairman of the Board and of the
Executive Committee, Chief
Executive Officer, Director
*Floyd D. Gottwald, Jr. 71 Vice Chairman of the Board,
Director
*Charles B. Walker 55 Vice Chairman of the Board,
Chief Financial Officer and
Treasurer, Director
*Thomas E. Gottwald 33 President and Chief Operating
Officer, Director
*William M. Gottwald, MD 46 Senior Vice President and
President of Whitby, Director
E. Whitehead Elmore 55 Special Counsel to the Company's
Executive Committee and
Corporate Secretary
Sampson H. Bass, Jr. 64 Vice President - Secretary to
the Executive Committee
David A. Fiorenza 44 Vice President - Finance and
Controller
C. S. Warren Huang 44 Vice President - Research and
Development
Donald R. Lynam 55 Vice President - Air
Conservation
Steven M. Mayer 51 Vice President and General
Counsel
Ian A. Nimmo 52 Vice President - Lubricant
Additives
Henry C. Page, Jr. 55 Vice President - Human Resources
Newton A. Perry 51 Vice President - Fuel Additives
A. Prescott Rowe 56 Vice President - External
Affairs
*Member of the Executive
Committee
Floyd D. Gottwald, Jr., and Bruce C. Gottwald are brothers. William M.
Gottwald, MD, is a son of Floyd D. Gottwald, Jr. Thomas E. Gottwald is a
son of Bruce C. Gottwald.
-23-
<PAGE>
Certain Agreements Between Albemarle and Ethyl
The Chemicals Businesses have in the past engaged in numerous
transactions with the Ethyl Businesses. Such transactions have included,
among other things, the provision of various types of financial support by
the Company. Although the Company will continue to provide certain support
services to Albemarle and Albemarle will provide certain support services
to the Company for a limited period of time, most of such services are
expected ultimately to be discontinued. In addition to these services, for
a more extended period of time, Albemarle will provide services to the
Company at Orangeburg, South Carolina, and Feluy, Belgium, and Albemarle
and the Company will exchange services at Houston, Texas.
Orangeburg, South Carolina Agreements
The Orangeburg, South Carolina plant consists of facilities for the
production of petroleum additives and specialty chemicals. After the
Distribution, Albemarle will operate for the Company the facilities that
produce petroleum additives (the "Orangeburg Additives Facility") for a
period of ten years, with an option by the Company to extend for an
additional ten years. The operating agreement relating to the Orangeburg
Additives Facility (the "Orangeburg Operating Agreement") provides that
Albemarle will produce certain petroleum additive products meeting the
Company's specifications and provide certain services and utilities
customarily used by or reasonably necessary to maintain the Orangeburg
Additives Facility in accordance with design capacity. At its option and
upon 180 days' notice, the Company may assume responsibility for the
operation of the Orangeburg Additives Facility, in which event Albemarle
would continue to provide certain services and utilities for that facility.
-24-
<PAGE>
The Company will reimburse Albemarle for certain costs specified in the
Orangeburg Operating Agreement and will pay to Albemarle a monthly operating
fee based on a percentage of such reimbursable costs. Albemarle will produce
under a supply contract MMT for the Company in facilities owned by Albemarle.
Albemarle also will be licensed by the Company, subject to certain restrictions,
to produce and sell MMT for its own account to the extent of any excess not set
aside for the Company under the supply contract.
Albemarle will own the land on which the Orangeburg Additives Facility
is located. In conjunction with Albemarle's operation of the Orangeburg
Additives Facility for the Company, Albemarle will lease the land to the
Company for a period of ten years, with an option by the Company to extend
for an additional ten years. Albemarle and the Company will have a
separate blending services agreement (the "Orangeburg Blending Agreement"),
pursuant to which Albemarle will provide storage, blending and packaging
services to the Company in connection with the operation of the Orangeburg
Additives Facility. The term of the Orangeburg Blending Agreement will be
for ten years, and the Company will have the option to extend for an
additional ten years. Pursuant to the Orangeburg Blending Agreement, the
Company will reimburse Albemarle for specified costs associated with the
blending operations and will pay to Albemarle a monthly operating fee based
on a percentage of such reimbursable costs. Pursuant to an antioxidant
supply agreement, Albemarle will produce antioxidants for the Company at
the Orangeburg plant. The Company will reimburse Albemarle for specified
production costs and pay a monthly fee. The antioxidant supply agreement
will be for ten years, and the Company will have the option to extend for
an additional ten years.
-25-
<PAGE>
Houston, Texas Agreement
The Houston, Texas plant consists of facilities for the production of
petroleum additives, olefins and derivatives and specialty chemicals.
After the Distribution, the Company will own the petroleum additives
facility at the Houston plant (the "Houston Additives Facilities"), and
Albemarle will own the facilities that produce olefins and derivatives and
specialty chemicals.
Albemarle and the Company will have a reciprocal agreement (the
"Houston Services Agreement"), with respect to the operation of the
Company's Houston Additives Facilities and Albemarle's chemical operations
adjoining the Houston Additives Facilities. Pursuant to the Houston
Services Agreement, the Company will provide to Albemarle certain services
and utilities related to Albemarle's chemicals operations in Houston, while
Albemarle will provide to the Company certain services and utilities
related to the Company's petroleum additives operations in Houston. The
term of the Houston Services Agreement is ten years, but any party
receiving services and utilities may terminate one or more of such services
or utilities upon giving 60 days' notice to the other party or may
terminate all of such services and utilities upon giving 180 days' notice
to the other party. Each party also has the right to extend for an
additional ten years the Houston Services Agreement with respect to the
services and utilities that it is receiving. Each party providing services
will receive from the other party reimbursement of specified costs and a
monthly service fee based on a percentage of such reimbursable costs.
Feluy, Belgium Agreement
The Feluy, Belgium plant consists of facilities for the production of
petroleum additives, olefins and derivatives and specialty chemicals.
After the Distribution, the Company will own and operate the petroleum
additives facility at the Feluy, Belgium plant (the "Feluy Additives
Facility"), and Albemarle will own the facilities that produce olefins and
derivatives and specialty chemicals at the Feluy plant.
Albemarle and the Company will have an agreement (the "Feluy Services
Agreement"), with respect to the operation of the Company's Feluy Additives
Facility. Pursuant to the Feluy Services Agreement, Albemarle will provide
to the Company certain services and utilities related to the Company's
petroleum additives operation in Feluy. The term of the Feluy Services
Agreement is ten years, but the Company may terminate one or more of such
services or utilities upon giving 60 days' notice to Albemarle or may
terminate all of such services and utilities upon giving 180 days' notice
to Albemarle. The Company also has the right to extend the Feluy Services
Agreement for an additional ten years. Albemarle will receive from the
Company reimbursement of specified costs and a monthly service fee based on
a percentage of such reimbursable costs.
-26-
<PAGE>
Indemnification and Tax-Sharing Agreements
Pursuant to an indemnification agreement between the Company and
Albemarle, the Company will indemnify Albemarle for losses to Albemarle
after the Distribution Date resulting from the conduct of the Ethyl
Businesses, including environmental liabilities, before and after the
Distribution Date, and Albemarle will indemnify the Company for losses to
the Company after the Distribution Date resulting from the conduct of the
-27-
<PAGE>
Chemicals Businesses, including environmental liabilities, before and
after the Distribution Date. Tax liabilities, and related indemnification,
are covered under a tax sharing agreement. Under that agreement the
Company will be responsible for the taxes of the Ethyl Businesses and the
Chemicals Businesses for periods prior to the Distribution, except with
respect to taxes attributable to subsidiaries of the Company that will
become subsidiaries of Albemarle in connection with the Distribution.
Albemarle will be responsible for the taxes of the Chemicals Businesses for
post-Distribution periods.
-28-
<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information contained on page 29 of the Annual Report under the
captions "Dividend Information & Equity Per Common Share" and "Market
Prices of Common Stock & Shareholder Data" and on pages 36 to 38 of the
Annual Report in Notes 1, 10 and 11 of the Notes to Financial Statements is
incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
The information for the five years ended December 31, 1993, contained
in the Five-Year Summary on pages 14 and 15 of the Annual Report is
incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The textual and tabular information concerning the years 1993, 1992 and
1991 contained in the "1993 Financial Review" section on pages 16 through
27 of the Annual Report (and the related notes on page 28) are incorporated
herein by reference.
Additional information on restructuring costs from that included in the
Annual Report is as follows:
The major components of the $36.1 million in special charges in 1993 ($22.4
million after income taxes) included $14.2 million related to ceasing production
at the Canadian lead antiknock facility of which $11.4 million was a noncash
write-down of the remaining book value of the assets (which will reduce annual
depreciation and amortization by about $1.5 million per year), $8.3 million for
relocation of employees and other restructuring costs, $6.0 million covering
manpower reductions of 55 employees and other costs in connection with
discontinuing pharmaceutical research projects at Whitby Research, Inc., as well
as $7.6 million for work force reductions of about 165 chemicals and corporate
employees in the U.S. and Europe.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements contained on pages 30 through
34, the Notes to Financial Statements contained on pages 35 through 45, the
Report of Independent Accountants on page 46 and the information under the
caption "Selected Quarterly Financial Data (Unaudited)" on page 28 of the Annual
Report are incorporated herein by reference.
-29-
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Inapplicable.
-30-
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in the Proxy Statement under the caption
"Election of Directors" concerning directors and persons nominated to
become directors of the Company is incorporated herein by reference. See
"Additional Information -- Executive Officers of the Company" at the end of
Part I above for information about the executive officers of the Company.
Item 11. EXECUTIVE COMPENSATION
The information contained in the Proxy Statement under the caption
"Compensation of Executive Officers and Directors" concerning executive
compensation is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information contained in the Proxy Statement under the caption
"Stock Ownership" is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the Proxy Statement under the caption
"Election of Directors," specifically in the last several paragraphs of
such section, is incorporated herein by reference.
-31-
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) The following consolidated financial statements of the
registrant included on pages 30 to 46 in the Annual Report are incorporated
herein by reference in Item 8:
Consolidated balance sheets as of December 31, 1993 and December 31,
1992
Consolidated statements of income, shareholders' equity and cash flows
for the years ended December 31, 1993, 1992, and 1991
Notes to financial statements
Report of Independent Accountants
(a) (2) See Index to Financial Statement Schedules of
registrant and its consolidated subsidiaries at F-1.
(a) (3) Exhibits
The following documents are filed as exhibits to this Form
10-K pursuant to Item 601 of Regulation S-K:
3.1 Restated Articles of Incorporation of the registrant (filed
as Exhibit 3.1 to the registrant's Report on Form 10-K for
the year ended December 31, 1992, and incorporated herein by
reference thereto).
3.2 By-laws of the registrant.
4.1 $500 million Credit Agreement, dated as of February 16,
1994.
4.2 Indenture, dated as of June 15, 1985 (filed as Exhibit 4 to
the registrant's Registration Statement on Form S-3 filed on
June 27, 1985, and incorporated herein by reference
thereto), as supplemented by the First Supplemental
Indenture dated as of June 15, 1986 (filed as Exhibit 4.2 to
the registrant's Registration Statement on Form S-3 filed on
June 12, 1986, and incorporated herein by reference
-32-
<PAGE>
thereto), and the Prospectus Supplement, dated as of
September 16, 1988, setting the terms for the public sale of
$200,000,000 aggregate principal amount of its 9.8% Notes
due September 15, 1998 (filed on September 16, 1988, and
incorporated herein by reference thereto).
10.1 Bonus Plan of the registrant (filed as Exhibit 10.1 to the
registrant's Report on Form 10-K for the year ended December
31, 1992, and incorporated herein by reference thereto).
10.2 Incentive Stock Option Plan of the registrant (filed as
Exhibit 10.2 to the registrant's Report on Form 10-K for the
year ended December 31, 1992, and incorporated herein by
reference thereto).
10.3 Non-Employee Directors' Stock Acquisition Plan (filed as Exhibit
A to the registrant's Proxy Statement for Annual Meeting of
Shareholders filed on March 17, 1993, and incorporated herein by
reference thereto).
10.4 Excess Benefit Plan of the registrant (filed as Exhibit 10.4 to
the registrant's Report on Form 10-K for the year ended December
31, 1992, and incorporated herein by reference thereto).
10.5 Supply Agreement, dated as of December 22, 1993, between Ethyl
Corporation and the Associated Octel Company Limited (filed as
Exhibit 99 on the Registrant's Report on Form 8-K filed on
February 17, 1994, and incorporated herein by reference thereto).
11 Computation of Earnings Per Share.
13 The registrant's Annual Report to Shareholders for the year
ended December 31, 1993 (note 1).
22 List of subsidiaries of the registrant.
23 Consent of Independent Certified Public Accountants.
__________________________
Note 1. With the exception of the information incorporated
in this Form 10-K by reference thereto, the Annual Report
shall not be deemed "filed" as part of this Form 10-K.
-33-
<PAGE>
28 Trust Agreement Between Ethyl Corporation and NationsBank of
Virginia, N.A. (filed as Exhibit 28 to the registrant's
Report on Form 10-K for the year ended December 31, 1992,
and incorporated herein by reference thereto).
99 Form 8-K filed on February 25, 1994.
(b) Form 8-K as filed with the Commission on February 25, 1994.
(c) Exhibits - The response to this portion of Item 14 is
submitted as a separate section of this report.
(d) Financial Statement Schedules - The response to this
portion of Item 14 is submitted as a separate section of this
report.
-34-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ETHYL CORPORATION
(Registrant)
By: /s/ Bruce C Gottwald
Bruce C. Gottwald, Chairman
of the Board
Dated: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of March 25, 1994.
Signature Title
/s/ Bruce C Gottwald Chairman of the Board,
(Bruce C. Gottwald) Chairman of the Executive
Committee, Chief Executive
Officer and Director
(Principal Executive Officer)
/s/ Charles B Walker Vice Chairman of the Board,
(Charles B. Walker) Treasurer, Chief Financial
Officer and Director
(Principal Financial Officer)
-35-
<PAGE>
Signature Title
/s/ David A. Fiorenza Vice President - Finance and
(David A. Fiorenza) Controller (Principal
Accounting Officer)
/s/ L B Andrew Director
(Lloyd B. Andrew)
/s/ Joseph C. Carter Jr Director
(Joseph C. Carter, Jr.)
/s/ Ronald V. Dolan Director
(Ronald V. Dolan)
/s/ Floyd D Gottwald Jr Vice Chairman of the Board
(Floyd D. Gottwald, Jr.) and Director
/s/ Bruce C. Gottwald Jr. Director
(Bruce C. Gottwald, Jr.)
/s/ Thomas E Gottwald President and Director
(Thomas E. Gottwald)
/s/ William M Gottwald Senior Vice President
(William M. Gottwald) and Director
-36-
<PAGE>
Signature Title
/s/ Gilbert M Grosvenor Director
(Gilbert M. Grosvenor)
/s/ Andre B. Lacy Director
(Andre B. Lacy)
/s/ Emmett J. Rice Director
(Emmett J. Rice)
-37-
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES OF REGISTRANT
AND SUBSIDIARIES
Pages
Report of Independent Accountants on Financial
Statement Schedules F-2
ETHYL CORPORATION AND SUBSIDIARIES
Schedules:
V - Property, Plant and Equipment for the years
ended December 31, 1993, 1992 and 1991 F-3
VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant & Equipment
for the years ended December 31, 1993, 1992
and 1991 F-4
X - Supplementary income statement information
for the years ended December 31, 1993, 1992
and 1991 F-5
Schedules other than those listed above are omitted as the information is
either not applicable, not required or has been furnished in the financial
statements or notes thereto.
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and
Shareholders of Ethyl Corporation
Our report on the consolidated financial statements of Ethyl Corporation and
Subsidiaries has been incorporated by reference in this Form 10-k from page 46
46 of the 1993 Annual Report to Shareholders of Ethyl Corporation. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedules listed in the index on page F-1 of
this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
/s/ Coopers & Lybrand
COOPERS & LYBRAND
Richmond, Virginia
January 31, 1994
F-2
<PAGE>
<TABLE>
ETHYL CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY,PLANT AND EQUIPMENT
for the years ended December 31, 1993, 1992, and 1991
( In Thousands )
Beginning Other Changes Ending
Balance Additions (1) Retirements Add (Deduct) Balance
--------- -------------- ----------- ------------- -------
<S> <C> <C> <C> <C> <C>
December 31, 1993
Land $54,131 $5,020 $15 $1,459 (2) $60,227
(368) (3)
Land Improvements 57,313 1,769 1,050 (2) 59,637
(1,137) (3)
642 (4)
Brinefields 17,184 2 727 (86) (4) 16,373
Buildings 114,995 5,034 188 18,905 (2) 137,980
(1,330) (3)
564 (4)
Machinery & 1,313,232 101,742 11,975 80,349 (2) 1,462,172
Equipment (20,381) (3)
(795) (4)
CWIP 82,361 91,462 15 797 (2) 172,241
(2,039) (3)
(325) (4)
---------- -------- ------- ------- ----------
Total $1,639,216 $205,029 $12,920 $77,305 $1,908,630
========== ======== ======= ======= ==========
December 31, 1992
Land $50,407 $4,121 $0 $623 (2) $54,131
(1,020) (3)
Land Improvements 44,589 11,987 40 1,345 (2) 57,313
(568) (3)
Brinefields 16,187 1,124 127 17,184
Buildings 107,384 8,725 217 1,338 (2) 114,995
(2,235) (3)
Machinery & 1,130,948 192,554 16,130 15,924 (2) 1,313,232
Equipment (10,064) (3)
CWIP 148,600 (61,099) 3 (5,137) (3) 82,361
---------- -------- ------- ------- ----------
Total $1,498,115 $157,412 $16,517 $206 $1,639,216
========== ======== ======= ======= ==========
December 31, 1991
Land $45,131 $750 $0 $26 (3) $50,407
4,500 (5)
Land Improvements 42,393 2,107 2 91 (3) 44,589
Brinefields 16,203 18 34 16,187
Buildings 96,476 11,359 427 (24) (3) 107,384
Machinery & 1,031,465 111,471 14,579 2,331 (3) 1,130,948
Equipment 260 (5)
CWIP 102,164 40,443 5,720 (3) 148,600
273 (5)
---------- -------- ------- ------- ----------
Total $1,333,832 $166,148 $15,042 $13,177 $1,498,115
========== ======== ======= ======= ==========
1) Consists of normal additions for cash
2) Purchase price allocation of businesses acquired
3) Foreign currency translation adjustment in accordance with FASB No.52
4) Reclass to Other Fixed Asset Category
5) Reclassified from Other Balance Sheet Accounts
Depreciation is computed over the estimated useful lives of the related assets
resulting in annual depreciation rates of:
Land Improvements.....Straight line - 3.3% to 20%
Machinery & equipment.....Straight line - 4% to 33.3%
Brinefields.....Straight line - 10% which will approximate unit of production
Buildings.....Straight line - 2.2% to 10%
</TABLE>
F-3
<PAGE>
<TABLE>
ETHYL CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
for the years ended December 31, 1993, 1992, and 1991
( In Thousands )
Beginning Other Changes Ending
Balance Additions Retirements Add (Deduct) Balance
--------- --------- ----------- ------------- -------
<S> <C> <C> <C> <C> <C>
December 31, 1993
Land Improvements $26,864 $3,114 $0 $115 (1) $29,767
(393) (2)
67 (3)
Brinefields 12,575 645 688 12,532
Buildings 43,785 5,551 147 239 (1) 48,741
(681) (2)
(6) (3)
Machinery & 726,218 103,682 10,876 7,308 (1) 819,320
Equipment (6,701) (2)
(61) (3)
(250) (4)
-------- -------- ------- ------ --------
Total $809,442 $112,992 $11,711 ($363) $910,360
======== ======== ======= ====== ========
December 31, 1992
Land Improvements $24,594 $2,574 $12 ($292) (2) $26,864
Brinefields 12,024 664 113 12,575
Buildings 40,269 4,331 116 (699) (2) 43,785
Machinery & 654,561 88,688 11,471 (5,429) (2) 726,218
Equipment (131) (4)
-------- -------- ------- ------ --------
Total $731,448 $96,257 $11,712 ($6,551) $809,442
======== ======== ======= ====== ========
December 31, 1991
Land Improvements $22,394 $2,136 $1 $65 (2) $24,594
Brinefields 11,420 609 5 12,024
Buildings 36,798 3,602 227 96 (2) 40,269
Machinery & 586,192 77,934 11,019 1,238 (2) 654,561
Equipment 216 (5)
-------- -------- ------- ------ --------
Total $656,804 $84,281 $11,252 $1,615 $731,448
======== ======== ======= ====== ========
1) Reserve for writedowns and disposals
2) Foreign currency translation adjustment in accordance with FASB No.52
3) Reclass to Other Fixed Asset Category
4) Reverse excess reserve for product discontinuance
5) Reclassified from Other Balance Sheet Accounts
</TABLE>
F-4
<PAGE>
ETHYL CORPORATION AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
for the years ended December 31, 1993, 1992, and 1991
( In Thousands )
Col. A Col. B
Item Charged to Costs and Expenses
1993 1992 1991
---- ---- ----
Maintenance and repairs: $96,851 $83,463 $80,991
======= ======= =======
Amortization of intangible assets, taxes, other than payroll and income taxes,
royalties and advertising costs are less than one percent of revenue as reported
in the related income statements for 1993, 1992 and 1991.
F-5
<PAGE>
EXHIBIT INDEX
Number and Name of Exhibit Page Number
3.1 Restated Articles of Incorporated by reference -
Incorporation see Page 34
3.2 By-laws Pages 46 through 75
4.1 $500 million Credit Agreement, Pages 76 through 185
dated as of February 16, 1994
4.2 1988 $200,000,000 Debt Incorporated by reference -
Offering see Page 35
10.1 Bonus Plan Incorporated by reference -
see Page 35
10.2 Incentive Stock Option Incorporated by reference -
Plan see Page 35
10.3 Non-Employee Directors' Stock Incorporated by reference -
Acquisition Plan see Page 35
10.4 Excess Benefit Plan Incorporated by reference
see Page 35
10.5 Supply Agreement between Ethyl Incorporated by reference
Corporation and Associated see Page 35
Octel Company
11 Computation of Earnings Page 186
Per Share
13 Annual Report Pages 187 through 238
22 List of Subsidiaries Pages 239
23 Consent of Independent Page 240
Certified Public Accountants
28 Trust Agreement Incorporated by reference -
see Page 36
99 Form 8K filed on February 25, 1994 Pages 241 through 261
ETHYL CORPORATION
BY-LAWS
ARTICLE I.
Meeting of Stockholders
Section 1. Places of Meetings.
All meetings of the stockholders shall
be held at the registered office of the
Corporation in the City of Richmond,
Virginia, or at such other place, either
within or without the State of Virginia,
as may, from time to time, be fixed by
the Board of Directors.
3/18/65 Section 2. Annual Meetings.
1/25/68 The annual meeting of the stockholders,
12/23/80 for the election of directors and
5/8/87 transaction of such other business as
5/24/90 may come before the meeting, shall be
held in each year on the fourth Thursday
in April, at 11 o'clock in the forenoon,
Richmond, Virginia time, or at such
other date and at such other time as the
Board of Directors of the Corporation
may designate from time to time.
6/18/64 Section 3. Special Meetings.
4/25/68 Special meetings of stockholders for any
2/28/72 purpose or purposes may be called at any
2/28/74 time by the Chairman of the Board, the
9/25/80 Vice Chairman of the Board who is most
2/19/85 senior in service with the Corporation
(eff. 1/1/86) or by a majority of the Board of
4/23/92 Directors. At a special meeting no
(eff. 3/1/94) business shall be transacted and no
corporate action shall be taken other
than that stated in the notice of the
meeting.
Ethyl Corporation
By-Laws -2-
2/28/86 Section 4. Notice of Meetings.
Notice of the time and place of every
meeting of the stockholders shall be
mailed at least ten (10) days and not
more than sixty (60) days previous
thereto to each stockholder of record
entitled to vote at the meeting, who
shall have furnished a written address
to the Secretary of the Corporation.
Such further notice shall be given as
may be required by law, but meetings
may be held without notice if all the
stockholders entitled to vote at the
meeting are present in person or by
proxy or if notice is waived in writing
by those not present.
Section 5. Quorum. Any number
of stockholders together holding at
least a majority of the outstanding
shares of capital stock entitled to vote
in respect to the business to be
transacted, who shall be present in
person or represented by proxy at any
meeting duly called, shall constitute a
quorum for the transaction of business.
If less than a quorum shall be in
attendance at the time for which a
meeting shall have been called, the
meeting may be adjourned from time to
time by a majority of the stockholders
present or represented by proxy without
notice other than by announcement at the
meeting until a quorum shall attend.
2/28/86 Section 6. Voting. At any
meeting of the stockholders each
stockholder of a class entitled to vote
on the matters coming before the meeting
shall have one vote, in person or by
proxy, for each share of capital stock
standing in his or her name on the books
of the Corporation at the time of such
meeting or on any date fixed by the
Board of Directors not exceeding seventy
(70) days prior to the meeting.
Ethyl Corporation
By-Laws -3-
Section 7. Voting List. The
officer or agent having charge of the
stock transfer books for shares of the
Corporation shall make, at least ten
(10) days before each meeting of
stockholders, a complete list of the
stockholders entitled to vote at such
meeting or any adjournment thereof, with
the address of and the number of shares
held by each. Such list, for a period
of ten (10) days prior to such meeting,
shall be kept on file at the registered
office of the Corporation or at its
principal place of business or at the
office of its transfer agent or
registrar and shall be subject to
inspection by any stockholder at any
time during usual business hours. Such
list shall also be produced and kept
open at the time and place of the
meeting and shall be subject to the
inspection of any stockholder during the
whole time of the meeting. The original
stock transfer books shall be prima
facie evidence as to who are the
stockholders entitled to examine such
list or transfer books or to vote at any
meeting of stockholders. If the
requirements of this section have not
been substantially complied with, the
meeting shall, on the demand of any
stockholder in person or by proxy, be
adjourned until the requirements are
complied with.
Ethyl Corporation
By-Laws -4-
9/24/87 Section 8. Stockholder
Proposals. To be properly brought
before an annual meeting of
stockholders, business must be either
(i) specified in the notice of meeting
(or any supplement thereto) given by or
at the direction of the Board of
Directors or (ii) otherwise properly
brought before the meeting or at the
direction of the Board of Directors, or
(iii) otherwise properly brought before
the annual meeting by a stockholder. In
addition to any other applicable
requirements, for business to be
properly brought before an annual
meeting by a stockholder, the
stockholder must have given timely
notice thereof in writing to the
Secretary of the Corporation. To be
timely, a stockholder's notice must be
given, either by personal delivery or by
United States mail, postage prepaid, to
the Secretary of the Corporation not
later than sixty (60) days in advance of
the annual meeting. A stockholder's
notice to the Secretary shall set forth
as to each matter the stockholder
proposes to bring before the annual
meeting (i) a brief description of the
business desired to be brought before
the annual meeting and the reasons for
conducting such business at the annual
meeting, (ii) the name and record
address of the stockholder proposing
such business, (iii) the class and
number of shares of the Corporation that
are beneficially owned by the
stockholder, and (iv) any material
interest of the stockholder in such
business.
Ethyl Corporation
By-Laws -5-
In the event that a stockholder
attempts to bring business before an
annual meeting without complying with
the provisions of this Section 8, the
Chairman of the meeting shall declare to
the meeting that the business was not
properly brought before the meeting in
accordance with the foregoing
procedures, and such business shall not
be transacted.
No business shall be conducted at
the annual meeting except in accordance
with the procedures set forth in this
Section 8, provided, however, that
nothing in this Section 8 shall be
deemed to preclude discussion by any
stockholder of any business properly
brought before the annual meeting.
ARTICLE II.
Directors
Section 1. General Powers. The
property, affairs and business of the
2/28/86 Corporation shall be managed under the
direction of the Board of Directors, and
except as otherwise expressly provided
by law or by the Articles of
Incorporation, or by these By-Laws, all
of the powers of the Corporation shall
be vested in such Board.
Any contract to which the
Corporation is a party that is (i) not
in the ordinary course of business or
(ii) is in the ordinary course of
business and involves a commitment by
the Corporation of more than $100,000
(eff. 3/1/94) and is not executed by the Chairman of
the Board or the Vice Chairman of the
Board most senior in service with the
Corporation, must be approved by the
Board of Directors or the Executive
Committee, or in accordance with the
policy adopted by the Board of Directors
or the Executive Committee, prior to
delivery.
Ethyl Corporation
By-Laws -6-
10/16/63 Section 2. Number of Directors. 9/25/86
4/16/64 The Board of Directors shall be 12/17/87
4/19/67 seventeen (17) in number. 2/9/88
5/18/67 1/26/89
7/26/67 3/23/89
12/23/69 (eff. 5/25/89)
3/25/71 (eff. 4/25/90)
1/27/72 4/24/91
3/23/72 2/27/92
1/28/82 2/27/92
5/13/82 (eff. 4/23/92)
5/14/82
9/23/82
3/24/83
1/26/84
3/22/84
(eff.
4/26/84)
12/20/84
(eff. 1/1/85)
3/28/85
(eff.
4/25/85)
2/28/86
Section 3. Election of
Directors.
(a) Directors shall be elected at
the annual meeting of stockholders.
(b) Directors shall hold their 2/28/86
offices until their successors are
elected. Any director may be removed
from office by a majority of the votes
entitled to be cast at an election of
directors of the voting group or voting
groups by which such director was
elected.
(c) Any vacancy occurring in the
Board of Directors may be filled by the
affirmative vote of the majority of the
remaining directors though less than a
quorum of the Board of Directors.
Ethyl Corporation
By-Laws -7-
(d) A majority of the number of 2/28/86
directors fixed by these By-Laws shall
constitute a quorum for the transaction
of business. The act of a majority of
the directors present at a meeting at
which a quorum is present shall be the
act of the Board of Directors.
6/18/64 Section 4. Meetings of
4/25/68 Directors. Meetings of the Board of
12/28/72 Directors shall be held at places within
2/28/74 or without the State of Virginia and at
9/25/80 times fixed by resolution of the Board,
4/23/92 or upon call by the Chairman by the
(eff. 3/1/94) Board or by the Vice Chairman of the
Board who is most senior in service with
the Corporation, and the Secretary or
officer performing the Secretary's
duties shall give not less than twenty-
four (24) hours' notice by letter,
telegraph or telephone of all meetings
of the directors, provided that notice
need not be given of regular meetings
held at times and places fixed by
resolution of the Board. Meetings may
be held at any time without notice if
all of the directors are present, or if
those not present waive notice in
writing either before or after the
meeting. Directors may be allowed by
resolution of the Board, a reasonable
fee and expenses for attendance of all
meetings.
Ethyl Corporation
By-Laws -8-
9/24/87 Section 5. Nominations.
Subject to the rights of holders of any
class or series of stock having a
preference over the common stock as to
dividends or upon liquidation,
nominations for the election of
Directors shall be made by the Board of
Directors or a committee appointed by
the Board of Directors or by any
stockholder entitled to vote in the
election of Directors generally.
However, any stockholder entitled to
vote in the election of Directors
generally may nominate one or more
persons for election as Directors at a
meeting only if written notice of such
stockholder's intent to make such
nomination or nominations has been
given, either by personal delivery or by
United States mail, postage prepaid, to
the Secretary of the Corporation not
later than (i) with respect to an
election to be held at an annual meeting
of stockholders, sixty (60) days in
advance of such meeting, and (ii) with
respect to an election to be held at a
special meeting of stockholders for the
election of Directors, the close of
business on the seventh day following
the date on which notice of such meeting
is first given to stockholders. Each
notice shall set forth: (a) the name and
address of the stockholder who intends
to make the nomination and of the person
or persons to be nominated; (b) a
representation that the stockholder is a
holder of record of stock of the
Corporation entitled to vote at such
meeting and intends to appear in person
or by proxy at the meeting to nominate
the person or persons specified in the
notice; (c) a description of all
arrangements or understandings between
the stockholder and each nominee and any
other person or persons (naming such
person or persons) pursuant to which the
nomination or nominations are to be made
by the stockholder; (d) such other
information regarding each nominee
proposed by such stockholder as would be
Ethyl Corporation
By-Laws -9-
ARTICLE III.
Committees
Section 1. Executive Committee.
The Board of Directors shall, by vote of
6/18/64 a majority of the number of directors
4/25/68 fixed by these By-Laws, designate an
12/28/72 Executive Committee which shall consist
2/28/74 of two or more directors, including the
9/25/80 Chairman of the Board, any Vice Chairman
5/4/83 of the Board and the President. The
6/27/85 members of the Executive Committee shall
(eff. 3/1/94) serve until their successors are
designated by the Board of Directors or
until removed or until the Executive
Committee is dissolved by the Board of
Directors. All vacancies which may
occur in the Executive Committee shall
be filled by the Board of Directors.
1/16/64 Section 2. General Powers.
2/28/86 When the Board of Directors is not in
session, the Executive Committee shall
have all power vested in the Board of
Directors by law, except as otherwise
provided in the Virginia Stock
Corporation Act. The Executive
Committee shall report at the next
regular or special meeting of the Board
of Directors all action which the
Executive Committee may have taken on
behalf of the Board since the last
regular or special meeting of the Board
of Directors.
Ethyl Corporation
By-Laws -10-
4/25/68 Section 3. Meetings of the
12/28/72 Executive Committee. Meetings of the
2/28/74 Executive Committee shall be held at
9/25/80 such places and at such times fixed by
4/23/92 resolution of the Committee, or upon
1/31/94 call by the Chairman of the Executive
Committee or the Chairman of the Board
or by the Vice Chairman of the Board
most senior in service with the
Corporation. Not less than twelve (12)
hours' notice shall be given by letter,
telegraph or telephone of all meetings
of the Executive Committee, provided
that notice need not be given of regular
meetings held at times and places fixed
by resolution of the Committee and that
meetings may be held at any time without
notice if all of the members of the
Committee are present or if those not
present waive notice in writing either
before or after the meeting. A majority
of the members of the Executive
Committee then serving shall constitute
a quorum for the transaction of business
at any meeting.
3/19/64 Section 4. Bonus, Salary and
5/28/64 Stock Option Committee. The Board of
11/18/65 Directors, at its regular annual
6/22/67 meeting, shall designate a Bonus, Salary
1/23/69 and Stock Option Committee which shall
7/23/87 consist of three or more directors who
shall not be eligible for bonus, stock
option or stock appreciation rights. In
addition, the Board at any time may
designate one or more alternate members
of such Committee who shall be directors
not eligible for bonus, stock option or
stock appreciation rights who may act in
place of any absent regular member upon
invitation by the Chairman or Secretary
of the Committee.
Ethyl Corporation
By-Laws -11-
With respect to bonus, the Bonus,
Salary and Stock Option Committee shall
have and may exercise the powers to
determine the amounts annually available
for bonus pursuant to any bonus plan or
formula approved by the Board, to
determine the various bonus awards and
to exercise such further powers with
respect to bonus as may from time to
time be conferred by the Board of
Directors.
With respect to salary, Bonus,
Salary and Stock Option Committee shall
have and may exercise the power to fix
and determine from time to time all
salaries at a rate in excess of $6,900
per month or such higher figure as it
may from time to time set as the salary
figure for automatic review for bonus
consideration, and such further powers
with respect to salary as may from time
to time be conferred by the Board of
Directors.
The Bonus, Salary and Stock Option
Committee shall exercise such powers
with respect to the retention and fees
of consultants and the continuance of
employees in the employ of the Company
past their normal retirement date as may
from time to time be conferred by the
Board of Directors.
The Bonus, Salary and Stock Option
Committee shall administer the
Corporation's Incentive Stock Option
Plan (the Plan) and from time to time
may grant consistent with the Plan stock
options and stock appreciation rights.
5/28/64 Section 5. Vacancies and
Procedure. Vacancies in the Bonus and
Salary Committee shall be filled by the
Board of Directors, and members shall be
subject to removal by the Board at any
time.
Ethyl Corporation
By-Laws -12-
The Bonus and Salary Committee
shall fix its own rules of procedure. A
majority of the number of regular
members then serving shall constitute a
quorum; and regular and alternate
members present shall be counted to
determine whether there is a quorum.
The Bonus and Salary Committee shall
keep minutes of its meetings, and all
action taken by it shall be reported to
the Board of Directors.
Ethyl Corporation
By-Laws -13-
11/26/80 Section 6. Audit Committee.
3/24/88 The Board of Directors at its regular
annual meeting shall designate an Audit
Committee which shall consist of three
or more directors whose membership on
the Committee shall meet the
requirements set forth in the rules of
the New York Stock Exchange as amended
from time to time. Vacancies in the
Committee shall be filled by the Board
of Directors with directors meeting the
requirements set forth above, giving
consideration to continuity of the
committee, and members shall be subject
to removal by the Board at any time.
The Committee shall fix its own rules of
procedure and a majority of the members
serving shall constitute a quorum. The
Committee shall meet at least twice a
year with both the internal and the
Corporation's outside auditors present
at each meeting and shall keep minutes
of its meetings and all action taken
shall be reported to the Board of
Directors. The Committee shall review
the reports and minutes of any audit
committees of the Corporation's
subsidiaries. The Committee shall
review the Corporation's financial
reporting process, including accounting
policies and procedures. The Committee
shall examine the report of the
Corporation's outside auditors, consult
with them with respect to their report
and the standards and procedures
employed by them in their audit, report
to the Board the results of its study
and recommend the selection of auditors
for each fiscal year. The Committee
shall also oversee the activities of the
Corporation's internal audit program.
Ethyl Corporation
By-Laws -14-
11/26/80 Section 7. N o m i n a t i n g
4/23/92 Committee. The Board of Directors shall
designate a Nominating Committee which
shall consist of three or more
directors. The Committee shall make
recommendations to the Board regarding
nominees for election as directors by
the stockholders at each Annual
Stockholders' Meeting and make such
other recommendations regarding tenure,
classification and compensation of
directors as the Committee may deem
advisable from time to time. The
Committee shall fix its own rules of
procedure and a majority of the members
serving shall constitute a quorum.
Section 8. Other Committees of
Board. The Board of Directors, by
resolution duly adopted, may establish
such other committees of the Board
having limited authority in the
management of the affairs of the
Corporation as it may deem advisable and
the members, terms and authority of such
committees shall be as set forth in the
resolutions establishing the same.
4/23/92 Section 9. Ex-Officio Members.
An officer designated as an ex officio
member of a Committee shall be entitled
to attend meetings, but shall not have
the power to vote unless such officer is
specifically designated as a voting
member of such Committee.
1/16/64 Section 10. M a n a g e m e n t
4/25/68 Committees. The chief executive officer
1/22/70 of the Corporation from time to time may
4/23/92 delegate to the Executive Committee or
any other committee of the Board of
Directors, or to such committees as he
may establish for the purpose, such of
his management functions as chief
executive officer as he may deem
advisable in the best interest of the
Corporation. The members, terms,
authority and procedures of such
committees in exercising management
functions shall be as designated by the
chief executive officer.
Ethyl Corporation
By-Laws -15-
When exercising management
functions so delegated, reports as to
action taken by such committees need not
be submitted to the Board except where
the chief executive officer deems it
advisable as a matter of general
information.
1/16/64 Section 11. Advisory Committee
4/25/68 to Chief Executive Officer. The Chief
1/22/70 Executive Officer may establish such
4/23/92 advisory committees as he may deem
(eff. 3/1/94) advisable to assist him in the
administration and management of the
business of the Corporation; such
committees shall consist of officers,
employees or consultants to be appointed
by the Chief Executive Officer who shall
serve for such terms and have such
authority as may be designated by the
Chief Executive Officer.
Ethyl Corporation
By-Laws -16-
ARTICLE IV.
Officers
Section 1.1 Election. The
officers of the Corporation shall
6/18/64 consist of a Chairman of the Board, a
7/26/67 President, one or more Vice Chairmen of
4/25/68 the Board, a Chairman of the Executive
1/22/70 Committee, one or more Vice Presidents
12/28/72 (any one or more of whom may be
2/28/74 designated as Executive Vice Presidents
9/25/80 or Senior Vice Presidents), a Secretary
(eff. 3/1/94) and a Treasurer. In addition, such
other officers as are provided for in
Section 3 of this Article may from time
to time be elected by the Board of
Directors. All officers shall hold
office until the next annual meeting of
the Board of Directors or until their
successors are elected. The Chairman of
the Board, the President, any Vice
Chairman of the Board and the Chairman
of the Executive Committee shall be
chosen from among the directors. Any
two officers may be combined in the same
person as the Board of Directors may
determine, except that the President and
Secretary may not be the same person.
2/28/74 Section 2. Removal of Officers;
9/25/80 Vacancies. Any officer of the
Corporation may be removed summarily
with or without cause, at any time by a
resolution passed at any meeting by
affirmative vote of a majority of the
number of directors fixed by these By-
Laws. Vacancies may be filled at any
meeting of the Board of Directors.
6/18/64 Section 3. Other Officers.
7/26/67 Other officers may from time to time be
2/28/74 elected by the Board, including one or
9/25/80 more Assistant Secretaries and Assistant
Treasurers, and one or more Divisional
Presidents and Divisional Vice
Presidents (any one or more of whom may
be designated as Divisional Executive
Vice Presidents or Divisional Senior
Vice Presidents).
Ethyl Corporation
By-Laws -17-
2/28/74 Section 4. Duties. The
9/25/80 officers of the Corporation shall have
such duties as generally pertain to
their offices, respectively, as well as
such powers and duties as are
hereinafter provided and as from time to
time shall be conferred by the Board of
Directors. The Board of Directors may
require any officer to give such bond
for the faithful performance of his
duties as the Board may see fit.
6/18/64 Section 5. Duties of the
4/25/68 Chairman of the Board. The Chairman of
1/22/70 the Board shall be the chief executive
12/28/72 officer of the Corporation and shall
2/28/74 serve as Chairman of the Executive
9/25/80 Committee with the power to vote and,
4/23/92 except as otherwise provided in these
(eff. 3/1/94) By-Laws or the resolutions establishing
such committees, he shall be ex officio
a member of all other committees of the
Board. He shall preside at all meetings
of the stockholders, the Board of
Directors and the Executive Committee.
In the incapacity or absence of the
President, the Chairman of the Board
shall perform the duties and have the
authority of the President. He may
appoint advisory committees as provided
in Section 8 of Article III. He may
sign and execute in the name of the
Corporation deeds, mortgages, bonds,
contracts, or other instruments, except
in cases where the signing and the
execution thereof shall be expressly
delegated by the Board of Directors or
by these By-Laws to some other officer
or agent of the Corporation or shall be
required by law otherwise to be signed
or executed. In addition, he shall
perform all duties incident to the
office of Chairman of the Board and
chief executive officer and such other
duties as from time to time may be
assigned to him by the Board of
Directors.
Ethyl Corporation
By-Laws -18-
(eff. 3/1/94) Section 6. Duties of any Vice
Chairman of the Board. Each Vice
Chairman of the Board shall perform the
duties incident to the office of the
Vice Chairman of the Board and shall
have such other powers and duties as may
from time to time be assigned to him by
the Board of Directors or the Chairman
of the Board. The Vice Chairman of the
Board who is most senior in service with
the Corporation shall perform the duties
of the Chairman of the Board in the
absence of the Chairman of the Board.
Any Vice Chairman of the Board may sign
and execute in the name of the
Corporation deeds, mortgages, bonds,
contracts and other instruments, except
in cases where the signing and execution
thereof shall be expressly delegated by
the Board of Directors or by these By-
Laws to some other officer or agent of
the Corporation or shall be required by
law otherwise to be signed or executed.
Ethyl Corporation
By-Laws -19-
6/18/64 Section 7. Duties of the
4/25/68 President. The President shall be the
1/22/70 chief operating officer and chief
12/28/72 administrative officer of the
2/28/74 Corporation, shall be responsible for
9/25/80 the execution of the policies of the
4/23/92 Board of Directors and shall have
(eff. 3/1/94) general direction and supervision over
the business of the Corporation and its
several officers, subject to the
Chairman of the Board and the Board of
Directors. He shall serve as a member
of the Executive Committee with the
power to vote, and except as otherwise
provided in these By-Laws or the
resolutions establishing such
committees, he shall be ex officio a
member of all other committees of the
Board. The President may sign and
execute in the name of the Corporation
deeds, mortgages, bonds, contracts or
other instruments, except in cases where
the signing and the execution thereof
shall be expressly delegated by the
Board of Directors or by these By-Laws
to some other officer or agent of the
Corporation or shall be required by law
otherwise to be signed or executed. In
addition, he shall perform all duties
incident to the office of the President
and such other duties as from time to
time may be assigned to him by the Board
of Directors or the Chairman of the
Board.
Ethyl Corporation
By-Laws -20-
4/23/92 Section 8. Duties of the Vice
President. Each Vice President of the
Corporation (including any Executive
Vice President and Senior Vice
President) shall have powers and duties
as pertain to the office of the Vice
President and as may from time to time
be assigned to him by the Board of
Directors, the Chairman of the Board, or
the President. When there shall be more
than one Vice President of the
Corporation, the Board of Directors may
from time to time designate one of them
to perform the duties of the President
in the absence of the President and the
Chairman of the Board. Any Vice
President of the Corporation may sign
and execute in the name of the
Corporation deeds, mortgages, bonds,
contracts or other instruments, except
in cases where the signing and the
execution thereof shall be expressly
delegated by the Board of Directors or
by these By-Laws to some other officer
or agent of the Corporation or shall be
required by law otherwise to be signed
or executed.
4/25/68 Section 9. Duties of the
12/28/72 Treasurer. The Treasurer shall have
2/28/74 charge and custody of and be responsible
9/25/80 for all funds and securities of the
7/26/90 Corporation and shall cause all such
funds and securities to be deposited in
such banks and depositories as the Board
of Directors from time to time may
direct. He shall in general perform all
the duties incident to the office of
Treasurer and such other duties as from
time to time may be assigned to him by
the Board of Directors, the Chairman of
the Board, the President, a Vice
Chairman of the Board or the Chairman of
the Executive Committee.
Ethyl Corporation
By-Laws -21-
7/26/90 Section 10. Duties of the
Controller. The Controller shall
maintain adequate accounts and records
of all assets, liabilities and
transactions of the Corporation in
accordance with generally accepted
accounting practices; shall exhibit at
the office of the Corporation his
accounts and records to any of the
directors of the Corporation at any time
upon request; shall render such
statements of his accounts and records
and such other statements to the Board
of Directors and officers as often and
in such manner as they shall require;
and shall make and file (or supervise
the making and filing of) all tax
returns required by law.
Ethyl Corporation
By-Laws -22-
4/25/68 Section 11. Duties of the
12/28/72 Secretary. The Secretary shall act as
2/28/74 secretary of all meetings of the Board
9/25/80 of Directors, the Executive Committee
and other Committees of the Board, and
the stockholders of the Corporation, and
shall keep the minutes thereof in the
proper book or books to be provided for
that purpose. He shall see that all
notices required to be given by the
Corporation are duly given and served;
shall have custody of the seal of the
Corporation and shall affix the seal or
cause it to be affixed to all
certificates for stock of the
Corporation and to all documents the
execution of which on behalf of the
Corporation under its corporate seal is
duly authorized in accordance with the
provisions of these By-Laws; shall have
custody of all deeds, leases, contracts
and other important corporate documents;
shall have charge of the books, records
and papers of the Corporation relating
to its organization and management as a
Corporation; shall see that the reports,
statements and other documents required
by law (except tax returns) are properly
filed; and shall, in general, perform
all the duties incident to the office of
Secretary and such other duties as from
time to time may be assigned to him by
the Board of Directors, the Chairman of
the Board, the President, a Vice
Chairman of the Board or the Chairman of
the Executive Committee.
Ethyl Corporation
By-Laws -23-
7/26/67 Section 12. Duties of Divisional
9/25/80 Officers. Divisional Presidents and
Divisional Vice Presidents shall be
deemed to be officers of the Corporation
whose duties and authority shall relate
only to the Division by which they are
employed, and they may sign and execute
in the name of the Corporation deeds,
mortgages, bonds, contracts and other
instruments authorized by the Board that
relate only to the business and
properties of such Division. Other
divisional officers may be designated
from time to time by the Board of
Directors and shall serve at the
pleasure of the Board and have such
duties as may be assigned by the Board.
Such officers shall be officers of the
respective divisions but shall not be
deemed to be officers of the
Corporation.
7/26/67 Section 13. Other Duties of
4/25/68 Officers. Any officer of the
12/28/72 Corporation shall have, in addition to
2/28/74 the duties prescribed herein or by law,
9/25/80 such other duties as from time to time
shall be prescribed by the Board of
Directors, the Chairman of the Board,
the President, a Vice Chairman of the
Board or the Chairman of the Executive
Committee.
Ethyl Corporation
By-Laws -24-
ARTICLE V.
Capital Stock
Section 1. Certificates. The
shares of capital stock of the
Corporation shall be evidenced by
certificates in forms prescribed by the
Board of Directors and executed in any
manner permitted by law and stating
thereon the information required by law.
Transfer agents and/or registrars for
one or more classes of the stock of the
Corporation may be appointed by the
Board of Directors and may be required
to countersign certificates representing
stock of such class or classes. In the
event that any officer whose signature
or facsimile thereof shall have been
used on a stock certificate shall for
any reason cease to be an officer of the
Corporation and such certificate shall
not then have been delivered by the
Corporation, the Board of Directors may
nevertheless adopt such certificate and
it may then be issued and delivered as
though such person had not ceased to be
an officer of the Corporation.
Section 2. Lost, Destroyed and
Mutilated Certificates. Holders of the
stock of the Corporation shall
immediately notify the Corporation of
any loss, destruction or mutilation of
the certificate therefor, and the Board
of Directors may in its discretion cause
one or more new certificates for the
same number of shares in the aggregate
to be issued to such stockholder upon
the surrender of the mutilated
certificate or upon satisfactory proof
of such loss or destruction, and the
deposit of a bond in such form and
amount and with such surety as the Board
of Directors may require.
Ethyl Corporation
By-Laws -25-
Section 3. Transfer of Stock.
The stock of the Corporation shall be
transferable or assignable only on the
books of the Corporation by the holders
in person or by attorney on surrender of
the certificate for such shares duly
endorsed and, if sought to be
transferred by attorney, accompanied by
a written power of attorney to have the
same transferred on the books of the
Corporation. The Corporation will
recognize, however, the exclusive right
of the person registered on its books as
the owner of shares to receive dividends
and to vote as such owner.
2/28/86 Section 4. Fixing Record Date.
For the purpose of determining
stockholders entitled to notice of or to
vote at any meeting of stockholders or
any adjournment thereof, or entitled to
receive payment of any dividend, or in
order to make a determination of
stockholders for any other proper
purpose, the Board of Directors may fix
in advance a date as the record date for
any such determination of stockholders,
such date in any case to be not more
than seventy (70) days prior to the date
on which the particular action,
requiring such determination of
stockholders, is to be taken. If no
record date is fixed for the
determination of stockholders entitled
to notice of or to vote at a meeting of
stockholders, or stockholders entitled
to receive payment of a dividend, the
date on which notice of the meeting is
mailed or the date on which the
resolution of the Board of Directors
declaring such dividend is adopted, as
the case may be, shall be the record
date for such determination of
stockholders. When a determination of
stockholders entitled to vote at any
meeting of stockholders has been made as
provided in this section such
determination shall apply to any
adjournment thereof.
Ethyl Corporation
By-Laws -26-
ARTICLE VI.
Miscellaneous Provisions
Section 1. Seal. The seal of
the Corporation shall consist of a flat-
face circular die, of which there may be
any number of counterparts, on which
there shall be engraved in the center of
the words "Incorporated - February 15,
1887" and between two concentric circles
around the margin the words "Ethyl
Corporation - A Virginia Corporation".
7/18/63 Section 2. Fiscal Year. The
fiscal year of the Corporation shall end
on December 31st in each year, and shall
consist of such accounting periods as
may be recommended by the Treasurer and
approved by the Executive Committee.
Section 3. Books and Records.
The Corporation shall keep correct and
complete books and records of account
and shall keep minutes of the
proceedings of its stockholders and
Board of Directors; and shall keep at
its registered office or principal place
of business, or at the office of its
transfer agent or registrar a record of
its stockholders, giving the names and
addresses of all stockholders, and the
number, class and series of the shares
being held.
Ethyl Corporation
By-Laws -27-
Any person who shall have been a
stockholder of record for at least six
months immediately preceding his demand
or who shall be the holder of record of
at least five per cent (5%) of all the
outstanding shares of the Corporation,
upon written demand stating the purpose
thereof, shall have the right to
examine, in person, or by agent or
attorney at any reasonable time or
times, for any proper purpose, its books
and records of account, minutes and
records of stockholders and to make
extracts therefrom. Upon the written
request of any stockholder, the
Corporation shall mail to such
stockholder its most recent published
financial statements showing in
reasonable detail its assets and
liabilities and the results of its
operations.
The Board of Directors shall,
subject to provisions of the foregoing
paragraph of this section, to the
provisions of Section 7 of Article I and
to the laws of the State of Virginia,
have power to determine from time to
time whether and to what extent and
under what conditions and limitations
the accounts, records and books of the
Corporation, or any of them, shall be
open to the inspection of the
stockholders.
Section 4. Checks, Notes and
Drafts. Checks, notes, drafts and other
orders for the payment of money shall be
signed by such persons as the Board of
Directors from time to time may
authorize. When the Board of Directors
so authorizes, however, the signature of
any such person may be a facsimile.
Ethyl Corporation
By-Laws -28-
Section 5. Amendment of By-
Laws. These By-Laws may be amended or
altered at any meeting of the Board of
Directors by affirmative vote of a
majority of the number of directors
fixed by these By-Laws. The
stockholders entitled to vote in respect
of the election of directors, however,
shall have the power to rescind, alter,
amend or repeal any By-Laws and to enact
By-Laws which, if expressly so provided,
may not be amended, altered or repealed
by the Board of Directors.
Ethyl Corporation
By-Laws -29-
1/16/64 Section 6. Voting of Stock
4/25/68 Held. Unless otherwise provided by
12/28/72 resolution of the Board of Directors or
2/28/74 of the Executive Committee, the Chairman
9/25/80 of the Board, and Vice Chairman of the
4/23/92 Board or the President shall from time
1/31/94 to time appoint an attorney or attorneys
(eff. 3/1/94) or agent or agents of this Corporation,
in the name and on behalf of this
Corporation, to cast the vote which this
Corporation may be entitled to cast as a
stockholder or otherwise in any other
corporation, any of whose stock or
securities may be held by this
Corporation, at meetings of the holders
of the stock or other securities of such
other corporation, or to consent in
writing to any action by any of such
other corporation, and shall instruct
the person or persons so appointed as to
the manner of casting such votes or
giving such consent and may execute or
cause to be executed on behalf of this
Corporation and under its corporate seal
or otherwise, such written proxies,
consents, waivers or other instruments
as may be necessary or proper in the
premises; or, in lieu of such
appointment, the Chairman of the Board
or the Vice Chairman of the Board who is
most senior in service with the
Corporation may attend in person any
meetings of the holders of stock or
other securities of any such other
corporation and there vote or exercise
any or all power of this Corporation as
the holder of such stock or other
securities of such other corporation.
Ethyl Corporation
By-Laws -30-
9/24/87 Section 7. Restriction on
5/26/88 Transfer. To the extent that any
provision of the Rights Agreement
between the Corporation and Sovran Bank,
N.A., as Rights Agent, dated September
24, 1987, is deemed to constitute a
restriction on the transfer of any
securities of the corporation, including
without limitation, the Rights, as
defined therein, such restriction is
hereby authorized by the By-Laws of the
corporation.
2/14/89 Section 8. Control Share
Acquisitions Statute. Article 14.1 of
the Virginia Stock Corporation Act
("Control Share Acquisitions") shall not
apply to acquisitions of shares of this
Corporation.
$500,000,000
COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of February 16, 1994
among
ETHYL CORPORATION,
THE BANKS NAMED HEREIN,
CHEMICAL BANK, AS ADMINISTRATIVE AGENT
AND
NATIONSBANK OF NORTH CAROLINA, N.A., AS CO-AGENT
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Defined Terms. . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Terms Generally. . . . . . . . . . . . . . . . . . . . .17
ARTICLE II. THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . .18
Section 2.01. Commitments. . . . . . . . . . . . . . . . . . . . . . .18
Section 2.02. Loans. . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 2.03. Competitive Bid Procedure. . . . . . . . . . . . . . . .20
Section 2.04. Committed Borrowing Procedure. . . . . . . . . . . . . .23
Section 2.05. Refinancings . . . . . . . . . . . . . . . . . . . . . .24
Section 2.06. Fees . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 2.07. Notes; Repayment of Loans. . . . . . . . . . . . . . . .25
Section 2.08. Interest on Loans. . . . . . . . . . . . . . . . . . . .26
Section 2.09. Additional Interest; Alternate
Rate of Interest . . . . . . . . . . . . . . . . . . .27
Section 2.10. Termination, Reduction and
Extension of Commitments . . . . . . . . . . . . . . .28
Section 2.11. Optional Prepayment of Loans . . . . . . . . . . . . . .29
Section 2.12. Reserve Requirements; Change
in Circumstances . . . . . . . . . . . . . . . . . . .30
Section 2.13. Change in Legality . . . . . . . . . . . . . . . . . . .32
Section 2.14. Indemnity. . . . . . . . . . . . . . . . . . . . . . . .33
Section 2.15. Pro Rata Treatment, etc. . . . . . . . . . . . . . . . .34
Section 2.16. Payments . . . . . . . . . . . . . . . . . . . . . . . .34
Section 2.17. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 2.18. Certain Bank Obligations . . . . . . . . . . . . . . . .39
ARTICLE III. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . .40
Section 3.01. Organization; Corporate Powers . . . . . . . . . . . . .40
Section 3.02. Authorization. . . . . . . . . . . . . . . . . . . . . .40
Section 3.03. Governmental Approval. . . . . . . . . . . . . . . . . .41
Section 3.04. Financial Statements . . . . . . . . . . . . . . . . . .41
Section 3.05. No Material Adverse Change . . . . . . . . . . . . . . .41
Section 3.06. Subsidiaries . . . . . . . . . . . . . . . . . . . . . .42
Section 3.07. Litigation . . . . . . . . . . . . . . . . . . . . . . .42
Section 3.08. Tax Returns. . . . . . . . . . . . . . . . . . . . . . .42
Section 3.09. Properties . . . . . . . . . . . . . . . . . . . . . . .43
Section 3.10. Employee Benefit Plans . . . . . . . . . . . . . . . . .43
Section 3.11. Investment Company Act; Public
Utility Holding Company Act. . . . . . . . . . . . . .43
Section 3.12. Federal Reserve Regulations. . . . . . . . . . . . . . .44
Section 3.13. No Material Misstatements. . . . . . . . . . . . . . . .44
Section 3.14. Compliance with Laws . . . . . . . . . . . . . . . . . .44
Section 3.15. Environmental and Safety Matters . . . . . . . . . . . .44
ARTICLE IV. CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . .45
Section 4.01. Conditions to be Satisfied
on Date of Each Borrowing. . . . . . . . . . . . . . .45
ARTICLE V. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . .46
Section 5.01. Corporate Existence; Businesses and
Properties . . . . . . . . . . . . . . . . . . . . . .46
Section 5.02. Insurance. . . . . . . . . . . . . . . . . . . . . . . .47
Section 5.03. Obligations and Taxes. . . . . . . . . . . . . . . . . .47
Section 5.04. Financial Statements,
Reports, etc.. . . . . . . . . . . . . . . . . . . . .48
Section 5.05. Litigation and Other Notices . . . . . . . . . . . . . .49
Section 5.06. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . .50
Section 5.07. Access to Premises and Records . . . . . . . . . . . . .50
Section 5.08. Reorganization and Distribution
Agreement. . . . . . . . . . . . . . . . . . . . . . .51
Section 5.09. Issuance of Notes. . . . . . . . . . . . . . . . . . . .51
ARTICLE VI. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . .51
Section 6.01. Liens, etc.. . . . . . . . . . . . . . . . . . . . . . .51
Section 6.02. Indebtedness of Subsidiaries . . . . . . . . . . . . . .53
Section 6.03. Compliance with Regulations G,
U and X. . . . . . . . . . . . . . . . . . . . . . . .53
Section 6.04. Mergers, Consolidations and
Sales of Assets. . . . . . . . . . . . . . . . . . . .53
Section 6.05. Leverage Ratio . . . . . . . . . . . . . . . . . . . . .54
Section 6.06. Minimum Consolidated Tangible
Net Worth. . . . . . . . . . . . . . . . . . . . . . .54
ARTICLE VII. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . .54
ARTICLE VIII. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . .58
ARTICLE IX. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . .62
Section 9.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . .62
Section 9.02. Waivers; Amendments. . . . . . . . . . . . . . . . . . .62
Section 9.03. Right of Setoff. . . . . . . . . . . . . . . . . . . . .63
Section 9.04. Successors and Assigns . . . . . . . . . . . . . . . . .64
Section 9.05. Expenses; Indemnity. . . . . . . . . . . . . . . . . . .68
Section 9.06. Survival of Agreement, Representa-
tions and Warranties, etc. . . . . . . . . . . . . . .69
Section 9.07. Governing Law. . . . . . . . . . . . . . . . . . . . . .69
Section 9.08. Sharing of Setoffs . . . . . . . . . . . . . . . . . . .69
Section 9.09. Interest Rate Limitation . . . . . . . . . . . . . . . .70
Section 9.10. Entire Agreement . . . . . . . . . . . . . . . . . . . .70
Section 9.11. Waiver of Jury Trial . . . . . . . . . . . . . . . . . .70
Section 9.12. Severability . . . . . . . . . . . . . . . . . . . . . .71
Section 9.13. Counterparts . . . . . . . . . . . . . . . . . . . . . .71
Section 9.14. Headings . . . . . . . . . . . . . . . . . . . . . . . .71
Section 9.15. Jurisdiction; Consent to
Service of Process . . . . . . . . . . . . . . . . . .71
Section 9.16. Binding Effect . . . . . . . . . . . . . . . . . . . . .72
Section 9.17. Effectiveness. . . . . . . . . . . . . . . . . . . . . .72
Exhibits
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Competitive Bid Invitation
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject Letter
Exhibit A-5 Form of Committed Borrowing Request
Exhibit B-1 Form of Competitive Note
Exhibit B-2 Form of Committed Note
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Administrative Questionnaire
Schedules
Schedule 2.01 Banks and Commitments
Schedule 3.06 Subsidiaries
Schedule 3.07 Litigation
Schedule 3.15 Environmental and Safety Matters
Schedule 6.01 Liens
Schedule 6.02 Indebtedness
<PAGE>
COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT dated as of February 16, 1994, among ETHYL
CORPORATION, a Virginia corporation (hereinafter called the
Company), the banks listed in Schedule 2.01 (the "Banks"),
CHEMICAL BANK, a New York banking corporation, as
administrative agent for the Banks under this Agreement (in
such capacity, the "Administrative Agent"), and NATIONSBANK
OF NORTH CAROLINA, N.A., a national banking association, as
co-agent (in such capacity, the "Co-Agent").
The Company has requested the Banks to extend credit to the
Company in order to enable it to borrow on a committed revolving credit
basis on and after the Effective Date and at any time and from time to time
prior to the Maturity Date (as hereinafter defined), a principal amount not
in excess of $500,000,000 at any time outstanding. The Company has also
requested the Banks to provide a procedure pursuant to which the Company
may invite the Banks to bid on an uncommitted basis on short-term
borrowings by the Company. The proceeds of borrowings hereunder are to be
used for general corporate purposes, including to refinance existing debt
and to finance acquisitions and common stock repurchases. The Banks are
severally, and not jointly, willing to extend such credit to the Company on
the terms and conditions hereinafter set forth. Accordingly, the Company,
the Administrative Agent, the Co-Agent and the Banks agree as follows (it
being understood that this Agreement and the obligations of the parties
hereto will become effective only as provided in Section 9.17):
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following words and terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Committed Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II.
"Administrative Fees" shall have the meaning assigned to such
term in Section 2.06(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit D.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control
with the person specified.
"Albemarle" shall mean Albemarle Corporation, a Virginia
corporation.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes
hereof, "Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its prime rate
in effect at its principal office in New York City; each change in the
Prime Rate shall be effective on the date such change is publicly announced
as effective. "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding 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, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the inability or
failure of the Administrative Agent to obtain sufficient quotations in
accordance with the terms thereof, the Alternate Base Rate shall be
determined without regard to clause (b) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime
Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Applicable Commitment Fee Percentage" shall mean on any date the
applicable percentage set forth below opposite the applicable Ratings or,
under the circumstances specified below, opposite the Leverage Ratio:
S&P/Moody's/Duff Commitment Fee
& Phelps Rating;
Leverage Ratio
Category 1
A-/A3/A- or higher;
less than 30% .1250%
Category 2
BBB+/Baa1/BBB+;
greater than or equal
to 30% but less than 45% .1875%
Category 3
BBB/Baa2/BBB;
greater than or equal to 45%
but less than 50% .2250%
Category 4
BBB-/Baa3/BBB-;
greater than or equal to 50%
but less than 55% .2500%
Category 5
BB+/Ba1/BB+ or lower;
greater than or equal to 55% .3750%
For purposes of the foregoing, (i) if at least two Ratings shall be
available and the Ratings shall fall within different Categories specified
above, (A) if three Ratings shall be available, the Applicable Commitment
Fee Percentage shall be determined by reference to the lower of the two
highest Ratings (it being understood that if the two highest Ratings shall
be in the same Category, the Applicable Commitment Fee Percentage shall be
determined by reference to such Category) and (B) if two Ratings shall be
available, the Applicable Commitment Fee Percentage shall be determined by
reference to the Category in which the lower of the two Ratings falls;
(ii) if only one Rating shall be available, then the Applicable Commitment
Fee Percentage shall be determined by reference to the lower (i.e., the
numerically higher) of (A) the Category in which that Rating falls or (B)
the Category corresponding to the Leverage Ratio; and (iii) if no Ratings
shall be available, then the Applicable Commitment Fee Percentage shall be
determined by reference to the Leverage Ratio. If any Rating shall be
changed (other than as a result of a change in such rating agency's rating
system) such change shall be effective as of the date on which it is first
announced by the applicable rating agency. For purposes of the foregoing,
the Leverage Ratio shall be determined as of the end of each fiscal quarter
of the Company based on the financial statements of the Company delivered
for such fiscal quarter pursuant to Section 5.04 and the ratio so
determined shall be effective from and including the Determination Date
immediately following such fiscal quarter end to but excluding the next
following Determination Date; provided, however, that the Leverage Ratio
for any period during which the Company shall have failed to deliver the
financial statements required by Section 5.04 after having received from
the Administrative Agent notice of such non-delivery shall be deemed for
the purposes of this definition to correspond to Category 5 until such time
as the Administrative Agent receives such financial statements. Each
change in the Applicable Commitment Fee Percentage shall apply during the
period commencing on the effective date of such change in the Ratings or
the Leverage Ratio, as applicable, and ending on the date immediately
preceding the effective date of the next such change. If the rating system
of Moody's, S&P or Duff & Phelps shall change, the Company and the Banks
shall negotiate in good faith to amend the references to specific ratings
in this definition to reflect such changed rating system (and pending or in
the absence of any agreement the Applicable Commitment Fee Percentage will
be determined by reference to the other Rating or Ratings, if any).
"Applicable Margin" shall mean on any date, with respect to the
Loans comprising any Eurodollar Loan or ABR Loan, as the case may be, the
applicable spread set forth below opposite the applicable Ratings or, under
the circumstances specified below, opposite the Leverage Ratio:
S&P/Moody's/Duff Eurodollar Loan ABR Loan
& Phelps Rating; Spread Spread
Leverage Ratio
Category 1
A-/A3/A- or higher;
less than 30% .350% .000%
Category 2
BBB+/Baa1/BBB+;
greater than or equal to 30%
but less than 45% .430% .000%
Category 3
BBB/Baa2/BBB;
greater than or equal to 45%
but less than 50% .470% .000%
Category 4
BBB-/Baa3/BBB-;
greater than or equal to 50%
but less than 55% .600% .000%
Category 5
BB+/Ba1/BB+ or lower;
greater than or equal to 55% .875% .125%
For purposes of the foregoing, (i) if at least two Ratings shall be
available and the Ratings shall fall within different Categories specified
above, (A) if three Ratings shall be available, the Applicable Margin shall
be determined by reference to the lower of the two highest Ratings (it
being understood that if the two highest Ratings shall be in the same
Category, the Applicable Margin shall be determined by reference to such
Category) and (B) if two Ratings shall be available, the Applicable Margin
shall be determined by reference to the Category in which the lower of the
two Ratings falls; (ii) if only one Rating shall be available, then the
Applicable Margin shall be determined by reference to the lower (i.e., the
numerically higher) of (A) the Category in which that Rating falls or (B)
the Category corresponding to the Leverage Ratio; and (iii) if no Ratings
shall be available, then the Applicable Margin shall be determined by
reference to the Leverage Ratio. If any Rating shall be changed (other
than as a result of a change in such rating agency's rating system) such
change shall be effective as of the date on which it is first announced by
the applicable rating agency. For purposes of the foregoing, the Leverage
Ratio shall be determined as of the end of each fiscal quarter of the
Company based on the financial statements of the Company delivered for such
fiscal quarter pursuant to Section 5.04 and the ratio so determined shall
be effective from and including the Determination Date immediately
following such fiscal quarter end to but excluding the next following
Determination Date; provided, however, that the Leverage Ratio for any
period during which the Company shall have failed to deliver the financial
statements required by Section 5.04 after having received from the
Administrative Agent notice of such non-delivery shall be deemed for the
purposes of this definition to correspond to Category 5 until such time as
the Administrative Agent receives such financial statements. Each change
in the Applicable Margin shall apply during the period commencing on the
effective date of such change in the Ratings or the Leverage Ratio, as
applicable, and ending on the date immediately preceding the effective date
of the next such change. If the rating system of Moody's, S&P or
Duff & Phelps shall change, the Company and the Banks shall negotiate in
good faith to amend the references to specific ratings in this definition
to reflect such changed rating system (and pending or in the absence of any
agreement the Applicable Margin will be determined by reference to the
other Rating or Ratings, if any).
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Bank and an assignee, and accepted by the
Administrative Agent, in the form of Exhibit C or such other form as shall
be approved by the Administrative Agent.
"Attributable Debt" shall mean, in connection with a Sale and
Lease-Back Transaction, the present value (discounted in accordance with
GAAP at the debt rate implied in the lease) of the obligations of the
lessee for rental payments during the term of the applicable lease.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States, or any successor thereto.
"Borrowing" shall mean a group of Loans of a single Type made by
the Banks (or, in the case of a Competitive Borrowing, by the Bank or Banks
whose Competitive Bids have been accepted pursuant to Section 2.03) on a
single date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day not a Saturday, Sunday or legal
holiday in the State of New York on which banks are open for business in
New York City; provided, however, that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on
which banks are not open for dealings in dollar deposits in the London
Interbank Market.
"Capitalized Lease Obligations" shall mean the obligations to pay
rent or other amounts under any lease of (or other arrangement conveying
the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet under GAAP, and, for the purposes hereof, the amount of such
obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities and
Exchange Commission as in effect on the date hereof) other than Bruce C.
Gottwald, Floyd D. Gottwald, Jr. or members of their respective families,
or investment entities owned by any of them, shall own directly or
indirectly, beneficially or of record, shares representing more than 20% of
the aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Company or any corporation directly or
indirectly Controlling the Company; or (b) a majority of the seats (other
than vacant seats) on the board of directors of the Company or any
corporation directly or indirectly Controlling the Company shall at any
time be occupied by persons who were neither (i) nominated by the
management of the Company or by persons who were members of the board of
directors as of the Effective Date or members elected by two thirds of such
members, nor (ii) appointed by directors so nominated; provided, however,
that an event described in clause (a) above shall not constitute a "Change
in Control" if the acquisition of shares resulting in ownership of in
excess of the 20% threshold referred to in such clause (a) shall have been
approved, prior to the acquisition of such shares or the commencement by
the person or group referred to in such clause (a) of a tender offer for
shares of the Company that would result, if successful, in such person or
group owning in excess of such 20% threshold, by a majority of the members
of the board of directors of the Company who were either members of the
board of directors as of the date of this Agreement or nominated or
appointed as provided in clauses (b)(i) or (ii) above.
"Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
"Commitment" shall mean, with respect to each Bank, the
Commitment of such Bank hereunder as set forth in Schedule 2.01 hereto, as
the same may be permanently terminated, reduced or extended from time to
time pursuant to the provisions of Section 2.10. The Commitments shall be
deemed permanently terminated on the Maturity Date.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.06(a) hereof.
"Committed Borrowing" shall mean a borrowing consisting of
simultaneous Committed Loans from each of the Banks.
"Committed Borrowing Request" shall mean a request made pursuant
to Section 2.04 in the form of Exhibit A-5.
"Committed Loans" shall mean the revolving loans made by the
Banks to the Company pursuant to Section 2.04. Each Committed Loan shall
be a Eurodollar Committed Loan or an ABR Loan.
"Committed Note" shall mean a promissory note of the Company in
the form of Exhibit B-2 executed and delivered as provided in Section 2.07.
"Competitive Bid" shall mean an offer by a Bank to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a notification
made by the Company pursuant to Section 2.03(d) in the form of Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made
by a Bank pursuant to Section 2.03(b), (i) in the case of a Eurodollar
Competitive Loan, the Margin, and (ii) in the case of a Fixed Rate Loan,
the fixed rate of interest offered by the Bank making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
Section 2.03 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Bank or Banks
whose Competitive Bids for such Borrowing have been accepted by the Company
under the bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan from a Bank to the Company
pursuant to the bidding procedure described in Section 2.03. Each
Competitive Loan shall be a Eurodollar Competitive Loan or a Fixed Rate
Loan.
"Competitive Note" shall mean a promissory note of the Company in
the form of Exhibit B-1 executed and delivered as provided in Section 2.07.
"Consolidated" shall mean, as applied to any financial or
accounting term, such term determined on a consolidated basis for the
Company and the Subsidiaries in accordance with generally accepted
accounting principles, including principles of consolidation, consistent
with those applied in the preparation of the Consolidated financial
statements referred to in Section 3.04.
"Consolidated Capitalization" shall mean, as of any date, the sum
of (a) Consolidated Shareholders' Equity and (b) Consolidated Indebtedness,
in each case at such date.
"Consolidated Indebtedness" shall mean, as of any date, all
Indebtedness of the Company and the Subsidiaries at such date, computed and
consolidated in accordance with GAAP.
"Consolidated Shareholders' Equity" shall mean, as of any date,
the Shareholders' Equity of the Company and the Subsidiaries at such date,
computed and consolidated in accordance with GAAP.
"Control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of
a person, whether through the ownership of voting securities, by contract
or otherwise, and "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"Designated Subsidiary" shall mean any Subsidiary that (a) has
assets with a total market value not in excess of $10,000 and (b) has not
conducted any business or other operations during the prior 12-month
period.
"Determination Date" shall mean (a) the 60th day following the
end of the fiscal quarter of the Company during which the Spin-Off shall
have occurred and (b) thereafter the 60th day following the end of each of
the first three fiscal quarters in each fiscal year of the Company and the
120th day following the end of each fiscal year of the Company.
"Dollars", "dollars" or "$" shall mean dollars of lawful money of
the United States of America.
"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co.
"Effective Date" shall have the meaning given to such term in
Section 9.17.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that, together with the Company, is treated as a single
employer under Section 414 of the Code.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Committed Loan" shall mean any Committed Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance
with the provisions of Article II.
"Eurodollar Competitive Loan" shall mean any Competitive Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan or
Eurodollar Committed Loan.
"Event of Default" shall have the meaning given to such term in
Article VII.
"Executive Officer" shall mean an executive officer as defined in
Rule 13b-7 of the rules and regulations adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended.
"Fees" shall mean the Commitment Fees and the Administrative
Fees.
"Financial Officer" shall mean the Chief Financial Officer, the
Vice Chairman of the Board or the Treasurer of the Company.
"Financial Statements" shall mean (a) the Consolidated balance
sheets of the Company and its subsidiaries as at December 31, 1992, and the
related statements of income and changes in financial position for the
fiscal year then ended, reported on by Coopers & Lybrand, independent
public accountants and (b) the unaudited Consolidated balance sheets of the
Company and its subsidiaries as of September 30, 1993, and the related
statements of income and changes in financial position for the nine-month
period then ended, duly certified by a Financial Officer of the Company.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of Fixed
Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (expressed in the form of a
decimal to no more than four decimal places) specified by the Bank making
such Loan in its Competitive Bid.
"Foreign Subsidiary" shall mean any Subsidiary organized under
the laws of any country or any political subdivision of any country, except
for Subsidiaries organized under the laws of the United States of America
or Canada or any political subdivision of the United States of America or
Canada.
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local, or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantee" of or by any person shall mean any obligation,
contingent or otherwise, of such person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness
or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness, (b) to purchase property,
securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness or (c) to maintain working
capital, equity capital or other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness; provided, however, that the term Guarantee shall not include
endorsements for collection or deposit, in either case in the ordinary
course of business.
"Indebtedness" with respect to any person shall mean at any time,
without duplication, (i) all obligations of such person for borrowed money,
(ii) all obligations of such person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such person upon
which interest charges are customarily paid, (iv) all obligations of such
person under conditional sale or other title retention agreements relating
to property purchased by such person, (v) all obligations of such person
issued or assumed as the deferred purchase price of property or services
(other than accounts payable to suppliers incurred in the ordinary course
of business and not overdue), (vi) all obligations of others secured by any
Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (vii) all Capitalized Lease
Obligations of such person and (viii) all Guarantees of such person.
"Interest Payment Date" shall mean (i) as to any Eurodollar Loan
for which the Interest Period is 1, 2 or 3 months, the last day of the
Interest Period, (ii) as to any Eurodollar Loan for which the Interest
Period is 6 months, the last day of the Interest Period and the date that
would be the last day of an Interest Period commencing on the same date but
having a duration of 3 months, (iii) as to any ABR Loan, the last day of
March, June, September and December in each year, or if such day is not a
Business Day, the next succeeding Business Day and (iv) as to any Fixed
Rate Loan, the last day of the Interest Period applicable thereto.
"Interest Period" shall mean: (a) as to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending
on the numerically corresponding day (or if there is no corresponding day,
the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter,
as the Company may elect, and thereafter, each period commencing on the
last day of the next preceding Interest Period for such Eurodollar
Borrowing and ending on the numerically corresponding day (or if there is
no corresponding day, the last day) in the calendar month that is 1, 2, 3
or 6 months thereafter, as the Company may elect, (b) as to any ABR
Borrowing, the period commencing on the date of such Borrowing and ending
on the Maturity Date or the date of prepayment of such Borrowing and (c) as
to any Fixed Rate Borrowing, the period commencing on the date of such
Borrowing and ending on the date specified in the Competitive Bids in which
the offer to make the Fixed Rate Loans comprising such Borrowing were
extended, which shall not be earlier than seven days after the date of such
Borrowing or later than 360 days after the date of such Borrowing;
provided, however, that if any Interest Period would end on a day which
shall not be a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, with respect to Eurodollar Loans only,
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business
Day. Interest shall accrue from and including the first day of an Interest
Period to but excluding the last day of such Interest Period.
"Leverage Ratio" shall mean, as of any date, the ratio of (a)
Consolidated Indebtedness on such date to (b) Consolidated Capitalization
on such date.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the rate at which dollar
deposits approximately equal in principal amount to (i) in the case of a
Committed Borrowing the Administrative Agent's portion of such Eurodollar
Borrowing and (ii) in the case of a Competitive Borrowing, a principal
amount that would have been the Administrative Agent's portion of such
Competitive Borrowing had such Competitive Borrowing been a Committed
Borrowing, and for the maturity equal to the applicable Interest Period are
offered by major banks to the principal London office of the Administrative
Agent in immediately available funds in the London Interbank Market for
Eurodollars at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind whatsoever (including any
conditional sale or other title retention agreement, any lease in the
nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).
"Loan" shall mean a Competitive Loan or a Committed Loan, whether
made as a Eurodollar Loan, an ABR Loan or a Fixed Rate Loan, as permitted
hereby.
"Margin" shall mean, as to any Eurodollar Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a decimal
to no more than four decimal places) to be added to or subtracted from the
LIBO Rate in order to determine the interest rate applicable to such Loan,
as specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall mean "margin stock" as defined in Regulation
U of the Board.
"Material Adverse Effect" shall mean a materially adverse effect
on the business, assets, condition (financial or otherwise) or results of
operations of the Company and the Subsidiaries taken as a whole.
"Maturity Date" shall mean February 16, 1999 or any anniversary
of such date to which the Maturity Date shall have been extended pursuant
to Section 2.10(d).
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as defined
in Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate
(other than one considered an ERISA Affiliate only pursuant to subsection
(m) or (o) of Section 414 of the Code) is making or accruing an obligation
to make contributions, or has within any of the preceding five plan years
made or accrued an obligation to make contributions.
"Note" or "Notes" shall mean a Competitive Note or a Committed
Note of the Company executed and delivered under this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"person" shall mean any natural person, corporation, division of
a corporation, business trust, joint venture, association, company,
partnership or government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code that is maintained for current or former employees,
or any beneficiary thereof, of the Company or any ERISA Affiliate.
"Pre-Spin-Off Credit Agreement" shall mean the $1,000,000,000
Competitive Advance and Revolving Credit Facility Agreement dated as of the
date hereof, among the Company, the banks named therein and Chemical Bank,
as Agent for such banks.
"Projections" shall mean the financial projections for the
Company (as constituted as of the Effective Date) (a) dated December 23,
1993 and delivered to the Banks and (b) dated January 28, 1994 and
delivered to the Banks.
"Ratings" shall mean the ratings applicable to the senior,
unsecured, non-credit-enhanced, long-term debt of the Company established
by S&P, Moody's and Duff & Phelps.
"Regulation D" shall mean Regulation D of the Board as from time
to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation G" shall mean Regulation G of the Board as from time
to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation U" shall mean Regulation U of the Board as from time
to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation X" shall mean Regulation X of the Board as from time
to time in effect and all official rulings and interpretations thereunder
or thereof.
"Reorganization and Distribution Agreement" shall have the
meaning set forth in the Pre-Spin-Off Credit Agreement.
"Reportable Event" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect
to a Plan (other than a Plan maintained by an ERISA Affiliate that is
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code).
"Required Banks" shall mean a Bank or Banks having Commitments
representing at least 51% of the Total Commitment or, for purposes of
acceleration pursuant to clause (ii) of Article VII, Banks holding Loans
representing at least 51% of the aggregate principal amount of the Loans
outstanding.
"S&P" shall mean Standard & Poor's Corporation.
"Sale and Lease-Back Transaction" shall mean, with respect to the
Company or any Subsidiary, any arrangement, directly or indirectly, with
any person whereby the Company or such Subsidiary shall sell or transfer
any property, real or personal, used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose
or purposes as the property being sold or transferred.
"Shareholders' Equity" shall mean, for any corporation: the sum
of (i) its capital stock outstanding taken at par value, (ii) its paid-in
capital and (iii) its retained earnings, less its treasury stock, each to
be determined in accordance with generally accepted accounting principles
consistent with those applied in the preparation of the Financial
Statements.
"Spin-Off" shall have the meaning given to such term in the
Pre-Spin-Off Credit Agreement.
"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, partnership, association or
other business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power or more than 50% of the general partnership interests are, at
the time any determination is being made, owned, controlled or held, or (b)
which is, at the time any determination is made, otherwise Controlled, by
the parent or one or more subsidiaries of the parent or by the parent and
one or more subsidiaries of the parent.
"Subsidiary" shall mean a subsidiary of the Company.
"Total Commitment" shall mean at any time the aggregate amount of
the Banks' Commitments, as in effect at such time.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the
Loans comprising such Borrowing is determined. For purposes hereof, "Rate"
shall include the LIBO Rate, the Alternate Base Rate and the Fixed Rate.
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E of
Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. All references herein
to Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time;
provided, however, that if the Company notifies the Administrative Agent
that the Company wishes to amend any covenant in Article VI or any related
definition to eliminate the effect of any change in GAAP occurring after
the date of this Agreement on the operation of such covenant (or if the
Administrative Agent notifies the Company that the Required Banks wish to
amend Article VI or any related definition for such purpose), then the
Company's compliance with such covenant shall be determined on the basis of
GAAP in effect immediately before the relevant change in GAAP became
effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Company and the Required Banks.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each
Bank, severally and not jointly, agrees to make Committed Loans to the
Company, at any time or from time to time on or after the Effective Date
and until the Maturity Date or until the Commitment of such Bank shall have
been terminated in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding not exceeding the amount of such
Bank's Commitment minus the amount by which the Competitive Loans
outstanding at such time shall be deemed to have used such Commitment
pursuant to Section 2.15, subject, however, to the conditions that (a) at
no time shall (i) the sum of (x) the outstanding aggregate principal amount
of all Committed Loans made by all Banks plus (y) the outstanding aggregate
principal amount of all Competitive Loans made by all Banks exceed (ii) the
Total Commitment and (b) at all times the outstanding aggregate principal
amount of all Committed Loans made by each Bank shall equal the product of
(i) the percentage which its Commitment represents of the Total Commitment
times (ii) the outstanding aggregate principal amount of all Committed
Loans made pursuant to Section 2.04. Each Bank's Commitment is set forth
opposite its respective name in Schedule 2.01. Such Commitments may be
terminated or reduced from time to time pursuant to Section 2.10. Within
the foregoing limits, the Company may borrow, repay and reborrow hereunder
on or after the Effective Date and prior to the Maturity Date, subject to
the terms, provisions and limitations set forth herein. Upon the
reasonable request of any Bank, the Administrative Agent shall notify such
Bank of the aggregate principal amount of Competitive Loans and Committed
Loans outstanding at such time. Nothing contained in this Section 2.01
shall preclude the Company from borrowing on a committed or a competitive
basis outside of this Agreement so long as any such borrowing is not
otherwise prohibited hereunder.
SECTION 2.02. Loans. (a) Each Committed Loan shall be made as
part of a Borrowing consisting of Loans made by the Banks ratably in
accordance with their Commitments; provided, however, that the failure of
any Bank to make any Committed Loan shall not in itself relieve any other
Bank of its obligation to lend hereunder (it being understood, however,
that no Bank shall be responsible for the failure of any other Bank to make
any Loan required to be made by such other Bank). Each Competitive Loan
shall be made in accordance with the procedures set forth in Section 2.03.
The Loans comprising any Borrowing shall be in a minimum aggregate
principal amount of $5,000,000 and in integral multiples thereof, in the
case of Competitive Loans, or $10,000,000 and in integral multiples of
$1,000,000, in the case of Committed Loans (or, in either case, an
aggregate principal amount equal to the remaining balance of the available
Commitments).
(b) Each Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans, and each Committed
Borrowing shall be comprised entirely of Eurodollar Committed Loans or
ABR Loans, as the Company may request pursuant to Section 2.03 or 2.04, as
applicable. Each Bank may at its option fulfill its Commitment with
respect to any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Bank to make such Loan; provided that (i) any exercise of
such option shall not affect the obligation of the Company to repay such
Loan in accordance with the terms of this Agreement and the applicable Note
and (ii) the Company shall not be liable for increased costs under
Section 2.12, 2.13 or 2.17 to the extent that (A) such costs could be
avoided by the use of a different branch or Affiliate to make Eurodollar
Loans and (B) such use would not, in the judgment of such Bank, entail any
expense for which such Bank shall not be indemnified hereunder or otherwise
be disadvantageous to it. Borrowings of more than one Type may be
outstanding at the same time; provided, however, that the Company shall not
be entitled to request any Borrowing which, if made, would result in an
aggregate of more than five separate Eurodollar Committed Loans of any Bank
being outstanding hereunder at any one time. For purposes of the forego-
ing, Loans having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Loans.
(c) Subject to Section 2.05, each Bank shall make each Loan to
be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Administrative Agent in New York, New
York, not later than 12:00 noon, New York City time, and the Administrative
Agent shall by 3:00 p.m., New York City time, credit the amounts so
received to the general deposit account of the Company with the
Administrative Agent or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met,
return the amounts so received to the respective Banks. Competitive Loans
shall be made by the Bank or Banks whose Competitive Bids therefor are
accepted pursuant to Section 2.03 in the amounts so accepted and Committed
Loans shall be made by the Banks pro rata in accordance with Section 2.15.
Unless the Administrative Agent shall have received notice from a Bank
prior to the date of any Borrowing that such Bank will not make available
to the Administrative Agent such Bank's portion of such Borrowing, the
Administrative Agent may assume that such Bank has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with this paragraph (c) and the Administrative Agent may, in
reliance upon such assumption, make available to the Company on such date a
corresponding amount. If and to the extent that such Bank shall not have
made such portion available to the Administrative Agent, such Bank and the
Company severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount, together with interest thereon, for each
day from the date such amount is made available to the Company until the
date such amount is repaid to the Administrative Agent at (i) in the case
of the Company, the interest rate applicable at the time to the Loans
comprising such Borrowing and (ii) in the case of such Bank, the Federal
Funds Effective Rate. If such Bank shall repay to the Administrative Agent
such corresponding amount, such amount shall constitute such Bank's Loan as
part of such Borrowing for purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Company shall not be entitled to request any Committed Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date with respect to any Bank.
SECTION 2.03. Competitive Bid Procedure. (a) The Company may
request the Banks to make Competitive Bids in respect of an aggregate
amount of Competitive Borrowings at any time outstanding not in excess of
(i) the Total Commitment in effect at such time less (ii) the aggregate
Committed Borrowings outstanding at such time. In order to request
Competitive Bids, the Company shall hand deliver or telecopy to the
Administrative Agent a duly completed Competitive Bid Request in the form
of Exhibit A-1 hereto, to be received by the Administrative Agent (i) in
the case of a Eurodollar Competitive Borrowing, not later than 10:00 a.m.,
New York City time, four Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than
10:00 a.m., New York City time, one Business Day before a proposed Competi-
tive Borrowing. No ABR Loan shall be requested in, or made pursuant to, a
Competitive Bid Request. A Competitive Bid Request that does not conform
substantially to the format of Exhibit A-1 may be rejected in the
Administrative Agent's sole discretion, and the Administrative Agent shall
promptly notify the Company of such rejection by telecopier. Such request
shall in each case refer to this Agreement and specify (x) whether the
Borrowing then being requested is to be a Eurodollar Borrowing or a Fixed
Rate Borrowing, (y) the date of such Borrowing (which shall be a Business
Day) and the aggregate principal amount thereof which shall be in a minimum
principal amount of $5,000,000 and in integral multiples thereof, and
(z) the Interest Period with respect thereto (which may not end after the
Maturity Date (as such date may have been extended pursuant to Section
2.10)). Promptly after its receipt of a Competitive Bid Request that is
not rejected as aforesaid, the Administrative Agent shall invite by
telecopier (in the form set forth in Exhibit A-2 hereto) the Banks to bid,
on the terms and conditions of this Agreement, to make Competitive Loans
pursuant to the Competitive Bid Request.
(b) Each Bank may, in its sole discretion, make one or more
Competitive Bids to the Company responsive to any Competitive Bid Request;
provided, however, that no Bank may make a Competitive Bid in response to
any Competitive Bid Request for which the Interest Period requested would
end after the Maturity Date with respect to such Bank. Each Competitive
Bid by a Bank must be received by the Administrative Agent via telecopier,
in the form of Exhibit A-3 hereto, (i) in the case of a Eurodollar Competi-
tive Borrowing, not later than 9:30 a.m., New York City time, three
Business Days before a proposed Competitive Borrowing and (ii) in the case
of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on
the day of a proposed Competitive Borrowing. Multiple bids will be
accepted by the Administrative Agent. Competitive Bids that do not conform
substantially to the format of Exhibit A-3 may be rejected by the
Administrative Agent after conferring with, and upon the instruction of,
the Company, and the Administrative Agent shall notify the Bank making such
nonconforming bid of such rejection as soon as practicable. Each
Competitive Bid shall refer to this Agreement and specify (x) the principal
amount (which shall be in a minimum principal amount of $5,000,000 and in
integral multiples thereof and which may equal the entire principal amount
of the Competitive Borrowing requested by the Company) of the Competitive
Loan or Loans that the Bank is willing to make to the Company, (y) the
Competitive Bid Rate or Rates at which the Bank is prepared to make the
Competitive Loan or Loans and (z) the Interest Period and the last day
thereof. If any Bank shall elect not to make a Competitive Bid, such Bank
shall so notify the Administrative Agent via telecopier (I) in the case of
Eurodollar Competitive Loans, not later than 9:30 a.m., New York City time,
three Business Days before a proposed Competitive Borrowing, and (II) in
the case of Fixed Rate Loans, not later than 9:30 a.m., New York City time,
on the day of a proposed Competitive Borrowing; provided, however, that
failure by any Bank to give such notice shall not cause such Bank to be
obligated to make any Competitive Loan as part of such Competitive
Borrowing. A Competitive Bid submitted by a Bank pursuant to this para-
graph (b) shall be irrevocable.
(c) The Administrative Agent shall promptly notify the Company
by telecopier of all the Competitive Bids made, the Competitive Bid Rate,
the Interest Period and the principal amount of each Competitive Loan in
respect of which a Competitive Bid was made and the identity of the Bank
that made each bid. The Administrative Agent shall send a copy of all
Competitive Bids to the Company for its records as soon as practicable
after completion of the bidding process set forth in this Section 2.03.
(d) The Company may in its sole and absolute discretion, subject
only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The Company shall
notify the Administrative Agent by telephone, confirmed by telecopier in
the form of a Competitive Bid Accept/Reject Letter, whether and to what
extent it has decided to accept or reject any of or all the bids referred
to in paragraph (c) above, (x) in the case of a Eurodollar Competitive
Borrowing, not later than 10:30 a.m., New York City time, three Business
Days before a proposed Competitive Borrowing, and (y) in the case of a
Fixed Rate Borrowing, not later than 10:30 a.m., New York City time, on the
day of a proposed Competitive Borrowing; provided, however, that (i) the
failure by the Company to give such notice shall be deemed to be a rejec-
tion of all the bids referred to in paragraph (c) above, (ii) the Company
shall not accept a bid made at a particular Competitive Bid Rate if the
Company has decided to reject a bid made at a lower Competitive Bid Rate,
(iii) the aggregate amount of the Competitive Bids accepted by the Company
shall not exceed the principal amount specified in the Competitive Bid
Request, (iv) if the Company shall accept a bid or bids made at a
particular Competitive Bid Rate but the amount of such bid or bids shall
cause the total amount of bids to be accepted by the Company to exceed the
amount specified in the Competitive Bid Request, then the Company shall
accept a portion of such bid or bids in an amount equal to the amount
specified in the Competitive Bid Request less the amount of all other
Competitive Bids accepted with respect to such Competitive Bid Request,
which acceptance, in the case of multiple bids at such Competitive Bid
Rate, shall be made pro rata in accordance with the amount of each such bid
at such Competitive Bid Rate, and (v) except pursuant to clause (iv) above,
no bid shall be accepted for a Competitive Loan unless such Competitive
Loan is in a minimum principal amount of $5,000,000 and an integral
multiple thereof; provided further, however, that if a Competitive Loan
must be in an amount less than $5,000,000 because of the provisions of
clause (iv) above, such Competitive Loan may be for a minimum of $500,000
or any integral multiple thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple bids at a particular
Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded
to integral multiples of $500,000 in a manner which shall be in the
discretion of the Company. A notice given by the Company pursuant to this
paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding
Bank whether or not its Competitive Bid has been accepted (and if so, in
what amount and at what Competitive Bid Rate) by telecopy sent by the
Administrative Agent, and each successful bidder will thereupon become
bound, subject to the other applicable conditions hereof, to make the
Competitive Loan in respect of which its bid has been accepted.
(f) A Competitive Bid Request shall not be made within five
Business Days after the date of any previous Competitive Bid Request.
(g) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Bank, it shall submit such bid
directly to the Company one half of an hour earlier than the latest time at
which the other Banks are required to submit their bids to the
Administrative Agent pursuant to paragraph (b) above.
(h) All notices required by this Section 2.03 shall be given in
accordance with Section 9.01.
SECTION 2.04. Committed Borrowing Procedure. In order to
request a Committed Borrowing, the Company shall hand deliver or telecopy
(or notify by telephone and promptly confirm by hand delivery or telecopy)
to the Administrative Agent the information requested by the form of
Committed Borrowing Request attached as Exhibit A-5 hereto (a) in the case
of a Eurodollar Committed Borrowing, not later than 10:30 a.m., New York
City time, three Business Days before a proposed Borrowing and (b) in the
case of an ABR Borrowing, not later than 10:30 a.m., New York City time, on
the day of a proposed Borrowing. No Fixed Rate Loan shall be requested or
made pursuant to a Committed Borrowing Request. Such notice shall be
irrevocable and shall in each case specify (i) whether the Borrowing then
being requested is to be a Eurodollar Committed Borrowing or an
ABR Borrowing; (ii) the date of such Committed Borrowing (which shall be a
Business Day) and the amount thereof; and (iii) if such Borrowing is to be
a Eurodollar Committed Borrowing, the Interest Period with respect thereto.
If no election as to the Type of Committed Borrowing is specified in any
such notice, then the requested Committed Borrowing shall be an
ABR Borrowing. If no Interest Period with respect to any Eurodollar
Committed Borrowing is specified in any such notice, then the Company shall
be deemed to have selected an Interest Period of one month's duration. If
the Company shall not have given notice in accordance with this Sec-
tion 2.04 of its election to refinance a Committed Borrowing prior to the
end of the Interest Period in effect for such Borrowing, then the Company
shall (unless such Borrowing is repaid at the end of such Interest Period)
be deemed to have given notice of an election to refinance such Borrowing
with an ABR Borrowing. The Administrative Agent shall promptly advise the
Banks of any notice given pursuant to this Section 2.04 and of each Bank's
portion of the requested Borrowing.
SECTION 2.05. Refinancings. The Company may refinance all or
any part of any Borrowing with a Borrowing of the same or a different Type
made pursuant to Section 2.03 or Section 2.04, subject to the conditions
and limitations set forth herein and elsewhere in this Agreement, including
refinancings of Competitive Borrowings with Committed Borrowings and
Committed Borrowings with Competitive Borrowings. Any Borrowing or part
thereof so refinanced shall be deemed to be repaid in accordance with
Section 2.07 with the proceeds of a new Borrowing hereunder and the
proceeds of the new Borrowing, to the extent they do not exceed the
principal amount of the Borrowing being refinanced, shall not be paid by
the Banks to the Administrative Agent or by the Administrative Agent to the
Company pursuant to Section 2.02(c); provided, however, that (i) if the
principal amount extended by a Bank in a refinancing is greater than the
principal amount extended by such Bank in the Borrowing being refinanced,
then such Bank shall pay such difference to the Administrative Agent for
distribution to the Banks described in (ii) below, (ii) if the principal
amount extended by a Bank in the Borrowing being refinanced is greater than
the principal amount being extended by such Bank in the refinancing, the
Administrative Agent shall return the difference to such Bank out of
amounts received pursuant to (i) above, and (iii) to the extent any Bank
fails to pay the Administrative Agent amounts due from it pursuant to
(i) above, any Loan or portion thereof being refinanced with such amounts
shall not be deemed repaid in accordance with Section 2.07 and shall be
payable by the Company.
SECTION 2.06. Fees. (a) The Company agrees to pay to each
Bank, through the Administrative Agent, on each March 31, June 30,
September 30 and December 31 and on the date on which the Commitment of
such Bank shall be reduced or terminated as provided herein (including
pursuant to Section 9.17), a commitment fee (a "Commitment Fee") at a rate
per annum equal to the Applicable Commitment Fee Percentage from time to
time in effect on the average daily unused amount of the Commitment of such
Bank during the preceding quarter (or shorter period commencing with the
Effective Date or ending with the Maturity Date or any date on which the
Commitment of such Bank shall be terminated). For purposes of calculating
Commitment Fees, any amounts of the Commitments that shall be unavailable
due to outstanding Competitive Loans shall be deemed to be unused amounts.
All Commitment Fees shall be computed on the basis of the actual number of
days elapsed in a year of 360 days. The Commitment Fee due to each Bank
shall commence to accrue on the Effective Date, and shall cease to accrue
on the earlier of the Maturity Date and the termination of the Commitment
of such Bank as provided herein.
(b) The Company agrees to pay the Administrative Agent, for its
own account, (i) administrative fees at the times and in the amounts agreed
upon in the letter agreement dated January 4, 1994, between the Company and
the Administrative Agent and (ii) such Competitive Bid auction fees as
shall be agreed upon by the Company and the Administrative Agent from time
to time (collectively, the "Administrative Fees").
(c) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Banks. Once paid, none of the Fees shall be
refundable under any circumstances.
SECTION 2.07. Notes; Repayment of Loans. The Competitive Loans
made by each Bank shall be evidenced by a single Competitive Note duly
executed on behalf of the Company, dated the Effective Date, in
substantially the form attached hereto as Exhibit B-1 with the blanks
appropriately filled, payable to such Bank in a principal amount equal to
the Total Commitment. The Committed Loans made by each Bank shall be
evidenced by a single Committed Note duly executed on behalf of the
Company, dated the Effective Date, in substantially the form attached
hereto as Exhibit B-2 with the blanks appropriately filled, payable to such
Bank in a principal amount equal to the Commitment of such Bank. Each
Competitive Note and each Committed Note shall bear interest from the date
thereof on the outstanding principal balance thereof as set forth in
Section 2.08. Each Bank shall, and is hereby authorized by the Company to,
endorse on the schedule attached to the relevant Note held by such Bank (or
on a continuation of such schedule attached to each such Note and made a
part thereof), or otherwise to record in such Bank's internal records, an
appropriate notation evidencing the date and amount of each Competitive
Loan or Committed Loan, as applicable, of such Bank, each payment or
prepayment of principal of any Competitive Loan or Committed Loan, as
applicable, and the other information provided for on such schedule;
provided, however, that the failure of any Bank to make such a notation or
any error therein shall not in any manner affect the obligation of the
Company to repay the Competitive Loans or Committed Loans, as applicable,
made by such Bank in accordance with the terms of the relevant Note. The
outstanding principal balance of each Competitive Loan and Committed Loan,
as evidenced by the relevant Note, shall be payable on the last day of the
Interest Period applicable to such Loan and on the Maturity Date.
SECTION 2.08. Interest on Loans. (a) Subject to the provisions
of Section 2.09, the Loans comprising each ABR Borrowing shall bear
interest (computed on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be, when determined by reference
to the Prime Rate and over a year of 360 days at all other times) at a rate
per annum equal to the Alternate Base Rate plus the Applicable Margin.
(b) Subject to the provisions of Section 2.09, the Loans
comprising each Eurodollar Borrowing shall bear interest (computed on the
basis of the actual number of days elapsed over a year of 360 days) at a
rate per annum equal to (i) in the case of each Eurodollar Committed Loan,
the LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Margin, and (ii) in the case of each Eurodollar Competitive
Loan, the LIBO Rate for the Interest Period in effect for such Borrowing
plus the Margin offered by the Bank making such Loan and accepted by the
Company pursuant to Section 2.03.
(c) Subject to the provisions of Section 2.09, each Fixed Rate
Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed
rate of interest offered by the Bank making such Loan and accepted by the
Company pursuant to Section 2.03.
(d) Interest on each Loan shall be payable on each Interest
Payment Date applicable to such Loan. The LIBO Rate or the Alternate Base
Rate for each Interest Period or day within an Interest Period shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.09. Additional Interest; Alternate Rate of Interest.
(a) If the Company shall default in the payment of the principal of or
interest on any Loan or any other amount becoming due hereunder, the
Company shall on demand from time to time pay interest on any overdue
payment of principal and other amounts (other than interest) and, to the
extent permitted by law, on overdue payments of interest up to the date of
actual payment (after as well as before judgment):
(i) in the case of principal of or interest on an ABR Loan or a
Eurodollar Loan, at a rate determined by the Administrative Agent
(such determination to be conclusive and binding on the Company) to be
1% per annum above the rate which would otherwise be payable on such
Loans in accordance with the provisions herein; and
(ii) in the case of any other amount payable hereunder (other than
principal of or interest on any Loan referred to in clause (i) above),
at a rate 1% per annum above the Alternate Base Rate.
(b) In the event, and on each occasion, that on the day two
Business Days prior to the commencement of any Interest Period for a
Eurodollar Loan, the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company) that dollar
deposits in the principal amount of such Eurodollar Loan are not generally
available in the London Interbank Market, or that the rate at which such
dollar deposits are being offered will not adequately and fairly reflect
the cost to the Banks of making or maintaining the principal amount of such
Eurodollar Loan during such Interest Period, or that reasonable means do
not exist for ascertaining the LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written, telegraphic or telephonic
notice of such determination to the Company and the Banks, and any request
by the Company for a Eurodollar Loan or for conversion to or maintenance of
a Eurodollar Loan pursuant to the terms of this Agreement shall be deemed a
request for an ABR Borrowing. After such notice shall have been given and
until the circumstances giving rise to such notice no longer exist, each
request for a Eurodollar Loan shall be deemed to be a request for an ABR
Borrowing. Each determination by the Administrative Agent hereunder shall
be conclusive absent manifest error.
SECTION 2.10. Termination, Reduction and Extension of
Commitments. (a) The Commitments shall be automatically terminated on the
Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written
or telecopy notice to the Administrative Agent, the Company may at any time
in whole permanently terminate, or from time to time in part permanently
reduce, the Total Commitment; provided, however, that (i) each partial
reduction of the Total Commitment shall be in a minimum principal amount of
$10,000,000 and in integral multiples thereof and (ii) no such termination
or reduction shall be made which would reduce the Total Commitment to an
amount less than the aggregate outstanding principal amount of the Competi-
tive Loans.
(c) Each reduction in the Total Commitment hereunder shall be
made ratably among the Banks in accordance with their respective
Commitments. The Company shall pay to the Administrative Agent for the
account of the Banks, on the date of each termination or reduction, the
Commitment Fees on the amount of the Commitments so terminated or reduced
accrued to the date of such termination or reduction.
(d) Not later than the date 60 days prior to the first or any
subsequent anniversary of the date hereof, the Company may deliver to the
Administrative Agent (which shall promptly transmit to each Bank) a notice
requesting that the Commitments be extended to the first anniversary of the
Maturity Date. Within 30 days after its receipt of any such notice, each
Bank shall notify the Administrative Agent of its willingness or unwilling-
ness so to extend its Commitment. Any Bank that shall fail so to notify
the Administrative Agent within such period shall be deemed to have
declined to extend its Commitment. If Banks holding a majority in amount
of the Commitments agree to extend their Commitments, the Administrative
Agent shall so notify the Company and each Bank that shall have consented
to such request, whereupon (i) the respective Commitments of such
consenting Banks and each other Bank that shall consent to the extension of
its Commitment prior to the expiration of its respective 30-day period
shall without further act be extended to the first anniversary of the
Maturity Date at the time in effect, (ii) the term "Maturity Date" shall
thenceforth mean, as to the Loans of such consenting Banks, such first
anniversary and (iii) the Commitments of the non-extending Banks shall
terminate on the Maturity Date in effect prior to such extension and the
Loans and other amounts owed to such Banks shall become due and payable on
such date. If Banks holding a majority in amount of the Commitments shall
not have agreed to extend their Commitments, then none of the Commitments
shall be extended and the Maturity Date shall remain unchanged. In the
event that any Bank shall have declined or been deemed to have declined to
extend its Commitment and the Commitments of other Banks shall have been
extended, the Company shall have the right, but not the obligation, at its
own expense, upon notice to such Bank and the Administrative Agent, to
replace such Bank at any time prior to the termination of such Bank's
Commitment (in accordance with and subject to the restrictions contained in
Section 9.04) with an assignee willing to agree that its Commitment will
terminate on the extended Maturity Date, and such Bank hereby agrees to
transfer and assign without recourse (in accordance with and subject to the
restrictions contained in Section 9.04) all its interests, rights and
obligations under this Agreement to such assignee; provided, however, that
(i) no such assignment shall conflict with any law or any rule, regulation
or order of any Governmental Authority and (ii) the Company or such
assignee, as the case may be, shall pay to the affected Bank in immediately
available funds on the date of such assignment the principal of and
interest accrued to the date of payment on the Loans made by such Bank
hereunder and all other amounts accrued for such Bank's account or owed to
it hereunder.
SECTION 2.11. Prepayment of Loans. (a) The Company shall have
the right at any time and from time to time to prepay any Committed
Borrowing, in whole or in part, without premium or penalty (but in any
event subject to Section 2.14), upon prior written, telecopy or telephonic
notice to the Administrative Agent given no later than 10:30 a.m., New York
City time, one Business Day before any proposed prepayment; provided,
however, that each such partial prepayment shall be in a minimum principal
amount of $10,000,000 and in integral multiples of $1,000,000. The Company
shall not have the right to prepay any Competitive Borrowing.
(b) On the date of any termination or reduction of the
Commitments pursuant to Section 2.10, the Company shall pay or prepay so
much of the Committed Borrowings as shall be necessary in order that the
aggregate principal amount of the Competitive Loans and Committed Loans
outstanding will not exceed the Total Commitment after giving effect to
such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date
and the principal amount of each Borrowing to be prepaid, shall be
irrevocable and shall commit the Company to prepay such Borrowing (or
portion thereof) by the amount stated therein. All prepayments on
Eurodollar Loans under this Section shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment.
SECTION 2.12. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date hereof
any change in applicable law or regulations or in the interpretation or
administration thereof (including, without limitation, any request,
guideline or policy not having the force of law) by any Governmental
Authority charged with the administration or interpretation thereof shall
occur which shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including a tax) against any assets held
by, deposits with or for the account of or credit extended by such Bank
(including any reserve requirement that may be applicable to "eurocurrency
liabilities" under and as defined in Regulation D) or shall impose upon
such Bank or the London interbank market any other condition with respect
to this Agreement or the Eurodollar Loans or Fixed Rate Loans made by such
Bank and the result of any of the foregoing shall be to increase the cost
to such Bank of making or maintaining any Eurodollar Loan or Fixed Rate
Loan hereunder or to reduce the amount of any payment (whether of
principal, interest or otherwise) by an amount deemed by such Bank to be
material, then and in each such case the Company shall pay to such Bank, as
provided in paragraph (c) below, such amounts as shall be necessary to
compensate such Bank for such cost, reduction or payment; provided,
however, that the Company may, at its option and upon written notice to the
Administrative Agent and the Banks, either (i) elect to convert such Loan
of such Bank into an ABR Loan upon the payment by the Company of the
increased costs described above incurred prior to such conversion and any
amount owing in respect of Section 2.14 hereof, it being understood that
(A) for purposes of Section 2.11, such ABR Loan shall be subject to
prepayment only at such times and on such conditions as the Loan from which
it was converted and (B) upon such increased costs being eliminated, or
reduced by an amount deemed sufficient by the Company, such ABR Loan will
be converted into a Loan of the same Type as the Loan previously converted
into such ABR Loan having an Interest Period expiring on the same date as
the Loan previously converted into such ABR Loan or (ii) with the prior
consent of the Required Banks, elect to convert all (but not less than all)
Loans of all Banks of the same Type and Interest Period as the Loan subject
to such change into Loans of a different Type upon the payment of all
amounts that are due under this Section 2.12(a) and Section 2.14.
Notwithstanding the foregoing, no Bank shall be entitled to request
compensation under this paragraph with respect to any Competitive Loan if
it shall have been aware of the change giving rise to such request at the
time of submission of the Competitive Bid pursuant to which such
Competitive Loan shall have been made.
(b) If any Bank shall have determined that the adoption after
the date hereof of any law, rule, regulation, agreement or guideline
regarding capital adequacy, or any change in any law, rule, regulation,
agreement or guideline regarding capital adequacy or in the interpretation
or administration of any law, rule, regulation, agreement or guideline
regarding capital adequacy by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Bank (or any
lending office of such Bank) or any Bank's holding company with any request
or directive regarding capital adequacy issued under any law, rule,
regulation or guideline (whether or not having the force of law) of any
such authority, central bank or comparable agency issued after the date
hereof, has or would have the effect of reducing the rate of return on such
Bank's capital or on the capital of such Bank's holding company, if any, as
a consequence of this Agreement or the Loans made by such Bank pursuant
hereto to a level below that which such Bank or such Bank's holding company
could have achieved but for such applicability, adoption, change or
compliance by an amount deemed by such Bank to be material, then from time
to time the Company shall pay to such Bank following receipt of a
certificate of such Bank to such effect in accordance with paragraph (c)
below such additional amount or amounts as will compensate such Bank or
such Bank's holding company on an after-tax basis for any such reduction
suffered.
(c) Each Bank shall promptly deliver to the Company from time to
time one or more certificates setting forth the amounts due to such Bank
under paragraphs (a) and (b) above, the changes as a result of which such
amounts are due and the manner of computing such amounts. Each such
certificate shall be conclusive in the absence of manifest error. The
Company shall pay to each Bank the amounts shown as due on any such
certificate within 10 days after its receipt of the same. No failure on
the part of any Bank to demand compensation under paragraph (a) or (b)
above on any one occasion shall constitute a waiver of its right to demand
such compensation with respect to such period or any other period, except
that no Bank shall be entitled to compensation under this Section 2.12 for
any costs incurred or reduction suffered with respect to any date unless
such Bank shall have notified the Company that it will demand compensation
for such costs or reductions not more than 90 days after the later of
(i) such date and (ii) the date on which such Bank shall have become aware
of such costs or reductions. The protection of this Section 2.12 shall be
available to each Bank regardless of any possible contention of the
invalidity or inapplicability of any law, rule, regulation, guideline or
other change or condition which shall have occurred or been imposed and
shall give rise to any demand by such Bank for compensation hereunder.
(d) Promptly after actual notice to any Bank that a change
referred to in paragraph (a) or (b) above has occurred, such Bank will give
notice of such occurrence to the Company and the Administrative Agent and,
unless all the Eurodollar Loans giving rise to any such increased costs
shall have been converted to Loans of another type, such Bank will, for a
period of 30 days after the giving of such notice, use reasonable efforts
to specify a new Eurodollar lending office with respect to its Commitment
and the Eurodollar Loans held by it with a view to mitigating the
consequences of such occurrence to the greatest extent practicable unless
in the opinion of such Bank such specification might at such time or in the
future have an adverse effect upon it.
SECTION 2.13. Change in Legality. (a) Notwithstanding anything
to the contrary contained in Section 2.18 or elsewhere in this Agreement,
if any change after the date hereof in law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for a Bank
to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan,
then, by written notice to the Company and the Administrative Agent, such
Bank may:
(i) declare that Eurodollar Loans will not thereafter be made by
such Bank hereunder, whereupon such Bank shall not submit a
Competitive Bid in response to a request for Eurodollar Competitive
Loans and any request by the Company for a Eurodollar Committed
Borrowing shall, as to such Bank only, be deemed a request for an ABR
Loan unless such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, whereupon all of such Eurodollar Loans shall
be automatically converted to ABR Loans as of the effective date of
such notice as provided in paragraph (b) below.
(b) For purposes of this Section 2.13, a notice to the Company
by any Bank pursuant to paragraph (a) above shall be effective with respect
to outstanding Eurodollar Loans, if lawful, on the last day of the then
current Interest Period; in all other cases, such notice shall be effective
on the date of receipt by the Company.
SECTION 2.14. Indemnity. The Company shall reimburse each Bank
on demand for any loss incurred or to be incurred by it in the reemployment
of the funds released by any prepayment or conversion of any Eurodollar
Loan or Fixed Rate Loan required or permitted by any other provision of
this Agreement if such Loan is prepaid or converted other than on the last
day of any Interest Period for such Loan. Such loss shall be the
difference as reasonably determined by such Bank between the amount that
would have been realized by such Bank for the remainder of such Interest
Period for such Loan based on the interest rate applicable thereto
hereunder during such Interest Period and any lesser amount that would be
realized by such Bank in reemploying the funds received in prepayment by
making a Loan of the same type in the principal amount prepaid during the
period from the date of prepayment to the end of the Interest Period of the
Loan being prepaid. Without duplication of the foregoing indemnity
payments, the Company will indemnify each Bank against any actual loss or
expense which such Bank may sustain or incur as a consequence of (a) any
failure by the Company to borrow or to refinance any Loan hereunder after
irrevocable notice of such borrowing or refinancing, (b) any default in
payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, by notice of prepayment or otherwise), or (c) the
occurrence of any Event of Default, including but not limited to any loss
or expense sustained or incurred in liquidating or employing deposits from
third parties acquired to effect or maintain such Loan or any part thereof.
Each Bank shall provide to the Company a statement, signed by an officer of
such Bank and explaining the amount and calculation of any such actual loss
or expense, which statement shall, in the absence of manifest error, be
conclusive with respect to the parties hereto.
SECTION 2.15. Pro Rata Treatment, etc. Except as required under
Section 2.10(d) or 2.13, each Committed Borrowing, each payment or
prepayment of principal of any Committed Borrowing, each payment of
interest on the Committed Loans, each payment of the Commitment Fees, each
reduction of the Commitments and each refinancing of any Borrowing with a
Committed Borrowing of any Type, shall be made pro rata among the Banks in
accordance with their respective Commitments (or, if such Commitments shall
have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Committed Loans). Each payment of
principal of any Competitive Borrowing shall be allocated pro rata among
the Banks participating in such Borrowing in accordance with the respective
principal amounts of their outstanding Competitive Loans comprising such
Borrowing. Each payment of interest on any Competitive Borrowing shall be
allocated pro rata among the Banks participating in such Borrowing in
accordance with the respective amounts of accrued and unpaid interest on
their outstanding Competitive Loans comprising such Borrowing. For
purposes of determining the available Commitments of the Banks at any time
(but not for purposes of Section 2.06(a)), each outstanding Competitive
Borrowing shall be deemed to have utilized the Commitments of the Banks
(including those Banks which shall not have made Loans as part of such
Competitive Borrowing) pro rata in accordance with such respective
Commitments. Each Bank agrees that in computing such Bank's portion of any
Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Bank's percentage of such Borrowing to the next
higher or lower whole dollar amount.
SECTION 2.16. Payments. (a) The Company shall make each
payment (including principal of or interest on any Borrowing or any Fees or
other amounts) hereunder not later than 12:00 (noon), New York City time,
on the date when due in dollars to the Administrative Agent at its offices
at 270 Park Avenue, New York, New York, in immediately available funds.
(b) Whenever any payment (including principal of or interest on
any Borrowing or any Fees or other amounts) hereunder shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment
may be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of interest or Fees, if
applicable.
SECTION 2.17. Taxes. (a) Any and all payments by the Company
hereunder shall be made, in accordance with Section 2.16, free and clear of
and without deduction for any and all current or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding (i) taxes imposed on or measured by all or part
of the gross or net income (but not including any such tax in the nature of
a withholding tax) of the Administrative Agent or any Bank (or any
transferee or assignee thereof, including a participation holder (any such
entity a "Transferee")), in each case by the jurisdiction under the laws of
which the Administrative Agent or such Bank (or Transferee) is organized or
has its applicable lending office or any political subdivision of any
thereof and (ii) taxes that would not have been imposed if the only
connection between the Administrative Agent or any Bank (or Transferee), or
any Affiliate thereof, and the jurisdiction imposing such taxes were
activities of the Administrative Agent or such Bank (or Transferee)
pursuant to or in respect of this Agreement (including entering into,
lending money or extending credit pursuant to, receiving payments under or
enforcing this Agreement) (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities, collectively or
individually, "Taxes"). If the Company shall be required to deduct any
Taxes from or in respect of any sum payable hereunder to any Bank (or any
Transferee) or the Administrative Agent, (i) the sum payable shall be
increased by the amount (an "additional amount") necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 2.17) such Bank (or Transferee)
or the Administrative Agent (as the case may be) shall receive an amount
equal to the sum it would have received had no such deductions been made,
(ii) the Company shall make such deductions and (iii) the Company shall pay
the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Company agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise similarly
with respect to, this Agreement and the Notes ("Other Taxes").
(c) The Company will indemnify each Bank (or Transferee) and the
Administrative Agent for the full amount of Taxes and Other Taxes paid by
such Bank (or Transferee) or the Administrative Agent, as the case may be,
and any liability (including penalties, interest and expenses (including
reasonable attorney's fees and expenses)) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant Governmental Authority. A certificate as to the
amount of such payment or liability prepared by a Bank, or the
Administrative Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be
made within 30 days after the date the Bank (or Transferee) or the
Administrative Agent, as the case may be, makes written demand therefor.
Each Bank (or Transferee) or the Administrative Agent shall make written
demand for indemnification no later than 120 days after the earlier of
(i) the date on which such Bank (or Transferee) or the Administrative Agent
makes such payment of Taxes or Other Taxes and (ii) the date on which such
Governmental Authority makes written demand upon such Bank (or Transferee)
or the Administrative Agent for payment of such Taxes or Other Taxes.
(d) If a Bank (or Transferee) or the Administrative Agent shall
become aware that it is entitled to claim a refund, credit or reduction in
tax from a Governmental Authority in respect of Taxes or Other Taxes as to
which it has been indemnified by the Company, or with respect to which the
Company has paid additional amounts, pursuant to this Section 2.17, it
shall promptly notify the Company of the availability of such refund claim,
credit or reduction in tax and shall, within 30 days after receipt of a
request by the Company, make a claim to such Governmental Authority for
such refund, credit or reduction in tax at the Company's expense. If a
Bank (or Transferee) or the Administrative Agent receives a refund
(including pursuant to a claim for refund made pursuant to the preceding
sentence) or realizes a credit or reduction in tax in respect of any Taxes
or Other Taxes as to which it has been indemnified by the Company or with
respect to which the Company has paid additional amounts pursuant to this
Section 2.17, it shall within 30 days from the date of such receipt pay
over the amount of such refund or benefit of such credit or reduction in
tax to the Company (but only to the extent of indemnity payments made, or
additional amounts paid, by the Company under this Section 2.17 with
respect to the Taxes or Other Taxes giving rise to such refund, credit or
reduction in tax), net of all reasonable out-of-pocket expenses of such
Bank (or Transferee) or the Administrative Agent and without interest
(other than interest paid by the relevant Governmental Authority with
respect to such refund, credit or reduction in tax); provided, however,
that the Company, upon the request of such Bank (or Transferee) or the
Administrative Agent, agrees to repay the amount paid over to the Company
(plus penalties, interest or other charges) to such Bank (or Transferee) or
the Administrative Agent in the event such Bank (or Transferee) or the
Administrative Agent is required to repay such refund, credit or reduction
in tax to such Governmental Authority.
(e) As soon as practicable after the date of any payment of
Taxes or Other Taxes by the Company to the relevant Governmental Authority,
the Company will deliver to the Administrative Agent, at its address
referred to in Section 9.01, the original or a certified copy of a receipt
issued by such Governmental Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this
Section 2.17 shall survive the payment in full of the principal of and
interest on all Loans made hereunder.
(g) Each Bank (or Transferee) that is organized under the laws
of a jurisdiction other than the United States, any State thereof or the
District of Columbia (a "Non-U.S. Bank") shall deliver to each of the
Company and the Administrative Agent (i) two copies of either United States
Internal Revenue Service Form 1001 or Form 4224 (whichever is applicable,
or (ii) in the case of a Non-U.S. Bank claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto and a certificate representing that such
Non-U.S. Bank is not a bank for purposes of Section 881(c) of the Code, is
not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Code) of the Company and is not a controlled foreign corporation
related to the Company (within the meaning of Section 864(d)(4) of the
Code), in either case properly completed and duly executed by such Non-U.S.
Bank claiming complete exemption from, or reduced rate of, U.S. Federal
withholding tax on payments by the Company under this Agreement. Such
forms shall be delivered by each Non-U.S. Bank on or before the date it
becomes a party to this Agreement (or, in the case of a Transferee that is
a participation holder, on or before the date such participation holder
becomes a Transferee hereunder) and on or before the date, if any, such
Non-U.S. Bank changes its applicable lending office by designating a
different lending office (a "New Lending Office"). In addition, each Non-
U.S. Bank shall deliver such forms promptly upon (or, if reasonably
practicable, prior to) the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Bank. Notwithstanding any other
provision of this Section 2.17(g), a Non-U.S. Bank shall not be required to
deliver any form pursuant to this Section 2.17(g) that such Non-U.S. Bank
is not legally able to deliver. Each Bank (or Transferee) that is
organized under the laws of the United States or any state thereof or the
District of Columbia shall deliver to the Company an original copy of
Internal Revenue Service Form W-9 (or applicable successor form) properly
completed and duly executed by such Bank (or Transferee).
(h) The Company shall not be required to indemnify any Non-U.S.
Bank, or to pay any additional amounts to any Non-U.S. Bank, in respect of
United States Federal withholding tax (or any withholding tax imposed by a
state that applies only when such United States Federal withholding tax is
imposed) pursuant to paragraph (a) or (c) above to the extent
that: (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Bank became a
party to this Agreement (or, in the case of a Transferee that is a
participation holder, on the date such participation holder became a
Transferee hereunder) or, with respect to payments to a New Lending Office,
the date such Non-U.S. Bank designated such New Lending Office with respect
to a Loan; provided, however, that this clause (i) shall not apply to any
Transferee or New Lending Office that becomes a Transferee or New Lending
Office as a result of an assignment, participation, transfer or designation
made at the request of the Company; and provided further, however, that
this clause (i) shall not apply to the extent the indemnity payment or
additional amounts any Transferee, or Bank (or Transferee) through a New
Lending Office, would be entitled to receive (without regard to this
clause (i)) do not exceed the indemnity payment or additional amounts that
the person making the assignment, participation or transfer to such
Transferee, or Bank (or Transferee) making the designation of such New
Lending Office, would have been entitled to receive in the absence of such
assignment, participation, transfer or designation; or (ii) the obligation
to make such indemnification or to pay such additional amounts would not
have arisen but for a failure by such Non-U.S. Bank to comply with the
provisions of paragraph (g) above.
(i) Any Bank (or Transferee) claiming any indemnity payment or
additional amounts payable pursuant to this Section 2.17 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to
file any certificate or document reasonably requested in writing by the
Company or to change the jurisdiction of its applicable lending office if
the making of such a filing or change would avoid the need for or reduce
the amount of any such indemnity payment or additional amounts that may
thereafter accrue and would not, in the good faith determination of such
Bank (or Transferee), be otherwise disadvantageous to such Bank (or
Transferee).
(j) Nothing contained in this Section 2.17 shall require any
Bank (or Transferee) or the Administrative Agent to make available any of
its tax returns (or any other information that it deems to be confidential
or proprietary).
SECTION 2.18. Certain Bank Obligations. In the event
(a) any Bank delivers a certificate requesting compensation pursuant to
Section 2.12, (b) any Bank delivers a notice described in Section 2.13 or
(c) the Company is required to pay any additional amount to any Bank or any
Governmental Authority on account of any Bank, pursuant to Section 2.17,
the Company may require such Bank to transfer and assign, without recourse,
all of its interests, rights and obligations under this Agreement to an
assignee which shall assume such assigned obligations (which assignee may
be another Bank, if such Bank accepts such assignment); provided, that
(i) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction and
(ii) the Company or such assignee shall have paid to the assigning Bank in
immediately available funds an amount equal to the sum of the principal of
and interest accrued to the date of such payment on the outstanding Loans
of such Bank, plus all Commitment Fees and other amounts accrued for the
account of such Bank or owed to it hereunder (including any amounts under
Section 2.12, 2.14 or 2.17); provided further, that if prior to any such
transfer and assignment the circumstances or event that resulted in such
Bank's claim for compensation under Section 2.12 or notice under
Section 2.13 or the amount paid pursuant to Section 2.17, as the case may
be, cease to cause such Bank to suffer increased costs or reductions in
amounts received or receivable or reduction in return on capital, or cease
to have the consequences specified in Section 2.13, or cease to result in
amounts being payable under Section 2.17, as the case may be, or if such
Bank shall waive its right to claim further compensation under Section 2.12
or 2.17 in respect of such circumstances or event or shall withdraw its
notice under Section 2.13 or in respect of such circumstances or event, as
the case may be, then such Bank shall not thereafter be required to make
any such transfer and assignment hereunder if it has not already done so.
ARTICLE III
Representations and Warranties
The Company represents and warrants to the Administrative Agent
and the Banks that as of the Effective Date and as of the date of each
Borrowing, to the extent provided in Article IV:
SECTION 3.01. Organization, Corporate Powers. (a) The Company
is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia; each Subsidiary which is
not a Foreign Subsidiary is duly organized, validly existing and in good
standing, and each Foreign Subsidiary is duly organized and validly
existing, in each case under the laws of the jurisdiction of its
organization; (b) the Company and each of its Subsidiaries (i) has the
corporate power and authority to own its property and to carry on its
business as now conducted and as proposed to be conducted and (ii) is
qualified to do business in every jurisdiction where such qualification is
necessary except where the failure so to qualify would not have a
materially adverse effect on the condition, financial or otherwise, of the
Company and the Subsidiaries taken as a whole; and (c) the Company has the
corporate power to execute, deliver and perform this Agreement, to borrow
hereunder and to execute and deliver the Notes.
SECTION 3.02. Authorization. The execution, delivery and
performance of this Agreement, the borrowings hereunder and the execution
and delivery of the Notes (a) have been duly authorized by all requisite
corporate action on the part of the Company and (b) will not (i) violate
(A) any provision of law, statute, rule or regulation, the articles of
incorporation or By-laws of the Company or any Subsidiary, (B) any appli-
cable order of any court or other agency of government or (C) any
indenture, any agreement for borrowed money, any bond, note or other
similar instrument or any other material agreement to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary or any
of their respective property is bound, (ii) be in conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement, bond, note, instrument or
other material agreement or (iii) result in the creation or imposition of
any Lien of any nature whatsoever upon any property or assets of the
Company or any Subsidiary. This Agreement constitutes, and the Notes when
delivered hereunder will constitute, legal, valid and binding obligations
of the Company enforceable against the Company in accordance with their
respective terms.
SECTION 3.03. Governmental Approval. No action, consent or
approval of, or registration or filing with, or any other action by any
Governmental Authority is required in connection with the execution,
delivery and performance by the Company of this Agreement, the borrowings
hereunder or the execution, delivery and performance of the Notes.
SECTION 3.04. Financial Statements. The Financial Statements
(subject, in the case of the interim statements included in the Financial
Statements to year-end audit adjustments) fairly present the financial
condition and results of operations of the Company and the Subsidiaries for
the periods then ended. The balance sheets and the notes thereto included
in the Financial Statements disclose all material liabilities, direct or
contingent, of the Company and the Subsidiaries as of the dates thereof to
the extent required to be reflected thereon in accordance with GAAP. The
Financial Statements were prepared in accordance with GAAP. The
Projections have been prepared in good faith based upon assumptions
reasonably believed by the Company to be attainable.
SECTION 3.05. No Material Adverse Change. There has been no
material adverse change in the business, assets, condition (financial or
otherwise) or results of operations of the Company and the Subsidiaries
taken as a whole since December 31, 1993.
SECTION 3.06. Subsidiaries. Schedule 3.06 hereto sets forth a
complete and accurate chart of all of the Subsidiaries other than
Designated Subsidiaries as of the Effective Date, showing as of the
Effective Date (as to each such Subsidiary) the jurisdiction of its
incorporation. All of the outstanding shares of each class of stock of
each of the Subsidiaries, other than qualifying or similar shares as may be
required by law, are owned as of the Effective Date (directly or
indirectly) by the Company and none of such shares are covered by
outstanding options, warrants, rights of conversion or purchase and similar
rights at the date hereof. All the outstanding capital stock of each of
the Subsidiaries (other than the Designated Subsidiaries) (x) has been
validly issued, is fully paid and nonassessable and (y) to the extent owned
by the Company or one or more of the Subsidiaries (other than the
Designated Subsidiaries) (as shown in Schedule 3.06) is owned free and
clear of all Liens.
SECTION 3.07. Litigation. Except as set forth in Schedule 3.07
hereto or in the Company's Reports on Form 10-K, Form 10-Q, Form 8-K or any
successor forms thereto, as filed with the Securities and Exchange
Commission, there are not any actions, suits or proceedings at law or in
equity or by or before any governmental instrumentality or other agency now
pending or, to the knowledge of the Company, threatened (and reasonably
likely to be commenced) against or affecting the Company or any of the
Subsidiaries or any property or rights of the Company or any of the
Subsidiaries as to which there is a reasonable likelihood of an adverse
determination and which, if adversely determined, would individually or in
the aggregate materially impair the right of the Company and the
Subsidiaries taken as a whole to carry on business substantially as now
being conducted or would result in a Material Adverse Effect.
SECTION 3.08. Tax Returns. The Company and each of the
Subsidiaries have filed or caused to be filed all Federal and state tax
returns and all local tax returns which, to the knowledge of the Company,
are required to be filed and have paid or caused to be paid all taxes as
shown on such returns or on any assessment received by it or by any of them
to the extent that such taxes have become due, except taxes the validity of
which is being contested in good faith by appropriate proceedings and with
respect to which the Company or such Subsidiary, as the case may be, shall
have set aside on its books such reserves as are required by GAAP with
respect to any such tax so contested.
SECTION 3.09. Properties. The Company and its Subsidiaries have
good and marketable title to, or valid leasehold interests in, all their
respective properties and assets reflected on the Consolidated balance
sheet dated September 30, 1993, included in the Financial Statements,
except for such properties and assets as have been disposed of since
September 30, 1993 (a) as no longer used or useful in the conduct of their
respective businesses or (b) in connection with the Spin-Off or as have
been disposed of in the ordinary course of business, and all such
properties and assets are free and clear of all mortgages, pledges, liens,
charges and other encumbrances of any nature whatsoever, except such as are
not prohibited by the provisions of Section 6.01.
SECTION 3.10. Employee Benefit Plans. Each of the Company and
its ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the Code (insofar as it relates to the
Plans, the Multiemployer Plans and related matters) and the regulations and
published interpretations thereunder. The Spin-Off and all related
transactions comply with the applicable provisions of ERISA and the Code.
No Reportable Event has occurred with respect to any Plan with vested
unfunded liabilities in excess of $10,000,000 administered by the Company
or any of the ERISA Affiliates or any administrator designated by the
Company or any of its ERISA Affiliates. The present value of all unfunded
vested liabilities under Plans administered by the Company, its ERISA
Affiliates and administrators designated by the Company or any of its ERISA
Affiliates does not exceed in the aggregate 5% of the Consolidated
Shareholders' Equity of the Company. Neither the Company nor any ERISA
Affiliate has incurred any Withdrawal Liability that has not been fully
satisfied and that materially adversely affects the financial condition of
the Company and its ERISA Affiliates taken as a whole. Neither the Company
nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and neither the Company nor any ERISA
Affiliate reasonably expects any Multiemployer Plan to be in reorganization
or to be terminated, where such reorganization or termination has resulted
or can reasonably be expected to result in an increase in the contributions
required to be made to such Plan that would materially and adversely affect
the financial condition of the Company and its ERISA Affiliates taken as a
whole.
SECTION 3.11. Investment Company Act; Public Utility Holding
Company Act. Neither the Company nor any Subsidiary is an "investment
company" as that term is defined in or is otherwise subject to regulation
under, the Investment Company Act of 1940. Neither the Company nor any
Subsidiary is a "holding company" as that term is defined in, or is
otherwise subject to regulation under, the Public Utility Holding Company
Act of 1935.
SECTION 3.12. Federal Reserve Regulations. Neither the Company
nor any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock (within the meaning of Regulation
U), and no part of the proceeds of the Loans hereunder will be used
directly or indirectly to purchase or carry Margin Stock or to extend
credit to others for the purpose of directly or indirectly purchasing or
carrying Margin Stock or for any purpose that would violate, or be
inconsistent with, the provisions of Regulations G, U or X.
SECTION 3.13. No Material Misstatements. To the best of the
Company's knowledge, with respect to the Company (excluding the assets and
businesses transferred to Albemarle in connection with the Spin-Off), no
information, report, financial statement, exhibit or schedule furnished by
or on behalf of the Company to the Administrative Agent or any Bank in
connection with the negotiation of this Agreement or any Note or included
therein contains any misstatement of fact, or omitted or omits to state any
fact necessary to make the statements therein not misleading, where such
misstatement or omission would be material to the interests of the Banks
with respect to the Company's performance of its obligations hereunder.
SECTION 3.14. Compliance with Laws. Neither the Company nor any
of the Subsidiaries, nor any of their respective properties or assets, is
(a) in violation of, nor will the continued operation of their properties
and assets as currently conducted violate, any law, rule, regulation or
statute (including any zoning, building, environmental and safety law,
ordinance, code or approval or any building permits) or (b) in default with
respect to any judgment, writ, injunction, decree or order of any
Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.15. Environmental and Safety Matters. Except as set
forth in Schedule 3.15, the Company and each Subsidiary is in compliance in
all material respects with all Federal, state, local and other statutes,
ordinances, orders, judgments, rulings and regulations relating to
environmental pollution or to environmental regulation or control or to
employee health or safety, except where the failure to do so would not be
reasonably likely, individually or in the aggregate, to result in a
Material Adverse Effect. Except as set forth in Schedule 3.15, neither the
Company nor any Subsidiary has received notice of any material failure so
to comply, which non-compliance neither has been remedied nor is being
contested in good faith by the Company nor is the subject of the Company's
good faith efforts to achieve compliance. Except as set forth in
Schedule 3.15, the Company's and the Subsidiaries' facilities do not manage
any hazardous wastes, hazardous substances, hazardous materials, toxic
substances, toxic pollutants or substances similarly denominated, as those
terms or similar terms are used in the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response Compensation and Liability
Act, as amended by the Superfund Amendment and Reauthorization Act, the
Hazardous Materials Transportation Act, the Toxic Substance Control Act,
the Clean Air Act, as amended, the Clean Water Act, the Occupational Health
and Safety Act or any other applicable law relating to environmental
pollution or employee health and safety, in violation in any material
respect of any law or any regulations promulgated pursuant thereto, except
where the failure to do so would not reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Effect. Except as set
forth in Schedule 3.15, the Company is aware of no events, conditions or
circumstances involving environmental pollution or contamination or
employee health or safety that would be reasonably likely to result in a
Material Adverse Effect.
ARTICLE IV
Conditions of Lending
The obligations of the Banks to make Loans hereunder are subject
to the satisfaction of the following conditions:
SECTION 4.01. Conditions to be Satisfied on Date of Each
Borrowing. In the case of each Borrowing to be made hereunder, including
each Borrowing in which Loans are refinanced with new Loans as contemplated
by Section 2.05:
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.03 or 2.04, as the case may
be.
(b) The representations and warranties set forth in Article III
(except, in the case of a refinancing that does not increase the
aggregate principal amount of the Loans of any Bank outstanding, the
representations set forth in Sections 3.05 and 3.07) shall be true and
correct in all material respects on and as of the date of such
Borrowing with the same effect as though such representations and
warranties had been made on and as of such date, except to the extent
that such representations and warranties expressly relate to an
earlier date.
(c) At the time of each such Borrowing, the Company shall be in
compliance with all the terms and provisions set forth herein on its
part to be observed or performed, and immediately after such Borrowing
no Default or Event of Default shall have occurred and be continuing.
(d) Each Bank that shall not have previously received an
appropriate Note shall have received a duly executed Competitive Note
or Committed Note, as applicable, payable to its order and otherwise
complying with the provisions of Section 2.07.
Each Borrowing hereunder shall be deemed to constitute a representation and
warranty by the Company on the date of such Borrowing as to the matters
specified in paragraphs (b) and (c) of this Section.
ARTICLE V
Affirmative Covenants
The Company covenants and agrees with the Administrative Agent
and the Banks that, so long as this Agreement shall remain in effect or the
principal of or interest on any Loan, the Commitment Fee or any other
expenses or amounts payable hereunder shall be unpaid, unless the Required
Banks shall otherwise consent in writing, it will, and will cause each of
the Subsidiaries to:
SECTION 5.01. Corporate Existence; Businesses and Properties.
Do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its corporate existence, material rights, licenses,
permits and franchises, comply with all laws and regulations applicable to
it and conduct its business in substantially the same manner as heretofore
conducted or as at the time permitted under applicable law; at all times
maintain and preserve all property used or useful in the conduct of its
business and keep the same in good repair, working order and condition, and
from time to time make, or cause to be made, all needful and proper
repairs, renewals and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at
all times; provided, however, that nothing contained in this Section 5.01
(a) shall prevent the Company or any Subsidiary from ceasing or omitting to
exercise any rights, licenses, permits or franchises (including, in the
case of a Subsidiary only, the corporate existence thereof) which in the
judgment of the Company can no longer be advantageously exercised or
(b) shall prevent the Company or any Subsidiary from selling, abandoning or
otherwise disposing of any property, the retention of which in the judgment
of the Company is inadvisable to the business of the Company or any
Subsidiary, or prevent any liquidation of any Subsidiary or any merger or
consolidation or sale thereof.
SECTION 5.02. Insurance. (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable
insurers; (b) maintain such other insurance, to such extent and against
such risks, including fire and other risks insured against by extended
coverage, as is customary with companies in the same or similar businesses;
(c) maintain in full force and effect public liability insurance against
claims for personal injury or death or property damage occurring upon, in,
about or in connection with the use of any properties owned, occupied or
controlled by the Company or any Subsidiary, as the case may be, in such
amount as the Company or such Subsidiary, as the case may be, shall
reasonably deem necessary; and (d) maintain such other insurance as may be
required by law.
SECTION 5.03. Obligations and Taxes. Pay all of its
Indebtedness and obligations promptly and in accordance with their terms
and pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or
profits or in respect of its property, before the same shall become in
default, as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such properties
or any part thereof; provided, however, that neither the Company nor any of
the Subsidiaries shall be required to pay and discharge or to cause to be
paid and discharged any such tax, assessment, charge, levy or claim so long
as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and the Company or such Subsidiary, as the case may
be, shall set aside on its books such reserves as are required by generally
accepted accounting principles with respect to any such tax, assessment,
charge, levy or claim so contested.
SECTION 5.04. Financial Statements, Reports, etc. In the case
of the Company, furnish directly to the Administrative Agent and to each of
the Banks:
(a) within 120 days after the end of each fiscal year of the
Company (being December 31 in each calendar year), its Consolidated
balance sheets, Consolidated statements of income and Consolidated
statements of cash flows showing the Consolidated financial condition
of the Company and the Subsidiaries as of the close of such fiscal
year and the results of its operations and the operations of the
Subsidiaries during such year, all the foregoing consolidated
financial statements to be audited by Coopers & Lybrand, independent
public accountants, or other independent public accountants acceptable
to the Required Banks and accompanied by an opinion of such accountant
(which shall not be qualified in any material respect) to the effect
that such consolidated financial statements fairly present the
financial condition and results of operations of the Company and the
Subsidiaries on a consolidated basis in accordance with GAAP;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year, unaudited Consolidated balance
sheets, Consolidated statements of income and Consolidated statements
of cash flows showing the financial condition and results of
operations of the Company and the Subsidiaries on a consolidated basis
as of the end of each such quarter and for the then elapsed portion of
the fiscal year, certified by a Financial Officer of the Company as
presenting fairly the financial position and results of operations of
the Company and such Subsidiaries and as having been prepared in
accordance with GAAP (except for such changes therein as are approved
by the independent accountants for the Company), in each case subject
to normal year-end audit adjustments;
(c) concurrently with (a) and (b) above, a certificate of the
firm or person referred to therein (which certificate furnished by the
independent accountants referred to in paragraph (a) above may be
limited to the best of its knowledge and to accounting matters and may
disclaim responsibility for legal interpretations) (i) certifying that
no Default or Event of Default has occurred, or, if such a Default or
Event of Default has occurred, specifying the nature and extent
thereof and, in the case of the certificate furnished by a Financial
Officer of the Company, specifying any corrective action taken or
proposed to be taken with respect thereto and (ii) setting forth
computations in reasonable detail satisfactory to the Administrative
Agent demonstrating compliance with the covenants contained in
Section 6.05 and 6.06;
(d) promptly after the same become publicly available and to the
extent not required to be furnished by any other provision of this
Section 5.04, (i) copies of all proxy statements, financial statements
and reports that the Company sends to its stockholders and (ii) copies
of all regular, periodic and special reports, and all registration
statements relating to transactions requiring a vote of stockholders
of the Company or filed on Form S-1, S-2 or S-3 under the Securities
Act of 1933, which the Company or any Subsidiary files with the
Securities and Exchange Commission, or any Governmental Authority
which may be substituted therefor, or with any national securities
exchange, or distributed to its shareholders, as the case may be; and
(e) promptly, from time to time, such other information regarding
the operations, business affairs and condition (financial or
otherwise) of the Company and the Subsidiaries as each Bank through
the Administrative Agent may reasonably request; provided, however,
that the Company shall not be obligated to disclose, or to permit any
examination which will disclose, technical knowledge or confidential
trade information, except where appropriate safeguards exist that
prevent dissemination of such information in a manner detrimental to
the Company's competitive position.
SECTION 5.05. Litigation and Other Notices. Give the
Administrative Agent and each Bank prompt written notice of the following:
(a) any Default or Event of Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
(b) the filing or commencement of (or any threat or notice of
intention of any person to file or commence where such filing or
commencement is reasonably likely) any action, suit or proceeding,
whether at law or in equity or by or before any Governmental
Authority, against the Company or any Affiliate thereof as to which
there is a reasonable likelihood of an adverse determination and that,
if adversely determined, could reasonably be anticipated to result in
Material Adverse Effect; and
(c) any development that has resulted in, or could reasonably be
anticipated to result in, a Material Adverse Effect.
SECTION 5.06. ERISA. (a) Comply in all material respects with
the applicable provisions of ERISA and the Code (insofar as it relates to
the Plans, the Multiemployer Plans or related matters) and (b) furnish to
the Administrative Agent and each Bank, (i) as soon as possible after, and
in any event within 30 days after any Executive Officer of the Company or
any ERISA Affiliate knows or has reason to know that, any Reportable Event
with respect to any Plan with vested unfunded liabilities in excess of
$10,000,000 has occurred, a statement of a Financial Officer setting forth
details as to such Reportable Event and the action that the Company
proposes to take with respect thereto, together with a copy of the notice,
if any, of such Reportable Event given to PBGC, (ii) promptly after receipt
thereof, a copy of any notice the Company or any Subsidiary may receive
from PBGC relating to the intention of PBGC to terminate any Plan with
vested unfunded liabilities in excess of $10,000,000 or to appoint a
trustee to administer any such Plan, (iii) within 10 days after the due
date for filing with the PBGC pursuant to Section 412(n) of the Code a
notice of failure to make a required installment or other payment with
respect to a Plan with vested unfunded liabilities in excess of
$10,000,000, a statement of a Financial Officer setting forth details as to
such failure and the action that the Company proposes to take with respect
thereto, together with a copy of any such notice given to the PBGC, and
(iv) promptly and in any event within 30 days after receipt thereof by the
Company or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a
copy of each notice received by the Company or any ERISA Affiliate
concerning (A) the imposition of Withdrawal Liability or (B) a
determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, both within the meaning of Title IV of
ERISA.
SECTION 5.07. Access to Premises and Records. Maintain
financial records in accordance with GAAP, and permit representatives of
the Administrative Agent and of each Bank that shall make a request
therefor through the Agent to have access to such financial records and the
premises of the Company and each Subsidiary at reasonable times and to make
such extracts from such records as such representatives deem necessary, and
permit any such representatives to discuss the affairs, finances and
condition of the Company or any Subsidiary with the officers thereof and
independent accountants therefor.
SECTION 5.08. Reorganization and Distribution Agreement. In the
case of the Company, (a) maintain the Reorganization and Distribution
Agreement in full force and effect, (b) observe the provisions of the
Reorganization and Distribution Agreement and (c) not agree to any
amendment or modification of the Reorganization and Distribution Agreement
that could adversely affect the rights or interests of the Banks or that
could affect the relative creditworthiness of the Company.
SECTION 5.09. Issuance of Notes. Forthwith upon the
effectiveness of this Agreement, the Company shall execute and deliver to
the Banks the Notes (it being agreed, however, that this Agreement and the
obligations of the Company hereunder shall become effective as provided in
Section 9.17 whether or not such Notes shall have been delivered).
ARTICLE VI
Negative Covenants
The Company covenants and agrees with the Administrative Agent
and the Banks that, so long as this Agreement shall remain in effect or the
principal of or interest on any Note, the Commitment Fee or any other
expenses or amounts payable hereunder shall be unpaid, unless the Required
Banks otherwise consent in writing, it will not, and it will not cause,
permit or suffer any of the Subsidiaries, directly or indirectly, to:
SECTION 6.01. Liens, etc. Create, incur, assume or suffer to
exist any Lien upon or with respect to any of its assets or properties
(including stock or other securities of any person, including any Subsid-
iary) now owned or hereafter acquired or assign or otherwise convey any
right to receive income or revenues; provided that the foregoing
restrictions shall not apply to mortgages, deeds of trust, pledges, liens,
security interests or other charges or encumbrances:
(a) for taxes, assessments or governmental charges or levies on
property of the Company or any Subsidiary if the same shall not at the
time be delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings and with
respect to which the Company or Subsidiary shall have set aside
adequate reserves in accordance with GAAP with respect thereto;
(b) imposed by law, such as carrier's, warehousemen's and
mechanics' liens and other similar liens, which arise in the ordinary
course of business with respect to obligations not yet due or being
contested in good faith and by appropriate proceedings and with
respect to which the Company or Subsidiary shall have set aside
adequate reserves in accordance with GAAP with respect thereto;
(c) arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;
(d) other attachments, liens, charges, pledges, deposits,
encumbrances, or other security interests incidental to the conduct of
its business or the ownership of its property and assets which were
not incurred in connection with the borrowing of money or the
obtaining of advances or credit, and which do not in the aggregate
materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;
(e) Liens on the assets or properties of a Subsidiary in favor of
the Company or another Subsidiary to secure Indebtedness of such
Subsidiary to the Company or such other Subsidiary;
(f) any Lien on property or assets of the Company or any
Subsidiary existing on the date hereof and set forth on Schedule 6.01
and any Lien that replaces such an existing Lien; provided, however,
that the principal amount of the Indebtedness secured by the replacing
Lien does not exceed the principal amount of Indebtedness secured by
such existing Lien at the time of replacement of the existing Lien or
cover property different from the property covered by the existing
Lien;
(g) Liens on property or assets of the Company or any Subsidiary
granted in connection with Sale and Lease-Back Transactions, provided
that the aggregate amount of Attributable Debt in connection with such
Sale and Lease-Back Transactions shall not at any time be in excess of
$80,000,000; and
(h) Liens other than those referred to in subparagraphs (a)
through (g) above, provided that the aggregate amount of all
Indebtedness that is secured or evidenced by Liens other than those
referred to in subparagraphs (a) through (e) and (g) above does not at
any time exceed an amount equal to 10% of Consolidated Shareholders'
Equity of the Company.
SECTION 6.02. Indebtedness of Subsidiaries. Permit any of the
Subsidiaries to create, incur or assume any Indebtedness other than
(a) Indebtedness for borrowed money existing on the date hereof and set
forth in Schedule 6.02 and any extensions, renewals or replacements of such
Indebtedness, (b) Indebtedness incurred in connection with any Sale and
Lease-Back Transaction permitted under Section 6.01(g), (c) Indebtedness
owed to the Company or to any other direct or indirect wholly-owned
Subsidiary and (d) Indebtedness (in addition to that specified in (a)
through (c) above) in an aggregate principal amount as to all Subsidiaries
not in excess of $20,000,000.
SECTION 6.03. Compliance with Regulations G, U and X. Incur,
create or assume any Indebtedness or other liability or make any
investment, capital contribution, loan, advance or extension of credit or
take or permit to be taken any other action or permit to exist any event
permitted by this Credit Agreement but for the provisions of this Section
6.03, if such action or event would result in this Agreement, the Loans
hereunder, the use of the proceeds thereof or the other transactions
contemplated hereby violating or being inconsistent with Regulations G, U
or X, including without limitation the provisions of said Regulations
relating to withdrawal and substitution of collateral.
SECTION 6.04. Mergers, Consolidations and Sales of Assets.
Merge into or consolidate with any other person, or permit any other person
to merge into or consolidate with it, or sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired)
or any capital stock of any Subsidiary, except that (a) the Company and any
Subsidiary may purchase and sell inventory in the ordinary course of
business, (b) if at the time thereof and immediately after giving effect
thereto no Default or Event of Default shall have occurred and be
continuing (i) any wholly owned Subsidiary or any other person may merge
into the Company in a transaction in which the Company is the surviving
corporation, (ii) any wholly owned Subsidiary may merge into or consolidate
with any other wholly owned Subsidiary in a transaction in which the
surviving entity is a wholly owned Subsidiary and no person other than the
Company or a wholly owned Subsidiary receives any consideration and
(iii) so long as (A) the Ratings of the surviving corporation are better
than or equal to the Ratings of the Company and (B) the surviving
corporation agrees in writing to assume the obligations of the Company
under this Agreement, the Company may merge into or consolidate with any
other person, (c) the Company may sell 100% of the capital stock of any
Subsidiary for fair market value, as determined in good faith by the
Company's board of directors, provided such sale does not constitute a sale
of all or substantially all of the Company's assets and (d) the Company may
sell any portion of the capital stock of any Subsidiary in connection with
the establishment of a joint venture for the purpose of developing a
product or business related to any of the Company's existing lines of
business as of the date of this Agreement.
SECTION 6.05. Leverage Ratio. Permit the Leverage Ratio at any
time to be greater than 60%.
SECTION 6.06. Minimum Consolidated Shareholders' Equity. Permit
Consolidated Shareholders' Equity at any time to be less than $250,000,000.
ARTICLE VII
Events of Default
In the case of the happening of any of the following events
(hereinafter called Events of Default):
(a) any representation or warranty made or deemed made in connec-
tion with this Agreement or, with respect to the Company as
constituted as of the Effective Date, the Pre-Spin-Off Credit
Agreement or with the execution and delivery of the Notes or the
borrowings hereunder or any statement or representation made in any
report, certificate, financial statement or other instrument furnished
by the Company to the Administrative Agent or the Banks pursuant to
this Agreement or, with respect to the Company as constituted as of
the Effective Date, the Pre-Spin-Off Credit Agreement shall prove to
have been false or misleading in any respect material to the interests
of the Banks with respect to the Company's performance of its
obligations hereunder when made or delivered or when deemed made in
accordance with the terms hereof;
(b) default shall be made in the payment of the principal of or
interest on any Loan or of the Commitment Fee or any other amount due
under this Agreement, when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise and in the
case of interest on the Notes, the Commitment Fee or such other
amounts, except principal, such default shall continue unremedied for
a period of 10 days;
(c) default shall be made in the due observance or performance of
any covenant, condition or agreement contained in Section 5.01, 5.05
or 5.08 or in Article VI;
(d) default shall be made in the due observance or performance of
any other covenant, condition or agreement to be observed or performed
by the Company or any Subsidiary pursuant to the terms hereof and such
default shall continue unremedied for 30 days after written notice
thereof to the Company by the Administrative Agent or the Required
Banks;
(e) the Company or any Subsidiary shall fail to pay any principal
or interest, regardless of amount, due in respect of Indebtedness in a
principal amount greater than $25,000,000, owing by the Company or
such Subsidiary (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such Indebtedness; or the Company or any
Subsidiary shall fail to perform any term, covenant or agreement on
its part to be performed under any agreement or instrument evidencing
or securing or relating to any such Indebtedness, if the effect of
such failure is to cause or to permit the holder or holders of such
Indebtedness to accelerate the maturity of such Indebtedness;
(f) the Company or any Subsidiary other than a Designated
Subsidiary shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal, state or
foreign bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and
appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for the Company
or any Subsidiary other than a Designated Subsidiary or for a
substantial part of its property, (iv) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take corporate
action for the purpose of effecting any of the foregoing;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company or any
Subsidiary other than a Designated Subsidiary, or of a substantial
part of its property, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal, state or
foreign bankruptcy, insolvency or similar law, (ii) the appointment of
a receiver, trustee, custodian, sequestrator or similar official for
the Company or any Subsidiary other than a Designated Subsidiary or
for a substantial part of its property or (iii) the winding-up or
liquidation of the Company or any Subsidiary other than a Designated
Subsidiary; and such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for 30 days;
(h) one or more final judgments from which no further appeal can
be taken for the payment of money in an aggregate amount in excess of
$25,000,000 shall be rendered against the Company and/or a Subsidiary,
and the same shall remain undischarged for a period of 60 consecutive
days during which execution shall not be effectively stayed;
(i) (i) a Reportable Event or Reportable Events, or a failure to
make a required installment or other payment (within the meaning of
Section 412(n)(1) of the Code) shall have occurred with respect to any
Plan or Plans with vested unfunded liabilities in an aggregate amount
in excess of $10,000,000 and, within 30 days after the reporting of
such Reportable Event to the Administrative Agent or after the receipt
by the Administrative Agent of the statement required pursuant to
Section 5.06, the Administrative Agent shall have notified the Company
in writing that (A) the Required Banks have made a determination that,
on the basis of such Reportable Event or Reportable Events or the
failure to make a required payment, there are reasonable grounds for
the termination of such Plan or Plans by the PBGC or for the
appointment by the appropriate United States District Court of a
trustee to administer such Plan or Plans or for the imposition of a
Lien in favor of such Plan or Plans and (B) as a result thereof an
Event of Default exists hereunder; or (ii) a trustee shall be
appointed by a United States District Court to administer any Plan
with vested unfunded liabilities in excess of $10,000,000; or
(iii) the PBGC shall institute proceedings to terminate any Plan with
vested unfunded liabilities in excess of $10,000,000;
(j)(i) the Company or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) the Company or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability or is not in fact contesting such Withdrawal
Liability in a timely and appropriate manner and (iii) the amount of
the Withdrawal Liability specified in such notice, when aggregated
with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date or
dates of such notification), either (A) exceeds $10,000,000 or
requires payments exceeding $2,500,000 in any year or (B) is less than
$10,000,000 but remains unpaid 30 days after such payment is due;
(k) the Company or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of
Title IV of ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of the Company and its
ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have been or will
be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an
amount exceeding $2,500,000;
(l) there shall have occurred a Change in Control; or
(m) the Spin-Off shall have been consummated in violation of the
Pre-Spin-Off Credit Agreement;
then, and in every such event and at any time thereafter during the
continuance of such event, the Administrative Agent may, and upon written
request from the Required Banks shall, by notice to the Company, take
either or both of the following actions, at the same or different times:
(i) terminate the Commitments and (ii) declare the Loans to be forthwith
due and payable, whereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and any unpaid accrued
Fees and all other liabilities of the Company accrued hereunder, shall
become forthwith due and payable without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by
the Company, anything contained herein or in the Notes to the contrary
notwithstanding. Notwithstanding the foregoing, if an Event of Default
specified in paragraph (f) or (g) above occurs with respect to the Company
or any Subsidiary, the Commitments shall automatically terminate and the
Loans then outstanding, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Company accrued
hereunder, shall become immediately due and payable, without any action by
any Bank or the Administrative Agent and without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the Notes to the contrary notwith-
standing.
ARTICLE VIII
The Administrative Agent
In order to expedite the transactions contemplated by this
Agreement, Chemical Bank is hereby appointed to act as Administrative Agent
on behalf of the Banks. Each of the Banks, and each subsequent holder of
any Note by its acceptance thereof, hereby irrevocably authorizes the
Administrative Agent to take such actions on behalf of such Bank or holder
and to exercise such powers as are specifically delegated to the
Administrative Agent by the terms and provisions hereof, together with such
actions and powers as are reasonably incidental thereto. The
Administrative Agent is hereby expressly authorized by the Banks, without
hereby limiting any implied authority, (a) to receive on behalf of the
Banks all payments of principal of and interest on the Loans and all other
amounts due to the Banks hereunder, and promptly to distribute to each Bank
its proper share of each payment so received; (b) to give notice on behalf
of each of the Banks to the Company of any Event of Default specified in
this Agreement of which the Administrative Agent has actual knowledge
acquired in connection with its agency hereunder; and (c) to distribute to
each Bank copies of all notices, financial statements and other materials
delivered by the Company pursuant to this Agreement as received by the
Administrative Agent.
Neither the Administrative Agent nor any of its directors, offi-
cers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his own gross negligence or wilful
misconduct, or be responsible for any statement, warranty or representation
herein or the contents of any document delivered in connection herewith, or
be required to ascertain or to make any inquiry concerning the performance
or observance by the Company of any of the terms, conditions, covenants or
agreements contained in this Agreement. The Administrative Agent shall not
be responsible to the Banks or the holders of the Notes for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement, the Notes or any other instruments or agreements. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof until it shall have received from the payee
of such Note notice, given as provided herein, of the transfer thereof in
compliance with Section 9.04. The Administrative Agent shall in all cases
be fully protected in acting, or refraining from acting, in accordance with
written instructions signed by the Required Banks (or such greater
percentage of Banks as may be required hereunder) and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Banks and each subsequent
holder of any Note. The Administrative Agent shall, in the absence of
knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have
been signed or sent by the proper person or persons. Neither the
Administrative Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Company on account of the
failure of or delay in performance or breach by any other Bank or the
Company of any of their respective obligations hereunder or in connection
herewith. The Administrative Agent may execute any and all duties
hereunder by or through agents or employees and shall be entitled to rely
upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel.
The Banks hereby acknowledge that the Administrative Agent shall
be under no duty to take any discretionary action permitted to be taken by
it pursuant to the provisions of this Agreement unless it shall be
requested in writing to do so by the Required Banks.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign
at any time by notifying the Banks and the Company. Upon any such
resignation, the Required Banks, with the consent of the Company (which
consent shall not be unreasonably withheld), shall have the right to
appoint a successor. If no successor shall have been so appointed by the
Required Banks and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation,
then the retiring Administrative Agent may, on behalf of the Banks, appoint
a successor Administrative Agent which shall be a bank with an office in
New York, New York, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Administrative Agent.
With respect to the Loans made by it hereunder and the Notes
issued to it, the Administrative Agent in its individual capacity and not
as Administrative Agent shall have the same rights and powers as any other
Bank and may exercise the same as though it were not the Administrative
Agent, and the Administrative Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with the
Company or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent.
Each Bank agrees (i) to reimburse the Administrative Agent, on
demand, in the amount of its pro rata share (based on its Commitment
hereunder) of any expenses incurred for the benefit of the Banks by the
Administrative Agent, including counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Banks, which shall
not have been reimbursed by the Company and (ii) to indemnify and hold
harmless the Administrative Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share, from
and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or
asserted against it in its capacity as the Administrative Agent or any of
them in any way relating to or arising out of this Agreement or any action
taken or omitted by it or any of them under this Agreement, to the extent
the same shall not have been reimbursed by the Company; provided, however,
that no Bank shall be liable to the Administrative Agent or any such
director, officer, employee or agent for any portion of such liabilities,
taxes, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or
wilful misconduct of the Administrative Agent or any of its directors,
officers, employees or agents.
Each Bank acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Bank and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Bank and based on such documents and
information as it shall from time to time deem appropriate, continue to
make its own decisions in taking or not taking action under or based upon
this Agreement, any related agreement or any document furnished hereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except as otherwise expressly provided
herein, notices and other communications provided for herein shall be in
writing and shall be delivered or mailed or sent by telecopy addressed,
(a) if to the Company, in all cases to it at
330 South Fourth Street
Richmond, Virginia 23219
Telephone: (804) 788-5402
Telecopy: (804) 788-5406
Attention of Secretary;
(b) if to Chemical Bank, either individually or in its capacity
as Administrative Agent, in all cases to it at
270 Park Avenue
New York, New York 10017
Telephone: (212) 270-7213
Telecopy: (212) 270-2202
Attention of: Banking and Corporate Finance; and
(c) if to the Co-Agent or any other Bank, in all cases to it at
the address listed next to its name in Schedule 2.01.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given (i) on the date of receipt, if delivered by hand or overnight
courier service or sent by telecopy, (ii) on the date five Business Days
after dispatch if sent by registered or certified mail, and (iii) on the
date of receipt, if by telephone, in each case addressed to such party as
provided in this Section or in accordance with the latest unrevoked
direction from such party.
SECTION 9.02. No Waivers; Amendments. (a) No failure or delay
of the Administrative Agent or of any Bank in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Administrative Agent, the Banks and
holders of the Notes hereunder are cumulative and not exclusive of any
rights or remedies which they would otherwise have. No waiver of any
provision of this Agreement or the Notes nor consent to any departure by
the Company therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) below, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances. Each holder of any of the Notes shall be bound by any
amendment, modification, waiver or consent authorized as provided herein,
whether or not such Note shall have been marked to indicate such amendment,
modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof may be
amended or modified except pursuant to an agreement or agreements in
writing entered into by the Company and the Required Banks; provided,
however, that no such agreement shall (i) decrease the principal amount of,
or extend the maturity of or the scheduled dates for the payment of
principal of or interest on, any Loan or waive or excuse any such payment
or any part thereof or reduce the rate of interest on any Loan, without the
written consent of each holder affected thereby, (ii) increase or extend
the Commitment or decrease the Commitment Fees of any Bank without the
written consent of each Bank, (iii) amend or modify the definition of
"Required Banks" or the provisions of this Section 9.02 or Section 9.08
without the written consent of each Bank, (iv) amend or modify the
provisions of Section 9.17 without the written consent of Banks having
Commitments representing at least 66-2/3% of the Total Commitment or (v)
amend, modify or otherwise affect the rights or duties of the
Administrative Agent hereunder, without the written consent of the
Administrative Agent. Each Bank and holder of any Note shall be bound by
any modification or amendment authorized by this Section regardless of
whether its Notes shall be marked to make reference thereto, and any
consent by any Bank or holder of a Note pursuant to this Section shall bind
any person subsequently acquiring a Note from it, whether or not such Note
shall be so marked.
SECTION 9.03. Right of Setoff. If an Event of Default shall
have occurred and be continuing that in the good faith judgment of any Bank
shall materially compromise in any respect such Bank's interest as a Bank
hereunder, such Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply 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 against any of and all the
obligations of the Company now or hereafter existing under this Agreement
held by such Bank, irrespective of whether or not such Bank shall have made
any demand under this Agreement and although such obligations may be
unmatured. The rights of each Bank under this Section are in addition to
other rights and remedies (including other rights of setoff) which such
Bank may have.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and
all covenants, promises and agreements by or on behalf of the Company, the
Administrative Agent or the Banks that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and
assigns.
(b) Each Bank may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time
owing to it and the Notes held by it); provided, however, that (i) except
in the case of an assignment to a Bank or an Affiliate of such Bank, each
of the Company and the Administrative Agent must give its prior written
consent to such assignment (which consent shall not be unreasonably
withheld), (ii) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Bank's rights and obligations
under this Agreement, (iii) the amount of the Commitment of the assigning
Bank subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $10,000,000 (or, if such
assigning Bank's Commitment is less than $10,000,000, such amount), (iv)
the parties to each such assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with the Note
or Notes subject to such assignment and a processing and recordation fee of
$3,000 and (v) the assignee, if it shall not be a Bank, shall deliver to
the Administrative Agent an Administrative Questionnaire. Upon acceptance
and recording pursuant to paragraph (e) of this Section 9.04, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution
thereof, (A) the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Bank under this Agreement and (B) the assigning
Bank thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Bank's rights and obligations under
this Agreement, such Bank shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.12, 2.13, 2.17 and
9.05 (to the extent that such Bank's entitlement to such benefits arose out
of such Bank's position as a Bank prior to the applicable assignment), as
well as to any Fees accrued for its account and not yet paid).
Notwithstanding the foregoing, any Bank assigning its rights and
obligations under this Agreement may retain any Competitive Loans made by
it outstanding at such time, and in such case shall retain its rights
hereunder in respect of any Loans so retained until such Loans have been
repaid in full in accordance with this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Bank thereunder and the assignee thereunder shall be deemed
to confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Bank warrants that it is the legal and
beneficial owner of the interest being assigned thereby, free and clear of
any adverse claim and that its Commitment, and the outstanding balances of
its Loans, in each case without giving effect to assignments thereof which
have not become effective, are as set forth in such Assignment and
Acceptance, (ii) except as set forth in (i) above, such assigning Bank
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant hereto, or the financial
condition of the Company or any Subsidiary or the performance or observance
by the Company or any Subsidiary of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee represents and warrants that it is legally authorized
to enter into such Assignment and Acceptance; (iv) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 5.04 and
such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (v) such assignee will independently and without reliance upon
the Administrative Agent, such assigning Bank or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Bank.
(d) The Administrative Agent shall maintain at one of its
offices in The City of New York a copy of each Assignment and Acceptance
and the names and addresses of the Banks, and the Commitment of, and
principal amount of the Loans owing to, each Bank pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register
shall be conclusive in the absence of manifest error and the Company, the
Administrative Agent and the Banks may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Bank hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Company and any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Bank and an assignee together with the
Note or Notes subject to such assignment, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be
a Bank hereunder), the processing and recordation fee referred to in
paragraph (b) above and, if required, the written consent of the Company
and the Administrative Agent to such assignment, the Administrative Agent
shall (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Banks. Within five Business Days after receipt of notice,
the Company, at its own expense, shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Committed Note and/or
Competitive Note, (x) a new Competitive Note to the order of such assignee
in an amount equal to the Total Commitment and a new Committed Note to the
order of such assignee in an amount equal to the portion of the Commitment
assumed by it pursuant to such Assignment and Acceptance and, (y) if the
assigning Bank has retained a Commitment, a new Committed Note to the order
of such assigning Bank in a principal amount equal to the Commitment
retained by it. Such new Committed Note shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered
Committed Note; such new Notes shall be dated the date of the surrendered
Notes which they replace and shall otherwise be in substantially the form
of Exhibit B-1 or B-2 hereto, as appropriate. Canceled Notes shall be
returned to the Company.
(f) Each Bank may without the consent of the Company or the
Administrative Agent sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing
to it and the Notes held by it); provided, however, that (i) such Bank's
obligations under this Agreement shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
entities shall be entitled to the benefit of the cost protection provisions
contained in Sections 2.12, 2.13 and 2.17 to the same extent as if they
were Banks and (iv) the Company, the Administrative Agent and the other
Banks shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement,
and such Bank shall retain the sole right to enforce the obligations of the
Company relating to the Loans and to approve any amendment, modification or
waiver of any provision of this Agreement (other than amendments,
modifications or waivers decreasing any Fees payable hereunder or the
amount of principal of or the rate at which interest is payable on the
Loans, extending the final scheduled maturity of the Loans or any date
scheduled for the payment of interest on the Loans or extending the
Commitments).
(g) Any Bank or participant may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section 9.04, disclose to the assignee or participant or
proposed assignee or participant any information relating to the Company
furnished to such Bank by or on behalf of the Company, provided that, prior
to any such disclosure of information designated by the Company as
confidential, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the
confidentiality of such confidential information. It is understood that
confidential information relating to the Company would not ordinarily be
provided in connection with assignments or participations of Competitive
Loans.
(h) Any Bank may at any time assign all or any portion of its
rights under this Agreement and the Notes issued to it to a Federal Reserve
Bank; provided that no such assignment shall release a Bank from any of its
obligations hereunder.
SECTION 9.05. Expenses; Indemnity. The Company agrees to pay
all reasonable out-of-pocket expenses incurred by the Administrative Agent
in connection with the preparation of this Agreement or in connection with
any amendments, modifications or waivers of the provisions hereof (whether
or not the transactions hereby contemplated shall be consummated) or
incurred by the Administrative Agent or any Bank in connection with the
enforcement or protection of their rights in connection with this Agreement
or in connection with the Loans made or the Notes issued hereunder,
including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent, and, in connection
with any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel for the Administrative Agent or any
Bank. The Company further agrees that it shall indemnify the Banks from
and hold them harmless against any documentary taxes, assessments or
charges made by any Governmental Authority by reason of the execution and
delivery of this Agreement.
(b) The Company agrees to indemnify the Administrative Agent,
each Bank, each of their Affiliates and each of the foregoing persons'
respective directors, officers, employees and agents (each such person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, charges and disbursements,
incurred by or asserted against any Indemnitee arising out of, in any way
connected with, or as a result of (i) the execution or delivery of this
Agreement or any instrument or agreement contemplated hereby, the
arrangement or syndication of the credit facilities provided for hereby,
performance by the parties hereto of their respective obligations hereunder
or the consummation of the transactions contemplated hereby, (ii) the use
of the proceeds of the Loans or (iii) any claim, litigation, investigation
or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; provided that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or wilful misconduct of such Indemnitee.
SECTION 9.06. Survival of Agreements, Representations and
Warranties, etc. All warranties, representations and covenants made by the
Company herein or in any certificate or other instrument delivered by it or
on its behalf in connection with this Agreement shall be considered to have
been relied upon by the Banks and shall survive the making of the Loans
herein contemplated and the issuance and delivery to the Banks of the Notes
regardless of any investigation made by the Banks or on their behalf and
shall continue in full force and effect so long as any amount due or to
become due hereunder is outstanding and unpaid and so long as the
Commitments have not been terminated. All statements in any such
certificate or other instrument shall constitute representations and
warranties by the Company hereunder.
SECTION 9.07. Governing Law. This Agreement and the Notes shall
be construed in accordance with and governed by the laws of the State of
New York.
SECTION 9.08. Sharing of Setoffs. If one or more Events of
Default shall occur, the holder of any Loan shall have the right, in
addition to and not in limitation of any right which any such holder may
have under applicable law or otherwise, to set off against the unpaid
balance of any Loan or Loans or participation therein held by it any debt
owing to the Company by such holder, including, without limitation, any
funds in any deposit account maintained by the Company with such holder,
and nothing in this Agreement shall be deemed a waiver or prohibition of
any Bank's right of banker's lien or setoff. Each holder of a Loan agrees
that, if it shall through the exercise of a right of banker's lien, setoff,
counterclaim or otherwise obtain payment (voluntary or involuntary) in
respect of any Loan or Loans as a result of which the unpaid principal
portion of its Loans shall be proportionately less than the unpaid
principal portion of the Loans of any other Bank, it shall be deemed to
have simultaneously purchased from such other holder a participation in the
Loan held by such other holder so that the aggregate unpaid principal
amount of the Loan or Loans and participations in Notes held by each holder
shall be in the same proportion to the aggregate unpaid principal amount of
all Loans then outstanding as the principal amount of such Loan held by it
prior to such exercise of banker's lien, setoff or counterclaim or receipt
of other payment was to the principal amount of all Loans outstanding prior
to such exercise of banker's lien, setoff or counterclaim or receipt of
other payment, and it shall promptly remit to each such holder the amount
of the participation thus deemed to have been purchased. The Company
expressly consents to the foregoing arrangements and agrees that any holder
of a participation in a Loan so acquired may exercise any and all rights of
banker's lien, setoff, counterclaim or otherwise with respect to any and
all moneys owing by such holder to the Company as fully as if such holder
were a holder of a Loan in the amount of such participation. If all or any
portion of any such excess payment is thereafter recovered from the holder
which received the same, the purchase provided for herein shall be deemed
to have been rescinded to the extent of such recovery, without interest.
SECTION 9.09. Interest Rate Limitation. Notwithstanding
anything herein or in the Notes to the contrary, if at any time the
applicable interest rate, together with all fees and charges which are
treated as interest under applicable law (collectively the "Charges"), as
provided for herein or in any other document executed in connection
herewith, or otherwise contracted for, charged, received, taken or reserved
by any Bank, shall exceed the maximum lawful rate (the "Maximum Rate")
which may be contracted for, charged, taken, received or reserved by such
Bank in accordance with applicable law, the rate of interest payable under
the Notes held by such Bank, together with all Charges payable to such
Bank, shall be limited to the Maximum Rate.
SECTION 9.10. Entire Agreement. This Agreement constitutes the
entire contract between the parties relative to the subject matter hereof.
Any previous agreement among the parties with respect to the subject matter
hereof is superseded by this Agreement. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party other than the
parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
SECTION 9.11. Waiver of Jury Trial. Each party hereto hereby
waives, to the fullest extent permitted by applicable law, any right it may
have to a trial by jury in respect of any litigation directly or indirectly
arising out of, under or in connection with this Agreement. Each party
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it and the other parties hereto have been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way
be affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but
all of which when taken together shall constitute but one contract, and
shall become effective as provided in Section 9.16.
SECTION 9.14. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process.
(a) The Company hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law. Nothing in
this Agreement shall affect any right that any Bank may otherwise have to
bring any action or proceeding relating to this Agreement against the
Company or its properties in the courts of any jurisdiction.
(b) The Company hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any
New York State or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in
any such court.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.01. Nothing in
this Agreement will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 9.16. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Company and the
Administrative Agent and when the Administrative Agent shall have received
copies hereof which, when taken together, bear the signatures of each Bank,
and thereafter shall be binding upon and inure to the benefit of the
Company, the Administrative Agent and each Bank and their respective
successors and assigns, except that the Company shall not have the right to
assign or delegate any of its rights or duties hereunder or any interest
herein without the prior consent of all the Banks.
SECTION 9.17. Effectiveness. This Agreement shall become
effective, and the obligations of the Company outstanding hereunder at the
time of such effectiveness shall be determined, as provided in Section 9.17
of the Pre-Spin-Off Credit Agreement (the date on which this Agreement
shall become effective being called the "Effective Date"). Notwithstanding
the foregoing, as of the Effective Date each Bank shall be deemed to have
made under this Agreement (a) its pro rata share of the Committed Loans
specified in the certificate of a Financial Officer of the Company and
Albemarle delivered pursuant to Section 9.17(a) of the Pre-Spin-Off Credit
Agreement (such certificate being called the "Officer's Certificate") and
(b) such Competitive Loans as are set forth opposite its name on the
Officer's Certificate, and the interest accrued on all such Loans under the
Pre-Spin-Off Credit Agreement shall be deemed to be accrued on such Loans
under this Agreement and shall become the obligation of the Company
hereunder. Each Loan deemed made under this Agreement shall be of the same
Type, shall have the same Interest Period as such Loan under the
Pre-Spin-Off Credit Agreement and shall bear interest from the Effective
Date as provided in Section 2.08 of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their duly authorized officers as of the day and
year first above written.
ETHYL CORPORATION,
by
/s/Charles B. Walker
Name: Charles B. Walker
Title: Executive Vice
President and
Chief Financial
Officer
CHEMICAL BANK,
acting individually and as
Administrative Agent,
by
/s/Laura E. Thorne
Name: Laura E. Thorne
Title: Vice President
NATIONSBANK OF NORTH CAROLINA, N.A., acting
individually and as Co-Agent,
by
/s/Robert Y. Bennett
Name: Robert Y. Bennett
Title: Vice President
THE BANK OF NEW YORK,
by
/s/Victoria Wohlsen
Name: Victoria Wohlsen
Title: Vice President
BANK BRUSSELS LAMBERT, NEW YORK BRANCH,
by
/s/Eric Hollanders
Name: Eric Hollanders
Title: Senior Vice
President, Credit
Department
by
/s/Craig Hallsteen
Name: Craig Hallsteen
Title: Vice President
CENTRAL FIDELITY NATIONAL BANK
by
/s/Harry A. Turton, Jr.
Name: Harry A. Turton, Jr.
Title: Vice President
CONTINENTAL BANK N.A.,
by
/s/Adam N. Balbach
Name: Adam N. Balbach
Title: Vice President
PHILADELPHIA NATIONAL BANK
(incorporated as Corestates
Bank, N.A.),
by
/s/James P. Richards
Name: James P. Richards
Title: Vice President
CREDIT LYONNAIS ATLANTA AGENCY,
by
/s/David M. Cawrse
Name: David M. Cawrse
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
by
/s/David M. Cawrse
Name: David M. Cawrse
Title: Authorized
Signature
CREDIT SUISSE,
by
/s/William P. Murray
Name: William P. Murray
Title: Member of Senior
Management
by
/s/Kristinn R. Kristinsson
Name: Kristinn R. Kristinsson
Title: Associate
CRESTAR BANK,
by
/s/Timothy J. Cecil
Name: Timothy J. Cecil
Title: Vice President
FIRST UNION NATIONAL BANK OF VIRGINIA,
by
/s/R. Lowndes Burke
Name: R. Lowndes Burke
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
by
/s/Philip A. Marsden
Name: Philip A. Marsden
Title: Deputy General
Manager
MELLON BANK, N.A.,
by
/s/Linda C. Carstens
Name: Linda C. Carstens
Title: Vice President
THE MITSUBISHI BANK, LTD.,
NEW YORK BRANCH,
by
/s/J. Bruce Meredith
Name: J. Bruce Meredith
Title: Senior Vice
President and
Manager
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
by
/s/Michael C. Mauer
Name: Michael C. Mauer
Title: Vice President
J.P. MORGAN DELAWARE,
by
/s/David J. Morris
Name: David J. Morris
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by
/s/Dale Robert Mason
Name: Dale Robert Mason
Title: Assistant Vice
President
ROYAL BANK OF CANADA,
by
/s/John M. Crawford
Name: John M. Crawford
Title: Senior Manager
SHAWMUT BANK, N.A.,
by
/s/Gary P. Kearns
Name: Gary P. Kearns
Title: Senior Vice
President
SIGNET BANK/VIRGINIA,
by
/s/Kevin W. Walsh
Name: Kevin W. Walsh
Title: Vice President
SOCIETE GENERALE,
by
/s/Salvatore Galatioto
Name: Salvatore Galatioto
Title: Vice President
SWISS BANK CORPORATION,
NEW YORK BRANCH,
by
/s/Edward J. McDonnell
Name: Edward J. McDonnell
Title: Associate Director,
Merchant Banking
by
/s/George W. Lambertson
Name: George W. Lambertson
Title: Associate Director,
Merchant Banking
TORONTO-DOMINION (NEW YORK), INC.,
by
/s/Warren Finlay
Name: Warren Finlay
Title: Vice President
WACHOVIA BANK OF NORTH CAROLINA, N.A.,
by
/s/Christopher L. Fincher
Name: Christopher L. Fincher
Title: Assistant Vice
President
<PAGE>
Schedule 2.01
to Credit Agreement
Lenders and Commitments
Lender Commitment
Chemical Bank $50,000,000
270 Park Avenue
New York, New York 10017
Attention: Laura Thorne
Telephone: (212) 270-7213
Telecopy: (212) 270-2122
NationsBank of North Carolina, N.A. 46,000,000
1111 East Main Street
4th Floor Pavilion
Richmond, VA 23227
Attention: Mr. Robert Y. Bennett
Telephone: (804) 788-3631
Telecopy: (804) 788-3669
The Bank of New York 29,000,000
1 Wall Street, 22nd Floor
New York, NY 10286
Attention: Ms. Vicky Wohlsen
Telephone: (212) 635-1456
Telecopy: (212) 635-6434
Bank Brussels Lambert, New York Branch 10,000,000
630 Fifth Avenue, 20th Floor
New York, NY 10111
Attention: Mr. Craig Halsteen
Telephone: (212) 632-5325
Telecopy: (212) 632-5308
Central Fidelity National Bank 10,000,000
1021 East Cary Street
Richmond, VA 23219
Attention: Mr. Harry Turton
Telephone: (804) 697-6801
Telecopy: (804) 697-6869
Continental Bank N.A. 29,000,000
950 East Paces Ferry Road, Suite 3375
Atlanta, GA 30326
Attention: Mr. Richard C. Wilson
Telephone: (404) 364-3300
Telecopy: (404) 364-3303
Philadelphia National Bank $10,000,000
FC1-1-82-25
Broad & Chestnut Streets
Philadelphia, PA 19101
Attention: Mr. James P. Richards
Telephone: (215) 973-7397
Telecopy: (215) 973-6745
Credit Lyonnais Atlanta Agency and 10,000,000
Credit Lyonnais Cayman Island Branch
1301 Avenue of the Americas, 10th Floor
New York, NY 10019
Attention: Mr. Ron Finn
Telephone: (212) 261-7050
Telecopy: (212) 459-3187
Credit Suisse 29,000,000
12 East 49th Street
New York, NY 10017
Attention: Mr. Kris Kristensson
Telephone: (212) 238-5206
Telecopy: (212) 238-5245
With a copy to:
Credit Suisse 29,000,000
191 Peachtree Street, Suite 3500
Atlanta, GA 30303
Attention: Mr. Myron P. Schmidt
Telephone: (404) 577-6100
Telecopy: (404) 577-9029
Crestar Bank 22,500,000
919 East Main Street
Richmond, VA 23219
Attention: Mr. Tim Cecil
Telephone: (804) 782-5998
Telecopy: (804) 782-5413
First Union Bank of Virginia 15,000,000
901 East Cary Street, 2nd Floor
Richmond, VA 23219
Attention: Mr. R. Lowndes Burke
Telephone: (804) 788-9732
Telecopy: (804) 788-9673
J.P. Morgan Delaware $11,250,000
902 Market Street
Wilmington, DE 19801
Attention: Mr. David J. Morris
Telephone: (302) 651-3788
Telecopy: (302) 654-5336
The Long-Term Credit Bank of Japan, 15,000,000
Limited, New York Branch
165 Broadway
New York, NY 10006
Attention: Mr. Philip A. Marsden
Telephone: (212) 335-4529
Telecopy: (212) 608-2371
Mellon Bank, N.A. 15,000,000
One Mellon Bank Center
Pittsburgh, PA 15258
Attention: Ms. Linda C. Carstens
Telephone: (412) 234-1898
Telecopy: (412) 234-8888
The Mitsubishi Bank, Ltd., New York Branch 10,000,000
225 Liberty Street, 39th Floor
New York, NY 10281
Attention: Mr. Bruce Meredith
Telephone: (212) 667-2883
Telecopy: (212) 667-3550
Morgan Guaranty Trust Company of New York 11,250,000
60 Wall Street, 22nd Floor
New York, NY 10260
Attention: Mr. David Common
Telephone: (212) 648-3319
Telecopy: (212) 648-5336
PNC Bank, National Association 29,000,000
Land Title Building
100 South Broad Street, 7th Floor
Philadelphia, PA 19110
Attention: Mr. Dale Mason
Telephone: (215) 585-5934
Telecopy: (215) 585-6037
Royal Bank of Canada 29,000,000
Grand Cayman (North America No. 1) Branch
c/o New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, New York 11201-2701
Attention: Manager, Loans Administration
Telephone: (212) 858-7168
Telecopy: (718) 522-6292/3
With a copy to:
Royal Bank of Canada 29,000,000
One Financial Square
New York, NY 10005-3531
Attention: Mr. John M. Crawford
Telephone: (212) 428-6261
Telecopy: (212) 428-6459
Shawmut Bank, N.A. 22,500,000
One Federal Street, OF-0324
Boston, MA 02211
Attention: Mr. Gary P. Kearns
Telephone: (617) 292-3469
Telecopy: (617) 292-2566
Signet Bank/Virginia 15,000,000
800 East Main Street
Richmond, VA 23219
Attention: Mr. Kevin Walsh
Telephone: (804) 771-7395
Telecopy: (804) 771-7151
Societe Generale 22,500,000
50 Rockefeller Plaza
New York, NY 10030
Attention: Mr. Brian Campbell
Telephone: (212) 830-7037
Telecopy: (212) 581-8752
Swiss Bank Corporation, New York Branch 29,000,000
222 Broadway
New York, NY 10008
Attention: Mr. George Lambertson
Telephone: (212) 574-4072
Telecopy: (212) 574-3852
Toronto-Dominion (New York), Inc. $15,000,000
909 Fannin
Houston, TX 77010
Attention: Ms. Diana Bailey
Telephone: (713) 653-8250
Telecopy: (713) 951-9921
Wachovia Bank of North Carolina, N.A. 15,000,000
301 North Main Street
Winston-Salem, NC 27150
Attention: Mr. Christopher L. Fincher
Telephone: (910) 770-6609
Telecopy: (910) 770-6935
<PAGE>
Schedule 3.07
Litigation
None.
<PAGE>
Schedule 3.15
Environmental and Safety Matters
Ethyl Corporation
1. Louisiana Department of Environmental Quality (La. DEQ), Penalty
Assessment, Docket No. GWP-88-003, Penalty Assessment dated May 5,
1988, regarding alleged violation of RCRA groundwater monitoring
requirements, decision dated January 29, 1990 assessing penalty of
$8,111, affirmed by Secretary on August 31, 1991, and appealed to
Louisiana First Circuit Court of Appeal, where the appeal is pending.
2. La. DEQ Penalty Assessment HEP-89-784, issued November 30, 1989, seeks
penalty of $38,000 in regard to alleged violations of RCRA, and is
under administrative appeal.
3. La. DEQ Penalty Assessment HEP-91-0339, issued August 15, 1991, seeks
$15,000 penalty in regard to alleged violations of RCRA, and is under
administrative appeal.
4. La. DEQ Penalty Assessment HEP-90-0644, issued November 17, 1992,
seeks $51,183 in regard to alleged violations of RCRA, and is under
administrative appeal.
<PAGE>
Schedule 6.01
Liens
None.
<PAGE>
EXHIBIT A-1
FORM OF
COMPETITIVE BID REQUEST
Chemical Bank, as Administrative Agent for
the Banks referred to below,
270 Park Avenue
New York, NY 10017
[Date]
Attention: Laura Thorne
Ladies and Gentlemen:
The undersigned, Ethyl Corporation, a Virginia corporation (the
"Company"), refers to the Competitive Advance and Revolving Credit Facility
Agreement dated as of February 16, 1994 (as amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Company, the
Banks party thereto, Chemical Bank, as Administrative Agent, and
NationsBank of North Carolina, N.A., as Co-Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The Company hereby gives you notice
pursuant to Section 2.03(a) of the Credit Agreement that it requests a
Competitive Borrowing under the Credit Agreement, and in that connection
sets forth below the terms on which such Competitive Borrowing is requested
to be made:
(A) Interest Rate Basis 1/ _______ _______ _______
(B) Date of Competitive Borrowing
(which is a Business Day) _______ _______ _______
(C) Interest Period and the last
day thereof 2/ _______ _______ _______
(D) Principal Amount of
Competitive Borrowing 3/ $_______ $______ $______
Upon acceptance of any or all of the Loans offered by the
Banks in response to this request, the Company shall be deemed to affirm as
of such date the representations and warranties made in the Credit
Agreement to the extent specified in Article IV thereof.
Very truly yours,
ETHYL CORPORATION,
by
____________________________
Title: [Responsible Officer]
Copy to:
Chemical Bank Agency Services Corporation
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: Janet Belden
- ---------------
1/ Eurodollar Competitive Loan or Fixed Rate Loan.
2/ Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
3/ Not less than $5,000,000 and in integral multiples thereof.
<PAGE>
EXHIBIT A-2
FORM OF
COMPETITIVE BID INVITATION
[Name of Bank]
[Address]
[Date]
Ladies and Gentlemen:
Reference is made to the Competitive Advance and Revolving Credit
Facility Agreement dated as of February 16, 1994 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among
Ethyl Corporation, a Virginia corporation (the "Company"), the Banks party
thereto, Chemical Bank, as Administrative Agent, and NationsBank of North
Carolina, N.A., as Co-Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in
the Credit Agreement. The Company made a Competitive Bid Request on
, 19 , pursuant to Section 2.03(a) of the Credit Agreement, and in that
connection you are invited to submit a Competitive Bid by [Date]/[Time]. 1/
Your Competitive Bid must comply with Section 2.03(b) of the Credit
Agreement and the terms set forth below on which the Competitive Bid
Request was made:
(A) Interest Rate Basis ____________
(B) Date of Competitive Borrowing ____________
(C) Interest Period and the last
day thereof ____________
(D) Principal Amount of
Competitive Borrowing $____________
Very truly yours,
CHEMICAL BANK, as
Administrative Agent,
by
____________________________
Title:
- ------------------
1/ The Competitive Bid must be received by the Administrative Agent (i) in
the case of Eurodollar Competitive Loans, not later than 9:30 a.m., New
York City time, three Business Days before a proposed Competitive
Borrowing, and (ii) in the case of Fixed Rate Loans, no later than 9:30
a.m., New York City time, on the Business Day of a proposed Competitive
Borrowing.
<PAGE>
EXHIBIT A-3
FORM OF
COMPETITIVE BID
Chemical Bank, as Administrative Agent
for the Banks referred to below,
270 Park Avenue
New York, NY 10017
[Date]
Attention: Laura Thorne
Ladies and Gentlemen:
The undersigned, [Name of Bank], refers to the Competitive Advance and
Revolving Credit Facility Agreement dated as of February 16, 1994 (as
amended, modified, extended or restated from time to time, the "Credit
Agreement"), among Ethyl Corporation, a Virginia corporation (the
"Company"), the Banks party thereto, Chemical Bank, as Administrative
Agent, and NationsBank of North Carolina, N.A., as Co-Agent. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement. The undersigned hereby
makes a Competitive Bid pursuant to Section 2.03(b) of the Credit Agree-
ment, in response to the Competitive Bid Request made by the Company on
, 19 , and in that connection sets forth below the terms on which such
Competitive Bid is made:
(A) Interest Period and last
day thereof ______ _______ _______
(B) Principal Amount 1/ $______ $_______ $_______
(C) Competitive Bid Rate 2/ ______ _______ _______
The undersigned hereby confirms that it is prepared, subject to the
conditions set forth in the Credit Agreement, to extend credit to the
Company upon acceptance by the Company of this bid in accordance with
Section 2.03(d) of the Credit Agreement.
Very truly yours,
[NAME OF BANK],
by
________________________________
Title:
Copy to:
Chemical Bank Agency Services Corporation
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: Janet Belden
- -------------------------
1/ Not less than $5,000,000 or greater than the requested Competitive
Borrowing and in integral multiples of $5,000,000. Multiple bids will be
accepted by the Administrative Agent.
2/ i.e., LIBOR + or - %, in the case of Eurodollar Competitive Loans or
%, in the case of Fixed Rate Loans.
<PAGE>
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
[Date]
Chemical Bank, as Administrative Agent
for the Banks referred to below
270 Park Avenue
New York, NY 10017
Attention: Laura Thorne
Ladies and Gentlemen:
The undersigned, Ethyl Corporation (the "Company"), refers to the
Competitive Advance and Revolving Credit Facility Agreement dated as of
February 16, 1994 (as amended, modified, extended or restated from time to
time, the "Credit Agreement"), among the Company, the Banks party thereto,
Chemical Bank, as Administrative Agent, and NationsBank of North Carolina,
N.A., as Co-Agent.
In accordance with Section 2.03(c) of the Credit Agreement, we have
received a summary of bids in connection with our Competitive Bid Request
dated ___________ and in accordance with Section 2.03(d) of the Credit
Agreement, we hereby accept the following bids for maturity on [date]:
Principal Amount Fixed Rate/Margin Bank
$ [%]/[+/-. %]
$
We hereby reject the following bids:
Principal Amount Fixed Rate/Margin Bank
$ [%]/[+/-. %]
$
The $ should be deposited in Chemical Bank account number
[ ] on [date].
Very truly yours,
ETHYL CORPORATION,
by
Name:
Title:
<PAGE>
EXHIBIT A-5
FORM OF
COMMITTED BORROWING REQUEST
Chemical Bank, as Administrative Agent
for the Banks referred to below,
270 Park Avenue
New York, NY 10017
[Date]
Attention: Laura Thorne
Ladies and Gentlemen:
The undersigned, Ethyl Corporation, a Virginia corporation (the "Company"),
refers to the Competitive Advance and Revolving Credit Facility Agreement
dated as of February 16, 1994 (as amended, modified, extended or restated
from time to time, the "Credit Agreement"), among the Company, the Banks
party thereto, Chemical Bank, as Administrative Agent, and NationsBank of
North Carolina, N.A., as Co-Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in
the Credit Agreement. The Company hereby gives you notice pursuant to
Section 2.04 of the Credit Agreement that it requests a Committed Borrowing
under the Credit Agreement, and in that connection sets forth below the
terms on which such Committed Borrowing is requested to be made:
(A) Date of Committed Borrowing
(which is a Business Day) _________________________________
(B) Principal Amount of
Committed Borrowing 1/ $_________________________________
(C) Interest rate basis 2/ _________________________________
(D) Interest Period and the
last day thereof 3/ _________________________________
Upon acceptance of any or all of the Loans made by the Banks in
response to this request, the Company shall be deemed to have represented
and warranted (but only to the extent required by Section 4.01 of the
Credit Agreement) that the conditions to lending specified in Sec-
tion 4.01(b) and (c) of the Credit Agreement have been satisfied.
Very truly yours,
ETHYL CORPORATION,
by
___________________________
Title: [Responsible Officer]
Copy to:
Chemical Bank Agency Services Corporation
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: Ed Cruz
- ----------------
1/ Not less than $10,000,000 and in integral multiples of $1,000,000.
2/ Eurodollar Loan or ABR Loan.
3/ Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
<PAGE>
EXHIBIT B-1
FORM OF COMPETITIVE NOTE
$[ ] New York, New York
[ ]
FOR VALUE RECEIVED, the undersigned, ETHYL CORPORATION, a Virginia
corporation (the "Company"), hereby promises to pay to the order of
[ ] (the "Bank"), at the office of Chemical Bank (the "Agent"), at
270 Park Avenue, New York, New York 10017, (i) on the last day of each
Interest Period as defined in the Competitive Advance and Revolving Credit
Facility Agreement dated as of February 16, 1994, among the Company, the
Banks party thereto, the Agent and NationsBank of North Carolina, N.A., as
Co-Agent (as amended, modified, extended or restated from time to time, the
"Credit Agreement"), the aggregate unpaid principal amount of all
Competitive Loans made by the Bank to the Company pursuant to Section 2.03
of the Credit Agreement to which such Interest Period applies and (ii) on
the Maturity Date (as defined in the Credit Agreement), the lesser of the
principal sum of [ ] Dollars ($[ ]) and the aggregate
unpaid principal amount of all Competitive Loans made by the Bank to the
Company pursuant to Section 2.03 of the Credit Agreement, in lawful money
of the United States of America in immediately available funds, and to pay
interest from the date hereof on such principal amount from time to time
outstanding, in like funds, at said office, at the rate or rates per annum
and payable on the dates determined pursuant to the Credit Agreement.
The Company promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their
due dates at the rate or rates determined as set forth in the Credit
Agreement.
The Company hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Competitive Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule
attached hereto and made a part hereof, or on a continuation thereof which
shall be attached hereto and made a part hereof, or otherwise recorded by
such holder in its internal records; provided, however, that the failure of
the holder hereof to make such a notation or any error in such a notation
shall not in any manner affect the obligations of the Company to make
payments of principal and interest in accordance with the terms of this
Competitive Note and the Credit Agreement.
This Competitive Note is one of the Competitive Notes referred to in
the Credit Agreement which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events,
for prepayment of the principal hereof prior to the maturity thereof under
certain circumstances and for the amendment or waiver of certain provisions
of the Credit Agreement, all upon the terms and conditions therein
specified. This Competitive Note shall be construed in accordance with and
governed by the laws of the State of New York and any applicable laws of
the United States of America.
ETHYL CORPORATION,
by
_________________________
Name:
Title:
<PAGE>
Loans and Payments
Unpaid Name of
Payments Principal Person
Amount Interest Interest Balance of Making
Date of Loan Rate Period Principal Interest Note Notation
<PAGE>
EXHIBIT B-2
FORM OF COMMITTED NOTE
$ New York, New York
[ ]
FOR VALUE RECEIVED, the undersigned, ETHYL CORPORATION, a Virginia
corporation (the "Company"), hereby promises to pay to the order of
(the "Bank"), at the office of Chemical Bank (the "Agent"), at
270 Park Avenue, New York, New York 10017, on (i) the last day of each Interest
Period as defined in the Competitive Advance and Revolving Credit Facility
Agreement dated as of February 16, 1994, among the Company, the Banks party
thereto, the Agent and NationsBank of North Carolina, N.A., as Co-Agent (as
amended, modified, extended or restated from time to time, the "Credit
Agreement"), the aggregate unpaid principal amount of all Committed Loans made
by the Bank to the Company pursuant to Sections 2.02 and 2.04 of the Credit
Agreement to which such Interest Period applies and (ii) the Maturity Date, the
lesser of the principal sum of Dollars ($ ) and
the aggregate unpaid principal amount of all Committed Loans made by the
Bank to the Company pursuant to Sections 2.02 and 2.04 of the Credit
Agreement, in lawful money of the United States of America in immediately
available funds, and to pay interest from the date hereof on such principal
amount from time to time outstanding, in like funds, at said office, at a
rate or rates per annum and payable on the dates determined pursuant to the
Credit Agreement.
The Company promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their
due dates at the rate or rates determined as set forth in the Credit
Agreement.
The Company hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Committed Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule
attached hereto and made a part hereof, or on a continuation thereof which
shall be attached hereto and made a part hereof, or otherwise recorded by
such holder in its internal records; provided, however, that the failure of
the holder hereof to make such a notation or any error in such a notation
shall not in any manner affect the obligations of the Company to make
payments of principal and interest in accordance with the terms of this
Committed Note and the Credit Agreement.
This Committed Note is one of the Committed Notes referred to in the
Credit Agreement which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events,
for prepayment of the principal hereof prior to the maturity thereof and
for the amendment or waiver of certain provisions of the Credit Agreement,
all upon the terms and conditions therein specified. This Committed Note
shall be construed in accordance with and governed by the laws of the State
of New York and any applicable laws of the United States of America.
ETHYL CORPORATION,
by
_________________________
Name:
Title:
<PAGE>
Loans and Payments
Unpaid Name of
Payments Principal Person
Amount Type of Interest Balance of Making
Date of Loan Loan Period Principal Interest Note Notation
<PAGE>
EXHIBIT C
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Competitive Advance and Revolving Credit
Facility Agreement dated as of February 16, 1994, (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among
Ethyl Corporation, a Virginia corporation (the "Company"), the Banks party
thereto (the "Banks"), Chemical Bank, as administrative agent for the Banks
(in such capacity, the "Administrative Agent") and NationsBank of North
Carolina, N.A., as Co-Agent. Terms defined in the Credit Agreement are
used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse,
from the Assignor, effective as of the Effective Date set forth on the
following page, the interests set forth on the following page (the
"Assigned Interest") in the Assignor's rights and obligations under the
Credit Agreement, including, without limitation, the interests set forth on
the following page in the Commitment of the Assignor on the Effective Date
and the Loans owing to the Assignor which are outstanding on the Effective
Date, together with unpaid interest accrued on the assigned Loans to the
Effective Date and the amount, if any, set forth on the following page of
the Fees accrued to the Effective Date for the account of the Assignor.
Each of the Assignor and the Assignee hereby makes and agrees to be bound
by all the representations, warranties and agreements set forth in
Section 9.04(c) of the Credit Agreement, a copy of which has been received
by each such party. From and after the Effective Date (i) the Assignee
shall be a party to and be bound by the provisions of the Credit Agreement
and, to the extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and under
the Credit Agreement or any other document issued in connection therewith
and (ii) the Assignor shall, to the extent of the interests assigned by
this Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the Agent
together with (i) the Notes evidencing the Loans included in the Assigned
Interest, (ii) if the Assignee is organized under the laws of a
jurisdiction outside the United States, the forms prescribed by the
Internal Revenue Service of the United States certifying as to the
Assignee's exemption from withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement or such other documents
as are necessary to indicate that all such payments are subject to such tax
at a rate reduced by an applicable tax treaty, all duly completed and
executed by such Assignee, (iii) if the Assignee is not already a Bank
under the Credit Agreement, an Administrative Questionnaire and (iv) a
processing and recordation fee of $3,000.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
Percentage Assigned
of Facility and
Commitment (set
forth, to at
least 8 decimals,
Principal Amount Assigned as a percentage of
(and Identifying the Facility and
information as to aggregate Commit-
individual Competitive ments of all Banks
Facility Loans therunder)
Commitment Assigned: $ %
Committed Loans: $ %
Competitive Loans: $ %
Fees Assigned (if any): $ %
The terms set forth above and
on the preceding page are
hereby agreed to: [Accepted
________________, as Assignor CHEMICAL BANK, as Administrative Agent
By:________________________ By:________________________
Name: Name:
Title: Title:
_______________, as Assignee ETHYL CORPORATION,
By:________________________ By:________________________
Name: Name:
Title: Title: ]
<PAGE>
EXHIBIT D
ADMINISTRATIVE QUESTIONNAIRE
ETHYL CORPORATION
Please accurately complete the following information and return via FAX to
the attention of Janet Belden at Chemical Bank Agency Services Corporation
as soon as possible.
FAX Number: 212-622-0854
LEGAL NAME OF YOUR INSTITUTION TO APPEAR IN DOCUMENTATION:
GENERAL INFORMATION - DOMESTIC RATE LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
CREDIT CONTACTS/NOTIFICATION METHODS:
Primary Contact:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
Backup Credit Contact:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
TAX WITHHOLDING:
UNITED STATES
Non-Resident Alien or Foreign Corporation or Other Foreign Entity
__________ YES __________ NO
If yes, please enclose Form 4224, 1001 or W-8. If no, please enclose
Form W-9.
Tax ID Number _________________________________
CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST, FEES, ETC.
Contact:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
Telex & Answer Back:
PAYMENT INSTRUCTIONS:
Name of Bank where funds are to be transferred:
Routing Transit/ABA number of Bank where funds are to be transferred:
Name of Account, if applicable:
Account Number:
Additional Information:
BID LOAN NOTIFICATIONS:
Contact:
Street Address:
City, State, Zip Code:
Phone Number:
Fax Number:
MAILINGS:
Please specify who should receive financial information:
Name:
Street Address:
City, State, Zip Code:
It is very important that all of the above information is accurately filled
in and returned promptly. If there is someone other than yourself who
should receive this questionnaire, please notify us of their name and FAX
number and we will FAX them a copy of the questionnaire. If you have any
questions, please call Lascelles Thompson at 212-622-8738, telecopy 212-
622-0854.
<PAGE>
EXHIBIT G
CERTIFICATE
Reference is made to Section 9.17(a) of the Competitive Advance and
Revolving Credit Facility Agreement dated as of February 16, 1994, among
Ethyl Corporation (the "Company"), the financial institutions listed on
Schedule 2.01 thereto (the "Banks"), and Chemical Bank, as administrative
agent for the Banks (in such capacity, the "Agent"). Capitalized terms
used herein but not defined herein shall have the meanings assigned to such
terms in the Credit Agreement.
Pursuant to Section 9.17(a)(iii) of the Credit Agreement, I,
[Financial Officer], [title] of the Company, hereby certify that the
following information with respect to the Loans made to the Company under
the Credit Agreement is true and correct:
1. As of the date hereof, there are $[ ] of Committed Loans
outstanding under the Credit Agreement. $[ ] of such Committed
Loans as set forth in the table below are to become outstanding Loans for
the account of Albemarle under the Albemarle Credit Agreement in
consideration of the transfer by the Company of certain assets to Albemarle
in connection with the Spin-Off. $[ ] of such Committed Loans as
set forth in the table below are to become outstanding Loans for the
account of the Company under the Post-Spin-Off Ethyl Credit Agreement.
Ethyl Committed Loans:
Principal Amount Date of Loan Type of Loan Interest Period
Albemarle Committed Loans:
Principal Amount Date of Loan Type of Loan Interest Period
2. As of the date hereof, there are $[ ] of Competitive Loans
outstanding under the Credit Agreement. The following table sets forth the
allocation of the aggregate principal amount of Competitive Loans
outstanding to each Bank under the Post-Spin-Off Credit Agreements on the
same basis as in paragraph 1 above:
Ethyl Competitive Loans:
Principal Amount Date of Loan Type of Loan Interest Period
Albemarle Competitive Loans:
Principal Amount Date of Loan Type of Loan Interest Period
IN WITNESS WHEREOF, I have hereunto set my name this [ ] day of
[ ], 1994.
ETHYL CORPORATION,
By
Name:
Title:
ALBEMARLE CORPORATION,
By
Name:
Title:
EXHIBIT 11
ETHYL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
for the years ended December 31, 1993, 1992 and 1991
(In thousands except per share amounts)
1993 1992 1991
---- ---- ----
Income from continuing operations before
extraordinary item and cumulative
effect of accounting changes $90,022 $107,245 $94,052
Extraordinary item (5,000) - -
Cumulative effect of accounting
changes - (14,732) -
------- -------- -------
Income from continuing operations 85,022 92,513 94,052
Income from discontinued insurance
operation 90,483 162,472 112,616
------- -------- -------
Net income 175,505 254,985 206,668
Less preferred stock dividends
First Preferred:
6% Series A, $6.00 per share (12) (12) (12)
------- -------- -------
Net income applicable to
common stock $175,493 $254,973 $206,656
======== ======== ========
Average number of shares of
common stock outstanding 118,382 118,329 118,322
Shares issuable upon the
assumed exercise of out-
standing stock options (1) 54 51 58
------- -------- -------
Shares of common stock and
common stock equivalents (1) (2) 118,436 118,380 118,380
Earnings per share: (3)
Income from continuing operations
before extraordinary item and
cumulative effect of accounting $0.76 $0.90 $0.80
changes
Extraordinary item (0.04) - -
Cumulative effect of accounting
changes - (0.12) -
------- -------- -------
Income from continuing operations 0.72 0.78 0.80
Income from discontinued insurance
operation 0.76 1.37 0.95
------- -------- -------
Net income (3) $1.48 $2.15 $1.75
======= ======== =======
Note:
(1) For fully-diluted earnings per share, the shares issuable upon the
assumed exercise of outstanding stock options would be 58, 57, and
68 in 1993, 1992, and 1991, respectively, and the shares of common
stock and common stock equivalents would have been 118,440, 118,386,
and 118,390, respectively.
(2) To determine the average number of shares of common stock and
common stock equivalents, the average number of common shares
and common stock equivalents outstanding (actual or assumed
for equivalents) during each month were added together and the
sum was then divided by 12.
(3) Primary earnings per share and fully-diluted earnings per share are
the same amounts.
Exhibit 13
ANNUAL REPORT
<TABLE>
FIVE - YEAR SUMMARY
(In Thousands Except Per-Share Amounts)
Years Ended December 31 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Results of Operations(1)
Net sales $1,938,390 $1,692,582 $1,534,571 $1,590,940 $1,519,637
Costs and expenses 1,734,635 1,509,260 1,330,721 1,348,736 1,272,824
Special charges(2) 36,150 9,500 11,185 48,710 -
Operating profit 167,605 173,822 192,665 193,494 246,813
Interest and financing expenses 44,085 62,279 59,097 64,839 61,159
Special items:
Gain on sale of 20% of First Colony
Corporation(3) - (93,600) - - -
Gain on sale of subsidiary(4) - - - (78,993) -
Other income, net (9,987) (1,475) (1,652) (8,110) (11,649)
Income from continuing operations before
income taxes and extraordinary item and
cumulative effect of accounting changes 133,507 206,618 135,220 215,758 197,303
Income taxes 43,485 99,373 41,168 79,331 62,133
Income from continuing operations
before extraordinary item and
cumulative effect of accounting
changes 90,022 107,245 94,052 136,427 135,170
Extraordinary after-tax charge due to early
extinguishment of debt(5) (5,000) - - - -
Cumulative effect of accounting changes for:(6)
Postretirement health benefits (net of tax - (34,348) - - -
Deferred income taxes - 19,616 - - -
Income from continuing operations 85,022 92,513 94,052 136,427 135,170
Income from discontinued operations 90,483 162,472 112,616 95,762 96,162
Net income $ 175,505 $ 254,985 $ 206,668 $ 232,189 $ 231,332
Financial Position and Other Data(1)
Total assets - continuing operations $2,009,198 $1,878,898 $1,570,505 $1,385,643 $1,242,754
Net assets of discontinued operations - 658,550 909,876 775,523 706,595
Total $2,009,198 $2,537,448 $2,480,381 $2,161,166 $1,949,349
Continuing Operations:
Working capital $ 407,182 $ 327,840 $ 318,716 $ 277,289 $ 268,312
Current ratio 2.25 to 1 1.71 to 1 2.25 to 1 2.12 to 1 2.28 to 1
Depreciation and amortization $ 127,456 $ 105,765 $ 89,879 $ 88,522 $ 81,683
Capital expenditures 205,029 157,412 166,148 151,822 119,082
Acquisitions of businesses 125,431 136,50 24,035 61,575 33,563
Gross margin as a % of net sales 28.5 29.2 31.9 31.6 31.2
Research and development expenses $ 75,624 $ 73,831 $ 69,119 $ 65,186 $ 61,229
Long-term debt(7) 686,986 711,736 810,849 683,829 497,181
Redeemable preferred stock 200 200 200 214 215
Common and other shareholders' equity 752,581 1,401,279 1,219,313 1,047,606 901,299
Long-term debt as a % of total
capitalization(7) 47.7 33.7 39.9 39.5 35.5
Net Income as a % of shareholders' equity 16.3 19.5 18.2 23.8 22.8
Common Stock
Earnings per share:
Income from continuing operations before
extraordinary item and cumulative effect
of accounting changes $ .76 $ .90 $ .80 $ 1.15 $ 1.13
Extraordinary item (.04) - - - -
Cumulative effect of accounting changes - (.12) - - -
Income from continuing operations .72 .78 .80 1.15 1.13
Income from discontinued operations .76 1.37 .95 .80 .80
Net income $ 1.48 $ 2.15 $ 1.75 $ 1.95 $ 1.93
Shares used to compute earnings per share 118,436 118,380 118,380 119,309 120,038
Dividends per share:
Cash dividends declared:
Regular $ .60 $ .60 $ .60 $ .60 $ .51
Special - - - - 1.50
Subtotal .60 .60 .60 .60 2.01
Dividend of common stock of First
Colony Corporation, at book value 5.72 - - - -
Dividend of common stock of Tredegar
Industries, Inc., at book value - - - - 1.54
Total $ 6.32 $ .60 $ .60 $ .60 $ 3.55
Equity per share(8) $ 6.36 $ 11.84 $ 10.31 $ 8.85 $ 7.53
</TABLE>
(1) The results and net assets of the Insurance segment spun off in mid-1993
and the Aluminum, Plastics and Energy businesses spun off in mid-1989 are
reported as discontinued operations. Certain amounts have been
restated/reclassified to conform to the current presentation.
(2) Includes the 1993 writedown of the Canadian plant and other related costs
of $14,200, costs of work-force reductions in the U.S. and Europe
amounting to $7,635, and $14,315 for downsizing cost of Whitby Research,
Inc., and relocation of employees and other related costs ($22,400 after
income taxes); 1992 includes charges for the 1994 relocation of the
Petroleum Additives Division R&D personnel ($6,000 after taxes); 1991
includes expenses and write-offs of $6,350 resulting from the
discontinuance of certain developmental research programs and expenses
of $4,835 covering the mid-1992 relocation of the Petroleum Additives
Division headquarters ($7,000 after income taxes); 1990 includes mainly
the write-off of goodwill and provisions for relocation expenses of
Whitby, Inc., and for environmental remediation projects at certain
chemical facilities ($42,441 after income taxes).
(3) Results from the December 1992 sale of approximately 20% of First Colony
Corporation stock ($30,200 after income taxes).
(4) Resulted from the 1990 sale of Hardwicke Chemical Company ($50,765 after
income taxes).
(5) The extraordinary after-tax charge is the result of the early redemption
of the $116,250, 9 3/8% Sinking Fund Debentures, net of income taxes of
$3,000.
(6) Change in accounting for postretirement health benefits ($54,460 before
income taxes) and deferred income taxes in accordance with FASB
Statements No. 106 and 109, respectively, adopted effective January 1,
1992.
(7) Long-term debt in 1992 includes $250 million of debt of First Colony
Corporation spun off July 1, 1993; excluding the debt and net assets of
discontinued operations at December 31, 1992, the consolidated debt-to-
total-capitalization ratio of the continuing operation would be 38.3%.
(8) Based on the number of common shares outstanding at the end of each year.
The decline in 1993 reflects the dividend of common stock of First Colony
Corporation of $5.72 per share at book value.
<PAGE>
1993 FINANCIAL REVIEW
In the financial data and discussion, the accounts and operations of the
Chemicals segment and Corporate activities are reported under the caption
"Chemicals." On July 1, 1993, the Company completed the spin-off of its
approximate 80% interest in First Colony Corporation (First Colony), which
included the operations of First Colony Life Insurance Company and
subsidiaries. Consequently, the accounts and operations of the Insurance
segment are reported as "Discontinued Insurance Operation."
The Company has scheduled a spin-off to Ethyl's shareholders of its Chemicals
Businesses, which include the Olefins and Derivatives Division, the Bromine
Chemicals Division and the Specialty Chemicals Division. The Internal
Revenue Service has acted favorably on the requested determination that the
spin-off will be tax-free to Ethyl and its shareholders. A Form 10 has been
filed with the Securities and Exchange Commission, and an Information
Statement was mailed to Ethyl shareholders. The spin-off transaction is
scheduled to be completed on February 28, 1994. The impact of the spin-off
has not been reflected in the financial information being presented, but pro
forma disclosures are included in the Notes to Financial Statements.
Results of Operations:
1993 Compared to 1992
Net Sales
Net sales for 1993 increased $245.8 million (15%) from 1992. The increase
primarily reflected acquisition of Amoco's petroleum additives business in
June 1992, a lubricant additives business in Japan at the end of 1992 and the
organic and inorganic brominated compounds business of Potasse et Produits
Chimiques (PPC) in February 1993. Additional increases were due to higher
shipments of linear and poly alpha olefins and zeolites, partially offset by
lower selling prices. Shipments of flame retardants and pharmaceutical
products also were higher. Revenues from lead antiknocks were down due to
lower shipments, as expected, partly offset by higher selling prices.
Costs & Expenses
Cost of goods sold in 1993 increased $187.2 million (16%), primarily
due to increased shipments, mainly reflecting the impact of acquisitions in
1992 and 1993 (discussed earlier).
Other significant factors were higher operating costs (including depreciation
of the new linear alpha olefin facility) due to low capacity utilization at
the Feluy, Belgium, and Houston, Texas, olefin manufacturing facilities and
higher maintenance and repair expenses ($96.9 million in 1993 versus $83.5
million in 1992) resulting partly from scheduled plant turnarounds at Feluy
and Houston and higher environmental operating costs. These items were partly
offset by slightly lower per-unit raw material costs, the nonrecurrence of
$12.7 million of start-up costs in 1992 at Ethyl's new linear alpha olefin
facility in Feluy and a favorable foreign-exchange effect. In addition, lead
antiknock product costs were lower because of product source (a higher
<PAGE>
percentage of lower-cost, self-produced product was sold in 1993 than in
1992, when a larger quantity and higher percentage of purchased material was
sold).
Average raw material costs decreased during 1993 from 1992. Ethylene, process
oil, aluminum metal, 2-ethyl-1-hexanol and isobutylene costs were lower.
Polybutene costs were higher. Average energy unit costs were mixed. Natural
gas prices were higher in 1993 than in the prior year, but electricity costs
were lower.
Gross profit margin decreased to 28.5% in 1993 from 29.2% in 1992 primarily
due to continuing high costs at the olefin manufacturing facilities due to
low capacity utilization caused by continuing excess capacity in the
marketplace, a situation likely to continue into 1994. The decline in the
gross profit margin also reflected the impact of low profit margins from the
PPC operations, which reflected the ongoing recession in Europe that
continues in 1994.
Selling, general and administrative expenses combined with research-and-
development expenses increased 12% in 1993 over 1992. The 1993 increase
reflected the impact of the PPC and petroleum additives acquisitions, higher
employee-related expenses, higher expenses for outside consulting and
testing costs and increased technical services expenses, partially offset by
the favorable effect of foreign exchange rates and the recovery of prior
years' legal fees resulting from settlement of a lawsuit in 1993. The
additional technical services expenses are due mainly to changes in the
lubricant additives market and the efforts to integrate the lubricant
additives products and technologies acquired from Amoco in 1992.
Selling, general and administrative and research-and-development expenses as
a percentage of net sales decreased slightly to 18% in 1993 from 18.3% in
1992.
Special Charges
Special charges in 1993 amounted to $36.1 million, while 1992 had special
charges of $9.5 million. The 1993 special charges include the provisions for
corporate downsizing, plant write-down and related costs amounting to $36.1
million ($22.4 million after income taxes, or $.19 per share). The major
components included $14.2 million related to ceasing production at the
Canadian antiknock facility, including plant write-down and other related
costs, $14.3 million for downsizing costs of Whitby Reasearch, Inc.,
relocation of employees and other related costs as well as $7.6 million for
work-force reductions in the U.S. and Europe. The early-retirement and work-
force-reduction program is expected to result in annual after-tax savings of
about $12 million.
In 1992 special charges were $9.5 million ($6 million after income taxes, or
$.05 per share) for estimated relocation and related expenses in connection
with the planned transfer of Petroleum Additives Division R&D personnel from
St. Louis, Missouri, to Richmond, Virginia, when new research facilities are
completed in mid-1994.
<PAGE>
Operating Profit
Operating profit in 1993 decreased 4% from 1992. However, 1993 included
special charges of $36.1 million (discussed earlier), while1992 included a
special charge of $9.5 million (also discussed earlier). Excluding the effects
of these special charges, 1993 operating profit increased 11% from 1992. The
increase was due to higher lubricant additives profit mainly reflecting the
increased 1993 volumes resulting from 1992 acquisitions, partly offset by higher
operating costs resulting from an inventory-reduction program; higher antiknock
profit mainly reflecting lower product costs; higher profit from fuel additives
other than antiknocks, primarily due to higher shipments partly resulting from
1992 acquisitions; improved poly alpha olefin results reflecting higher
shipments and operating margins; and higher zeolite profit due mainly to
additional volume and a favorable foreign-exchange impact. Partly offsetting
factors were lower linear alpha olefin profit due to higher operating costs
offset in part by higher shipments; lower alcohols profit due to lower ship-
ments and margins; lower bromine chemicals profit due to lower selling prices
and higher product costs; and lower pharmaceutical intermediates profit
primarily due to lower margins offset in part by higher shipments.
Interest & Financing Expenses
Interest and financing expenses in 1993 decreased $18.2 million (29%) from
1992 due to lower average outstanding long-term debt and slightly lower
average interest rates in 1993.
Other Income, Net
Other income, net, increased to $10 million from $1.5 million in 1992
primarily due to a gain of about $5.9 million on the sale in 1993 of a
financial services subsidiary. Also, 1992 results reflected losses on non-
operating assets that did not recur in 1993.
Income Taxes
Income tax expense in 1993 decreased 56% from 1992, reflecting a 35%
reduction in income from continuing operations before income taxes and
extraordinary item and the cumulative effect of accounting changes as well as
a lower effective income tax rate (32.6% in 1993 versus 48.1% in 1992). The
1993 rate reflected a deferred tax benefit to be realized in 1994 in
connection with the downsizing of Whitby Research in addition to other
favorable tax credits, which were partly offset by (1) the absence of a tax
benefit on significant operating losses of the Company's Belgian subsidiary,
(2) a nonrecurring deferred tax charge required by Financial Accounting
Standards Board (FASB) Statement No. 109, and (3) additional taxes on the
first-half 1993 earnings of the spun-off insurance business resulting from
federal income tax legislation, which increased the income tax rate
retroactive to January 1, 1993. In addition, the 1992 rate reflected a high
tax rate on the gain on the sale of 20% of the Company's interest in First
Colony due to a lower tax basis than book basis.
See Note 15 of Notes to Financial Statements on Page 40 for details of
changes in effective income tax rates.
<PAGE>
Extraordinary Item
In December 1993, the Company redeemed its $116.25-million 9 3/8% Sinking Fund
Debentures at a premium, resulting in an after-tax charge of $5 million
($.04 per share).
Discontinued Insurance Operation
The Company's interest in First Colony's income after income taxes decreased
44% to $90.5 million in 1993 from $162.5 million in 1992. The decline
resulted from the spin-off of the Company's 80% interest in First Colony on
July 1, 1993, whereby six months of income was reported in the 1993 period
versus 12 months of income from the Company's then-100% interest in the
discontinued insurance operation that was reported in the 1992 period.
1992 Compared to 1991
Net Sales
Net sales for 1992 increased $158 million (10%) from 1991, largely due to
increased shipments of lubricant additives and fuel additives other than
antiknocks, primarily reflecting the acquisition of Amoco's petroleum
additives business in June 1992. Shipments of flame retardants,
pharmaceutical products and agricultural intermediates also were higher.
Olefin shipments were down slightly for the year, and zeolite volumes also
were lower. Antiknock shipments declined, as expected, but the impact was
offset in part by higher selling prices.
Costs & Expenses
Cost of goods sold in 1992 increased $154.4 million (15%) from 1991,
primarily reflecting increased shipments due to the acquisition of Amoco's
petroleum additives business and higher start-up costs at Ethyl's new olefin
facilities in Feluy ($12.7 million in 1992 versus $3.9 million in 1991).
Other significant factors were high operating costs (including depreciation
on the new linear and poly alpha olefin facilities) due to low capacity
utilization at the Feluy and Houston olefin manufacturing facilities, an
unfavorable foreign-exchange effect and higher environmental costs, partially
offset by slightly lower per-unit raw material costs. Maintenance and repairs
of fixed assets amounted to $83.5 million in 1992 versus $81 million in 1991.
Average raw material costs decreased during 1992 from 1991. The average
prices for ethylene, process oil, aluminum metal and bisphenol-A were lower
than 1991 prices, while average prices of phenol, isobutylene, sodium metal
and lead metal were higher than in 1991. Average prices for polybutenes and
for 2-ethyl-1-hexanol were about the same in 1992 as in 1991. Average energy
unit costs increased in 1992 over the prior year.
Gross profit margin decreased to 29.2% in 1992 from 31.9% in 1991. The
decrease mainly reflected high operating costs at the olefin manufacturing
facilities due to start-up costs at Feluy as well as low capacity utilization
caused by excess capacity in the marketplace, unfavorable foreign-exchange
effects and higher environmental costs.
Selling, general and administrative expenses combined with research-and-
development expenses increased 8% in 1992 over 1991. The 1992 increase mainly
reflects higher employee-related and other expenses to support business
expansions (including the addition of over 100 sales and technical-services
support staff with the Amoco acquisition in late June 1992) and advertising
and promotional costs of new pharmaceutical products as well as the effect of
inflation, offset in part by lower expenses associated with product testing
and outside consulting related to HiTEC- 3000 performance additive (MMT).
Selling, general and administrative and research and development expenses as
a percentage of net sales decreased slightly to 18.3% in 1992 from 18.6% in
1991.
<PAGE>
Special Charges
Special charges in 1992 amounted to $9.5 million, while 1991 had special
charges of $11.2 million. The 1992 special charges of $9.5 million
represented the estimated relocation and related ex-penses in connection with
the planned transfer of Petroleum Additives Division R&D employees from St.
Louis to Richmond when new research facilities are completed in mid-1994.
In 1991, special charges of $11.2 million reflected a charge of $6.4 million
resulting from the discontinuation of certain developmental research
programs as well as a charge of $4.8 million for the relocation of the
Petroleum Additives Division headquarters to Richmond in 1992.
Operating Profit
Operating profit in 1992 decreased 10% from 1991. However, special charges of
$9.5 million in 1992 and $11.2 million in 1991 and an additional annual
charge of $4 million in connection with the accounting change for
postretirement health costs in 1992 affected the comparison. Excluding the
effects of these items, 1992 operating profit decreased 8% resulting
primarily from lower olefins profit, mainly reflecting start-up costs of
$12.7 million related to the new linear alpha olefin facility in Feluy in
1992 versus $3.9 million related primarily to the new poly alpha olefin
facility in 1991 and higher production costs at the Feluy and Houston olefin
manufacturing facilities as well as lower profit margins. Lubricant additives
profit declined from 1991 reflecting lower shipments and higher costs.
However, lubricant additives in the second half of 1992 had improved results
versus the prior year, reflecting the benefit of the acquisition of Amoco's
petroleum additives business. Operating profit for 1992 compared to 1991
reflected higher selling and administrative expenses, an unfavorable foreign-
exchange impact and higher environmental costs, partially offset by im-proved
1992 results in silicon materials, flame retardants and fuel additives other
than antiknocks as well as Whitby Pharmaceuticals, reflecting higher
shipments. Overall antiknock profit was slightly ahead of 1991 in spite of a
decline in MMT results due to lower shipments.
Interest & Financing Expenses
Interest and financing expenses in 1992 increased $3.2 million (5%) due to a
lower amount of interest capitalized and interest on higher average debt
outstanding in 1992, partially offset by a lower average interest rate in
1992.
Other Income, Net
Other income, net, decreased 11% in 1992 (to $1.5 million in 1992 from $1.7
million in 1991) due to lower interest income from a reduction in short-term
securities.
Gain on Sale of 20% Interest in First Colony Corporation
In December 1992, the Company sold approximately 20% of its investment in
First Colony for $256.4 million, net of selling expenses. This resulted in a
$93.6-million gain ($30.2 million after income taxes, or $.25 per share).
Income Taxes
Income tax expense in 1992 increased 141% from 1991 reflecting a 53% increase
in income from continuing operations before income taxes and cumulative
effect of accounting changes as well as a higher effective income tax rate
(48.1% in 1992 versus 30.4% in 1991). The increased rate is due primarily to
a high tax rate on the gain on the sale of 20% of the Company's interest in
First Colony Corporation due to a lower tax basis than book basis. Excluding
the impact of this sale, the 1992 effective tax rate would be 31.8% versus
30.4% in 1991, reflecting reduced benefits from the Company's foreign sales
corporation.
Accounting Changes
In the fourth quarter of 1992, the Company changed its method of accounting
for postretirement health benefits and its method of accounting for deferred
income taxes, both retroactive to January 1, 1992, in accordance with FASB
<PAGE>
Statement Numbers 106 and 109, respectively.
By changing to the accrual method of accounting for postretirement health
benefits, the Company recognized a cumulative noncash charge of $54.5
million, or $34.3 million, net of income taxes, and increased its 1992 annual
expenses to approximately $7.1 million from $3.1 million. By changing its
method of accounting for income taxes, the Company also decreased
its deferred income tax liability and increased net income by $19.6 million.
The combined cumulative net charge amounted to $14.7 million ($.12 per
share). (See Notes 14 and 15 of Notes to Financial Statements on Pages 39 and
40 for details.)
Discontinued Insurance Operation
In 1992, the Company's interest in First Colony's income after income taxes
increased $49.9 million (44%) to $162.5 million over 1991 including a $60.6
million increase in realized gains on investments as a result of bond calls and
redemptions. Excluding realized gains, Insurance profit increased due to higher
earnings on increased business in force, relatively better life insurance
mortality experience and accelerated income from collateralized mortgage
obligations (CMOs) in the bond portfolio. These increases were offset in part by
accelerated amortization of deferred acquisition costs related to both realized
investment gains and CMO income and a provision for guaranty fund costs related
to the insolvency of certain life insurance companies.
Information About Significant Product Lines
Lead antiknock compounds, which are sold worldwide by the Petroleum Additives
Division to petroleum refiners, remain one of the Company's largest product
lines. The Company estimates that it accounts for approximately one-third of
the total worldwide sales of lead antiknock compounds. For a number of years
lead antiknock compounds have been subject to regulations restricting the
amount of the product that can be used in gasoline in the United States.
Similar restrictions have been in effect in Canada since 1990. The North
American market for these products in motor vehicles has effectively been
eliminated, but the market for their use in piston aircraft and certain other
applications has remained at about the same level for years and is expected
to remain stable. As the Company has forecast and planned, the market for
these products in other major areas of the world, particularly Western
Europe, continues to decline as use of unleaded gasoline grows.
The contribution of lead antiknock compounds to the Company's net sales has
declined to about 13% in 1993 from about 16% in 1992 and about 19% in 1991.
The lead antiknock profit contribution to the Company's operating profit
excluding allocation of corporate expenses is estimated to have been 49% in
1993, 50% in 1992 and 44% in 1991. Excluding the costs related to the
planned cessation of lead antiknock compound production at the Company's
Canadian plant, the 1993 lead antiknock profit contribution would have been
about 52%. In recent years, the Company has been able to offset a continuing
decline in shipments of lead antiknock compounds with higher margins due
primarily to significant increases in selling prices. Any further decline in
the use of lead antiknocks would adversely affect such sales and profit
contributions unless the Company can offset such declines with increased
market share and/or higher selling prices.
<PAGE>
The Company currently produces some of its lead antiknock compounds in its
subsidiary's Canadian plant and obtains additional quantities under a supply
agreement with E. I. DuPont de Nemours & Company. On January 11, 1994, the
Company announced an agreement with The Associated Octel Company Limited
(Octel) of London under which Octel will allocate a portion of its production
capacity of lead antiknock compounds to the Company for sale and distribution
through the Company's worldwide network. Ethyl also announced that its
Canadian subsidiary would cease production of lead antiknock compounds by
March 31, 1994. The agreement continues so long as the Company determines
that a market continues to exist for lead antiknock compounds. Under the
agreement with Octel, the Company has the right to purchase from Octel lead
antiknock compounds, which the Company estimates will be sufficient to cover
its needs in any contract year. Purchases are at a fixed initial price per
pound with periodic escalations and adjustments.
In addition to the supply agreement, Octel and the Company have agreed that
the Company will assume the distribution for Octel of any of its lead
antiknock compounds that are shipped in bulk.
The Company believes the agreements with Octel will assure it of an ongoing,
efficient source of supply for lead antiknock compounds as the worldwide
demand for these products continues to decline. It does not anticipate that
the cessation of its Canadian lead antiknock operations and the entry into
the Octel supply agreement will adversely affect its relations with its
customers, nor will these changes have a material effect on its future
results of operations. The Company and Octel will continue to compete
vigorously in sales and marketing of lead antiknock compounds.
The Company also sells manganese-based antiknock compounds (MMT) used in
unleaded gasoline in Canada. The Company conducted extensive testing of this
product prior to filing a request in 1990 for a fuel-additive waiver from the
United States Environmental Protection Agency (EPA), which is required to
begin marketing the additive for use in unleaded gasoline in the United
States. The Company voluntarily withdrew its waiver application in November
1990 after public hearings and detailed exchanges of information with the
EPA, when the EPA raised several health and environmental questions near the
end of the 180-day statutory review period. The Company continued testing and
filed a new waiver request in July 1991, followed by additional public
hearings and detailed exchanges of information with the EPA.
In January 1992, the EPA denied the Company's application for a waiver. An
appeal was filed with the United States Court of Appeals for the District of
Columbia Circuit contesting the EPA's denial of the application for a waiver
for the use of the additive in unleaded gasoline. In April 1993, the Court
remanded the case to the EPA for reconsideration within 180 days of its
denial of the Company's waiver application, directing the EPA to consider new
evidence and make a new decision.
On November 30, 1993, the EPA determined that emissions data contained in the
Company's application satisfy all Clean Air Act standards, but reported that
it was not able to complete its assessment of the overall public-health
implications of manganese. The Company and the EPA mutually agreed to an 180-
day extension (until May 29, 1994) to resolve this last remaining issue.
<PAGE>
Financial Condition & Liquidity:
Consolidated cash and cash equivalents at December 31, 1993, were about $48.2
million, which represents a decrease of $114.8 million from $163 million at
year-end 1992. The large decrease primarily is due to the use of $100 million
reserved at the end of 1992 for the early redemption on January 11, 1993, of
the Company's $100-million 11% Notes due in 1995.
Cash flows from operating activities in 1993 of $150.1 million, supplemented
by additional long-term debt of $360.4 million, were used primarily to
provide funds for capital expenditures, to acquire the organic and inorganic
brominated compounds business of Potasse et Produits Chimiques (PPC) from
Rhone-Poulenc S.A. in February 1993 and make a further payment in connection
with the acquisition of the lubricant additives business in Japan (total
outlay for acquisitions of approximately $125.4 million), to pay regular
quarterly dividends to common shareholders and to repay long-term debt. Long-
term debt of $230.4 million was repaid in 1993, of which $100 million
represented the 11% Notes due in 1995 that was repaid with a like amount of
short-term securities reserved for this purpose. The balance of $130.4 mil
lion included the early repayment on December 15, 1993, of the Company's
$116.25-million 9 3/8% Sinking Fund Debentures due in 2016 and the remaining
amount consisted of scheduled debt repayments.
Cash flows from operating activities in 1992 of $222.1 million, supplemented by
additional long-term debt of $164.5 million, were used primarily to provide
funds for capital expenditures, to acquire the lubricant and fuel additives
business from Amoco in June and a lubricant additives business in Japan in
December (for a total of $136.5 million) and to pay regular quarterly dividends
to common shareholders. A $250-million special dividend received from First
Colony in December 1992 was used to repay a like amount of long-term debt.
Additional long-term debt of approximately $150 million was repaid in December
with part of the proceeds from the sale of approximately 20% of First Colony.
The balance of the proceeds were invested in short-term securities and reserved
for purposes of redeeming, at principal amount on January 11, 1993, the
Company's $100-million 11% Notes.
The Company anticipates that cash provided from operations in the future will
be sufficient to pay its operating expenses, satisfy debt-service obligations
and make dividend payments to common shareholders. With respect to operating
expenses, management expects that, because the discount rates used for
actuarial calculations in connection with the Company's pension and
postretirement benefit plans declined, pension and postretirement benefit
expenses will increase in 1994.
The noncurrent portion of Ethyl's consolidated long-term debt amounted to
$687 million at December 31, 1993, representing an increase of $225.3 million
from $461.7 million at the end of 1992. The Company's long-term debt as a
percent of total capitalization at December 31, 1993, was 47.7%. On a pro
forma basis, assuming the spin-off of First Colony had taken place at
December 31, 1992, the Company's long-term debt as a percent of total
capitalization would have been 38.3% at December 31, 1992. The Company
targets a range of 40% to 50% for its long-term debt ratio.
<PAGE>
The Company's capital-spending program over the next three to five years is
expected to decrease from current levels, but it likely will be maintained at
the current level in 1994 by spending on projects already approved
(primarily an additional $130 million for petroleum additives facilities to
manufacture products now provided by Amoco under a short-term supply
agreement expiring in mid-1995). Capital spending for environmental and
safety projects likely will increase somewhat from current levels. The
capital spending will be financed with a mixture of cash provided from
operations and additional long-term debt.
Ethyl's acquisition searches are primarily for chemical businesses and are
normally for cash and are funded through internal and external sources,
including the use of existing lines of credit and long-term debt. The
proceeds from occasional sales of businesses normally are used to repay long-
term debt.
On February 16, 1994, Ethyl entered into a new five-year, $1-billion
unsecured credit facility to replace its existing $700-million credit
agreement. On March 1, 1994, the credit facility automatically will be split
into twoseparate, $500-million facilities upon the scheduled spin-off of the
Company's Chemicals Businesses to be contained in a wholly owned subsidiary,
Albemarle Corporation. The initial proceeds from the Albemarle credit
facility will be utilized by Albemarle to absorb the planned transfer from
the Company to Albemarle of a portion of the Company's borrowing under the
credit facility. Fees of up to 3/8 of 1% per annum are assessed on the unused
portion of the new commitment. The credit facility permits borrowing for the
next five years at various interest rate options. The facility contains a
number of covenants, representations and events of default typical for a
credit facility agreement of this size and nature, including financial
covenants requiring the Company to maintain consolidated indebtedness (as
defined) of not more than 60% of the sum of shareholders' equity and
consolidated indebtedness and maintenance of minimum shareholders' equity of
at least $250 million after the spin-off.
The amount and timing of additional borrowing will depend on the Company's
specific cash requirements. See Notes 9 and 21 of Notes to Financial
Statements on pages 37 and 44 for information on unused lines of credit.
Environmental Matters
The Company is subject to federal, state and local requirements regulating
the handling, manufacture and use of materials (some of which may be
classified as hazardous or toxic by one or more regulatory agencies), the
discharge of materials into the environment and the protection of the
environment. It is the Company's policy to comply with these requirements and
to provide workplaces that are safe, healthful and environmentally sound
<PAGE>
for employees and that will not adversely affect the safety, health or
environment of communities in which Ethyl does business. The Company believes
that as a general matter its policies, practices and procedures are properly
designed to prevent any unreasonable risk of environmental damage, and of
resulting financial liability, in connection with its business.
To the best of the Company's knowledge, Ethyl currently is complying with and
expects to continue to comply in every material respect with all existing
environmental laws, regulations, statutes and ordinances even though
compliance with government pollution-abatement and safety regulations usually
increases operating costs and requires remediation costs and investment of
capital that in some cases produces no monetary return. Such compliance with
federal, state, local and foreign environmental protection laws has not in
the past had, and is not expected to have in the future, a material effect
upon the Company's competitive position.
Environmental operating and remediation costs charged to expense were
approximately $61 million in 1993, $51 million in 1992 and $38 million in
1991 (excluding depreciation of previous capital expenditures) and are
expected to be somewhat higher in the next few years than in the past.
Virtually all of the costs represent ongoing costs of operations. For sites
where Ethyl has been named a Potentially Responsible Party (PRP), costs had
been accrued previously, and payments related to such sites were charged
against accrued reserves, which at December 31, 1993, were immaterial.
Capital expenditures for pollution-abatement and safety projects, including
such costs that are included in other projects, were approximately $30
million in 1993, versus $29 million in 1992 and $25 million in 1991. For each
of the next few years, capital expenditures for these types of proj-ects are
likely to exceed current levels. Management's estimates of the effects of
compliance with governmental pollution-abatement and safety regulations are
subject to (1) the possibility of changes in the applicable statutes and
regulations or in judicial or administrative construction of such statutes
and regulations and (2) uncertainty as to whether anticipated solutions to
pollution problems will be successful, or whether additional expenditures may
prove necessary.
Among other environmental requirements, the Company is subject to the Federal
Superfund law, and similar state laws, under which the Company may be
designated as a PRP and may be liable for a share of the costs associated
with cleaning up various hazardous-waste sites. In most cases, the Company's
participation is de minimis. Further, almost all such sites represent
environmental issues that are quite mature and have been investigated,
studied and in many cases settled.
In de minimis PRP matters, the Company's policy generally is to negotiate a
consent decree and to pay any apportioned settlement, enabling the Company to
be effectively relieved of any further liability as a PRP, except for remote
contingencies.
In other than de minimis PRP matters, the Company's records indicate that
unresolved exposures are immaterial. The Company accrues and expenses its
proportionate share of PRP costs in accordance with FASB Statement No. 5 and
FASB Interpretation No. 14.
Because management has been actively involved in evaluating environmental
matters, the Company is able to conclude that the outstanding environmental
liabilities for unresolved PRP sites for which the Company would not be a de
minimis participant are not material.
<PAGE>
<TABLE>
GEOGRAPHIC AREAS:
(In Thousands)
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Net sales:
Domestic unaffiliated:
United States $ 969,438 $ 829,432 $ 712,826 $ 778,127 $ 758,308
Export 338,944 352,596 323,564 279,639 285,375
Transfers to foreign affiliates 258,966 270,887 331,751 313,068 297,286
Foreign unaffiliated 630,008 510,554 498,181 533,174 475,954
Elimination of transfers (258,966) (270,887) (331,751) (313,068) (297,286)
Total $ 1,938,390 $1,692,582 $1,534,571 $1,590,940 $1,519,637
Operating profit:
Domestic $ 161,590 $ 174,870 $ 178,776 $ 178,538 $ 230,950
Foreign 42,392 35,068 52,058 50,833 52,036
Subtotal 203,982 209,938 230,834 229,371 282,986
Unallocated expenses (36,377) (36,116) (38,169) (35,877) (36,173)
Operating profit 167,605 173,822 192,665 193,494 246,813
Interest and financing expenses (44,085) (62,279) (59,097) (64,839) (61,159)
Gain on sale of 20% of First
Colony Corporation - 93,600 - - -
Gain on sale of Hardwicke Chemical Company - - - 78,993 -
Other income, net 9,987 1,475 1,652 8,110 11,649
Income from continuing operations before income
taxes and extraordinary item and cumulative effect
of accounting changes $ 133,507 $ 206,618 $ 135,220 $ 215,758 $ 197,303
Identifiable assets:
Domestic $ 1,250,650 $1,155,860 $ 975,415 $ 894,269 $ 895,191
Foreign 628,830 517,390 484,498 407,501 245,887
Non-operating assets 129,718 205,648 110,592 83,873 101,676
Net assets of discontinued
insurance operation - 658,550 909,876 775,523 706,595
Total $ 2,009,198 $2,537,448 $2,480,381 $2,161,166 $1,949,349
Refer to notes (a) through (g) on page 28.
</TABLE>
Geographic Areas
Domestic operating profit includes profit from U.S. export sales and profit
from sales to foreign affiliates of products that are resold in foreign
markets. Intercompany transfers from foreign areas to the United States are
not material. Transfers between geographic areas are priced at various
discounts depending on the product and economic activity of the transferee.
Net unaffiliated sales of foreign subsidiaries for 1993 increased 23% over
1992, primarily due to the PPC acquisition and the acquisition of a lubricant
additives business in Japan. Net unaffiliated sales of foreign subsidiaries
for 1992 increased 2% over 1991.
Export sales decreased 4% in 1993 from 1992. This decrease was due to a
<PAGE>
decline in shipments of lead antiknocks and alpha olefins to Europe,
partially offset by increases in shipments of lead antiknocks to Latin
America and of lubricant additives to the Far East. Export sales increased 9%
in 1992 from 1991 due primarily to higher lead antiknock selling prices and
increased shipments of flame retardants to the Far East. Transfers to foreign
affiliates declined in 1993 and 1992 from the prior year with the 1992
decrease due primarily to lower lead antiknock volume and lower olefins
shipments and selling prices to Ethyl S.A.
Foreign operating profit for 1993 increased 21% from 1992 due to the
acquisition of the lubricant additives business in Japan and favorable
foreign-exchange effects, partially offset by a $14.2-million charge for
write-down of the Canadian plant and other costs. Foreign operating profit
for 1992 decreased 33% from 1991 due mainly to higher linear and poly alpha
olefin costs due to low capacity utilization as well as $12.7 million in
start-up costs at the Feluy olefins manufacturing plant in 1992 versus $3.9
million in 1991 and an unfavorable foreign-exchange effect. This was offset
partially by higher operating profit at Ethyl Canada due to higher antiknock
shipments.
Total assets, excluding net assets of the discontinued insurance operation,
were $2,009.2 million at the end of 1993, an increase of $130.3 million from
$1,878.9 million at the end of 1992, which was $308.4 million higher than
$1,570.5 million at the end of 1991. The increase in operating assets in 1993
primarily reflected capital expenditures for new plants and expansions in the
U.S. and the acquisition of PPC in France. The increase in 1992 primarily
reflected the acquisitions of petroleum additives businesses.
The decrease in non-operating assets in 1993 primarily reflected the use of
$100 million in short-term securities reserved in 1992 for redemption of the
Company's $100 million of 11% Notes on January 11, 1993. The increase in non-
operating assets in 1992 mainly reflected the short-term securities used to
redeem the 11% Notes.
<PAGE>
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA (a)
(In Thousands Except Earnings Per Share) (Unaudited)
First Second Third Fourth
1993 Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Net sales $ 469,828 $495,038 $486,874 $486,650
Gross profit $ 131,008 $140,486 $150,349 $130,296
Special charges (b) - $ 2,400 $ 10,600 $ 23,150
Income from continuing operations before
extraordinary item $ 26,329 $ 30,825 $ 19,966 $ 12,902
Extraordinary after-tax charge due to early
extinguishment of debt (e) - - - (5,000)
Income from continuing operations 26,329 30,825 19,966 7,902
Income from discontinued insurance operation (f) 45,536 44,947 - -
Net income $ 71,865 $ 75,772 $ 19,966 $ 7,902
Earnings per share:
Income from continuing operations before
extraordinary item $ .22 $ .26 $ .17 $ .11
Extraordinary after-tax charge (e) - - - (.04)
Income from continuing operations .22 .26 .17 .07
Income from discontinued insurance operation (f) .39 .38 - -
Net income $ .61 $ .64 $ .17 $ .07
Shares used to compute earnings per share 118,428 118,436 118,444 118,436
1992
Net sales $389,158 $373,802 $460,672 $468,950
Gross profit $125,349 $112,139 $130,272 $125,726
Special charges (c) - - - $ 9,500
Gain on sale of 20% of First
Colony Corporation (d) - - - $ 93,600
Income from continuing operations
before cumulative effect of accounting
changes $ 26,196 $ 17,340 $ 22,307 $ 41,402
Cumulative effect of accounting changes
(net of tax) (g) (14,732) - - -
Income from continuing operations 11,464 17,340 22,307 41,402
Income from discontinued insurance
operation (f) 36,789 34,667 48,977 42,039
Net income $ 48,253 $ 52,007 $ 71,284 $ 83,441
Earnings per share:
Income before cumulative effect of
accounting changes $ .22 $ .15 $ .19 $ .34
Cumulative effect of accounting changes (g) (.12) - - -
Income from continuing operations .10 .15 .19 .34
Income from discontinued insurance operation (f) .31 .29 .41 .36
Net income $ .41 $ .44 $ .60 $ .70
Shares used to compute earnings per share 118,348 118,380 118,379 118,415
</TABLE>
Notes to Financial Tables
(a) Certain 1993 previously reported quarterly amounts and certain prior-
year amounts have been restated/reclassified to conform to current
presentation.
(b) Operating profit for 1993 includes special charges for the
write-down of the Canadian plant and other costs of $14,200, costs of work-
force reductions in the U.S. and Europe amounting to $7,635
and $14,315 for downsizing costs of Whitby Research, Inc., and relocation of
employees and other related costs ($22,400 after income taxes).
(c) Operating profit for 1992 includes a special charge of $9,500 ($6,000 after
income taxes) for expenses covering the planned 1994 relocation of Petroleum
Additives Division research and development personnel from St. Louis, Missouri,
to Richmond, Virginia.
(d) Reflects the sale of approximately 20% of Ethyl's investment in First Colony
Corporation, which owns First Colony Life Insurance Company ($30,200 after
income taxes).
(e) The extraordinary item is the result of the early redemption of Ethyl's
$116,250 9 3/8% Sinking Fund Debentures, net of income taxes of $3,000.
(f) On July 1, 1993, Ethyl completed the spin-off of its 80% interest in First
Colony Corporation, which included the operations of First Colony Life Insurance
Company and subsidiaries. Theresults of the Insurance business are reported as a
discontinued insurance operation.
(g) The cumulative effect of accounting changes results from a change in the
method of accounting for postretirement health benefits and deferred income
taxes in accordance with FASB Statements No. 106 and No. 109, respectively,
retroactive to January 1, 1992.
<PAGE>
HOW ETHYL USED THE REVENUES IT RECEIVED
Continuing Operations
(In Millions) (Unaudited)
1993 1992
Materials,
services, etc. $1,242.1 63.8% $1,062.0 62.7%
Payrolls &
employee benefits 327.3 16.8 300.0 17.7
Current income &
other taxes 94.0 4.8 80.5 4.7
Regular dividends
declared 71.0 3.6 71.0 4.2
Interest expense 44.1 2.3 62.3 3.7
For use in the business
including expansion &
modernization 169.9 8.7 118.3 7.0
Total revenues $1,948.4 100.0% $1,694.1 100.0%
Dividend Information & Equity per Common Share
During 1993 and 1992, the quarterly dividend rate on the common stock was
$.15 per share, or $.60 on an annual basis.
See Note 11 of Notes to Financial Statements on page 38 for details of
restrictions on dividends.
Equity per common share at December 31, 1993, was $6.36. This reflects the
distribution on July 10, 1993, in the form of a tax-free dividend, of one
share of First Colony Corporation common stock for every three shares of
Ethyl common stock (equivalent to $5.72 per common share based on book
value). Excluding the impact of this special dividend in 1993, equity per
common share would have been about $12.08 per share at December 31, 1993, and
would have compared favorably to $11.84 per share at December 31, 1992, which
was up 15% from $10.31 at December 31, 1991.
Market Prices of Common Stock & Shareholder Data
The Company's common stock is traded primarily on the New York Stock Exchange
under the symbol EY.
The Cumulative First Preferred 6% Series A stock is not listed.
There were 118,405,287 shares of common stock held by 13,939 shareholders of
record, as of December 31, 1993. On that date, there were 28 shareholders of
record of Cumulative First Preferred 6% Series A stock.
<PAGE>
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars Except Share Data)
December 31 1993 1992
ASSETS
Current assets:
Cash and cash equivalents $ 48,201 $ 162,988
Accounts receivable, less allowance
for doubtful accounts (1993 - $4,189;
1992 - $4,062) 345,160 316,582
Inventories:
Finished goods 219,001 214,527
Work-in-process 12,419 11,434
Raw materials 32,173 26,569
Stores, supplies and other 27,221 27,249
290,814 279,779
Deferred income taxes and prepaid
expenses 49,522 29,584
Total current assets 733,697 788,933
Property, plant and equipment, at cost 1,908,630 1,639,216
Less accumulated depreciation and
amortization (910,360) (809,442)
Net property, plant and equipment 998,270 829,774
Other assets and deferred charges 164,382 160,394
Goodwill and other intangibles -
net of amortization 112,849 99,797
Net assets of discontinued
insurance operation - 658,550
Total assets $2,009,198 $2,537,448
See accompanying notes to financial statements.
<PAGE>
December 31 1993 1992
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 154,971 $ 159,372
Accrued expenses 125,704 94,112
Long-term debt, current portion 14,056 114,456
Dividends payable 17,764 17,756
Income taxes payable 14,020 75,397
Total current liabilities 326,515 461,093
Long-term debt 686,986 461,736
Other noncurrent liabilities 99,240 98,800
Deferred income taxes 143,676 114,340
Redeemable preferred stock:
Cumulative First Preferred
($100 par value) 6% Series A 200 200
Shareholders' equity:
Common stock ($1 par value)
Issued - 118,405,287 in 1993 and
118,357,515 in 1992 118,405 118,358
Additional paid-in capital 2,450 1,708
Foreign currency translation adjustments (1,757) 9,840
Unrealized gain on marketable equity
securities of discontinued insurance
operation (net of deferred income
taxes of $33,434) - 64,901
Retained earnings 633,483 1,206,472
752,581 1,401,279
Total liabilities & shareholders' equity $2,009,198 $2,537,448
See accompanying notes to financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
(In Thousands of Dollars Except Per-Share Amounts)
Years ended December 31 1993 1992 1991
<S> <C> <C> <C>
Net sales $1,938,390 $1,692,582 $1,534,571
Cost of goods sold 1,386,251 1,199,096 1,044,720
Gross profit 552,139 493,486 489,851
Selling, general and administrative
expenses 272,760 236,333 216,882
Research and development expenses 75,624 73,831 69,119
Special charges 36,150 9,500 11,185
Operating profit 167,605 173,822 192,665
Interest and financing expenses 44,085 62,279 59,097
Gain on sale of 20% interest in
First Colony Corporation - (93,600) -
Other income, net (9,987) (1,475) (1,652)
Income from continuing operations before
income taxes and extraordinary item and
cumulative effect of accounting changes 133,507 206,618 135,220
Income taxes 43,485 99,373 41,168
Income from continuing operations before
extraordinary item and cumulative effect of
accounting changes 90,022 107,245 94,052
Extraordinary after-tax charge due to
early extinguishment of debt (5,000) - -
Income from continuing operations before
cumulative effect of accounting changes 85,022 107,245 94,052
Cumulative effect of accounting
changes for:
Postretirement health benefits (net of tax) - (34,348) -
Deferred income taxes - 19,616 -
Total - (14,732) -
Income from continuing operations 85,022 92,513 94,052
Income from discontinued insurance operation 90,483 162,472 112,616
Net income $ 175,505 $ 254,985 $ 206,668
Earnings per share:
Income from continuing operations before
extraordinary item and cumulative effect
of accounting changes $ .76 $ .90 $ .80
Extraordinary item (.04) - -
Cumulative effect of accounting changes - (.12) -
Income from continuing operations .72 .78 .80
Income from discontinued insurance operation .76 1.37 .95
Net income $ 1.48 $ 2.15 $ 1.75
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
(In Thousands of Dollars Except Share Data)
Years Ended December 31 1993 1992 1991
Shares Amounts Shares Amounts Shares Amounts
<S> <C> <C> <C> <C> <C> <C>
Common stock
(authorized 400,000,000 shares)
Beginning balance 118,357,515 $ 118,358 118,316,994 $ 118,317 118,324,675 $ 118,325
Issued upon exercise of stock
options and SARs 75,714 75 59,199 59 63,936 64
Purchased and retired (27,942) (28) (18,678) (18) (71,617) (72)
Ending balance 118,405,287 118,405 118,357,515 118,358 118,316,994 118,317
</TABLE>
<TABLE>
<S> <C> <C> <C>
Additional paid-in capital
Beginning balance 1,708 865 398
Exercise of stock options and SARs 1,374 1,367 1,185
Retirement of purchased common stock (621) (524) (716)
Distribution of common stock under bonus plan (11) - (3)
Retirement of purchased 6% First Preferred stock - - 1
Ending balance 2,450 1,708 865
Foreign currency translation adjustments
Beginning balance 9,840 20,993 19,107
Translation adjustments (11,597) (11,153) 1,886
Ending balance (1,757) 9,840 20,993
Unrealized gain on marketable equity securities
Beginning balance 64,901 56,640 21,903
Unrealized gains 13,326 8,261 34,737
Spinoff of First Colony Corporation (78,227) - -
Ending balance - 64,901 56,640
Retained earnings
Beginning balance 1,206,472 1,022,498 887,873
Net income 175,505 254,985 206,668
Cash dividends declared:
First Preferred stock, $6.00 per share (12) (12) (12)
Common stock, $.60 per share (71,033) (70,999) (70,994)
Dividend of common stock of
First Colony Corporation, at book value (677,449) - -
Retirement of common stock - - (1,037)
Ending balance 633,483 1,206,472 1,022,498
Total shareholders' equity $ 752,581 $1,401,279 $1,219,313
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
(In Thousands of Dollars)
Years ended December 31 1993 1992 1991
<S> <C> <C> <C>
CONTINUING OPERATIONS:
Cash and cash equivalents at beginning of year $162,988 $ 36,031 $ 32,632
Cash flows from operating activities:
Income from continuing operations 85,022 92,513 94,052
Adjustments to reconcile income from continuing operations
to cash flows from continuing operating activities:
Depreciation and amortization 127,456 105,765 89,879
Special charges 36,150 9,500 11,185
After-tax gain on sale of 20% interest in First Colony Corporation - (30,200) -
Cumulative effect of accounting changes - 14,732 -
Deferred income taxes, excluding cumulative effect of accounting changes (7,663) (3,030) 6,469
Changes in assets and liabilities, net of effects from acquisitions:
Income tax payment on 1992 gain on sale of
20% of First Colony Corporation (60,552) - -
(Increase) decrease in accounts receivable (16,268) 3,506 (4,390)
(Increase) in inventories (918) (16,807) (31,619)
(Decrease) increase in accounts payable and accrued expenses (13,686) 43,879 20,083
(Decrease) increase in income taxes payable (2,454) 3,231 (32,485)
Other, net 3,046 (1,022) (19,789)
Cash provided from continuing operating activities 150,133 222,067 133,385
Cash flows from investing activities:
Capital expenditures (205,029) (157,412) (166,148)
Acquisitions of businesses (net of $5,369 cash acquired in 1993 (125,431) (136,500) (24,035)
Proceeds from sale of 20% interest in First Colony Corporation - 256,350 -
Other, net 537 (4,274) (17,350)
Cash used in investing activities of continuing operations (329,923) (41,836) (207,533)
Cash flows from financing activites:
Additional long-term debt 360,448 164,500 138,400
Repayment of long-term debt (230,355) (409,700) (2,260)
Cash dividends paid (71,037) (71,006) (71,008)
Repurchases of capital stock (649) (543) (1,838)
Other, net 1,448 1,475 1,253
Cash provided from (used in) financing activities of
continuing operations 59,855 (315,274) 64,547
Net cash used in continuing operations (119,935) (135,043) (9,601)
Cash provided by discontinued insurance operation 5,148 262,000 13,000
(Decrease) increase in cash and cash equivalents (114,787) 126,957 3,399
Cash and cash equivalents at end of year $ 48,201 $162,988 $ 36,031
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Ethyl Corporation & Subsidiaries
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Consolidation - The consolidated financial statements include the accounts
and operations of Ethyl Corporation and all of its subsidiaries (the
Company). All significant intercompany accounts and transactions are
eliminated in consolidation.
Basis of Presentation - On April 22,1993, Ethyl's board
of directors approved the spin-off of Ethyl's 80-percent interest in First
Colony Corporation (First Colony) in the form of a stock dividend to Ethyl
common shareholders. The tax-free distribution was made on July 1, 1993. The
Company has accounted for the financial results and net assets of First
Colony prior to the spin-off as a discontinued insurance operation in
accordance with Accounting Principles Board (APB) Opinion No. 30.
Previously reported financial statements for all periods and certain amounts
in the accompanying financial statements and notes thereto have been restated
to conform to the current presentation.
Foreign Currency Translation - The financial statements of all foreign
subsidiaries were prepared in their respective local currencies and
translated into U.S. dollars based on the current exchange rate. Translation
adjustments (net of deferred income tax benefit of $1,164,000 in 1993 and
deferred income tax charges of $5,716,000 and $12,140,000 in 1992 and 1991,
respectively) are reflected as foreign-currency translation adjustments in
Shareholders' Equity and accordingly have no effect on net income.
Transaction adjustments for all foreign subsidiaries are included in income.
Inventories - Inventories are stated at the lower of cost or market, with
cost determined on the last-in, first-out (LIFO) basis for substantially all
domestic inventories, and on either the weighted-average cost or first-in,
first-out basis for other inventories. Cost elements included in work-in-
process and finished goods inventories are raw materials, direct labor and
manufacturing overhead. Raw materials include purchase and delivery costs.
Stores and supplies include purchase costs.
Property, Plant & Equipment - Accounts include costs of assets constructed or
purchased, related delivery and installation costs and interest incurred on
significant capital projects during their construction periods. Expenditures
for renewals and betterments also are capitalized, but expenditures for
repairs and maintenance are expensed as incurred. The cost and accumulated
depreciation applicable to assets retired or sold are removed from the
respective accounts, and gains or losses thereon are included in income.
Depreciation is computed primarily by the straight-line method based on the
estimated useful lives of the assets.
Environmental Compliance & Remediation - Environmental compliance costs
include the cost of purchasing and/or constructing assets to prevent, limit
and control pollution or to monitor the environmental status at various
locations. These costs are capitalized and depreciated based on estimated
useful lives.
Environmental-compliance costs also include maintenance and operating costs
with respect to pollution-prevention-and-control facilities and
administrative costs. Such operating costs are expensed as incurred.
Environmental remediation costs of facilities used in current operations are
generally immaterial and are expensed as incurred. Remediation costs and
post-remediation costs at facilities or off-plant-disposal sites that relate
to an existing condition caused by past operations are accrued as liabilities
and expensed when costs can be reasonably estimated.
Goodwill & Other Intangibles - Goodwill acquired prior to November 1, 1970,
($1,652,000) is not being amortized. Goodwill acquired subsequently
($75,333,000 and $57,895,000 at December 31, 1993 and 1992, respectively, net
of accumulated amortization) is amortized on a straight-line basis, over
periods from 10 to 20 years. Goodwill of $22,065,000 arising from the 1993
acquisition of Potasse et Produits Chimiques S.A. (PPC) is being amortized on
a straight-line basis over periods of 16 to 20 years. Other intangibles
($35,864,000 and $40,250,000 at December 31, 1993 and 1992, respectively, net
of accumulated amortization) are amortized on a straight-line basis primarily
over periods from three to 17 years. Amortization of goodwill and other
intangibles amounted to $14,464,000 for 1993, $9,508,000 for 1992 and
$5,598,000 for 1991. Accumulated amortization of goodwill and other
intangibles was $41,058,000 and $26,594,000 at the end of 1993 and 1992,
respectively.
Pension Plans & Other Postemployment Benefits - Annual costs of pension plans
are determined actuarially based on Financial Accounting Standards Board
(FASB) Statement No. 87, "Employers Accounting for Pensions." The policy of
the Company is to fund its U.S. pension plans at amounts not less than the
minimum requirements of the Employee Retirement Income Security Act of 1974.
Annual costs of other postretirement plans are accounted for based on FASB
Statement No. 106, "Employers Accounting for Postretirement Benefits Other
Than Pensions." The policy of the Company is to fund its postretirement
health benefits for retirees on a pay-as-you-go basis. Annual costs of other
postemployment plans for employees who leave the Company for reasons other
than retirement are accounted for based on FASB Statement No. 112, "Employers
Accounting for Postemployment Benefits." The Company's policy is to fund such
benefits on a pay-as-you-go basis.
<PAGE>
Research & Development Expenses - Company- sponsored research-and-development
expenses related to present and future products are expensed currently as
incurred.
Income Taxes - In the fourth quarter of 1992, the Company adopted FASB
Statement No. 109, "Accounting for Income Taxes," retroactive to January 1,
1992. Deferred tax liabilities and assets are recognized for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Deferred tax liabilities and assets are determined
based on differences between financial statement carrying amounts and tax
bases of assets and liabilities using enacted tax rates in effect in the
years in which the differences are expected to reverse.
Prior to 1992, the provision for income taxes was based on APB No. 11 and
deferred income taxes arose from differences in recognition of revenue and
expense between financial and income tax reporting of various items.
Earnings Per Share - Earnings per share is computed after deducting
applicable preferred stock dividends from net income and using the weighted-
average number of shares of common stock and common stock equivalents
outstanding during the year. The numbers of shares used in computing earnings
per share were 118,436,000 in 1993 and 118,380,000 in 1992 and 1991.
2. SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental information for the Consolidated Statements of Cash Flows is as
follows: (In Thousands)
1993 1992 1991
Cash paid during the year for:
Income taxes $110,867 $35,863 $85,127
Interest and financing expenses
(net of capitalization) 45,352 62,320 58,225
Supplemental investing and
financing non-cash transactions:
Dividend of common stock of
First Colony Corporation-at book value $677,449 - -
Assumption of liabilities in connection
with the acquisition of Potasse et Produits
Chimiques (PPC) in February, 1993. $ 49,000 - -
Also see Note 20 with respect to Discontinued
Insurance Operation.
3. INDUSTRY SEGMENT:
The geographic areas table on page 26 (and the related notes on page 28) is
an integral part of the consolidated financial statements. Information about
the Company's geographic areas is presented for the years 1989-1993. The
discussion of geographic areas information is unaudited.
4. CASH & CASH EQUIVALENTS:
Cash and cash equivalents consist of the following:
(In Thousands)
1993 1992
Cash and time deposits $43,854 $ 62,988
Short-term securities 4,347 100,000
Total $48,201 $162,988
Short-term securities (generally commercial paper maturing in less than 90
days) are stated at cost plus accrued income, which approximates market
value.
5. INVENTORIES:
Domestic inventories stated on the LIFO basis amounted to $115,874,000 and
$98,323,000 at December 31, 1993 and 1992, respectively, which are below
replacement cost by approximately $36,239,000 and $49,089,000, respectively.
6. DEFERRED INCOME TAXES & PREPAID EXPENSES:
Deferred income taxes and prepaid expenses consist of the following:
(In Thousands)
1993 1992
Deferred income taxes-current $42,754 $23,697
Prepaid expenses 6,768 5,887
Total $49,522 $29,584
7. PROPERTY, PLANT & EQUIPMENT, AT COST:
Property, plant and equipment, at cost consist of
the following:
(In Thousands)
1993 1992
Land $ 60,22 7 $ 54,131
Land improvements 59,637 57,313
Buildings 137,980 114,995
Machinery and equipment 1,436,965 1,293,997
Capitalized interest 41,580 36,419
Construction in progress 172,241 82,361
Total $1,908,630 $1,639,216
<PAGE>
Interest capitalized on significant capital projects in
1993, 1992 and 1991 was $6,864,000, $6,763,000, $8,964,000, respectively,
while amortization of capitalized interest (which is included in depreciation
expense) was $3,246,000, $2,807,000 and $2,266,000, respectively.
8. ACCRUED EXPENSES:
Accrued expenses consist of the following:
(In Thousands)
1993 1992
Employee benefits, payrolls and related taxes $ 35,565 $33,689
Other 90,139 60,423
Total $125,704 $94,112
9. LONG-TERM DEBT:
A summary of long-term debt maturities at December 31, 1993, is listed below:
<TABLE>
(In Thousands)
Variable
Variable 9.8% Rate
Foreign Rate Notes Medium-
Bank Bank Due Term
Borrowings Loans 1998 Notes Misc. Total
<S> <C> <C> <C> <C> <C> <C>
1994 $13,356 $ 700 $ 14,056
1995 13,359 801 14,160
1996 13,356 841 3,440
1997 13,359 $ 6,750 88 20,197
1998 13,353 $200,000 6,750 71 220,174
1999-2016 25,333 $373,000 20,250 1,624 420,207
$92,116 $373,000 $200,000 $33,750 $3,368 702,234
Less unamortized discount (1,192)
Total long-term
debt at December 31, 1993 $ 701,042
</TABLE>
Ethyl S.A. had borrowings totaling approximately 3,256.7 million Belgian
francs ($92.1 million) outstanding as of December 31, 1993, with the Generale
de Banque, Brussels, Belgium (Banque). Funds borrowed were used to finance
the construction of new production facilities in Feluy, Belgium. Annual
repayments of the loans are 472 million Belgian francs (approximately $13.4
million) through 1999 and a final payment of 423 million Belgian francs
(approximately $12 million) in October 2000. The annual interest rate has
been fixed at 9.28% for the period through October 5, 1994. Banque has been
granted tax concessions by the Belgian Government and consequently has
reduced the interest rate by 25% to 6.96%. Thereafter, the interest rate
is subject to renegotiation.
The Company's $200-million 9.8% Notes are due September 15, 1998, at 100% of
their principal amount. The Notes are not redeemable prior to September 15,
1995, when they will be redeemable at the option of the Company at 100% of
their principal amount.
The Company's $33.75-million variable-rate (ranging from 8.6% to 8.86%)
Medium-Term Notes were issued in five series (1 through 5) of $6.75 million
each, which are due annually in serial order at 100% of their principal
amount, beginning December 15, 1997, through December 15, 2001.
The Company had a variable-rate revolving credit agreement with a group of
banks permitting it to borrow up to $700 million, which has been replaced
with a new agreement. (See Note 21 for a discussion of the new credit
facility.) The former agreement had fees of up to 3/8 of 1% per annum
assessed on the unused amount of the commitment. The agreement permitted
borrowing through October 16, 1995, at various interest rate options. $373
million was borrowed at December 31, 1993. Amounts outstanding at October
16, 1995, are repayable in 20 consecutive quarterly installments commencing
March 31, 1996. Average interest rates on variable-rate loans during 1993 and
1992 were 3.6% and 4.2%, respectively. See Note 11 for restrictions on
dividends. The Company also has three uncommitted agreements with banks
providing for immediate borrowings up to a maximum of $200 million at the
individual bank's money market rate. None was borrowed under these agreements
at December 31, 1993. The average interest rates on borrowings during 1993
and 1992 under these agreements were 3.4% and 4.1%, respectively.
10. CAPITAL STOCK:
Redeemable Preferred Stock - Transactions in 1991-1993 were as follows:
Issued
Shares Amounts
Cumulative First Preferred, 6% Series A
(authorized 1,000,000 shares)
January 1, 1991, balance 2,144 $214,400
Purchased and retired in 1991 (142) (14,200)
December 31, 1991, 1992, and 1993, balance 2,002 $200,200
<PAGE>
The Cumulative First Preferred 6% Series A stock is redeemable at $101 per
share at the option of the Company and is preferentially entitled to par
value in involuntary liquidation and the redemption price in voluntary
liquidation. Annual mandatory sinking fund requirements approximate $114,000.
Stock previously purchased is currently being applied to satisfy the annual
sinking fund requirement.
Shareholder Rights Plan - In 1987, the Company declared a dividend of one
preferred share purchase right on each outstanding share of common stock as
part of a new Shareholder Rights Plan.
Each right entitles common shareholders to buy 1.638 one-thousandth of a
share of the Company's authorized Cumulative Second Preferred stock, Series
B, at an exercise price of $105. The rights will be exercisable, if not
earlier redeemed, only if a person or group acquires 20% or more of the
Company's common stock or announces a tender offer, the consummation of which
would result in ownership by a person or group of 30% or more of the common
stock.
Each holder of a right, upon the occurrence of certain events, will become
entitled to receive, upon exercise and payment of the purchase price,
preferred stock (or in certain circumstances, cash, property or other
securities of the Company or another person) having a value equal to twice
the amount of the purchase price.
The rights will expire on September 24, 1997.
Stock Option Plan - The Company has an incentive stock option plan, whereby
incentive stock options and nonqualifying stock options may be granted to
officers and other key employees to purchase a specified number of shares of
common stock at a price not less than the fair market value on the date of
grant and for a term not to exceed 10 years. In addition to the stock
options, the optionee may also be granted a stock appreciation right (SAR).
To date, SARs generally have been granted for the same number of shares
subject to related options. Activity in 1991, 1992 and 1993 is shown below:
Shares Option Prices
Outstanding at January 1, 1991 484,852 $17.00-$28.74
Granted 177,500 $25.75-$28.33
Exercised (60,618) $17.00-$26.13
Surrendered upon exercise of SARs (22,264) $17.00-$26.13
Lapsed (11,924) $20.07-$26.13
Outstanding at December 31, 1991 567,546 $20.07-$28.74
Granted 178,900 $28.00-$31.49
Exercised (56,759) $20.07-$27.53
Surrendered upon exercise of SARs (29,564) $20.07-$26.13
Lapsed (6,605) $22.00-$27.53
Outstanding at December 31, 1992 653,518 $20.07-$31.49
Adjustment for First Colony spin-off 238,711 $13.22-$20.73
Exercised (71,865) $13.22-$28.74
Surrendered upon exercise of SARs (59,212) $14.49-$26.13
Lapsed (153,539) $15.94-$31.49
Outstanding at December 31, 1993 607,613 $13.22-$20.73
All but 22,500 of the unexercised options and related SARs granted prior to
1993 were exercisable at December 31, 1993. On December 31, 1992 and 1993,
3,138,724 and 3,053,552 shares, respectively, were available for grant.
11. RESTRICTIONS ON DIVIDENDS:
The Company's revolving credit agreement contains restrictions, among others,
on the payment of dividends. At December 31, 1993, approximately
$256,489,000 can be used for such purposes.
12. GAINS & LOSSES ON FOREIGN CURRENCY:
Foreign currency transaction adjustments resulted in a gain of $1,725,000 in
1993, a loss of $4,918,000 in 1992 and a gain of $3,845,000 in 1991.
13. RENTAL EXPENSE & CONTRACTUAL COMMITMENTS:
Rental expense was $29,680,000 for 1993, $27,060,000 for 1992 and $21,200,000
for 1991.
The Company has a number of operating lease agreements primarily for office
space, transportation equipment and storage facilities.
<PAGE>
Future lease payments for the next five years for all noncancelable leases as
of December 31, 1993, are $16,704,000 for 1994, $11,800,000 for 1995,
$8,827,000 for 1996, $4,775,000 for 1997, $2,917,000 for 1998, and amounts
payable after 1998 are $12,291,000.
Contractual obligations for plant construction and purchases of real property
and equipment amounted to approximately $114,000,000 at December 31, 1993.
The Company is from time to time subject to routine litigation incidental to
its business. The Company is not a party to any pending litigation
proceedings that will have a materially adverse effect on the Company's
results of operations or financial condition. Further, no additional
disclosures are required in conformity with FASB Statement No.5, "Accounting
for Contingencies," due to immateriality.
14. PENSION PLANS & OTHER
POSTRETIREMENT BENEFITS:
U.S. Pension Plans - The Company has noncontributory defined benefit pension
plans covering most U.S. employees. The benefits for these plans are based
primarily on years of service and employees' compensation. The Company's
funding policy complies with the requirements of Federal law and regulations.
Plan assets consist principally of common stock, U.S. government and
corporate obligations and group annuity contracts. The pension information
for all periods includes amounts related to the Company's salaried plan and
to the hourly plans.
The components of net pension income are as follows:
(In Thousands)
1993 1992 1991
Return on plan assets:
Actual return $50,130 $43,970 $83,905
Expected return higher (lower)
than actual 3,679 7,091 (35,365)
Expected return 53,809 51,061 48,540
Amortization of transition asset 6,995 6,995 6,995
Service cost (benefits earned
during the year) (12,355) (11,219) (10,564)
Interest cost on projected
benefit obligation (36,978) (34,740) (33,443)
Amortization of prior service costs (4,318) (3,811) (3,811)
Net pension income $ 7,153 $ 8,286 $ 7,717
Amortization of the transition asset is based on the amount determined at the
date of adoption of FASB Statement No. 87.
Net pension income and plan obligations are calculated using assumptions of
estimated discount and interest rates and rates of projected increases in
compensation. The discount rate on projected benefit obligations was
primarily assumed to be 6.75% at December 31, 1993, and 7.25% at December 31,
1992 and 1991. The assumed interest rate at the beginning of each year is the
same as the discount rate at the end of each prior year. The rates of
projected compensation increase were assumed to be primarily 4.5% at December
31, 1993, and 5% at December 31, 1992 and 1991. The expected long-term rate
of return on plan assets was assumed to be primarily 9% each year. Net
pension income (table at left) is determined using assumptions as of the
beginning of each year. Funded status (table below) is determined using
assumptions as of the end of each year.
The following table presents a reconciliation of the
funded status of the U.S. pension plans to prepaid
pension expense, which is included in "Other assets
and deferred charges":
(In Thousands)
Years ended December 31 1993 1992
Plan assets at fair value $637,427 $620,646
Less actuarial present value of benefit obligations:
Accumulated benefit obligation (including vested
benefits of $486,284 and $444,229, respectively) 502,828 455,189
Projected compensation increase 63,873 56,785
Projected benefit obligation 566,701 511,974
Plan assets in excess of projected
benefit obligation 70,726 108,672
Unrecognized net loss (gain) 30,379 (3,946)
Unrecognized transition asset being amortized
principally over 16 years (56,422) (63,418)
Unrecognized prior service costs being amortized 44,997 41,237
Prepaid pension expense $ 89,680 $ 82,545
Foreign Pension Plans - Pension coverage for employees of the Company's
foreign subsidiaries is provided through separate plans. Obligations under
such plans are systematically provided for by depositing funds with trustees
or under insurance policies. 1993, 1992 and 1991 pension cost for these plans
was $2,265,000, $1,954,000 and $1,509,000, respectively. The actuarial
present value of accumulated benefits at December 31, 1993 and 1992, was
$13,445,000 and $13,457,000, substantially all of which was vested, compared
with net assets available for benefits of $14,451,000 and $14,853,000,
respectively.
<PAGE>
Consolidated - Consolidated net pension income for 1993, 1992 and 1991 was
$4,888,000, $6,332,000 and $6,208,000, respectively.
Other Postretirement Benefits - The Company also provides postretirement
medical benefits and life insurance for certain groups of retired employees.
In 1992, the Company adopted FASB Statement No. 106. The Company elected to
recognize immediately the cumulative effect of the change in accounting for
postretirement benefits of $54.5 million ($34.3 million net of income tax
benefit) which represents the accumulated postretirement benefit obligation
(APBO) existing at January 1, 1992, net of plan assets. The Company continues
to fund medical and life insurance benefit costs principally on a pay-as-you-
go basis. Although the availability of medical coverage after retirement
varies for different groups of employees, the majority of employees who
retire from the Company before becoming eligible for Medicare can continue
group coverage by paying the full cost of a composite monthly premium
designed to cover the claims incurred by active and retired employees. The
availability of group coverage for Medicare-eligible retirees also varies by
employee group with coverage designed either to supplement or coordinate with
Medicare. Retirees generally pay a portion of the cost of the coverage.
The components of net periodic postretirement benefit cost are as follows:
(In Thousands)
Years ended December 31 1993 1992
Service cost (benefits attributed to employee
service during the year) $ (3,088) $ (3,191)
Interest cost on accumulated postretirement
benefit obligation (6,911) (6,753)
Actual return on plan assets 2,823 2,797
Net periodic postretirement benefit cost $ (7,176) $ (7,147)
The pay-as-you-go expenditures for postretirement benefits prior to adoption
of FASB No. 106 were $2,970,000 in 1991.
Summary information on the Company's plans is as follows:
(In Thousands)
Years ended December 31 1993 1992
Accumulated postretirement benefit obligation for:
Retirees $ 51,091 $48,121
Fully eligible, active plan participants 18,608 13,879
Other active plan participants 41,492 30,274
111,191 92,274
Less plan assets at fair value 33,153 32,500
Less unrecognized net loss 14,776 1,267
Accrued postretirement benefit cost $ 63,262 $58,507
Plan assets are held under an insurance contract and reserved for retiree
life insurance benefits.
The discount rate used in determining the APBO was 6.75% at December 31,
1993, and 8% at December 31, 1992. The expected long-term rate of return on
plan assets used in determining the net periodic postretirement benefit cost
was 9% in 1993 and 1992, and the estimated pay increase was 4.5% at December
31, 1993, and 5% at December 31, 1992. The assumed health-care cost trend
rate used in measuring the accumulated postretirement benefit obligation was
15% in 1992 and 14% in 1993, declining by 1% per year to an ultimate rate of
7%, except that managed-care costs were assumed to begin at 12% in 1992 and
11% in 1993, declining by 1% per year to 6%.
If the health-care cost trend rate assumptions were increased by 1%, the
APBO, as of December 31, 1993, would be increased by approximately $9.3
million. The effect of this change on the sum of the service cost and
interest cost components of net periodic postretirement benefit cost for 1993
would be an increase of about $1.4 million.
Changes in Estimates - The lower discount rate at December 31, 1993,
increased the pension accumulated benefit obligation by about $24.5 million
and the pension projected benefit obligation by approximately $33 million,
while the lower rate of projected compensation increase reduced the pension
projected benefit obligation by about $10 million. The lower discount rate at
December 31, 1993, increased the postretirement accumulated benefit
obligation by approximately $17 million. As a result of the changes in rates,
the combined increase in pension and postretirement benefit expenses in 1994
will be approximately $1 million.
15. INCOME TAXES:
As discussed in Note 1, in the fourth quarter of 1992 the Company adopted
FASB Statement No. 109, which requires the use of the asset and liability
approach for financial accounting and reporting for income taxes. Financial
statements for prior years have not been restated, and the cumulative effect
of the accounting change as of January 1, 1992, resulted in a reduction of
the deferred income tax liability and an increase in net income of $19.6
million, or $.17 per share. This amount was included in the 1992 consolidated
statements of income reported as part of the cumulative effect of accounting
changes.
<PAGE>
Income from continuing operations before income taxes and extraordinary item
and cumulative effect of accounting changes and current and deferred income
taxes are composed of the following:
(In Thousands)
1993 1992 1991
Income from continuing operations
before income taxes and
extraordinary item and cumulative
effect of accounting changes:
Domestic $121,486 $189,788 $ 95,883
Foreign 12,021 16,830 39,337
Total $133,507 $206,618 $135,220
Current income taxes:
Federal $ 33,195 $ 78,268 $ 20,234
State 4,171 11,897 1,957
Foreign 13,782 12,238 12,508
Total 51,148 102,403 34,699
Deferred income taxes:
Federal (10,944) 4,987 5,612
State (282) 259 825
Foreign 3,563 (8,276) 32
Total (7,663) (3,030) 6,469
Total income taxes $ 43,485 $ 99,373 $ 41,168
The significant differences between the U.S. federal statutory rate and the
effective income tax rate are as follows:
% of Income
Before Income Taxes
Continuing operations: 1993 1992 1991
Federal statutory rate 35.0% 34.0% 34.0%
Deferred tax benefit attributable to
Whitby Research downsizing (7.0) - -
Higher net tax on foreign related
operations primarily due to absence of
tax benefit on significant losses of
Belgian subsidiary 3.9 - -
State taxes, net of federal tax benefit 1.9 1.4 1.4
Foreign sales corporation benefit (1.8) (1.5) (3.9)
Increase in federal deferred taxes
to enacted 35% rate 1.8 - -
Gain on sale of 20% of First
Colony Corporation - 16.3 -
Other items, net (1.2) (2.1) (1.1)
Effective income tax rate 32.6% 48.1% 30.4%
1993 and 1992 deferred income taxes result from temporary differences in the
recognition of income and expenses for financial and income tax reporting
purposes, using the liability or balance sheet method. Such temporary
differences result primarily from differences between the financial statement
carrying amounts and tax bases of assets and liabilities using enacted tax
rates in effect in the years in which the differences are expected to
reverse. Recently enacted federal income tax legislation, which increased the
corporate income tax rate to 35% retroactive to January 1, 1993, has been
applied to all future years and resulted in an increase in the deferred
income tax liability and a decrease in net income of $2.3 million, or $.02
per share. The deferred income tax assets and deferred income tax liabilities
recorded on the balance sheets as of December 31, 1993 and 1992, are as
follows:
(In Thousands)
Deferred tax assets: 1993 1992
Environmental reserves $ 12,599 $ 10,367
Future employee benefits 8,753 6,946
Intercompany profit in inventories 6,015 6,585
Inventory capitalization 1,876 2,356
Deferred tax benefit attributable to
Whitby Research downsizing 9,300 -
Corporate downsizing, plant writedown
and related costs 9,740 -
Belgian subsidiary net operating
loss carryforward 16,360 11,462
Valuation allowance for Belgian loss
carryforward (9,104) -
Other 4,931 6,163
Net deferred tax asset 60,470 43,879
Deferred tax liabilities:
Depreciation 129,526 97,728
Future employee benefits 10,581 8,328
Foreign currency translation adjustment 6,485 13,172
Capitalization of interest 10,209 8,215
Other 4,591 7,079
Deferred tax liabilities 161,392 134,522
Net deferred tax liabilities $100,922 $ 90,643
Reconciliation to financial statements:
Current tax assets $ 42,754 $ 23,697
Deferred tax liabilities 143,676 114,340
Net deferred tax liabilities $100,922 $ 90,643
<PAGE>
During 1993, it was concluded that it was more likely than not that a portion
of the benefit from the Belgian subsidiary's operating loss carryforward
would not be realized, and consequently there was a need for a valuation
allow-ance relating to this operating loss carryforward. While the benefit of
the losses may be carried forward indefinitely, continued operating losses in
1993 make the timing of any realization currently undeterminable. Therefore
a valuation allowance of $9.1 million against a $16.4 million benefit
attributable to the operating loss carryforwards of the Belgian subsidiary
was established.
1991 deferred income taxes, determined under APB Opinion No. 11, result from
timing differences between financial and income tax reporting of depreciation
($5,370,000) and future employee benefits ($2,450,000).
Based on current United States income tax rates, it is anticipated that no
additional United States income taxes would be incurred if the unremitted
earnings of the Company's foreign subsidiaries were remitted to Ethyl
Corporation due to available foreign tax credits.
16. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and estimates were used by the Company in estimating
the fair values of its outstanding financial instruments in conformity with
the disclosure requirements of FASB Statement No. 107, "Disclosures About
Fair Value of Financial Instruments."
Cash & cash equivalents - The carrying value
approximates fair value.
Long-term debt - The fair value of the Company's long-term debt is estimated
based on current rates available to the Company for debt of the same
remaining duration.
The estimated fair values of Ethyl's financial instruments as of December 31,
1993, are as follows:
(In Thousands)
Carrying Fair
Value Value
Cash and cash equivalents $ 48,201 $ 48,201
Long-term debt, including current maturities $ 701,042 $732,500
17. SPECIAL CHARGES:
Special charges for 1993 amounted to $36,150,000 ($22,400,000 after income
taxes, or $.19 per share), of which $14,200,000 of this charge was incurred
for plant writedown and other related costs in connection with the Company's
decision to discontinue production of lead antiknock compounds at the Sarnia,
Ontario, plant. This decision resulted from entering into an agreement with
The Associated Octel Company whereby Ethyl is assured of an ample long-term
supply of lead antiknock compounds. The remainder of the special charges
relate to costs of work-force reductions in the U.S. and Europe amounting to
$7,635,000 and $14,315,000 for downsizing costs of Whitby Research, Inc.,
relocation of employees and other miscellaneous costs.
A special charge in 1992 amounting to $9,500,000 ($6,000,000 after income
taxes, or $.05 per share) covered expenses for the planned relocation of the
Petroleum Additives Division research and development employees to Richmond,
Virginia, in 1994.
Special charges in 1991 totaling $11,185,000 ($7,000,000 after income taxes,
or $.06 per share) consist of a charge amounting to $4,835,000 for expenses
covering the mid-1992 relocation of the Petroleum Additives Division
headquarters to Richmond, Virginia, and a charge of $6,350,000 for expenses
and write-offs resulting from the discontinuance of certain developmental
research programs.
18. GAIN ON SALE OF 20% INTEREST IN
FIRST COLONY CORPORATION:
The gain on the sale of 20% of the Company's interest in First Colony
Corporation of $93,600,000 ($30,200,000 after income taxes, or $.25 per
share) resulted from the December 15, 1992, initial public offering sale of
9,700,000 shares of First Colony Corporation stock at a price of $28.00 per
share less expenses. The after-tax gain of $30,200,000 reflects higher tax
expenses based on a lower tax basis than book basis.
<PAGE>
19. EXTRAORDINARY CHARGE:
The extraordinary charge due to early extinguishment of debt net of income
taxes of $3,000,000, or $.04 per share, results from the Company redeeming
its $116.25-million 93-8% Sinking Fund Debentures due December 15, 2016, on
December 15, 1993, at a redemption price of 105.081 of the principal amount
and the write-off of remaining deferred financing costs associated with
obtaining the Sinking Fund Debt.
20. DISCONTINUED INSURANCE OPERATION:
On July 1, 1993, the Company's 80-percent investment in First Colony
Corporation was spun off in a tax-free distribution to the Company's
shareholders. The distribution consisted of the net assets of the Company's
investment in First Colony Corporation totaling $757,211,000 less unrealized
gains on marketable equity securities amounting to $78,227,000 (net of
deferred income taxes of $40,299,000) and retroactive income tax charges of
$1,535,000 due to a change in federal tax legislation.
The results of operations during the first six months of 1993 and during
years ended December 31, 1992 and 1991, were as follows:
Statements of Income (In Thousands)
Six Months
Ended
June 30 Years Ended December 31
1993 1992 1991
Revenues $737,137 $1,282,448 $1,033,575
Benefits and expenses 566,174 1,044,580 874,113
Income before income taxes and
cumulative effect of
accounting changes 170,963 237,868 159,462
Income taxes 58,316 74,475 46,846
Income before cumulative effect
of accounting changes 112,647 163,393 112,616
Cumulative effect of
accounting changes - 332 -
Net income 112,647 163,725 112,616
Less provision for minority interest 22,164 1,253 -
Income from discontinued
insurance operation $ 90,483 $ 162,472 $ 112,616
The net assets of the discontinued insurance operation consist of the
following:
(In Thousands)
December 31
1992
Assets
Cash $ 12,689
Investments 6,465,738
Deferred policy acquisition costs 548,736
Value of acquired insurance in force 38,145
Other assets and goodwill 305,425
Total assets 7,370,733
Liabilities and Minority Interest
Policy liabilities & policyholder funds 5,975,477
Long-term debt 250,000
Deferred income taxes 248,911
Other liabilities 76,483
Minority interest shareholders 161,312
Total liabilities and minority interest 6,712,183
Net assets of discontinued insurance operation $ 658,550
Long-term Debt - Insurance - First Colony Corporation had a senior term loan
agreement at December 31, 1992, with a group of banks and Credit Suisse as
administrative agent. The term loan amounted to $250 million and was due in
1994. The current rate through June 11, 1994, based on LIBOR was 4.8275%.
<PAGE>
21. SUBSEQUENT EVENTS:
New Credit Facility - On February 16, 1994, the Company entered into a new,
five-year, $1-billion unsecured credit facility to replace its existing $700-
million credit agreement. On March 1, 1994, the credit facility will
automati-cally be split into two separate $500-million facilities upon the
scheduled spin-off of the Company's Chemicals Businesses as contained in a
wholly owned subsidiary, Albemarle Corporation (Albemarle). The initial
proceeds from the Albemarle credit facility will be utilized by Albemarle to
absorb the planned transfer from the Company to Albemarle of a portion of the
Company's borrowing under the credit facility. Fees of up to 3/8 of 1% per
annum are assessed on the unused portion of the commitment. The credit
facility permits borrowing for the next five years at various interest rate
options. The facility contains a number of covenants, representations and
events of default typical of a credit facility agreement of this size and
nature, including financial covenants requiring the Company to maintain
consolidated indebtedness (as defined) of not more than 60% of the sum of
shareholders' equity and consolidated indebtedness and maintenance of minimum
shareholders' equity after the spin-off of at least $250 million.
Spin-Off of Albemarle Corporation - On February 17, 1994, the Company
announced it would distribute (through the Distribution) to its common
shareholders all of the outstanding shares of its wholly owned subsidiary,
Albemarle, a Virginia corporation. Following the Distribution, Albemarle will
own, directly or indirectly, the olefins and derivatives, bromine chemicals
and specialty chemical businesses formerly owned directly or indirectly by
the Company. The Distribution will be made in the form of a tax-free spin-off
to shareholders of record at the close of business on February 28, 1994. One
share of Albemarle common stock will be distributed on or about March 10,
1994, to Ethyl common shareholders for every two shares of Ethyl common stock
held.
Supplemental Pro Forma Financial Information (Unaudited) - As a result of the
aforementioned Distribution, the Company believes that the following pro
forma financial information is important to enable the reader to obtain a
meaningful understanding of the Company's financial position and results of
operations. The pro forma financial statements presented at right are for
informational purposes only to illustrate the estimated effects of the
Distribution of Albemarle on Ethyl on a stand-alone basis and may not
necessarily reflect the future results of operations or financial position of
Ethyl or what the earnings, results of operations, or financial position of
Ethyl would have been had Albemarle operated as a separate, independent
company.
The pro forma condensed balance sheet of Ethyl as of December 31, 1993,
presents the financial position of Ethyl assuming that the Distribution, the
split of the Ethyl credit facility (such that Albemarle absorbs the transfer
from Ethyl of a portion of Ethyl's borrowing under a credit facility), and
the reduction of Ethyl's shareholders' equity as a result of such transfer
had occurred as of that date. The pro forma condensed statements of income
for the years ended December 31, 1993 and 1992, present the results of
operations of Ethyl assuming that the Distribution had occurred as of
January 1, 1992.
<PAGE>
<TABLE>
Pro Forma Condensed Balance Sheet (Unaudited)
(In Thousands)
Pro Forma
December 31, 1993 Historical Adjustments(a)
<S> <C> <C> <C>
Assets
Current assets:
Cash & cash equivalents $ 48,201 $ (32,922) $ 15,279
Accounts receivable,
less allowance for
doubtful accounts 345,160 (140,304) 204,856
Inventories 290,814 (136,415) 154,399
Deferred income taxes
& prepaid expenses 49,522 (17,756) 31,766
Total current assets 733,697 (327,397) 406,300
Property, plant & equipment 1,908,630 (1,363,942) 544,688
Less accumulated depreciation
and amortization (910,360) 686,652 (223,708)
Net property, plant & equipment 998,270 (677,290) 320,980
Other assets & deferred charges 164,382 (48,544) 115,838
Goodwill & other intangibles -
net of amortization 112,849 (34,095) 78,754
Total assets $2,009,198 $(1,087,326) $921,872
Liabilities & Shareholders' Equity
Current liabilities:
Accounts payable $ 154,971 $ (80,941) $ 74,030
Accrued expenses 125,704 (53,320) 72,384
long-term debt, current portion 14,056 (14,043) 13
Dividends payable 17,764 17,764
Income taxes payable 14,020 14,020
Total current liabilities 326,515 (148,304) 178,211
Long-term debt 686,986 (386,438) 300,548
Other noncurrent liabilities 99,240 (29,544) 69,696
Deferred income taxes 143,676 (120,902) 22,774
Redeemable preferred stock 200 200
Shareholders' equity 752,581 (402,138) 350,443
Total liabilities & shareholders' equity $2,009,198 $(1,087,326) $921,872
</TABLE>
See Note (a) under Pro Forma Condensed Statements of Income on Page 45.
<TABLE>
Pro Forma Condensed Statements of Income (Unaudited)
(In Thousands Except Per-Share Amounts)
1993 1992
Pro Pro
Years Ended December 31 Historical Adjustments(b) Forma Historical Adjustments(b) Forma
<S> <C> <C> <C> <C> <C> <C>
Net sales $1,938,390 $(903,418) $1,034,972 $1,692,582 $(818,223) $874,359
Cost of goods sold 1,386,251 (710,970) 675,281 1,199,096 (631,903) 567,193
Gross profit 552,139 (192,448) 359,691 493,486 (186,320) 307,166
Selling, general & administrative
expenses 272,760 (106,161) 166,599 236,333 (92,884) 143,449
Research & development expenses 75,624 (30,303) 45,321 73,831 (31,997) 41,834
Special charges 36,150 (7,322) 28,828 9,500 - 9,500
Operating profit 167,605 (48,662) 118,943 173,822 (61,439) 112,383
Interest & financing expenses 44,085 (17,358)(c) 26,727 62,279 (15,953)(c) 46,326
Gain on sale of 20% of First Colony
Corporation - - - (93,600) - (93,600)
Other (income) expenses, net (9,987) 1,640 (8,347) (1,475) 1,998 523
Income from continuing
operations before income taxes &
extraordinary item & cumulative
effect of accounting changes 133,507 (32,944) 100,563 206,618 (47,484) 159,134
Income taxes 43,485 (17,098)(d) 26,387 99,373 (12,657)(d) 86,716
Income from continuing operations
before extraordinary item &
cumulative effect of accounting
changes $ 90,022 $ (15,846) $ 74,176 $ 107,245 $(34,827) $ 72,418
Earnings per share based on
income from continuing
operations before extraordinary &
cumulative effect of accounting
changes $ .76(e) $ .63(e) $ .90(e) $ .61(e)
</TABLE>
Introduction To Notes: The following is a summary of the adjustments
reflected in the pro forma condensed financial statements. Following the
Distribution, in the opinion of management, expenses of Ethyl will not differ
from the amounts remaining in the Ethyl consolidated financial statements
after eliminating those expenses attributable to Albemarle.
Notes:
(a) To record, as if the Distribution occurred on December 31, 1993, the
planned transfer from Ethyl to Albemarle of a portion of an Ethyl borrowing
under a credit facility necessary to achieve a planned debt-to-total-
capitalization ratio and the simultaneous elimination of the historical
assets, liabilities and equity of Albemarle. Also, to record the proposed
Distribution to holders of Ethyl common stock, par value $1.00 per share, of
all of the outstanding Albemarle common stock, without par value.
Approximately 59.2 million shares of Albemarle common stock are expected to
be distributed (one share of Albemarle for every two shares of Ethyl).
(b) To eliminate the historical income and expenses of Albemarle for
the respective periods presented, as if the Distribution had occurred on
January 1, 1992.
(c) To eliminate interest expense that would have been incurred by Albemarle
on debt transferred to Albemarle (as if the Distribution had occurred on
January 1, 1992), including debt under the credit facility
transferred from Ethyl. Interest eliminated under the credit facility was
computed at the weighted-average interest rates of 3.6% and 4.2% for the
years ended December 31, 1993 and 1992, respectively, less capitalized
interest of $1,101,000 and $949,000, respectively. Interest rates utilized to
calculate the Albemarle interest eliminated under the credit facility are
those rates that were available to Ethyl under its revolving credit agreement
during the respective periods presented. Such rates were utilized because,
during management's negotiations to obtain the credit facility, the rates
available to Ethyl and Albemarle on a stand-alone basis were approximately
the same. Management was advised that these rates would have been the same
during the respective periods presented.
(d) To record the estimated tax benefits for the pro forma adjustments
described in Note (c) at assumed combined state and federal income tax rates
of 37.6% and 37.3% for the years ended December 31, 1993 and 1992,
respectively.
(e) Historical and pro forma earnings per share, based on income from
continuing operations before extraordinary item and cumulative effect of
accounting changes, are computed after deducting applicable preferred stock
dividends from such income and using the weighted-average number of shares of
common stock and common stock equivalents outstanding for the periods
presented.
<PAGE>
Management's Report on the Financial Statements
Ethyl Corporation's management has prepared the financial statements and
related notes appearing on pages 30 through 45 in conformity with generally
accepted accounting principles. In so doing, management makes informed
judgments and estimates of the expected effects of events and transactions.
Financial data appearing elsewhere in this annual report are consistent with
these financial statements.
Ethyl maintains a system of internal controls to provide reasonable, but not
absolute, assurance of the reliability of the financial records and the
protection of assets. The internal control system is supported by written
policies and procedures, careful selection and training of qualified
personnel and an extensive internal audit program.
These financial statements have been audited by Coopers & Lybrand,
independent certified public accountants. Their audit was made in accordance
with generally accepted auditing standards and included a review of Ethyl's
internal accounting controls to the extent considered necessary to determine
audit procedures.
The audit committee of the board of directors, composed only of outside
directors, meets with management, internal auditors and the independent
accountants to review accounting, auditing and financial reporting matters.
The independent accountants are appointed by the board on recommendation of
the audit committee, subject to shareholder approval.
Report of Independent Accountants
certified public accountants Riverfront Plaza West in principal areas of
901 East Byrd Street the world
Suite 1200
Richmond, Virginia 23219
Telephone (804) 697-1900
To the Board of Directors & Shareholders of Ethyl Corporation
We have audited the accompanying consolidated balance sheets of Ethyl
Corporation and Subsidiaries (the Company) as of December 31, 1993 and 1992,
and the related consolidated statements of income, shareholders' equity and
cash flows for each of the three years in the period ended December 31, 1993.
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 Ethyl
Corporation and Subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in Notes 14 and 15 to the consolidated
financial statements, effective January 1, 1992, the Company changed its
method of accounting both for postretirement benefits other than pensions and
for income taxes by adopting Financial Accounting Standards Board Statements
No. 106 and No. 109, respectively.
COOPERS & LYBRAND
January 31, 1994
(except as to the information presented in Note 21,
for which the date is February 17, 1994)
EXHIBIT 22
LIST OF SUBSIDIARIES
The following is a list of the significant subsidiaries of the registrant
as of December 31, 1993. Each such subsidiary does business under its
corporate name.
Jurisdiction of
Subsidiary Incorporation
- ---------- ---------------
Albemarle Corporation Virginia
EID Corporation Liberia
Ethyl Asia Pacific Company Virginia
Ethyl Canada Inc. Province of Ontario, Canada
Ethyl China Corporation Virginia
Ethyl Coordination Center S.A. Belgium
Ethyl Foreign Sales Corporation U.S. Virgin Islands
Ethyl France S.A.R.L. France
Ethyl Interamerica Corporation Delaware
Ethyl Investments Inc. Province of Ontario, Canada
Ethyl Japan Corporation Japan
Ethyl Mineraloel-Additive GmbH Germany
Ethyl Petroleum Additives, Inc. Delaware
Ethyl Petroleum Additives Limited United Kingdom
Ethyl S.A. Belgium
Imi-Tech Corporation Illinois
Potasse et Produits Chimiques S.A. France
Whitby, Inc. Virginia
Whitby Pharmaceuticals, Inc. Delaware
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITOR
We consent to the incorporation by reference in the following Form S-8
registration statements of our (i) report dated January 31, 1994, except as to
the information presented in Note 21, for which the date is February 17, 1994,
on our audits of the consolidated financial statements of Ethyl Corporation and
Subsidiaries appearing on page 46 of the Ethyl Corporation 1993 Annual Report to
Shareholder, which report is included in this Annual Report on Form 10-K; and
(ii) report dated January 31, 1994 on the financial statement schedules, which
report appears on page F-2 of this Form 10-K, as of December 31, 1993 and 1992,
and for the years ended December 31, 1993, 1992 and 1991:
Savings Plan for the Employees of Ethyl Corporation (File No. 33-44990), and
Incentive Stock Option Plan of Ethyl Corporation dated September 8, 1982
(File No. 2-78933).
/s/ Coopers & Lybrand
COOPERS & LYBRAND
Richmond, Virginia
March 25, 1994
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 17, 1994
ETHYL CORPORATION
(Exact name of as specified in charter)
Virginia 1-5112 54-0118820
-------- ------ ----------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
330 South Fourth Street, Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 804-788-5000
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On February 17,1994, Ethyl Corporation, a Virginia corporation
("Ethyl" or the "Company") announced that it would distribute to its
shareholders all of the outstanding shares of its wholly-owned subsidiary,
Albemarle Corporation, a Virginia corporation ("Albemarle"). Following the
Distribution, Albemarle will own, directly or indirectly, the olefins and
derivatives, bromine chemicals and specialty chemicals businesses (the
"Chemicals Businesses") formerly owned, directly or indirectly, by Ethyl.
Ethyl's ongoing operations will consist of its petroleum additives and
pharmaceutical businesses (the "Ethyl Businesses").
At the close of business on February 28, 1994 (the "Distribution
Date"), Ethyl will deliver certificates representing all of the common
stock of Albemarle, without par value ("Albemarle Common Stock"),
outstanding as of the Distribution Date to Harris Trust and Savings Bank
(the "Distribution Agent"), for distribution (the "Distribution") to the
holders of record of the Company's common stock, par value $1.00 per share
("Ethyl Common Stock"), as of the Distribution Date. The Distribution
Agent is expected to mail certificates representing the distributed
Albemarle Common Stock to the holders of shares of Ethyl Common Stock on or
about March 10, 1994. The Distribution ratio is one share of Albemarle
Common Stock for every two shares of Ethyl Common Stock.
Additional information concerning the Distribution is contained in an
information statement dated February 17, 1994 (the "Information
Statement"), copies of which are being mailed to holders of Ethyl Common
Stock, and a copy of which is filed as an Exhibit to this Form 8-K.
* * * * *
Item 5. Other Events.
The following information is provided with respect to Ethyl and its
operations following the Distribution:
Description of Business
The Company will continue to be a major producer of petroleum
additives. It also will continue to own Whitby, Inc. ("Whitby"), which
markets and distributes finished pharmaceuticals. Following the
Distribution, the Company will employ approximately 1,700 people.
Petroleum Additives. The Company's petroleum additives business
includes fuel additives and lubricant additives. Fuel additives increase
the quality of gasolines and diesel fuel by raising the level of octane and
cetane, retain the quality of fuel over time, maintain engine cleanliness,
protect metals and reduce friction and wear and reduce emissions. Fuel
additives are used in fuels for over-the-road and off-highway vehicles,
prop and jet aircraft, railroad, marine and other gasoline, diesel or
synfuel powered engines as well as home heating oil. Lubricant additives
extend the useful life of an oil, provide protection against wear and
corrosion of metallic parts, protect seals, withstand extremely high
temperatures and pressures, maintain viscosity and increase the adhesion of
oils to metallic parts. Lubricant additives are used in oils, fluids and
greases for over-the-road and off-highway vehicles, aircraft, power tools,
marine, railroad, industrial and other equipment, machinery and processes
requiring lubrication.
Gasoline fuel additive products include lead and manganese antiknock
compounds to increase octane and prevent power loss due to early or late
combustion (engine knock); hindered phenolic antioxidants to prevent
thermal degradation during storage and transport; corrosion inhibitors to
prevent fuel storage and pumping system failures; detergent packages to
keep carbon deposits from forming on fuel injectors, intake valves or
carburetors and in combustion chambers; and dyes to provide color
differentiation.
Lead antiknock compounds, which are sold worldwide to petroleum
refiners, remain one of the Company's largest product lines. The Company
estimates that it accounts for approximately one-third of the total
worldwide sales of lead antiknock compounds.
Lead antiknock compounds have been subject to regulations restricting
the amount that can be used in gasoline in the United States for a number
of years and in Canada since 1990. The North American market for these
products in motor vehicles has effectively been eliminated, but the market
for their use in piston aircraft and certain other applications has
remained at about the same level for years and is expected to remain
stable. As the Company has forecasted and planned, the market for these
products in other major markets, particularly Western Europe, continues to
decline as the use of unleaded gasoline grows.
After excluding the Chemical Businesses, the operating profit
contribution of lead antiknock compounds is estimated to have declined to
approximately 70% in 1993 from approximately 80% in 1992 which had increased
from approximately 75% in 1991. The decline in 1993 percentage contribution
primarily reflected an increase in profits from non-lead antiknock products
and a 1993 charge resulting from the planned cessation of lead antiknock
compound production at the Company's Canadian plant. In recent years, the
Company has been able to offset a continuing decline in shipments of lead
antiknock compounds with higher margins due primarily to significant increases
in selling prices. Any further decline in the use of lead antiknocks will
adversely affect profit and sales contributions unless the Company can offset
such declines with increased market share and/or higher selling prices.
The Company currently produces some of its lead antiknock compounds in
its subsidiary's Canadian plant and obtains additional quantities under a
supply agreement with E. I. DuPont de Nemours & Company. On January 11,
1994, the Company announced (i) an agreement with The Associated Octel
Company Limited ("Octel") of London in which Octel has agreed to allocate a
portion of its production capacity of lead antiknock compounds to the
Company for sale and distribution through the Company's worldwide network
and (ii) that the Company's Canadian subsidiary would cease production of
lead antiknock compounds at its Canadian plant by March 31, 1994. The
agreement continues so long as the Company determines that a market
continues to exist for lead antiknock compounds. Under the agreement with
Octel, the Company has the right to purchase from Octel antiknock compounds
estimated to be sufficient to cover the Company's needs in any contract
year. Purchases are at a fixed initial price per pound with periodic
escalations and adjustments.
In addition to the supply agreement, Octel and the Company have agreed
that the Company will assume the distribution for Octel of any of its lead
antiknock compounds that are shipped in bulk.
The Company believes the agreements with Octel will assure it of an
ongoing efficient source of supply for lead antiknock compounds as the
worldwide demand for these products continues to decline. It does not
anticipate that the cessation of its Canadian antiknock operations and the
entry into the Octel supply agreement will adversely affect its relations
with its customers, nor will these changes have a material effect on its
future results of operations. The Company and Octel will continue to
compete vigorously in sales and marketing of lead antiknock compounds.
The Company also sells manganese-based antiknock compounds ("MMT"),
which are used in unleaded gasoline in Canada. The Company conducted
extensive testing of this product prior to filing a request in 1990 for a
fuel-additive waiver from the United States Environmental Protection Agency
(the "EPA") required to begin marketing the additive for use in unleaded
gasoline in the United States. The Company voluntarily withdrew its waiver
application in November 1990 after public hearings and detailed exchanges
of information with the EPA, when the EPA raised several health and
environmental questions near the end of the 180-day statutory review
period. The Company continued testing and filed a new waiver request in
July, 1991, followed by additional public hearings and detailed exchanges
of information with the EPA. In January, 1992, the EPA denied the
Company's application for a waiver. An appeal was filed with the United
States Court of Appeals for the District of Columbia Circuit contesting the
EPA's denial of the application for a waiver for the use of the additive in
unleaded gasoline. In April, 1993 the Court remanded the case to the EPA
for reconsideration within 180 days of its denial of the Company's waiver
application, directing the EPA to consider new evidence and make a new
decision. On November 30, 1993, the EPA determined that emissions data
contained in the Company's application satisfy all Clean Air Act standards,
but reported that it was not able to complete its assessment of the overall
public health implications of manganese. The Company and the EPA mutually
agreed to an 180-day extension to resolve this last remaining issue.
The Company also produces diesel fuel additive products, including
cetane improvers for consistent combustion and power delivery; amine
stabilizers and hindered phenolic antioxidants to prevent degradation
during storage and transport; cold flow improvers to enhance fuel pumping
under cold-weather conditions; detergent packages to keep carbon deposits
from forming on fuel injectors and in combustion chambers; dyes for fuel
identification and leak detection; lubricity agents; and a conductivity
modifier to neutralize static charge build-up in fuel and products for home
heating oils.
In addition to fuel additives, the Company's petroleum additives
products consist of lubricant additives. Lubricant additive products
include (i) engine oil additive packages for passenger car motor oils for
gasoline engines, heavy-duty diesel oils for diesel powered vehicles,
diesel oils for locomotive, marine and stationary power engines and two-
stroke oils for two-cycle engines, (ii) specialty additive packages for
automatic transmission fluids, automotive and industrial gear oils,
hydraulic fluids and industrial oils, and (iii) components for engine oil
and specialty additive packages such as antioxidants to resist high-
temperature degradation, antiwear agents to protect metal surfaces from
abrasion, detergents to prevent carbon and varnish deposits from forming on
engine parts, dispersants to keep engine parts clean by suspending
insoluble products of fuel combustion and oil oxidation, friction reducers
to facilitate movement, pour point depressants to enable oils to flow at
cold temperatures, corrosion inhibitors to protect metal parts, and
viscosity-index improvers to control oils' rate of flow at low and high
temperatures.
The market for lubricant additives is experiencing significant changes
as a result of market and regulatory demands for better fuel economy,
reduced emissions and cleaner oils that have led to new equipment design
and more stringent performance requirements. Such requirements mean
reformulation of many products, new product development and more product
qualification tests. A major petroleum additives research complex in
Richmond, Virginia is scheduled for completion in the summer of 1994. The
June 1992 acquisition of the petroleum additive products and technologies
of Amoco Petroleum Additives Company ("Amoco") and their subsequent
integration into the Company's product lines also has been part of a major
ongoing effort to expand and improve the product lines of the petroleum
additives business.
A majority of the Company's production of petroleum additives is in
the United States. The Company also has production facilities in Feluy,
Belgium.
Fuel additives for gasoline, diesel fuels and heating oils are sold
directly to petroleum refiners and marketers, terminals and blenders.
Lubricant additive packages are sold directly to companies producing
finished oils and fluids.
Major raw materials used by the petroleum additives business include
polybutenes, process oils, sodium and lead metals, 2-ethyl-1-hexanol and
isobutylene as well as electricity and natural gas as fuels, which are
purchased at prices the Company believes are competitive.
The Company's petroleum additives businesses operate in highly
competitive markets, most of which involve a limited number of competitors.
The competitors are both larger and smaller than the Company in terms of
resources and market share. Competition in connection with all of the
Company's petroleum additive products requires continuing investments in
research and development of new products or leading technologies, in
continuing product and process improvements and in providing specialized
customer services.
Pharmaceuticals. Whitby offers a complete line of hydrocodone-based
analgesic products, including LORTAB(TM) products, which compete in the
codeine combinations subsegment of the narcotic analgesic market, VICON(TM)
products, which include prescription and over-the-counter vitamin and
mineral products, and THEO-24(TM) products, which consist of a series of
varying dosage bronchodilators in the theophylline class. Other products
include WINSOR(TM) brand prescription dosage ibuprofen and over-the-counter
products such as vitamin supplements and CORTICAINE(TM), a cortisone cream.
Third-party manufacturers inspected by the United States Food and Drug
Administration formulate and produce Whitby's products according to
Whitby's specifications.
Whitby sells its products to wholesalers, large pharmacy chains and
institutional purchasers such as hospital chains and health maintenance
organizations.
Research and Patents. With respect to the petroleum additives
businesses, the Company spent approximately $45 million, $42 million and
$34 million in 1993, 1992 and 1991, respectively, on research and
development, which qualified under the technical accounting definition of
research and development. Total research and development and technical
support spending with respect to the petroleum additives businesses for
1993 was approximately $76 million, including $31 million related to
technical services support to customers, testing of existing products, cost
reduction, quality improvement and environmental studies. In December,
1993, the Company announced that it was discontinuing Whitby's
pharmaceutical research operations.
Excluding the Chemicals Businesses, the Company owns over 800 active
United States and foreign patents, including 29 United States patents and
83 foreign patents issued in 1993. Some of these patents are licensed to
others. In addition, rights under the patents and inventions of others
have been acquired by the Company through licenses. The Company will
transfer to Albemarle patents and patent applications relating to the
Chemicals Businesses, will license Albemarle to use technology relating to
the Chemicals Businesses and will grant Albemarle limited rights to
manufacture and sell MMT. Albemarle will license the Company to use
certain patents and technology owned by Albemarle the use of which has
application to the Ethyl Businesses. The Company's patent position is
actively managed and is deemed by it to be adequate for the conduct of its
business.
Environmental Requirements. The Company is subject to federal, state
and local requirements regulating the handling, manufacture or use of
materials (some of which are classified as hazardous or toxic by one or
more regulatory agencies), the discharge of materials into the environment
and the protection of the environment. It is the Company's policy to
comply with these requirements and to provide workplaces for employees that
are safe, healthful and environmentally sound and that will not adversely
affect the safety, health or environment of communities in which the
Company does business. The Company believes that as a general matter its
policies, practices and procedures are properly designed to prevent any
unreasonable risk of environmental damage, and of resulting financial
liability, in connection with its business.
The Clean Air Act Amendments of 1990 ("the Amendments") became law on
November 15, 1990. Because the EPA and the states are still in the process
of completing and implementing definitive regulations interpreting the
Amendments and establishing detailed requirements, the Company is unable at
this time to make any detailed assessment of the effect of the Amendments
on its earnings or operations.
Among other environmental requirements, the Company is subject to the
federal Comprehensive Environmental Response, Compensation and Liability
Act ("Superfund"), and similar state laws, under which the Company has been
designated as a potentially responsible party ("PRP") that may be liable
for a share of the costs associated with cleaning up various hazardous
waste sites, some of which are on the EPA's Superfund national priority
list. In most cases where the Company has been identified as a PRP,
participation is de minimis. Further, almost all of the sites represent
environmental issues that are quite mature and that have been investigated,
studied and in many cases settled. In de minimis PRP matters, the
Company's policy generally is to negotiate a consent decree and to pay any
apportioned settlement, enabling the Company to be effectively relieved of
any further liability as a PRP, except for remote contingencies. In other
than de minimis PRP matters, the Company's records indicate that unresolved
exposures are expected to be immaterial. The Company accrues and expenses
its proportionate share of PRP costs in accordance with Statement of
Financial Accounting Standards No. 5 and Financial Accounting Standards
Board Interpretation No. 14. Because the Company's management has been
actively involved in evaluating environmental matters, the Company is able
to conclude that the outstanding environmental liabilities for unresolved
PRP sites for which the Company would not be a de minimis participant
should not be material.
Compliance with government pollution-abatement and safety regulations
usually increases operating costs and requires remediation costs and
investment of capital that in some cases produces no monetary return. With
respect to the Ethyl Businesses, operating and remediation costs charged to
expense were approximately $13 million in 1993 versus $12 million in 1992
and $6 million in 1991 (excluding depreciation of previous capital
expenditures) and are expected to be somewhat higher in the next few years
than in the past. Capital expenditures for pollution-abatement and safety
projects, including such costs that are included in other projects, were
approximately $4 million in 1993 compared with $7 million and
$6 million for the years 1992 and 1991, respectively. For each
of the next few years, capital expenditures for these types of projects are
likely to be in the same range as in recent years. Management's estimates of
the effects of compliance with governmental pollution-abatement and safety
regulations are subject to (i) the possibility of changes in the applicable
statutes and regulations or in judicial or administrative construction of
such statutes and regulations, and (ii) uncertainty as to whether
anticipated solutions to pollution problems will be successful, or whether
additional expenditures may prove necessary.
In connection with the Distribution, Albemarle will assume
environmental liabilities of the Chemicals Businesses, and the Company will
retain such liabilities relating to the Ethyl Businesses.
Properties. The following is a brief description of the principal
plants and related facilities of the Company, all of which are owned except
as stated below.
LOCATION PRINCIPAL OPERATIONS
Bracknell, Berkshire, England Research activities
Feluy, Belgium Production of lubricant additives
Houston, Texas Production of lubricant additive
dispersants and blends; research activities
Natchez, Mississippi Production of lubricant additives,
including mainly detergents
Orangeburg, South Carolina Production of fuel additives,
(leased land) including antioxidants*, diesel fuel cetane
improver and manganese antiknocks*
St. Louis, Missouri Research and product-development activities
Sarnia, Ontario, Canada Production of lead antiknock compounds**,
lubricant additives, cold flow improvers
and diesel fuel cetane improvers
Sauget, Illinois Production of lubricant additives,
including detergents, dispersants, antiwear
agents, crankcase packages, transmission
and gear packages and friction reducers
___________________________________
* Will be produced for the Company by Albemarle.
** The Company will cease production of lead antiknock compounds by March
31, 1994.
The Company believes that its plants are more than adequate at current
sales levels. Operating rates of plants vary with product mix and normal
seasonal sales swings. The Company believes that its plants generally are
in good operating condition. The Company is constructing a new research
and product-development facility in Richmond, Virginia scheduled for
startup in the summer of 1994. At that time, research and product-
development activities at St. Louis, Missouri will be phased out. All
losses in connection with the discontinuance of the St. Louis operations
have been fully provided for. The Company also is partially replacing the
manufacturing capacity of Amoco's Wood River, Illinois lubricant and fuel
additives plant from which the Company currently is receiving product under
a supply agreement. The new, more efficient facilities are scheduled for
start-up in 1995.
Legal Proceedings. The Company and its subsidiaries are involved from
time to time in legal proceedings of types regarded as common in the
Company's businesses, particularly administrative or judicial proceedings
seeking remediation under environmental laws, such as Superfund, and
products liability litigation.
A 1992 products liability suit is pending in a Minnesota state court
against the Company, another chemical company, and the owner and leasing
agent of a residence in Minneapolis at which two children are claimed to
have been injured by ingesting soil and dust containing lead from peeling
paint and automotive emissions. In recent years, many suits have been
brought against paint manufacturers and landlords alleging personal injury
caused by ingesting lead from paint found in paint chips, dirt and dust.
Like these suits, the Minnesota suit just mentioned involves alleged injury
from paint lead in chips, dirt and dust, but also involves alleged injury
from gasoline lead in dirt and dust, as well. The Company believes the
Minnesota suit is without merit with respect to the Company, but since the
suit partially rests on a theory of harm to children from eating dirt
containing automotive lead emissions, the Company is vigorously defending
it.
While it is not possible to predict or determine the outcome of the
proceedings presently pending, in the Company's opinion they will not
ultimately result in any liability that would have a material adverse
effect upon the results of operations or financial condition of the Company
and its subsidiaries on a consolidated basis.
Albemarle will assume the defense of a number of pending legal and
administrative proceedings that are related to the Chemicals Businesses and
will assume any liability attributable to those businesses.
Financings. In connection with the Distribution, the Company has
refinanced its existing $700 million credit facility, with a $1 billion
credit facility that will be split at the time of the Distribution into a
$500 million facility for Albemarle and a $500 million facility for the
Company. The Company's $500 million credit facility is with major
commercial banks, has a five-year term and is not collateralized. Two
options will be available under the Company's new Credit Facility: (i) a
competitive advance option provided on an uncommitted basis through an
auction mechanism and (ii) a revolving credit option provided on a
committed basis. Availability under each option will be reduced by usage
under the other option on a dollar-for-dollar basis. The Credit Facility
provides for a facility fee to be payable based on the face amount of the
Credit Facility, irrespective of usage and a fixed annual administrative
fee. The Credit Facility contains certain restrictive financial covenants
applicable to the Company. Among other things, the Credit Facility
requires the Company to maintain certain financial ratios and contains
customary financial and operating covenants, including maintenance of
consolidated indebtedness at not more than 60% of the sum of shareholders'
equity and consolidated indebtedness, maintenance of minimum shareholders'
equity of $250 million and restrictions on the ability of the Company to
incur indebtedness, to merge or consolidate, to sell certain assets, and to
create, incur or permit the existence of certain liens.<PAGE>
MANAGEMENT
In connection with the Distribution, the Company's Board of Directors
has elected Thomas E. Gottwald as a director effective immediately
following the Distribution Date. In addition, the following changes will
be made in the Company's executive officers in connection with the
Distribution: Bruce C. Gottwald will become Chairman of the Board,
Chairman of the Executive Committee and Chief Executive Officer; Thomas E.
Gottwald will become President and Chief Operating Officer; F. D. Gottwald,
Jr. will become Vice Chairman of the Board while assuming the duties of
Chairman of the Board and Chief Executive Officer of Albemarle; Charles B.
Walker will become Vice Chairman of the Board and Chief Financial Officer
while also assuming the position of Vice Chairman of the Board and Chief
Financial Officer of Albemarle; Dr. William M. Gottwald, President of
Whitby, also will become a Senior Vice President of the Company; and E.
Whitehead Elmore will become Special Counsel to the Company's Executive
Committee and Corporate Secretary, while also becoming Senior Vice
President, Secretary and General Counsel of Albemarle. Other officers of
the Company will include:
Sampson H. Bass, Jr. Vice President Secretary to the Executive
Committee
David A. Fiorenza Vice President Finance and Controller
C. S. Warren Huang Vice President Research and Development
Donald R. Lynam Vice President Air Conservation
Steven M. Mayer Vice President and General Counsel
Ian A. Nimmo Vice President Lubricant Additives
Henry C. Page, Jr. Vice President Human Resources
Newton A. Perry Vice President Fuel Additives
A. Prescott Rowe Vice President External Affairs
Certain Transactions with Albemarle
The Chemicals Businesses have in the past engaged in numerous
transactions with the Ethyl Businesses. Such transactions have included,
among other things, the provision of various types of financial support by
the Company. Although the Company will continue to provide certain support
services to Albemarle and Albemarle will provide certain support services
to the Company for a limited period of time after the Distribution,
most of such services are expected ultimately to be discontinued. In
addition to these services, for a more extended period of time, Albemarle
will provide services to the Company at Orangeburg, South Carolina, and
Feluy, Belgium and Albemarle and the Company will exchange services at
Houston, Texas.
Orangeburg, South Carolina Agreements
The Orangeburg, South Carolina plant consists of facilities for the
production of petroleum additives and specialty chemicals. After the
Distribution, Albemarle will operate for the Company the facilities that
produce petroleum additives (the "Orangeburg Additives Facility") for a
period of ten years, with an option by the Company to extend for an
additional ten years. The operating agreement relating to the Orangeburg
Additives Facility (the "Orangeburg Operating Agreement") provides that
Albemarle will produce certain petroleum additive products meeting the
Company's specifications and provide certain services and utilities
customarily used by or reasonably necessary to maintain the Orangeburg
Additives Facility in accordance with design capacity. At its option and
upon 180 days' notice, the Company may assume responsibility for the
operation of the Orangeburg Additives Facility, in which event Albemarle
would continue to provide certain services and utilities for that facility.
The Company will reimburse Albemarle for certain costs specified in the
Orangeburg Operating Agreement and will pay to Albemarle a monthly
operating fee based on a percentage of such reimbursable costs. Albemarle
will produce under a supply contract MMT for the Company in facilities
owned by Albemarle. Albemarle also will be licensed by the Company,
subject to certain restrictions, to produce and sell MMT for its own
account to the extent of any excess not set aside for the Company under the
supply contract.
Albemarle will own the land on which the Orangeburg Additives Facility
is located. In conjunction with Albemarle's operation of the Orangeburg
Additives Facility for the Company, Albemarle will lease the land to the
Company for a period of ten years, with an option by the Company to extend
for an additional ten years. Albemarle and the Company will have a
separate blending services agreement (the "Orangeburg Blending Agreement"),
pursuant to which Albemarle will provide storage, blending and packaging
services to the Company in connection with the operation of the Orangeburg
Additives Facility. The term of the Orangeburg Blending Agreement will be
for ten years, and the Company will have the option to extend for an
additional ten years. Pursuant to the Orangeburg Blending Agreement, the
Company will reimburse Albemarle for specified costs associated with the
blending operations and will pay to Albemarle a monthly operating fee based
on a percentage of such reimbursable costs. Pursuant to an antioxidant
supply agreement, Albemarle will produce antioxidants for the Company at
the Orangeburg plant. The Company will reimburse Albemarle for specified
production costs and pay a monthly fee. The antioxidant supply agreement
will be for ten years, and the Company will have the option to extend for
an additional ten years.
Houston, Texas Agreement
The Houston, Texas plant consists of facilities for the production of
petroleum additives, olefins and derivatives and specialty chemicals.
After the Distribution, the Company will own the petroleum additives
facility at the Houston plant (the "Houston Additives Facilities"), and
Albemarle will own the facilities that produce olefins and derivatives and
specialty chemicals.
Albemarle and the Company will have a reciprocal agreement (the
"Houston Services Agreement"), with respect to the operation of the
Company's Houston Additives Facilities and Albemarle's chemical operations
adjoining the Houston Additives Facilities. Pursuant to the Houston
Services Agreement, the Company will provide to Albemarle certain services
and utilities related to Albemarle's chemicals operations in Houston, while
Albemarle will provide to the Company certain services and utilities
related to the Company's petroleum additives operations in Houston. The
term of the Houston Services Agreement is ten years, but any party
receiving services and utilities may terminate one or more of such services
or utilities upon giving 60 days' notice to the other party or may
terminate all of such services and utilities upon giving 180 days' notice
to the other party. Each party also has the right to extend for an
additional ten years the Houston Services Agreement with respect to the
services and utilities that it is receiving. Each party providing services
will receive from the other party reimbursement of specified costs and a
monthly service fee based on a percentage of such reimbursable costs.
Feluy, Belgium Agreement
The Feluy, Belgium plant consists of facilities for the production of
petroleum additives, olefins and derivatives and specialty chemicals.
After the Distribution, the Company will own and operate the petroleum
additives facility at the Feluy, Belgium plant (the "Feluy Additives
Facility"), and Albemarle will own the facilities that produce olefins and
derivatives and specialty chemicals at the Feluy plant.
Albemarle and the Company will have an agreement (the "Feluy Services
Agreement"), with respect to the operation of the Company's Feluy Additives
Facility. Pursuant to the Feluy Services Agreement, Albemarle will provide
to the Company certain services and utilities related to the Company's
petroleum additives operation in Feluy. The term of the Feluy Services
Agreement is ten years, but the Company may terminate one or more of such
services or utilities upon giving 60 days' notice to Albemarle or may
terminate all of such services and utilities upon giving 180 days' notice
to Albemarle. The Company also has the right to extend the Feluy Services
Agreement for an additional ten years. Albemarle will receive from the
Company reimbursement of specified costs and a monthly service fee based on
a percentage of such reimbursable costs.
Indemnification and Tax-Sharing Agreements
Pursuant to an indemnification agreement between the Company and
Albemarle, the Company will indemnify Albemarle for losses to Albemarle
after the Distribution Date resulting from the conduct of the Ethyl
Businesses, including environmental liabilities, before and after the
Distribution Date, and Albemarle will indemnify the Company for losses to
the Company after the Distribution Date resulting from the conduct of the
Chemicals Businesses, including environmental liabilities, before and after
the Distribution Date. Tax liabilities, and related indemnification, are
covered under a tax sharing agreement. Under that agreement the Company
will be responsible for the taxes of the Ethyl Businesses and the Chemicals
Businesses for periods prior to the Distribution, except with respect to
taxes attributable to subsidiaries of the Company that will become
subsidiaries of Albemarle in connection with the Distribution. Albemarle
will be responsible for the taxes of the Chemicals Businesses for post-
Distribution periods.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
The pro forma condensed balance sheet of Ethyl as of December 31,
1993, presents the financial position of Ethyl assuming that the
Distribution, the split of the Ethyl credit facility (such that Albemarle
absorbs the transfer from Ethyl of a portion of Ethyl's borrowing under a
credit facility), and the reduction of Ethyl's shareholders' equity as a
result of such transfer had occurred as of that date. The pro forma
condensed statements of income for the years ended December 31, 1993 and 1992,
present the results of operations of
Ethyl assuming that the Distribution had occurred as of January 1, 1992.
For ease of understanding, the pro forma adjustments, presented in the
columns entitled "Adjustments Increases (Decreases)",
consist of those adjustments which identify (i) the
impact of dividing the Ethyl credit facility, transferring a portion of the
debt under the credit facility to Albemarle and adjusting Ethyl's interest
expense (including the impact of interest capitalization) for debt absorbed
by Albemarle and (ii) the historical accounts of Albemarle (eliminated as a
result of the Distribution), for which such balances for the year ended
December 31, 1992 are set forth in the Form 10/A filed with the
Securities and Exchange Commission on February 11, 1994. In the opinion of
management, the pro forma condensed financial statements include all
material adjustments necessary to restate the historical amounts to
accommodate these assumptions. Each period presented should be treated as
a stand-alone period.
No pro forma adjustments are made to the condensed statements of income
for selling, general and administrative expenses with respect to Ethyl, because
following the Distribution, in the opinion of management, such expenses of
Ethyl will not differ from the amounts remaining in the Ethyl condensed
consolidated financial statements after eliminating those expenses attributable
to Albemarle. The pro forma information presented is for information purposes
only and may not necessarily be indicative of future results of operations
and financial position or what results of operations or financial position
would have been had Ethyl operated without Albemarle during the periods
presented.
<PAGE>
<TABLE>
ETHYL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED BALANCE SHEET
(In thousands of dollars)(Unaudited)
December 31, 1993
<CAPTION>
Adjustments
Increases (Decreases)
Historical NoteB(i) ProForma
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 48,201 $ $ (32,922) $ 15,279
Accounts receivable, less
allowance for doubtful 345,160 (140,304) 204,856
accounts
Inventories 290,814 (136,415) 154,399
Deferred income taxes
and prepaid expenses 48,620 (17,756) 30,864
------- ------ ------- ------
Total current assets 732,795 (327,397) 405,398
------- ------ ------- -------
Property, plant and
equipment 1,908,630 (1,363,942) 544,688
Less accumulated
depreciation and
amortization (910,360) 686,652 (223,708)
------- ------ ------- -------
Net 998,270 (677,290) 320,980
------- ------ ------- -------
Other assets and deferred
charges 164,382 (48,544) 115,838
Goodwill and other
Intangibles - net of 112,849 (34,095) 78,754
amortiization ------- ------ ------ ------
Total assets $2,008,296 $ $ (1,087,326) $ 920,970
========== ====== ========= =======
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable $ 154,971 $ $ (80,941) $ 74,030
Accrued expenses 123,327 (53,320) 70,007
Long-term debt,
current portion 14,056 (14,043) 13
Dividends payable 17,764 17,764
Income taxes payable 14,020 14,020
------ ------ ------- ------
Total current liabilities 324,138 (148,304) 175,834
------- ------ ------- -------
Long-term debt 686,986 (305,034) (81,404) 300,548
Other noncurrent liabilities 101,617 (29,544) 72,073
Deferred income taxes 142,774 (120,902) 21,872
Redeemable preferred stock 200 200
Shareholders' equity:
Common stock 118,405 118,405
Other shareholders'
equity 634,176 305,034 (707,172) 232,038
------- ------- ------- -------
752,581 305,034 (707,172) 350,443
------- ------- ------- -------
Total liabilities and
shareholders' equity $2,008,296 $ $(1,087,326) $ 920,970
========= ======= ========= =======
See accompanying notes to the pro forma condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
ETHYL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENTS OF INCOME
For the Years Ended December 31, 1993 and 1992
(In Thousands Except Per-Share Amounts)
(Unaudited)
1993 1992
-------------------------------------------------------- ----------------------------------------------------
Adjustments Adjustments
Increases (Decreases) Increases (Decreases)
Historical Note B(ii) NoteB(iii)/ Note B(iii)/
(iv) ProForma Historical Note B(ii) (iv) ProForma
---------- ---------- ---------- -------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $1,938,390 $(903,418) $ $1,034,972 $1,692,582 $(818,223) $ $874,359
Cost of goods
sold 1,386,251 (710,970) 675,281 1,199,096 (631,903) 567,193
--------- ------- ------ ------- --------- ------- ------- -------
Gross profit 552,139 (192,448) 359,691 493,486 (186,320) 307,166
Selling, general
and administra-
tive expenses 272,760 (106,161) 166,599 236,333 (92,884) 143,449
Research and
development
expenses 72,624 (30,303) 45,321 73,831 (31,997) 41,834
Special charges 36,150 (7,322) 28,828 9,500 - 9,500
------ ----- ------ ------ ----- ------- ------- -----
Operating profit 167,605 (48,662) 118,943 173,822 (61,439) 112,383
Interest and
financing
expenses 44,085 (7,797) (9,561) 26,727 62,279 (4,923) (11,030) 46,326
Gain on sale
of 20% of
First Colony
Corporation - - - (93,600) - (93,600)
Other (income)
expenses, net (9,987) 1,640 (8,347) (1,475) 1,998 523
----- ----- ------ ----- ----- ----- ------- ------
Income from
continuing
operations
before income
taxes,
extraordinary
item and
cumulative effect
of accounting
changes 133,507 (42,505) 9,561 100,563 206,618 (58,514) 11,030 159,134
Income taxes 43,485 (20,695) 3,597 26,387 99,373 (16,771) 4,114 86,716
------ ------ ----- ------ ------ ------ ----- ------
Income from
continuing
operations
before extra-
ordinary item
and cumulative
effect of
accounting
changes $90,022 $ (21,810) $ 5,964 $ 74,176 $ 107,245 $(41,743) $ 6,916 $ 72,418
====== ====== ===== ====== ======= ======= ===== ======
Earnings per
share - income
from continuing
operations before
extraordinary
item and
cumulative effect
of accounting
changes $ 0.76(C) $ 0.63(C) $ 0.90(C) $ 0.61(C)
==== ==== ==== ====
See accompanying notes to the proforma condensed financial statements.
</TABLE>
<PAGE>
ETHYL CORPORATION AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
A. The pro forma information presented is not necessarily indicative of
the future results or financial position of Ethyl or the net income
and financial position that would have resulted had the Distribution
occurred prior to the periods presented.
B. The adjustments in the pro forma condensed financial statements are
described below:
(i) To record, as if the distribution occurred on December 31, 1993,
the planned transfer from Ethyl to Albemarle Corporation
("Albemarle") of a portion of an Ethyl borrowing under a credit
facility necessary to achieve a planned debt to total
capitalization ratio and the simultaneous elimination of the
historical assets, liabilities and equity of Albemarle. Also, to
record the proposed distribution to holders of Ethyl common stock,
par value $1.00 per share, of all of the outstanding Albemarle
common stock, without par value. Approximately 59.2 million shares
of Albemarle common stock are expected to be distributed (one
share of Albemarle for every two shares of Ethyl).
(ii) To eliminate the historical income and expenses of Albemarle
for the respective periods presented.
(iii) To eliminate interest expense which would have been incurred by
Albemarle on debt transferred to Albemarle, including debt
under the credit facility transferred from Ethyl. Interest
eliminated under the credit facility was computed at the
weighted average interest rates of 3.6% and 4.2% for the years ended
December 31, 1993 and 1992, respectively,
less capitalized interest of $1,101,000 and $949,000,
respectively. Interest rates utilized to calculate the
Albemarle interest eliminated under the credit facility are
those rates which were available to Ethyl under its revolving
credit agreement during the respective periods presented. Such
rates were utilized because during management's negotiations to
obtain the credit facility, the rates available to Ethyl and
Albemarle on a stand alone basis were approximately the same.
Management was advised that these rates would have been the
same during the respective periods presented.
<PAGE>
ETHYL CORPORATION AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONDENSED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(iv) To record the estimated tax benefits for the pro forma
adjustment described in Note B(iii) at an assumed combined
state and federal income tax rate of 37.6% and 37.3%,
for the years ended December 31, 1993 and 1992, respectively.
C. Historical and pro forma earnings per share, based on income from
continuing operations before extraordinary item and cumulative effect of
accounting changes, are computed after deducting applicable preferred
stock dividends from such income and using the weighted average number of
shares of common stock and common stock equivalents outstanding for the
periods presented.
* * * * *
(c) Exhibits.
Exhibit No. Description
20. Albemarle Corporation Information Statement, dated
February 17, 1994
99. Supply Agreement, dated as of December 22, 1993,
between Ethyl Corporation and The Associated Octel
Company Limited*
______________
*Subject to a request for confidential treatment, certain provisions of the
Supply Agreement have been intentionally omitted.
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SIGNATURE
Pursuant to the requirements 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.
ETHYL CORPORATION
Date: February 21, 1994 By: /s/ E. Whitehead Elmore
---------------------------
E. Whitehead Elmore
Vice President, Secretary
and General Counsel
