AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1997.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934)
ETHYL CORPORATION
(NAME OF ISSUER)
ETHYL CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK
(TITLE OF CLASS OF SECURITIES)
297659-104
(CUSIP NUMBER OF CLASS OF SECURITIES)
E. WHITEHEAD ELMORE, ESQ.
SECRETARY AND SPECIAL COUNSEL TO
THE EXECUTIVE COMMITTEE
ETHYL CORPORATION
330 SOUTH FOURTH STREET
RICHMOND, VIRGINIA 23219
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
------------------------
COPIES TO:
ALLEN C. GOOLSBY, ESQ.
HUNTON & WILLIAMS
RIVERFRONT PLAZA, EAST TOWER
951 EAST BYRD STREET
RICHMOND, VIRGINIA 23219
AUGUST 27, 1997
(Date Tender Offer First Published,
Sent or Given to Security Holders)
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$323,750,000 $64,750
* Calculated solely for the purpose of determining the filing fee, based
upon the purchase of 35,000,000 shares at $9.25 per share.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule 13E-4 relates is
Ethyl Corporation, a Virginia corporation (the "Company"), and the address of
its principal executive office is 330 South Fourth Street, Richmond, Virginia
23219.
(b) This Schedule 13E-4 relates to the offer by the Company to purchase
35,000,000 shares (or such lesser number of shares as are properly tendered) of
its common stock (the "Shares"), 118,443,835 of which Shares were outstanding as
of July 31, 1997, at prices not in excess of $9.25 nor less than $7.75 net per
Share in cash upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated August 27, 1997 (the "Offer to Purchase"), and in the
related Letter of Transmittal (or similar materials distributed to participants
in the Company's dividend reinvestment plan or employee savings plan), which
together constitute the "Offer," copies of which are attached as Exhibit (a)(1)
and (a)(2), respectively, and incorporated herein by reference. Executive
officers and directors of the Company may participate in the Offer on the same
basis as the Company's other shareholders, although the Company has been advised
that no director or executive officer of the Company intends to tender any
Shares pursuant to the Offer. The information set forth in "Introduction" and
"The Offer -- Section 1, Number of Shares; Proration" of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in "Introduction" and the "The
Offer -- Section 8, Price Range of Shares; Dividends" of the Offer to Purchase
is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "The Offer -- Section 9, Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth in "Introduction" and "The
Offer -- Section 9, Source and Amount of Funds," "The Offer -- Section 2,
Purpose of the Offer; Certain Effects of the Offer," "The Offer -- Section 11,
Interest of Directors and Officers; Transactions and Arrangements Concerning
Shares" and "The Offer -- Section 12, Effects of the Offer on the Market for
Shares; Registration under the Exchange Act" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" and
Schedule A, "Certain Transactions Involving Shares," of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in "Introduction" and "The Offer -- Section 9,
Source and Amount of Funds," "The Offer -- Section 2, Purpose of the Offer;
Certain Effects of the Offer" and "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and "The Offer -- Section 16,
Fees and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "The Offer -- Section 10, Certain
Information Concerning the Company" of the Offer to Purchase is incorporated
herein by reference, the information set forth on pages 25 through 42 of the
Company's Annual Report to Shareholders incorporated by reference into the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, filed
as Exhibit (g)(1) hereto, is incorporated herein by reference, and the
information set forth on pages 3 through 9 of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997, filed as Exhibit (g)(2) hereto,
is incorporated herein by reference.
1
<PAGE>
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "The Offer -- Section 13, Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(c) The information set forth in "The Offer -- Section 12, Effects of the
Offer on the Market for Shares; Registration under the Exchange Act" of the
Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase and Letter of
Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase, dated August 27, 1997.
(2) Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6) Form of Memorandum, dated August 27, 1997, to Participants in the
Savings Plan for the Employees of Ethyl Corporation.
(7) Text of Press Release issued by the Company, dated August 26, 1997.
(8) Form of Summary Advertisement, dated August 27, 1997.
(9) Form of Letter to Shareholders of the Company, dated August 27,
1997, from Bruce C. Gottwald, Chairman of the Board and Chief Executive
Officer of the Company.
(10) Form of Letter to Participants in the Savings Plan for the
Employees of Ethyl Corporation, dated August 27, 1997, from Bruce C.
Gottwald, Chairman of the Board and Chief Executive Officer of the
Company.
(b) Competitive Advance, Revolving Credit Facility and Term Loan Agreement,
dated as of August 26, 1997, among the Company, the banks named therein and
NationsBank, N.A., as administrative agent.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 25 through 42 of the Company's Annual Report to Shareholders
incorporated by reference into the Company's Annual Report on Form 10-K
for the year ended December 31, 1996.
(2) Pages 3 through 9 of the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997.
(h) Computation of Ratio of Earnings to Fixed Charges.
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13E-4 is true, complete and
correct.
August 27, 1997
ETHYL CORPORATION
By: /s/ Charles B. Walker
--------------------------------------
Name: Charles B. Walker
Title: Vice Chairman, Chief Financial
Officer and Treasurer
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- -----------
<S> <C>
(a)(1) Form of Offer to Purchase, dated August 27, 1997.
(2) Form of Letter of Transmittal (including Certification of Taxpayer Identification Number on Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(6) Form of Memorandum, dated August 27, 1997, to Participants in the Savings Plan for the Employees of Ethyl
Corporation.
(7) Text of Press Release issued by the Company, dated August 26, 1997.
(8) Form of Summary Advertisement, dated August 27, 1997.
(9) Form of Letter to Shareholders of the Company, dated August 27, 1997, from Bruce C. Gottwald, Chairman of the
Board and Chief Executive Officer of the Company.
(10) Form of Letter to Participants in the Savings Plan for the Employees of Ethyl Corporation, dated August 27, 1997,
from Bruce C. Gottwald, Chairman of the Board and Chief Executive Officer of the Company.
(b) Competitive Advance, Revolving Credit Facility and Term Loan Agreement, dated as of August 26, 1997, among the
Company, the banks named therein and NationsBank, N.A., as administrative agent.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 25 through 42 of the Company's Annual Report to Shareholders incorporated by reference into the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
(2) Pages 3 through 9 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
(h) Computation of Ratio of Earnings to Fixed Charges
</TABLE>
4
Ethyl Corporation
Offer To Purchase for Cash Up to
35,000,000 Shares Of Its Common Stock
At A Purchase Price Not In Excess Of $9.25
Nor Less Than $7.75 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 25, 1997,
UNLESS THE OFFER IS EXTENDED.
------------------
ETHYL CORPORATION, A VIRGINIA CORPORATION (THE "COMPANY"), HEREBY INVITES ITS
SHAREHOLDERS TO TENDER SHARES OF ITS COMMON STOCK, $1.00 PAR VALUE PER SHARE
(THE "SHARES"), AT PRICES NOT IN EXCESS OF $9.25 NOR LESS THAN $7.75 PER
SHARE IN CASH, AS SPECIFIED BY SHAREHOLDERS TENDERING THEIR SHARES, UPON
THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH HEREIN AND IN THE
RELATED LETTER OF TRANSMITTAL (OR SIMILAR MATERIALS DISTRIBUTED TO
PARTICIPANTS IN THE SAVINGS PLAN FOR THE EMPLOYEES OF ETHYL
CORPORATION), WHICH TOGETHER CONSTITUTE THE "OFFER." THE COMPANY
WILL DETERMINE THE SINGLE PER SHARE PRICE, NOT IN EXCESS OF $9.25
NOR LESS THAN $7.75 PER SHARE, NET TO THE SELLER IN CASH (THE
"PURCHASE PRICE"), THAT IT WILL PAY FOR SHARES PROPERLY TENDERED
PURSUANT TO THE OFFER, TAKING INTO ACCOUNT THE NUMBER OF SHARES
SO TENDERED AND THE PRICES SPECIFIED BY TENDERING SHAREHOLDERS.
THE COMPANY WILL SELECT THE LOWEST PURCHASE PRICE THAT WILL
ALLOW IT TO BUY 35,000,000 SHARES (OR SUCH LESSER NUMBER OF
SHARES AS ARE PROPERLY TENDERED AT PRICES NOT IN EXCESS OF
$9.25 NOR LESS THAN $7.75 PER SHARE). ALL SHARES PROPERLY
TENDERED AT PRICES AT OR BELOW THE PURCHASE PRICE AND
NOT WITHDRAWN WILL BE PURCHASED AT THE PURCHASE PRICE,
SUBJECT TO THE TERMS AND THE CONDITIONS OF THE
OFFER, INCLUDING THE PRORATION AND CONDITIONAL
TENDER PROVISIONS. ALL SHARES ACQUIRED IN THE
OFFER WILL BE ACQUIRED AT THE PURCHASE PRICE.
THE COMPANY RESERVES THE RIGHT, IN ITS SOLE
DISCRETION, TO PURCHASE MORE THAN 35,000,000
SHARES PURSUANT TO THE OFFER. SEE
SECTION 15.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED,
BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
THE SHARES ARE LISTED AND TRADED ON THE NEW YORK STOCK EXCHANGE (THE "NYSE") AND
THE PACIFIC STOCK EXCHANGE. ON AUGUST 26, 1997, THE LAST FULL TRADING DAY ON
THE NYSE PRIOR TO THE ANNOUNCEMENT AND COMMENCEMENT OF THE OFFER, THE
CLOSING PER SHARE SALES PRICE AS REPORTED ON THE NYSE COMPOSITE TAPE WAS
$9.00. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES. SEE SECTION 8.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER.
HOWEVER, NONE OF THE COMPANY, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER
MAKES ANY RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING THEIR SHARES. EACH SHAREHOLDER MUST MAKE THE
DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES AND AT
WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY HAS
BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS
INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
IMPORTANT
ANY SHAREHOLDER WISHING TO TENDER ALL OR ANY PART OF HIS SHARES SHOULD
EITHER (A) COMPLETE AND SIGN A LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) IN
ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL AND EITHER MAIL OR
DELIVER IT WITH ANY REQUIRED SIGNATURE GUARANTEE AND ANY OTHER REQUIRED
DOCUMENTS TO HARRIS TRUST AND SAVINGS BANK (THE "DEPOSITARY"), AND EITHER MAIL
OR DELIVER THE STOCK CERTIFICATES FOR SUCH SHARES TO THE DEPOSITARY (WITH ALL
SUCH OTHER DOCUMENTS) OR TENDER SUCH SHARES PURSUANT TO THE PROCEDURE FOR BOOK-
ENTRY TENDER SET FORTH IN SECTION 3, OR (B) REQUEST A BROKER, DEALER, COMMERCIAL
BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE TRANSACTION FOR SUCH
SHAREHOLDER. HOLDERS OF SHARES REGISTERED IN THE NAME OF A BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE SHOULD CONTACT SUCH PERSON IF
THEY DESIRE TO TENDER THEIR SHARES. ANY SHAREHOLDER WHO DESIRES TO TENDER SHARES
AND WHOSE CERTIFICATES FOR SUCH SHARES CANNOT BE DELIVERED TO THE DEPOSITARY OR
WHO CANNOT COMPLY WITH THE PROCEDURE FOR BOOK-ENTRY TRANSFER OR WHOSE OTHER
REQUIRED DOCUMENTS CANNOT BE DELIVERED TO THE DEPOSITARY, IN ANY CASE, BY THE
EXPIRATION OF THE OFFER MUST TENDER SUCH SHARES PURSUANT TO THE GUARANTEED
DELIVERY PROCEDURE SET FORTH IN SECTION 3.
TO PROPERLY TENDER SHARES, SHAREHOLDERS MUST COMPLETE THE SECTION OF THE
LETTER OF TRANSMITTAL RELATING TO THE PRICE AT WHICH THEY ARE TENDERING SHARES.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THIS OFFER
TO PURCHASE, THE LETTER OF TRANSMITTAL OR THE NOTICE OF GUARANTEED DELIVERY MAY
BE DIRECTED TO THE INFORMATION AGENT OR TO THE DEALER MANAGER AT THEIR
RESPECTIVE ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON THE BACK COVER OF THIS
OFFER TO PURCHASE.
THE DEALER MANAGER FOR THE OFFER IS:
[Credit Suisse and First Boston Logo]
Offer to Purchase dated August 27, 1997.
<PAGE>
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY OR THE DEALER MANAGER AS TO WHETHER SHAREHOLDERS SHOULD
TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS
NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE DEALER MANAGER.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- -----
<S> <C>
SUMMARY.......................................................................................................... S-1
INTRODUCTION..................................................................................................... 1
THE OFFER........................................................................................................ 2
1. Number of Shares; Proration.......................................................................... 2
2. Purpose of the Offer; Certain Effects of the Offer................................................... 4
3. Procedures for Tendering Shares...................................................................... 5
4. Withdrawal Rights.................................................................................... 8
5. Purchase of Shares and Payment of Purchase Price..................................................... 9
6. Conditional Tender of Shares......................................................................... 10
7. Certain Conditions of the Offer...................................................................... 10
8. Price Range of Shares; Dividends..................................................................... 11
9. Source and Amount of Funds........................................................................... 12
10. Certain Information Concerning the Company........................................................... 13
11. Interest of Directors and Officers; Transactions and Arrangements Concerning Shares.................. 20
12. Effects of the Offer on the Market for Shares; Registration under the Exchange Act................... 21
13. Certain Legal Matters; Regulatory Approvals.......................................................... 21
14. Certain Federal Income Tax Consequences.............................................................. 21
15. Extension of Offer; Termination; Amendment........................................................... 23
16. Fees and Expenses.................................................................................... 24
17. Miscellaneous........................................................................................ 25
SCHEDULE A Certain Transactions Involving Shares A-1
</TABLE>
<PAGE>
SUMMARY
THIS GENERAL SUMMARY IS SOLELY FOR THE CONVENIENCE OF THE COMPANY'S
SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF,
AND MORE SPECIFIC DETAILS CONTAINED IN, THIS OFFER TO PURCHASE.
<TABLE>
<S> <C>
Purchase Price................ The Company will select a single Purchase Price, which will be not more than $9.25 nor less
than $7.75 per Share. All Shares purchased by the Company will be purchased at the Purchase
Price, even if such Shares were tendered at or below the Purchase Price. Each shareholder
desiring to tender Shares must specify in the Letter of Transmittal the minimum price (not more
than $9.25 nor less than $7.75 per Share) at which such shareholder is willing to have his or
her Shares purchased by the Company.
Number of Shares to be
Purchased................... 35,000,000 Shares (or such lesser number of Shares as are properly tendered).
How to Tender Shares.......... See Section 3. Call the Information Agent or the Dealer Manager or consult your broker for
assistance.
Brokerage Commissions......... None. A tendering shareholder who holds securities with such shareholder's broker may be
required by such broker to pay a service charge or other fee.
Stock Transfer Tax............ None, if payment is made to the registered holder.
Expiration and Proration
Dates....................... Thursday, September 25, 1997, at 5:00 P.M., New York City time, unless extended by the Company.
Payment Date.................. As soon as practicable after the expiration of the Offer.
Position of the Company and
its Directors............... Neither the Company nor its Board of Directors makes any recommendation to any shareholder as
to whether to tender or refrain from tendering Shares.
Withdrawal Rights............. Tendered Shares may be withdrawn at any time until 5:00 P.M., New York City time, on Thursday,
September 25, 1997, unless the Offer is extended by the Company, and, unless previously
purchased, after 12:00 Midnight, New York City time, on Wednesday, October 22, 1997. See
Section 4.
Third Quarter Dividend........ All shareholders of record at the close of business on September 15, 1997, will be entitled to
the third quarter dividend of $0.125 per share to be paid on October 1, 1997, regardless
whether such shareholders tender their Shares pursuant to the Offer either before or after the
record date.
Dividend Reduction............ The Board of Directors has determined that the annual cash dividend should be reduced from
$0.50 per Share to $0.25 per Share effective for the 1997 fourth quarter dividend scheduled to
be paid on January 1, 1998.
Odd Lots...................... There will be no proration of Shares tendered by any shareholder owning beneficially fewer than
100 Shares who properly tenders, and does not withdraw, all such Shares prior to the Proration
Date at prices at or below the Purchase Price and who checks the "Odd Lots" box in the Letter
of Transmittal. See Section 1.
Further Developments Regarding
the Offer................... Call the Information Agent or the Dealer Manager or consult your broker.
</TABLE>
S-1
<PAGE>
(This Page Intentionally Left Blank)
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF ETHYL CORPORATION:
INTRODUCTION
Ethyl Corporation, a Virginia corporation (the "Company"), invites its
shareholders to tender shares of its common stock, $1.00 par value per share
(the "Shares"), at prices not in excess of $9.25 nor less than $7.75 per Share,
as specified by shareholders tendering their Shares, upon the terms and subject
to the conditions set forth herein and in the related Letter of Transmittal (or
similar materials distributed to participants in the Savings Plan for the
Employees of Ethyl Corporation), which together constitute the "Offer." The
Company will determine the single per Share price, not in excess of $9.25 nor
less than $7.75 per Share, net to the seller in cash (the "Purchase Price"),
that it will pay for Shares properly tendered pursuant to the Offer, taking into
account the number of Shares so tendered and the prices specified by tendering
shareholders. The Company will select the lowest Purchase Price that will allow
it to buy 35,000,000 Shares (or such lesser number of Shares as are properly
tendered). All Shares acquired in the Offer will be acquired at the Purchase
Price. All Shares properly tendered at prices at or below the Purchase Price and
not withdrawn will be purchased at the Purchase Price upon the terms and subject
to the conditions of the Offer, including the proration and conditional tender
provisions. Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration or conditional tender will be returned. The
Company reserves the right, in its sole discretion, to purchase more than
35,000,000 Shares pursuant to the Offer. See Section 15.
THIS OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF
SHARES BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 35,000,000 Shares are properly tendered at or
below the Purchase Price and not withdrawn, the Company will buy Shares first
from all Odd Lot Holders (as defined in Section 1) who properly tendered all
their Shares at or below the Purchase Price (and did not withdraw them prior to
the expiration of the Offer) and then on a PRO RATA basis from all other
shareholders who properly tendered at prices at or below the Purchase Price (and
did not withdraw them prior to the expiration of the Offer). See Section 1. All
stock certificates representing Shares not purchased pursuant to the Offer,
including Shares tendered at prices greater than the Purchase Price and not
withdrawn and Shares not purchased because of proration or conditional tenders,
will be returned at the Company's expense to the shareholders who tendered such
Shares.
The Purchase Price will be paid net to the tendering shareholder in cash
for all Shares purchased. Tendering shareholders will not be obligated to pay
brokerage commissions, solicitation fees or, subject to Instruction 7 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Company. A tendering shareholder who holds securities with such shareholder's
broker may be required by such broker to pay a service charge or other fee.
HOWEVER, ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN
AND RETURN TO THE DEPOSITARY THE FORM W-9 THAT IS INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO
THE OFFER. SEE SECTION 3. The Company will pay all fees and expenses of Credit
Suisse First Boston Corporation ("Credit Suisse First Boston" or the "Dealer
Manager"), Harris Trust and Savings Bank (the "Depositary") and Corporate
Investor Communications, Inc. (the "Information Agent") incurred in connection
with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER.
HOWEVER, NONE OF THE COMPANY, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER MAKES
ANY RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING THEIR SHARES. EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE OR PRICES SHARES
SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR
EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
Shareholders who are participants in the Ethyl Corporation Automatic
Dividend Reinvestment Plan (the "Dividend Reinvestment Plan") may instruct
Harris Trust and Savings Bank, as administrator under the Dividend Reinvestment
Plan, to tender part or all of the Shares attributed to such participant's
account and in each case must specify the price or prices at which such Shares
are to be tendered. See Section 3.
1
<PAGE>
The Savings Plan for the Employees of Ethyl Corporation (the "Savings
Plan") holds Shares (approximately 3.0% of the outstanding Shares) in accounts
for participants in the Savings Plan. NationsBank of Georgia, N.A. (the "Savings
Plan Trustee "), serves as trustee for the Savings Plan. Under the terms of the
Savings Plan, a participant may instruct the Savings Plan Trustee to tender all
or part of the Shares allocated to one or more of the participant's accounts
and, in such case, must specify the price at which such Shares are to be
tendered. See Section 3. The special Odd Lot purchase rules described below do
not apply to any Shares held in a Savings Plan account. See Section 1.
As of July 31, 1997, the Company had issued and outstanding 118,443,835
Shares and had reserved 6,034,925 Shares for issuance upon exercise of
outstanding stock options. The 35,000,000 Shares that the Company is offering to
purchase pursuant to the Offer represent 29.55% of the outstanding Shares. The
Shares are listed and traded on the New York Stock Exchange (the "NYSE"), and
the Pacific Stock Exchange under the symbol "EY." On August 26, 1997, the last
full trading day on the NYSE prior to the announcement and commencement of the
Offer, the closing per Share sales price as reported on the NYSE Composite Tape
was $9.00. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES. See Section 8.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase up to 35,000,000 Shares or such lesser number of Shares as are properly
tendered (and not withdrawn in accordance with Section 4) prior to the
Expiration Date (as defined below) at prices not in excess of $9.25 nor less
than $7.75 net per Share in cash. The term "Expiration Date" means 5:00 P.M.,
New York City time, on Thursday, September 25, 1997, unless and until the
Company, in its sole discretion, shall have extended the period of time during
which the Offer will remain open, in which event the term "Expiration Date"
shall refer to the latest time and date at which the Offer, as so extended by
the Company, shall expire. See Section 15 for a description of the Company's
right to extend, delay, terminate or amend the Offer. The Company reserves the
right to purchase more than 35,000,000 Shares pursuant to the Offer. In
accordance with applicable regulations of the Securities and Exchange Commission
(the "Commission"), the Company may purchase pursuant to the Offer an additional
amount of Shares not to exceed 2% of the outstanding shares without amending or
extending the Offer. See Section 15. In the event of an over-subscription of the
Offer as described below, Shares tendered at or below the Purchase Price prior
to the Expiration Date will be subject to proration, except for Odd Lots as
explained below. The proration period expires on the Expiration Date.
The Company will select the lowest Purchase Price that will allow it to buy
35,000,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $9.25 nor less than $7.75 per Share). All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, subject to the terms and the conditions
of the Offer, including the proration and conditional tender provisions. All
Shares purchased in the Offer will be purchased at the Purchase Price.
THE OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF
SHARES BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
In accordance with Instruction 5 of the Letter of Transmittal, shareholders
desiring to tender Shares must specify the price, not in excess of $9.25 nor
less than $7.75 per Share, at which they are willing to sell their Shares to the
Company. As promptly as practicable following the Expiration Date, the Company
will, in its sole discretion, determine the Purchase Price that it will pay for
Shares properly tendered pursuant to the Offer and not withdrawn, taking into
account the number of Shares tendered and the prices specified by tendering
shareholders. The Company intends to select the lowest Purchase Price, not in
excess of $9.25 nor less than $7.75 net per Share in cash, that will enable it
to purchase 35,000,000 Shares (or such lesser number of Shares as are properly
tendered) pursuant to the Offer. Shares properly tendered pursuant to the Offer
at or below the Purchase Price and not withdrawn will be purchased at the
Purchase Price, subject to the terms and conditions of the Offer, including the
proration and conditional tender provisions. All Shares tendered and not
purchased pursuant to the Offer, including Shares tendered at prices in excess
of the Purchase Price and Shares not purchased because of proration or
conditional tender, will be returned to the tendering shareholders at the
Company's expense as promptly as practicable following the Expiration Date.
PRIORITY OF PURCHASES. Upon the terms and subject to the conditions of the
Offer, if more than 35,000,000 Shares have been properly tendered at prices at
or below the Purchase Price and not withdrawn prior to the Expiration Date, the
Company will purchase properly tendered Shares on the basis set forth below:
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(a) FIRST, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder (as defined below) who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder at
a price at or below the Purchase Price (tenders of less than
all Shares owned by such shareholder will not qualify for this
preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed
Delivery; and
(b) SECOND, after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6, for which the
condition was satisfied, and all other Shares tendered properly
and unconditionally, in each case, at prices at or below the
Purchase Price and not withdrawn prior to the Expiration Date, on
a PRO RATA basis (with appropriate adjustments to avoid purchases
of fractional Shares) as described below; and
(c) THIRD, if necessary, Shares conditionally tendered, for which the
condition was not satisfied, at or below the Purchase Price and
not withdrawn prior to the Expiration Date, selected by random lot
in accordance with Section 6.
ODD LOTS. For purposes of the Offer, the term "Odd Lots" shall mean all
Shares properly tendered prior to the Expiration Date at prices at or below the
Purchase Price and not withdrawn by any person (an "Odd Lot Holder") who owned,
beneficially or of record, an aggregate of fewer than 100 Shares (and so
certified in the appropriate place on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery), excluding participants in the
Savings Plan. In order to qualify for this preference, an Odd Lot Holder must
tender all such Shares in accordance with the procedures described in Section 3.
As set forth above, Odd Lots will be accepted for payment before proration, if
any, of the purchase of other tendered Shares. This preference is not available
to partial tenders or to beneficial or record holders of an aggregate of 100 or
more Shares, even if such holders have separate accounts or certificates
representing fewer than 100 Shares. By accepting the Offer, an Odd Lot Holder
would not only avoid the payment of brokerage commissions but also would avoid
any applicable odd lot discounts in a sale of such Shares. A tendering
shareholder who holds securities with such shareholder's broker may be required
by such broker to pay a service charge or other fee. Any Odd Lot Holder wishing
to tender all of such shareholder's Shares pursuant to this Section should
complete the box captioned "Odd Lots" on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery.
The Company also reserves the right, but will not be obligated, to purchase
all Shares duly tendered by any shareholder who tendered all Shares owned,
beneficially or of record, at or below the Purchase Price and who, as a result
of proration, would then own, beneficially or of record, an aggregate of fewer
than 100 Shares. If the Company exercises this right, it will increase the
number of Shares that it is offering to purchase by the number of Shares
purchased through the exercise of the right.
The special Odd Lot purchase rules described above do not apply to any
Shares held in a Savings Plan account.
PRORATION. In the event that proration of tendered Shares is required, the
Company will determine the proration factor as soon as practicable following the
Expiration Date. Proration for each shareholder tendering Shares, other than Odd
Lot Holders, shall be based on the ratio of the total number of Shares the
Company desires to purchase to the total number of Shares tendered by all
shareholders, other than Odd Lot Holders, at or below the Purchase Price,
subject to the conditional tender provisions described in Section 6. Because of
the difficulty in determining the number of Shares properly tendered (including
Shares tendered by guaranteed delivery procedures, as described in Section 3)
and not withdrawn, and because of the Odd Lot procedure, the Company does not
expect that it will be able to announce the final proration factor, if required,
or to commence payment for any Shares purchased pursuant to the Offer until
approximately five NYSE trading days after the Expiration Date. The preliminary
results of any proration will be announced by press release as promptly as
practicable after the Expiration Date. Shareholders may obtain such preliminary
information from the Information Agent or the Dealer Manager and may be able to
obtain such information from their brokers.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares and will be furnished to brokers, banks and similar
persons whose names, or the names of whose nominees, appear on the Company's
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
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2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
Some of the information presented in the Offer, including the following
discussion, includes forward-looking comments within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the Company believes its
expectations are based on reasonable assumptions within the bounds of its
knowledge of its business operations, there can be no assurance that actual
results will not differ materially from its expectations. Factors that could
cause actual results to differ from expectations include, without limitation,
the timing of orders received from customers, the gain or loss of significant
customers, competition from other manufacturers, changes in the demand for or
changes in the cost of the Company's products, changes in the market in general
and significant changes in new product introduction resulting in an increase in
capital project requests and approvals leading to additional capital spending.
The Board of Directors has reviewed the Company's capital structure and
dividend policy. Cash flow from the Company's lead antiknock compounds business
historically has been strong and supported a dividend payout, which recently has
been significantly above the Company's business objective of thirty percent of
net earnings. During the last several months, the Company has experienced a
decline in its lead antiknock business that has been somewhat faster than
earlier anticipated. See Section 10. Based on the fact that the petroleum
additives industry is mature, coupled with a lack of large reasonably-priced
candidates for acquisition, the Board of Directors has concluded that it is
strategic for the Company to reduce equity capital by repurchasing a significant
portion of the outstanding Shares. The Company is making the Offer in order to
enhance long-term shareholder value by using the Company's cash flow and debt
capacity to alter the Company's capital structure and reduce the amount of
equity capital in the Company and lower its average cost of capital. The Offer
also will afford those shareholders who desire liquidity an opportunity to sell
all or a portion of their Shares without the usual transaction costs associated
with open market sales.
Concurrently with the announcement of the Offer, the Company announced that
the Board intends to reduce the annual cash dividend on the common stock of the
Company from $0.50 per Share to $0.25 per Share effective for the 1997 fourth
quarter dividend scheduled to be paid on January 1, 1998. Shareholders of record
at the close of business on September 15, 1997, will be entitled to the
quarterly $0.125 per share dividend to be paid on October 1, 1997, regardless
whether they tender Shares either before or after the record date for the
dividend. The revised dividend policy results in a dividend payout ratio that is
closer to the Company's dividend payout target of 30 percent of net earnings and
is more comparable to those of other public U.S. industrial companies. Moreover,
the Company believes that reducing the dividend rate improves the Company's
financial flexibility for the future. The Company intends to utilize the
increase in cash flow resulting from the dividend reduction for debt service and
general corporate purposes.
The reduction in the dividend means that a higher proportion of the total
return to the Company's shareholders will need to come from capital gains as
compared to dividend income. From the standpoint of most individual investors,
current federal income tax law makes capital gains more attractive than dividend
income. However, capital gains are not as predictable as dividend income and are
dependent on factors including, but not limited to, the Company's ability to
increase its earnings and cash flow. Moreover, capital gains can be impacted by
factors outside the control of management such as the general level of
inflation, interest rates in the economy and stock market fluctuations.
The magnitude of the purchase of Shares in the Offer is substantial. The
Board of Directors took into account that the purchase of 35,000,000 Shares
would represent the retirement of 29.55% of its outstanding Shares at an
aggregate cost of approximately $327.3 million if the Offer were fully
subscribed and the purchase of Shares were made at the maximum per Share price.
Under the same assumptions, the Company's shareholders' equity would be reduced
from $447.8 million at June 30, 1997, to $120.5 million. This substantial
expenditure by the Company will be financed through a borrowing under a credit
facility that includes both a term loan and revolving credit facilities.
In deciding to approve the Offer, the Board of Directors also took into
account the expected financial impact of the Offer, including the significantly
increased interest expense and debt amortization. The Company's new credit
arrangements contain covenants intended to limit the Company's future actions.
The Board of Directors believes that, under the terms of these credit
arrangements, the Company's financial flexibility will be decreased for several
years. See Section 9. The Company believes that its cash available under the new
credit facility following completion of the Offer, together with its anticipated
cash flow from operations, are adequate for its needs in the foreseeable future.
However, the Company's actual experience may differ from the expectations set
forth as a result of future events that might have the effect of reducing the
Company's available cash.
The Company has been advised that none of its directors or executive
officers intends to tender any Shares pursuant to the Offer. See Section 11. As
of July 31, 1997, Bruce C. Gottwald and Floyd D. Gottwald, Jr., who are
brothers, together
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with members of their immediate families (collectively, the "Gottwalds"), as a
group beneficially owned an aggregate of 21,217,634 Shares representing 17.91%
of the outstanding Shares, assuming the exercise by such persons of their
currently exercisable options. The Gottwalds have advised the Company that they
do not intend to tender any Shares pursuant to the Offer. If the Company
purchases 35,000,000 Shares pursuant to the Offer, then after the purchase of
such Shares the Gottwalds would own beneficially 25.43% of the outstanding
Shares, assuming the exercise by such persons of their currently exercisable
options. The Virginia Stock Corporation Act provides that plans of merger or
share exchanges require the affirmative vote of more than two-thirds of each
class of outstanding voting stock of corporations organized in Virginia.
Therefore, the proposed purchase of 35,000,000 Shares pursuant to the Offer
coupled with the intention of the Gottwalds not to tender any Shares would
decrease the number of additional Shares needed to veto mergers and other
extraordinary transactions that require such an affirmative shareholder vote to
which the Gottwalds are opposed. The Board of Directors considered this factor
in determining to approve the Offer.
NONE OF THE COMPANY, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ANY OR ALL OF SUCH SHAREHOLDER'S SHARES AND NONE OF THEM HAS
AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. SHAREHOLDERS ARE URGED TO
EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT
AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF
SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH TO TENDER.
The Company may in the future purchase additional Shares in the open
market, in private transactions, through tender offers or otherwise. Any such
purchases may be on the same terms or on terms that are more or less favorable
to shareholders than the terms of the Offer. However, Rule 13e-4 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prohibits the
Company and its affiliates from purchasing any Shares, other than pursuant to
the Offer, until at least ten business days after the Expiration Date. Any
possible future purchases by the Company will depend on many factors, including
the market price of the Shares, the results of the Offer, the Company's business
and financial position and general economic and market conditions.
Shares the Company acquires pursuant to the Offer will be restored to the
status of authorized and unissued Shares and will be available for the Company
to issue without further shareholder action (except as required by applicable
law or the rules of the NYSE or any other securities exchange on which the
Shares are listed) for purposes including, but not limited to, the acquisition
of other businesses, the raising of additional capital for use in the Company's
business and the satisfaction of obligations under existing or future employee
benefit plans. The Company has no current plans for reissuance of the Shares
repurchased pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
PROPER TENDER OF SHARES. For Shares to be tendered properly pursuant to the
Offer, (a) the certificates for such Shares (or confirmation of receipt of such
Shares pursuant to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) including any required signature guarantees
and any other documents required by the Letter of Transmittal, must be received
prior to 5:00 P.M., New York City time, on the Expiration Date by the Depositary
at its address set forth on the back cover of this Offer to Purchase, or (b) the
tendering shareholder must comply with the guaranteed delivery procedure set
forth below. IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL,
SHAREHOLDERS DESIRING TO TENDER SHARES PURSUANT TO THE OFFER MUST PROPERLY
INDICATE IN THE SECTION CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES
ARE BEING TENDERED" ON THE LETTER OF TRANSMITTAL THE PRICE (IN MULTIPLES OF
$0.125) AT WHICH THEIR SHARES ARE BEING TENDERED. Shareholders who desire to
tender Shares at more than one price must complete a separate Letter of
Transmittal for each price at which Shares are tendered, provided that the same
Shares cannot be tendered (unless properly withdrawn previously in accordance
with the terms of the Offer) at more than one price. IN ORDER TO PROPERLY TENDER
SHARES, ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON
EACH LETTER OF TRANSMITTAL.
In addition, if certificates representing shares that are to be tendered
have been lost or destroyed, shareholders must complete the box captioned
"Description of Shares Tendered" on the Letter of Transmittal. The shareholder
then will be instructed by the Depositary as to the steps that must be taken in
order to replace the certificate(s).
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Also, Odd Lot Holders who tender all such Shares must complete the box
captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery, in order to qualify for the preferential
treatment available to Odd Lot Holders as set forth in Section 1.
SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required (i) if the Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company or Philadelphia Depository Trust
Company (collectively, the "Book-Entry Transfer Facilities") whose name appears
on a security position listing as the owner of the Shares) tendered therewith
and such holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal; or (ii) if Shares are tendered for the account of a firm or
other entity that is a member in good standing of the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guaranteed
Program or the Stock Exchange Medallion Program (each such entity being
hereinafter referred to as an "Eligible Institution"). See Instruction 1 of the
Letter of Transmittal. If a certificate for Shares is registered in the name of
a person other than the person executing a Letter of Transmittal, or if payment
is to be made, or Shares not purchased or tendered are to be issued, to a person
other than the registered holder, then the certificate must be endorsed or
accompanied by an appropriate stock power, in each case, signed exactly as the
name of the registered holder appears on the certificate or stock power and
guaranteed by an Eligible Institution.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or a timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at a Book-Entry Transfer Facility
as described above), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS,
INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF
DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at each Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase and any
financial institution that is a participant in a Book-Entry Transfer Facility's
system may make book-entry delivery of the Shares by causing such facility to
transfer Shares into the Depositary's account in accordance with the Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through a book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, either (i) a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees, or an Agent's Message, and any other required documents
must, in any case, be transmitted to and received by the Depositary at its
address set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or (ii) the guaranteed delivery procedure described below must
be followed. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary, which states that such
Book-Entry Transfer Facility has received an express acknowledgement from the
participant in such Book-Entry Transfer Facility tendering the Shares that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Company may enforce such agreement against such
participant.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE TO SHAREHOLDERS FOR SHARES
PURCHASED PURSUANT TO THE OFFER, EACH SHAREHOLDER WHO DOES NOT OTHERWISE
ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH
THE SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") AND PROVIDE
CERTAIN OTHER INFORMATION BY COMPLETING THE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL. If a tendering shareholder fails to provide a correct TIN and
certain other information to the Depositary, the gross payments made to such
shareholder for Shares purchased pursuant to the Offer may be subject to backup
federal income tax withholding equal to 31%. In addition, the Internal Revenue
Service (the "Service") may impose a penalty on a tendering shareholder who
fails to provide a correct TIN. Certain shareholders (including, among others,
all corporations and certain foreign shareholders) are not subject to backup
withholding. Foreign shareholders (as defined below) may be required to submit
Form W-8, certifying non-United States status, to avoid backup withholding. See
Instructions 14 and 15 of the Letter of Transmittal. For a discussion of certain
federal income tax consequences to tendering shareholders, see Section 14.
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WITHHOLDING FOR FOREIGN SHAREHOLDERS. Even if a foreign shareholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold federal income taxes equal to 30% of the gross payments payable to
a foreign shareholder or his agent unless the Depositary determines that an
exemption from or a reduced rate of withholding is available pursuant to a tax
treaty or that an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business in
the United States (as defined in applicable Treasury Regulations). For this
purpose, a "foreign shareholder" is a beneficial owner of shares that is not a
"U.S. Holder." A U.S. Holder is a beneficial owner that is (i) a citizen or
resident of the United States, (ii) a corporation or other entity taxable as a
corporation created or organized in or under the laws of the United States or
any State, including the District of Columbia, (iii) any estate the income of
which is subject to United States federal income taxation regardless of the
source of such income and (iv) a trust if a United States court is able to
exercise primary supervision over administration of the trust and one or more
United States fiduciaries have authority to control all substantial decisions of
the trust. In order to obtain an exemption from or a reduced rate of withholding
pursuant to a tax treaty, a foreign shareholder must deliver to the Depositary a
properly completed Form 1001. To obtain an exemption from withholding on the
grounds that the gross proceeds paid pursuant to the Offer are effectively
connected with the conduct of a trade or business within the United States, a
foreign shareholder must deliver to the Depositary a properly completed Form
4224. The Depositary will determine a shareholder's status as a foreign
shareholder and eligibility for a reduced rate of, or an exemption from,
withholding by reference to any outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(e.g., Form 1001 or Form 4224) unless facts and circumstances indicate that such
reliance is not warranted. A foreign shareholder may be eligible to obtain a
refund of all or a portion of any tax withheld if such shareholder meets one of
the three tests for sale treatment described in Section 14 or is otherwise able
to establish that no tax or a reduced amount of tax is due. Backup withholding
generally will not apply to amounts subject to the 30% or treaty-reduced rate of
withholding.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share certificates cannot be delivered to the
Depositary prior to the Expiration Date (or the procedures for book-entry
transfer cannot be completed on a timely basis) or if time will not permit all
required documents to reach the Depositary prior to the Expiration Date, such
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand, mail, telegram or facsimile
transmission, prior to the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the form
the Company has provided with this Offer to Purchase (specifying the
price at which the Shares are being tendered), including (where
required) a signature guarantee by an Eligible Institution; and
(c) the certificates for all tendered Shares, in proper form for transfer
(or confirmation of book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities),
together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any required
signature guarantees or other documents required by the Letter of
Transmittal, are received by the Depositary within three NYSE trading
days after the date of receipt by the Depositary of such Notice of
Guaranteed Delivery.
If any tendered Shares are not purchased, or if less than all Shares
evidenced by a shareholder's certificates are tendered, certificates for
unpurchased Shares will be returned as promptly as practicable after the
expiration or termination of the Offer or, in the case of Shares tendered by
book-entry transfer at a Book-Entry Transfer Facility, such Shares will be
credited to the appropriate account maintained by the tendering shareholder at
the appropriate Book-Entry Transfer Facility, in each case without expense to
such shareholder.
DIVIDEND REINVESTMENT PLAN. Shares credited to participants' accounts under
the Dividend Reinvestment Plan will be tendered by Harris Trust and Savings
Bank, as administrator, according to instructions provided to the administrator
from participants in the Dividend Reinvestment Plan. Shares for which the
administrator has not received timely instructions from participants will not be
tendered. The administrator will make available to the participants in the
Dividend Reinvestment Plan all documents furnished to shareholders generally in
connection with the Offer. Because the Depositary for the Offer also acts as
administrator of the Dividend Reinvestment Plan, participants in the Dividend
Reinvestment Plan may use the Letter of Transmittal to instruct the
administrator regarding the Offer by completing the box entitled "Dividend
Reinvestment Plan Shares." Each participant may direct that all, some or none of
the Shares credited to the participant's account under the Dividend Reinvestment
Plan be tendered and the price at which such participant's Shares are to be
tendered. Participants in the Dividend Reinvestment Plan are urged to read the
Letter of Transmittal and related materials carefully.
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If a participant tenders all of his or her Dividend Reinvestment Plan
Shares and all such Shares are purchased by the Company pursuant to the Offer,
such tender will be deemed to be authorization and written notice to Harris
Trust and Savings Bank of termination of such shareholder's participation in the
Dividend Reinvestment Plan.
SAVINGS PLAN. Participants in the Savings Plan who wish to have the Savings
Plan Trustee tender all or part of the Shares allocated to their accounts should
so indicate by completing, executing and returning to the Savings Plan Trustee
the election form included with the memorandum furnished to such participants.
PARTICIPANTS IN THE SAVINGS PLAN MAY NOT USE THE LETTER OF TRANSMITTAL TO DIRECT
THE TENDER OF THE SAVINGS PLAN SHARES, BUT MUST USE THE SEPARATE ELECTION FORM
ENCLOSED WITH THE MEMORANDUM TO PARTICIPANTS IN THE SAVINGS PLAN. SAVINGS PLAN
PARTICIPANTS ARE URGED TO READ THE SEPARATE ELECTION FORM AND RELATED MATERIALS
CAREFULLY. ANY SAVINGS PLAN SHARES TENDERED BUT NOT PURCHASED WILL BE RETURNED
TO THE PARTICIPANT'S SAVINGS PLAN ACCOUNT.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance of any tender of
Shares will be determined by the Company, in its sole discretion, and its
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payment for
which may be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender with
respect to any particular Shares or any particular shareholder. No tender of
Shares will be deemed to have been properly made until all defects or
irregularities have been cured by the tendering shareholder or waived by the
Company. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person shall be obligated to give notice of any
defects or irregularities in tenders, nor shall any of them incur any liability
for failure to give any such notice.
TENDERING SHAREHOLDER'S REPRESENTATION AND WARRANTY; COMPANY'S ACCEPTANCE
CONSTITUTES AN AGREEMENT. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer, as well as the tendering shareholder's
representation and warranty to the Company that (a) such shareholder has a net
long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated by the Commission under the Exchange Act and (b) the tender of such
Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person,
directly or indirectly, to tender Shares for such person's own account unless,
at the time of tender and at the end of the proration period or period during
which Shares are accepted by lot (including any extensions thereof), the person
so tendering (i) has a net long position equal to or greater than the amount of
(x) Shares tendered or (y) other securities convertible into or exchangeable or
exercisable for the Shares tendered and will acquire such Shares for tender by
conversion, exchange or exercise, and (ii) will deliver or cause to be delivered
such Shares in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
shareholder and the Company upon the terms and subject to the conditions of the
Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be withdrawn
at any time after 12:00 Midnight, New York City time, on Wednesday, October 22,
1997.
For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic or facsimile transmission form and must be received in a
timely manner by the Depositary at its address set forth on the back cover of
this Offer to Purchase. Any such notice of withdrawal must specify the name of
the tendering shareholder, the name of the registered holder, if different from
that of the person who tendered such Shares, the number of Shares tendered and
the number of Shares to be withdrawn. If the certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the release of such certificates, the tendering shareholder must also
submit the serial numbers shown on the particular certificates for Shares to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry tender set forth in Section 3, the notice of withdrawal also must
specify the name and the number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with the procedures of such facility. None of the Company, the Dealer Manager,
the Depositary, the Information Agent or any other person shall be obligated to
give notice of any defects or irregularities in any notice of withdrawal nor
shall any of them incur liability for failure to give any such notice. All
questions as to the form and validity (including time of receipt) of
8
<PAGE>
notices of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding.
Withdrawals may not be rescinded and any Shares withdrawn will thereafter
be deemed not properly tendered for purposes of the Offer unless such withdrawn
Shares are properly retendered prior to the Expiration Date by following one of
the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company (i) will determine the
Purchase Price it will pay for the Shares properly tendered and not withdrawn
prior to the Expiration Date, taking into account the number of Shares so
tendered and the prices specified by tendering shareholders and (ii) will accept
for payment and pay for (and thereby purchase) Shares properly tendered at
prices at or below the Purchase Price and not withdrawn prior to the Expiration
Date. For purposes of the Offer, the Company will be deemed to have accepted for
payment (and therefore purchased) Shares that are tendered at or below the
Purchase Price and not withdrawn (subject to the proration and conditional
tender provisions of the Offer) only when, as and if it gives oral or written
notice to the Depositary of its acceptance of such Shares for payment pursuant
to the Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date the Company will accept for payment and pay a
single per Share Purchase Price for 35,000,000 Shares (subject to increase or
decrease as provided in Section 15) or such lesser number of Shares as are
properly tendered at prices not in excess of $9.25 nor less than $7.75 per Share
and not withdrawn as permitted in Section 4.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering shareholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any proration and commence payment for Shares
purchased until approximately five NYSE trading days after the Expiration Date.
Certificates for all Shares tendered and not purchased, including all Shares
tendered at prices in excess of the Purchase Price and Shares not purchased due
to proration or conditional tender, will be returned (or, in the case of Shares
tendered by book-entry transfer, such Shares will be credited to the account
maintained with the Book-Entry Transfer Facility by the participant therein who
so delivered such Shares) to the tendering shareholder at the Company's expense
as promptly as practicable after the Expiration Date without expense to the
tendering shareholders. Under no circumstances will interest on the Purchase
Price be paid by the Company by reason of any delay in making payment. In
addition, if certain events occur, the Company may not be obligated to purchase
Shares pursuant to the Offer. See Section 7.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered holder or such other person), payable on account of the transfer to
such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 7 of the Letter of Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO
THE OFFER. SEE SECTION 3. ALSO SEE SECTION 3 REGARDING FEDERAL INCOME TAX
CONSEQUENCES FOR FOREIGN SHAREHOLDERS.
9
<PAGE>
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances set forth in Section 1 above, the Company may
prorate the number of Shares purchased pursuant to the Offer. As discussed in
Section 14, the number of Shares to be purchased from a particular shareholder
might affect the tax consequences to such shareholder of such purchase and such
shareholder's decision whether to tender. Accordingly, a shareholder may tender
Shares subject to the condition that a specified minimum number, if any, must be
purchased, and any shareholder wishing to make such a conditional tender should
so indicate in the box captioned "Conditional Tender" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery. It is the
tendering shareholder's responsibility to calculate such minimum number of
Shares and each shareholder is urged to consult his or her own tax advisor. If
the effect of accepting tenders on a pro rata basis is to reduce the number of
Shares to be purchased from any shareholder below the minimum number so
specified, such tender will automatically be deemed withdrawn, except as
provided in the next paragraph, and Shares tendered by such shareholder will be
returned as soon as practicable after the Expiration Date.
However, if so many conditional tenders would be deemed withdrawn that the
total number of Shares to be purchased falls below 35,000,000 Shares, then, to
the extent feasible, the Company will identify conditional tenders from
shareholders who tender all of their Shares and will select enough of such
conditional tenders, which would otherwise have been deemed withdrawn, to
purchase such desired number of Shares. In selecting among such conditional
tenders, the Company will select by random lot.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
AND WILL THEREBY BE DEEMED WITHDRAWN.
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for, Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after August 27, 1997, and prior to
the time of payment for any such Shares (whether any Shares have theretofore
been accepted for payment, purchased or paid for pursuant to the Offer) any of
the following events shall have occurred (or shall have been determined by the
Company to have occurred) that, in the Company's sole judgment in any such case
and regardless of the circumstances giving rise thereto (including any action or
omission to act by the Company), makes it inadvisable to proceed with the Offer
or with such acceptance for payment or payment:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person,
domestic or foreign, before any court, authority, agency or tribunal
that directly or indirectly (i) challenges the making of the Offer, the
acquisition of some or all of the Shares pursuant to the Offer or
otherwise relates in any manner to the Offer or (ii) in the Company's
sole judgment, could materially and adversely affect the business,
condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or otherwise materially
impair in any way the contemplated future conduct of the business of
the Company or any of its subsidiaries or materially impair the
contemplated benefits of the Offer to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the
Company or any of its subsidiaries, by any court or any authority,
agency or tribunal that, in the Company's sole judgment, would or might
directly or indirectly (i) make the acceptance for payment of, or
payment for, some or all of the Shares illegal or otherwise restrict or
prohibit consummation of the Offer; (ii) delay or restrict the ability
of the Company, or render the Company unable, to accept for payment or
pay for some or all of the Shares; (iii) materially impair the
contemplated benefits of the Offer to the Company; or (iv) materially
and adversely affect the business, condition (financial or other),
income, operations or prospects of the Company and its subsidiaries,
taken as a whole, or otherwise materially impair in any way the
contemplated future conduct of the business of the Company or any of
its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities
exchange or in the over-the-counter market; (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States; (iii) the commencement of a war, armed hostilities
or other international or national calamity directly or indirectly
involving the United States; (iv) any limitation (whether or not
mandatory) by any governmental, regulatory or administrative agency or
authority on, or any event
10
<PAGE>
that, in the Company's sole judgment, might affect, the extension of
credit by banks or other lending institutions in the United States; (v)
any significant decrease in the market price of the Shares or any
change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the sole
judgment of the Company, have a material adverse effect on the
Company's business, operations or prospects or the trading in the
Shares; (vi) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening
thereof; or (vii) any decline in either the Dow Jones Industrial
Average or the Standard and Poor's Index of 500 Industrial Companies by
an amount in excess of 10 percent measured from the close of business
on August 26, 1997;
(d) a tender or exchange offer with respect to some or all of the Shares
(other than the Offer), or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by another person
or shall have been publicly disclosed, or the Company shall have
learned that (i) any person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act), other than the Gottwalds, the Dividend
Reinvestment Plan or the Savings Plan, shall have acquired or proposed
to acquire beneficial ownership of more than five percent of the
outstanding Shares, or any new group shall have been formed that
beneficially owns more than five percent of the outstanding Shares;
(e) any change or changes shall have occurred in the business, condition
(financial or otherwise), assets, income, operations, prospects or
stock ownership of the Company or its subsidiaries that, in the
Company's sole judgment, is or may be material to the Company or its
subsidiaries; or
(f) any conditions in the Senior Credit Facility described in Section 9
below relating to the borrowing of funds to purchase the Shares shall
not have been satisfied or waived.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition, and may be waived by
the Company, in whole or in part, at any time and from time to time in its sole
discretion. The Company's failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Company concerning the events described above
will be final and binding.
8. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and traded on the NYSE under the symbol "EY." The
following table sets forth, for the periods indicated, the high and low intraday
per share sales prices on the NYSE Composite Tape as compiled from published
financial sources and the cash dividends paid, or to be paid, per share in each
such fiscal quarter.
<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW DIVIDENDS
<S> <C>
1995:
1st Quarter................................................ $11 $9 1/2 $ 0.125
2nd Quarter................................................ 12 3/8 10 1/4 0.125
3rd Quarter................................................ 11 13/16 10 5/8 0.125
4th Quarter................................................ 13 1/8 10 7/8 0.125
1996:
1st Quarter................................................ 13 9 5/8 0.125
2nd Quarter................................................ 10 7/8 9 5/8 0.125
3rd Quarter................................................ 10 8 3/8 0.125
4th Quarter................................................ 9 3/4 8 1/4 0.125
1997:
1st Quarter................................................ 10 3/8 8 3/8 0.125
2nd Quarter................................................ 9 5/8 8 1/2 0.125
3rd Quarter (through August 26, 1997)...................... 9 3/8 8 3/4 0.125
</TABLE>
On August 26, 1997, the last full trading day on the NYSE prior to the
announcement and commencement of the Offer, the closing per share sales price on
the NYSE Composite Tape was $9.00. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
The Company's Board of Directors has declared a dividend of $0.125 per
share to holders of record of the Company's common stock at the close of
business on September 15, 1997, to be paid on October 1, 1997. All shareholders
of record at
11
<PAGE>
the close of business on September 15, 1997, regardless whether such
shareholders tender their Shares pursuant to the Offer either before or after
such date, will be entitled to receive such dividend when it is paid.
Concurrently with the announcement of the Offer, the Company announced that
upon consummation of the Offer the Board intends to reduce the annual cash
dividend of the Company from $0.50 per Share to $0.25 per Share, effective for
the fourth quarter 1997 dividend declaration to be paid on January 1, 1998. The
declaration and payment of future dividends will be dependent on the Company's
earnings and financial condition, economic and market conditions and other
factors deemed relevant by the Company's Board of Directors. The Company intends
to utilize the increase in cash flow resulting from the dividend reduction for
debt service and general corporate purposes.
9. SOURCE AND AMOUNT OF FUNDS.
Assuming the Company purchases 35,000,000 Shares pursuant to the Offer at a
price of $7.75 per Share or $9.25 per Share, the total amount required by the
Company to purchase such Shares will be $271,250,000 or $323,750,000,
respectively. Including the estimated transaction fees and other expenses of
$5,800,000, a total of $277,050,000 or $329,550,000, respectively, will be
funded with additional long-term debt. No cash on hand is assumed to be used
because the available portion of the cash balance is not material.
In anticipation of this incremental borrowing, the Company's existing
$500,000,000 unsecured competitive advance and revolving credit agreement with a
group of banks is being replaced with a five-year unsecured credit agreement
(the "Senior Credit Facility") with a group of banks, led by NationsBank, N.A.,
a national banking association, permitting the Company to borrow $300,000,000
under a five-year term loan facility and up to $600,000,000 under a revolving
credit facility. The loan underwriting fees of $2,250,000 will be amortized over
the five-year life of the Senior Credit Facility.
The funding required to purchase the Shares may be less than the amount
provided from the proceeds of the $300,000,000 term loan, which will be borrowed
on or about September 30, 1997. Any excess will be used to reduce other
long-term debt. At $7.75 per Share, the excess is estimated to approximate
$22,950,000, including estimated transaction fees and other expenses. The
variable interest rate under the term loan facility will be determined
periodically, normally quarterly, under various interest rate options, including
a LIBOR-based option. The LIBOR-based option will initially approximate 6.225%,
based on rates provided by the underwriter. Payments including principal and
interest are due quarterly beginning on January 1, 1998.
If the amount required to repurchase the Shares exceeds $300,000,000, the
remainder will be provided from the five-year revolving credit facility. At
$9.25 per Share, the remainder is estimated to approximate $29,550,000 including
the estimated transaction fees and other expenses, and it will be borrowed under
the Company's revolving credit facility on or about September 30, 1997. The
variable interest rate under the revolving credit facility will be determined
periodically, for periods as short as 30 days, under various interest rate
options, including a LIBOR-based option. The LIBOR-based option will initially
approximate 6.050%, based on rates provided by the underwriter. An annual
facility fee, initially 0.175% or 17.5 basis points, based on the Company's debt
rating, will also be assessed on the entire amount of the revolving credit
facility. Interest will be paid at the end of each period.
The Senior Credit Facility will contain a number of covenants,
representations and events of default typical of a credit facility of this size
and nature, including financial covenants relating to consolidated debt (defined
as indebtedness of the consolidated group determined on a consolidated basis in
accordance with GAAP), including: (i) maximum consolidated leverage or
indebtedness to earnings (defined as earnings before interest, income taxes,
depreciation and amortization) of 3.5 to 1.0, (ii) minimum consolidated earnings
to fixed charges coverage of 1.25 to 1.0 and (iii) minimum consolidated net
worth (defined as a percentage of shareholders' equity after the effects of the
repurchase of Shares pursuant to the Offer or in the open market plus 50% of
future net income). Some of these will be more restrictive than the covenants
under the existing revolving credit facility. The Company has been in compliance
with the covenants in the existing agreement, and expects to be in compliance
with the covenants in the Senior Credit Facility.
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<PAGE>
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL.
DESCRIPTION OF BUSINESS. The Company is incorporated in Virginia and is a
major developer, manufacturer and blender of petroleum additives, which are
marketed to customers in the United States and around the world. The Company has
about 1,800 employees. Petroleum additives products include additives for
gasoline, diesel fuels, and home heating oils as well as additives for
passenger-car and diesel crankcase lubricants including railroad engine oil
additives, automatic transmission fluids and lubricants for gears, hydraulic and
industrial equipment.
Competition as well as specification and regulatory changes in connection
with all of the Company's products require continuing investments in research
and development of new products or leading technologies, in continuing product
and process improvements and in providing specialized customer services.
MANUFACTURING AND BLENDING. The Company manufactures and blends a broad
range of performance enhancing additives for motor fuels and lubricating oils.
Most sales of fuel additives for gasoline, diesel fuels and heating oils are
directly to petroleum refiners and marketers, terminals and blenders. Lubricant
additive packages are sold directly to companies producing finished oils and
fluids in the United States and throughout the world. The processes and
technologies for most of the Company's products were developed in the Company's
research and development laboratories, although some technology was obtained
from acquired businesses.
The Company manufactures and blends a majority of its lubricant additives
and non-antiknock fuel additives in the United States but also has manufacturing
and blending facilities in Belgium, Canada and Brazil and obtains some products
under long-term supply agreements.
LUBRICANT ADDITIVES PRODUCTS. Lubricant additives extend the useful life of
lubricants and assist them in preventing wear and corrosion of metallic parts,
protecting seals, allowing metallic parts to withstand extremely high
temperatures and pressures and increasing 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 and marine, railroad and industrial
equipment and machinery requiring lubrication, thereby extending equipment life.
Lubricant additives are used in meeting government regulations and original
equipment manufacturers' specifications and standards, including improving fuel
economy.
FUEL ADDITIVES PRODUCTS. Fuel additives increase the quality of gasolines
and diesel fuel by raising the level of octane and cetane, respectively,
retaining the quality of fuel over time, maintaining engine cleanliness,
protecting metals, reducing friction and wear and lowering emissions. Fuel
additives are used by refiners to meet regulations and standards, including
those reducing exhaust emissions. Additives also are used in fuels for
over-the-road and off-highway vehicles, piston and jet aircraft, as well as
railroad, marine and other gasoline, diesel or synfuel powered engines and also
in home heating oil.
Lead antiknock compounds, sold to petroleum refiners in many countries
around the world, remain one of the Company's largest product lines. The
components are manufactured by The Associated Octel Company Limited under a
long-term supply contract.
Lead antiknock compounds have been subject to regulation restricting the
amount of the product that can be used in motor gasoline. These regulations
began in the United States in the 1970s and have slowly spread to other
countries. Today, the use of lead antiknock compounds for motor gasoline has
been eliminated in the U.S. and Canada though use in certain other applications
continues in these countries. As the Company has forecast and planned, the
market for lead antiknock compounds continues to decline as the use of unleaded
gasoline grows and regulations limit the use of leaded gasoline.
The Company also sells a manganese-based antiknock compound,
HiTEC(Register mark) 3000 performance additive, which is used in leaded and
conventional unleaded gasoline. The compounds are manufactured for the Company
by Albemarle Corporation under a long-term supply contract.
PRODUCT DEVELOPMENTS. 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 many products, new product development and
more product qualification tests.
Recent product developments are part of the Company's major ongoing effort
to expand and improve its product lines and expand geographic distribution of
its petroleum additive products. As part of this effort, the Company has
initiated a
13
<PAGE>
product line review and integration process in order to take full advantage of
the technology obtained through the acquisition of the worldwide lubricant
additives business of Texaco Inc. ("Texaco"). That product line integration
process is continuing.
ENVIRONMENTAL CONSIDERATIONS. The Company maintains and operates
manufacturing and distribution facilities and equipment used in the petroleum
additives business. These are subject to environmental risks and regulations,
which are discussed more fully in Management's Discussion and Analysis under the
heading "Environmental Matters" in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
RESEARCH AND DEVELOPMENT. The Company's research and development activities
are focused on supporting customers by providing products, performance data and
other technical services. With the trend for oil companies to reduce their in-
house research capabilities, there is a growing reliance on the additive
suppliers to perform the majority of the technical work. In addition, there is
an increasing demand from governments and the original equipment manufacturers
for products that meet more stringent performance specifications. Research,
development and testing staff also participate in testing of existing products
as well as activities related to cost reduction, quality improvement and
environmental studies.
The acquisition of the worldwide lubricant additives business of Texaco
added a number of significant patents to the Company's lubricant additives
technology base. Since the acquisition, considerable effort has been focused on
combining the R&D activities, technologies and product lines of the two
businesses. Significant synergy has been achieved from the consolidated R&D
operation.
OTHER INFORMATION. Additional information concerning the Company is
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997. See "Additional Information."
CERTAIN FINANCIAL INFORMATION.
FINANCIAL HIGHLIGHTS. Set forth on the following page are certain financial
highlights of the Company and its subsidiaries. The historical financial
information was derived from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996 (the "Company's 1996 Annual Report"), and from the unaudited
consolidated financial statements included in the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1997 (the "Company's 1997 Quarterly
Report"), each of which is incorporated herein by reference, as well as other
information and data contained in the Company's 1996 Annual Report and the
Company's 1997 Quarterly Report. The pro forma information is as set forth on
pages 16 through 20 of this Offer to Purchase.
On February 29, 1996, the Company completed the acquisition of the
worldwide lubricant additives business of Texaco, including manufacturing and
blending facilities, identifiable intangibles and working capital. The
acquisition, accounted for under the purchase method, included a cash payment of
$134.3 million and a future contingent payment of up to $60 million. The cash
payment was financed primarily under the Company's revolving credit agreement.
The payment of up to $60 million will become due on February 26, 1999, with
interest payable on the contingent debt until such date. The actual amount of
the contingent payment and total interest is being determined using an
agreed-upon formula based on volumes of certain acquired product lines shipped
during the calendar years 1996 through 1998, as specified in the contingent note
agreement. Texaco retained substantially all noncurrent liabilities.
More comprehensive financial information is included in the Company's 1996
Annual Report and the Company's 1997 Quarterly Report. The financial information
which follows should be read in conjunction with all of the financial statements
and related notes contained therein, copies of which may be obtained as set
forth under the caption "Additional Information."
RECENT DEVELOPMENTS. Profit from lead antiknocks for the second half of
1997 (especially the third quarter of 1997) is expected to be significantly
below the second half of 1996 due to a declining market as well as continuing
fluctuations in lead orders and shipping patterns, which could cause the
Company's overall earnings for the second half and full year 1997 to fall below
the earnings for the same 1996 periods.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the six months ended June 30, 1997,
and the year ended December 31, 1996, summarize selected items from the
"Selected Unaudited PRO FORMA Consolidated Financial Information" and should be
read in conjunction with, and not as a substitute for, the more detailed
"Selected Unaudited PRO FORMA Consolidated Financial Information."
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
UNAUDITED UNAUDITED
------------------------- -------------------
<S> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND
RATIOS)
Net sales (Historical)......................................... $ 535,049 $ 1,149,651
Net income:
Historical................................................... 42,527 92,972
PRO FORMA 1996 for the acquisition of the lubricant additives
business from Texaco...................................... 94,504
PRO FORMA for Texaco and the Offer at $7.75 per Share........ 37,145 83,247
PRO FORMA for Texaco and the Offer at $9.25 per Share........ 36,143 81,249
Earnings per share:
Historical................................................... .36 .78
PRO FORMA 1996 for the acquisition of the lubricant additives
business from Texaco...................................... .80
PRO FORMA for Texaco and the Offer at $7.75 per Share........ .45 1.00
PRO FORMA for Texaco and the Offer at $9.25 per Share........ .43 .97
Ratio of earnings to fixed charges: (1)(2)
Historical................................................... 5.92 5.83
PRO FORMA 1996 for the acquisition of the lubricant additives
business from Texaco...................................... 5.70
PRO FORMA for Texaco and the Offer at $7.75 per Share........ 3.66 3.67
PRO FORMA for Texaco and the Offer at $9.25 per Share........ 3.41 3.45
Long-term debt: (2)
Historical................................................... $ 291,358 $ 325,480
PRO FORMA for the Offer at $7.75 per Share................... 568,408 602,530
PRO FORMA for the Offer at $9.25 per Share................... 620,908 655,030
Shareholders' equity:
Historical................................................... $ 447,773 $ 439,900
PRO FORMA for the Offer at $7.75 per Share................... 172,973 165,100
PRO FORMA for the Offer at $9.25 per Share................... 120,473 112,600
Long-term debt as a % of total capitalization: (2)(3)
Historical................................................... 39.4% 42.5%
PRO FORMA for the Offer at $7.75 per Share................... 76.7% 78.5%
PRO FORMA for the Offer at $9.25 per Share................... 83.8% 85.3%
</TABLE>
- ---------------
(1) The ratios of earnings to fixed charges were computed by dividing pretax
income before fixed charges by the amount of the fixed charges. Earnings
consist of pretax income, to which has been added fixed charges. Fixed
charges consist of interest expense, debt service expense and a portion of
rent expense approximating the interest factor.
(2) The financial statements for 1996 and 1997 do not include a contingent note
payable to Texaco, of up to $60 million (or the expensing of the related
interest cost) related to the purchase of the Texaco lubricant additives
business. Also, the earnings to fixed charges ratio and the long-term debt
as a percentage of total capitalization data do not include the effects of
the contingent note.
(3) Long-term debt as a percentage of total capitalization was computed by
dividing long-term debt by the sum of long-term debt and total shareholders'
equity.
15
<PAGE>
SELECTED UNAUDITED
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following information includes certain historical and PRO FORMA
consolidated financial information related to the Company. Historical financial
information was excerpted or derived from the audited consolidated financial
statements contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 and from the unaudited consolidated financial statements
contained in the Company's Quarterly Report on Form 10-Q for the six months
ended June 30, 1997. The historical information should be read in conjunction
with the financial information and related notes contained therein, copies of
which may be obtained as set forth under the caption "Additional Information."
The unaudited PRO FORMA consolidated financial position data of the Company
as of June 30, 1997 and December 31, 1996, and the unaudited PRO FORMA
consolidated results of operations for the six months ended June 30, 1997 and
year ended December 31, 1996, are presented for both the high and low prices of
the Offer. Also, inasmuch as the Company's 1996 financial statements only
included ten months operations of the lubricant additives business acquired from
Texaco on February 29, 1996, unaudited PRO FORMA consolidated results of
operations for the year ended December 31, 1996, are provided to present a
summary of the combined results as if the acquisition had occurred January 1,
1996.
The unaudited PRO FORMA consolidated financial position data for the Offer
assumes that, on June 30, 1997, and December 31, 1996, the Company acquired
35,000,000 Shares at prices of $7.75 and $9.25 per Share for total Share
purchase prices of $271,250,000 and $323,750,000, respectively, which when added
to stock purchase transaction fees and other expenses of $3,550,000 equals
$274,800,000 and $327,300,000, respectively, the PRO FORMA cost of the
repurchased Shares. The loan underwriting fees of $2,250,000 are recorded as PRO
FORMA deferred charges. (The stock purchase transaction fees and other expenses
combined with the loan underwriting fees total $5,800,000 in estimated
transaction fees and other expenses.) The PRO FORMA amount of additional long
term debt of $277,050,000 and $329,550,000, respectively, equals the total of
the cost of the repurchased Shares combined with the cost of the loan
underwriting fees.
The unaudited PRO FORMA consolidated results of operations assume that the
Offer occurred on January 1, 1996.
The PRO FORMA consolidated financial information of the Company is
presented for informational purposes only, is unaudited and does not purport to
be indicative of the future results or the consolidated financial position of
the Company or the consolidated net income and consolidated financial position
that would actually have been attained had the PRO FORMA transactions occurred
on the dates or for the periods indicated. This information should be read in
conjunction with the historical consolidated financial statements of Ethyl
Corporation and subsidiaries, incorporated by reference from the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, and the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997
referred to above. See "Additional Information."
The financial information and related ratio of earnings to fixed charges
and long-term debt as a percentage of total capitalization data do not reflect a
contingent note payable to Texaco, of up to $60 million (or the expensing of the
related interest cost), related to the purchase of Texaco's lubricant additives
business. The payment is due on February 26, 1999, with the actual amount being
determined using an agreed-upon formula based on volumes of certain acquired
product lines shipped during the calendar years 1996 through 1998.
16
<PAGE>
SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
PRO FORMA FOR
SHARE REPURCHASE
---------------------------
ASSUMED ASSUMED
$7.75/SHARE $9.25/SHARE
PURCHASE PURCHASE
HISTORICAL PRICE PRICE
---------- ----------- -----------
<S> <C>
RESULTS OF OPERATIONS:
Net Sales........................................................................ $ 535,049 $ 535,049 $ 535,049
Cost of goods sold............................................................... 379,653 379,653 379,653
---------- ----------- -----------
Gross Profit..................................................................... 155,396 155,396 155,396
SG&A and R&D expenses............................................................ 78,721 78,721 78,721
---------- ----------- -----------
Operating Profit............................................................... 76,675 76,675 76,675
Interest and financing expenses.................................................. 10,563 19,012(2) 20,585(2)
Other income, net................................................................ (357) (357) (357)
---------- ----------- -----------
Income before income taxes....................................................... 66,469 58,020 56,447
Income taxes..................................................................... 23,942 20,875(2) 20,304(2)
---------- ----------- -----------
Net Income..................................................................... $ 42,527 $ 37,145 $ 36,143
---------- ----------- -----------
---------- ----------- -----------
Earnings per share (2)........................................................... $ 0.36 $ 0.45 $ 0.43
---------- ----------- -----------
---------- ----------- -----------
Average number of common shares outstanding (3)(4)............................... 118,446 83,446 83,446
Ratio of earnings to fixed charges (5)........................................... 5.92 3.66 3.41
FINANCIAL POSITION:
ASSETS:
Cash and cash equivalents........................................................ $ 15,786 $ 15,786 $ 15,786
Other current assets............................................................. 388,991 388,991 388,991
Net property, plant & equipment.................................................. 415,322 415,322 415,322
Prepaid pension cost, other assets and deferred charges (3)...................... 170,538 172,788 172,788
Goodwill and other intangibles................................................... 70,478 70,478 70,478
---------- ----------- -----------
Total assets..................................................................... $1,061,115 $ 1,063,365 $ 1,063,365
---------- ----------- -----------
---------- ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Total current liabilities........................................................ $ 177,865 $ 177,865 $ 177,865
Long-term debt (1)(3)............................................................ 291,358 568,408 620,908
Other noncurrent liabilities..................................................... 84,834 84,834 84,834
Deferred income taxes............................................................ 59,285 59,285 59,285
SHAREHOLDERS' EQUITY:
Common stock (3)............................................................... 118,444 83,444 83,444
Additional paid-in capital (3)................................................. 2,799 -- --
Foreign currency translation adjustments....................................... (6,931) (6,931) (6,931)
Retained earnings (3).......................................................... 333,461 96,460 43,960
---------- ----------- -----------
447,773 172,973 120,473
---------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....................................... $1,061,115 $ 1,063,365 $ 1,063,365
---------- ----------- -----------
---------- ----------- -----------
Ending shares outstanding (3).................................................... 118,444 83,444 83,444
Book value per share (6)......................................................... $ 3.78 $ 2.07 $ 1.44
Working capital.................................................................. 226,912 226,912 226,912
Long-term debt (1)(3)............................................................ 291,358 568,408 620,908
Long-term debt as a % of total capitalization (7)................................ 39.4% 76.7% 83.8%
</TABLE>
See accompanying notes to the unaudited PRO FORMA consolidated financial
information.
17
<PAGE>
SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA FOR
PRO FORMA SHARE REPURCHASE
ADJUSTMENTS PRO FORMA --------------------------
FOR PURCHASE FOR PURCHASE ASSUMED ASSUMED
OF LUBRICANT OF LUBRICANT $7.75/SHARE $9.25/SHARE
ADDITIVES ADDITIVES PURCHASE PURCHASE
HISTORICAL BUSINESS (1) BUSINESS (1) PRICE PRICE
---------- ------------ ------------ ----------- -----------
<S> <C>
RESULTS OF OPERATIONS:
Net Sales.......................................... $1,149,651 $ 49,175 $1,198,826 $ 1,198,826 $ 1,198,826
Cost of goods sold................................. 804,623 43,264 847,887 847,887 847,887
---------- ------------ ------------ ----------- -----------
Gross Profit....................................... 345,028 5,911 350,939 350,939 350,939
SG&A and R&D expenses.............................. 175,349 2,150 177,499 177,499 177,499
---------- ------------ ------------ ----------- -----------
Operating Profit................................. 169,679 3,761 173,440 173,440 173,440
Interest and financing expenses.................... 24,268 1,289 25,557 43,229(2) 46,366(2)
Other income, net.................................. (361) -- (361) (361) (361)
---------- ------------ ------------ ----------- -----------
Income before income taxes......................... 145,772 2,472 148,244 130,572 127,435
Income taxes....................................... 52,800 940 53,740 47,325(2) 46,186(2)
---------- ------------ ------------ ----------- -----------
Net Income....................................... $ 92,972 $ 1,532 $ 94,504 $ 83,247 $ 81,249
---------- ------------ ------------ ----------- -----------
---------- ------------ ------------ ----------- -----------
Earnings per share (2)............................. $ 0.78 $ 0.80 $ 1.00 $ 0.97
---------- ------------ ----------- -----------
---------- ------------ ----------- -----------
Average number of common shares outstanding (3)(4). 118,448 118,448 83,448 83,448
Ratio of earnings to fixed charges (5)............. 5.83 5.70 3.67 3.45
FINANCIAL POSITION:
ASSETS:
Cash and cash equivalents.......................... $ 20,148 $ -- $ 20,148 $ 20,148 $ 20,148
Other current assets............................... 407,017 -- 407,017 407,017 407,017
Net property, plant & equipment.................... 430,877 -- 430,877 430,877 430,877
Prepaid pension cost, other assets and
deferred charges (3)............................. 159,470 -- 159,470 161,720 161,720
Goodwill and other intangibles..................... 77,657 -- 77,657 77,657 77,657
---------- ------------ ------------ ----------- -----------
Total assets..................................... $1,095,169 $ -- $1,095,169 $ 1,097,419 $ 1,097,419
---------- ------------ ------------ ----------- -----------
---------- ------------ ------------ ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Total current liabilities.......................... $ 180,911 $ -- $ 180,911 $ 180,911 $ 180,911
Long-term debt (1)(3).............................. 325,480 -- 325,480 602,530 655,030
Other noncurrent liabilities....................... 84,502 -- 84,502 84,502 84,502
Deferred income taxes.............................. 64,376 -- 64,376 64,376 64,376
SHAREHOLDERS' EQUITY:
Common stock (3)................................. 118,444 -- 118,444 83,444 83,444
Additional paid-in capital (3)................... 2,799 -- 2,799 -- --
Foreign currency translation adjustments......... (1,888) -- (1,888) (1,888) (1,888)
Retained earnings (3)............................ 320,545 -- 320,545 83,544 31,044
---------- ------------ ------------ ----------- -----------
439,900 -- 439,900 165,100 112,600
---------- ------------ ------------ ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......... $1,095,169 $ -- $1,095,169 $ 1,097,419 $ 1,097,419
---------- ------------ ------------ ----------- -----------
---------- ------------ ------------ ----------- -----------
Ending shares outstanding (3)...................... 118,444 118,444 83,444 83,444
Book value per share (6)........................... $ 3.71 $ 3.71 $ 1.98 $ 1.35
Working capital.................................... 246,254 246,254 246,254 246,254
Long-term debt (1)(3).............................. 325,480 325,480 602,530 655,030
Long-term debt as a % of total capitalization (7).. 42.5% 42.5% 78.5% 85.3%
</TABLE>
See accompanying notes to the unaudited PRO FORMA consolidated financial
information.
18
<PAGE>
NOTES TO SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(1) On February 29, 1996, the Company completed the acquisition of the worldwide
lubricant additives business of Texaco including manufacturing and blending
facilities, identifiable intangibles and working capital. The acquisition,
accounted for under the purchase method, included a cash payment of $134.3
million and a future contingent payment of up to $60 million. The cash payment
was financed primarily under the Company's revolving credit agreement. The
payment of up to $60 million will become due on February 26, 1999, with interest
payable on the contingent debt until such date. The actual amount of the
contingent payment and total interest is being determined using an agreed-upon
formula based on volumes of certain acquired product lines shipped during the
calendar years 1996 through 1998, as specified in the contingent note agreement.
Texaco retained substantially all noncurrent liabilities.
As the Company's 1996 results of operations only included ten months results of
the acquired lubricant additives business, unaudited PRO FORMA information is
provided to present a summary of the combined results as if the acquisition had
occurred January 1, 1996, giving effect to the following purchase accounting
adjustments:
a) Elimination of sales and costs of goods sold on transactions between the
Company and Texaco, primarily including certain of the acquired
business' blending and packaging operations pursuant to the Company's
agreement to blend and/or package certain products for Texaco under a
tolling arrangement. The tolling contract calls for the Company to
process, for a fee, products that the Company neither owns nor sells.
b) Depreciation on fixed assets and amortization of intangible assets based
on the purchase price allocation.
c) Efficiencies realized in selling, general and administrative expenses,
as well as research, development and testing expenses, based on staffing
levels and the number of activities and research, development and
testing and other procedures actually being integrated into the combined
company.
d) Elimination of historical interest expense of the acquired business as
well as the addition of the incremental interest expense on additional
revolving credit debt that would have been incurred to finance the
acquisition.
e) Estimated income tax effects on the PRO FORMA adjustments.
The accompanying historical and PRO FORMA financial information does not reflect
the contingent note payable to Texaco of up to $60 million (or the expensing of
the related interest cost) related to the purchase of Texaco's lubricant
additives business. Also, the ratio of earnings to fixed charges and long-term
debt as a percentage of total capitalization data do not include the effects of
principal or interest on the contingent note.
(2) PRO FORMA adjustments to income statement data for the Offer relate to
interest expense on PRO FORMA borrowings of $277,050,000 and $329,550,000,
respectively, assumed to be needed at January 1, 1996, to complete the assumed
purchase of 35,000,000 Shares of common stock at prices of $7.75 and $9.25 per
share, respectively, combined with estimated transaction costs and other
expenses of $5,800,000. Additional PRO FORMA adjustments to interest expense on
long-term debt reflect reduced dividend payments (beginning with the April 1,
1996 dividend payment) of $4,375,000 per quarter, due to 35,000,000 fewer shares
outstanding, which reduces interest expense in each period. The PRO FORMA
adjustments do not reflect the Board of Directors' intention to reduce the
annual dividend from $0.50 per Share to $0.25 per Share. PRO FORMA interest
expense was calculated assuming (i) a $300,000,000 variable-rate term loan,
initially bearing interest at LIBOR plus .600% (initially expected to
approximate 6.2856%), and (ii) additional Offer related debt required in excess
of the $300,000,000 variable-rate term loan and historical borrowings, financed
under the Company's new $600,000,000 revolving credit facility bearing interest
at the LIBOR rate plus .425% (initially approximates 6.1106%). In addition, PRO
FORMA interest expense also reflects the amount of an annual facility fee of
$1,050,000 associated with the committed amount of the revolving credit facility
and the periodic amortization of the one-time loan underwriting fee of
$2,250,000 as calculated based on the five year life of the Senior Credit
Facility. The rates utilized herein were provided by the underwriter. The
average interest rate on PRO FORMA debt for the six months ended June 30, 1997,
was 6.5% for both the $7.75 and $9.25 per share prices. The average interest
rate on PRO FORMA debt for the year ended December 31, 1996, was 6.3% for both
the $7.75 and $9.25 per share prices.
PRO FORMA income tax adjustments related to interest expense were recorded at an
assumed combined domestic state and federal income tax rate of approximately
36.30% since all additional debt incurred to fund the Offer is assumed to be
domestic debt.
Shares used to compute earnings per share were decreased by the assumed purchase
of 35,000,000 Shares.
19
<PAGE>
(3) PRO FORMA adjustments to long-term debt as of the balance sheet dates of
$277,050,000 (all from the $300,000,000 variable term loan) and $329,550,000
($300,000,000 variable term loan and $29,550,000 additional revolver debt),
respectively, for the Offer are based on the Company's repurchase of 35,000,000
Shares at a $7.75 and $9.25 price per share plus transaction costs of
$5,800,000. The corresponding adjustments for these transactions are to
shareholders' equity for $274,800,000 and $327,300,000 with the remainder of
$2,250,000 accounted for as deferred financing cost.
(4) The PRO FORMA financial information assumes that none of the 881,329 shares
exercisable under the Company's stock option plan are purchased pursuant to the
Offer.
(5) The ratios of earnings to fixed charges were computed by dividing pretax
income before fixed charges by the amount of the fixed charges. Earnings consist
of pretax income, to which has been added fixed charges. Fixed charges consist
of interest expense, debt service expense and a portion of rent expense
approximating the interest factor. Interest expense does not include the
interest on the contingent note payable to Texaco.
(6) Book value per common share is calculated as total shareholders' equity at
the end of the period divided by the number of common shares outstanding at the
end of the period.
(7) The long-term debt as a percentage of total capitalization data were
computed by dividing long-term debt by the sum of long-term debt and total
shareholders' equity.
ADDITIONAL INFORMATION
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's equity securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's shareholders and
filed with the Commission. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 2120, Washington, D.C. 20549; at its
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and 7 World Trade Center, New York, New York 10048. Copies
of such material may also be obtained by mail, upon payment of the Commission's
customary charges, from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains an internet web site at http://www.sec.gov containing reports, proxy
statements and other information regarding companies that file reports
electronically with the Commission. Such reports, proxy statements and other
information concerning the Company also can be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005, on which the Shares are listed.
11. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING SHARES.
As of July 31, 1997, the Company had issued and outstanding 118,443,835
Shares and had reserved for issuance upon exercise of outstanding stock options
6,034,925 Shares. The 35,000,000 Shares that the Company is offering to purchase
represents 29.55% of the Shares then outstanding. As of July 31, 1997, the
Company's directors and executive officers as a group (22 persons) beneficially
owned an aggregate of 10,315,237 Shares representing 8.67% of the outstanding
Shares, assuming the exercise by such persons of their currently exercisable
options. See "Purpose of the Offer; Certain Effects of the Offer" for a
discussion of the Shares owned by the Gottwalds.
Except as set forth in Schedule A, neither the Company, nor any subsidiary
of the Company nor, to the best of the Company's knowledge, any of the Company's
directors or executive officers, nor any affiliates of any of the foregoing, had
any transactions involving the Shares during the 40 business days prior to the
date hereof.
Except as otherwise described herein, neither the Company nor, to the best
of the Company's knowledge, any of its affiliates, directors or executive
officers, is a party to any contract, arrangement, understanding or relationship
with any other person relating to the Offer, directly or indirectly, with
respect to any securities of the Company including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations.
On September 24, 1987, the Board of Directors of the company declared a
dividend of one Preferred Stock, Series B purchase right ("Right") for each
outstanding share of common stock to shareholders of record at the close of
business on October 5, 1987. Each Right entitles the registered holder to
purchase from the company 2.522 one-thousandth of a share of
20
<PAGE>
the Company's Preferred Stock, Series B (the "Preferred Stock"). Upon occurrence
of certain events, each Right entitles the holder to purchase shares of common
stock at a substantial discount. Each one one-thousandth of a share of Preferred
Stock is structured to be the economic equivalent of one share of the Company's
common stock. The Rights will expire by their terms on September 24, 1997.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and is expected to
reduce the number of shareholders. Nonetheless, the Company expects that there
will be a sufficient number of Shares outstanding and publicly traded following
consummation of the Offer to ensure a continued trading market for the Shares.
Based upon published guidelines of the NYSE, the Company does not believe that
its purchase of Shares pursuant to the Offer will cause the Company's remaining
Shares to be delisted from the NYSE.
The Shares are currently "margin securities" under the regulations of the
Federal Reserve Board. This has the effect, among other things, of allowing
brokers to extend credit to their customers using such Shares as collateral. The
Company believes that, following the purchase of Shares pursuant to the Offer,
the Shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its shareholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's shareholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that appears
to be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Company as contemplated herein. Should
any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of or payment for Shares tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that the failure to obtain any such approval
or other action might not result in adverse consequences to the Company's
business. The Company's obligations under the Offer to accept for payment and
pay for Shares is subject to certain conditions. See Section 7.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
GENERAL. The federal income tax discussion set forth below summarizes the
principal federal income tax consequences to U.S. Holders of sales of Shares
pursuant to the Offer and is included for general information only. The
discussion does not address all aspects of federal income taxation that may be
relevant to a particular shareholder or any relevant foreign, state, local or
other tax laws. Certain shareholders (including insurance companies, tax-exempt
entities, foreign persons, financial institutions, broker dealers, employee
benefit plans, personal holding companies, persons who hold Shares as a position
in a "straddle" or as part of a "hedging" or "conversion" transaction or other
than as a capital asset, and persons who acquired their Shares upon the exercise
of employee stock options or as compensation) may be subject to special rules
not discussed below. Foreign shareholders should see Section 3 for a discussion
of the applicable United States withholding tax rules. This discussion is based
on laws, regulations, rulings and court decisions currently in effect, all of
which are subject to change, possibly with retroactive effect. The Company has
neither requested nor obtained a written opinion of counsel or a ruling from the
Service with respect to the tax matters discussed below. EACH SHAREHOLDER IS
URGED TO CONSULT AND RELY ON THE SHAREHOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO THE SHAREHOLDER OF SELLING SHARES PURSUANT TO THE
OFFER, INCLUDING THE APPLICATION OF FOREIGN, STATE, LOCAL OR OTHER TAX LAWS.
A sale of Shares pursuant to the Offer will constitute a "redemption" under
the Internal Revenue Code of 1986, as amended (the "Code"), and will be a
taxable transaction for federal income tax purposes. If the redemption qualifies
as a sale of Shares by a shareholder under Section 302 of the Code, the
shareholder will recognize gain or loss equal to the difference between (i) the
cash received pursuant to the Offer and (ii) the shareholder's tax basis in the
Shares surrendered pursuant to the Offer. If the redemption does not qualify as
a sale of Shares under Section 302, the shareholder will not be treated as
having sold Shares but will be treated as having received a dividend taxable as
ordinary income in an amount equal to the cash received pursuant to the Offer.
As described below, whether a redemption qualifies for sale treatment will
depend
21
<PAGE>
largely on the total number of the shareholder's Shares (including any Shares
constructively owned by the shareholder) that are purchased. A shareholder
desiring to obtain sale treatment therefore may want to make a conditional
tender, as described in Section 6, to make sure that a minimum number of his or
her Shares (if any) are purchased.
SALE TREATMENT. Under Section 302 of the Code, a redemption of Shares
pursuant to the Offer will be treated as a sale of such Shares for federal
income tax purposes if such redemption (i) results in a "complete redemption" of
all of the shareholder's stock in the Company, (ii) is "substantially
disproportionate" with respect to the shareholder, or (iii) is "not essentially
equivalent to a dividend" with respect to the shareholder. In determining
whether any of these three tests under Section 302 is satisfied, a shareholder
must take into account not only Shares that the shareholder actually owns, but
also any Shares that the shareholder is treated as owning pursuant to the
constructive ownership rules of Section 318 of the Code. Under those rules, a
shareholder generally is treated as owning (i) Shares owned by the shareholder's
spouse, children, grandchildren and parents, (ii) Shares owned by certain trusts
of which the shareholder is a beneficiary, in proportion to the shareholder's
interest, (iii) Shares owned by any estate of which the shareholder is a
beneficiary, in proportion to the shareholder's interest, (iv) Shares owned by
any partnership or "S corporation" in which the shareholder is a partner or
shareholder, in proportion to the shareholder's interest, (v) Shares owned by
any non-S corporation of which the shareholder owns at least 50% in value of the
stock in proportion to the shareholder's interest, and (vi) Shares that the
shareholder has an option or similar right to acquire. A shareholder that is a
partnership or S corporation, estate, trust or non-S corporation is treated as
owning stock owned (as the case may be) by partners or S corporation
shareholders, by estate beneficiaries, by certain trust beneficiaries, and by
50% shareholders of a non-S corporation. Stock constructively owned by a person
generally is treated as being owned by that person for the purpose of
attributing ownership to another person.
A redemption of Shares from a shareholder pursuant to the Offer will result
in a "complete redemption" of all the shareholder's stock in the Company if
either (i) the Company purchases all of the Shares actually and constructively
owned by the shareholder, or (ii) the shareholder actually owns no Shares after
all transfers of Shares pursuant to the Offer, constructively owns only Shares
owned by certain family members, and the shareholder qualifies to and does waive
(pursuant to Section 302(c)(2) of the Code constructive ownership of Shares
owned by family members. Any shareholder desiring to waive such constructive
ownership of Shares should consult a tax advisor about the applicability of
Section 302(c)(2).
A redemption of Shares from a shareholder pursuant to the Offer will be
"substantially disproportionate" with respect to the shareholder if the
percentage of Shares actually and constructively owned by the shareholder
immediately after all redemptions of Shares pursuant to the Offer compared to
all Shares outstanding immediately after such redemptions is less than 80% of
the number of Shares actually and constructively owned by the shareholder
immediately before such redemptions compared to all Shares outstanding
immediately before such redemptions. If exactly 35,000,000 Shares are redeemed
pursuant to the Offer, the number of Shares outstanding after consummation of
the Offer will be 70.450% of the number of Shares currently outstanding.
Consequently, in that case a shareholder must dispose of more than 43.640%
(I.E., 100% minus 80% of 70.450%) of the number of Shares the shareholder
actually and constructively owns in order possibly to qualify for a
substantially disproportionate redemption. If the Company were to exercise its
right to purchase an additional 2% of the shares, a shareholder would have to
dispose of more than 45.240% (I.E., 100% minus 80% of 68.450%) of the number of
outstanding shares the shareholder actually and constructively owns in order
possibly to qualify for a substantially disproportionate redemption.
A redemption of Shares from a shareholder pursuant to the Offer will be
"not essentially equivalent to a dividend" if, pursuant to the Offer, the
shareholder experiences a "meaningful reduction" in his or her proportionate
interest in the Company, including voting rights, participation in earnings and
liquidation rights, arising from the actual and constructive ownership of
Shares. The Service has indicated in a published ruling that a very small
reduction (3.3%) in the proportionate interest of a small minority
(substantially less than 1%) shareholder of a publicly-held corporation who does
not exercise any control over corporate affairs generally constitutes a
"meaningful reduction" in the shareholder's interest. The fact that the
redemption fails to qualify as a sale pursuant to the other two tests is not
taken into account in determining whether the redemption is "not essentially
equivalent to a dividend." If exactly 35,000,000 Shares are redeemed pursuant to
the Offer, the number of Shares outstanding will be reduced by 29.550%.
Consequently, in that case a shareholder must dispose of more than 29.550% of
the number of Shares the shareholder actually and constructively owns in order
to have any reduction in the shareholder's proportionate stock interest in the
Company. If the Company were to exercise its right to purchase an additional 2%
of the outstanding Shares, a shareholder would have to dispose of more than
31.550% of the number of Shares the shareholder actually and constructively owns
in order to have any reduction in the shareholder's proportionate interest.
Shareholders should be aware that their ability to satisfy any of the
foregoing tests also may be affected by proration pursuant to the Offer.
THEREFORE, UNLESS A SHAREHOLDER MAKES A CONDITIONAL TENDER (SEE SECTION 6), THE
SHAREHOLDER (OTHER
22
<PAGE>
THAN AN ODD LOT HOLDER WHO TENDERS ALL OF HIS OR HER SHARES AT OR BELOW THE
PURCHASE PRICE) CAN BE GIVEN NO ASSURANCE, EVEN IF HE OR SHE TENDERS ALL OF THE
SHAREHOLDER'S SHARES, THAT THE COMPANY WILL PURCHASE A SUFFICIENT NUMBER OF SUCH
SHARES TO PERMIT THE SHAREHOLDER TO SATISFY ANY OF THE FOREGOING TESTS.
Shareholders also should be aware that an acquisition or disposition of Shares
in the market or otherwise as part of a plan that includes the shareholder's
tender of Shares pursuant to the Offer might be taken into account in
determining whether any of the foregoing tests is satisfied. Shareholders are
urged to consult their own tax advisors with regard to whether acquisitions from
or sales to third parties, including market sales, and a tender may be so
integrated.
If any of the foregoing three tests is satisfied, the shareholder will
recognize gain or loss equal to the difference between the amount of cash
received pursuant to the Offer and the shareholder's tax basis in the Shares
sold. Capital gains of individuals, estates and trusts generally are subject to
a maximum federal income tax rate of (i) 39.6% if, at the time the Company
accepts the Shares for payment, the shareholder held the Shares for not more
than one year, (ii) 28% if the shareholder held such Shares for more than one
year but not more than 18 months at such time and (iii) 20% if the shareholder
held such Shares for more than 18 months at such time. Capital gains of
corporations generally are taxed at the federal income tax rates applicable to
corporate ordinary income.
DIVIDEND TREATMENT. If none of the foregoing three tests under Section 302
of the Code is satisfied, the shareholder generally will be treated as having
received a dividend taxable as ordinary income in an amount equal to the amount
of cash received by the shareholder pursuant to the Offer, to the extent the
Company has accumulated or current earnings and profits. The Company expects
that its current and accumulated earnings and profits will be sufficient to
cover the amount of any payments pursuant to the Offer that are treated as
dividends.
Dividend income of individuals, estates and trusts generally is subject to
federal income tax at a maximum rate of 39.6%. Dividend income of corporations,
subject to the provisions discussed below, generally is subject to federal
income tax at a maximum rate of 35%. To the extent that the purchase of Shares
from any shareholder pursuant to the Offer is treated as a dividend, the
shareholder's tax basis in any Shares that the shareholder actually or
constructively owns after consummation of the Offer should be increased by the
shareholder's tax basis in the Shares surrendered pursuant to the Offer.
TREATMENT OF DIVIDEND INCOME FOR CORPORATE SHAREHOLDERS. In the case of a
corporate shareholder, if the cash received for Shares pursuant to the Offer is
treated as a dividend, the dividend income may be eligible for the 70%
dividends-received deduction under Section 243 of the Code. The
dividends-received deduction is subject to certain recently amended limitations;
for example, the deduction may not be available if the corporate shareholder
does not satisfy certain holding period requirements with respect to its
tendered Shares or if the Shares are "debt-financed portfolio stock." If a
dividends-received deduction is available, the dividend (having arisen in a
non-PRO RATA redemption) also likely will be treated as an "extraordinary
dividend" under Section 1059 of the Code. In that case, the corporate
shareholder's tax basis in its remaining Shares (for purposes of determining
gain or loss on a future disposition) generally will be reduced (but not below
zero) by the amount of any "extraordinary dividend" not taxed because of the
dividends-received deduction. Any amount of the "extraordinary dividend" not
taxed because of the dividends-received deduction in excess of the corporate
shareholder's tax basis for the remaining Shares generally would be currently
taxable as gain from the sale of Shares. If a redemption of Shares from a
corporate shareholder pursuant to the Offer is treated as a dividend as a result
of the shareholder's constructive ownership of other Shares that it has an
option or other right to acquire, the portion of the extraordinary dividend not
otherwise taxed because of the dividends-received deduction would reduce the
shareholder's basis only in its Shares sold pursuant to the Offer, and any
excess of such non-taxed portion over such basis would be currently taxable as
gain from the sale of Shares. Corporate shareholders should consult their tax
advisors as to the availability of the dividends-received deduction and the
application of Section 1059 of the Code.
SEE SECTION 3 WITH RESPECT TO THE APPLICATION OF BACKUP FEDERAL INCOME TAX
WITHHOLDING.
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 7 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any Shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
Shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for Shares upon the occurrence of any of the
conditions specified in Section 7 hereof by giving oral or written notice
23
<PAGE>
of such termination or postponement to the Depositary and making a public
announcement thereof. The Company's reservation of the right to delay payment
for Shares that it has accepted for payment is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that the Company must pay the
consideration offered or return the Shares tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law, the
Company further reserves the right, in its sole discretion, and regardless of
whether any of the events set forth in Section 7 shall have occurred or shall be
deemed by the Company to have occurred, to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered in the Offer to holders of Shares or by decreasing or increasing the
number of Shares being sought in the Offer). Amendments to the Offer may be made
at any time and from time to time effected by public announcement thereof, such
announcement, in the case of an extension, to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the last previously scheduled
or announced Expiration Date. Any public announcement made pursuant to the Offer
will be disseminated promptly to shareholders in a manner reasonably designed to
inform shareholders of such change. Without limiting the manner in which the
Company may choose to make a public announcement, except as required by
applicable law, the Company shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. These rules require that the
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of such terms or
information. If (i) the Company increases or decreases the price to be paid for
Shares, the number of Shares being sought in the Offer or the Dealer Manager's
soliciting fees and, in the event of an increase in the number of Shares being
sought, such increase exceeds 2% of the outstanding Shares, and (ii) the Offer
is scheduled to expire at any time earlier than the expiration of a period
ending on the tenth business day from, and including, the date that such notice
of an increase or decrease is first published, sent or given in the manner
specified in this Section 15, the Offer will be extended until the expiration of
such period of ten business days.
16. FEES AND EXPENSES.
The Company has retained Credit Suisse First Boston Corporation to act as
the Dealer Manager in connection with the Offer. Credit Suisse First Boston will
receive a fee for its services as Dealer Manager of $0.08 for each Share
purchased by the Company pursuant to the Offer. The Company also has agreed to
reimburse Credit Suisse First Boston for certain reasonable out-of-pocket
expenses incurred in connection with the Offer, including fees and expenses of
counsel, and to indemnify Credit Suisse First Boston against certain liabilities
in connection with the Offer, including liabilities under the federal securities
laws. Credit Suisse First Boston has rendered various investment banking and
other advisory services to the Company in the past, for which it has received
customary compensation, and can be expected to render similar services to the
Company in the future.
The Company has retained Corporate Investor Communications, Inc. to act as
Information Agent and Harris Trust and Savings Bank to act as Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telegraph and personal interviews and may request brokers,
dealers and other nominee shareholders to forward materials relating to the
Offer to beneficial owners. The Information Agent and the Depositary will each
receive reasonable and customary compensation for their respective services,
will be reimbursed by the Company for certain reasonable out-of-pocket expenses
and will be indemnified against certain liabilities in connection with the
Offer, including certain liabilities under the federal securities laws.
No fees or commissions will be payable by the Company or the Dealer Manager
to brokers, dealers or other persons (other than fees to the Dealer Manager, the
Information Agent and the Depositary as described above) for soliciting tenders
of Shares pursuant to the Offer. The Company, however, upon request, will
reimburse brokers, dealers and commercial banks for customary mailing and
handling expenses incurred by such persons in forwarding the Offer and related
materials to the beneficial owners of Shares held by any such person as a
nominee or in a fiduciary capacity. No broker, dealer, commercial bank or trust
company has been authorized to act as the agent of the Company, the Dealer
Manager, the Information Agent or the Depositary for purposes of the Offer. The
Company will pay or cause to be paid all stock transfer taxes, if any, on its
purchase of Shares except as otherwise provided in Instruction 7 in the Letter
of Transmittal.
24
<PAGE>
17. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction the
securities or blue sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer is being made on the Company's behalf by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4, which contains additional information with respect
to the Offer. Such Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be obtained, at the same places and in
the same manner as is set forth in Section 10 with respect to information
concerning the Company.
ETHYL CORPORATION
August 27, 1997
25
<PAGE>
SCHEDULE A
CERTAIN TRANSACTIONS INVOLVING SHARES
EXECUTIVE OFFICERS AND DIRECTORS
During the 40 business days prior to August 27, 1997, the only transactions
effected in the Shares by the Company's executive officers and directors were as
follows:
(a) Savings Plan transactions allocated on July 10, 1997:
NUMBER OF AVERAGE
NAME SHARES BUY PRICE
----- --------- ---------
Bruce C. Gottwald 5,252.247 $9.4139
Thomas E. Gottwald 183.857 9.4139
Charles B. Walker 133.157 9.4139
David A. Fiorenza 110.366 9.4139
Russell L. Gottwald, Jr. 65.799 9.4139
C.S. Warren Huang 196.359 9.4139
Ronald E. Kollman 95.875 9.4139
Donald R. Lynam 251.055 9.4139
Steven M. Mayer 107.641 9.4139
Ian A. Nimmo 423.254 9.4139
Henry C. Page, Jr. 223.520 9.4139
Newton A. Perry 132.274 9.4139
Ann M. Pettigrew 94.363 9.4139
A. Prescott Rowe 297.090 9.4139
Roger H. Venable 98.665 9.4139
Wayne C. Drinkwater 190.993 9.4139
(b) Savings Plan for the Employees of Albemarle Corporation transactions
allocated on July 10, 1997:
NUMBER OF AVERAGE
NAME SHARES BUY PRICE
----- --------- ---------
E. Whitehead Elmore 1,315.423 $9.4139
(c) Savings Plan transactions allocated on July 11, 1997:
NUMBER OF AVERAGE
NAME SHARES BUY PRICE
----- --------- ---------
Thomas E. Gottwald 252.925 $9.4148
Charles B. Walker 50.895 9.4148
David A. Fiorenza 41.955 9.4148
Russell L. Gottwald, Jr. 73.024 9.4148
C.S. Warren Huang 50.983 9.4148
Ronald E. Kollman 62.647 9.4148
Donald R. Lynam 42.088 9.4148
Steven M. Mayer 50.186 9.4148
Ian A. Nimmo 51.980 9.4148
Henry C. Page, Jr. 55.963 9.4148
Newton A. Perry 55.321 9.4148
Ann M. Pettigrew 31.068 9.4148
A. Prescott Rowe 43.393 9.4148
Roger H. Venable 37.000 9.4148
Wayne C. Drinkwater 77.892 9.4148
A-1
<PAGE>
(d) Open market sale on July 15, 1997:
NUMBER OF AVERAGE
NAME SHARES BUY PRICE
----- --------- ---------
Russell L. Gottwald, Jr. 8.000 $9.1875
(e) Savings Plan transactions allocated on July 30, 1997:
NUMBER OF AVERAGE
NAME SHARES BUY PRICE
----- --------- ---------
Thomas E. Gottwald 263.121 $ 9.05
Charles B. Walker 52.947 9.05
David A. Fiorenza 43.647 9.05
Russell L. Gottwald, Jr. 62.338 9.05
C.S. Warren Huang 53.038 9.05
Ronald E. Kollman 65.171 9.05
Donald R. Lynam 43.785 9.05
Steven M. Mayer 52.210 9.05
Ian A. Nimmo 54.076 9.05
Henry C. Page, Jr. 58.219 9.05
Newton A. Perry 57.551 9.05
Ann M. Pettigrew 32.320 9.05
A. Prescott Rowe 45.142 9.05
Roger H. Venable 38.490 9.05
Wayne C. Drinkwater 81.032 9.05
(f) Savings Plan transactions allocated on August 14, 1997:
NUMBER OF AVERAGE
NAME SHARES BUY PRICE
----- --------- ---------
Thomas E. Gottwald 264.951 $8.9875
Charles B. Walker 53.315 8.9875
David A. Fiorenza 43.950 8.9875
Russell L. Gottwald, Jr. 38.247 8.9875
C.S. Warren Huang 53.407 8.9875
Ronald E. Kollman 65.624 8.9875
Donald R. Lynam 44.089 8.9875
Steven M. Mayer 52.573 8.9875
Ian A. Nimmo 54.452 8.9875
Henry C. Page, Jr. 58.623 8.9875
Newton A. Perry 57.951 8.9875
Ann M. Pettigrew 32.545 8.9875
A. Prescott Rowe 45.456 8.9875
Roger H. Venable 38.758 8.9875
Wayne C. Drinkwater 81.595 8.9875
(g) Automatic distribution from savings plan for U.K. employees on August
18, 1997:
NUMBER OF AVERAGE
NAME SHARES BUY PRICE
----- --------- ---------
Alexander McLean 652 N/A
A-2
<PAGE>
Manually signed photocopies of the Letter of Transmittal will be accepted
from Eligible Institutions. The Letter of Transmittal and certificates for
Shares and any other required documents should be sent or delivered by each
shareholder or his broker, dealer, commercial bank, trust company or nominee to
the Depositary at its address set forth below.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1010 New York, NY 10005 77 Water Street, 5th
New York, New York 10268-1010 Floor
New York, New York 10005
BY FACSIMILE TRANSMISSION:
(Eligible Institutions
Only)
(212) 701-7636
(212) 701-7637
CONFIRM BY TELEPHONE:
(212) 701-7621
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone numbers and location
listed below. Shareholders may also contact their local broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[logo] CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road, Carlstadt, New Jersey 07072
(888) 881-0524 (toll free)
Banks and Brokers call: (201) 896-1900
THE DEALER MANAGER FOR THE OFFER IS:
[Credit Suisse and First Boston logo]
Eleven Madison Avenue
New York, NY 10010-3629
(800) 881-8320 (toll free)
August 27, 1997
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ETHYL CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 27, 1997
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON THURSDAY, SEPTEMBER 25, 1997, UNLESS THE OFFER IS EXTENDED.
TO: HARRIS TRUST AND SAVINGS BANK, DEPOSITARY
C/O HARRIS TRUST COMPANY OF NEW YORK
BY OVERNIGHT COURIER:
77 Water Street, 4th Floor
New York, New York 10005
<TABLE>
<S> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND:
Wall Street Station (Eligible Institutions Only) Receive Window
P.O. Box 1010 (212) 701-7636 77 Water Street, 5th Floor
New York, New York 10268-1010 (212) 701-7637 New York, New York 10005
</TABLE>
CONFIRM BY TELEPHONE:
(212) 701-7621
Delivery of this instrument and all other documents to the address or
transmission of instructions to a facsimile number other than as set forth above
does not constitute a valid delivery.
PLEASE READ THE ENTIRE LETTER
OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS,
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
This Letter of Transmittal is to be used only if (a) certificates for Shares
(as defined below) are to be forwarded herewith, or (b) a tender of Shares is
being made concurrently by book-entry transfer to the account maintained by
Harris Trust and Savings Bank (the "Depositary") at The Depository Trust Company
or Philadelphia Depository Trust Company (hereinafter, collectively referred to
as the "Book-Entry Transfer Facilities") pursuant to Section 3 of the Offer to
<TABLE>
<CAPTION>
Purchase. See Instruction 2.
<S> <C>
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED CERTIFICATES
(PLEASE USE PREADDRESSED LABEL OR FILL IN (ATTACH SIGNED ADDITIONAL LIST IF NECESSARY)
EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)
CERTIFICATE NO. OF SHARES* NO. OF SHARES
NUMBER(S) TENDERED**
TOTAL SHARES
TENDERED
Indicate in this box order (by certificate number) in which Shares are to be purchased in event of proration. (Attach
additional list if necessary.) *** See Instruction 10.
1st: 2nd: 3rd: 4th: 5th:
[ ] Check here if any of the certificates representing Shares that you own have been lost or destroyed. See Instruction 18.
Number of Shares represented by lost or destroyed certificates:
* Does not need to be completed if Shares are tendered by book-entry transfer.
** If you desire to tender fewer than all Shares evidenced by any certificates listed above, please indicate in this column
the number of Shares you wish to tender. Otherwise, all Shares evidenced by such certificates will be deemed to have been
tendered. See Instruction 4.
*** If you do not designate an order, in the event less than all Shares tendered are purchased due to proration, Shares will
be selected for purchase by the Depositary.
</TABLE>
<PAGE>
DIVIDEND REINVESTMENT PLAN SHARES
(SEE INSTRUCTION 16)
This section is to be completed ONLY if Shares held in the Dividend Reinvestment
Plan are to be tendered.
[ ] By checking this box, the undersigned represents that the undersigned is a
participant in the Dividend Reinvestment Plan and hereby instructs the
Depositary to tender on behalf of the undersigned the following number of
Shares credited to the Dividend Reinvestment Plan account of the undersigned
at the Purchase Price per Share indicated below under the item "Price (In
Dollars) Per Share At Which Shares Are Being Tendered:"
__________Shares*
* The undersigned understands and agrees that all Shares held in the Dividend
Reinvestment Plan account(s) of the undersigned will be tendered if the
above box is checked and the space above is left blank. Shares assigned to
the undersigned's account pursuant to the dividend to be distributed by the
Company on October 1, 1997, will be issued after the expiration of the Offer
and cannot be tendered.
[ ] Please check this box if you have tendered all Shares held in your Dividend
Reinvestment Plan account(s) and desire, upon the purchase by the Company of
all of your Shares in such accounts pursuant to the Offer, to terminate your
participation in the Dividend Reinvestment Plan and receive the dividend to
be paid on October 1, 1997, in cash.
NOTE: SIGNATURE MUST BE PROVIDED BELOW.
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY.
SHARES HELD IN THE SAVINGS PLAN FOR THE EMPLOYEES OF ETHYL CORPORATION (THE
"SAVINGS PLAN") MAY BE TENDERED ONLY BY SUBMITTING A SEPARATE ELECTION FORM TO
THE SAVINGS PLAN TRUSTEE AS PROVIDED HEREIN. IF YOU HOLD SHARES IN THE SAVINGS
PLAN, YOU MUST TENDER SUCH SHARES SEPARATELY.
SHAREHOLDERS WHO CANNOT DELIVER THE CERTIFICATES FOR THEIR SHARES TO THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE (AS
DEFINED BELOW)) OR WHO CANNOT COMPLETE THE PROCEDURE FOR BOOK-ENTRY TRANSFER ON
A TIMELY BASIS OR WHO CANNOT DELIVER A LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE DEPOSITARY PRIOR TO THE EXPIRATION DATE MUST, IN EACH
CASE, TENDER THEIR SHARES PURSUANT TO THE GUARANTEED DELIVERY PROCEDURE SET
FORTH IN SECTION 3 OF THE OFFER TO PURCHASE. SEE INSTRUCTION 2.
SHAREHOLDERS WHO DESIRE TO TENDER SHARES PURSUANT TO THE OFFER (AS DEFINED
BELOW) AND WHO CANNOT DELIVER THE CERTIFICATES FOR THEIR SHARES (OR WHO ARE
UNABLE TO COMPLY WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS)
AND ALL OTHER DOCUMENTS REQUIRED BY THIS LETTER OF TRANSMITTAL TO THE DEPOSITARY
AT OR BEFORE THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE) MAY
TENDER THEIR SHARES ACCORDING TO THE GUARANTEED DELIVERY PROCEDURES SET FORTH IN
SECTION 3 OF THE OFFER TO PURCHASE. SEE INSTRUCTION 2. DELIVERY OF DOCUMENTS TO
ONE OF THE BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK ENTRY-TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:___________________________________
Check Box of Applicable Book-Entry Facility:
[ ] The Depository Trust Company
[ ] The Philadelphia Depository Company
Account Number:_________________________________________________
Transaction Code Number:________________________________________
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):______________________________________
Date of Execution of Notice of Guaranteed Delivery:___________________
Name of Institution that Guaranteed Delivery:
Check Box of Applicable Book-Entry Transfer Facility and Give Account
Number if Delivered by Book-Entry
Transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Company
Account Number:______________________________________________________
2
<PAGE>
ODD LOTS
(SEE INSTRUCTION 8)
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of fewer than 100
Shares. The undersigned either (check one box):
[ ] is the beneficial or record owner of an aggregate of fewer than 100 Shares,
all of which are being tendered; or
[ ] is a broker, dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s) thereof Shares with respect to
which it is the record holder, and (b) believes, based upon representations
made to it by such beneficial owner(s), that each such person is the
beneficial owner of an aggregate of fewer than 100 Shares and is tendering
all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price (defined below), as the same shall be determined by
the Company in accordance with the terms of the Offer (persons checking
this box need not indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) per Share
at which Shares are being Tendered" in this Letter of Transmittal.
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
CONDITIONAL TENDER
(SEE INSTRUCTION 9)
[ ] check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of tendered Shares and complete the following:
Minimum number of Shares to be sold: _____________________________________
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
TO HARRIS TRUST AND SAVINGS BANK:
The undersigned hereby tenders to Ethyl Corporation, a Virginia corporation
(the "Company"), the above-described shares of the Company's common stock, $1.00
par value per share (the "Shares"), at the price per Share indicated in this
Letter of Transmittal, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Company's Offer to Purchase, dated August 27,
1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which together constitute the "Offer").
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to all the Shares that are being tendered hereby and orders the registration
of all such Shares if tendered by book-entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that said Depositary
also acts as the agent of the Company) with respect to such Shares with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest) to:
(a) deliver certificate(s) for such Shares or transfer ownership of
such Shares on the account books maintained by any of the Book-Entry
Transfer Facilities, together in either such case with all accompanying
evidences of transfer and authenticity, to, or upon the order of, the
Company upon receipt by the Depositary, as the undersigned's agent, of the
aggregate Purchase Price (as defined below) with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer
on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that:
(i) the undersigned has a net long position in Shares or equivalent
securities at least equal to the Shares tendered within the meaning of
Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and
(ii) such tender of Shares complies with Rule 14e-4;
(b) when and to the extent the Company accepts such Shares for
purchase, the Company will acquire good, marketable and unencumbered title
to them, free and clear of all security interests, liens, charges,
encumbrances, conditional sales agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary or
desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and
(d) the undersigned has read and agrees to all of the terms of the
Offer.
All authorities conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors, assigns,
trustees in bankruptcy and legal representatives of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed
above, if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares that
the undersigned wishes to tender should be set forth above in the appropriate
boxes. The price at which such Shares are being tendered should be indicated in
the box below.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price (not
in excess of $9.25 nor less than $7.75 per Share) net to the seller in cash (the
"Purchase Price") that it will pay for Shares properly tendered and not
withdrawn prior to the Expiration Date pursuant to the Offer, taking into
account the number of Shares so tendered and the prices (in multiples of $0.125)
specified by tendering shareholders. The undersigned understands that the
Company will select the lowest Purchase Price that will allow it to buy
35,000,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $9.25 nor less than $7.75 per Share) pursuant to the
Offer. The undersigned understands that all Shares properly tendered at prices
at or below the Purchase Price and not withdrawn prior to the Expiration Date
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including its proration and conditional tender
provisions, and that the Company
4
<PAGE>
will return all other Shares not purchased pursuant to the Offer, including
Shares tendered at prices greater than the Purchase Price and not withdrawn
prior to the Expiration Date and Shares not purchased because of proration or
conditional tender.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares delivered
herewith but not tendered or not purchased will be returned to the undersigned
at the address indicated above, unless otherwise indicated below under the
"Special Payment Instructions" or the "Special Delivery Instructions." The
undersigned recognizes that the Company has no obligation, pursuant to the
Special Payment Instructions, to transfer any certificate for Shares from the
name of its registered holder, or to order the registration or transfer of
Shares tendered by book-entry transfer, if the Company purchases none of the
Shares represented by such certificate or tendered by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the aggregate Purchase Price for such of the Shares tendered
hereby as are purchased will be issued to the order of the undersigned and
mailed to the address indicated above, unless otherwise indicated below under
the "Special Payment Instructions" or the "Special Delivery Instructions."
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A
SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
[ ] $7.750 [ ] $8.125 [ ] $8.500 [ ] $8.875 [ ] $9.125
[ ] $7.875 [ ] $8.250 [ ] $8.625 [ ] $9.000 [ ] $9.250
[ ] $8.000 [ ] $8.375 [ ] $8.750
<TABLE>
<CAPTION>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
SEE INSTRUCTIONS 1, 4, 6, 7 AND 11) (SEE INSTRUCTIONS 1, 4, 6, 7 AND 11)
To be completed ONLY if certificates for Shares not tendered
To be completed ONLY if certificates for Shares not or not purchased and/or any check for the Purchase Price of
tendered or not purchased and/or any check for the aggregate Shares purchased, issued in the name of the undersigned, are
Purchase Price of Shares purchased are to be issued in the to be mailed to someone other than the undersigned, or to
name of and sent to someone other than the undersigned. the undersigned at an address other than that shown above.
Mail:
Issue: [ ] Check to:
[ ] Check to: [ ] Certificates to:
[ ] Certificates to: Name(s):_______________________________________
Name(s):________________________________________________ (Please Print)
(Please Print) Address:_______________________________________
Address:________________________________________________ _______________________________________________
(Zip Code) (Zip Code)
________________________________________________________
(Taxpayer Identification or Social Security No.)
</TABLE>
5
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL SHAREHOLDERS)
(PLEASE COMPLETE AND RETURN THE ENCLOSED FORM W-9)
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificate(s) and documents transmitted with
this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or another
person acting in a fiduciary or representative capacity, please set forth full
title and see Instruction 6.)
______________________________________________________________________________
______________________________________________________________________________
Signature(s) of Owner(s)
Dated:_________________________, 1997
Name(s):______________________________________________________________________
(Please Print)
Capacity (full title):________________________________________________________
Address:______________________________________________________________________
(Include Zip Code)
Area Code(s) and
Telephone Number(s):__________________________________________________________
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
NAME OF FIRM:_________________________________________________________________
AUTHORIZED SIGNATURE:_________________________________________________________
NAME:_________________________________________________________________________
(Please Print)
Title:________________________________________________________________________
Address: _____________________________________________________________________
(Include Zip Code)
Area Code and
Telephone Number:_____________________________________________________________
Dated:_________________________, 1997
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of such Shares) exactly as the name
of the registered holder appears on the certificate tendered with this
Letter of Transmittal and payment and delivery are to be made directly to
such owner unless such owner has completed above either the box entitled
"Special Payment Instructions" or "Special Delivery Instructions;" or
(b) such Shares are tendered for the account of a firm or other entity
that is a member in good standing of the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program
or the Stock Exchange Medallion Program (each such entity, an "Eligible
Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used only if certificates for
Shares are delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or if a tender for Shares is being made concurrently pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Certificates for all physically tendered Shares or confirmation of
a book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility of Shares tendered electronically, together in each case with a
properly completed and duly executed Letter of Transmittal or duly executed and
manually signed facsimile of it, or an Agent's Message, and any other documents
required by this Letter of Transmittal, should be mailed or delivered to the
Depositary at the appropriate address set forth herein and must be delivered to
the Depositary on or before the Expiration Date (as defined in the Offer to
Purchase). DELIVERY OF DOCUMENTS TO ONE OF THE BOOK-ENTRY TRANSFER FACILITIES
DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary, which states that such
Book-Entry Transfer Facility has received an express acknowledgement from the
participant in such Book-Entry Transfer Facility tendering the Shares that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Company may enforce such agreement against such
participant.
Shareholders whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary before the Expiration Date, or whose Shares cannot be delivered on a
timely basis pursuant to the procedures for book-entry transfer, must, in any
such case, tender their Shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery (or a facsimile thereof) and by otherwise complying with the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to
such procedure, certificates for all physically tendered Shares or book-entry
confirmations, as the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), or an Agent's Message,
and all other documents required by this Letter of Transmittal, must be received
by the Depositary within three New York Stock Exchange trading days after
receipt by the Depositary of such Notice of Guaranteed Delivery, all as provided
in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY U.S.
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
7
<PAGE>
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering shareholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their tender.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to shareholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered," in the box
captioned "Description of Shares Tendered." In such case, if any tendered Shares
are purchased, a new certificate for the remainder of the Shares (including any
Shares not purchased) evidenced by the old certificate(s) will be issued and
sent to the registered holder(s), unless otherwise specified in either the
"Special Payment Instructions" or "Special Delivery Instructions" box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. Unless
otherwise indicated, all Shares represented by the certificate(s) listed and
delivered to the Depositary will be deemed to have been tendered.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be
properly tendered, the shareholder MUST check the box indicating the price per
Share at which he or she is tendering Shares under "Price (In Dollars) Per Share
at Which Shares Are Being Tendered" on this Letter of Transmittal. ONLY ONE BOX
MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE
IS NO PROPER TENDER OF SHARES. A shareholder wishing to tender portions of his
or her Share holdings at different prices must complete a separate Letter of
Transmittal for each price at which he or she wishes to tender each such portion
of his or her Shares. The same Shares cannot be tendered (unless previously
properly withdrawn as provided in Section 4 of the Offer to Purchase) at more
than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the certificate(s)
without any change whatsoever.
(b) If the Shares are registered in the names of two or more joint
holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered
holder(s) of the Shares listed and transmitted hereby, no endorsement(s) of
certificate(s) representing such Shares or separate stock power(s) are
required unless payment is to be made or the certificate(s) for Shares not
tendered or not purchased are to be issued to a person other than the
registered holder(s). SIGNATURE(S) ON SUCH CERTIFICATE(S) MUST BE
GUARANTEED BY AN ELIGIBLE INSTITUTION. If this Letter of Transmittal is
signed by a person other than the registered holder(s) of the
certificate(s) listed, or if payment is to be made or certificate(s) for
Shares not tendered or not purchased are to be issued to a person other
than the registered holder(s), the certificate(s) must be endorsed or
accompanied by appropriate stock power(s), in either case signed exactly as
the name(s) of the registered holder(s) appear on the certificate(s), and
the signature(s) on such certificate(s) or stock power(s) must be
guaranteed by an Eligible Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock
power(s) are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing
and must submit proper evidence satisfactory to the Company of their
authority to so act.
7. STOCK TRANSFER TAXES. Except as provided in this Instruction 7, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. The Company will pay or cause to be paid any stock transfer taxes
payable on the transfer to it of Shares purchased pursuant to the Offer. If,
however:
(a) payment of the aggregate Purchase Price for Shares tendered hereby
and accepted for purchase is to be made to any person other than the
registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be
registered in the name(s) of any person(s) other than the registered
holder(s); or
(c) tendered certificates are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from such aggregate Purchase Price the amount of
any stock transfer taxes (whether imposed on the registered holder, such other
person or otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption from them is
submitted.
8
<PAGE>
8. ODD LOTS. As described in Section 1 of the Offer to Purchase, if the
Company is to purchase fewer than all Shares tendered before the Expiration Date
and not withdrawn, the Shares purchased first will consist of all Shares
tendered by any shareholder who owned, of record or beneficially, an aggregate
of fewer than 100 Shares, and who tenders all of his or her Shares at or below
the Purchase Price, excluding participants in the Savings Plan. This preference
will not be available unless the box captioned "Odd Lots" is completed.
9. CONDITIONAL TENDERS. As described in Sections 1 and 6 of the Offer to
Purchase, shareholders may condition their tenders on all or a minimum number of
their tendered Shares being purchased ("Conditional Tenders"). If the Company is
to purchase less than all Shares tendered before the Expiration Date and not
withdrawn, the Depositary will perform a preliminary proration, and any Shares
tendered at or below the Purchase Price pursuant to a Conditional Tender for
which the condition was not satisfied shall be deemed withdrawn, subject to
reinstatement if such Conditionally Tendered Shares are subsequently selected by
random lot for purchase subject to Sections 1 and 6 of the Offer to Purchase.
Conditional tenders will be selected by lot only from shareholders who tender
all of their Shares. All tendered Shares shall be deemed unconditionally
tendered unless the "Conditional Tender" box is completed. The Conditional
Tender alternative is made available so that a shareholder may assure that the
purchase of Shares from the shareholder pursuant to the Offer will be treated as
a sale of such Shares by the shareholder, rather than the payment of a dividend
to the shareholder, for federal income tax purposes. Odd Lot Shares, which will
not be subject to proration, cannot be conditionally tendered. It is the
tendering shareholder's responsibility to calculate the minimum number of Shares
that must be purchased from the shareholder in order for the shareholder to
qualify for sale (rather than dividend) treatment, and each shareholder is urged
to consult his or her own tax advisor.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
AND THEREBY DEEMED WITHDRAWN.
10. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of
the Offer to Purchase, shareholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the federal income tax treatment of the Purchase Price for the
Shares purchased. See Sections 1 and 14 of the Offer to Purchase.
11. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in the name of a
person other than the signer of the Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing the Letter of Transmittal or to the signer at a different address, the
boxes captioned "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal should be completed as applicable
and signatures must be guaranteed as described in Instruction 1.
12. IRREGULARITIES. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Company in its sole discretion, which determinations
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders of Shares it determines not to be in proper
form or the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer and any defect or irregularity in the
tender of any particular Shares, and the Company's interpretation of the terms
of the Offer (including these instructions) will be final and binding on all
parties. No tender of Shares will be deemed to be properly made until all
defects and irregularities have been cured or waived. Unless waived, any defects
or irregularities in connection with tenders must be cured within such time as
the Company shall determine. None of the Company, the Dealer Manager (as defined
in the Offer to Purchase), the Depositary, the Information Agent (as defined in
the Offer to Purchase) or any other person is or will be obligated to give
notice of any defects or irregularities in tenders and none of them will incur
any liability for failure to give any such notice.
13. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Information Agent or the Dealer Manager at
their respective addresses and telephone numbers set forth at the end of this
Letter of Transmittal or from your broker, dealer, commercial bank or trust
company.
14. FORM W-9 AND FORM W-8. Shareholders other than corporations and certain
foreign persons may be subject to backup federal income tax withholding. Each
tendering shareholder who does not otherwise establish to the satisfaction of
the Depositary an exemption from backup federal income tax withholding is
required to provide the Depositary with a correct taxpayer identification number
("TIN") on Form W-9, which is provided with this Letter of Transmittal. For an
individual, his or her TIN will generally be his or her social security number.
Failure to provide the information requested or to make the certification on
Form W-9 may subject the tendering shareholder to 31% backup federal income tax
withholding on the payments made to or for the shareholder with respect to
Shares purchased pursuant to the Offer. Failing to furnish a correct TIN may
subject the shareholder to a $50.00 penalty imposed by the Internal Revenue
Service. Providing false information may result in additional penalties. Backup
withholding is not an additional tax. Rather, the tax liability of a person
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a
9
<PAGE>
refund may be obtained. Shareholders who are foreign persons should submit Form
W-8 to certify that they are exempt from backup withholding. Form W-8 may be
obtained from the Depositary.
15. WITHHOLDING ON FOREIGN SHAREHOLDERS. Even if a foreign shareholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold federal income taxes equal to 30% of the gross payments payable to
a foreign shareholder or his agent unless the Depositary determines that an
exemption from or a reduced rate of withholding is available pursuant to a tax
treaty or an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business in
the United States. In order to obtain an exemption from or a reduced rate of
withholding pursuant to a tax treaty, a foreign shareholder must deliver to the
Depositary a properly completed Form 1001. For this purpose, a foreign
shareholder is a shareholder that is not (i) a citizen or resident of the United
States, (ii) a corporation or other entity taxable as a corporation created or
organized in or under the laws of the United States or any State thereof
(including the District of Columbia) or (iii) any estate the income of which is
subject to United States federal income taxation regardless of the source of
such income. In order to obtain an exemption from withholding on the grounds
that the gross proceeds paid pursuant to the Offer are effectively connected
with the conduct of a trade or business within the United States, a foreign
shareholder must deliver to the Depositary a properly completed Form 4224. The
Depositary will determine a shareholder's status as a foreign shareholder and
eligibility for a reduced rate of, or an exemption from, withholding by
reference to outstanding certificates or statements concerning eligibility for a
reduced rate of, or exemption from, withholding (E.G., Form 1001 or Form 4224)
unless facts and circumstances indicate that such reliance is not warranted. A
foreign shareholder may be eligible to obtain a refund of all or a portion of
any tax withheld if such shareholder meets one of the three tests for sale
treatment described in Section 14 of the Offer to Purchase or is otherwise able
to establish that no tax or a reduced amount of tax is due. Backup withholding
generally will not apply to amounts subject to the 30% or treaty-reduced rate of
withholding. Foreign shareholders are urged to consult their tax advisors
regarding the application of federal income tax withholding, including
eligibility for a withholding tax reduction or exemption and refund procedures.
16. DIVIDEND REINVESTMENT PLAN. If a shareholder desires to tender Shares
credited to the shareholder's account under the Dividend Reinvestment Plan, the
item "Dividend Reinvestment Plan Shares" should be completed. A participant in
the Dividend Reinvestment Plan may complete such box on only one Letter of
Transmittal submitted by such participant. If a participant submits more than
one Letter of Transmittal and completes such box on more than one Letter of
Transmittal, the participant will be deemed to have elected to tender all Shares
credited to the shareholder's account under the Dividend Reinvestment Plan at
the lowest price specified in such Letters of Transmittal.
If a shareholder tenders Shares held in the Dividend Reinvestment Plan, all
such Shares credited to such shareholder's account(s) including fractional
Shares, will be tendered, excluding Shares credited to such shareholder's
account as a result of the dividend payable on October 1, 1997, unless otherwise
specified above under the item captioned "Dividend Reinvestment Plan Shares." In
the event that the item "Dividend Reinvestment Plan Shares" is not completed, no
Shares held in the tendering shareholder's account will be tendered.
ANY DIVIDEND REINVESTMENT PLAN SHARES TENDERED BUT NOT PURCHASED WILL BE
RETURNED TO THE PARTICIPANT'S DIVIDEND REINVESTMENT PLAN ACCOUNT.
17. THE SAVINGS PLAN. Participants in the Savings Plan for the Employees of
Ethyl Corporation (the "Savings Plan") who wish to have NationsBank of Georgia,
N.A., as trustee thereof (the "Savings Plan Trustee"), tender all or part of the
Shares allocated to their accounts should so indicate by completing, executing
and returning to the Savings Plan Trustee the election form included with the
memorandum furnished to such participants.
PARTICIPANTS IN THE SAVINGS PLAN MAY NOT USE THE LETTER OF TRANSMITTAL TO
DIRECT THE TENDER OF THE SAVINGS PLAN SHARES, BUT MUST USE THE SEPARATE ELECTION
FORM ENCLOSED WITH THE MEMORANDUM TO PARTICIPANTS IN THE SAVINGS PLAN. SAVINGS
PLAN PARTICIPANTS ARE URGED TO READ THE SEPARATE ELECTION FORM AND RELATED
MATERIALS CAREFULLY. ANY SAVINGS PLAN SHARES TENDERED BUT NOT PURCHASED WILL BE
RETURNED TO THE PARTICIPANT'S SAVINGS PLAN ACCOUNT.
18. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary by checking the box provided in the box titled
"Description of Shares Tendered" and indicating the number of Shares so lost,
destroyed or stolen. The shareholder will then be instructed by the Depositary
as to the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be prepared until the
procedures for replacing lost, destroyed or stolen certificates have been
followed.
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<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[logo] CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072
(888) 881-0524 (toll free)
Banks and Brokers call:
(201) 896-1900
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST AND SAVINGS BANK
BY OVERNIGHT COURIER:
77 Water Street, 4th Floor
New York, New York 10005
<TABLE>
<S> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND:
Wall Street Station (Eligible Institutions Only) Receive Window
P.O. Box 1010 (212) 701-7636 77 Water Street, 5th Floor
New York, New York 10268-1010 (212) 701-7637 New York, New York 10005
</TABLE>
CONFIRM BY TELEPHONE:
(212) 701-7621
THE DEALER MANAGER FOR THE OFFER IS:
[Credit Suisse and First Boston logo]
Eleven Madison Avenue
New York, New York 10010-3629
(800) 881-8320 (toll free)
IMPORTANT: This Letter of Transmittal or a facsimile hereof (together with
certificates for the Shares being tendered and all other required documents), or
a Notice of Guaranteed Delivery must be received prior to 5:00 p.m., New York
City time, on the Expiration Date. SHAREHOLDERS ARE ENCOURAGED TO RETURN A
COMPLETED FORM W-9 WITH THEIR LETTER OF TRANSMITTAL.
11
ETHYL CORPORATION
NOTICE OF GUARANTEED DELIVERY OF SHARES OF COMMON STOCK
This form or a facsimile hereof must be used to accept the Offer (as
defined below) if:
(a) certificates for shares of common stock, $1.00 par value per share
(the "Shares"), of Ethyl Corporation, a Virginia corporation (the
"Company"), cannot be delivered to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Company's Offer to Purchase dated
August 27, 1997 (the "Offer to Purchase")); or
(b) the procedure for book-entry transfer (set forth in Section 3 of
the Offer to Purchase) cannot be completed on a timely basis; or
(c) the Letter of Transmittal (or a facsimile thereof) and all other
required documents cannot be delivered to the Depositary prior to the
Expiration Date.
This form, properly completed and duly executed, may be delivered by hand,
mail or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
TO: HARRIS TRUST AND SAVINGS BANK, DEPOSITARY
BY OVERNIGHT COURIER:
77 Water Street, 4th Floor
New York, New York 10005
<TABLE>
<S> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND:
Wall Street Station (Eligible Institutions Only) Receive Window
P.O. Box 1010 (212) 701-7636 77 Water Street, 5th Floor
New York, New York 10268-1010 (212) 701-7637 New York, New York 10005
</TABLE>
CONFIRM BY TELEPHONE:
(212) 701-7621
DELIVERY OF THIS INSTRUMENT TO THE ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of both of which is
hereby acknowledged, Shares pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase.
ODD LOTS
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning, beneficially or of record, an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
<TABLE>
<CAPTION>
<S> <C>
[ ] was the beneficial or record owner of an aggregate of fewer than 100
Shares, all of which are being tendered; or
[ ] is a broker, dealer, commercial bank, trust company or other nominee
that (a) is tendering for the beneficial owner(s) thereof Shares with
respect to which it is the record holder, and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person was the beneficial owner of an aggregate of fewer than 100
Shares and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price, as the same shall be determined by the Company in
accordance with the terms of the Offer (persons checking this box need not
indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) Per Share
at Which Shares are Being Tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
</TABLE>
CONDITIONAL TENDER
(SEE INSTRUCTION 9)
[ ] check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE NOTICE OF GUARANTEED DELIVERY FOR
EACH PRICE AT WHICH SHARES ARE TENDERED.)
[ ] $7.750 [ ] $8.125 [ ] $8.500 [ ] $8.875 [ ] $9.125
[ ] $7.875 [ ] $8.250 [ ] $8.625 [ ] $9.000 [ ] $9.250
[ ] $8.000 [ ] $8.375 [ ] $8.750
</TABLE>
(Please type or print)
Certificate Nos. (if available):
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Name(s)
- ----------------------------------------------------------------------------
Address(es)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Area Code(s) and Telephone Number(s)
SIGN HERE
- ----------------------------------------------------------------------------
Signature(s)
Dated:
----------------------------------------------------------------------
If Shares will be tendered by book-entry transfer, check one box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Company
Account Number:
--------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned is a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc. or a commercial
bank or trust company having an office, branch or agency in the United States
and represents that: (a) the above-named person(s) "own(s)" the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (b) such tender of Shares complies with
such Rule 14e-4, and guarantees that the Depositary will receive (i)
certificates of the Shares tendered hereby in proper form for transfer, or (ii)
confirmation that the Shares tendered hereby have been delivered pursuant to the
procedure for book-entry transfer (set forth in Section 3 of the Offer to
Purchase) into the Depositary's account at The Depository Trust Company or
Philadelphia Depository Company, as the case may be, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other documents required by the Letter of Transmittal, all within three New York
Stock Exchange trading days after the date the Depositary receives this Notice
of Guaranteed Delivery.
Authorized Signature:_____________________________________________________
Name:_____________________________________________________________________
(Please Print)
Title:____________________________________________________________________
Name of Firm:_____________________________________________________________
Address:__________________________________________________________________
__________________________________________________________________________
(Including Zip Code)
Area Code and Telephone Number:___________________________________________
Date: ______________________________________________________________, 1997
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE
SENT WITH THE LETTER OF TRANSMITTAL.
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
ETHYL CORPORATION
Offer To Purchase For Cash Up To
35,000,000 Shares Of Its Common Stock
At A Purchase Price Not In Excess Of $9.25
Nor Less Than $7.75 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON THURSDAY, SEPTEMBER 25, 1997, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Ethyl Corporation, a Virginia corporation (the "Company"), has appointed us
to act as Dealer Manager in connection with its offer to purchase up to
35,000,000 shares of the Company's Common Stock, $1.00 par value per share (the
"Shares"), at prices not in excess of $9.25 nor less than $7.75 per Share,
specified by its shareholders, upon the terms and subject to the conditions set
forth in its Offer to Purchase, dated August 27, 1997 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which together constitute the
"Offer").
The Company will determine the single per Share price, not in excess of
$9.25 nor less than $7.75 per Share, net to the seller in cash (the "Purchase
Price") that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 35,000,000 Shares (or such lesser number of Shares as are
properly tendered). All Shares acquired in the Offer will be acquired at the
Purchase Price. All Shares properly tendered at prices at or below the Purchase
Price and not withdrawn will be purchased at the Purchase Price, upon the terms
and subject to the conditions of the Offer, including the proration and
conditional tender provisions. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration will be returned.
The Company reserves the right, in its sole discretion, to purchase more than
35,000,000 Shares pursuant to the Offer. See Sections 1 and 15 of the Offer to
Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase),
more than 35,000,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will,
upon the terms and subject to the conditions of the Offer, accept Shares for
purchase first from Odd Lot Holders (as defined in the Offer to Purchase) who
properly tender their Shares at or below the Purchase Price and then on a pro
rata basis from all other shareholders whose Shares are properly tendered at or
below the Purchase Price and not withdrawn. If any shareholder tenders Shares
and does not wish to have such Shares purchased subject to proration, such
shareholder may tender Shares subject to the condition that a specified minimum
number of Shares (which may be represented by designated stock certificates) or
none of such Shares be purchased. See Sections 1, 3 and 6 of the Offer to
Purchase.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS SUBJECT, HOWEVER, TO CERTAIN OTHER CONDITIONS. SEE
SECTION 7 OF THE OFFER TO PURCHASE.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated August 27, 1997;
2. Letter to Clients, which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
3. Letter, dated August 27, 1997, from Bruce C. Gottwald, Chairman and
Chief Executive Officer of the Company, to shareholders of the Company;
4. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Form W-9); and
<PAGE>
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Share certificates and all other required documents cannot be delivered to
the Depositary by the Expiration Date or if the procedure for book-entry
transfer cannot be completed on a timely basis.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON THURSDAY, SEPTEMBER 25, 1997, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any person
for soliciting tenders of Shares pursuant to the Offer other than fees paid to
the Dealer Manager, the Information Agent or the Depositary as described in the
Offer to Purchase. The Company will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to the beneficial owners of Shares held by you as a nominee
or in a fiduciary capacity. The Company will pay or cause to be paid any stock
transfer taxes applicable to its purchase of Shares, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3, "The Offer -- Procedures for Tendering Shares"
of the Offer to Purchase, tenders may be made without the concurrent deposit of
stock certificates or concurrent compliance with the procedure for book-entry
transfer, if such tenders are made by or through a broker or dealer that is a
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States. Certificates
for Shares so tendered (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the "Book-Entry Transfer
Facilities" described in the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal, must be received by the Depositary within
three New York Stock Exchange trading days after timely receipt by the
Depositary of a properly completed and duly executed Notice of Guaranteed
Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
Credit Suisse First Boston Corporation or to the Information Agent at their
respective addresses and telephone numbers set forth on the back cover page of
the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent, Corporate Investor Communications, Inc., telephone: (888)
881-0524 (toll free) or from the undersigned, telephone: (800) 881-8320 (toll
free).
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE DEALER
MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
ETHYL CORPORATION
Offer To Purchase For Cash Up To
35,000,000 Shares Of Its Common Stock
At A Purchase Price Not In Excess Of $9.25
Nor Less Than $7.75 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON THURSDAY, SEPTEMBER 25, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated August 27,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") in connection with the Offer by Ethyl
Corporation, a Virginia corporation (the "Company"), to purchase up to
35,000,000 shares of its Common Stock, $1.00 par value per share (the "Shares"),
at prices not in excess of $9.25 nor less than $7.75 per Share, specified by
tendering shareholders, upon the terms and subject to the conditions set forth
in the Offer.
The Company will determine the single per Share price, not in excess of
$9.25 nor less than $7.75 per Share, net to the seller in cash (the "Purchase
Price") that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 35,000,000 Shares (or such lesser number of Shares as are
properly tendered). All Shares acquired in the Offer will be acquired at the
Purchase Price. All Shares properly tendered at prices at or below the Purchase
Price and not withdrawn will be purchased at the Purchase Price, upon the terms
and subject to the conditions of the Offer, including the proration and
conditional tender provisions. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration will be returned.
The Company reserves the right, in its sole discretion, to purchase more than
35,000,000 Shares pursuant to the Offer. See Sections 1 and 15 of the Offer to
Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase),
more than 35,000,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company, upon
the terms and subject to the conditions of the Offer, will accept Shares for
purchase first from Odd Lot Holders (as defined in the Offer to Purchase) who
properly tender their Shares at or below the Purchase Price and then on a pro
rata basis from all other shareholders whose Shares are properly tendered at or
below the Price and not withdrawn. If any shareholder tenders Shares and does
not wish to have such Shares subject to proration, such shareholder may tender
Shares subject to the condition that a specified minimum number of Shares (which
may be represented by designated stock certificates) or none of such Shares be
purchased. See Sections 1, 3 and 6 of the Offer to Purchase.
We are the owner of record of Shares held for your account. As such, we are
the only ones who can tender and then only pursuant to your instructions. WE ARE
SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION ONLY; YOU CANNOT USE
IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
<PAGE>
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender Shares at prices not in excess of $9.25 nor less
than $7.75 per Share as indicated in the attached Instruction Form, net to
you in cash.
2. You may condition your tender of Shares on the Company purchasing
all or a minimum number of your Shares.
3. You may designate the priority in which your Shares shall be
purchased in the event of proration.
4. The Offer is not conditioned upon any minimum number of Shares
being tendered.
5. The Offer, proration period and withdrawal rights will expire at
5:00 P.M, New York City time, on Thursday, September 25, 1997, unless the
Company extends the Offer.
6. The Offer is for 35,000,000 Shares, constituting approximately
29.55% of the Shares outstanding as of August 27, 1997.
7. Tendering shareholders will not be obligated to pay any brokerage
commissions, solicitation fees to the Company or the Dealer Manager or,
subject to Instruction 7 of the Letter of Transmittal, any stock transfer
taxes on the Company's purchase of Shares pursuant to the Offer. Tendering
shareholders will not be obligated to pay any brokerage commissions or
solicitation fees to the Dealer Manager, Information Agent or Depositary.
8. If you beneficially held an aggregate of fewer than 100 Shares and
you instruct us to tender on your behalf all such Shares at or below the
Purchase Price before the Expiration Date (as defined in the Offer to
Purchase) and check the box captioned "Odd Lots" in the attached
Instruction Form, the Company, upon the terms and subject to the conditions
of the Offer, will accept all such Shares for purchase before proration, if
any, of the purchase of other Shares properly tendered at or below the
Purchase Price.
9. If you wish to tender portions of your Shares at different prices,
you must complete a separate Instruction Form for each price at which you
wish to tender each such portion of your Shares. We must submit separate
Letters of Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, we will tender all such Shares unless
you specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON THURSDAY, SEPTEMBER 25, 1997, UNLESS THE COMPANY EXTENDS THE
OFFER.
As described in Section 1 of the Offer to Purchase, if more than 35,000,000
Shares have been properly tendered at prices at or below the Purchase Price and
not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase), the Company will purchase properly tendered Shares on the basis set
forth below:
(a) FIRST, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder (as defined in the Offer to Purchase)
who:
1
<PAGE>
(1) tenders all Shares beneficially owned by such Odd Lot Holder at
a price at or below the Purchase Price (tenders of less than all Shares
owned by such shareholder will not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) SECOND, after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6 of the Offer to
Purchase, for which the condition was satisfied, and all other Shares
tendered properly and unconditionally at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date, on a pro rata basis
(with appropriate adjustments to avoid purchases of fractional Shares) as
described in the Section 1 of the Offer to Purchase; and
(c) THIRD, if necessary, Shares conditionally tendered, for which the
condition was not satisfied, at or below the Purchase Price and not
withdrawn prior to the Expiration Date, selected by random lot in
accordance with Section 6 of the Offer to Purchase.
You may condition your tender on the Company purchasing a minimum number of
your tendered Shares. In such case, if as a result of the preliminary proration
provisions in the Offer to Purchase the Company would purchase less than such
minimum number of your Shares, then the Company will not purchase any of your
Shares, except as provided in the next sentence. In such case, if as a result of
conditionally tendered Shares not being purchased the total number of Shares
that would have been purchased is less than 35,000,000, the Company will select,
by random lot, for purchase from shareholders who tender all their Shares,
conditionally tendered Shares for which the condition, based on a preliminary
proration, has not been satisfied. See Section 1 of the Offer to Purchase.
The Offer is being made to all holders of Shares. The Company is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company will
make a good faith effort to comply with such statute. If, after such good faith
effort, the Company cannot comply with such statute, the Offer will not be made
to, nor will tenders be accepted from or on behalf of, holders of Shares in such
state. In those jurisdictions whose securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of the Company by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
INSTRUCTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF ETHYL CORPORATION
Please tender to Ethyl Corporation (the "Company"), on (our) (my) behalf,
the number of Shares indicated below, which are beneficially owned by (us) (me)
and registered in your name, upon terms and subject to the conditions contained
in the Offer to Purchase of the Company dated August 27, 1997, and the related
Letter of Transmittal, the receipt of both of which is acknowledged.
Number of Shares to be tendered: _________________________Shares
2
<PAGE>
<TABLE>
<CAPTION>
ODD LOTS
(SEE INSTRUCTION 8)
<S> <C>
[ ] By checking this box the undersigned represents that the undersigned owns, beneficially or of record, an aggregate of
fewer than 100 Shares and is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price, as the same shall be determined by the Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (in Dollars) per Share at Which Shares are Being Tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
CONDITIONAL TENDER
[ ] check here if tender of Shares is conditional on the Company purchasing all or a minimum number of the tendered Shares and
complete the following:
Minimum number of Shares to be sold:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE INSTRUCTION
FORM FOR EACH PRICE AT WHICH SHARES ARE TENDERED.)
[ ] $7.750 [ ] $8.125 [ ] $8.500 [ ] $8.875 [ ] $9.125
[ ] $7.875 [ ] $8.250 [ ] $8.625 [ ] $9.000 [ ] $9.250
[ ] $8.000 [ ] $8.375 [ ] $8.750
</TABLE>
3
<PAGE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER.
HOWEVER, NONE OF THE COMPANY, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER MAKES
ANY RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING THEIR SHARES. EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE OR PRICES SHARES
SHOULD BE TENDERED.
Signature(s):____________________________________________________
_________________________________________________________________
Name(s):_________________________________________________________
_________________________________________________________________
(Please Print)
_________________________________________________________________
(Taxpayer Identification or
Social Security Number)
Address:_________________________________________________________
_________________________________________________________________
(Including Zip Code)
Area Code and Telephone Number:__________________________________
Date: _____________________________________________________, 1997
IMPORTANT: SHAREHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED FORM W-9 WITH THEIR
INSTRUCTION FORM.
4
SAVINGS PLAN FOR THE EMPLOYEES OF
ETHYL CORPORATION
To: Participants in the Savings Plan for the Employees of Ethyl Corporation.
Re: Ethyl Corporation's Offer to Purchase for Cash Up to 35,000,000 Shares
of its Common Stock
Date: August 27, 1997
This memorandum is being sent to you because you are a participant in the
Savings Plan for the Employees of Ethyl Corporation (the "Savings Plan").
The Savings Plan is described in its Summary Plan Description ("SPD").
Please refer to the Savings Plan SPD for more information regarding the Savings
Plan.
ETHYL CORPORATION IS OFFERING TO PURCHASE SHARES OF ITS COMMON STOCK
Ethyl Corporation (the "Company") is inviting its shareholders to tender
shares of the Company's common stock, $1.00 par value per share (the "Shares"),
for sale directly to the Company. Shareholders are being invited to tender their
Shares at prices not in excess of $9.25 nor less than $7.75 per Share. The
details of the invitation to Company shareholders, including NationsBank of
Georgia, N.A., the trustee of the Savings Plan (the "Trustee") and holder of
record of any Shares held in your Savings Plan accounts, are described in the
Company's Offer to Purchase, dated August 27, 1997 (the "Offer to Purchase"),
and this memorandum (which together constitute the "Offer" for purposes of
tendering Shares held in your Savings Plan account). Copies of the Offer to
Purchase and certain related materials (excluding the Letter of Transmittal),
which are being sent to the Company's shareholders generally, are enclosed for
your review.
The Letter of Transmittal referred to above and in the Offer to Purchase
cannot be used to tender the Shares held in your Savings Plan account: the
enclosed Election Form for the Savings Plan is a substitute for the Letter of
Transmittal and must be used to tender Shares in your Savings Plan account.
Also, please note that if you hold an "odd lot," as described in Section 1 of
the Offer to Purchase, in your Savings Plan account, the special odd lot
purchase rule will not apply to your Shares in the Savings Plan. That is, the
proration provisions that will apply if more than 35,000,000 Shares are properly
tendered (as described in Section 1 of the Offer to Purchase) will apply to any
Shares tendered from the Savings Plan, even if you are an odd lot holder. You
are permitted, however, to make a conditional tender of the Shares allocated to
your Savings Plan account. See Section 6 of the Offer to Purchase for the
provisions governing conditional tenders.
YOUR DECISION WHETHER TO TENDER
As a participant in the Savings Plan you may direct the Trustee to tender
Shares allocated to your Savings Plan account pursuant to the Offer.
PARTICIPANTS CONSIDERING TENDERING SHARES FROM THEIR SAVINGS PLAN ACCOUNT SHOULD
REVIEW CAREFULLY THE TAX CONSEQUENCES OF DOING SO. SEE "POTENTIAL TAX
CONSEQUENCES OF TENDERING SHARES" IN THIS MEMORANDUM. ALSO, THE PROCEEDS FROM
ANY SALE OF SHARES FROM YOUR SAVINGS PLAN ACCOUNT WILL NOT BE DISTRIBUTED TO
YOU. INSTEAD, ANY PROCEEDS WILL CONTINUE TO BE HELD IN THE SAVINGS PLAN AND WILL
BE REINVESTED IN THE PRIME FUND (THE NATIONSBANK MONEY MARKET FUND). SEE
"REINVESTMENT OF SALE PROCEEDS" IN THIS MEMORANDUM.
HOW TO TENDER SHARES; COMPLETION OF ELECTION FORM
If you wish to direct the Trustee to tender all or part of the Shares in
your Savings Plan account, you must complete and return the enclosed Election
Form in accordance with the instructions specified on the Election Form. Before
deciding whether or not to tender your Shares, please carefully read the
enclosed materials.
<PAGE>
YOUR ELECTION WILL BE EFFECTIVE ONLY IF YOUR PROPERLY COMPLETED ELECTION
FORM IS RECEIVED BY THE TRUSTEE AT ITS ADDRESS SET FORTH ON THE ENCLOSED RETURN
ENVELOPE NO LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, SEPTEMBER 22,
1997. Election Forms that are received after this deadline, and Election Forms
that are not properly completed, will not be accepted. Examples of improperly
completed Election Forms include Forms that are not signed and Forms that
contain incorrect or incomplete information.
Savings Plan participants who desire to tender Shares at more than one
price must complete a separate Election Form for each price at which Shares are
tendered, provided that the same Shares cannot be tendered (unless properly
withdrawn in accordance with the terms of the Offer) at more than one price. IN
ORDER TO PROPERLY TENDER SHARES, ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN
THE APPROPRIATE SECTION ON EACH ELECTION FORM.
SAVINGS PLAN ACCOUNTS. Under the Savings Plan, you may direct the Trustee
to tender all or part of the Shares that are allocated to your account including
Shares that were purchased with Company Matching Contributions. The label
attached below identifies the number of Shares that were allocated to your
account as of August 22, 1997. You may be allocated additional Shares by the
Trustee prior to the deadline date of Monday, September 22, 1997. If you decide
to tender, you may call the NationsBank Answer Line at 1-800-828-4190 to get the
number of Shares as of the date you tender your Shares. Unallocated Shares (for
example, Shares that were recently purchased by the Trustee) are not subject to
your tender direction. The Trustee will decide whether and, if so, upon what
terms, unallocated Shares will be tendered.
REINVESTMENT OF SALE PROCEEDS
If you direct the Trustee to tender Shares allocated to your account in
the Savings Plan, proceeds from the sale of the Shares will be invested in the
Prime Fund. In accordance with the Savings Plan's investment transfer
provisions, you will be able to transfer amounts from the Prime Fund to the
Savings Plan's other investment funds. The first opportunity that you will have
to transfer sale proceeds from the Prime Fund to the Savings Plan's other
investment funds will be the date that the Savings Plan Trustee posts the
payment for the tendered Shares to your Savings Plan accounts, which is expected
to occur as soon as practicable following the expiration of the Offer.
IF YOU TENDER SHARES AND LATER ELECT TO TRANSFER FROM THE PRIME FUND TO
THE ETHYL COMMON STOCK FUND, THE CASH WILL BE USED TO PURCHASE COMMON STOCK AT
THE MARKET PRICE AT THE TIME OF TRANSFER. ACCORDINGLY, THE REINVESTMENT PURCHASE
PRICE MAY BE HIGHER THAN THE SALE PRICE. THIS WOULD RESULT IN A DECREASE IN THE
NUMBER OF SHARES CREDITED TO YOUR SAVINGS PLAN ACCOUNT. IT IS ALSO POSSIBLE THAT
THE REINVESTMENT PRICE WILL BE LOWER THAN THE TENDER OFFER SALE PRICE, WHICH
WOULD RESULT IN AN INCREASED NUMBER OF SHARES BEING CREDITED TO YOUR ACCOUNT.
THERE CAN BE NO ASSURANCE OF THE REINVESTMENT PRICE, SINCE IT IS DEPENDENT ON
MARKET CONDITIONS AT THE TIME. ALSO, FAVORABLE TAX TREATMENT UNDER THE SAVINGS
PLAN MAY BE LOST AS A RESULT OF TENDERING SHARES FROM YOUR ACCOUNT. SEE
"POTENTIAL TAX CONSEQUENCES OF TENDERING SHARES" IN THIS MEMORANDUM.
POTENTIAL TAX CONSEQUENCES OF TENDERING SHARES
TENDERING AND SELLING SHARES FROM YOUR SAVINGS PLAN ACCOUNT NOW COULD
RESULT IN THE LOSS OF A FAVORABLE TAX TREATMENT AVAILABLE WITH RESPECT TO ANY
SHARES THAT SUBSEQUENTLY ARE DISTRIBUTED TO YOU FROM THE SAVINGS PLAN. Shares
that you receive in a distribution from the Savings Plan generally are eligible
for favorable tax treatment. Specifically, depending upon the type of
distribution, all or a portion of any "net unrealized appreciation" on the
Shares is not taxable to you until you sell the Shares. If you tender and sell
Shares from your Savings Plan account, any net unrealized appreciation in the
Shares that are sold will be lost. In addition, if the proceeds are transferred
from the Prime Fund to the Ethyl Common Stock Fund, the cost of the Shares in
your account will be recalculated to reflect current market prices of the newly
acquired Shares. If your net unrealized appreciation is lost, the amount of tax
that you owe immediately upon receipt of a Savings Plan distribution may be
greater than if you had not tendered and sold your Shares in the Offer.
<PAGE>
CHANGING YOUR INSTRUCTION TO THE TRUSTEE
As more fully described in Section 4 of the Offer to Purchase, tenders
will be deemed irrevocable unless withdrawn by the dates specified therein. If
you instruct the Trustee to tender Shares, and you subsequently decide to change
your instructions, you may do so by sending a notice of withdrawal to the
Trustee. The notice of withdrawal will be effective only if it is in writing and
is received by the Trustee at or before 5:00 P.M., New York City time, on
Monday, September 22, 1997, at the address set forth on the enclosed return
envelope. Any notice of change of instruction to the Trustee must specify your
name, your social security number, the number of Shares tendered, whether
employee pre-tax, employee after-tax or employer matching shares and the number
of Shares to be withdrawn. Upon receipt of a timely written notice of change of
instruction to the Trustee, previous instructions to tender with respect to such
Shares will be deemed cancelled. If you later wish to retender Shares, you may
call your local human resources representative, or George Herceg, Director,
Benefits at (804) 788-5472 to obtain a new Election Form. Any new Election Form
must be received by the Trustee at or before 5:00 P.M., New York City time, on
Monday, September 22, 1997.
IF YOU HAVE QUESTIONS
If you have any questions about the Offer or any of the other matters
discussed above, please call Corporate Investor Communications, Inc., the
Information Agent, at (888) 881-0524 (toll free). If you have questions about
the Savings Plan, please refer to the Savings Plan SPD. Additional copies of the
SPD for the Savings Plan may be obtained from George R. Herceg, Director,
Benefits at (804) 788-5472.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
PARTICIPANT AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH
PARTICIPANT MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES AND, IF
SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE OR PRICES.
ELECTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF ETHYL CORPORATION
Please tender to Ethyl Corporation (the "Company"), on my behalf, the number of
Shares indicated below held in the Savings Plan for the Employees of Ethyl
Corporation (the "Savings Plan"), which are beneficially owned by me and held by
you under the Savings Plan, upon the terms and subject to the conditions
contained in the Offer to Purchase of the Company dated August 27, 1997, the
receipt of which is acknowledged. I understand that the label that follows sets
forth the number of Shares allocated to me as of August 22, 1997, in the various
Savings Plan accounts.
Number of Shares to be tendered from my Pre-Tax account: _____ Shares
Number of Shares to be tendered from my After-Tax account: _____ Shares
Number of Shares to be tendered from my Employer Matching account: _____ Shares
CONDITIONAL TENDER
[ ] Check here if tender of Shares is conditional on the Company purchasing
all or a minimum number of the tendered Shares and complete the
following:
Minimum number of Shares to be sold:__________
<PAGE>
<TABLE>
<S> <C>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(SHAREHOLDERS WHO DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE
A SEPARATE ELECTION FORM FOR EACH PRICE
AT WHICH SHARES ARE TENDERED.)
[ ] $7.750 [ ] $8.125 [ ] $8.500 [ ] $8.875 [ ] $9.125
[ ] $7.875 [ ] $8.250 [ ] $8.625 [ ] $9.000 [ ] $9.250
[ ] $8.000 [ ] $8.375 [ ] $8.750
</TABLE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED.
Signature: __________________________________________________________________
Name: _______________________________________________________________________
(Please Print)
_____________________________________________________________________________
(Taxpayer Identification or
Social Security Number)
_____________________________________________________________________________
Address: _____________________________________________________________________
(Including Zip Code)
Area Code and Telephone Number: ______________________________________________
Date: _________________________________________ , 1997
IMPORTANT: THIS SAVINGS PLAN PARTICIPANT'S ELECTION FORM (OR A
FACSIMILE THEREOF) MUST BE RECEIVED BY THE TRUSTEE PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, SEPTEMBER 22,
1997.
ETHYL LOGO N E W S
<TABLE>
<S> <C>
CONTACT
Ethyl Corporation 330 South Fourth Street A. Prescott Rowe (804) 788-5413
External Affairs Post Office Box 2189 John S. Graham (804) 788-5036
Richmond, Virginia 23217
</TABLE>
ETHYL CORPORATION ANNOLNCES
STOCK BUYBACK PLAN
FOR IMMEDIATE RELEASE
Richmond, Virginia, August 26, 1997 -- Ethyl Corporation (NYSE: EY)
today announced that its board of directors approved a plan to purchase up
to 3 5 million shares of the company's outstanding common stock and reduce
the annual dividend from 50 cents a share to 25 cents a share beginning
with the fourth-quarter dividend scheduled to be paid on January 1, 1998.
The third-quarter dividend of 12.5 cents will be paid on October 1 to
shareholders of record September 15, 1997, whether or not they accept the
company's offer to purchase shares.
The company will offer to purchase the shares through a Dutch Auction
tender offer at prices not in excess of $9.25 nor less than $7.75 per
share. The offer will be mailed to shareholders on August 27. Ethyl will
select the lowest purchase price that will allow it to buy the 35 million
shares. The company will pay the same price for all shares purchased in the
offering.
Ethyl said that if the number of shares properly tendered is equal to
or less than the 35 million shares it seeks to purchase through the offer,
then the purchase price will be the highest price of those prices specified
by the tendering shareholders. If the number of shares tendered is greater
than the number sought, Ethyl will select the purchase price that will
allow it to buy the number of shares it seeks.
The purchase of 35 million shares would represent the retirement of
about 30 percent of Ethyl's approximate 118 million outstanding common
shares.
... more
<PAGE>
ETHYL SHARE PURCHASE-2-2-2-2
Bruce C. Gottwald, chairman and chief executive officer of Ethyl,
said: "Since the early 1990s, Ethyl has focused its growth on its
petroleum additives businesses. During this period, Ethyl has invested
about $500 million to acquire the petroleum additives businesses of
Amoco Petroleum Additives Company, Nippon Cooper Company and Texaco Inc.
These investments have fulfilled Ethyl's goal of establishing itself as
a major supplier to the worldwide petroleum additives industry. There do
not appear to be any other large acquisitions in this industry available
and currently the prices of alternative businesses appear to be very
high."
In light of the foregoing, the company said its board of
directors has reviewed the company's capital structure and dividend
policy. Cash flow from the company's lead antiknock compounds business
historically has been strong and supported a generous dividend payout,
which recently has been significantly above the company's business
objective of 30 percent of net earnings. During the last several months,
the company has experienced a decline in its lead antiknock business
that is somewhat faster than earlier anticipated, Based on the fact that
the petroleum additives industry is mature, coupled with a lack of
large, reasonably priced candidates for acquisition, the board of
directors has concluded that it is strategic for the company to reduce
equity capital by repurchasing a significant portion of the outstanding
shares.
Mr. Gottwald also said: "The company is making this offer in order
to enhance long-term shareholder value by using the company's cash and
debt capacity to alter the company's capital structure and reduce the
amount of equity capital in the company and lower its average cost of
capital. This offer also will afford those shareholders who desire
liquidity an opportunity to sell all or a portion of their shares
without the usual transaction costs associated with open market sales."
CS First Boston, dealer manager, has been retained by the company
to advise on this offering. Corporate Investor Communications, Inc., has
been appointed information agent.
Ethyl Corporation, headquartered in Richmond, Va., develops,
manufactures and blends performance-enhancing and environmentally
beneficial fuel and lubricant additives marketed worldwide to refiners
and others who sell petroleum products for use in transportation and
industrial equipment.
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase and the
related Letter of Transmittal which are being mailed to shareholders of Ethyl
Corporation on or about August 27, 1997. While the Offer is being made to all
shareholders of the Company, tenders will not be accepted from or on behalf
of shareholders in any jurisdiction in which the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In those
jurisdictions whose laws require the Offer to be made by a licensed broker
or dealer, the Offer shall be deemed to be made on behalf of the
Company by Credit Suisse First Boston Corporation ("Credit Suisse
First Boston") or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
by
Ethyl Corporation
Up To 35,000,000 Shares
Of Its Common Stock
At a Purchase Price
Not In Excess Of $9.25 Nor Less Than $7.75 Per Share
Ethyl Corporation, a Virginia corporation (the "Company"),
hereby invites its shareholders to tender up to 35,000,000 shares of its
Common Stock, $1.00 par value per share (the "Shares"), at prices not in
excess of $9.25 nor less than $7.75 per Share in cash, as specified by
shareholders tendering their Shares, upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, SEPTEMBER 25, 1997, UNLESS THE OFFER IS
EXTENDED.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES
BEING TENDERED, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS AS SET FORTH IN
THE OFFER TO PURCHASE. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES
ANY RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING THEIR SHARES. EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE OR PRICES SHARES
SHOULD BE TENDERED.
As promptly as practicable following the Expiration Date (as
defined below), the Company will purchase up to 35,000,000 Shares or such lesser
number of Shares as are properly tendered (and not withdrawn in accordance with
Section 4 of the Offer to Purchase) prior to the Expiration Date at prices not
in excess of $9.25 nor less than $7.75 per Share in cash. The term "Expiration
Date" means 5:00 p.m., New York City time, on Thursday, September 25, 1997,
unless and until the Company, in its sole discretion, shall have extended the
period of time during which the Offer will remain open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the Offer, as
so extended by the Company, shall expire.
The Company will select the lowest Purchase Price that will
allow it to buy 35,000,000 Shares (or such lesser number of Shares as are
properly tendered at prices not in excess of $9.25 nor less than $7.75 per
Share). All Shares properly tendered at prices at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, subject to the
terms and the conditions of the Offer, including the proration and
conditional tender provisions. All Shares purchased in the Offer will be
purchased at the Purchase Price. The Company is making the Offer because the
Board of Directors believes that, given the Company's business, assets and
prospects and the current market price of the Shares, the purchase of the
Shares is an attractive use of the Company's funds.
Upon the terms and subject to the conditions of the Offer, if
more than 35,000,000 Shares have been properly tendered at prices at or below
the Purchase Price and not withdrawn prior to the Expiration Date, the Company
will purchase properly tendered Shares in the following order of priority:
(a) FIRST,all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder (as defined in the Offer to Purchase)
who: (1) tenders all Shares beneficially owned by such Odd Lot Holder at a
price at or below the Purchase Price (tenders of less than all Shares owned
by such shareholder will not qualify for this preference); and (2) completes
the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable,
on the Notice of Guaranteed Delivery; (b) SECOND, after purchase of all of
the foregoing Shares, all other Shares tendered properly and unconditionally
at prices at or below the Purchase Price and not withdrawn prior to the
Expiration Date, on a PRO RATA basis (with appropriate adjustments to avoid
purchases of fractional Shares) as described below; and (c) THIRD, if
necessary, shares tendered conditionally at or below the Purchase Price and
not withdrawn prior to the Expiration Date, selected by random lot. The
Company also reserves the right, but will not be obligated, to purchase all
Shares duly tendered by any shareholder who tendered all Shares owned,
beneficially or of record, at or below the Purchase Price and who, as a
result of proration, would then own, beneficially or of record, an aggregate
of fewer than 100 Shares. If the Company exercises this right, it will
increase the number of Shares that it is offering to purchase by the number
of Shares purchased through the exercise of the right.
The Company expressly reserves the right, in its sole
discretion, at any time and from time to time, to extend the period of time
during which the Offer is open and thereby delay acceptance for payment of,
and payment for, any Shares by giving oral or written notice of such
extension to Harris Trust and Savings Bank (the "Depositary") and making a
public announcement thereof.
Shares tendered pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date and, unless theretofore accepted for
payment by the Company pursuant to the Offer, may also be withdrawn at any
time after 12:00 Midnight, New York City time, on Wednesday, October 22,
1997. For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic or facsimile transmission form and must be received in a
timely manner by the Depositary at one if its addresses set forth on the back
cover of the Offer to Purchase. Any such notice of withdrawal must specify
the name of the tendering shareholder, the name of the registered holder, if
different from that of the person who tendered such Shares, the number of
Shares tendered and the number of Shares to be withdrawn. If the certificates
for Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the release of such certificates, the tendering
shareholder must also submit the serial numbers shown on the particular
certificates for Shares to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution (except in the case
of Shares tendered by an Eligible Institution). If Shares have been tendered
pursuant to the procedure for book-entry tender set forth in Section 3 of the
Offer to Purchase, the notice of withdrawal also must specify the name and
the number of the account at the applicable Book-Entry Transfer Facility to
be credited with the withdrawn Shares and otherwise comply with the
procedures of such facility.
CONCURRENTLY WITH THE ANNOUNCEMENT OF THE OFFER, THE COMPANY
ANNOUNCED THAT THE BOARD OF DIRECTORS INTENDS TO REDUCE THE ANNUAL CASH
DIVIDEND ON THE COMMON STOCK OF THE COMPANY FROM $0.50 PER SHARE TO $0.25 PER
SHARE EFFECTIVE FOR THE 1997 FOURTH QUARTER DIVIDEND SCHEDULED TO BE PAID ON
JANUARY 1, 1998. Shareholders of record at the close of business on September
15, 1997 will be entitled to the quarterly $0.125 per Share dividend to be
paid on October 1, 1997 regardless whether they tender shares either before
or after the record date. The revised dividend policy results in a dividend
payout ratio that is closer to the Company's target dividend payout of 30% of
net earnings and is more comparable to those of other public U.S. industrial
companies. Moreover, the Company believes that reducing the dividend rate
improves the Company's financial flexibility for the future.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY TENDERS ARE
MADE. The information required to be disclosed by Rule 13e-4(d)(1) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference. The Offer to Purchase and the related Letter of Transmittal are
being mailed to record holders of Shares and are being furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear
on the Company's shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
Additional copies of the Offer to Purchase and the Letter of
Transmittal may be obtained from the Depositary, the Information Agent or the
Dealer Manager and will be furnished promptly at the Company's expense.
THE INFORMATION AGENT FOR THE OFFER IS:
[CIC LOGO]
Corporate Investor Communications, Inc.
111 Commerce Road o Carlstadt, New Jersey 07072-2586
Banks and Brokers call (201) 896-1900
All others call Toll Free (888) 881-0524
The Dealer Manager for the Offer is:
|
CREDIT|FIRST
SUISEE|BOSTON
|
Eleven Madison Avenue
New York, New York 10010-3629
(800) 881-8320 (toll free)
August 27, 1997
[ETHYL CORPORATION LETTERHEAD]
August 27, 1997
TO OUR SHAREHOLDERS:
Ethyl Corporation ("Ethyl") is offering to purchase 35,000,000 shares (or
such lesser number as are properly tendered), or approximately 29.55% of the
currently outstanding shares, of its common stock (the "Shares") from existing
shareholders. The price will not be in excess of $9.25 nor less than $7.75 per
Share. Ethyl is conducting the tender offer through a procedure commonly
referred to as a "Dutch auction." This allows you to select the price within the
specified price range at which you are willing to sell your Shares to Ethyl. On
August 26, 1997, the last trading day prior to the announcement and
commmencement of the offer, the closing price per share for Ethyl's common stock
on the New York Stock Exchange (the "NYSE") was $9.00.
Any shareholder whose Shares are purchased in the offer will receive the
total purchase price in cash and will not incur the usual transaction costs
associated with open-market sales. Any shareholders owning an aggregate of less
than 100 Shares whose Shares are purchased pursuant to the offer will avoid the
applicable odd lot discounts payable on sales of odd lots on the NYSE.
Ethyl will pay the same per Share price (the "Purchase Price") for all
Shares it purchases in the offer. If the number of Shares properly tendered is
equal to or less than the number of Shares Ethyl seeks to purchase through the
offer, the Purchase Price will be the highest price of those specified by
tendering shareholders. All Shares properly tendered at prices at or below the
Purchase Price and not withdrawn on or prior to the Expiration Date (as defined
in the Offer to Purchase) will be purchased at the Purchase Price, net to the
seller in cash, subject to the terms and conditions described in the Offer to
Purchase and the related Letter of Transmittal. Those terms and conditions
include, among other things, provisions relating to possible proration,
conditional tenders and the tender of odd lots.
If tendering shareholders properly tender more than the number of Shares
Ethyl seeks to purchase through the offer, Ethyl will take into account the
number of Shares so tendered and certain other factors described in the Offer to
Purchase and select the Purchase Price that will allow Ethyl to buy the number
of Shares that it seeks to purchase through the offer. In such circumstances,
Ethyl would not purchase the Shares of any tendering shareholder who specified a
price per Share above the Purchase Price.
In recent years, Ethyl has invested approximately $500 million in its
petroleum additives business. These investments have enabled Ethyl to establish
itself as a leading supplier to the worldwide petroleum industry. Ethyl has
determined that additional large acquisitions are not currently available and,
accordingly, has reevaluated its capital structure and dividend policy. The
Board of Directors has made the strategic decision to reduce equity capital by
making the offer and decided that the annual dividend should be reduced from 50
cents per Share to 25 cents per Share beginning with the fourth-quarter dividend
scheduled to be paid on January 1, 1998. The revised dividend policy, which
provides increased financial flexibility, results in a dividend payout ratio
that is closer to Ethyl's dividend payout target of 30 percent of net earnings,
and is more comparable to those of other public U.S. industrial companies.
The offer is explained in detail in the Offer to Purchase and Letter of
Transmittal. We encourage you to read these materials carefully before making
any decision with respect to the offer. If you want to tender your Shares, the
instructions on how to tender Shares are also explained in detail in the
accompanying materials.
Neither Ethyl nor its Board of Directors makes any recommendation to any
shareholder whether to tender all or any Shares.
Sincerely,
/s/ BRUCE C. GOTTWALD
--------------------------
Bruce C. Gottwald
Chairman and Chief Executive Officer
[ETHYL CORPORATION LETTERHEAD]
August 27, 1997
TO PARTICIPANTS IN THE SAVINGS PLAN FOR
THE EMPLOYEES OF ETHYL CORPORATION:
Ethyl Corporation ("Ethyl") is offering to purchase up to 35,000,000
shares, or approximately 29.55% of the currently outstanding shares, of its
common stock (the "Shares") from existing shareholders. The price will not be in
excess of $9.25 nor less than $7.75 per share. As a participant in the Savings
Plan for the Employees of Ethyl Corporation (the "Savings Plan"), you will be
able to tender Shares in your plan account. Ethyl is conducting the offer
through a procedure commonly referred to as a "Dutch Auction." This procedure
allows you to select the lowest price within the specified price range at which
you are willing to sell your Shares to Ethyl.
The enclosed memorandum to Savings Plan participants contains information
regarding the tender offer that is relevant to Savings Plan participants. Also
enclosed with this letter is the election form that all Savings Plan
participants must complete and return to the Savings Plan trustee prior to 5:00
P.M., New York City time, on September 22, 1997, if they wish to tender their
Savings Plan Shares.
On August 26, 1997, the last trading day prior to the announcement and
commencement of the offer, the closing price per share for Ethyl's common stock
on the New York Stock Exchange was $9.00.
Ethyl will pay the same per Share price (the "Purchase Price") for all
Shares it purchases in the offer. If the number of Shares properly tendered is
equal to or less than the number of Shares Ethyl seeks to purchase through the
offer, the Purchase Price will be the highest price of those specified by
tendering shareholders. If tendering shareholders properly tender more than the
number of Shares Ethyl seeks to purchase through the offer, Ethyl will take into
account the number of Shares so tendered and certain other factors described in
the Offer to Purchase and select the Purchase Price that allows Ethyl to buy the
number of Shares that it seeks to purchase through the offer. In such
circumstances, Ethyl would not purchase the Shares of any tendering shareholder
who specified a price per Share above the Purchase Price.
In recent years, Ethyl has invested approximately $500 million in its
petroleum additives business. These investments have enabled Ethyl to establish
itself as a leading supplier to the worldwide petroleum industry. Ethyl has
determined that additional large acquisitions are not currently available and,
accordingly, has reevaluated its capital structure and dividend policy. The
Board of Directors has made the strategic decision to reduce equity capital by
making the offer and decided that the annual dividend should be reduced from 50
cents per Share to 25 cents per Share beginning with the fourth-quarter dividend
scheduled to be paid on January 1, 1998. The revised dividend policy, which
provides increased financial flexibility, results in a dividend payout ratio
that is closer to Ethyl's dividend payout target of 30 percent of net earnings,
and is more comparable to those of other public U.S. industrial companies.
We encourage you to read carefully the memorandum, the election form and
the other enclosed materials, including the Offer to Purchase. Neither Ethyl nor
its Board of Directors makes any recommendation to any Savings Plan participant
whether to tender all or any Shares in the Savings Plan. Each Savings Plan
participant should independently decide whether to tender Shares, taking into
account his or her own personal circumstances. Your decision will not affect in
any way the terms of your employment by Ethyl.
Sincerely,
/S/ BRUCE C. GOTTWALD
-----------------------
Bruce C. Gottwald
Chairman and Chief Executive Officer
$900,000,000
COMPETITIVE ADVANCE,
REVOLVING CREDIT FACILITY AND TERM LOAN AGREEMENT
Dated as of August 26, 1997
among
ETHYL CORPORATION,
THE BANKS NAMED HEREIN,
NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT
<PAGE>
<TABLE>
<S> <C>
TABLE OF CONTENTS
Page
ARTICLE I Definitions 1
SECTION 1.01. Defined Terms. 1
SECTION 1.02. Terms Generally. 15
ARTICLE II The Credits 15
SECTION 2.01. Commitments. 15
SECTION 2.02. Loans. 16
SECTION 2.03. Competitive Bid Procedure. 18
SECTION 2.04. Committed Borrowing Procedure. 20
SECTION 2.05. Refinancings. 21
SECTION 2.06. Fees. 21
SECTION 2.07. Notes; Repayment of Loans. 22
SECTION 2.08. Interest on Loans. 23
SECTION 2.09. Additional Interest; Alternate Rate of Interest. 23
SECTION 2.10. Termination, Reduction and Extension of Commitments. 24
SECTION 2.11. Prepayment of Loans. 25
SECTION 2.12. Reserve Requirements; Change in Circumstances. 26
SECTION 2.13. Change in Legality. 28
SECTION 2.14. Indemnity. 28
SECTION 2.15. Pro Rata Treatment, etc. 29
SECTION 2.16. Payments. 29
SECTION 2.17. Taxes. 30
SECTION 2.18. Certain Bank Obligations. 33
ARTICLE III Representations and Warranties 33
SECTION 3.01. Organization, Corporate Powers. 34
SECTION 3.02. Authorization. 34
SECTION 3.03. Governmental Approval. 34
SECTION 3.04. Financial Statements. 34
SECTION 3.05. No Material Adverse Change. 35
SECTION 3.06. Subsidiaries. 35
SECTION 3.07. Litigation. 35
SECTION 3.08. Tax Returns. 35
SECTION 3.09. Properties. 36
SECTION 3.10. Employee Benefit Plans. 36
SECTION 3.11. Investment Company Act; Public Utility Holding Company Act. 36
SECTION 3.12. Federal Reserve Regulations. 37
SECTION 3.13. No Material Misstatements. 37
SECTION 3.14. Compliance with Laws. 37
SECTION 3.15. Environmental and Safety Matters. 37
SECTION 3.16. Use of Proceeds. 38
ARTICLE IV Conditions of Lending 38
SECTION 4.01. Conditions to be Satisfied on Date of Each Borrowing. 38
SECTION 4.02. Conditions to be Satisfied on the Effective Date. 39
ARTICLE V Affirmative Covenants 39
SECTION 5.01. Corporate Existence; Businesses and Properties. 39
SECTION 5.02. Insurance. 40
SECTION 5.03. Obligations and Taxes. 40
SECTION 5.04. Financial Statements, Reports, etc. 40
SECTION 5.05. Litigation and Other Notices. 42
SECTION 5.06. ERISA. 42
SECTION 5.07. Access to Premises and Records. 43
SECTION 5.08. Subsidiary Guarantors. 43
SECTION 5.09. Use of Proceeds. 43
ARTICLE VI Negative Covenants 43
SECTION 6.01. Liens, etc. 44
SECTION 6.02. Indebtedness of Subsidiaries. 45
SECTION 6.03. Compliance with Regulations G, U and X. 45
SECTION 6.04. Mergers, Consolidations and Sales of Assets. 45
SECTION 6.05. Consolidated Leverage Ratio. 46
SECTION 6.06. Consolidated Fixed Charge Coverage Ratio. 46
SECTION 6.07. Consolidated Net Worth. 46
ARTICLE VII Events of Default 46
ARTICLE VIII The Administrative Agent 49
ARTICLE IX Miscellaneous 51
SECTION 9.01. Notices. 51
SECTION 9.02. No Waivers; Amendments. 52
SECTION 9.03. Right of Setoff. 53
SECTION 9.04. Successors and Assigns. 53
SECTION 9.05. Expenses; Indemnity. 56
SECTION 9.06. Survival of Agreements, Representations and Warranties, etc. 57
SECTION 9.07. Governing Law. 57
SECTION 9.08. Sharing of Setoffs. 57
SECTION 9.09. Interest Rate Limitation. 58
SECTION 9.10. Entire Agreement. 58
SECTION 9.11. Waiver of Jury Trial. 58
SECTION 9.12. Severability. 58
SECTION 9.13. Counterparts. 59
SECTION 9.14. Headings. 59
SECTION 9.15. Jurisdiction; Consent to Service of Process. 59
SECTION 9.16. Binding Effect. 60
</TABLE>
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 Revolving Note
Exhibit B-3 Form of Term 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, REVOLVING CREDIT FACILITY AND TERM LOAN AGREEMENT
dated as of August 26, 1997, among ETHYL CORPORATION, a Virginia corporation
(hereinafter called the Company), the banks listed in Schedule 2.01 (the
"Banks"), NATIONSBANK, N.A., a national banking association, as administrative
agent for the Banks under this Agreement (in such capacity, the "Administrative
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 $900,000,000
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 and the Banks agree as
follows:
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.
"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 Facility 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 Consolidated Leverage Ratio:
S&P/Moody's Rating;
Consolidated Leverage Ratio Facility Fee
--------------------------- ------------
Category 1
BBB+/Baa1 or higher;
less than or equal to 1.0:1.0 .085%
Category 2
BBB/Baa2;
greater than 1.0:1.0 but less
than or equal to 1.75:1.0 .100%
Category 3
BBB-/Baa3;
greater than 1.75:1.0 but less
than or equal to 2.50:1.0 .125%
Category 4
BB+/Ba1,
greater than 2.50:1.0 but less
than or equal to 3.25:1.0 .175%
Category 5
lower than BB+/Ba1;
greater than 3.25:1.0 .250%
For purposes of the foregoing, (i) if two Ratings shall be available and the
Ratings shall fall within different Categories specified above, the Applicable
Facility Fee Percentage shall be determined by reference to the Category in
which the higher of the two Ratings falls; (ii) if only one Rating shall be
available, then the Applicable Facility Fee Percentage shall be determined by
reference to the Category in which such Rating falls; and (iii) if no Ratings
shall be available, then the Applicable Facility Fee Percentage shall be
determined by reference to the Consolidated 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 hereof, the Applicable
Facility Fee Percentage shall initially be set at Category 4 (until the Ratings
are adjusted to take into account the purchase of shares contemplated
hereunder). For purposes of the foregoing, the Consolidated 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 (but after giving effect,
in any event, to the repurchase of shares contemplated hereunder); provided,
however, that the Consolidated 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 Facility Fee Percentage
shall apply during the period commencing on the effective date of such change in
the Ratings or the Consolidated 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 or S&P 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 Facility 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 Consolidated Leverage Ratio:
<PAGE>
<TABLE>
<S> <C>
Revolving Loans Term Loan
--------------- ---------
S&P/Moody's & Phelps Rating; Eurodollar Loan ABR Loan Eurodollar ABR Loan
Consolidated Leverage Ratio Spread Spread Spread Spread
--------------------------- ------ ------ ------ ------
Category 1
BBB+/Baa1 or higher;
less than or equal to 1.0:1.0 .165% .000% .250% .000%
Category 2
BBB/Baa2;
greater than 1.0:1.0 but less
than or equal to 1.75:1.0 .225% .000% .325% .000%
Category 3
BBB-/Baa3;
greater than 1.75:1.0 but less
than or equal to 2.50:1.0 .300% .000% .425% .000%
Category 4
BB+/Ba1,
greater than 2.50:1.0 but less
than or equal to 3.25:1.0 .425% .000% .600% .000%
Category 5
lower than BB+/Ba1;
greater than 3.25:1.0 .500% .000% .750% .000%
</TABLE>
For purposes of the foregoing, (i) if two Ratings shall be available and the
Ratings shall fall within different Categories specified above, the Applicable
Margin shall be determined by reference to the Category in which the higher of
the two Ratings falls; (ii) if only one Rating shall be available, then the
Applicable Margin shall be determined by reference to the Category in which such
Rating falls; and (iii) if no Ratings shall be available, then the Applicable
Margin shall be determined by reference to the Consolidated 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 hereof, the
Applicable Facility Fee Percentage shall initially be set at Category 4 (until
the Ratings are adjusted to take into account the purchase of shares
contemplated hereunder). For purposes of the foregoing, the Consolidated
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 (but
after giving effect, in any event, to the repurchase of shares contemplated
hereunder); provided, however, that the Consolidated 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 Consolidated 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 or S&P 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.
"Attributed Principal Amount" shall mean, on any day, with respect to any
Securitization Transaction, the aggregate amount (with respect to any such
transaction, the "Invested Amount") paid to, or borrowed by, such person as of
such date under such Securitization Transaction, minus the aggregate amount
received by the party providing the financing and applied to reduction of the
Invested Amount under such Securitization Transaction.
"Banks" shall mean the banks and financial institutions party to this
Agreement, being the Revolving Lenders and the Term Lenders.
"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
Closing 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.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Commitment" shall mean the Revolving Commitment and the Term Loan
Commitment.
"Committed Borrowing" shall mean a borrowing consisting of simultaneous
Revolving Loans from each of the Revolving Lenders.
"Committed Borrowing Request" shall mean a request made pursuant to Section
2.04 in the form of Exhibit A-5.
"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 Revolving 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 EBITDA" means for any period for the Consolidated Group, the
sum of Consolidated Net Income plus Consolidated Interest Expense plus all
provisions for any Federal, state or other domestic and foreign income taxes
plus depreciation and amortization, in each case on a consolidated basis
determined in accordance with GAAP applied on a consistent basis, but excluding
for purposes hereof extraordinary gains and losses and related tax effects
thereon. Except as otherwise expressly provided, the applicable period shall be
for the four consecutive fiscal quarters ending as of the date of determination.
"Consolidated Fixed Charge Coverage Ratio" means for any period for the
Consolidated Group, the ratio of Consolidated EBITDA minus capital expenditures
to Consolidated Fixed Charges.
"Consolidated Fixed Charges" means for any period for the Consolidated
Group, the sum of Consolidated Interest Expense plus scheduled payments of
Consolidated Funded Debt (and, without duplication, mandatory commitment
reductions, sinking fund payments and the like relating thereto in the
applicable period) plus dividends paid by the Company in cash or property (other
than dividends paid solely in shares of that class to the holders of that class)
and amounts paid for the purchase or redemption of shares of stock (excluding
for purposes hereof, the redemption of shares within one year after the Closing
Date up to $435,000,000), in each case on a consolidated basis determined in
accordance with GAAP applied on an consistent basis. Except as otherwise
expressly provided, the applicable period shall be for the four consecutive
fiscal quarters ending as of the date of determination.
"Consolidated Funded Debt" means Indebtedness of the Consolidated Group
determined on a consolidated basis in accordance with GAAP applied on a
consistent basis.
"Consolidated Group" means the Company and its consolidated subsidiaries, as
determined in accordance with GAAP.
"Consolidated Interest Expense" means for any period for the Consolidated
Group, all interest expense, including the amortization of debt discount and
premium, and the interest component under capital leases, in each case on a
consolidated basis determined in accordance with GAAP applied on a consolidated
basis. Except as expressly provided otherwise, the applicable period shall be
for the four consecutive quarters ending as of the date of determination.
"Consolidated Leverage Ratio" means, as of the last day of any fiscal
quarter, the ratio of Consolidated Funded Debt on such day to Consolidated
EBITDA for the period of four consecutive fiscal quarters ending as of such day.
"Consolidated Net Income" means for any period for the Consolidated Group,
net income on a consolidated basis determined in accordance with GAAP applied on
a consistent basis, but excluding for purposes of determining the Consolidated
Leverage Ratio and Consolidated Fixed Charge Coverage Ratio, any extraordinary
gains or losses and related tax effects thereon. Except as expressly provided
otherwise, the applicable period shall be for the four consecutive quarters
ending as of the date of determination.
"Consolidated Net Worth" means, as for any date for the Consolidated Group,
shareholders' equity or net worth as determined 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 $10,000 and (b) has not conducted any
business or other operations during the prior 12-month period.
"Determination Date" shall mean the 60th day following the end of each of
the first three fiscal quarters in each fiscal year of the Company and the 120th
day following the end of each fiscal year of the Company.
"Dollars", "dollars" or "$" shall mean dollars of lawful money of the United
States of America.
"Domestic Subsidiary" shall mean any Subsidiary organized and existing under
the laws of the United States, or any state thereof or the District of Columbia.
"Effective Date" shall mean the date on which the conditions set forth in
Section 4.02 shall have been satisfied and the initial Borrowings shall have
been made under this Agreement.
"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 Revolving Loan or Term 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.
"Facility Fee" shall have the meaning assigned to such term in Section
2.06(a).
"Fees" shall mean the Facility 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, 1996, 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
June 30, 1997, and the related statements of income and changes in financial
position for the six-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.
"Guarantors" shall mean each of the persons identified as a Guarantor on the
signature page to the Subsidiary Guaranty and each other person which may
hereafter become a Guarantor by execution of a Joinder Agreement.
"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, (viii) the
outstanding Attributed Principal Amount under all Securitization Transactions,
(ix) the principal balance outstanding under all synthetic leases, tax retention
operating leases, off-balance sheet loan or other similar off-balance sheet
financing product to which such person is a party, where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP and (x) the 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.
"Joinder Agreement" shall mean a guaranty joinder agreement in substantially
the form attached as Exhibit D hereto.
"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 1/100 of 1%) equal to the rate of interest determined by the
Administrative Agent on the basis of offered rates for deposits in dollars for a
period of time corresponding to such Interest Period (and commencing on the
first day of such Interest Period), appearing on Telerate Page 3750 (or, if, for
any reason, Telerate Page 3750 is not available, the Reuters Screen LIBO Page)
as of approximately 11:00 A.M. (London time) two
(2) Business Days before the first day of such Interest Period. As used herein,
"Telerate Page 3750" means the display designated as page 3750 by Dow Jones
Markets, Inc. (or such other page as may replace such page on that service for
the purpose of displaying the British Bankers Association London interbank
offered rates) and "Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).
"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 Revolving Loan, a Competitive Loan or a Term 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 the fifth (5th) anniversary date of the Effective
Date, 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., or any successor.
"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 Revolving Note, a Competitive Note or a Term
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.
"Pro Form Basis" shall mean, with respect to any transaction of merger or
consolidation, that such transaction shall be deemed to have occurred as of the
first day of the period of four fiscal quarters ending as of the most recent
fiscal quarter end preceding the date of such transaction with respect to which
the Administrative Agent and the Banks shall have received financial statements
and an officer's certificate in accordance with the provisions of Section 5.04.
"Ratings" shall mean the ratings applicable to the senior, unsecured,
non-credit-enhanced, long-term debt of the Company established by S&P and
Moody's.
"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.
"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.
"Revolving Commitment" shall mean, with respect to each Revolving Lender,
the commitment of such Revolving Lender to make Revolving Loans in an aggregate
principal amount up to the amount shown on Schedule 2.1 hereto as its Revolving
Commitment, as such amount may be reduced from time to time in accordance with
the provisions hereof. The Revolving Commitment shall be deemed permanently
terminated on the Maturity Date.
"Revolving Lenders" shall mean the Banks holding Revolving Commitments, as
identified on Schedule 2.1 hereto, and their successors and assigns.
"Revolving Loans" shall mean the revolving loans made by the Banks to
the Company pursuant to Section 2.01(a). Each Revolving Loan shall be a
Eurodollar Committed Loan or an ABR Loan.
"Revolving Note" shall mean a promissory note of the Company in the form of
Exhibit B-2 executed and delivered as provided in Section 2.7.
"S&P" shall mean Standard & Poor's Ratings Services, a Division of The
McGraw Hill Corporation, Inc., or any successor.
"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.
"Securitization Transaction" shall mean any financing transaction or series
of financing transactions that have been or may be entered into by a member of
the Consolidated Group pursuant to which such member of the Consolidated Group
may sell, convey or otherwise transfer to (i) a Subsidiary or affiliate, or (ii)
any other Person, or may grant a security interest in, any accounts, chattel
paper, instruments or general intangibles, or interests therein secured by the
merchandise or services financed thereby (whether such accounts, chattel paper,
instruments or general intangibles are then existing or arising in the future)
of such member of the Consolidated Group, and any assets related thereto,
including without limitation, all security interests in merchandise or services
financed thereby, the proceeds thereof, and other assets which are customarily
sold or in respect of which security interests are customarily granted in
connection with securitization transactions involving such assets.
"Subsidiary" or "subsidiary" shall mean a subsidiary of the Company.
"Subsidiary Guaranty" shall mean the Guaranty Agreement dated as of the
Closing Date given to the Administrative Agent for the benefit of the Banks in
support of the Loans and obligations hereunder by the Subsidiaries of the
Company identified therein, as amended and modified.
"Term Borrowing" shall mean a borrowing consisting of simultaneous Term
Loans from each of the Term Lenders.
"Term Lenders" shall mean Banks holding Term Loan Commitments, as identified
on Schedule 2.1 hereto, and their successors and assigns.
"Term Loan" shall mean the term loan made by the Banks to the Company
pursuant to Section 2.01(b). Each Revolving Loan shall be a Eurodollar Committed
Loan or an ABR Loan.
"Term Loan Commitment" shall mean, with respect to each Term Lender, the
commitment of such Term Lender to make its portion of the Term Loan in the
principal amount shown on Schedule 2.1 hereto as its Term Loan Commitment (and
for purposes of making determinations of Required Banks hereunder after the
Effective Date, the principal amount outstanding on the Term Loan).
"Total Revolving Commitment" shall mean at any time the aggregate amount of
the Revolving Lenders' Revolving 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.
<PAGE>
ARTICLE II
The Credits
SECTION 2.01. Commitments.
(a) Revolving Loans. Subject to the terms and conditions and relying upon
the representations and warranties herein set forth, each Revolving Lender,
severally and not jointly, agrees to make Revolving 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 Revolving Commitment of such Revolving Lender 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 Revolving Lender's
Revolving 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 Revolving Loans made by
all Revolving Lenders plus (y) the outstanding aggregate principal amount of all
Competitive Loans made by all Revolving Lenders exceed (ii) the Total Revolving
Commitment and (b) at all times the outstanding aggregate principal amount of
all Revolving Loans made by each Revolving Lender shall equal the product of (i)
the percentage which its Revolving Commitment represents of the Total Revolving
Commitment times (ii) the outstanding aggregate principal amount of all
Revolving Loans made pursuant to Section 2.04. Each Revolving Lender's Revolving
Commitment is set forth opposite its respective name in Schedule 2.01. Such
Revolving 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 Revolving Lender, the Administrative Agent shall
notify such Revolving Lender of the aggregate principal amount of Competitive
Loans and Revolving 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.
(b) Term Loan. Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Term Lender severally and
not jointly, agrees to make its portion of a term loan in the aggregate
principal amount of THREE HUNDRED MILLION DOLLARS ($300,000,000) to the Company
upon request on a Business Day from the Effective Date through September 30,
1997. Each Term Lender's Term Loan Commitment is set forth opposite its
respective name in Schedule 2.01. Amounts repaid on the Term Loan may not be
reborrowed.
SECTION 2.02. Loans.
(a)(i) Each Revolving Loan shall be made as part of a Borrowing consisting
of Revolving Loans made by the Revolving Lenders ratably in accordance with
their Revolving Commitments; provided, however, that the failure of any
Revolving Lender to make any Revolving Loan shall not in itself relieve any
other Revolving Lender of its obligation to lend hereunder (it being understood,
however, that no Revolving Lender shall be responsible for the failure of any
Revolving Lender to make any Revolving Loan required to be made by such other
Revolving Lender). Each Competitive Loan shall be made in accordance with the
procedures set forth in Section 2.03. The Revolving 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 Revolving Loans (or, in
either case, an aggregate principal amount equal to the remaining balance of the
available Revolving Commitments).
(ii) The Term Loan shall be made as part of a Borrowing on request as
provided in Section 2.01(b) consisting of the Term Loan made by the Term Lenders
ratably in accordance with their Term Commitments; provided that the failure of
any Term Lender to make its Term Loan shall not in itself relieve any other Term
Lender of its obligation to lend hereunder (it being understood, however, that
no Term Lender shall be responsible for the failure of any other Term Lender to
make its portion of the Term Loan required to be made by such other Term
Lender).
(b) Each Competitive Borrowing shall be comprised entirely of Eurodollar
Competitive Loans or Fixed Rate Loans, and each Committed Borrowing and each
Term 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 foregoing,
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, not later than 12:00 noon, Charlotte, North
Carolina time, and the Administrative Agent shall by 3:00 p.m., Charlotte, North
Carolina 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 Revolving Lenders whose Competitive Bids therefor are
accepted pursuant to Section 2.03 in the amounts so accepted and Committed Loans
shall be made by the Revolving Lenders 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 (i) any Committed Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date with respect to
any Bank or (ii) any Term Borrowing if the Interest Period requested with
respect thereto would extend beyond any principal amortization payment date
unless the portion of the Term Loan comprised of ABR Loans together with the
portion of the Term Loan comprised of Eurodollar Loans with Interest Periods
expiring prior to the date of the principal amortization payment is due, is at
least equal to the amount of such principal amortization payment due on such
date.
SECTION 2.03. Competitive Bid Procedure.
(a) The Company may request the Revolving Lenders to make Competitive Bids
in respect of an aggregate amount of Competitive Borrowings at any time
outstanding not in excess of (i) the Total Revolving 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.,
Charlotte, North Carolina 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., Charlotte, North Carolina time, one Business Day before a proposed
Competitive 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 Revolving
Lenders to bid, on the terms and conditions of this Agreement, to make
Competitive Loans pursuant to the Competitive Bid Request.
(b) Each Revolving Lender may, in its sole discretion, make one or more
Competitive Bids to the Company responsive to any Competitive Bid Request;
provided, however, that no Revolving Lender 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 Revolving Lender. Each
Competitive Bid by a Revolving Lender must be received by the Administrative
Agent via telecopier, in the form of Exhibit A-3 hereto, (i) in the case of a
Eurodollar Competitive Borrowing, not later than 9:30 a.m., Charlotte, North
Carolina 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., Charlotte,
North Carolina 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 Revolving Lender 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 Revolving Lender is willing to make to the Company, (y) the
Competitive Bid Rate or Rates at which the Revolving Lender is prepared to make
the Competitive Loan or Loans and (z) the Interest Period and the last day
thereof. If any Revolving Lender shall elect not to make a Competitive Bid, such
Revolving Lender shall so notify the Administrative Agent via telecopier (I) in
the case of Eurodollar Competitive Loans, not later than 9:30 a.m., Charlotte,
North Carolina 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.,
Charlotte, North Carolina time, on the day of a proposed Competitive Borrowing;
provided, however, that failure by any Revolving Lender to give such notice
shall not cause such Revolving Lender to be obligated to make any Competitive
Loan as part of such Competitive Borrowing. A Competitive Bid submitted by a
Revolving Lender pursuant to this paragraph (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 Revolving Lender 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.,
Charlotte, North Carolina 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., Charlotte, North Carolina 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 rejection 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 Revolving
Lender 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 Revolving Lender, 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.
<PAGE>
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., Charlotte, North
Carolina time, three Business Days before a proposed Borrowing and (b) in the
case of an ABR Borrowing, not later than 10:30 a.m., Charlotte, North Carolina
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 Section 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 Revolving Lender, through the
Administrative Agent, on each March 31, June 30, September 30 and December 31
and on the date on which the Revolving Commitment of such Revolving Lender shall
be reduced or terminated as provided herein, a commitment fee (a " Facility
Fee") at a rate per annum equal to the Applicable Facility Fee Percentage from
time to time in effect on the average daily amount of the Revolving Commitment
of such Bank during the preceding quarter (or shorter period commencing with the
Closing Date or ending with the Maturity Date or any date on which the
Commitment of such Bank shall be terminated). All Facility Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days. The Facility Fee due to each Revolving Lender shall commence to accrue on
the Closing Date, and shall cease to accrue on the earlier of the Maturity Date
and the termination of the Commitment of such Revolving Lender 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 August 22, 1997, 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
appropriate Banks. Once paid, none of the Fees paid by the Company shall be
refundable under any circumstances, except in the case of manifest error.
SECTION 2.07. Notes; Repayment of Loans.
The Competitive Loans made by each Revolving Lender shall be evidenced by a
single Competitive Note duly executed on behalf of the Company, dated the
Closing Date, in substantially the form attached hereto as Exhibit B-1 with the
blanks appropriately filled, payable to such Revolving Lender in a principal
amount equal to the Total Revolving Commitment. The Revolving Loans made by each
Revolving Lender shall be evidenced by a single Revolving Note duly executed on
behalf of the Company, dated the Closing 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 Revolving Commitment of such
Revolving Lender. The Term Loan made by each Term Lender shall be evidenced by a
single Term Note duly executed on behalf of the Company, dated the Closing Date,
in substantially the form attached hereto as Exhibit B-3 with the blanks
appropriately filled, payable to such Term Lender in the principal amount equal
to the Term Commitment of such Term Lender. Each Competitive Note, each
Revolving Note and each Term 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, Revolving Loan or Term Loan, as
applicable, of such Bank, each payment or prepayment of principal of any
Competitive Loan, Revolving Loan or Term 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, Revolving
Loan or Term 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. The outstanding principal balance of Term Loan, as evidenced
by the relevant Term Note, shall be due on the last day of the Interest Period
applicable to such Loan (subject to refinancing as provided herein) and in
twenty (20) consecutive quarterly installments as follows:
January 2, 1998 $10,000,000
Six Month Anniversary Date of Effective Date $10,000,000
Nine Month Anniversary Date of Effective Date $10,000,000
One Year Anniversary Date of Effective Date $10,000,000
January 2, 1999 $5,000,000
Eighteen Month Anniversary Date of Effective Date $5,000,000
Twenty-One Month Anniversary Date of Effective Date $5,000,000
Two Year Anniversary Date of Effective Date $5,000,000
January 2, 2000 $15,000,000
Thirty Month Anniversary Date of Effective Date $15,000,000
Thirty-Three Month Anniversary Date of Effective Date $15,000,000
Three Year Anniversary Date of Effective Date $15,000,000
January 2, 2001 $20,000,000
Forty-Two Month Anniversary Date of Effective Date $20,000,000
Forty-Five Month Anniversary Date of Effective Date $20,000,000
Four Year Anniversary Date of Effective Date $20,000,000
January 2, 2002 $25,000,000
Fifty-Four Month Anniversary Date of Effective Date $25,000,000
Fifty-Seven Month Anniversary Date of Effective Date $25,000,000
Five Year Anniversary Date of the Effective Date $25,000,000
-----------
$300,000,000
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 Revolving Lender
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 Revolving Lender 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 Revolving 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 Revolving Commitment; provided, however, that (i) each partial reduction
of the Total Revolving 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 Revolving Commitment to an
amount less than the aggregate outstanding principal amount of the Competitive
Loans.
(c) Each reduction in the Total Revolving Commitment hereunder shall be made
ratably among the Revolving Lenders in accordance with their respective
Revolving Commitments. The Company shall pay to the Administrative Agent for the
account of the Revolving Lenders, on the date of each termination or reduction,
the Facility Fees on the amount of the Revolving 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 Revolving Lender) a notice
requesting that the Revolving Commitments be extended to the first anniversary
of the Maturity Date. Within 30 days after its receipt of any such notice, each
Revolving Lender shall notify the Administrative Agent of its willingness or
unwillingness so to extend its Commitment. Any Revolving Lender that shall fail
so to notify the Administrative Agent within such period shall be deemed to have
declined to extend its Revolving Commitment. If Revolving Lenders holding a
majority in amount of the Revolving Commitments agree to extend their Revolving
Commitments, the Administrative Agent shall so notify the Company and each
Revolving Lender that shall have consented to such request, whereupon (i) the
respective Revolving Commitments of such consenting Revolving Lenders and each
other Revolving Lender that shall consent to the extension of its Revolving
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
Revolving Loans of such consenting Revolving Lenders, such first anniversary and
(iii) the Revolving Commitments of the non-extending Revolving Lenders shall
terminate on the Maturity Date in effect prior to such extension and the
Revolving Loans and other amounts owed to such Revolving Lenders shall become
due and payable on such date. If Revolving Lenders holding a majority in amount
of the Revolving Commitments shall not have agreed to extend their Revolving
Commitments, then none of the Revolving Commitments shall be extended and the
Maturity Date shall remain unchanged. In the event that any Revolving Lender
shall have declined or been deemed to have declined to extend its Revolving
Commitment and the Revolving Commitments of other Revolving Lender shall have
been extended, the Company shall have the right, but not the obligation, at its
own expense, upon notice to such Revolving Lender and the Administrative Agent,
to replace such Revolving Lender at any time prior to the termination of such
Revolving Lender's Revolving Commitment (in accordance with and subject to the
restrictions contained in Section 9.04) with an assignee willing to agree that
its Revolving Commitment will terminate on the extended Maturity Date, and such
Revolving Lender 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 Revolving Lender
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 Revolving
Lender hereunder and all other amounts accrued for such Revolving Lender'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 the Term Loan and 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., Charlotte, North Carolina 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 Revolving 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 Revolving Loans outstanding will not exceed
the Total Revolving 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, (i) each Committed
Borrowing, each payment or prepayment of principal of any Committed Borrowing,
each payment of interest on the Revolving Loans, each payment of the Facility
Fees, each reduction of the Revolving Commitments and each refinancing of any
Borrowing with a Committed Borrowing of any Type, shall be made pro rata among
the Revolving Lenders in accordance with their respective Revolving Commitments
(or, if such Revolving Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Revolving
Loans) and (ii) each Term Borrowing, each payment or prepayment of principal on
the Term Loan and each refinancing of a Term Borrowing shall be made pro rata
among the Term Lenders in accordance with their respective Term Loan Commitments
(and, after the making of the Term Loan, in accordance with the principal amount
of their outstanding Term Loan). Each payment of principal of any Competitive
Borrowing shall be allocated pro rata among the Revolving Lenders 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
Revolving Lenders 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 Revolving Commitments of the Revolving Lenders at any time (but not
for purposes of Section 2.06(a)), each outstanding Competitive Borrowing shall
be deemed to have utilized the Revolving Commitments of the Banks (including
those Revolving Lenders which shall not have made Revolving Loans as part of
such Competitive Borrowing) pro rata in accordance with such respective
Revolving 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), Charlotte, North Carolina time, on the date when due in dollars to the
Administrative Agent at its offices at 101 North Tryon Street, Independence
Center, 15th Floor, NC1-001-15-02, Charlotte, North Carolina 28255, Attn: Agency
Services, 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 Facility 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 Closing 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
applicable 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.
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 June 30, 1997 (except as disclosed in the
Form 10Q for the second quarter of 1997).
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 Closing Date, showing
as of the Closing 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 Closing 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.
<PAGE>
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 June 30, 1997, included in the Financial
Statements, except for such properties and assets as have been disposed of since
June 30, 1997 (a) as no longer used or useful in the conduct of their respective
businesses or (b) 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. 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 Net Worth. 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, 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.
SECTION 3.16. Use of Proceeds.
The proceeds of Revolving Loans and the Term Loan will be used to purchase
common stock of the Company, to refinance existing Funded Debt and to finance
working capital and other corporate purposes.
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, Revolving Note or Term
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.
SECTION 4.02. Conditions to be Satisfied on the Effective Date.
In the case, and as conditions to the making, of the initial Borrowing
hereunder, the Administrative Agent shall have received:
(a) executed copies of this Agreement, the Notes and the Subsidiary
Guaranty;
(b) opinions of counsel to the Company and the Guarantors relating to this
Agreement, the Notes and the Subsidiary Guaranty from counsel and in such form
reasonably acceptable to the Administrative Agent and the Banks;
(c) certified copies of articles of incorporation, bylaws, resolutions, good
standing certificates, or their equivalent, for the Company and the Guarantors;
(d) payment of all fees due in connection with the effectiveness of this
Agreement;
(e) evidence of termination of existing $500 million Competitive Advance and
Revolving Credit Facility Loan Agreement dated as of February 16, 1994, as
amended and modified, among the Company, the banks named therein, Chemical Bank,
as Administrative Agent, and NationsBank of North Carolina, N.A., as Co-Agent;
and
(f) copies of the offer to purchase relating to shares to be purchased with
proceeds of the initial Borrowings under this Agreement.
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.
<PAGE>
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. Subsidiary Guarantors.
Where Domestic Subsidiaries of the Company which are not Guarantors hereunder
("Non-Guarantor Domestic Subsidiaries") shall at any time constitute more than
(the "Threshold Requirement"):
(a) in any instance for any such Non-Guarantor Domestic
Subsidiary, five percent (5%) of consolidated assets for the
Consolidated Group or five percent (5%) of consolidated revenues for
the Consolidated Group, or
(b) in the aggregate for all such Non-Guarantor Domestic
Subsidiaries, ten percent (10%) of consolidated assets for the
Consolidated Group or ten percent (10%) of consolidated revenues for
the Consolidated Group,
then the Company shall (i) promptly notify the Administrative Agent thereof, and
promptly cause such Domestic Subsidiary or Domestic Subsidiaries to become a
Guarantor by execution of a Joinder Agreement, such that immediately after
joinder as a Guarantor, the remaining Non-Guarantor Domestic Subsidiaries shall
not in any instance, or in the aggregate, exceed the Threshold Requirement, and
(ii) deliver with the Joinder Agreement, supporting resolutions, incumbency
certificates, corporate formation and organizational documentation and opinions
of counsel as the Administrative Agent may reasonably request.
SECTION 5.09. Use of Proceeds.
Proceeds of the Loans will be used solely for the purposes provided in
Section 3.16.
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 Subsidiary) 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
Net Worth.
SECTION 6.02. Indebtedness of Subsidiaries.
Permit any of the Subsidiaries to create, incur or assume any Indebtedness
other than (a) the Subsidiary Guaranty, (b) 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, (c) Indebtedness incurred in
connection with any Sale and Lease-Back Transaction permitted under Section
6.01(g), (d) Indebtedness owed to the Company or to any other direct or indirect
wholly-owned Subsidiary and (e) Indebtedness (in addition to that specified in
(a) through (d) 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 on a Pro Forma
Basis 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. Consolidated Leverage Ratio.
Permit the Consolidated Leverage Ratio as of the end of each fiscal quarter
to be greater than 3.5:1.0.
SECTION 6.06. Consolidated Fixed Charge Coverage Ratio.
Permit the Consolidated Fixed Charge Coverage Ratio as of the end of each
fiscal quarter to be less than 1.25:1.0.
SECTION 6.07. Consolidated Net Worth.
Permit Consolidated Net Worth at any time to be less than an amount equal to
85% of Consolidated Net Worth at June 30, 1997 (after adjustment to give effect
to share repurchases within one year after the Closing Date contemplated in
connection herewith up to $435,000,000 plus, beginning with the fiscal year
ending December 31, 1998, as of the end of each fiscal year, 50% of Consolidated
Net Income (but not less than zero) for the year then ended, such increases to
be cumulative.
<PAGE>
SECTION 6.08 Loans and Investments to Foreign Subsidiaires.
Permit additional loans and investments (other than extension of normal
credit terms in connection with the sale of inventory or providing of services
in the ordinary course of business) by the Company and its Domestic Subsidiaries
after the Closing Date (that is, in excess of loans and investments existing on
the Closing Date) to exceed $15,000,000 at any time outstanding.
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 connection with
this 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 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 or any of the other Credit Documents
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 guaranty given by any Guarantor shall cease to be in full force and
effect, or any Guarantor shall deny or disaffirm its obligations under the
guaranty;
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 notwithstanding.
ARTICLE VIII
The Administrative Agent
In order to expedite the transactions contemplated by this Agreement,
NationsBank, N.A. 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, officers,
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 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.
<PAGE>
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 NationsBank, N.A., either individually or in its capacity as
Administrative Agent, in all cases to it at
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-02
Charlotte, North Carolina 28255
Telephone: (704) 386-9046
Telecopy: (704) 388-9436
Attention of: Agency Services; and
(c) if to 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 Facility Fees of
any Bank without the written consent of each Bank affected thereby, (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) release all
or substantially all of the Guarantors from their obligations under the
Subsidiary Guaranty, 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 fifty percent (50%) of the
assigning Bank's respective Commitment and not less than $15,000,000 (except in
the case of assignments to a Bank or an affiliate of a Bank) without the prior
written consent of the Company, which consent will not be unreasonably withheld
or delayed, and the Administrative Agent, (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 $3,500 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 Moore & Van Allen,
PLLC, 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.
(i) 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.
<PAGE>
SECTION 9.07. Governing Law.
This Agreement and the Notes shall be construed in accordance with and
governed by the laws of the Commonwealth Of Virginia.
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.
<PAGE>
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 Virginia State court
or Federal court of the United States of America sitting in Richmond, Virginia,
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 Virginia 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 Virginia 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.
<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
NATIONSBANK, N.A.,
acting individually and as
Administrative Agent,
By:/s/ William K. Burton
--------------------------------
Name: William K. Burton
Title: Senior Vice President
<PAGE>
<TABLE>
<S> <C>
Schedule 2.01
to Credit Agreement
Lenders and Commitments
Revolving Term Loan
Lender Commitment Percent Commitment Percent
------ ---------- ------- ---------- -------
NationsBank, N.A.
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-02
Charlotte, NC 28255
Attn: Jeffrey Pugh, Agency Services
Ph: (704) 386-9046
Fx: (704) 388-9436
$600,000,000 100.0000% $300,000,000 100.0000%
with a copy to:
NationsBank, N.A.
1111 East Main Street
4th Floor Pavilion
Richmond, VA 23227
Attn: E. Turner Coggin
Ph: (804) 788-3455
Fx: (804) 788-3669
</TABLE>
<PAGE>
Schedule 3.07
Litigation
----------
None.
<PAGE>
Schedule 3.15
Environmental and Safety Matters
Ethyl Corporation
1. People of the State of Illinois filed suit against Ethyl Petroleum
Additives, Inc. December 16, 1996 (amended May 1997) for alleged
violations of Illinois air laws and regulations in connection with
alleged emissions for tertiary nonyl mercaptan from its Sauget
facility. Illinois is seeking $50,000 for each violation of the act
and $10,000 for each day during which the violation continued
thereafter. Ethyl is contesting the case; the parties are in
negotiations to resolve the matter.
2. The Texas Natural Resource Conservation Commission served a Notice of
Executive Director's Preliminary Report and Petition for a TNRCC Order
Assessing Administrative Penalties and Requiring Certain Actions of
Ethyl Corporation on April 7, 1995 in connection with alleged
violations of the Solid Waste Disposal Act, Texas Health and Safety
Code. The TNRCC sought $508,320 in administrative penalties. Ethyl is
contesting the petition; the parties are in negotiations to resolve
the matter.
<PAGE>
Schedule 6.01
Liens
-----
None.
<PAGE>
EXHIBIT A-1
FORM OF
COMPETITIVE BID REQUEST
NationsBank, N.A., as Administrative Agent
for the Banks referred to below
101 North Tryon Street, 15th Floor
NC1-001-15-02
Charlotte, NC 28255
Attn: Agency Services
[Date]
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 August 26, 1997 (as amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Company, the
Banks party thereto, and NationsBank, N.A., as Administrative 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)
- ------------------
(1) Eurodollar Competitive Loan or Fixed Rate Loan.
<PAGE>
(C) Interest Period and the last
day thereof(1)
(D) Principal Amount of
Competitive Borrowing(2) $ $ $
- ------------------
(1) Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
(2) Not less than $5,000,000 and in integral multiples thereof.
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:
NationsBank, N.A.
1111 East Main Street
4th Floor Pavilion
Richmond, VA 23277
Attn: E. Turner Coggin
<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 August 26, 1997 (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 and NationsBank,
N.A., as Administrative 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]. 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 $
- -------------------
(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>
Very truly yours,
NATIONSBANK, N.A.,
as Administrative Agent,
By
Title:
<PAGE>
EXHIBIT A-3
FORM OF
COMPETITIVE BID
NationsBank, N.A., as Administrative Agent
for the Banks referred to below
101 North Tryon Street, 15th Floor
NC1-001-15-02
Charlotte, NC 28255
Attn: Agency Services
[Date]
Ladies and Gentlemen:
The undersigned, [Name of Bank], refers to the Competitive Advance and
Revolving Credit Facility Agreement dated as of August 26, 1997 (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 and NationsBank, N.A., as Administrative 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 Agreement, 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:
NationsBank, N.A.
1111 East Main Street
4th Floor Pavilion
Richmond, VA 23277
Attn: E. Turner Coggin
- ----------------------
(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]
NationsBank, N.A., as Administrative Agent
for the Banks referred to below
101 North Tryon Street, 15th Floor
NC1-001-15-02
Charlotte, NC 28255
Attn: Agency Services
Ladies and Gentlemen:
The undersigned, Ethyl Corporation (the "Company"), refers to the
Competitive Advance and Revolving Credit Facility Agreement dated as of August
26, 1997 (as amended, modified, extended or restated from time to time, the
"Credit Agreement"), among the Company, the Banks party thereto and NationsBank,
N.A., as Administrative 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
NationsBank, N.A., as Administrative Agent
for the Banks referred to below
101 North Tryon Street, 15th Floor
NC1-001-15-02
Charlotte, NC 28255
Attn: Agency Services
[Date]
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 August 26, 1997 (as amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Company, the
Banks party thereto and NationsBank, N.A., as Administrative 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 $
(C) Interest rate basis
(D) Interest Period and the
last day thereof
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 Section 4.01(b) and (c)
of the Credit Agreement have been satisfied.
Very truly yours,
ETHYL CORPORATION,
By
Title: [Responsible Officer]
Copy to:
NationsBank, N.A.
1111 East Main Street
4th Floor Pavilion
Richmond, VA 23277
Attn: E. Turner Coggin
- ------------------
Not less than $10,000,000 and in integral multiples of $1,000,000.
Eurodollar Loan or ABR Loan.
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
$600,000,000 Richmond, Virginia
August 26, 1997
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 NationsBank, N.A. (the
"Agent"), at 101 N. Tryon Street, 15th Floor, NC1-001-15-02, Charlotte, North
Carolina 28255, Attn: Agency Services, (i) on the last day of each Interest
Period as defined in the Competitive Advance and Revolving Credit Facility
Agreement dated as of August 26, 1997, among the Company, the Banks party
thereto, and the 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 Six Hundred Million Dollars ($600,000,000) 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 Commonwealth of Virginia and any applicable laws of the United States of
America.
ETHYL CORPORATION,
By
Name:
Title:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Loans and Payments
Unpaid Name of
Payments Principal Person
Amount of Type of Interest Balance Making
Date of Loan Loan Period Principal Interest of Note Notation
---- ------- ---- ------ --------- -------- ------- --------
</TABLE>
<PAGE>
EXHIBIT B-2
FORM OF REVOLVING NOTE
$[_______________] Richmond, Virginia
August 26, 1997
FOR VALUE RECEIVED, the undersigned, ETHYL CORPORATION, a Virginia
corporation (the "Company"), hereby promises to pay to the order of (the
"Bank"), at the office of NationsBank, N.A. (the "Agent"), at 101 N. Tryon
Street, 15th Floor, NC1-001-15-02, Charlotte, North Carolina 28255, Attn:
Agency Services, on (i) the last day of each Interest Period as defined in the
Competitive Advance and Revolving Credit Facility Agreement dated as of August
26, 1997, among the Company, the Banks party thereto, and the Agent (as
amended, modified, extended or restated from time to time, the "
Credit Agreement"), the aggregate unpaid principal amount of all Revolving Loans
made by the Bank to the Company pursuant to Sections 2.02 and 2.04 of the Credit
Agreement to which such Interest Period applies and (ii) the Maturity Date, the
lesser of the principal sum of [__________] Dollars ($[_____]) and the aggregate
unpaid principal amount of all Revolving 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 Revolving 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 Revolving Note and the Credit Agreement.
This Revolving Note is one of the Revolving 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 Revolving Note shall be construed
in accordance with and governed by the laws of the Commonwealth of Virginia and
any applicable laws of the United States of America.
ETHYL CORPORATION,
By
Name:
Title:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Loans and Payments
Unpaid Name of
Payments Principal Person
Amount of Type of Interest Balance Making
Date of Loan Loan Period Principal Interest of Note Notation
---- ------- ---- ------ --------- -------- ------- --------
</TABLE>
<PAGE>
EXHIBIT B-3
FORM OF TERM NOTE
$[_______________] Richmond, Virginia
August 26, 1997
FOR VALUE RECEIVED, the undersigned, ETHYL CORPORATION, a Virginia
corporation (the "Company"), hereby promises to pay to the order of (the
"Bank"), at the office of NationsBank, N.A. (the "Agent"), at 101 N. Tryon
Street, 15th Floor, NC1-001-15-02, Charlotte, North Carolina 28255, Attn:
Agency Services, the principal amount of ___________ Dollars ($__________)on
(i) the last day of each Interest Period as defined in the Competitive Advance
and Revolving Credit Facility Agreement dated as of August 26, 1997, among the
Company, the Banks party thereto, and the Agent (as amended,
modified, extended or restated from time to time, the "Credit Agreement"), the
aggregate unpaid principal amount of the Term Loan made by the Bank to the
Company pursuant to Section 2.02 of the Credit Agreement to which such Interest
Period applies and (ii) the Bank's pro rata share of principal amortization
payments provided on the Term Loan pursuant to Section 2.07, 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 Term 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 Term Note and the Credit Agreement.
This Term Note is one of the Term 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 Term Note shall be construed in accordance with and
governed by the laws of the Commonwealth of Virginia and any applicable laws of
the United States of America.
ETHYL CORPORATION,
By
Name:
Title:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Loans and Payments
Unpaid Name of
Payments Principal Person
Amount of Type of Interest Balance Making
Date of Loan Loan Period Principal Interest of Note Notation
---- ------- ---- ------ --------- -------- ------- --------
</TABLE>
<PAGE>
EXHIBIT C
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Competitive Advance and Revolving Credit
Facility Agreement dated as of August 26, 1997, (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"),
and NationsBank, N.A., as administrative agent for the Banks (in such capacity,
the "Administrative 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 $3,500.
3. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia.
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):
<TABLE>
<S> <C>
Percentage Assigned
of Facility and Commitment
(set forth, to at least 8 decimals,
Principal Amount Assigned (and as a percentage of the Facility
Identifying Information as to and the aggregate Commitments
Facility individual Competitive Loans of all Banks thereunder)
-------- ---------------------------- ------------------------
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 NATIONSBANK, N.A., as Administrative Agent
By: By:
Name: Name:
Title: Title:
, as Assignee ETHYL CORPORATION,
By: By:
Name: Name:
Title: Title:
</TABLE>
<PAGE>
EXHIBIT D
ADMINISTRATIVE QUESTIONNAIRE
ETHYL CORPORATION
Please accurately complete the following information and return via FAX to
the attention of Jeffrey Pugh at NationsBank Agency Services as soon as
possible.
FAX Number: 704-388-9436
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 Jeffrey Pugh at 704-386-9046, telecopy 704-388-9436.
<PAGE>
EXHIBIT E
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT (the "Agreement"), dated as of ________________,
19__, is by and between ______________________, a ___________________ (the
"Applicant Guarantor"), and NATIONSBANK, N.A., in its capacity as Administrative
Agent under that certain Credit Agreement dated as of August 26, 1997 (as
amended and modified, the "Credit Agreement") by and among ETHYL CORPORATION, a
Virginia corporation, and the Banks identified therein and NationsBank, N.A., as
Administrative Agent. All of the defined terms in the Credit Agreement are
incorporated herein by reference.
The Applicant Guarantor has indicated its desire to become a Guarantor
or is required by the terms of Section 5.08 of the Credit Agreement to become, a
Guarantor under the Subsidiary Guaranty.
Accordingly, the Applicant Guarantor hereby agrees as follows with the
Administrative Agent, for the benefit of the Lenders:
1. The Applicant Guarantor hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Applicant Guarantor will be deemed
to be a party to the Subsidiary Guarantor and a "Guarantor" for all purposes
under the Subsidiary Guaranty, and shall have all of the obligations of a
Guarantor thereunder as if it had executed the Subsidiary Guarantor. The
Applicant Guarantor agrees to be bound by, all of the terms, provisions and
conditions contained in the Subsidiary Guaranty, including without limitation
all of the undertakings and waivers set forth therein.
Without limiting the generality of the foregoing terms of this paragraph 1, the
Applicant Guarantor hereby (A) jointly and severally together with the other
Guarantors, guarantees to each Bank and the Administrative Agent as provided in
the Subsidiary Guaranty, the prompt payment and performance of the Guaranteed
Obligations in the Subsidiary Guaranty in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof,
and (B) agrees that if any of the Guaranteed Obligations are not paid or
performed in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise), the Applicant Guarantor will, jointly
and severally together with the other Guarantors, promptly pay and perform the
same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration or otherwise) in accordance with the
terms of such extension or renewal.
2. The Applicant Guarantor acknowledges and confirms that it has
received a copy of the Subsidiary Guaranty, the Credit Agreement and the
Schedules and Exhibits thereto.
3. The Applicant Guarantor hereby waives acceptance by the
Administrative Agent and the Lenders of the guaranty by the Applicant Guarantor
under Section 4 of the Credit Agreement upon the execution of this Joinder
Agreement by the Applicant Guarantor.
4. 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 one contract.
5. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Applicant Guarantor has caused this Joinder
Agreement to be duly executed by its authorized officers, and the Administrative
Agent, for the benefit of the Lenders, has caused the same to be accepted by its
authorized officer, as of the day and year first above written.
APPLICANT GUARANTOR
By:_______________________________
Name:
Title:
Address for Notices:
Attn:______________________________
Telephone:
Telecopy:
Acknowledged and accepted:
NATIONSBANK, N.A., as Administrative Agent
By:_______________________________
Name:
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Introduction to the Consolidated Financial Statements: The Company completed
the acquisition of the worldwide lubricant additives business of Texaco Inc.
on February 29, 1996. The operating results of this business are included in
the Consolidated Financial Statements and related Notes to Financial
Statements from March 1, 1996 forward. At the close of business on February
28, 1994, the Company completed the spin-off of its wholly owned subsidiary,
Albemarle Corporation ("Albemarle"), in the form of a tax-free stock dividend
to Ethyl common shareholders. The operating results of what is now Albemarle
are included in the financial statements for the two months ended February 28,
1994. (See Notes 2 and 3 on pages 32 and 33, respectively.)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars Except Per-Share Amounts) Ethyl Corporation & Subsidiaries
Years ended December 31 1996 1995 1994
<S> <C> <C> <C>
Net sales $1,149,651 $960,450 $1,174,086
Cost of goods sold 804,623 636,056 776,508
-------- -------- ----------
Gross profit 345,028 324,394 397,578
Selling, general and administrative expenses 103,626 100,062 144,455
Research, development and testing expenses 71,723 77,153 82,661
Special charges - 4,750 2,720
-------- -------- ----------
Operating profit 169,679 142,429 167,742
Interest and financing expenses 24,268 26,833 25,378
Other (income) expense, net (361) (580) 1,218
-------- -------- ----------
Income before income taxes 145,772 116,176 141,146
Income taxes 52,800 42,213 43,391
-------- -------- ----------
Net income $ 92,972 $ 73,963 $ 97,755
======== ======== ==========
Earnings per share $ .78 $ .62 $ .83
<FN> ======== ======== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE> 26
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars Except Share Data)
- - ----------------------------------------------------------------------------
December 31 1996 1995
- - ----------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 20,148 $ 29,972
Accounts receivable, less allowance for doubtful
accounts (1996 - $2,375; 1995 - $2,317) 177,788 169,451
Inventories:
Finished goods and work-in-process 179,322 146,010
Raw materials 21,498 13,285
Stores, supplies and other 9,782 6,587
--------- ---------
210,602 165,882
Deferred income taxes and prepaid expenses 18,627 23,207
--------- ---------
Total current assets 427,165 388,512
--------- ---------
Property, plant and equipment, at cost 764,145 713,635
Less accumulated depreciation and amortization (333,268) (285,327)
--------- ---------
Net property, plant and equipment 430,877 428,308
--------- ---------
Other assets and deferred charges 159,470 151,833
Goodwill and other intangibles - net of amortization 77,657 15,134
--------- ---------
Total assets $1,095,169 $ 983,787
========= =========
See accompanying notes to financial statements.
<PAGE> 27
Ethyl Corporation & Subsidiaries
December 31 1996 1995
Liabilities & shareholders' equity
Current liabilities:
Accounts payable $ 74,939 $ 55,903
Accrued expenses 64,167 58,682
Dividends payable 14,806 14,806
Long-term debt, current portion 6,701 -
Income taxes payable 20,298 16,379
--------- --------
Total current liabilities 180,911 145,770
--------- --------
Long-term debt 325,480 302,973
Other noncurrent liabilities 84,502 84,171
Deferred income taxes 64,376 40,745
Shareholders' equity:
Common stock ($1 par value)
Issued - 118,443,835 in 1996 and 1995 118,444 118,444
Additional paid-in capital 2,799 2,799
Foreign currency translation adjustments (1,888) 2,090
Retained earnings 320,545 286,795
--------- --------
439,900 410,128
--------- --------
Total liabilities & shareholders' equity $1,095,169 $ 983,787
========= ========
See accompanying notes to financial statements.
<PAGE> 28
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In Thousands of Dollars Except Share Data) Ethyl Corporation & Subsidiaries
- - -----------------------------------------------------------------------------------------------------------------
Years Ended December 31 1996 1995 1994
- - -----------------------------------------------------------------------------------------------------------------
Shares Amounts Shares Amounts Shares Amounts
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common stock
(authorized 400,000,000 shares)
Beginning balance 118,443,835 $118,444 118,434,401 $118,434 118,405,287 $118,405
Issued upon exercise of
stock options and SARs - - 9,434 10 75,723 76
Purchased and retired - - - - (46,609) (47)
----------- ------- ----------- ------- ----------- -------
Ending balance 118,443,835 118,444 118,443,835 118,444 118,434,401 118,434
=========== ------- =========== ------- =========== -------
Additional paid-in capital
Beginning balance 2,799 2,706 2,450
Exercise of stock options and SARs - 93 858
Retirement of purchased common stock - - (602)
------- ------- -------
Ending balance 2,799 2,799 2,706
------- ------- -------
Foreign currency translation adjustments
Beginning balance 2,090 (2,253) (1,757)
Translation adjustments (3,978) 4,343 3,647
Spin-off of Albemarle Corporation - - (4,143)
------- ------- -------
Ending balance (1,888) 2,090 (2,253)
------- ------- -------
Retained earnings
Beginning balance 286,795 272,050 633,483
Net income 92,972 73,963 97,755
Cash dividends declared:
First Preferred stock, $6.00 per share - - (12)
Common stock, $.50 per share (59,222) (59,218) (59,215)
Dividend of common stock of
Albemarle Corporation, at book value - - (399,957)
Redemption of 6% First Preferred stock - - (4)
------- ------- -------
Ending balance 320,545 286,795 272,050
------- ------- -------
Total shareholders' equity $439,900 $410,128 $390,937
======= ======= =======
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE> 29
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In Thousands of Dollars) Ethyl Corporation & Subsidiaries
- - ---------------------------------------------------------------------------------------------------------
Years ended December 31 1996 1995 1994
- - ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and cash equivalents at beginning of year $ 29,972 $ 31,166 $ 48,201
-------- --------- ----------
Cash flows from operating activities:
Net income 92,972 73,963 97,755
Adjustments to reconcile income to cash flows from operating activities:
Depreciation and amortization 61,919 49,224 53,983
Special charges - 4,750 10,720
Gain on sale of subsidiary - - (4,150)
Deferred income taxes 7,860 15,714 10,262
Changes in assets and liabilities, net of effects from acquisition:
Decrease (increase) in accounts receivable 18,710 64,771 (29,701)
(Increase) decrease in inventories (1,241) (15,560) 9,166
Decrease (increase) in prepaid expenses 5,239 (2,366) (5,516)
(Decrease) in accounts payable and accrued expenses (78) (37,948) (2,621)
Increase (decrease) in income taxes payable 2,741 (1,208) (6,903)
Other, net (2,884) (2,003) (10,775)
-------- --------- ----------
Cash provided from operating activities 185,238 149,337 122,220
-------- --------- ----------
Cash flows from investing activities:
Capital expenditures (29,403) (44,831) (147,260)
Acquisition of business (net of $1,245 cash acquired) (133,032) - -
Proceeds from sale of subsidiary - - 60,500
Other, net (2,405) 217 (8,234)
-------- --------- ----------
Cash used in investing activities (164,840) (44,614) (94,994)
-------- --------- ----------
Cash flows from financing activities:
Additional long-term debt 29,000 153,000 47,400
Repayment of long-term debt - (200,000) -
Cash dividends paid (59,222) (59,220) (62,184)
Cash and cash equivalents of Albemarle spun off
as a dividend on February 28, 1994 - - (29,332)
Repurchases of capital stock - - (649)
Other, net - 303 504
-------- --------- ----------
Cash used in financing activities (30,222) (105,917) (44,261)
-------- --------- ----------
(Decrease) in cash and cash equivalents (9,824) (1,194) (17,035)
-------- --------- ----------
Cash and cash equivalents at end of year $ 20,148 $ 29,972 $ 31,166
======== ========= ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS
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 - The Company completed the acquisition of the
worldwide lubricant additives business of Texaco Inc. ("Texaco") on February
29, 1996. The Consolidated Financial Statements and related Notes to Financial
Statements include the results of operation of the Texaco additives business
from March 1, 1996 forward. The balance sheet accounts of this business are
included in the Consolidated Balance Sheet at December 31, 1996. At the close
of business on February 28, 1994, the Company completed the spin-off of its
wholly owned subsidiary, Albemarle Corporation ("Albemarle"), in the form of a
tax-free stock dividend to Ethyl common shareholders. The operating results of
what is now Albemarle are included in the consolidated financial statements
and related Notes to Financial Statements for the two months ended February
28, 1994. Certain amounts in the accompanying financial statements and notes
thereto have been reclassified 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 at the end of the period
for the balance sheet and a weighted-average rate for the period on the
statement of income. Translation adjustments (net of deferred income tax
liability of $56,000 and income tax benefits of $262,000 and $1,481,000 in
1996, 1995 and 1994, 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 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 capitalized
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 therein are included in
income. Depreciation is computed primarily by the straight-line method based
on the estimated useful lives of the assets.
The Company re-evaluates property, plant and equipment based on fair values
or undiscounted operating cash flows whenever significant events or changes
occur which might impair recovery of recorded costs, and it writes down
recorded costs of the assets to fair value when recorded costs, prior to
impairment, are higher.
ENVIRONMENTAL COMPLIANCE & REMEDIATION - Environmental compliance costs
include the costs 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 including post-remediation monitoring costs at
facilities or off-plant disposal sites that relate to an existing condition
caused primarily 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
($6,559,000 and $8,500,000 at December 31, 1996 and 1995, respectively, net of
accumulated amortization) is being amortized on a straight-line basis, over a
period of ten years. Other intangibles ($69,446,000 and $4,982,000 at December
31, 1996 and 1995, respectively, net of accumulated amortization) are being
amortized on a straight-line basis primarily over periods from four to twenty
years. Amortization of goodwill and other intangibles amounted to $8,676,000
for 1996, $4,504,000 for 1995 and $9,379,000 for 1994. Accumulated
amortization of goodwill and other intangibles was $26,436,000 and $17,760,000
at the end of 1996 and 1995, respectively. The Company re-evaluates goodwill
<PAGE> 31
and other intangibles based on fair values or undiscounted operating cash
flows whenever significant events or changes occur which might impair recovery
of recorded costs, and it writes down recorded costs of the assets to fair
value when recorded costs, prior to impairment, are higher.
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 immaterial and 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.
PROFIT-SHARING & EMPLOYEE SAVINGS PLAN - The Company's employees
participate in defined contribution profit-sharing and employee savings plans,
which are generally available to all full-time and hourly employees. Certain
other employees, who are covered by a collective bargaining agreement, may
participate pursuant to the terms of such bargaining agreement. The plans are
funded with contributions by participants and the Company. The Company has
recorded expenses of $2,952,000, $2,703,000 and $3,321,000 in 1996, 1995 and
1994, respectively, related to these plans.
RESEARCH, DEVELOPMENT & TESTING EXPENSES - Company-sponsored research,
development and testing expenses related to present and future products are
expensed as incurred. Research and development expenses determined in
accordance with FASB Statement No. 2, "Accounting for Research and Development
Costs," were $47.4 million, $54.5 million and $49.7 million in 1996, 1995 and
1994, respectively.
INCOME TAXES - Income taxes are determined based on FASB Statement No. 109,
"Accounting for Income Taxes." 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.
DERIVATIVE INSTRUMENTS & HEDGING OF FOREIGN CURRENCY EXPOSURES - The
Company's general practice has been not to make use of derivative financial
instruments or hedging transactions but rather to manage foreign currency
exposure by attempting to maintain assets and liabilities in approximate
balance for each of the major foreign currencies to which the Company has risk
exposure. At December 31, 1996, the Company was not a party to any derivative
financial instruments or hedging transactions.
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 118,448,000 in 1996, 118,446,000 in 1995, and 118,451,000 in
1994.
STOCK-BASED COMPENSATION - The Company currently accounts for its
stock-based compensation plans pursuant to the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB Opinion No. 25").
In 1995, the FASB issued Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation." This standard, which was
effective for the year ended December 31, 1996, allows companies to account
for stock-based compensation plans using a fair-value-based method or continue
measuring compensation expense using the intrinsic value method prescribed in
APB Opinion No. 25. Companies electing to continue using the intrinsic value
method must disclose PRO FORMA net income and earnings per share as if the
fair-value-based method of accounting had been applied. The Company has made
such required disclosures in Note 13 which begins on page 35.
ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ somewhat from those estimates.
<PAGE> 32
2. ACQUISITION OF TEXACO LUBRICANT ADDITIVES BUSINESS
On February 29, 1996, the Company completed the acquisition of the worldwide
lubricant additives business of Texaco Inc., ("Texaco") including
manufacturing and blending facilities (with an allocated value of $27.1
million), identifiable intangibles (with an allocated value of $72.1 million)
and working capital. The acquisition (accounted for under the purchase
method), included a cash payment of $134.3 million, an estimated $6.4 million
for decommissioning and related costs for those acquired facilities that are
being phased out of production and shutdown during 1997, certain liabilities
assumed, and deferred taxes, as well as a future contingent payment of up to
$60 million. The cash payment was financed primarily under the Company's
revolving credit agreement. The payment of up to $60 million will become due
on February 26, 1999, with interest payable on the contingent debt until such
date. The actual amount of the contingent payment and total interest will be
determined using an agreed-upon formula based on volumes of certain acquired
product lines shipped during the calendar years 1996 through 1998, as
specified in the contingent note agreement. Texaco retained substantially all
noncurrent liabilities.
As the Company's 1996 financial statements only include ten months of
operations of the recently acquired lubricant additives business, the
following selected unaudited PRO FORMA information is being provided to
present a summary of the combined results of the Company and the worldwide
lubricant additives business of Texaco as if the acquisition had occurred as
of January 1, 1996 and 1995, giving effect to purchase accounting adjustments.
The PRO FORMA data is for informational purposes only and may not necessarily
reflect the results of operations of Ethyl had the acquired business operated
as part of the Company for the years ended December 31, 1996 and 1995.
(In Thousands Except Per-Share Amounts)
- - -----------------------------------------------------------------------------
Year Ended December 31 1996 1995
PRO FORMA PRO FORMA
Historical (unaudited) Historical (unaudited)
- - -----------------------------------------------------------------------------
Net sales $1,149,651 $ 1,198,826 $960,450 $1,304,012
Net income $ 92,972 $ 94,504 $ 73,963 $ 86,106
Earnings per share $ .78 $ .80 $ .62 $ .73
- - -----------------------------------------------------------------------------
The PRO FORMA amounts reflect the results of operations for the Company, the
acquired business, and the following purchase accounting adjustments for the
periods presented:
- - - Elimination of sales and costs of goods sold on
transactions between the Company and Texaco, primarily including certain of
the acquired business' blending and packaging operations pursuant to the
Company's agreement to blend and/or package certain products for Texaco
under a tolling arrangement. The tolling contract calls for the Company to
process, for a fee, products that the Company neither owns nor sells.
- - - Depreciation on fixed assets and amortization of intangible assets based on
the purchase price allocation for each period presented.
- - - Efficiencies realized in selling, general and administrative expenses, as
well as research, development and testing expenses, based on staffing levels
and the number of activities and research, development and testing and other
procedures actually being integrated into the combined company.
- - - Elimination of historical interest expense of the acquired business as well
as the addition of the incremental interest expense on additional revolving
credit debt that would have been incurred to finance the acquisition.
- - - Estimated income tax effect on the PRO FORMA adjustments.
<PAGE> 33
3. SPIN-OFF OF ALBEMARLE CORPORATION
At the close of business on February 28, 1994, Ethyl completed the
spin-off of its wholly owned subsidiary, Albemarle, in the form of a tax-free
stock dividend. Following the spin-off, Albemarle owned, directly or
indirectly, the olefins and derivatives, bromine chemicals and specialty
chemicals businesses formerly owned directly or indirectly by the Company. One
share of Albemarle common stock was distributed to Ethyl common shareholders
for every two shares of Ethyl common stock held. Following the distribution,
in the opinion of management, expenses of Ethyl would not have differed
materially from the amounts remaining in the Ethyl consolidated financial
statements after eliminating those expenses attributable to Albemarle.
SUPPLEMENTAL PRO FORMA CONDENSED STATEMENTS OF INCOME (UNAUDITED) - As a
result of the aforementioned distribution, the Company believes that the
following PRO FORMA Condensed Statements of Income are important to enable the
reader to obtain a meaningful understanding of the Company's results of
operations for 1994. The PRO FORMA Condensed Statements of Income 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 what the earnings or results of operations of Ethyl would
have been had Albemarle operated as a separate, independent company.
<TABLE>
<CAPTION>
PRO FORMA CONDENSED STATEMENTS OF INCOME (UNAUDITED)
- - -------------------------------------------------------------------------------
(In Thousands Except Per-Share Amounts)
- - -------------------------------------------------------------------------------
Year Ended December 31, 1994 Historical Adjustments(a) ProForma
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $1,174,086 $(155,064) $1,019,022
Cost of goods sold 776,508 (119,086) 657,422
--------- -------- ---------
Gross profit 397,578 (35,978) 361,600
Selling, general & administrative expenses 144,455 (14,471) 129,984
Research, development & testing expenses 82,661 (8,662) 73,999
Special charges 2,720 - 2,720
--------- -------- ---------
Operating profit 167,742 (12,845) 154,897
Interest & financing expenses 25,378 (2,873)(b) 22,505
Other expense, net 1,218 543 1,761
--------- -------- ---------
Income before income taxes 141,146 (10,515) 130,631
Income taxes 43,391 (4,239)(c) 39,152
--------- -------- ---------
Net income $ 97,755 $ (6,276) $ 91,479
========= ======== ========
Earnings per share(d) $ .83 $ .78
========= ========
</TABLE>
NOTES:
a. To eliminate the historical income and expenses of Albemarle for the period
presented, as if the distribution had occurred on January 1, 1994.
b. 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, 1994), including debt under the credit facility transferred from
Ethyl. Interest eliminated under the credit facility was computed at the
weighted-average interest rate of 3.8% for the two months ended February
28, 1994, less capitalized interest of $124,000. Interest rates used 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 period presented. Such rates were used 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 period presented.
c. To record the estimated income tax effect for the pro forma adjustments
described in Notes (a) and (b) for the two months ended February 28, 1994.
d. Historical and PRO FORMA earnings per share, based on net income 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 period presented.
<PAGE> 34
4. SUPPLEMENTAL CASH-FLOW INFORMATION
Supplemental information for the Consolidated Statements of Cash Flows is as
follows:
(In Thousands)
1996 1995 1994
Cash paid during the year for:
Income taxes $37,409 $ 22,881 $45,513
Interest and financing
expenses(net of capitalization) 24,644 31,390 24,118
Supplemental investing and
financing non-cash transactions:
Dividend of common stock of Albemarle
Corporation at book value - - 399,957
Liabilities assumed in connection with
the acquisition of the Texaco lubricant
additives business (primarily deferred
taxes and working capital liabilities) 63,610 - -
Also see Notes 2 and 3 with respect to acquired and spun-off operations.
5. GEOGRAPHIC AREAS
The geographic areas table on page 23 (and the related introduction and
notes on pages 22 and 23) is an integral part of the consolidated financial
statements. Information about the Company's geographic areas, as well as major
customers, is presented for the years 1992-1996. The discussion of geographic
areas information for the years 1994-1996 on page 24 is unaudited.
6. CASH & CASH EQUIVALENTS
Cash and cash equivalents consist of the following:
(In Thousands)
1996 1995
------- -------
Cash and time deposits $13,894 $21,167
Short-term securities 6,254 8,805
------- -------
Total $20,148 $29,972
======= =======
Short-term securities (generally commercial paper maturing in less than 90
days) are stated at cost plus accrued income, which approximates market value.
7. INVENTORIES
Domestic inventories stated on the LIFO basis amounted to $103,521,000 and
$58,750,000 at December 31, 1996 and 1995, respectively, which are below
replacement cost by approximately $16,875,000 and $20,310,000, respectively.
8. DEFERRED INCOME TAXES & PREPAID EXPENSES
Deferred income taxes and prepaid expenses consist of the following:
(In Thousands)
1996 1995
------- -------
Deferred income taxes - current $15,907 $15,499
Prepaid expenses 2,720 7,708
------- -------
Total $18,627 $23,207
======= =======
9. PROPERTY, PLANT & EQUIPMENT, AT COST
Property, plant and equipment, at cost, consist of the following:
(In Thousands)
1996 1995
------- -------
Land $ 54,646 $ 49,346
Land improvements 30,565 29,516
Buildings 100,881 94,270
Machinery and equipment 548,178 489,511
Capitalized interest 21,638 21,004
Construction in progress 8,237 29,988
------- -------
Total $764,145 $713,635
======= =======
The cost of the property, plant and equipment is depreciated, generally by
the straight-line method, over the following useful lives:
Land improvements 5-30 years
Buildings 10-40 years
Machinery and equipment 3-25 years
Interest capitalized on significant capital projects in 1996, 1995 and 1994
was $634,000, $2,223,000 and $8,060,000, respectively, while amortization of
capitalized interest (which is included in depreciation expense) was
$1,864,000, $1,878,000, and $1,294,000, respectively.
<PAGE> 35
10. ACCRUED EXPENSES
Accrued expenses consist of the following:
(In Thousands)
1996 1995
Employee benefits, payroll and related taxes $ 15,356 $ 13,078
Other 48,811 45,604
-------- --------
Total $ 64,167 $ 58,682
======== ========
11. LONG-TERM DEBT
A summary of long-term debt maturities at December 31, 1996, is listed
below:
(In Thousands)
Variable-
Variable- Rate
Rate Medium-
Bank Term
Loans Notes Total
1997 $ 6,750 $ 6,750
1998 6,750 6,750
1999 $ 9,000 6,750 15,750
2000 290,000 6,750 296,750
2001 6,750 6,750
-------- -------- --------
$299,000 $ 33,750 332,750
======== ========
Less unamortized discount (569)
--------
Total long-term debt at December 31, 1996 332,181
Less amount maturing during 1997
(net of unamortized discount) 6,701
--------
Amount maturing after 1997 $325,480
========
The Company has an unsecured competitive advance and revolving credit
facility agreement with a group of banks permitting it to borrow up to $500
million. 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 three
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 (as defined) and consolidated
indebtedness and maintenance of minimum shareholders' equity of at least $250
million. The Company was in compliance with such covenants at December 31,
1996. Under this agreement, $290 million was borrowed at December 31, 1996.
Amounts outstanding at February 16, 2000, mature on that date. Average
interest rates on variable-rate bank loans during 1996 and 1995 were 5.9% and
6.4%, respectively.
The Company also has four uncommitted agreements with banks providing for
immediate borrowings up to a maximum of $155 million at the individual bank's
money-market rate. No amounts were borrowed under these agreements at December
31, 1996. The average interest rates on borrowings during 1996 and 1995 under
these agreements were 5.6% and 6.1%, respectively.
The Company also has a $9 million variable-rate LIBOR based loan with
NationsBank, N.A. which is due February 27, 1999. The current interest rate is
determined every 90 days. The agreement contains a number of convenants,
representations and events of default typical of a loan of this nature. The
average interest rate was 5.76% during 1996.
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.
12. OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities consist of the following:
(In Thousands)
1996 1995
Provision for environmental remediation
and future shutdown costs $50,954 $52,511
Other 33,548 31,660
------- -------
Total $84,502 $84,171
======= =======
13. CAPITAL STOCK & STOCK OPTIONS
SHAREHOLDER RIGHTS PLAN - Pursuant to a Rights Agreement dated September 24,
1987, the Company distributed one Preferred Stock, Series B purchase right
("Right") for each outstanding share of Common Stock to the shareholders of
record on October 5, 1987. Unless the Board of Directors directs otherwise,
one additional Right will be issued with respect to each additional share of
Common Stock issued prior to the occurrence of certain potential
change-in-control events. The Rights become exercisable upon certain potential
change-in-control events. When exercisable, the Rights entitle holders to
purchase 2.522 one-thousandth of a share (subject to adjustment) of Preferred
Stock, Series B, and upon the occurrence of certain events, the Rights entitle
holders to purchase shares of Common Stock at a substantial discount. Exercise
of the Rights will cause substantial dilution to a person or group attempting
<PAGE> 36
to acquire control of the Company without the approval of the Board of
Directors. The Board of Directors may, under certain circumstances, cause the
Company to redeem the Rights in whole, but not in part, at a price of $.01 per
Right. The Rights expire on September 24, 1997, if not redeemed earlier. The
Rights have no voting or dividend privileges. Until such time as the Rights
become exercisable, they are attached to and do not trade separately from the
Common Stock.
REDEEMABLE PREFERRED STOCK - The Cumulative First Preferred 6% Series A
stock of 2,002 shares, which was previously outstanding, was called for
redemption in December 1994 at $101 per share, plus accrued dividends.
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 an exercise price not less than the fair market value on the
date of grant and for a term not to exceed 10 years. Certain options become
exercisable upon the attainment of specified earnings objectives or market
price appreciation of the Company's common stock. The remaining options become
exercisable one year after the grant date. In addition to the stock options,
the recipient 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.
During 1994, the Board of Directors of the Company unanimously adopted and
the shareholders approved an amendment to the Company's incentive stock option
plan increasing the number of shares issuable under the option plan by
5,900,000 to 11,900,000 and establishing an annual limit of 200,000 on the
number of shares for which options may be granted to an individual. At
December 31, 1996 and 1995, 5,964,925 and 6,156,014 shares, respectively, were
available for grant.
A summary of the status of the Company's stock option plan as of December
31, 1994, 1995, and 1996, and changes during the years ending on those dates
is presented below:
Weighted-
Average
Exercise
Shares Price
- - ----------------------------------------------------------------------------
Outstanding at January 1, 1994 607,613 $17.24
Granted 3,042,000 12.50
Adjustment for Albemarle Spin-off 168,650 11.56
Exercised (73,475) 12.29
Surrendered upon exercise of SARs (48,402) 12.17
Lapsed (413,112) 15.20
---------
Outstanding at December 31, 1994 3,283,274 12.40
Exercised (9,434) 10.85
---------
Outstanding at December 31, 1995 3,273,840 12.40
Granted 280,000 8.88
Lapsed (88,911) 12.73
---------
Outstanding at December 31, 1996 3,464,929 12.11
=========
Exercisable at:
December 31, 1994 241,274
December 31, 1995 944,240
December 31, 1996 895,329
The fair value, as of the grant date, of each option granted in 1996 was
estimated using a Black-Scholes type option-pricing model, as prescribed by
FASB Statement No. 123. The following assumptions were used for valuing the
options granted in 1996:
Dividend yield 4.6%
Expected volatility 19.4%
Risk-free interest rate 6.3%
Expected life 7 years
Based on these assumptions, the stock options granted in 1996 have an
estimated average value, as of the grant date, of $1.63 per share.
Had compensation cost for the Company stock option plan been determined
based on the fair value at the grant date consistent with the fair value
method prescribed by FASB Statement No. 123, the Company's 1996 net income
would have been reduced on a PRO FORMA basis from $92,972,000 to $92,881,000.
Earnings per share would have been unchanged at $.78.
However, the Company continues to apply APB Opinion No. 25 and related
interpretations in accounting for the stock option plan. Accordingly, no
compensation cost has been recognized for the stock option plan.
<PAGE> 37
The following tables summarize information about the stock options outstanding
or exercisable at December 31, 1996:
Options Outstanding
- - -----------------------------------------------------
Range of Number Weighted-Average
Exercise Outstanding Remaining Exercise
Prices at 12/31/96 Contractual Life Price
- - -----------------------------------------------------
$8.88 280,000 9.9 years $ 8.88
9.00 - 9.86 59,681 3.1 9.59
11.22 - 11.71 201,328 3.9 11.51
12.50 - 12.83 2,909,270 7.2 12.51
14.11 14,650 1.0 14.11
---------
8.88 - 14.11 3,464,929 7.1 12.11
=========
Options Exercisable
------------------------------------------------
Range of Number
Exercise Exercisable Weighted-Average
Prices at 12/31/96 Exercise Price
------------------------------------------------
$ 8.88 - $ 8.88
9.00 - 9.86 59,681 9.59
11.22 - 11.71 201,328 11.51
12.50 - 12.83 619,670 12.53
14.11 14,650 14.11
-------
8.88 - 14.11 895,329 12.13
=======
14. LOSSES AND GAINS ON FOREIGN CURRENCY
Foreign currency transaction adjustments resulted in a loss of $3,158,000
in 1996 and gains of $1,827,000 in 1995 and $1,968,000 in 1994 and are
included in income.
15. CONTRACTUAL COMMITMENTS & CONTINGENCIES
Rental expense was $17,126,000 for 1996, $13,703,000 for 1995 and
$17,120,000 for 1994.
The Company has a number of operating lease agreements primarily for
office space, transportation equipment and storage facilities.
Future lease payments for the next five years for all noncancelable leases
as of December 31, 1996, are $8,891,000 for 1997, $4,343,000 for 1998,
$2,270,000 for 1999, $1,334,000 for 2000, $721,000 for 2001, and amounts
payable after 2001 are $2,613,000.
Contractual obligations for plant construction and purchases of real
property and equipment amounted to approximately $2,900,000 at December 31,
1996.
The Company and Albemarle entered into agreements, dated as of February
28, 1994, pursuant to which the Company and Albemarle agreed to coordinate
certain facilities and services of adjacent operating sites at plants in
Orangeburg, South Carolina; Houston, Texas; and Feluy, Belgium. On March 1,
1996, certain of the agreements were transferred to Amoco Chemical Company as
part of Albemarle's sale of a portion of its business. In addition, the
Company and Albemarle entered into agreements providing for the blending by
Albemarle of Ethyl's additive products and the production of antioxidants and
manganese-based antiknock compounds at the Orangeburg plant. Ethyl was billed
approximately $34 million in 1996 and $48 million during both 1995 and 1994 in
connection with these agreements. Also, as discussed in prior years, the
Company and Albemarle entered into a tax sharing agreement and an
indemnification agreement, which together allocate taxes and various
indemnifications, respectively, for periods prior to February 28, 1994.
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 are expected to 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.
At December 31, 1996 and 1995, the Company had accruals of $41,200,000 and
$41,600,000, respectively, for environmental liabilities. In developing its
estimates of environmental remediation and monitoring costs, the Company
considers, among other things, risk-based assessments of the contamination,
currently available technological solutions, alternative cleanup methods, and
prior Company experience in remediation of contaminated sites, all of which
are based on presently enacted laws and regulations. Amounts accrued do not
take into consideration claims for recoveries from insurance. Although studies
have not been completed for certain sites, some amounts generally are
estimated to be expended over extended periods. When specific amounts within a
range cannot be determined, the Company has accrued the minimum amount in that
range.
Environmental exposures are difficult to assess and estimate for numerous
reasons including the complexity and differing interpretations of regulations,
lack of reliable data, multiplicity of possible solutions, and length of time.
As the scope of the Company's environmental contingencies becomes more clearly
defined, it is possible that expenditures in excess of those amounts already
accrued may be necessary. However, management believes that these overall
costs are expected to be incurred over an extended period of time and, as a
result, such contingencies are not expected to have a material impact on the
consolidated financial position or liquidity of the Company, but they could
have a material adverse effect on the Company's results of operations in any
given future quarterly or annual period.
The Company has agreed to a contingent note payable of up to $60 million as
part of the acquisition of the lubricant additives business of Texaco Inc. See
Note 2 on page 32 for additional information.
<PAGE> 38
16. 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 and hourly plans.
Some of the changes from 1994 to 1995 in the following tables reflect the
effects of the spin-off of Albemarle at the close of business on February 28,
1994. The impact from the related hourly plans and a portion of the salaried
plan identified with employees who were transferred to Albemarle is included
for the two months of 1994.
The components of U.S. net pension income are as follows:
(In Thousands)
Years ended December 31 1996 1995 1994
------- ------- -------
Return on plan assets:
Actual return $ 67,490 $ 48,411 $ 32,018
Actual return (higher)
lower than expected (35,451) (17,612) 3,256
------- ------- -------
Expected return 32,039 30,799 35,274
Amortization of transition asset 4,277 4,277 4,730
Service cost (benefits earned
during the year) (4,210) (2,821) (5,462)
Interest cost on projected
benefit obligation (21,428) (22,753) (24,122)
Amortization of prior
service costs (2,816) (2,683) (2,958)
------- ------- -------
Net pension income $ 7,862 $ 6,819 $ 7,462
======= ======= =======
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 assumed
to be 7.0% at December 31, 1996 and 1995, and 8.25% at December 31, 1994. 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, 1996,
1995 and 1994. The expected long-term rate of return on plan assets was
assumed to be 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 1996 1995
Plan assets at fair value $426,671 $387,484
Less actuarial present value of
benefit obligations:
Accumulated benefit obligation
(including vested benefits of
$293,134 and $298,293, respectively) 297,031 302,079
Projected compensation increase 20,394 18,015
------- -------
Projected benefit obligation 317,425 320,094
------- -------
Plan assets in excess of projected
benefit obligation 109,246 67,390
Unrecognized net (gain) loss (34,142) 1,609
Unrecognized transition asset being
amortized principally over 16 years (22,307) (26,584)
Unrecognized prior-service costs
being amortized 21,069 22,897
------- -------
Prepaid pension expense $ 73,866 $ 65,312
======= =======
One of the Company's U.S. pension plans is the supplemental executive
retirement plan ("SERP"), which is an unfunded defined benefit plan. The
actuarial present value of accumulated benefit obligations related to the
Company's SERP totalled $12,451,000 and $11,999,000 at December 31, 1996 and
1995, respectively. The prepaid pension expense asset in the table above is
net of an accrued pension expense liability of $11,164,000 and $10,443,000
related to the SERP at December 31, 1996 and 1995, respectively. Pension
expense for the SERP totalled $1,410,000, $1,456,000 and $1,459,000 for 1996,
1995 and 1994, respectively.
<PAGE> 39
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. Pension cost for 1996, 1995 and 1994 for these
plans was $1,681,000, $1,195,000 and $3,317,000, respectively. The actuarial
present value of accumulated benefits at December 31, 1996 and 1995, was
$25,527,000 and $15,570,000, substantially all of which was vested, compared
with net assets available for benefits of $23,717,000 and $18,811,000,
respectively.
CONSOLIDATED - Consolidated net pension income for 1996, 1995 and 1994 was
$6,181,000, $5,624,000 and $4,145,000, respectively.
OTHER POSTRETIREMENT BENEFITS - The Company also provides postretirement
medical benefits and life insurance for certain groups of retired employees
which it accounts for based on FASB Statement No. 106.
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 1996 1995 1994
------ ------ -------
Service cost (benefits attributed to
employee service during the year) $ (932) $ (720) $ (1,789)
Interest cost on accumulated
postretirement benefit obligation (3,424) (3,654) (4,419)
Amortization of prior service cost 28 72 -
Actual return on plan assets 2,286 2,309 2,101
------ ------ -------
Net periodic postretirement
benefit cost $(2,042) $(1,993) $ (4,107)
====== ====== =======
Summary information on the Company's plans is as follows:
(In Thousands)
Years ended December 31 1996 1995
-------- --------
Accumulated postretirement benefit
obligation (APBO) for:
Retirees $ 39,564 $ 40,277
Fully eligible, active plan participants 2,463 2,669
Other active plan participants 9,513 10,163
-------- --------
51,540 53,109
Plan assets at fair value (26,663) (25,615)
Unrecognized prior service cost 307 863
Unrecognized net gain (loss) 3,367 (270)
-------- --------
Accrued postretirement benefit cost $ 28,551 $ 28,087
======== ========
Plan assets are held under an insurance contract and reserved for retiree
life-insurance benefits.
The discount rate used in determining the APBO was 7.0% at December 31,
1996 and 1995, and 8.25% at December 31, 1994. The expected long-term rate of
return on plan assets used in determining the net periodic postretirement
benefit cost was 9% for each year, and the estimated pay increase was 4.5% at
December 31, 1996, 1995 and 1994. The assumed health-care cost trend rate used
in measuring the accumulated postretirement benefit obligation was 13% in
1994, 12% in 1995 and 11% in 1996, declining by 1% per year to an ultimate
rate of 7%, except that managed-care costs were assumed to begin at 10% in
1994, 9% in 1995 and 8% in 1996, 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, 1996, would be increased by approximately $3.0
million. The effect of this change on the sum of the service cost and interest
cost components of net periodic postretirement benefit cost for 1996 would be
an increase of about $0.4 million.
CHANGES IN ESTIMATES - The lower discount rate at December 31, 1995,
increased the pension accumulated benefit obligation by about $31.3 million
and the pension projected benefit obligation by about $33.2 million. The lower
discount rate at December 31, 1995, increased the postretirement accumulated
benefit obligation by approximately $6.3 million. The rate-change effects on
net pension income and postretirement benefit costs are not material to the
Company's financial statements.
<PAGE> 40
17. INCOME TAXES
Income before income taxes, and current and deferred income taxes are
composed of the following:
(In Thousands)
Years ended December 31 1996 1995 1994
------- ------- -------
Income before income taxes:
Domestic $114,547 $ 90,409 $103,083
Foreign 31,225 25,767 38,063
------- ------- -------
Total $145,772 $116,176 $141,146
Current income taxes:
Federal $ 28,982 $ 15,442 $ 19,451
State 2,579 2,409 3,109
Foreign 13,379 8,648 10,569
------- ------- -------
Total 44,940 26,499 33,129
Deferred income taxes:
Federal 8,196 12,002 6,180
State 1,370 1,427 (45)
Foreign (1,706) 2,285 4,127
------- ------- -------
Total 7,860 15,714 10,262
------- ------- -------
Total income taxes $ 52,800 $ 42,213 $ 43,391
======= ======= =======
The significant differences between the U.S. federal statutory rate and the
effective income tax rate are as follows:
% of Income
Before Income Taxes
1996 1995 1994
------ ------ ------
Federal statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal tax benefit 1.8 2.1 1.8
Foreign sales corporation benefit (0.1) (0.6) (1.2)
Research tax credit (0.4) (1.7) -
Provision for legal settlement - 0.9 -
Gain on sale of subsidiary - - (3.8)
Other items, net (0.1) 0.6 (1.1)
------ ------ ------
Effective income tax rate 36.2% 36.3% 30.7%
====== ====== ======
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.
The deferred income tax assets and deferred income tax liabilities recorded
on the balance sheets as of December 31, 1996 and 1995, are as follows:
(In Thousands)
Deferred tax assets: 1996 1995
------ ------
Environmental reserves $15,708 $14,720
Acquired fixed asset basis differences
of Belgian subsidiary 4,823 -
Future employee benefits 4,266 3,873
Undistributed earnings of
foreign subsidiaries 5,090 5,657
Intercompany profit in inventories 6,448 3,497
Inventory capitalization 978 905
Facilities write-down and other costs 4,749 2,758
Other 810 4,149
------ ------
Gross deferred assets 42,872 35,559
Valuation allowance (6,277) -
------ ------
Net deferred tax assets 36,595 35,559
------ ------
Deferred tax liabilities:
Depreciation 37,486 36,063
Long-term contingent note payable 22,422 -
Future employee benefits 17,346 14,302
Capitalization of interest 2,510 1,287
Other 5,300 9,153
------ ------
Deferred tax liabilities 85,064 60,805
------ ------
Net deferred tax liabilities $48,469 $25,246
====== ======
Reconciliation to financial statements:
Deferred tax assets $15,907 $15,499
Deferred tax liabilities 64,376 40,745
------ ------
Net deferred tax liabilities $48,469 $25,246
====== ======
During 1996, it was concluded that it is more likely than not that a
portion of the deferred tax assets related to a Belgian subsidiary acquired as
part of the Texaco additives acquisition will not be realized. A valuation
allowance was therefore established for these assets at the date of
acquisition. If this deferred tax asset is realized at a future date, the
valuation allowance will be used to reduce the bases of the identifiable
intangibles acquired. Based on current U.S. income tax rates, it is
anticipated that no additional U.S. 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.
18. 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."
<PAGE> 41
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
are as follows:
(In Thousands)
Carrying Fair
Value Value
------- -------
December 31, 1996
Cash and cash equivalents $ 20,148 $ 20,148
Long-term debt, including current maturities $332,181 $334,275
December 31, 1995
Cash and cash equivalents $ 29,972 $ 29,972
Long-term debt, including current maturities $302,973 $306,279
19. SPECIAL CHARGES
A special charge in 1995 amounting to $4,750,000 ($4,150,000 after income
taxes, or $0.04 per share) covered a provision for the cost of a legal
settlement by a subsidiary.
Special charges in 1994 amounted to $2,720,000 ($1,690,000 after income
taxes, or $.01 per share) consisting of a charge of $10,720,000 primarily for
a provision for environmental remediation as well as other costs largely
offset by the benefit of an $8,000,000 legal settlement.
<TABLE>
<CAPTION>
20. SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA
Information for 1996 includes the results of the worldwide lubricant
additives business of Texaco Inc. since its acquisition on February 29, 1996.
(In Thousands Except Earnings Per Share) (Unaudited)
- - -------------------------------------------------------------------------------------------
First Second Third Fourth
1996 Quarter Quarter Quarter Quarter
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $242,185 $299,320 $304,169 $303,977
Gross profit $ 76,057 $ 81,804 $ 95,427 $ 91,740
Net income $ 19,030 $ 20,112 $ 28,485 $ 25,345
Earnings per share $ .16 $ .17 $ .24 $ .21
Shares used to compute earnings per share 118,456 118,448 118,444 118,444
- - -------------------------------------------------------------------------------------------
1995
Net sales $234,291 $224,530 $241,672 $259,957
Gross profit $ 82,179 $ 70,599 $ 81,918 $ 89,698
Special charges (a) $ - $ - $ 4,750 $ -
Net income $ 21,493 $ 13,006 $ 16,967 $ 22,497
Earnings per share $ .18 $ .11 $ .14 $ .19
Shares used to compute earnings per share 118,438 118,443 118,442 118,460
- - -------------------------------------------------------------------------------------------
<FN>
(a) Refer to Note 19 "Special Charges."
</TABLE>
<PAGE> 42
MANAGEMENT'S REPORT ON THE FINANCIAL STATEMENTS
Ethyl Corporation's management has prepared the financial statements and
related notes appearing on pages 25 through 41 in conformity with generally
accepted accounting principles. In so doing, management makes informed
judgments and estimates of the expected effects of certain events and
transactions on the reported amounts of assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Financial data appearing elsewhere in this
annual report are consistent with these financial statements. However, actual
results could differ from the estimates on which these financial statements
are based.
The Company 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, L.L.P.,
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 in principal areas of the world
Riverfront Plaza West
901 East Byrd Street
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, 1996 and 1995,
and the related consolidated statements of income, shareholders' equity and
cash flows for each of the three years in the period ended December 31, 1996.
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, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
January 30, 1997
- --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30
1997 December 31
ASSETS (unaudited) 1996
---------- ----------
Current assets:
Cash and cash equivalents $ 15,786 $ 20,148
Accounts receivable, less allowance for
doubtful accounts (1997 - $2,375; 1996
- $2,375) 153,706 177,788
Inventories:
Finished goods and work-in-process 183,102 179,322
Raw materials 19,539 21,498
Stores, supplies and other 10,061 9,782
---------- ----------
Total inventories 212,702 210,602
Deferred income taxes and prepaid expenses 22,583 18,627
---------- ----------
Total current assets 404,777 427,165
---------- ----------
Property, plant and equipment, at cost 760,657 764,145
Less accumulated depreciation and
amortization (345,335) (333,268)
---------- ----------
Net property, plant and equipment 415,322 430,877
---------- ----------
Prepaid pension cost, other assets
and deferred charges 170,538 159,470
Goodwill and other intangibles - net of
amortization 70,478 77,657
---------- ----------
Total assets $ 1,061,115 $ 1,095,169
========== ==========
See accompanying notes to financial statements.
3
<PAGE>
ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
June 30
1997 December 31
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 1996
---------- ----------
Current liabilities:
Accounts payable $ 79,119 $ 74,939
Accrued expenses 61,048 64,167
Cash dividends payable 14,806 14,806
Long-term debt, current portion 6,727 6,701
Income taxes payable 16,165 20,298
---------- ----------
Total current liabilities 177,865 180,911
---------- ----------
Long-term debt 291,358 325,480
Other noncurrent liabilities 84,834 84,502
Deferred income taxes 59,285 64,376
Shareholders' equity:
Common stock ($1 par value)
Issued - 118,443,835 in 1997 and 1996 118,444 118,444
Additional paid-in capital 2,799 2,799
Foreign currency translation adjustments (6,931) (1,888)
Retained earnings 333,461 320,545
---------- ----------
447,773 439,900
---------- ----------
Total liabilities and shareholders' equity $ 1,061,115 $ 1,095,169
========== ==========
See accompanying notes to financial statements.
4
<PAGE>
ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
-------------------- -------------------
1997 1996 1997 1996
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Net sales $269,336 $ 299,320 $535,049 $ 541,505
Cost of goods sold 189,965 217,516 379,653 383,644
-------- -------- ------- --------
Gross profit 79,371 81,804 155,396 157,861
Selling, general and administrative expenses 23,670 26,000 45,929 49,843
Research, development and testing expenses 16,395 17,716 32,792 34,028
-------- -------- ------- --------
Operating profit 39,306 38,088 76,675 73,990
Interest and financing expenses 5,265 6,273 10,563 12,198
Other (income)/expense, net (19) (425) (357) (955)
-------- -------- ------- --------
Income before income taxes 34,060 32,240 66,469 62,747
Income taxes 12,122 12,128 23,942 23,605
------- -------- ------- --------
Net income $ 21,938 $ 20,112 $ 42,527 $ 39,142
======= ======== ======= ========
Earnings per share $ .19 $ .17 $ .36 $ .33
======= ======== ======= ========
Shares used to compute earnings per share 118,448 118,448 118,446 118,452
======= ======== ======= ========
Cash dividends per share of common stock $ .125 $ .125 $ .25 $ .25
======= ======== ======= ========
<FN>
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
ETHYL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
(Unaudited)
Six Months Ended
June 30
--------------------
1997 1996
-------- --------
Cash and cash equivalents at beginning of year $ 20,148 $ 29,972
-------- --------
Cash flows from operating activities:
Net income 42,527 39,142
Adjustments to reconcile net income to cash flows
from operating activities:
Depreciation and amortization 32,359 27,956
Working capital decreases, net of effects from
acquisition 7,214 24,355
Other, net (6,361) (2,419)
-------- --------
Cash provided from operating activities 75,739 89,034
-------- --------
Cash flows from investing activities:
Acquisition of business (net of $1,245 cash acquired) - (134,615)
Capital expenditures (16,159) (18,347)
Other, net (131) (611)
-------- --------
Cash used in investing activities (16,290) (153,573)
-------- --------
Cash flows from financing activities:
Repayment of long-term debt (34,200) -
Additional long-term debt - 114,000
Cash dividends paid (29,611) (29,611)
Other, net - -
-------- --------
Cash provided from (used in) financing activities (63,811) 84,389
-------- --------
(Decrease)increase in cash and cash equivalents (4,362) 19,850
-------- --------
Cash and cash equivalents at end of period $ 15,786 $ 49,822
======== ========
See accompanying notes to financial statements.
6
<PAGE>
ETHYL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(In Thousands Except Per-Share Amounts)
(Unaudited)
1. In the opinion of management, the accompanying consolidated
financial statements of Ethyl Corporation and Subsidiaries (the
"Company") contain all adjustments necessary to present fairly, in
all material respects, the Company's consolidated financial position
as of June 30, 1997 and the consolidated results of operations for
the three and six-month periods ended June 30, 1997 and 1996 and the
consolidated cash flows for the six-month periods ended June 30, 1997
and 1996. All adjustments are of a normal, recurring nature. These
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
December 31, 1996, Annual Report. The December 31, 1996,
consolidated balance sheet data was derived from audited financial
statements but does not include all disclosures required by generally
accepted accounting principles. The results of operations for the
six-month period ended June 30, 1997, are not necessarily indicative
of the results to be expected for the full year.
2. On February 29, 1996, the Company completed the acquisition
of the worldwide lubricant additives business of Texaco Inc.,
("Texaco") including manufacturing and blending facilities,
identifiable intangibles and working capital. The acquisition,
accounted for under the purchase method, included a cash payment of
$134.3 million and a future contingent payment of up to $60 million.
The cash payment was financed primarily under the Company's revolving
credit agreement. The payment of up to $60 million will become due
on February 26, 1999, with interest payable on the contingent debt
until such date. The actual amount of the contingent payment and
total interest will be determined using an agreed-upon formula based
on volumes of certain acquired product lines shipped during the
calendar years 1996 through 1998, as specified in the contingent note
agreement. Texaco retained substantially all noncurrent liabilities.
As the Company's June 30,1996, financial statements only include four
months of operations of the acquired lubricant additive business,
the following selected unaudited pro forma information is being
provided to present a summary of the combined results of the Company
and the worldwide lubricant additives business of Texaco as if the
acquisition had occurred as of January 1, 1996, giving effect to
adjustments for interest expense that would have been incurred to
finance the acquisition and other purchase accounting adjustments.
The pro forma data is for informational purposes only and may not
necessarily reflect the results of operations of Ethyl had the
acquired business operated as part of the Company for the six-month
period ended June 30, 1996.
Six Months Ended
June 30
1996
-------
Net Sales $590,680
Net Income $ 40,674
Earnings Per Share $.34
7
<PAGE>
ETHYL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(In Thousands Except Per-Share Amounts)
(Unaudited)
3. Long-term debt consists of the following: June 30 December 31
1997 1996
-------- ---------
Variable-rate bank loans (average effective
interest rate was 6.0% for the six-month
period ended June 30, 1997 and 5.9% for
the year 1996) $264,800 $299,000
8.6% to 8.86% Medium-Term Notes due
through 2001 33,750 33,750
-------- --------
Total long-term debt 298,550 332,750
Less unamortized discount (465) (569)
-------- --------
Net long-term debt $298,085 $332,181
Less current portion (6,727) (6,701)
-------- --------
Long-term debt $291,358 $325,480
======== ========
(No portion of the contingent note payable principal related to the purchase
of the lubricant additives business from Texaco has been recorded on the June
30, 1997 or December 31, 1996 consolidated balance sheets.)
4. Recently Issued Accounting Standards:
Effective December 31, 1997, the Company will adopt Financial Accounting
Standards Board ("FASB") Statement No. 128 "Earnings Per Share" which
will supersede Accounting Principles Board ("APB") Opinion No. 15
"Earnings Per Share." This new statement requires that "basic earnings per
share" be computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding for the period.
"Diluted earnings per share," if different, reflect potential dilution if
stock options or other contracts would result in the issue or exercise of
additional shares of common stock that shared in the earnings. "Basic
earnings per share" and "diluted earnings per share" will replace
"primary earnings per share" and "fully diluted earnings per share,"
respectively, as described under APB Opinion No. 15, and must be reported
on the income statement.
FASB Statement No. 128 may not be adopted for quarterly periods prior to
December 31, 1997, but supplemental pro forma disclosure of the impact of
FASB Statement No. 128 may be reported. Presently, management does not
anticipate any material change in the earnings per share amounts as a
result of FASB Statement No. 128.
8
<PAGE>
ETHYL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(In Thousands Except Per-Share Amounts)
(Unaudited)
4. Recently Issued Accounting Standards (cont'd.):
FASB Statement No. 130, "Reporting Comprehensive Income" is effective for
periods beginning after December 15, 1997, including interim periods.
This Statement establishes standards for reporting "comprehensive income"
in financial statements, either in the income statement or in a separate
statement, and also requires display of "accumulated other comprehensive
income" in a separate caption in the equity section of the balance sheet.
Material components of accumulated other comprehensive income must also be
disclosed in a statement or in notes to financial statements.
FASB Statement No. 131, "Disclosures about Segments of an Enterprise and
Related Information" is effective for annual periods beginning after
December 15, 1997, and for interim periods after the year of adoption.
This statement establishes standards for reporting information about
operating segments, including related disclosures about products and
services, geographic areas, and major customers. The Company has not
identified what impact, if any, Statement No. 131 will have on operating
segments reported, or on the financial statements and related disclosures.
9
EXHIBIT (H)
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------
SIX MONTHS ENDED JUNE 30, 1997 PRO FORMA
---------------------------------------- FOR
PRO FORMA FOR SHARE
SHARE REPURCHASE REPURCHASE
-------------------------- PRO FORMA -----------
ASSUMED ASSUMED FOR PURCHASE ASSUMED
$7.75/SHARE $9.25/SHARE OF LUBRICANT $7.75/SHARE
PURCHASE PURCHASE ADDITIVES PURCHASE
HISTORICAL PRICE PRICE HISTORICAL BUSINESS PRICE
---------- ----------- ----------- ---------- ------------ -----------
<S> <C>
EARNINGS
Income before income taxes........... $ 66,469 $58,020 $56,447 $ 145,772 $148,244 $ 130,572
Interest expense (net)............... 10,563 19,012 20,585 24,268 25,557 43,229
Portion of rents representative of
interest factor.................... 2,865 2,865 2,865 5,542 5,583 5,583
Amortizaiton of capitalized
interest........................... 923 923 923 1,864 1,864 1,864
---------- ----------- ----------- ---------- ------------ -----------
Total Earnings................... $ 80,820 $80,820 $80,820 $ 177,446 $181,248 $ 181,248
---------- ----------- ----------- ---------- ------------ -----------
---------- ----------- ----------- ---------- ------------ -----------
FIXED CHARGES
Interest expense (before deducting
capitalized interest).............. $ 10,782 $19,231 $20,804 $ 24,902 $ 26,191 $ 43,863
Portion of rents representative of
interest factor.................... 2,865 2,865 2,865 5,542 5,583 5,583
---------- ----------- ----------- ---------- ------------ -----------
Total Fixed Charges.............. $ 13,647 $22,096 $23,669 $ 30,444 $ 31,774 $ 49,446
---------- ----------- ----------- ---------- ------------ -----------
---------- ----------- ----------- ---------- ------------ -----------
Ratio of Earnings to Fixed Charges... 5.9222 3.6577 3.4146 5.8286 5.7043 3.6656
---------- ----------- ----------- ---------- ------------ -----------
---------- ----------- ----------- ---------- ------------ -----------
<CAPTION>
ASSUMED
$9.25/SHARE
PURCHASE
PRICE
-----------
<S> <C>
EARNINGS
Income before income taxes........... $ 127,435
Interest expense (net)............... 46,366
Portion of rents representative of
interest factor.................... 5,583
Amortizaiton of capitalized
interest........................... 1,864
-----------
Total Earnings................... $ 181,248
-----------
-----------
FIXED CHARGES
Interest expense (before deducting
capitalized interest).............. $ 47,000
Portion of rents representative of
interest factor.................... 5,583
-----------
Total Fixed Charges.............. $ 52,583
-----------
-----------
Ratio of Earnings to Fixed Charges... 3.4469
-----------
-----------
</TABLE>
