FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1993
Commission file number 1-3970
HARSCO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-1483991
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
Camp Hill, Pennsylvania 17001-8888
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 717-763-7064
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common stock, par value $1.25 per share New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of class)
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Subsection 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES
(X)) NO ( )
The aggregate market value of the Company's voting stock held by
non-affiliates of the Company as of March 4, 1994 was $1,135,870,000.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Classes Outstanding at March 4,
1994
Common stock, par value $1.25 per share 25,032,945
Preferred stock purchase rights 25,032,945
Documents Incorporated by Reference
Selected portions of the 1993 Annual Report to Shareholders are
incorporated by Reference in Parts I, II and IV of this Report.
Selected portions of the Notice of 1994 Meeting and Proxy Statement
dated March 25, 1994 are Incorporated by Reference in Part III of this
Report.
HARSCO CORPORATION AND SUBSIDIARY COMPANIES
INFORMATION REQUIRED IN REPORT
PART I
Item 1. Business:
(a) Description of Business:
The operations of Harsco Corporation (Harsco or the Company) are
broadly diversified and include products serving thousands of customers
engaged in steel, industrial, commercial, construction and
infrastructure, and defense applications. These operations fall into
three operating Groups: Industrial Services and Building Products,
Engineered Products and Defense. The Company primarily serves its
customers through its own salaried sales forces and independent
manufacturers' representatives, commission agents and distributors.
Harsco utilizes both Company-owned and leased sales offices and
warehouses. There were several significant changes in products,
services, and markets, but not in methods of distribution during the
1993 fiscal year.
In February 1993, the Company purchased certain assets of the Wayne
Corporation, a manufacturer of school buses located in Richmond,
Indiana for approximately $2.1 million. In a defense conversion
activity, production of these school buses was transferred to the
BMY-Wheeled Vehicles Division in Marysville, Ohio, and Wayne Wheeled
Vehicles was formed. Harsco entered into six new contracts for metal
reclamation and specialized steel mill services in Mexico in 1993. In
addition, the Company initiated service at a steelmaking location in
Canada to provide environmental recycling of steel production residual
materials, which is a new service developed through the Company's
research and development efforts. On August 31, the Company completed
the largest acquisition in Harsco's history by purchasing all of the
outstanding capital stock of MultiServ International, N.V., the leading
international provider of specialized steel mill services, for a
consideration of $384 million. MultiServ's operations were combined
with the Company's Heckett Division, and Harsco is now the world leader
in the provision of specialized steel mill services to over 130
locations in 27 countries on six continents.
Harsco acquired Electroforjados Nacionales, S.A. de C.V., a producer of
steel and fiberglass grating products, with annual revenues of about
$10 million, located in Queretaro, Mexico during the fourth quarter.
The Company also restructured and renamed the Patent Scaffolding
Division to Patent Construction Systems Division to better describe the
range of products and to emphasize a wide array of services in the
construction marketplace. In January 1994, Harsco and FMC Corporation
formed a joint venture, United Defense, L.P., by combining the
BMY-Combat Systems Division with FMC's Defense Systems Group. Harsco
obtained a 40% ownership in United Defense, L.P., which expects to
achieve $1 billion in revenues in 1994.
The Company's operations are conducted through 10 divisions, each of
which has its own executive, supervisory and operating personnel. Each
division has general responsibility for its own activities, including
marketing. At the Company's headquarters, an executive management
group, most of whom have been associated with the Company for many
years, manages and provides leadership for business activities. This
management group is responsible for establishing basic Company policy
and strategic direction, especially in the areas of long-range
planning, capital expenditures and finance, and, in addition, makes
available to operating personnel technical assistance in a number of
specialized fields.
(b) Financial Information about Industry Groups:
Financial information concerning Industry Groups is included in Note 12
to the consolidated financial statements of the 1993 Annual Report to
Shareholders under Exhibit 13.
(c) Narrative Description of Business:
(1) A narrative description of the businesses by Operating Group
is as follows:
Industrial Services and Building Products
The major product classes in this Group are metal reclamation and
scaffolding, shoring and concrete forming equipment. Other classes
include: slag abrasives, steel mill services, rental of plant
equipment, roofing granules and miscellaneous.
Under metal reclamation the Company provides specialized services to
steel producers worldwide which includes metal reclamation, scrap
handling, cleaning of slag pits, handling of raw material and molten
slag, filling and grading of specified areas and the renting of various
types of plant equipment. Highly specialized recovery and cleaning
equipment, installed and operated on the property of steel producers,
together with standard materials handling equipment, including drag
lines, cranes, bulldozers, tractors, hauling equipment, lifting magnets
and buckets, are employed to reclaim metal. The customer uses this
metal in lieu of steel scrap and makes periodic payments to the Company
based upon the amounts of metal reclaimed. The nonmetallic residual
slag is graded into various sizes at on-site Company-owned processing
facilities and sold commercially. Graded slag is used as an aggregate
material in asphalt paving applications, railroad ballast and building
blocks. The Company also provides in-plant transportation and other
specialized services.
The Company obtained a significant amount of new business in 1993,
including six new contracts in Mexico to provide a variety of services
at mini-mills and large, integrated producers. In Germany, the Company
received a new contract for in-plant transportation services and
expanded the scope of services performed in Holland to include
responsibility for blast furnace and steel slag products. The Heckett
MultiServ Division was established, effective January 1, 1994 and is
the world leader in providing specialized steel mill services to over
130 locations in 27 countries, including Brazil, China, Russia and
Slovakia, spanning six continents. Heckett MultiServ locations account
for some 30 percent of the world's steelmaking capacity.
Slag abrasives and roofing granules are products derived from utility
coal slag and are processed at 15 locations in 12 states. Slag
abrasives are used for industrial surface preparation and cleaning of
bridges, ship hulls and various structures. Roofing granules are sold
to roofing shingle manufacturers.
In research and development activities, the Company continued to test
market a dust suppressant product, designed to improve dusting
conditions during the transfer of abrasives. In another project,
Harsco, in an effort to identify future alternative materials for
colored roofing granules, continued extensive lab testing, including
coloring and weathering exposure. Harsco anticipates that the demand
for slag abrasives will strengthen in 1994 because of increased
activity in the infrastructure repair and rebuild market, particularly
in the Northeast.
The Group's scaffolding, shoring and concrete forming operations
include steel and aluminum support systems that are leased or sold to
customers through a North American network of some 35 branch offices.
The Division was renamed Patent Construction Systems, effective in
December, to better describe the range of products and to emphasize a
wide array of services in the construction marketplace. In addition,
Patent Plant Services, headquartered in New Orleans, was organized to
enhance marketing efforts and long-term scaffolding service contracts
to paper mills, refineries, chemical and petrochemical applications and
power plants. Several large orders were received from refineries in
1993.
During the second half, the Company introduced the Pro 1000 Scaffold
Hoist_, part of the motorized swinging scaffold line, which will be
marketed worldwide.
For 1993, percentages of consolidated net sales of certain product
classes were as follows: metal reclamation, 15%; scaffolding, shoring
and concrete forming equipment, 6%; and five others, including mill
services, rental of plant equipment, roofing granules, slag abrasives
and miscellaneous, 7%
Engineered Products
Major product classes in this Group are gas control and containment,
grating, pipe fittings, process equipment and railway maintenance
equipment. Other classes include composite products, metal
fabrication, wear products and miscellaneous.
Gas containment products include propane tanks, cryogenic equipment,
high pressure cylinders, and composite products, while gas control
products include valves and regulators serving a variety of markets.
The cryogenics facility in Germany achieved ISO 9000 certification
during the first quarter of 1993, which will enhance product quality
and international marketing opportunities.
At the cylinder plant in Harrisburg, Pennsylvania, installation of a
new high-efficiency billet furnace was underway at year-end. During
the fourth quarter of 1993, Harsco formed a long-term commercial
agreement with INFLEX, S.A., a manufacturer of a broad line of
industrial cylinders, including NGV fuel tanks, located in Buenos
Aires, Argentina. Early in 1994, the Division name was changed from
Plant City Steel to Taylor-Wharton Gas Equipment to reflect the
Company's broader strategic objective of continuing to grow this
business through selective international acquisitions in a wide product
range.
Several new proprietary products were brought to market in the gas
control product class in 1993. Production was underway on the
innovative new propane valve for 20-pound cylinders on gas grills in
Canada during the first quarter, and the full program started in
September. A disposable refrigerant valve, developed to meet evolving
environmental market demands, was also introduced, as was a unique
scuba mouthpiece.
The Company's product class of railroad maintenance equipment includes
track machinery, which services private and government-owned railroads
and urban transit systems. This machinery is classified in the
categories of sleeper renewal, spike driving, Hy-Rail, rail grinding,
tamping, ballast maintenance, track renewal, track geometry, utility
vehicle and rail and overload line equipment.
Fairmont Tamper completed work on a Pony Track Renewal System for Japan
Railways East, under a contract valued at over $5 million, which was
delivered in January 1994, and will be used to upgrade railroad track
in that country over a course of 140 kilometers. The Company witnessed
increased demand for products in China and Mexico, which included an
order for over 25 HY-RAIL units, valued at more than $5 million. At
year-end, the backlog was significantly ahead of that at December 31,
1992.
Harsco's diverse product class of process equipment includes these
product lines: heat transfer equipment, mass transfer equipment,
air-cooled heat exchangers, process equipment, protective linings and
wear products, including bar, plate and fabrication, and manganese
products.
Demand for the Thermific boiler, first introduced in 1988, was again at
a record level, paced by the institutional building and retrofit
market. Two new commercial water heaters were brought to market early
in the year, and the lab blender redesign program was completed near
year-end. Plans were underway to achieve ISO 9000 certification for
major lines, which will aid in international marketing. In wear
products, the Company conducted a research and development project to
achieve enhanced weld requirements for product improvement.
Harsco manufactures a varied line of industrial grating products at
numerous plants in North America. The Company produces riveted,
pressure-locked and welded grating in steel and aluminum, used mainly
in industrial flooring applications for power, paper, chemical,
refining and processing applications, among others. The Company also
produces varied products for bridge and decking uses, as well as
fiberglass grating used principally in the process industries.
Production operations at a facility in Canada were phased out late in
1993, although sales and service continue in that country. A
state-of-the-art slitting machine, the most powerful of its type in
this country, was fully operational at the facility in Channelview,
Texas during the first quarter. During the fourth quarter, the Company
completed the acquisition of Electroforjados Nacionales, S.A. de C.V.
(ENSA), a producer of steel and fiberglass grating products located in
Queretaro, Mexico. ENSA, with annual sales of about $10 million, and
the Company's other grating operations were consolidated into the
Queretaro facility. The Division now operates at 13 facilities in
North America.
The Company is a major supplier of pipe fittings for the plumbing,
industrial, hardware and energy industries and produces a variety of
product lines, including forged and stainless steel fittings, conduit
fittings, nipples and couplings. During the first quarter, machinery,
tooling and equipment were installed at the facility in Houston for the
new line of swaged nipples and bull plugs, primarily serving industrial
and energy-related applications, which went on stream during the second
half. Also during the same quarter, production ceased at a plant in
Detroit, but service there is ongoing. The Division headquarters was
relocated to another facility in the metropolitan Columbus, Ohio
region.
For 1993, percentages of consolidated net sales of certain product
classes were as follows: gas control and containment, 13%; grating
products, 6%; pipe fittings, 6%; process equipment, 5%; railway
maintenance equipment, 6%; and four others, including structural
composites, specialty metal fabrications, wear products and
miscellaneous, 4%.
Defense
The Defense Group had two divisions at year-end 1993, which were
BMY-Combat Systems and BMY-Wheeled Vehicles. In 1993, this Group led
the Company in earnings. In January 1994, Harsco and FMC Corporation
completed the joint venture, first announced in December 1992, to
combine the BMY-Combat Systems Division with FMC's Defense Systems
Group. The new partnership, known as United Defense, L.P., was
effective on January 1, 1994 and expects to achieve annual sales of
about $1 billion in 1994. Harsco holds a 40 percent ownership in
United Defense, L.P., and FMC will manage the business.
United Defense, L.P. produces tracked vehicles, including
self-propelled howitzers, ammunition resupply units, military
earthmovers and battle tank recovery vehicles for the U.S. Government
and several international customers. Research and development programs
are also performed, and United Defense, L.P. is a coproducer of tracked
vehicles with the Republic of Korea.
Additional products of United Defense, L.P. include the Bradley
Fighting Vehicle and its derivatives, the Armored Gun System, the
Multiple Launch Rocket System carrier, and the M113 Armored Personnel
Carrier family of vehicles. The partnership also makes naval guns and
launching systems, military track for armored vehicles and provides
overhaul and conversion services.
In 1993, BMY-Combat Systems delivered 70 M109A6 Paladin Howitzers to
the U.S. Government. Deliveries of this vehicle are scheduled through
1994, and the Company will continue to participate in the production of
Paladin Howitzers through the defense business partnership, United
Defense, L.P. In 1993, the Company continued its nine-year
coproduction contract for M109 SPH vehicle kits with the Republic of
Korea and delivered 110 Howitzer kits. BMY-Combat Systems delivered 57
Armored Combat Earthmover (ACE) kits in 1993 to the Republic of Korea,
and deliveries are scheduled into 1995. In October, the Company
received a new contract from the U.S. Government for production of
these M9 ACE units, valued at about $78 million. The Company delivered
68 M88A1 Recovery Vehicles for international customers in 1993. In
October, the Company leased a facility in Fayette County, Pennsylvania
to expand its role in military vehicle maintenance and support
activities.
BMY-Wheeled Vehicles produces various models of the five-ton truck and
other commercial vehicles. In 1993, the BMY-Wheeled Vehicles Division
delivered 861 five-ton trucks to the U.S. Government and international
customers. The Company has produced over 25,000 of these units in
various configurations and anticipates the receipt of additional orders
in 1994. The Division will restart the production line in 1994 to
accommodate foreign production booked as of year-end.
In February 1993, the Company acquired certain assets from the Wayne
Corporation, a manufacturer of school buses, for approximately $2.1
million, and production of these buses was transferred to the
Marysville facility. This is a significant defense conversion effort
on the part of Harsco to use the skills of a work force in another
highly-regulated industry. The Company will continue to seek
additional commercial opportunities for production at that location.
For 1993, percentages of consolidated net sales of certain product
classes were as follows: tracked vehicles, 24% and wheeled vehicles,
8%.
(1) (i) The products and services of Harsco can be divided into a
number of classes. The product classes that contributed 10% or more as
a percentage of consolidated net sales in either of the last three
fiscal years are as set forth in the following table.
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Wheeled Vehicles 8% 24% 40%
Tracked Vehicles 24 24 14
Gas Control and Containment 13 11 9
Metal Reclamation 15 7 6
</TABLE>
(1) (ii) New products and services are added from time to time;
however, currently none require the investment of a material amount of
the Company's assets.
(1) (iii) The manufacturing requirements of the Company's
operations are such that no unusual sources of supply for raw materials
are required. The raw materials used by the Company include steel and
aluminum which usually are readily available.
(1) (iv) While Harsco has a number of trademarks, patents and
patent applications, it does not consider that any material part of its
business is dependent upon them.
(1) (v) Harsco furnishes building products and materials and a
wide variety of specialized equipment for commercial, industrial,
public works and residential construction which are seasonal in nature.
In 1993, construction related operations accounted for 9% of total
sales.
(1) (vi) The practices of the Company relating to working capital
items are not unusual compared with those practices of other
manufacturers servicing mainly industrial and commercial markets.
Under the Defense Group, due to the nature of long-term contracts,
sizable amounts of inventory are carried by the Company; however, these
are partially funded through progress payments by the U.S. Government
and advance payments by Foreign Governments. See Note 3 to
consolidated financial statements and "Advances on long-term contracts"
on the balance sheets in selected portions of the 1993 Annual Report to
Shareholders under Exhibit 13.
(1) (vii) Other than in the Defense Group of the Company's
business, whose principal customer has been the U.S. Government, as
further described under the Defense Group, no material part of the
business of the Company is dependent upon a single customer or a few
customers, the loss of any one of which would have a material adverse
effect upon the Company.
Sales to U.S. Government agencies in 1993, 1992 and 1991
amounted to 21%, 35% and 44% of the total sales, respectively.
(1) (viii) Backlog of orders stood at $146,751,000 and
$738,978,000 as of December 31, 1993 and 1992, respectively. It is
expected that approximately 22% of the total backlog at December 31,
1993, will not be filled within 1994. Excluded from the 1993 backlog
is $397,939,000 contributed to United Defense, L.P. There is no
significant seasonal aspect to the Company's backlog.
(1) (ix) Under the terms and regulations applicable to government
contracts, the Government has the right to terminate its contracts with
the Defense Group in accordance with procedures specified in the
regulations and, under certain circumstances, has the right to
renegotiate profits. In 1993, this group accounted for 32% of total
sales.
(1) (x) The various fields in which Harsco operates are highly
competitive and the Company encounters active competition in all of its
activities from both larger and smaller companies who produce the same
or similar products or services or who produce different products
appropriate for the same uses.
(1) (xi) The expense for internal product improvement and product
development activities was $5,156,000, $4,590,000 and $3,647,000 in
1993, 1992 and 1991, respectively. Customer-sponsored research and
development expenditures were $23,008,000, $17,889,000 and $8,872,000,
in 1993, 1992 and 1991, respectively.
(1) (xii) The Company has become subject, as have others, to more
stringent air and water quality control legislation. The Clean Air Act
Amendments of 1990 will impose greater costs on the Company and most
other domestic manufacturers in the future but the effect on the
Company's business is not yet determinable. In general, the Company
has not experienced substantial difficulty in complying with these
environmental regulations in the past and does not anticipate making
any major capital expenditures for environmental control facilities in
1994 or 1995. While the Company expects that environmental regulations
may expand, and its expenditures for air and water quality control will
continue, it cannot predict the effect on its business of such expanded
regulations. Additional information regarding environmental
consideration is incorporated by reference to Note 1 and Note 10 to the
Consolidated Financial Statements under Exhibit No. 13.
(1) (xiii) As of December 31, 1993, the Company had approximately
14,200 employees.
(d) Financial Information about Foreign and
Domestic Operations and Export Sales:
Financial information concerning foreign and domestic operations and
export sales is included in Note 12 to consolidated financial
statements in selected portions of the 1993 Annual Report to
Shareholders under Exhibit 13.
Item 2. Properties:
Information as to the principal plants owned and operated by Harsco is
summarized in the following table:
<TABLE>
<CAPTION>
Floor Space
Location (Sq. Ft.) Principal Products
Industrial Services and
Building Products:
<S> <C> <C>
Marion, Ohio 135,000 Construction
Equipment
Moundsville, West Virginia 12,000 Roofing
Granules/Abrasives
Drakesboro, Kentucky 19,000 Roofing Granules
Gary, Indiana 15,000 Roofing
Granules/Abrasives
Engineered Products:
Pomona, California 75,000 Composite
PressureVessels
Hamden, Connecticut 47,000 Pipe Fittings
Fitchburg, Massachusetts 30,000 Pipe Fittings
Houston, Texas 26,000 Pipe Fittings
West Jefferson, Ohio 144,000 Pipe Fittings
Clinton, Ontario, Canada 55,000 Pipe Fittings
Chicago, Illinois 35,000 Pipe Fittings
* Crowley, Louisiana 172,000 Pipe Fittings
Plant City, Florida 182,000 Metal Fabrication
</TABLE>
* This property is under a lease-purchase agreement, with purchase
price at a nominal amount.
<TABLE>
<CAPTION>
<S> <C> <C>
Birmingham, Alabama 133,000 Wear Products
Jesup, Georgia 43,000 Propane Tanks
Bloomfield, Iowa 40,000 Propane Tanks
West Jordan, Utah 26,000 Propane Tanks
Fairmont, Minnesota 312,000 Railroad Equipment
West Columbia, South Carolina 224,000 Railroad Equipment
Nottingham, England 33,000 Railroad Equipment
East Stroudsburg, Pennsylvania 172,000 Process Equipment
Tulsa, Oklahoma 41,000 Fractionation Trays
Tulsa, Oklahoma 131,000 Heat Exchangers
Tulsa, Oklahoma 13,000 Fractionation Trays
Mexico City, Mexico 31,000 Grating
Queretaro, Oro, Mexico 63,000 Grating
Madera, California 42,000 Grating
Nashville, Tennessee 83,000 Grating
Nashville, Tennessee 212,000 Grating
Long Island City, New York 48,000 Grating
Leeds, Alabama 45,000 Grating
Channelview, Texas 82,000 Grating
Carlisle, Ohio 26,000 Grating
Cheswick, Pennsylvania 54,000 Grating
Charlotte, North Carolina 23,000 Grating
Lockport, New York 104,000 Valve Manufacturing
Harrisburg, Pennsylvania 317,000 Cylinders
Theodore, Alabama 275,000 Cryogenic Storage
Vessels
Husum, Germany 60,000 Cryogenic Storage
Vessels
Shah Alam, Malaysia 20,000 Cryogenic Storage
Vessels
</TABLE>
<TABLE>
<CAPTION>
Defense:
<S> <C> <C>
Marysville, Ohio 306,000 Military Vehicles &
School Buses
York, Pennsylvania 1,022,000 Military Vehicles
</TABLE>
Harsco also operates the following plants which are leased:
<TABLE>
<CAPTION>
Expiration
Floor Space Principal
Dates of
Location (Sq. Ft.) Products
Lease
Engineered Products:
<S> <C> <C>
<C>
Cleveland, Ohio 40,000 Brass Castings
09/30/95
Decatur, Georgia 19,000 Pipe Fittings
06/30/95
Lansing, Ohio 67,000 Pipe Fittings
01/31/95
Baltimore, Maryland 15,000 Pipe Fittings
12/31/95
Brendale, Australia 110,000 Railroad Equipment
10/18/97
Bilston, England 37,000 Fractionation Trays
09/26/00
Bilston, England 41,000 Air Heating Systems
09/26/00
Defense:
Lamond Furnace, PA 175,000 Military Vehicles
10/31/96
</TABLE>
Harsco operates from a number of other plants, branches, warehouses and
offices in addition to the above. In particularly, the Company has
over 130 locations related to metal reclamation in twenty-seven
countries, however since these facilities are on the property of the
steel mill being serviced they are not listed. The Company considers
all of its properties to be in satisfactory condition.
Item 3. Legal Proceedings:
Information regarding legal proceedings is incorporated by reference to
Note 10 to the Consolidated Financial Statements, under Exhibit 13.
Item 4. Submission of Matters to a
Vote of Security Holders:
There were no matters that were submitted during the fourth quarter of
the year covered by this report to a vote of security holders, through
the solicitation of proxies or otherwise.
PART II
Item 5. Market for Registrant's Common Stock
and Related Stockholder Matters:
Harsco common stock is traded on the New York, Pacific, Boston, and
Philadelphia Stock Exchanges under the symbol HSC. At the end of 1993,
there were 24,967,801 shares outstanding. In 1993, the stock traded in
a range of 45-35 and closed at a year-end high of 40 5/8 . For
additional information regarding Harsco common stock market price,
dividends declared, and numbers of shareholders see Part II, Item 6.
Item 6. Selected Financial Data:
Five-year selected financial data is included under Exhibit 13.
Item 7. Management's Discussion of Financial
Condition and Results of Operations:
Management's Discussion of Financial Condition and Results of
Operations is included in selected portions of the 1993 Annual Report
to Shareholders under Exhibit 13.
Item 8. Financial Statements and Supplementary Data:
The financial statements and supplementary data is included in selected
portions of the 1993 Annual Report to Shareholders under Exhibit 13.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure:
None.
PART III
Item 10. Directors and Executive Officers of the Registrant:
(a) Identification of Directors:
Information regarding the identification of directors and positions
held is incorporated by reference to the Proxy Statement dated
March 25, 1994. M. W. Gambill informed the Board of Directors that he
is retiring as non-executive Chairman of the Board and Director
effective April 1, 1994. Upon his retirement as Chief Executive
Officer on January 1, 1994, the Company entered into a Retirement and
Consulting Agreement with Mr. Gambill. Under the Agreement, Mr.
Gambill will receive monthly compensation at the rate of $370,000 per
annum ending June 9, 1995. Mr. Gambill's age and employment background
are as follows.
Name Age
M. W. Gambill 63
Principal Occupation or Employment
Served as non-executive Chairman of the Board since January 1, 1994 and
is a Director. Chairman of the Board and Chief Executive Officer from
May 1, 1991 to January 1, 1994. From 1987 to 1991, President and Chief
Executive Officer. From 1985 to 1987 served as President and Chief
Operating Officer and from 1984 to 1985 served as Executive Vice
President of the Corporation and from 1975 to 1984 served as President
of the Heckett Division of the Corporation. Mr. Gambill is a director
of York International Corporation.
(b) Identification of Executive Officers:
Set forth below, as of March 24, 1994, are the executive officers (this
excludes certain corporate officers who are not deemed "executive
officers" within the meaning of applicable Securities and Exchange
Commission regulations) of the Company and certain information with
respect to each of them. The executive officers were elected to their
respective offices on April 27, 1994, or at various times during the
year as noted. All terms expire on April 30, 1994. There are no family
relationships between any of the officers.
Corporate Officers:
Name Age
D. C. Hathaway 49
Principal Occupation or Employment
President and Chief Executive Officer effective January 1, 1994, and
has been elected Chairman of the Board effective April 1, 1994.
Director since 1991. From May 1, 1991 to December 31, 1993, served as
President and Chief Operating Officer. From 1986 to 1991 served as
Senior Vice President-Operations of the Corporation. Served as Group
Vice President from 1984 to 1986 and as President of the Dartmouth
Division of the Corporation from 1979 until October 1984.
Name Age
W. D. Etzweiler 58
Principal Occupation or Employment
Senior Vice President and Chief Operating Officer - Commercial and
Industrial Products of the Corporation effective January 25, 1994.
From 1992 to January 24, 1994, served as Senior Vice President -
Operations of the Corporation. Served as President of the
Corporation's Patterson-Kelley Division from 1982 to 1991, Vice
President Sales and Marketing of the Patterson-Kelley Division from
1979 to 1982, Vice President of Marketing for the Patterson-Kelley
Division from 1971 to 1979, and various manager positions with the
Patterson-Kelley Division from 1966 to 1971.
Name Age
B. W. Taussig 54
Principal Occupation or Employment
Senior Vice President and Chief Operating Officer - Defense of the
Corporation effective January 25, 1994. From 1992 to January 24, 1994,
served as Senior Vice President - Operations of the Corporation.
Served as President of the BMY Defense Group from July 1, 1991 to
year-end, as President of the BMY Combat Systems Division from 1989 to
1991, and as Vice President Business Development of the BMY Combat
Systems Division from July 1989 to November 1989. From 1984 to 1989,
was Vice President and General Manager of the Naval Systems Division of
FMC Corporation, where he was responsible for a unit manufacturing
defense products with 3,100 employees and sales of approximately $350
million per year.
Name Age
L. A. Campanaro 45
Principal Occupation or Employment
Senior Vice President-Finance and Chief Financial Officer of the
Corporation effective December 1, 1992 and served as Vice President and
Controller from April 1, 1992 to November 30, 1992. Served as Vice
President of the BMY-Wheeled Vehicles Division from February 1, 1992 to
March 31, 1992, and previously served as Vice President and Controller
of the BMY-Wheeled Vehicles Division from 1988 to 1992, Vice President
Cryogenics of the Plant City Steel Division from 1987 to 1988, Senior
Vice President Taylor-Wharton Division from 1985 to 1987, Vice
President and Controller of Taylor-Wharton from 1982 to 1985, and
Director of Auditing of the Corporation from 1980 to 1982.
Name Age
P. C. Coppock 43
Principal Occupation or Employment
Senior Vice President, General Counsel, Secretary and Chief
Administrative Officer of the Corporation effective January 1, 1994.
Served as Vice President, General Counsel and Secretary of the
Corporation from May 1, 1991 to December 31, 1993. From 1989 to 1991
served as Secretary and Corporate Counsel and as Assistant Secretary
and Corporate Counsel from 1986 to 1989. Served in various Corporate
Attorney positions for the Corporation since 1981.
Name Age
S. D. Fazzolari 41
Principal Occupation or Employment
Vice President and Controller of the Corporation effective January 25,
1994. Served as Controller of the Corporation from January 26, 1993 to
January 24, 1994. Previously served as Director of Auditing from 1985
to January 25, 1993, and served in various auditing positions from 1980
to 1985.
Item 11. Executive Compensation:
Information regarding compensation of executive officers and directors
is incorporated by reference to the Sections entitled "Executive
Compensation and Other Information", and "Directors' Compensation" of
the Proxy Statement dated March 25, 1994.
Item 12. Security Ownership of Certain
Beneficial Owners and Management:
Information regarding security ownership of certain beneficial owners
and management is incorporated by reference to the section entitled
"Share Ownership of Management" of the Proxy Statement dated March 25,
1994.
Item 13. Certain Relationships and Related Transactions:
Information regarding certain relationships and related transactions is
incorporated by reference to the section entitled "Employment
Agreements with Officers of the Company" of the Proxy Statement dated
March 25, 1994.
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K:
The following portions of the Company's 1993 Annual Report to
Shareholders are incorporated herein by reference under Exhibit 13:
The consolidated financial statements and notes thereto, the related
report of Coopers & Lybrand, independent accountants, Management's
Discussion of Financial Condition and Results of Operations, Selected
Financial Data for the years 1989 through 1993, Market for Registrant's
Common Stock and Related Security Holder Matters, and the supplemental
financial data, Three-Year Summary of Quarterly Results.
Exhibit
Number
(a) 1. Consolidated Financial Statements:
Consolidated Balance Sheets
December 31, 1993 and 1992
13
Consolidated Statements of Income
for the years 1993, 1992 and 1991
13
Consolidated Statements of Cash Flows
for the years 1993, 1992 and 1991
13
Consolidated Statements of Changes in
Shareholders' Equity for the years
1993, 1992 and 1991
13
Notes to Consolidated Financial
Statements
13
Report of Independent Accountants
13
Management's Discussion of Financial
Condition and Results of Operations
13
Selected Financial Data for the Years
1989 through 1993
13
Three-Year Summary of Quarterly Results
13
(a) 2. Consolidated Financial Statement Schedules:
Report of Independent Accountants on
Consolidated Financial Statement Schedules
V. Property, Plant and Equipment
for the years 1993, 1992 and 1991
VI. Accumulated Depreciation of Property,
Plant and Equipment for the years
1993, 1992 and 1991
VIII. Valuation and Qualifying Accounts
and Reserves for the years
1993, 1992 and 1991
IX. Short-Term Borrowings
for the years 1993, 1992 and 1991
X. Supplementary Income Statement
Information for the years
1993, 1992 and 1991
Schedules other than those listed above are omitted for the reason that
they are either not applicable or not required or because the
information required is contained in the financial statements or notes
thereto.
Condensed financial information of the registrant is omitted since
there are no substantial amounts of "restricted net assets" applicable
to the Company's consolidated subsidiaries.
Financial statements of 50% or less owned associated companies are not
submitted inasmuch as (1) the registrant's investment in and advances
to such companies do not exceed 20% of the total consolidated assets,
(2) the registrant's proportionate share of the total assets of such
companies does not exceed 20% of the total consolidated assets, (3) the
registrant's equity in the income before income taxes of such companies
does not exceed 20% of the total consolidated income before income
taxes.
<TABLE>
<CAPTION>
(a) 3. Listing of Exhibits Filed with Form 10-K:
Exhibit
Number Data Required Location in 10-K
<S> <C> <C>
2(a) MultiServ International, N.V. Incorporated by reference
to
Acquisition Documents: Form 8-K dated August 31,
1993
- Securities Purchase Agreement
Dated July 8, 1993
- Supplemental Agreement
Dated July 8, 1993
2(b) Joint Venture with FMC Incorporated by reference
to
Corporation Combining Harsco's Form 8-K dated February
14, 1994
BMY-Combat Systems Division
with FMC Defense Systems Group
- Participation Agreement
Dated as of January 1, 1994
- Partnership Agreement
Dated as of January 1, 1994
- Registration Rights Agreement
Dated as of January 1, 1994
3(a) Articles of Incorporation as Exhibit volume, 1990 10-K
amended April 24, 1990
Certificate of Designation filed Exhibit volume, 1987 10-K
September 29, 1987
3(b) By-laws as amended April 25, 1990 Exhibit volume, 1990 10-K
4(a) Debt Securities Registered under Incorporated by reference
to Form
Rule 415 (8 3/4% Notes) S-3, File No. 2-97504,
dated
May 29, 1985
4(b) Harsco Corporation Rights Incorporated by reference
to Form
Agreement dated as of September 8-A, Exhibit 1, dated
October 2, 1987
29, 1987 with Chase Manhattan
Bank, N.A.
4(c) Registration of Preferred Stock Incorporated by reference
to Form
Purchase Rights 8-A dated October 2, 1987
4(d) Current Report on dividend Incorporated by reference
to Form
distribution of Preferred 8-K dated October 13,
1987
Stock Purchase Rights
4(e) Debt Securities Registered under Incorporated by reference
to Form
Rule 415 (8 3/4% Notes) S-3, File No. 33-21526
dated May
23, 1988
4(f) 8 3/4% 1991 Notes due May 15, 1996 Incorporated by reference
to the
described in Prospectus Prospectus Supplement
dated
Supplement dated May 7, 1991 May 7, 1991 to Form S-3,
to Form S-3 Registration under Registration No. 33-21526
dated
Rule 415 dated May 23, 1988 May 23, 1988
4(g) Debt Securities Registered Incorporated by reference
to Form
under Rule 415 (6% Notes) S-3, Registration No.
33-42389
dated August 23, 1991
4(h) 6% 1993 Notes due September 15, Incorporated by reference
to the
2003 described in Prospectus Prospectus Supplement
dated
Supplement dated September 8, September 8, 1993 to Form
S-3,
1993 to Form S-3 Registration under Registration No. 33-42389
dated
Rule 415 dated August 23, 1991 August 23, 1991
Material Contracts - Credit facility
10(a) Revolving Credit facility Exhibit volume, 1993 10-K
Agreement as amended and
restated as of October 20, 1993.
Material Contracts - Underwriting
10(b) Underwriting Agreement for Exhibit volume, 1987 10-K
Debt Securities dated
October 22, 1987
Material Contracts - Government contracts
10(c) Summary of Contract Exhibit volume, 1986 10-K
DAAE07-86-C-J111 with United
States of America May 14, 1986
10(d) Contract Modification dated Exhibit volume, 1987 10-K
February 3, 1988 to Contract
DAAE07-86-C-J111 with United
States Government
10(e) Novation agreement, ARVECO, Exhibit volume, 1986 10-K
Inc., and Harsco Corporation and
United States of America Contract
No. DAAE07-86-C-J111
Material Contracts - Management Contracts and Compensatory Plans
10(f) Harsco Corporation Incentive Plan Exhibit volume, 1992 10-K
as amended March 18, 1992
10(g) Harsco Corporation Supplemental Exhibit volume, 1991 10-K
Retirement Benefit Program as
amended
10(h) Trust Agreement between Harsco Exhibit volume, 1987 10-K
Corporation and Dauphin Deposit
Bank and Trust Company dated
July 1, 1987 relating to the
Supplemental Retirement Benefit
Plan
10(i) Harsco Corporation Supplemental Exhibit volume, 1991 10-K
Executive Retirement Plan as
amended
10(j) Trust Agreement between Harsco Exhibit volume, 1988 10-K
Corporation and Dauphin
Deposit Bank and Trust Company
dated November 22, 1988 relating
to the Supplemental Executive
Retirement Plan
10(k) 1986 Stock Option Plan as Exhibit volume, 1990 10-K
amended
Employment Agreements -
10(l) M. W. Gambill Exhibit volume, 1989 10-K
10(l) Uniform agreement, the
same as
shown for J. J. Burdge
10(l) D. C. Hathaway Exhibit volume, 1989 10-K
10(l) Uniform agreement, the
same as
shown for J. J. Burdge
10(l) L. A. Campanaro Exhibit volume, 1989
10-K
10(l) Uniform agreement, the
same as
shown for J. J. Burdge
10(l) W. D. Etzweiler Exhibit volume, 1989
10-K
10(l) Uniform agreement, the
same as
shown for J. J. Burdge
10(l) B. W. Taussig Exhibit volume, 1989 10-K
10(l) Uniform agreement, the
same as
shown for J. J. Burdge
Retirement Agreements -
10(m) Special Supplemental Retirement
Benefit Agreement and
Amendment for J. J. Burdge Exhibit volume, 1988 10-K
10(n) Special Supplemental Retirement
Benefit Agreement for
D. C. Hathaway Exhibit Volume, 1988 10-K
10(n) Retirement and Consulting Exhibit Volume, 1993 10-K
Agreement for M. W. Gambill
10(n) Special Supplemental Retirement Exhibit volume, 1993 10-K
Benefit Agreement for B. W. Taussig
Director Indemnity Agreements -
10(o) J. J. Burdge Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) M. W. Gambill Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) F. E. Masland, III Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) R. F. Nation Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) D. C. Smith, Jr. Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) A. J. Sordoni, III Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) R. C. Wilburn Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) R. L. Kirk Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) N. H. Prater Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) D. C. Hathaway Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) R. C. Smith Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(o) J. E. Marley Exhibit volume, 1989 10-K
Uniform agreement, same as
shown for J. J. Burdge
10(p) Harsco Corporation Exhibit volume, 1990 10-K
Directors Retirement Plan
10(q) Stock Option Agreement with Exhibit volume, 1991 10-K
M. W. Gambill dated April 22,
1991 awarded in lieu of increase
in cash salary compensation
upon promotion to Chairman
and Chief Executive Officer
10(r) Stock Option Agreement Exhibit volume, 1992 10-K
with M. W. Gambill dated
April 27, 1992 awarded in
lieu of increase in cash
salary compensation
10(s) Stock Option Agreement Exhibit volume 1993 10-K
with M. W. Gambill dated
April 26, 1993 awarded in
lieu of increase in cash salary
compensation
11 Computation of Fully Diluted Exhibit volume, 1993 10-K
Net Income per Common Share
12 Computation of ratios of Exhibit volume, 1993 10-K
earnings to fixed charges
13 Annual report to shareholders Exhibit volume, 1993 10-K
21 Subsidiaries of the registrant Exhibit volume, 1993 10-K
23 Consent of Independent
Accountants Exhibit volume, 1993 10-K
99 Additional exhibits
- Undertakings of Harsco Incorporated by reference
to
relating to registration Exhibit 28, Form 10-K for
the
statement on Form S-16 year ended December 31,
1982
(Reg. No. 2-58121)
- Undertakings of Harsco Incorporated by reference
to
relating to registration Exhibit 28, Form 10-K for
the
statement on Form S-8 year ended December 31,
1982
(Reg. No. 2-57876)
- Undertakings of Harsco Incorporated by reference
to
relating to registration Form S-8, Registration
No.
statement on Form S-8 33-14064, dated May 6,
1987
(Reg. No. 33-14064)
- Undertakings of Harsco Incorporated by reference
to
relating to registration Form S-3, Registration
No.
statement on Form S-3 2-97504 dated May 29,
1985
(Reg. No. 2-97504)
- Undertakings of Harsco Incorporated by reference
to
relating to registration Form S-3, Registration
No.
statement on Form S-3 33-21526 dated May 23,
1988
(Reg. No. 33-21526)
- Undertakings of Harsco Incorporated by reference
to
relating to registration Form S-3, Registration
No.
statement on Form S-3 33-42389, dated August
23, 1991
(Reg. No. 33-42389)
- Undertakings of Harsco Exhibit volume, 1990 10-K
with respect to indemnification
of directors, officers or
persons controlling Harsco
incorporated by reference
into registration statements
on Form S-8, Registration
File Numbers 2-57876,
33-5300, 33-14064 and 33-24854
</TABLE>
Exhibits other than those listed above are omitted for the reason that
they are either not applicable or not material.
The foregoing Exhibits are available from the Secretary of the Company
upon receipt of a fee of $10 to cover the Company's reasonable cost of
providing copies of such Exhibits.
(b) The Company filed a Report on Form 8-K dated January 8, 1993
reporting that the Company had received the decision of The Armed
Services Board of Contract Appeals in case ASBCA No. 36805 concerning
the Company's claim for reimbursement of after-imposed Retail Federal
Excise Tax paid on sales to the United States Government of certain
five-ton trucks under a 1986 contract. The decision holds that, as a
result of the extension of the Federal Excise Tax law beyond its
original October 1, 1988 expiration date, Harsco is entitled to payment
of a price adjustment to the contract to reimburse Federal Excise Tax
paid on vehicles to be delivered after October 1, 1988.
The Company filed a Report on Form 8-K dated July 8, 1993 reporting
that the Company had signed a definitive purchase agreement with the
shareholders representing the majority of the shares of MultiServ
International, N.V. for the acquisition of all of the outstanding
capital stock of MultiServ International, N.V.
The Company filed a Report on Form 8-K dated August 31, 1993 reporting
that the Company had acquired all of the outstanding capital stock of
MultiServ International, N.V.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HARSCO CORPORATION
Date March 18, 1994 By /S/ Leonard A. Campanaro
Leonard A. Campanaro
Senior Vice President-Finance
and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
Chairman
(Malcolm W. Gambill)
President & Chief Executive
(Derek C. Hathaway) Officer
Senior Vice President-Finance and
(Leonard A. Campanaro) Chief Financial Officer
(Principal Financial Officer)
Vice President and Controller
(Salvatore D. Fazzolari) (Principal Accounting Officer)
Director
(Jeffrey J. Burdge)
Director
(Robert L. Kirk)
Director
(James E. Marley)
Director
(Frank E. Masland III)
Director
(Robert F. Nation)
Director
(Nilon H. Prater)
Director
(DeWitt C. Smith, Jr.)
Director
(Roy C. Smith)
Director
(Andrew J. Sordoni III)
Director
(Dr. Robert C. Wilburn)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HARSCO CORPORATION
Date March 18, 1994 By /S/ Leonard A.
Campanaro
Leonard A. Campanaro
Senior Vice
President-Finance and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
/S/ Malcolm W. Gambill Chairman March
23, 1994
(Malcolm W. Gambill)
/S/ Derek C. Hathaway President & Chief Executive March
24, 1994
(Derek C. Hathaway) Officer
/S/ Leonard A. Campanaro Senior Vice President-Finance and March
24, 1994
(Leonard A. Campanaro) Chief Financial Officer
(Principal Financial Officer)
/S/ Salvatore D. Fazzolari Vice President and Controller March
25, 1994
(Salvatore D. Fazzolari) (Principal Accounting Officer)
/S/ Jeffrey J. Burdge Director March
18, 1994
(Jeffrey J. Burdge)
/S/ Robert L. Kirk Director March
18, 1994
(Robert L. Kirk)
/S/ James E. Marley Director March
18, 1994
(James E. Marley)
/S/ Frank E. Masland III Director March
18, 1994
(Frank E. Masland III)
/S/ Robert F. Nation Director March
18, 1994
(Robert F. Nation)
/S/ Nilon H. Prater Director March
18, 1994
(Nilon H. Prater)
/S/ DeWitt C. Smith, Jr. Director March
18, 1994
(DeWitt C. Smith, Jr.)
/S/ Roy C. Smith Director March
18, 1994
(Roy C. Smith)
/S/ Andrew J. Sordoni III Director March
18, 1994
(Andrew J. Sordoni III)
/S/ Dr. Robert C. Wilburn Director March
18, 1994
(Dr. Robert C. Wilburn)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of
Harsco Corporation
Our report on the consolidated financial statements of Harsco
Corporation and subsidiary companies, which includes explanatory
paragraphs regarding (i) uncertainties concerning the Company's
involvement in various disputes regarding Federal Excise Tax and other
contract matters primarily relating to the five-ton truck contract and
the ultimate outcome of the Company's claims against the Government
relating to certain contracts and (ii) changes in the Company's method
of accounting for income taxes and postretirement benefits other than
pensions, has been incorporated by reference in this Form 10-K from
page 56 of the 1993 Annual Report to Shareholders of Harsco
Corporation. In connection with our audits of such consolidated
financial statements, we have also audited the related consolidated
financial statement schedules listed in the index (Item 14(a) 2.) on
page 20 of this Form 10-K.
In our opinion, the consolidated financial statement schedules referred
to above, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND
Philadelphia, Pennsylvania
February 1, 1994, except
as to the first and third
paragraphs of Note 10, for
which the dates are February
25, 1994 and March 4, 1994,
respectively.
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
(dollars in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Changes Due
Balance at to Currency Balance at
Beginning Additions, at Cost Translation End of
Classification of Period Ordinary Acquisitions Retirements Adjustments Period
For the year 1993:
<S> <C> <C> <C> <C> <C> <C>
Land $ 11,232 $ 335 $ 902 $ (289) $ 110 $ 12,648
Bldgs. & Improvements 138,175 4,344 14,166 (1,372) 529 157,528
Machinery and equipment 653,928 61,410 <F1> 175,776 23,969 9,204 857,941
Uncompleted construction 12,040 17,306 11,397 7,774 357 32,612
_______ ______ _______ ______ ______ _________
$815,375 $83,395 $202,241 <F2> $30,082 $10,200 $1,060,729
_______ ______ _______ ______ _______ _________
_______ ______ _______ ______ _______ _________
<FN>
<F1> Machinery and equipment additions reflect expenditures for
expansion,
replacement and modernization relating principally to the
operating group,
Industrial Services and Building Products.
<F2> Includes three acquisitions of plant, property and equipment,
primarily in
the Industrial Services and Building Products Group for MultiServ
International, N.V.
</TABLE>
NOTE: For domestic and foreign facilities, property, plant and
equipment is depreciated over the estimated useful lives of the assets
using principally the straight-line method. The estimated useful lives
of various classes of assets are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Domestic Foreign
Buildings, general 10-50 years 10-50 years
Certain plant buildings and installations 5-20 years 5-25 years
Machinery and equipment 3-25 years 3-25 years
Aircraft and automotive equipment 3-10 years 3-10 years
Furniture and fixtures 5-15 years 5-15 years
</TABLE>
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
(dollars in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Changes Due
Balance at to Currency Balance at
Beginning Additions, at Cost Translation End of
Classification of Period Ordinary Acquisitions Retirements Adjustments Period
For the year 1992:
<S> <C> <C> <C> <C> <C> <C>
Land $ 11,296 $ 197 $ 1,160 $ 1,281 $ (140) $ 11,232
Bldgs. and improvements 135,873 9,102 4,370 10,609 (561) 138,175
Machinery and equipment 668,322 41,744 <F1> 12,092 54,598 (13,632) 653,928
Uncompleted construction 20,489 (8,323) - 103 (23) 12,040
_______ ______ ______ ______ ______ _______
$835,980 $42,720 $17,622 <F3> $66,591 <F2> $(14,356) $815,375
_______ ______ _______ ______ _______ ________
_______ ______ _______ ______ _______ ________
<FN>
<F1> Machinery and equipment additions reflect expenditures for
expansion,
replacement and modernization relating principally to the
operating group,
Industrial Services and Building Products.
<F2> Includes the disposition of certain businesses associated with
two product
classes (plastic products and hydraulic tool products) amounting
to
$34,542,000.
<F3> Relates to acquisition of Tamper business of Canron, Inc.
</TABLE>
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
(dollars in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Changes Due
Balance at to Currency Balance at
Beginning Additions, at Cost Translation End of
Classification of Period Ordinary Acquisitions Retirements Adjustments Period
For the year 1991:
<S> <C> <C> <C> <C> <C> <C>
Land $ 10,532 $ 711 $ 141 $ 47 $ (41) $ 11,296
Bldgs. and improvements 130,964 6,270 848 2,028 (181) 135,873
Machinery and equipment 645,761 48,783 <F1> 1,915 28,054 <F2> (83) 668,322
Uncompleted construction 23,467 (1,918) - 1,079 19 20,489
_______ ______ _____ ______ _____ _______
$810,724 $53,846 $2,904 $31,208 $ (286) $835,980
_______ ______ _____ ______ _____ _______
_______ ______ _____ ______ _____ _______
<FN>
<F1> Machinery and equipment additions reflect expenditures for
expansion,
replacement and modernization relating principally to the
operating group,
Industrial Services and Building Products.
<F2> Machinery and equipment retirements related principally to the
operating
group, Industrial Services and Building Products.
</TABLE>
SCHEDULE VI. ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
(dollars in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Additions Changes due Balance
Balance at Charged Charged to Currency at
Beginning to Cost to Other Translation End of
Description of Period & Expenses Expenses Acquisitions Retirements Adjustments,Etc. Period
For the year 1993:
<S> <C> <C> <C> <C> <C> <C> <C>
Bldgs. and improvements $ 68,033 $ 7,806 $ (208) $ - $ 522 $ (141) $ 74,968
Machinery and equipment 468,656 61,752 (2,959) - 26,863 (6,480) 494,106
_______ ______ ______ _____ ______ _______ _______
$536,689 $69,558 $(3,167) <F1> $ - $27,385 $ (6,621) $569,074
_______ ______ ______ _____ ______ _______ _______
_______ ______ ______ _____ ______ _______ _______
For the year 1992:
Bldgs. and improvements $ 66,004 $ 8,714 $ 85 $ - $ 6,721 $ (49) $ 68,033
Machinery and equipment 473,403 48,350 1,465 1,109 45,397 (10,274) 468,656
_______ ______ ______ _____ ______ _______ _______
$539,407 $57,064 $ 1,550 <F1> $1,109 <F2> $52,118 <F3> $(10,323) $536,689
_______ ______ ______ _____ ______ _______ _______
_______ ______ ______ _____ ______ _______ _______
For the year 1991:
Bldgs. and improvements $ 60,776 $ 6,554 $ 208 $ - $ 1,508 $ (26) $ 66,004
Machinery and equipment 449,224 51,110 273 - 27,046 <F4> (158) 473,403
_______ ______ ______ _____ ______ _______ _______
$510,000 $57,664 $ 481 <F1> $ - $28,554 $ (184) $539,407
_______ ______ ______ _____ ______ _______ _______
_______ ______ ______ _____ ______ _______ _______
<FN>
<F1> Provision (Income) for facility discontinuances or disposals.
<F2> Reserves of companies acquired during the year. See note on
Schedule V
related to the addition of property, plant and equipment through
acquisitions.
<F3> Includes the disposition of certain businesses associated with
two product
classes (plastic products and hydraulic tool products) amounting
to
$22,333,000.
<F4> Machinery and equipment retirements related principally to the
operating
group, Industrial Services and Building Products.
</TABLE>
SCHEDULE VIII. VALUATION AND QUALIFYING ACCOUNTS
(dollars in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions Deductions
Due to
Balance at Charged to Currency Balance at
Beginning Cost and Translation End of
Description of Period Expenses Adjustments Other <F1> Period
For the year 1993:
<S> <C> <C> <C> <C> <C>
Deducted from Receivables:
Uncollectible accounts $10,244 $ 2,761 $ (7) $ (467) $13,479
______ ______ ____ _____ ______
______ ______ ____ _____ ______
Deducted from Inventories:
Inventory valuations $ 8,708 $ 6,682 $ 61 $6,116 $ 9,213
______ ______ ____ _____ ______
______ ______ ____ _____ ______
For the year 1992:
Deducted from Receivables:
Uncollectible accounts $13,489 $ 2,914 $ 171 $5,988 $10,244
______ ______ ____ _____ ______
______ ______ ____ _____ ______
Deducted from Inventories:
Inventory valuations $12,844 $(2,217) $ 146 $1,773 $ 8,708
______ ______ ____ _____ ______
______ ______ ____ _____ ______
For the year 1991:
Deducted from Receivables:
Uncollectible accounts $13,578 $2,935 $ 16 $3,008 $13,489
______ ______ ____ _____ ______
______ ______ ____ _____ ______
Deducted from Inventories:
Inventory valuations $11,940 $3,330 $ 4 $2,422 $12,844
______ ______ ____ _____ ______
______ ______ ____ _____ ______
<FN>
<F1> Amounts charged to valuation account during the year.
</TABLE>
SCHEDULE IX. SHORT-TERM BORROWINGS
(dollars in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Weighted Maximum
Average Amount Average Amount Weighted Average
Balance at Interest Outstanding Outstanding Interest Rate
Category of Aggregate End of Rate at During the During the During the
Short-Term Borrowings Period 12/31 Period <F4> Period <F5> Period <F6>
<S> <C> <C> <C> <C> <C>
For the year 1993:
Payable to banks $51,884 <F1> 4.9% $51,998 $21,732 8.1%
For the year 1992:
Payable to banks $10,564 <F2> 9.3% $16,361 $13,140 12.1%
For the year 1991:
Payable to banks $18,274 <F3> 10.4% $39,231 $25,099 11.4%
<FN>
<F1> Includes $21,884 of foreign bank overdrafts at various interest
rates
payable upon demand and $30,000 revolving credit facility at
3.57%,
variable.
<F2> Includes $10,564 of foreign bank overdrafts at various interest
rates
payable upon demand.
<F3> Includes $18,274 of foreign bank overdrafts at various interest
rates
payable upon demand.
<F4> Calculated on the basis of the aggregate maximum amount
outstanding at any
month-end during the year.
<F5> Calculated on the basis of the average balance of borrowings
outstanding
at each month-end.
<F6> Actual interest cost divided by average debt amount.
</TABLE>
SCHEDULE X. SUPPLEMENTARY INCOME STATEMENT INFORMATION (dollars in
thousands)
COLUMN A COLUMN B
Item Charged to Costs and Expenses
1993 1992 1991
Maintenance and repairs $55,947 $47,670 $47,826
HARSCO CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 24, 1993
Amended and Restated as of October 20, 1993
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
Section 1. Definitions and Accounting Matters
1.01 Certain Defined Terms
1.02 Accounting Terms and Determinations
1.03 Classes and Types of Loans
Section 2. Commitments, Loans, Notes and Prepayments
2.01 Syndicated Loans
2.02 Borrowings of Syndicated Loans
2.03 Money Market Loans
2.04 Changes of Commitments
2.05 Facility Fees
2.06 Lending Offices
2.07 Several Obligations; Remedies Independent
2.08 Notes
2.09 Prepayments
2.10 Borrowings by Approved Borrowers
2.11 Extension of Revolving Credit Termination Date
Section 3. Payments of Principal and Interest
3.01 Repayment of Loans
3.02 Interest
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments
4.02 Pro Rata Treatment
4.03 Computations
4.04 Minimum Amounts
4.05 Certain Notices
4.06 Non-Receipt of Funds by the Agent
4.07 Sharing of Payments, Etc.
Section 5. Yield Protection, Etc.
5.01 Additional Costs
5.02 Limitation on Types of Loans
5.03 Illegality
5.04 Treatment of Affected Loans
5.05 Compensation
5.06 U.S. Taxes
5.07 Foreign Taxes
5.08 Replacement Banks
Section 6. Guarantee
6.01 Guarantee
6.02 Obligations Unconditional
6.03 Reinstatement
6.04 Subrogation
6.05 Remedies
6.06 Continuing Guarantee
Section 7. Conditions Precedent
7.01 Conditions to Effectiveness
7.02 Initial Loan to any Approved Borrower
7.03 Initial and Subsequent Loans
Section 8. Representations and Warranties
8.01 Corporate Existence
8.02 Financial Condition
8.03 Litigation
8.04 No Breach
8.05 Action
8.06 Approvals
8.07 Use of Credit
8.08 ERISA
8.09 Taxes
8.10 Investment Company Act
8.11 Public Utility Holding Company Act
8.12 Material Agreements and Liens
8.13 Environmental Matters
8.14 Subsidiaries, Etc.
8.15 True and Complete Disclosure
8.16 Corporate Existence of Approved Borrower
8.17 No Breach
8.18 Action
8.19 Approvals
8.20 Taxes on Payments of Approved Borrowers
Section 9. Covenants of the Company
9.01 Financial Statements, Etc.
9.02 Litigation
9.03 Existence, Etc.
9.04 Insurance
9.05 Prohibition of Fundamental Changes
9.06 Limitation on Liens
9.07 Interest Coverage Ratio
9.08 Tangible Net Worth
9.09 Total Debt to Total Capital Ratio
9.10 Lines of Business
9.11 Transactions with Affiliates
9.12 Use of Proceeds
Section 10. Events of Default
Section 11. The Agent
11.01 Appointment, Powers and Immunities
11.02 Reliance by Agent
11.03 Defaults
11.04 Rights as a Bank
11.05 Indemnification
11.06 Non-Reliance on Agent and Other Banks
11.07 Failure to Act
11.08 Resignation or Removal of Agent
Section 12. Miscellaneous
12.01 Waiver
12.02 Notices
12.03 Expenses, Etc.
12.04 Amendments, Etc.
12.05 Successors and Assigns
12.06 Assignments and Participations
12.07 Survival
12.08 Captions
12.09 Counterparts
12.10 Governing Law; Submission to Jurisdiction
12.11 Waiver of Jury Trial
12.12 Judgment Currency
12.13 Treatment of Certain Information; Confidentiality
12.14 Entire Agreement
SCHEDULE I - Material Agreements and Liens
SCHEDULE II - Subsidiaries
SCHEDULE III - Litigation
EXHIBIT A-l - Form of Revolving Credit Note
EXHIBIT A-2 - Form of Eurocurrency Note
EXHIBIT A-3 - Form of Money Market Note
EXHIBIT B-l - Form of Opinion of Counsel to the Company
EXHIBIT B-2 - Form of Opinion of Counsel to any Approved Borrower
EXHIBIT C - Form of Opinion of Special New York Counsel to Chase
EXHIBIT D - Form of Money Market Quote Request
EXHIBIT E - Form of Money Market Quote
EXHIBIT F - Form of Confidentiality Agreement
EXHIBIT G-l - Form of Designation Letter
EXHIBIT G-2 - Form of Termination Letter
AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 24, 1993,
amended and restated as of October 20, 1993, between: HARSCO
CORPORATION, a corporation duly organized and validly existing under
the laws of the State of Delaware (the Company"); each of the lenders
that is a signatory hereto identified under the caption "BANKS" on the
signature pages hereto or that, pursuant to Section 12.06(b) hereof,
shall become a "Bank" hereunder (individually, a "Bank" and,
collectively, the "Banks"); and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking association, as agent for the Banks
(in such capacity, together with its successors in such capacity, the
"Agent").
The Company, Chase as the sole lender party thereto and the Agent are
party to a Credit Agreement dated as of August 24, 1993 (as modified
and supplemented and in effect immediately prior to the Amendment
Effective Date referred to below, the "Original Credit Agreement")
providing (i) a term loan facility of $300,000,000, of which
$250,000,000 was borrowed on the Closing Date and $102,000,000 remains
outstanding on the Restatement Date (the "Existing Term Loan") and (ii)
a short term revolving credit facility of $150,000,000, which on the
Restatement Date remains undrawn (the "Existing Revolving Credit
Facility"). The proceeds of the Existing Term Loan were used to
purchase the shares of MultiServ International N.V. ("MSI"), to repay
certain indebtedness of MSI and its subsidiaries and to pay related
costs and expenses.
The Company wishes to (i) increase the Existing Term Loan up to
$150,000,000, (ii) eliminate the amortization of the Existing Term
Loan, (iii) be able to denominate the Existing Term Loan in other
currencies in addition to Dollars and (iv) to make the Existing Term
Loan and the Existing Revolving Credit Facility also available to
designated subsidiaries of the Company; and Chase wishes to syndicate
the Existing Term Loan and the Existing Revolving Credit Facility.
Accordingly, the Company has requested that the Banks and the Agent
agree to amend and restate the Original Credit Agreement, and the Banks
and the Agent are willing to amend and restate the Original Credit
Agreement, all on the terms and conditions hereinafter set forth so
that, as amended and restated, the Original Credit Agreement reads in
its entirety as provided herein.
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms shall
have the following meanings (all terms defined in this Section 1.01 or
in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Affiliate" shall mean any Person that directly or indirectly controls,
or is under common control with, or is controlled by, the Company and,
if such Person is an individual, any member of the immediate family
(including parents, spouse, children and siblings) of such individual
and any trust whose principal beneficiary is such individual or one or
more members of such immediate family and any Person who is controlled
by any such member or trust. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under
common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any
event, any Person that owns directly or indirectly securities having 5%
or more of the voting power for the election of directors or other
governing body of a corporation or 5% or more of the partnership or
other ownership interests of any other Person (other than as a limited
partner of such other Person) will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, (a) no
individual shall be an Affiliate solely by reason of his or her being a
director, officer or employee of the Company or any of its Subsidiaries
and (b) none of the Subsidiaries of the Company shall be Affiliates.
"Agent's Account" shall mean (a) in respect of (i) Dollars, account
number NYAO-DI-900-9-000002 maintained by the Agent with Chase at the
Principal Office, (ii) Belgian Francs, account number 550877160077
maintained by Chase with Banque Paribas Belgique S.A. at World Trade
Center Blvd., Emile Jacomain 162 BTE 2, 1210 Brussels, Belgium, (iii)
French Francs, account number 001014421280 maintained by Chase with
Societe Generale at 29 Boulevard Haussmann, 75009 Paris, France, (iv)
Deutschemarks, account number 400887330900 maintained by Chase with
Commerzbank, A.G., Neue Mainzer Strasse 32-36, 60311 Frankfurt am Main
1, Germany, and (v) Pounds Sterling, account number 440/00/04403657
maintained by Chase with National Westminster Bank PLC at National
Westminster Tower, 25 Old Broad Street, London EC2, England or (b) any
other account in respect of any such Currency as the Agent shall
designate in a notice to the Company and the Banks.
"Alternative Currency" shall mean at any time any of Belgian Francs,
French Francs, Deutschemarks and Pounds Sterling, so long as at such
time, (i) such Currency is dealt with in the London interbank deposit
market, (ii) such Currency is freely transferable and convertible into
Dollars in the London foreign exchange market and (iii) no central bank
or other governmental authorization in the country of issue of such
Currency is required to permit use of such Currency by any Bank for
making any Loan hereunder and/or to permit the relevant Borrower to
borrow and repay the principal thereof and to pay the interest thereon,
unless such authorization has been obtained.
"Amendment Effective Date" shall mean the date on which all of the
conditions set forth in Section 7.01 hereof shall have been satisfied
or waived by the Banks and the Agent.
"Applicable Lending Office" shall mean, for each Bank and for each Type
and Currency of Loan, the "Lending Office" of such Bank (or of an
affiliate of such Bank) designated for such Type and Currency of Loan
on the signature pages hereof or such other office of such Bank (or of
an affiliate of such Bank) as such Bank may from time to time specify
to the Agent and the Company as the office by which its Loans of such
Type and Currency are to be made and maintained.
"Applicable Margin" shall mean: (a) with respect to Base Rate Loans,
0% per annum; (b) with respect to LIBOR Loans that are Revolving Credit
Loans, the rate for each rating level period set forth in the schedule
below under the caption "Revolving Credit Loans"; and (c) with respect
to LIBOR Loans that are Eurocurrency Loans, the rate for each rating
level period set forth in the schedule below under the caption
"Eurocurrency Loans":
<TABLE>
<CAPTION>
LIBOR Loans
Rating Revolving Credit Loans Eurocurrency
Loans
<S> <C> <C>
Level I Period 0.3125% 0.4125%
Level II Period 0.4375% 0.5000%
Level III Period 0.5000% 0.5625%
Level IV Period 0.8750% 1.0000%
</TABLE>
Any change in the Applicable Margin for any Class of LIBOR Loans by
reason of a change in the Standard & Poor's Rating or the Moody's
Rating shall become effective on the date of announcement or
publication by the respective rating agencies of a change in such
rating or, in the absence of such announcement or publication, on the
effective date of such changed rating.
"Approved Borrower" shall mean any Wholly Owned Subsidiary of the
Company as to which a Designation Letter has been delivered to the
Agent and as to which a Termination Letter shall not have been
delivered to the Agent, which Subsidiary has been approved as a
borrower hereunder by all of the Banks, all in accordance with Section
2.10 hereof.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978, as
amended from time to time.
"Base Rate" shall mean, for any day, a rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and
(b) the Prime Rate for such day. Each change in any interest rate
provided for herein based upon the Base Rate resulting from a change in
the Base Rate shall take effect at the time of such change in the Base
Rate.
"Base Rate Loans" shall mean Syndicated Loans that bear interest at
rates based upon the Base Rate.
"Belgian Francs" shall mean lawful money of the Kingdom of Belgium.
"BMY Joint Venture" shall have the meaning assigned to such term in
Section 9.05(d) hereof.
"Borrowers" shall mean the Company and each Approved Borrower.
"Business Day" shall mean (a) any day on which commercial banks are not
authorized or required to close in New York City and (b) if such day
relates to the giving of notices or quotes in connection with a LIBOR
Auction or to a borrowing of, a payment or prepayment of principal of
or interest on, or an Interest Period for, a LIBOR Loan or a LIBOR
Market Loan or a notice by the Company with respect to any such
borrowing, payment, prepayment or Interest Period, any day on which
dealings in deposits are carried out in the London interbank market and
(c) if such day relates to a borrowing of, a payment or prepayment of
principal of or interest on, or an Interest Period for, any
Eurocurrency Loan denominated in an Alternative Currency, or a notice
by the Company with respect to any such borrowing, payment, prepayment
or Interest period, any day on which foreign exchange trading is
carried out in the London interbank market and on which banks are open
in the place of payment in the country in whose Currency such
Eurocurrency Loan is denominated.
"Capitol Lease Obligations" shall mean, for any Person, all obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a
capital lease on a balance sheet of such Person under GAAP, and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
"Chase" shall mean The Chase Manhattan Bank (National Association).
"Class" shall have the meaning assigned to such term in Section 1.03
hereof.
"Closing Date" shall mean August 30, 1993, the date upon which the
initial Loan was made hereunder.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitments" shall mean the Revolving Credit Commitments and the
Eurocurrency Commitments.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 5.04 hereof of one Type of Loan into another Type
of Loan, which may be accompanied by the transfer by a Bank (at its
sole discretion) of a Loan from one Applicable Lending Office to
another.
"Currency" shall mean Dollars or any Alternative Currency.
"Date of this Agreement" and "date hereof" shall mean August 24, 1993.
"Default" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"Deutschemarks" shall mean lawful money of the Federal Republic of
Germany.
"Disposition" shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired)
by the Company or any of its Subsidiaries to any other Person excluding
any sale, assignment, transfer or other disposition of any Property
sold or disposed of in the ordinary course of business and on ordinary
business terms. The terms "Dispose" and "Disposed" used as a verb
shall have a correlative meaning.
"Dollar Equivalent" shall mean, with respect to any Eurocurrency Loan
denominated in an Alternative Currency as at any date of determination
thereof, the amount of Dollars that would be required to purchase the
amount of the Alternative Currency of such Loan on the date two
Business Days prior to the date of such Loan, based upon the arithmetic
mean (rounded upwards, if necessary, to the nearest 1/100 of 1%), as
determined by the Agent, of the spot selling rate at which the
Reference Banks offer to sell such Alternative Currency for Dollars in
the London foreign exchange market at approximately 11:00 a.m. London
time for delivery on the date of such Loan.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiary" shall mean any Subsidiary organized or
incorporated under the law of one of the States of the United States of
America, the laws of the District of Columbia or the Federal laws of
the United States of America.
"Environmental Claim" shall mean, with respect to any Person, any
written or oral notice, claim, demand or other communication
(collectively, a "claim") by any other Person alleging or asserting
such Person's liability for investigatory costs, cleanup costs,
governmental response costs, damages to natural resources or other
Property, personal injuries, fines or penalties arising out of, based
on or resulting from (i) the presence, or Release into the environment,
of any Hazardous Material at any location, whether or not owned by such
Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental
Claim" shall include, without limitation, any claim by any governmental
authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law,
and any claim by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment.
"Environmental Laws" shall mean any and all present and future Federal,
state, local and foreign laws, rules or regulations, and any orders or
decrees, in each case as now or hereafter in effect, relating to the
regulation or protection of human health, safety or the environment or
to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or toxic or hazardous substances or
wastes into the indoor or outdoor environment, including, without
limitation, ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants, chemicals or toxic or
hazardous substances or wastes.
"Equity Rights" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any
stockholders, or voting trust agreements) for the issuance, sale,
registration or voting of, or securities convertible into, any
additional shares of capital stock of any class, or partnership or
other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code of which the Company is a member and (ii)
solely for purposes of potential liability under Section 302(c)(11) of
ERISA and Section 412(c)(11) of the Code and the lien created under
Section 302(f) of ERISA and Section 412(n) of the Code, described in
Section 414(m) or (o) of the Code of which the Company is a member.
"Eurocurrency Banks" shall mean Banks having Eurocurrency Commitments
and/or holding Eurocurrency Loans.
"Eurocurrency Commitment" shall mean, for each Eurocurrency Bank, the
obligation of such Bank to make Eurocurrency Loans in an aggregate
amount at any one time outstanding up to but not exceeding (a) in the
case of a Eurocurrency Bank that is a party to this Agreement as of the
Restatement Date, the amount set opposite the name of such Bank on the
signature pages hereof under the caption "Eurocurrency Commitment" and
(b) in the case of any other Eurocurrency Bank, the aggregate amount of
the Eurocurrency Commitment(s) of other Bank(s) acquired by it pursuant
to Section 12.06(b) hereof (in each case, as the same may be increased
or reduced from time to time pursuant to said Section 12.06(b)). The
original aggregate principal amount of the Eurocurrency Commitments is
$150,000,000.
"Eurocurrency Commitment Termination Date" shall mean the last Business
Day in September, 1998.
"Eurocurrency Loans" shall mean the Syndicated Loans provided for by
Section 2.01(b) hereof, which may be Base Rate Loans and/or LIBOR
Loans.
"Eurocurrency Notes" shall mean the promissory notes provided for by
Section 2.08(b) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be
modified and supplemented and in effect from time to time.
"Event of Default" shall have the meaning assigned to such term in
Section 10 hereof.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day, provided
that (a) if the day for which such rate is to be determined is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the immediately preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is
not so published for any Business Day, the Federal Funds Rate for such
Business Day shall be the average rate charged to Chase on such
Business Day on such transactions as determined by the Agent.
"French Francs" shall mean lawful money of the Republic of France.
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with those that, in accordance with the last sentence
of Section 1.02(a) hereof, are to be used in making the calculations
for purposes of determining compliance with this Agreement.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under
or with respect to, the Indebtedness, other obligations, net worth,
working capital or earnings of any Person, or a guarantee of the
payment of dividends or other distributions upon the stock or equity
interests of any Person, or an agreement to purchase, sell or lease (as
lessee or lessor) Property, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss,
and including, without limitation, causing a bank or other financial
institution to issue a letter of credit or other similar instrument for
the benefit of another Person, but excluding endorsements for
collection or deposit in the ordinary course of business. The terms
"Guarantee" and "Guaranteed" used as a verb shall have a correlative
meaning.
"Guarantor" shall mean the Company in its capacity as the guarantor
under Section 6 hereof.
"Hazardous Material" shall mean, collectively, (a) any petroleum or
petroleum products, flammable explosives, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde
foam insulation, and transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls (PCB's), (b) any
chemicals or other materials or substances that are now or hereafter
become defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely
hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants" or words of similar
import under any Environmental Law and (c) any other chemical or other
material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to
another Person subject to an understanding or agreement, contingent or
otherwise, to repurchase such Property from such Person); (b)
obligations of such Person to pay the deferred purchase or acquisition
price of Property or services, other than trade accounts payable (other
than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are
payable within 180 days of the date the respective goods are delivered
or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the
respective indebtedness so secured has been assumed by such Person; (d)
obligations of such Person in respect of letters of credit, bankers'
acceptances or similar instruments issued or accepted by banks and
other financial institutions for account of such Person; (e) Capital
Lease Obligations of such Person; and (f) Indebtedness of others
Guaranteed by such Person.
"Interest Coverage Ratio" shall mean, for any period, the ratio of (a)
Net Operating Income for such period to (b) Interest Expense for such
period.
"Interest Expense" shall mean, for any period, the sum, for the Company
and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all
interest in respect of Indebtedness (including, without limitation, the
interest component of any payments in respect of Capital Lease
Obligations) accrued or capitalized during such period (whether or not
actually paid during such period) plus (b) the net amount payable (or
minus the net amount receivable) under Interest Rate Protection
Agreements during such period (whether or not actually paid or received
during such period).
"Interest Period" shall mean:
(a) with respect to any LIBOR Loan, each period commencing on the date
such LIBOR Loan is made and ending on the numerically corresponding day
in the first, second, third or sixth calendar month thereafter, as the
Company (on its own behalf and on behalf of any other Borrower) may
select as provided in Section 4.05 hereof, except that each Interest
Period that commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month;
(b) with respect to any Base Rate Loan, the period commencing on the
date such Base Rate Loan is made and ending on the Quarterly Date next
succeeding such date;
(c) With respect to any Set Rate Loan, the period commencing on the
date such Set Rate Loan is made and ending on any Business Day up to
180 days thereafter, as the Company (on its own behalf and on behalf of
any other Borrower) may select as provided in Section 2.03(b) hereof;
and
(d) With respect to any LIBOR Market Loan, the period commencing on
the date such LIBOR Market Loan is made and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Company (on its own behalf and on behalf of any
other Borrower) may select as provided in Section 2.03(b) hereof,
except that each Interest Period that commences on the last Business
Day of a calendar month (or any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall
end on the last Business Day of the appropriate subsequent calendar
month.
Notwithstanding the foregoing: (i) no Interest Period for any Money
Market Loan may end after the Revolving Credit Termination Date; (ii)
no Interest Period for any Revolving Credit Loan may end after the
Revolving Credit Termination Date; (iii) no Interest Period for any
Eurocurrency Loan may end after the Eurocurrency Commitment Termination
Date; (iv) each Interest Period that would otherwise end on a day that
is not a Business Day shall end on the next succeeding Business Day
(or, in the case of an Interest Period for a LIBOR Loan or a LIBOR
Market Loan, if such next succeeding Business Day falls in the next
succeeding calendar month, on the immediately preceding Business Day);
and (v) notwithstanding clauses (i), (ii) and (iii) above, no Interest
Period for any LIBOR Loan or LIBOR Market Loan may have a duration of
less than one month.
"Interest Rate Protection Agreement" shall mean, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement
between such Person and one or more financial institutions providing
for the transfer or mitigation of interest risks either generally or
under specific contingencies.
"Investment" shall mean, for any Person: (a) the acquisition (whether
for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of any other Person or any agreement to
make any such acquisition (including, without limitation, any "short
sale" or any sale of any securities at a time when such securities are
not owned by the Person entering into such sale); (b) the making of any
deposit with, or advance, loan or other extension of credit to, any
other Person (including the purchase of Property from another Person
subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such Person), but excluding any such advance,
loan or extension of credit having a term not exceeding 180 days
representing the purchase price of inventory or supplies sold by such
Person in the ordinary course of business); (c) the entering into of
any Guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to
such Person; or (d) the entering into of any Interest Rate Protection
Agreement.
"Level I Period" shall mean any period during which (a) no Event of
Default has occurred and is continuing, (b) the Standard & Poor's
Rating is at or above A (or any successor rating) and (c) the Moody's
Rating is at or above A3 (or any successor rating).
"Level II Period" shall mean any period, other than a Level I Period,
during which (a) no Event of Default has occurred and is continuing,
(b) the Standard & Poor's Rating is at or above BBB (or any successor
rating) and (c) the Moody's Rating is at or above Baa2 (or any
successor rating).
"Level III Period" shall mean any period, other than a Level I Period
or a Level II Period, during which (a) no Event of Default has occurred
and is continuing, (b) the Standard & Poor's Rating is at or above BBB-
(or any successor rating) and (c) the Moody's Rating is at or above
Baa3 (or any successor rating).
"Level IV Period" shall mean any period that is not a Level I Period, a
Level II Period or a Level III Period.
"LIBO Base Rate" shall mean, with respect to any LIBOR Loan in any
Currency for any Interest Period therefor, the arithmetic mean (rounded
upwards, if necessary, to the nearest 1/100 of 1%), as determined by
the Agent, of the rates per annum quoted by each respective Reference
Bank at approximately 11:00 a.m. London time (or as soon thereafter as
practicable) on the date two Business Days prior to the first day of
such Interest Period for the offering by the respective Reference Banks
to leading banks in the London interbank market of deposits in such
Currency having a term comparable to such Interest Period and in an
amount comparable to the principal amount of the LIBOR Loan to be made
by the respective Reference Banks for such Interest Period. If any
Reference Bank is not participating in any LIBOR Loans during any
Interest Period therefor, the LIBO Base Rate for such Loans for such
Interest Period shall be determined by reference to the amount of such
Loans that such Reference Bank would have made or had outstanding had
it been participating in such Loan during such Interest Period;
provided that in the case of any LIBOR Market Loan, the LIBO Base Rate
for such Loan shall be determined with reference to deposits of
$25,000,000. If any Reference Bank does not timely furnish such
information for determination of any LIBO Base Rate, the Agent shall
determine such LIBO Base Rate on the basis of the information timely
furnished by the remaining Reference Banks.
"LIBO Margin" shall have the meaning assigned to such term in Section
2.03(c)(ii)(C) hereof.
"LIBO Rate" shall mean, for any LIBOR Loan, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined by the
Agent to be equal to the rate of interest specified in the definition
of "LIBO Base Rate" in this Section 1.01 for the Interest Period for
such Loan divided by 1 minus the Reserve Requirement (if any) for such
Loan for such Interest Period.
"LIBOR Auction" shall mean a solicitation of Money Market Quotes
setting forth LIBO Margins based on the LIBO Rate pursuant to Section
2.03 hereof.
"LIBOR Loans" shall mean Syndicated Loans interest rates on which are
determined on the basis of LIBO Rates and, for the purposes of the
definition of "LIBO Base Rate" in this Section 1.01 and in Section 5
hereof, LIBOR Market Loans.
"LIBOR Market Loans" shall mean Money Market Loans interest rates on
which are determined on the basis of LIBO Rates pursuant to a LIBOR
Auction.
"Lien" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect
of such Property. For purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any Property that it has acquired or
holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement (other than an operating lease) relating to such Property.
"Loans" shall mean Syndicated Loans and Money Market Loans.
"Majority Banks" shall mean Majority Revolving Credit Banks and
Majority Eurocurrency Banks.
"Majority Eurocurrency Banks" shall mean Eurocurrency Banks having more
than 50% of the aggregate amount of the Eurocurrency Commitments, or if
the Eurocurrency Commitments shall have terminated, Banks holding more
than 50% of the aggregate unpaid principal amount of the Eurocurrency
Loans.
"Majority Revolving Credit Banks" shall mean Revolving Credit Banks
having more than 50% of the aggregate amount of the Revolving Credit
Commitments or, if the Revolving Credit Commitments shall have
terminated, Banks holding more than 50% of the sum of (a) the aggregate
unpaid principal amount of the Revolving Credit Loans plus (b) the
aggregate unpaid principal amount of the Money Market Loans.
"Margin Stock" shall mean "margin stock" within the meaning of
Regulation U and Regulation X.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Company and its Subsidiaries taken
as a whole, (b) the ability of the Company or any Approved Borrower to
perform its obligations hereunder and under the Notes, (c) the validity
or enforceability of this Agreement or of the Notes, (d) the rights and
remedies of the Banks and the Agent hereunder and under the Notes or
(e) the timely payment of the principal of or interest on the Loans or
other amounts payable in connection therewith.
"Money Market Borrowing" shall have the meaning assigned to such term
in Section 2.03(b) hereof.
"Money Market Loan Limit" shall have the meaning assigned to such term
in Section 2.03(c)(ii) hereof.
"Money Market Loans" shall mean the loans provided for by Section 2.03
hereof.
"Money Market Notes" shall mean the promissory notes provided for by
Section 2.08(c) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be
modified and supplemented and in effect from time to time.
"Money Market Quote" shall mean an offer in accordance with Section
2.03(c) hereof by a Bank to make a Money Market Loan with one single
specified interest rate.
"Money Market Quote Request" shall have the meaning assigned to such
term in Section 2.03(b) hereof.
"Moody's" shall mean Moody's Investors Service, Inc. or any successor
thereto.
"Moody's Rating" shall mean, at any time, the then current rating
(including the failure to rate) by Moody's of the Company's senior
unsecured, unguaranteed long term public debt.
"Multiemployer Plan" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the
Company or any ERISA Affiliate and that is covered by Title IV of
ERISA.
"Net Income" shall mean, for any period for the Company and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), net income for such period.
"Net Operating Income" shall mean, for any period for the Company and
its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), net income (calculated before
interest income and expense, equity in net income or loss of
unconsolidated companies, taxes, cumulative effect(s) of accounting
change(s) and extraordinary and unusual items) for such period plus, if
the BMY Joint Venture is formed and the transactions referred to in
Section 9.05(d) hereof are consummated, equity in net income or loss
attributable to the BMY Joint Venture (to the extent not included in
determining net income) for such period.
"Net Worth" shall mean, as at any date, the sum for the Company and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) of the following:
(a) the amount of common stock; plus
(b) the amount of any preferred stock that does not have any
requirement for the Company to purchase, redeem, retire or otherwise
acquire the same; plus
(c) the amount of additional paid-in capital and retained earnings
(or, in the case of an additional paid-in capital or retained earnings
deficit, minus the amount of such deficit); plus
(d) cumulative translation adjustments (or, in the case of negative
adjustments, minus the amount of such adjustments); plus
(e) cumulative pension liability adjustments (or, in the case of
negative adjustments, minus the amount of such adjustments); minus
(f) the cost of treasury stock.
"Notes" shall mean the Syndicated Notes and the Money Market Notes.
"Obligors" shall mean the Borrowers and the Guarantor.
"Original Notes" shall mean the promissory notes of the Company
delivered to the lenders party to the Original Credit Agreement on the
Closing Date pursuant to the Original Credit Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
maintained by the Company or any ERISA Affiliate and that is covered by
Title IV of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal of any Loan
or any other amount under this Agreement or any Note that is not paid
when due (whether at stated maturity, by acceleration, by optional
prepayment or otherwise), a rate per annum during the period from and
including the due date to but excluding the date on which such amount
is paid in full equal to 2% plus the Base Rate as in effect from time
to time plus the Applicable Margin for Base Rate Loans (provided that,
if the amount so in default is principal of a LIBOR Loan or a Money
Market Loan and the due date thereof is a day other than the last day
of the Interest Period therefor, the "Post-Default Rate" for such
principal shall be, for the period from and including such due date to
but excluding the last day of such Interest Period, 2% plus the
interest rate for such Loan as provided in Section 3.02 hereof and,
thereafter, the rate provided for above in this definition).
"Pounds Sterling" shall mean lawful money of England.
"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at the Principal Office as its prime commercial
lending rate.
"Principal Office" shall mean the principal office of Chase, located on
the date hereof at 1 Chase Manhattan Plaza, New York, New York 10081.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible
or intangible.
"Quarterly Dates" shall mean the last Business Day of March, June,
September and December in each year, the first of which shall be the
first such day after the date of this Agreement.
"Reference Banks" shall mean Canadian Imperial Bank of Commerce, Chase
and Mellon Bank, N.A. (or their respective Applicable Lending Offices,
as the case may be).
"Regulations A, Regulation D, Regulation U and Regulation X" shall mean
Regulation A, Regulation D, Regulation U and Regulation X,
respectively, of the Board of Governors of the Federal Reserve System
(or any successor), as the same may be modified and supplemented and in
effect from time to time.
"Regulatory Change" shall mean, with respect to any Bank, any change
after the date of this Agreement in Federal, state or foreign law or
regulations (including, without limitation, Regulation D) or the
adoption or making after such date of any interpretation, directive or
request applying to a class of banks including such Bank of or under
any Federal, state or foreign law or regulations (whether or not having
the force of law and whether or not failure to comply therewith would
be unlawful) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata.
"Reserve Requirement" shall mean, for any Interest Period for any LIBOR
Loan or LIBOR Market Loan, the average maximum rate at which reserves
(including, without limitation, any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest Period
under Regulation D by member banks of the Federal Reserve System in New
York City with deposits exceeding one billion Dollars against
"Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement
shall include any other reserves required to be maintained by such
member banks by reason of any Regulatory Change with respect to (i) any
category of liabilities that includes deposits by reference to which
the LIBO Rate for Eurocurrency Loans or LIBOR Market Loans (as the case
may be) is to be determined as provided in the definition of "LIBO Base
Rate" in this Section 1.01 or (ii) any category of extensions of credit
or other assets that includes LIBOR Loans or LIBOR Market Loans.
"Restatement Date" shall mean October 20, 1993.
"Revolving Credit Banks" shall mean Banks having Revolving Credit
Commitments and/or holding Revolving Credit Loans.
"Revolving Credit Commitment" shall mean, for each Revolving Credit
Bank, the obligation of such Bank to make Revolving Credit Loans in an
aggregate amount at any one time outstanding up to but not exceeding
(a) in the case of a Revolving Credit Bank that is a party to this
Agreement as of the Restatement Date, the amount set forth opposite the
name of such Bank on the signature pages hereof under the caption
"Revolving Credit Commitment" and (b) in the case of any other
Revolving Credit Bank, the aggregate amount of the Revolving Credit
Commitments of other Banks acquired by it pursuant to Section 12.06(b)
hereof (in each case, as the same may be reduced or increased from time
to time pursuant to Section 2.04 hereof or increased or reduced from
time to time pursuant to said Section 12.06(b)). The original
aggregate principal amount of the Revolving Credit Commitments is
$150,000,000.
"Revolving Credit Loans" shall mean the Syndicated Loans provided for
by Section 2.01(a) hereof, which may be Base Rate Loans and/or LIBOR
Loans.
"Revolving Credit Notes" shall mean the promissory notes provided for
by Section 2.08(a) hereof, and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be
modified and supplemented and in effect from time to time.
"Revolving Credit Termination Date" shall mean August 23, 1994, as the
same may be extended pursuant to Section 2.11 hereof.
"Set Rate" shall have the meaning assigned to such term in Section
2.03(c)(ii)(D) hereof.
"Set Rate Auction" shall mean a solicitation of Money Market Quotes
setting forth Set Rates pursuant to Section 2.03 hereof.
"Set Rate Loans" shall mean Money Market Loans the interest rates on
which are determined on the basis of Set Rates pursuant to a Set Rate
Auction.
"Standard & Poor's" shall mean Standard & Poor's Corporation or any
successor thereto.
"Standard & Poor's Rating" shall mean, at any time, the then current
rating (including the failure to rate) by Standard & Poor's of the
Company's senior unsecured, unguaranteed long term public debt.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes
of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or
one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.
"Syndicated Loans" shall mean the Revolving Credit Loans and the
Eurocurrency Loans.
"Syndicated Notes" shall mean the Revolving Credit Notes and the
Eurocurrency Notes.
"Tangible Net Worth" shall mean, as at any date, Net Worth minus, for
the Company and its Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP), the sum of the following:
the book value of all assets that should be classified as intangibles
(without duplication of deductions in respect of items already deducted
in arriving at additional paid-in capital and retained earnings) but in
any event including goodwill, cost in excess of net assets of companies
acquired, minority interests, research and development costs,
trademarks, trade names, copyrights, patents and franchises,
unamortized debt discount and expense, all reserves deducted from
shareholders' equity not already deducted in the calculation of Net
Worth and any write-up in the book value of assets resulting from a
revaluation thereof subsequent to December 31, 1992.
"Total Assets" shall mean, as at any date of determination thereof, the
aggregate book value of all assets of the Company and its Subsidiaries
that would appear on a consolidated balance sheet of the Company and
its subsidiaries prepared in accordance with generally accepted
accounting principles.
"Total Capital" shall mean, at any time, Net Worth plus Total Debt.
"Total Debt" shall mean, at any time, the aggregate outstanding
principal amount of all Indebtedness of the Company and its
Subsidiaries at such time (other than Indebtedness described in clause
(d) of the definition of the term "Indebtedness") determined on a
consolidated basis (without duplication) in accordance with GAAP;
provided that the term "Total Debt" shall include any preferred stock
that provides for the mandatory purchase, retirement, redemption or
other acquisition of the same by the Company.
"Type" shall have the meaning assigned to such term in Section 1.03
hereof.
"Wholly Owned Subsidiary" shall mean, with respect to any Person, any
Subsidiary of such Person of which all of the equity securities or
other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are owned or controlled by such Person.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be
delivered to the Banks hereunder shall (unless otherwise disclosed to
the Banks in writing at the time of delivery thereof in the manner
described in subsection (b) below) be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent
with those used in the preparation of the latest financial statements
furnished to the tanks hereunder (which, prior to the delivery of the
first financial statements under Section 9.01 hereof, shall mean the
audited financial statements as at December 31, 1992 referred to in
Section 8.02 hereof). All calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise
expressly provided herein) be made by application of generally accepted
accounting principles applied on a basis consistent with those used in
the preparation of the latest annual or quarterly financial statements
furnished to the Banks pursuant to Section 9.01 hereof (or, prior to
the delivery of the first financial statements under Section 9.01
hereof, used in the preparation of the audited financial statements as
at December 31, 1992 referred to in Section 8.02 hereof) unless (i) the
Company shall have objected to determining such compliance on such
basis at the time of delivery of such financial statements or (ii) the
Majority Banks shall so object in writing within 30 days after delivery
of such financial statements, in either of which events such
calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under Section 9.01
hereof, shall mean the audited financial statements referred to in
Section 8.02 hereof).
(b) The Company shall deliver to the Banks at the same time as the
delivery of any annual or quarterly financial statement under Section
9.01 hereof (i) a description in reasonable detail of any material
variation between the application of accounting principles employed in
the preparation of such statement and the application of accounting
principles employed in the preparation of the next preceding annual or
quarterly financial statements as to which no objection has been made
in accordance with the last sentence of subsection (a) above and (ii)
reasonable estimates of the difference between such statements arising
as a consequence thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in Section 8 hereof, the Company will not
change the last day of its fiscal year from December 31 of each year,
or the last days of the first three fiscal quarters in each of its
fiscal years from March 31, June 30, and September 30 of each year,
respectively.
1.03 Classes and Types of Loans. Loans hereunder are distinguished by
"Class", by "Type" and by "Currency". The "Class" of a Loan (or of a
Commitment to make a Loan) refers to whether such Loan is a Money
Market Loan, a Revolving Credit Loan, or a Eurocurrency Loan, each of
which constitutes a Class. The "Type" of a Loan refers to whether such
Loan is a Base Rate Loan, a LIBOR Loan, a Set Rate Loan or a LIBOR
Market Loan, each of which constitutes a Type. Loans may be identified
by both Class and Type and Eurocurrency Loans that are LIBOR Loans may
also be identified by Currency.
Section 2. Commitments, Loans. Notes and Prepayments.
2.01 Syndicated Loans.
(a) Revolving Credit Loans. Each Revolving Credit Bank severally
agrees, on the terms and conditions of this Agreement, to make loans to
any Borrower in Dollars during the period from and including the
Closing Date to but not including the Revolving Credit Termination Date
in an aggregate principal amount at any one time outstanding up to but
not exceeding the amount of the Revolving Credit Commitment of such
Bank as in effect from time to time (such Loans being herein called
"Revolving Credit Loans"). Subject to the terms and conditions of this
Agreement, during such period each Borrower may borrow, repay and
reborrow the amount of the Revolving Credit Commitments by means of
Base Rate Loans and LIBOR Loans.
(b) Eurocurrency Loans. Pursuant to Section 2.01(b) of the Original
Credit Agreement, Chase made on the Closing Date the Existing Term Loan
to the Company in Dollars as a Base Rate Loan. On the Amendment
Effective Date the Existing Term Loan shall be deemed hereunder to be a
Eurocurrency Loan that is a Base Rate Loan in Dollars having an
Interest Period that ends on the date four Business Days after the
Amendment Effective Date and the Eurocurrency Banks shall be deemed to
have acquired from Chase interests in the Existing Term Loan in such
amounts so that after giving effect to such assignments, the
Eurocurrency Banks shall hold Eurocurrency Loans hereunder that are
Base Rate Loans in Dollars with Interest Periods that end on the date
four Business Days after the Amendment Effective Date ratably in
accordance with their respective Eurocurrency Commitments. Thereafter,
each Eurocurrency Bank severally agrees, on the terms and conditions of
this Agreement, to make loans to any Borrower in Dollars or in any of
the Alternative Currencies during the period from and including the
Restatement Date to but not including the Eurocurrency Commitment
Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount of the Eurocurrency
Commitment of such Bank as in effect from time to time (such Loans
being herein called "Eurocurrency Loans"). Subject to the terms and
conditions of this Agreement, during such period each Borrower may
borrow, repay and reborrow the amount of the Eurocurrency Commitments
by means of Base Rate Loans in Dollars and LIBOR Loans in any Currency.
For purposes of determining whether the amount of any borrowing would,
together with all other outstanding Eurocurrency Loans, exceed the
Eurocurrency Commitments, and for purposes of determining the unused
portion of the Eurocurrency Commitments, the amount of each
Eurocurrency Loan denominated in an Alternative Currency shall be
deemed to be the Dollar Equivalent of the amount in the Alternative
Currency of such Eurocurrency Loan.
(c) Limit on LIBOR Loans. No more than six separate Interest Periods
in respect of LIBOR Loans of a Class (other than Money Market Loans)
from each Bank may be outstanding at any one time.
2.02 Borrowings of Syndicated Loans. The Company (on its own behalf
and on behalf of any other Borrower) shall give the Agent notice of
each borrowing hereunder as provided in Section 4.05 hereof. Not later
than 1:00 p.m. New York time (in the case of Loans denominated in
Dollars) or 11:00 a.m. local time in the location of the Agent's
Account (in the case of Eurocurrency Loans denominated in an
Alternative Currency) on the date specified for each borrowing of
Syndicated Loans hereunder, each Bank shall, subject to Section 4.01(a)
hereof, make available the amount of the Syndicated Loan or Loans to be
made by it on such date to the Agent, at the Agent's Account for the
Currency of such Loans in immediately available funds, for account of
the relevant Borrower. The amount so received by the Agent shall,
subject to the terms and conditions of this Agreement, be made
available to the relevant Borrower by depositing the same, in
immediately available funds, in an account of the relevant Borrower
designated by the Company.
2.03 Money Market Loans.
(a) In addition to borrowings of Syndicated Loans, at any time prior
to the Revolving Credit Termination Date each Borrower may, as set
forth in this Section 2.03, request the Revolving Credit Banks to make
offers to make Money Market Loans to it in Dollars. The Revolving
Credit Banks may, but shall have no obligation to, make such offers and
such Borrower may, but shall have no obligation to, accept any such
offers in the manner set forth in this Section 2.03. Money Market
Loans may be LIBOR Market Loans or Set Rate Loans (each a "Type" of
Money Market Loan), provided that:
(i) there may be no more than ten different Interest Periods for both
Syndicated Loans and Money Market Loans outstanding at the same time
(for which purpose Interest Periods described in different lettered
clauses of the definition of the term "Interest Period" shall be deemed
to be different Interest Periods even if they are coterminous); and
(ii) the aggregate principal amount of all Money Market Loans,
together with the aggregate principal amount of all Revolving Credit
Loans, at any one time outstanding shall not exceed the aggregate
amount of the Revolving Credit Commitments at such time.
(b) When any Borrower wishes to request offers to make Money Market
Loans, the Company (on its own behalf and on behalf of any other
Borrower) shall give the Agent (which shall promptly notify the
Revolving Credit Banks) notice (a "Money Market Quote Request") so as
to be received no later than 11:00 a.m. New York time on (x) the fourth
Business Day prior to the date of borrowing proposed therein, in the
case of a LIBOR Auction or (y) the Business Day immediately preceding
the date of borrowing proposed therein, in the case of a Set Rate
Auction (or, in any such case, such other time and date as the Company
and the Agent, with the consent of the Majority Revolving Credit Banks,
may agree). Offers to make Money Market Loans may be requested for up
to three different Interest Periods in a single notice (for which
purpose Interest Periods in different lettered clauses of the
definition of the term "Interest Period" shall be deemed to be
different Interest Periods even if they are coterminous); provided that
the request for each separate Interest Period shall be deemed to be a
separate Money Market Quote Request for a separate borrowing (a "Money
Market Borrowing"). Each such notice shall be substantially in the
form of Exhibit D hereto and shall specify as to each Money Market
Borrowing:
(i) the name of the Borrower and the proposed date of such borrowing,
which shall be a Business Day;
(ii) the aggregate amount of such Money Market Borrowing, which shall
be at least $25,000,000 (or a larger multiple of $5,000,000) but shall
not cause the limits specified in Section 2.03(a) hereof to be
violated;
(iii) the duration of the Interest Period applicable thereto;
(iv) whether the Money Market Quotes requested for a particular
Interest Period are seeking quotes for LIBOR Market Loans or Set Rate
Loans; and
(v) if the Money Market Quotes requested are seeking quotes for Set
Rate Loans, the date, if such date is different from the proposed date
of the borrowing, on which the Money Market Quotes are to be submitted
(the date on which such Money Market Quotes are to be submitted is
called the "Quotation Date"). If no such date is specified, the
Quotation Date is the proposed date of borrowing.
Except as otherwise provided in this Section 2.03(b), no Money Market
Quote Request shall be given within five Business Days (or such other
number of days as the Company and the Agent, with the consent of the
Majority Revolving Credit Banks, may agree) of any other Money Market
Quote Request.
(c) (i) Each Revolving Credit Bank may submit one or more Money Market
Quotes, each containing an offer to make a Money Market Loan in
response to any Money Market Quote Request; provided that, if the
request under Section 2.03(b) hereof specified more than one Interest
Period, such Bank may make a single submission containing one or more
Money Market Quotes for each such Interest Period. Each Money Market
Quote must be submitted to the Agent not later than (x) 2:00 p.m. New
York time on the fourth. Business Day prior to the proposed date of
borrowing, in the case of a LIBOR Auction or (y) 10:00 a.m. New York
time on the Quotation Date, in the case of a Set Rate Auction (or, in
any such case, such other time and date as the Company and the Agent,
with the consent of the Majority Revolving Credit Banks, may agree);
provided that any Money Market Quote may be submitted by Chase (or its
Applicable Lending Office) only if Chase (or such Applicable Lending
Office) notifies the Company of the terms of the offer contained
therein not later than (x) 1:00 p.m. New York time on the fourth
Business Day prior to the proposed date of borrowing, in the case of a
LIBOR Auction or (y) 9:45 a.m. New York time on the Quotation Date, in
the case of a Set Rate Auction. Subject to Sections 5.02(b), 5.03,
7.03 and 10 hereof, any Money Market Quote so made shall be irrevocable
except with the consent of the Agent given on the instructions of the
Company.
(ii) Each Money Market Quote shall be substantially in the form of
Exhibit E hereto and shall specify:
(A) the name of the Borrower the proposed date of borrowing and the
Interest Period therefor;
(B) the principal amount of the Money Market Loan for which each such
offer is being made, which principal amount shall be at least
$5,000,000 (or a larger multiple of $1,000,000); provided that the
aggregate principal amount of all Money Market Loans for which a
Revolving Credit Bank submits Money Market Quotes (x) may be greater or
less than the Revolving Credit Commitment of such Bank but (y) may not
exceed the principal amount of the Money Market Borrowing for a
particular Interest Period for which offers were requested;
(C) in the case of a LIBOR Auction, the margin above or below the
applicable LIBO Rate (the LIBO Margin) offered for each such Money
Market Loan, expressed as a percentage (rounded upwards, if necessary,
to the nearest 1/10,000 of 1%) to be added to or subtracted from the
applicable LIBO Rate;
(D) in the case of a Set Rate Auction, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/10,000 of 1%) offered
for each such Money Market Loan (the "Set Rate"); and
(E) the identity of the quoting Bank.
Unless otherwise agreed by the Agent and the Company, no Money Market
Quote shall contain qualifying, conditional or similar language or
propose terms other than or in addition to those set forth in the
applicable Money Market Quote Request and, in particular, no Money
Market Quote may be conditioned upon acceptance of all (or some
specified minimum) of the principal amount of the Money Market Loan for
which such Money Market Quote is being made; provided that the
submission by any Bank containing more than one Money Market Quote may
be conditioned on offers contained in such submission not being
accepted to the extent that it would result in such Bank making Money
Market Loans pursuant thereto in excess of a specified aggregate amount
(the "Money Market Loan Limit").
(d) The Agent shall (x) in the case of a Set Rate Auction, as promptly
as practicable after the Money Market Quote is submitted (but in any
event not later than 10:15 a.m. New York time on the Quotation Date) or
(y) in the case of a LIBOR Auction, by 4:00 p.m. New York time on the
day a Money Market Quote is submitted, notify the Company (which will
promptly notify the relevant Borrower if it is not the Company) of the
terms (i) of any Money Market Quote submitted by a Revolving Credit
Bank that is in accordance with Section 2.03(c) hereof and (ii) of any
Money Market Quote that amends, modifies or is otherwise inconsistent
with a previous Money Market Quote submitted by such Bank with respect
to the same Money Market Quote Request. Any such subsequent Money
Market Quote shall be disregarded by the Agent unless such subsequent
Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Company
shall specify (A) the aggregate principal amount of the Money Market
Borrowing for which offers have been received and (B) the respective
principal amounts and LIBO Margins or Set Rates, as the case may be, so
offered by each Revolving Credit Bank (identifying the Bank that made
each Money Market Quote).
(e) Not later than 11:00 a.m. New York time on (x) the third Business
Day prior to the proposed date of borrowing, in the case of a LIBOR
Auction or (y) the Quotation Date, in the case of a Set Rate Auction
(or, in any such case, such other time and date as the Company and the
Agent, with the consent of the Majority Revolving Credit Banks, may
agree), the Company (on behalf of the relevant Borrower) shall notify
the Agent of its acceptance or nonacceptance of the offers so notified
to it pursuant to Section 2.03(d) hereof (which notice shall specify
the aggregate principal amount of offers from each Bank for each
Interest Period that are accepted; and the failure of the Company to
give such notice by such time shall constitute nonacceptance) and the
Agent shall promptly notify each affected Bank. The notice of the
Agent shall also specify the aggregate principal amount of offers for
each Interest Period that were accepted and the lowest and highest LIBO
Margins and Set Rates that were accepted for each Interest Period. Any
Money Market Quote may be accepted in whole or in part (provided that
any Money Market Quote accepted in part shall be at least $5,000,000 or
a larger multiple of $1,000,000); provided that:
(i) the aggregate principal amount of each Money Market Borrowing may
not exceed the applicable amount set forth in the related Money Market
Quote Request;
(ii) the aggregate principal amount of each Money Market Borrowing
shall be at least $25,000,000 (or a larger multiple of $5,000,000) but
shall not cause the limits specified in Section 2.03(a) hereof to be
violated;
(iii) acceptance of offers may, subject to clause (v) below, be made
only in ascending order of LIBO Margins or Set Rates, as the case may
be, in each case beginning with the lowest rate so offered;
(iv) no offer may be accepted where the Agent has advised the Company
that such offer fails to comply with Section 2.03(c)(ii) hereof or
otherwise fails to comply with the requirements of this Agreement
(including, without limitation, Section 2.03(a) hereof); and
(v) the aggregate principal amount of each Money Market Borrowing from
any Bank may not exceed any applicable Money Market Loan Limit of such
Bank.
If offers are made by two or more Revolving Credit Banks with the same
LIBO Margins or Set Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which offers are
accepted for the related Interest Period, the principal amount of Money
Market Loans in respect of which such offers are accepted shall be
allocated by the Company on behalf of the relevant Borrower among such
Banks as nearly as possible (in amounts of at least $5,000,000 or
larger multiples of $1,000,000) in proportion to the aggregate
principal amount of such offers. Determinations by the Company on
behalf of the relevant Borrower of the amounts of Money Market Loans
shall be conclusive in the absence of manifest error.
(f) Any Revolving Credit Bank whose offer to make any Money Market
Loan has been accepted in accordance with the terms and conditions of
this Section 2.03 shall, not later than 1:00 p.m. New York time on the
date specified for the making of such Loan, make the amount of such
Loan available to the Agent at the Agent's Account for Dollars in
immediately available funds, for account of the relevant Borrower. The
amount so received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to such Borrower on
such date by depositing the same, in immediately available funds, in an
account maintained with Chase at the Principal Office designated by the
Company.
(g) The amount of any Money Market Loan made by any Bank shall not
constitute a utilization of such Bank's Revolving Credit Commitment.
(h) The Company on behalf of the relevant Borrower shall pay to the
Agent a fee of $3000 each time the Company gives a Money Market Quote
Request to the Agent.
2.04 Chances of Commitments.
(a) The aggregate amount of the Revolving Credit Commitments shall
automatically terminate at the open of business on the Revolving Credit
Termination Date.
(b) The aggregate amount of the Eurocurrency Commitments shall
automatically terminate at the open of business on the Eurocurrency
Commitment Termination Date.
(c) The Company shall have the right at any time or from time to time
(i) so long as no Revolving Credit Loans or Money Market Loans are
outstanding, to terminate the Revolving Credit Commitments, (ii) so
long as no Eurocurrency Loans are outstanding, to terminate the
Eurocurrency Commitments, and (iii) to reduce the aggregate unused
amount of the Revolving Credit Commitments (for which purpose use of
the Revolving Credit Commitments shall be deemed to include the
aggregate principal amount of all Money Market Loans) or the
Eurocurrency Commitments, as the case may be; provided that (x) the
Company shall give notice of each such termination or reduction as
provided in Section 4.05 hereof and (y) each partial reduction shall be
in an aggregate amount at least equal to $3,000,000 (or a larger
multiple of $1,000,000).
(d) Any Commitment once terminated or reduced may not be reinstated.
2.05 Facility Fees. The Company shall pay to the Agent for account of
each Revolving Credit Bank a facility fee on the daily average amount
of such Bank's Revolving Credit Commitment (whether or not utilized),
for the period from and including the Amendment Effective Date to but
not including the earlier of the date such Revolving Credit Commitment
is terminated, at a rate per annum equal to (a) 0.1250% during any
Level I Period, (b) 0.1875% during any Level II Period, (c) 0.2500%
during any Level III Period and (d) 0.3750% during any Level IV Period.
The Company shall pay to the Agent for account of each Eurocurrency
Bank a facility fee on the daily average amount of such Bank's
Eurocurrency Commitment (whether or not utilized), for the period from
and including tne Amendment Effective Date to but not including the
earlier of the date such Eurocurrency Commitment is terminated, at a
rate per annum equal to (a) 0.1500% during any Level I Period, (b)
0.2500% during any Level II Period, (c) 0.3125% during any Level III
Period and (d) 0.3750% during any Level IV Period. Accrued facility
fee shall be payable on each Quarterly Date and on the earlier of the
date the Revolving Credit Commitments or the Eurocurrency Commitments,
as the case may be, are terminated. Any change in a facility fee by
reason of a change in the Standard & Poor's Rating or the Moody's
Rating shall become effective on the date of announcement or
publication by the respective rating agencies of a change in such
rating or, in the absence of such announcement or publication, on the
effective date of such changed rating.
2.06 Lending Offices. The Loans of each Type and Currency made by
each Bank shall be made and maintained at such Bank's Applicable
Lending Office for Loans of such Type and Currency.
2.07 Several Obligations: Remedies Independent. The failure of any
Bank to make any Loan to be made by it on the date specified therefor
shall not relieve any other Bank of its obligation to make its Loan on
such date, but neither any Bank nor the Agent shall be responsible for
the failure of any other Bank to make a Loan to be made by such other
Bank, and no Bank shall have any obligation to the Agent or any other
Bank for the failure by such Bank to make any Loan required to be made
by such Bank. The amounts payable by any Borrower at any time
hereunder and under the Notes to each Bank shall be a separate and
independent debt and each Bank shall be entitled to protect and enforce
its rights arising out of this Agreement and the Notes, and it shall
not be necessary for any other Bank or the Agent to consent to, or be
joined as an additional party in, any proceedings for such purposes.
2.08 Notes.
(a) The Revolving Credit Loans made by each Bank to any Borrower shall
be evidenced by a single promissory note of the relevant Borrower, with
the guarantee of the Company endorsed thereon in the case of an
Approved Borrower, substantially in the form of Exhibit A-l hereto,
dated the Amendment Effective Date, payable to the order of such Bank
and otherwise duly completed.
(b) The Eurocurrency Loans made by each Bank to any Borrower shall be
evidenced by a single promissory note of the relevant Borrower, with
the guarantee of the Company endorsed thereon in the case of an
Approved Borrower, substantially in the form of Exhibit A-2 hereto,
dated the Amendment Effective Date, payable to the order of such Bank
and otherwise duly completed.
(c) The Money Market Loans made by any Bank to any Borrower shall be
evidenced by a single promissory note of the relevant Borrower, with
the guarantee of the Company endorsed thereon in the case of an
Approved Borrower, substantially in the form of Exhibit A-3 hereto,
dated the Amendment Effective Date, payable to the order of such Bank
and otherwise duly completed.
(d) The date, amount, Type, Currency (in the case of Eurocurrency
Loans) interest rate and duration of Interest Period of each Loan of
each Class made by each Bank to each Borrower, and each payment made on
account of the principal thereof, shall be recorded by such Bank on its
books and, prior to any transfer of the Note evidencing the Loans of
such Class held by it, endorsed by such Bank on the schedule attached
to such Note or any continuation thereof; provided that the failure of
such Bank to make, or any error in making, any such recordation or
endorsement shall not affect the obligations of such Borrower to make a
payment when due of any amount owing hereunder or under such Note in
respect of the Loans to be evidenced by such Note.
(e) No Bank shall be entitled to have its Notes subdivided, by
exchange for promissory notes of lesser denominations or otherwise,
except in connection with a permitted assignment of all or any portion
of such Bank's relevant Commitment, Loans and Notes pursuant to Section
12.06(b) hereof.
2.09 Prepayments. Subject to Sections 4.04 and 5.05 hereof, Loans may
be prepaid at any time or from time to time, provided that the Company
shall give the Agent notice of each such prepayment as provided in
Section 4.05 hereof (and, upon the date specified in any such notice of
prepayment, the amount to be prepaid shall become due and payable
hereunder).
2.10 Borrowings by Approved Borrowers. The Company may, at any time
or from time to time, designate one or more Wholly Owned Subsidiaries
as Borrowers hereunder by furnishing to the Agent a letter (a
"Designation Letter") in duplicate, substantially in the form of
Exhibit G-l hereto, duly completed and executed by the Company and such
Subsidiary. Upon approval by all of the Banks (which approval shall
not be unreasonably withheld) of such Subsidiary as an Approved
Borrower, which approval shall be evidenced by the Agent signing and
returning to the Company a copy of such Designation Letter, such
Subsidiary shall be an Approved Borrower. There may be no more than
ten Approved Borrowers at any one time. So long as all principal and
interest on all Loans of any Approved Borrower hereunder have been paid
in full, the Company may terminate its status as an Approved Borrower
hereunder by furnishing to the Agent a letter (a "Termination Letter"),
substantially in the form of Exhibit G2 hereto, duly completed and
executed by the Company and such Approved Borrower. Any Termination
Letter furnished in accordance with this Section 2.10 shall be
effective upon receipt by the Agent. Notwithstanding the foregoing,
the delivery of a Termination Letter with respect to any Approved
Borrower shall not affect any obligation of such Approved Borrower
theretofore incurred.
2.11 Extension of Revolving Credit Termination Date. (a) The Company
may, by notice to the Agent (which shall promptly deliver a copy to
each of the Revolving Credit Banks) not less than 60 days and not more
than 90 days prior to the Revolving Credit Termination Date then in
effect hereunder (the "Existing Termination Date"), request that the
Revolving Credit Banks extend the Revolving Credit Termination Date for
an additional 364 days from the Consent Date (as defined below). Each
Revolving Credit Bank, acting in its sole discretion, shall, by notice
to the Company and the Agent given on the date (and, subject to the
proviso below, only on the date) 30 days prior to the Existing
Termination Date (provided, if such date is not a Business Day, then
such notice shall be given on the next succeeding Business Day) (the
"Consent Date"), advise the Company whether or not such Revolving
Credit Bank agrees to such extension; provided that each Revolving
Credit Bank that determines not to extend the Revolving Credit
Termination Date (a "Non-extending Bank") shall notify the Agent (which
shall notify the Company) of such fact promptly after such
determination (but in any event no later than the Consent Date) and any
Revolving Credit Bank that does not advise the Company on or before the
Consent Date shall be deemed to be a Non-extending Bank. The election
of any Revolving Credit Bank to agree to such extension shall not
obligate any other Revolving Credit Bank to agree.
(b) The Company shall have the right on or before the Existing
Termination Date to replace each Non-extending Bank with, and otherwise
add to this Agreement, one or more other banks (which may include any
Bank, each prior to the Existing Commitment Termination Date an
"Additional Commitment Bank") with the approval of the Agent (which
approval shall not be unreasonably withheld), each of which Additional
Commitment Banks shall have entered into an agreement in form and
substance satisfactory to the Company and the Agent pursuant to which
such Additional Commitment Bank shall, effective as of the Existing
Termination Date, undertake a Revolving Credit Commitment (if any such
Additional Commitment Bank is a Revolving Credit Bank, its Revolving
Credit Commitment shall be in addition to such Revolving Credit Bank's
Revolving Credit Commitment hereunder on such date).
(c) If (and only if) Revolving Credit Banks holding Revolving Credit
Commitments that, together with the Additional Revolving Credit
Commitments of the Additional Commitment Banks that will become
effective on the Existing Termination Date, aggregate at least 90% of
the aggregate amount of the Revolving Credit Commitments (not including
the additional Revolving Credit Commitments of the Additional
Commitment Banks) on the Consent Date shall have agreed to extend the
Existing Termination Date, then, effective as of the Existing
Termination Date, the Existing Termination Date shall be extended to
the date falling 364 days after the Consent Date (provided, if such
date is not a Business Day, then the Revolving Credit Termination Date
as so extended shall be the next preceding Business Day) and each
Additional Commitment Bank shall thereupon become a "Revolving Credit
Bank" with a Revolving Credit Commitment for all purposes of this
Agreement.
Notwithstanding the foregoing, the extension of the Revolving Credit
Termination Date shall not be effective with respect to any Revolving
Credit Bank unless:
(i) no Default shall have occurred and be continuing on each of the
date of the notice requesting such extension, on the Consent Date or on
the Existing Termination Date;
(ii) each of the representations and warranties of the Company in
Section 8 hereof shall be true and correct on and as of each of the
date of the notice requesting such extension, the Consent Date and the
Existing Termination Date with the same force and effect as if made on
and as of each such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date); and
(iii) each Non-extending Bank shall have been paid in full by the
Company all principal of, interest on and all other amounts payable
hereunder in respect of its Revolving Credit Loans and Money Market
Loans and any accrued facility fee payable to it in respect of its
Revolving Credit Commitment under Section 2.05 hereof on or before the
Existing Termination Date.
Even if the Existing Termination Date is extended as aforesaid, the
Revolving Credit Commitment of each Non-extending Bank shall terminate
on the Existing Termination Date.
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans.
(a) Each Borrower hereby promises to pay to the Agent for account of
each Revolving Credit Bank the principal amount of each Revolving
Credit Loan made by such Bank to such Borrower, and each Revolving
Credit Loan shall mature, on the last day of the Interest Period for
such Revolving Credit Loan.
(b) Each Borrower hereby promises to pay to the Agent for account of
each Revolving Credit Bank that makes any Money Market Loan to such
Borrower the principal amount of such Money Market Loan, and such Money
Market Loan shall mature, on the last day of the Interest Period for
such Money Market Loan.
(c) Each Borrower hereby promises to pay to the Agent for account of
each Eurocurrency Bank the principal amount of each Eurocurrency Loan
made by such Bank to such Borrower, and each Eurocurrency Loan shall
mature, on the last day of the Interest Period for such Eurocurrency
Loan.
3.02 Interest. Each Borrower hereby promises to pay to the Agent for
account of each Bank interest on the unpaid principal amount of each
Loan made by such Bank to such Borrower for the period from and
including the date of such Loan to but excluding the date such Loan
shall be paid in full, at the following rates per annum:
(a) if such Loan is a Base Rate Loan, the Base Rate (as in effect from
time to time) plus the Applicable Margin;
(b) if such Loan is a Syndicated Loan that is a LIBOR Loan, for each
Interest Period relating thereto, the LIBO Rate for such Loan for such
Interest Period plus the Applicable Margin;
(c) if such Loan is a LIBOR Market Loan, the LIBO Rate for such Loan
for the Interest Period therefor plus (or minus) the LIBO Margin quoted
by the Bank making such Loan in accordance with Section 2.03 hereof;
and
(d) if such Loan is a Set Rate Loan, the Set Rate for such Loan for
the Interest Period therefor quoted by the Bank making such Loan in
accordance with Section 2.03 hereof.
Notwithstanding the foregoing, each Borrower hereby promises to pay to
the Agent for account of each Bank interest at the applicable
Post-Default Rate on any principal of any Loan made by such Bank to
such Borrower and on any other amount payable by such Borrower
hereunder or under the Notes of such Borrower held by such Bank to or
for account of such Bank, that shall not be paid in full when due
(whether at stated maturity, by acceleration, by optional prepayment or
otherwise), for the period from and including the due date thereof to
but excluding the date the same is paid in full. Accrued interest on
each Loan shall be payable (i) in the case of a Base Rate Loan, on the
Quarterly Dates, (ii) in the case of a LIBOR Loan or a Money Market
Loan, on the last day of the Interest Period therefor and, if such
Interest Period is longer than 90 days (in the case of a Set Rate Loan)
or three months (in the case of a LIBOR Loan or a LIBOR Market Loan),
at 90-day or three-month intervals, respectively, following the first
day of such Interest Period, and (iii) in the case of any Loan, upon
the payment or prepayment thereof (but only on the principal amount so
paid or prepaid), except that interest payable at the Post-Default Rate
shall be payable from time to time on demand. Promptly after the
determination of any interest rate provided for herein or any change
therein, the Agent shall give notice thereof to the Banks to which such
interest is payable and to the Company.
Section 4. Payments: Pro Rata Treatment; Computations: Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal of and interest on Loans made in Dollars, and other amounts
(other than the principal of and interest on Eurocurrency Loans made in
an Alternative Currency) payable by any Borrower and the Guarantor
under this Agreement and the Notes, shall be made in Dollars, and all
payments of principal of and interest on Eurocurrency Loans made in an
Alternative Currency shall be made in such Alternative Currency, in
immediately available funds, without deduction, set-off or
counterclaim, to the Agent's Account for such Currency, for account of
the Agent, not later than 1:00 p.m. New York time (in the case of Loans
denominated in Dollars) or 11:00 a.m. local time in the location of the
Agent's Account (in the case of Eurocurrency Loans denominated in an
Alternative Currency), on the date on which such payment shall become
due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day), provided
that if a new Loan is to be made by any Bank to any Borrower on a date
such Borrower is to repay any principal of an outstanding Loan of such
Bank in the same Currency, such Bank shall apply the proceeds of such
new Loan to the payment of the principal to be repaid and only an
amount equal to the difference between the principal to be borrowed and
the principal to be repaid shall be made available by such Bank to the
Agent as provided in Section 2.02 hereof or paid by such Borrower to
the Agent pursuant to this Section 4.01, as the case may be.
(b) Any Bank for whose account any such payment is to be made may (but
shall not be obligated to) debit the amount of any such payment that is
not made by such time to any ordinary deposit account of the relevant
Borrower or the Company with such Bank (with notice to the Company and
the Agent).
(c) Each Borrower shall, at the time of making each payment under this
Agreement or any Note for account of any Bank, specify to the Agent
(which shall so notify the intended recipient(s) thereof) the Loans or
other amounts payable by such Borrower hereunder to which such payment
is to be applied (and in the event that such Borrower fails to so
specify, or if an Event of Default has occurred and is continuing, the
Agent may distribute such payment to the Banks for application in such
manner as it or the Majority Banks, subject to Section 4.02 hereof, may
determine to be appropriate).
(d) Each payment received by the Agent under this Agreement or any
Note for account of any Bank shall be paid by the Agent promptly to
such Bank, in immediately available funds, for account of such Bank's
Applicable Lending Office for the Loan or other obligation in respect
of which such payment is made.
(e) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest
shall be payable for any principal so extended for the period of such
extension.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing of Loans of a particular Class (other than
of Money Market Loans) from the Banks under Section 2.01 hereof shall
be made from the relevant Banks, each payment of facility fee under
Section 2.05 hereof in respect of Revolving Credit Commitments or
Eurocurrency Commitments, as the case may be, shall be made for account
of the Revolving Credit Banks or the Eurocurrency Banks, respectively,
and each termination or reduction of the amount of the Revolving Credit
Commitments or Eurocurrency Commitments, as the case may be, under
Section 2.04 hereof shall be applied to the respective Revolving Credit
Commitments or Eurocurrency Commitments, as the case may be, of the
Revolving Credit Banks or the Eurocurrency Banks, respectively, pro
rata according to the amounts of their respective Commitments of such
Class; (b) the making of Revolving Credit Loans and Eurocurrency Loans
of a particular Type (other than Conversions provided for by Section
5.04 hereof) shall be made pro rata among the relevant Banks according
to the amounts of their respective Revolving Credit Commitments and
Eurocurrency Commitments and the then current Interest Period for each
LIBOR Loan of any Class made on the same date to the same Borrower
shall be coterminous; (c) each payment or prepayment of principal of
Revolving Credit Loans or Eurocurrency Loans by any Borrower shall be
made for account of the relevant Banks pro rata in accordance with the
respective unpaid principal amounts of the Syndicated Loans of such
Class held by them; and (d) each payment of interest on Revolving
Credit Loans and Eurocurrency Loans by such Borrower shall be made for
account of the relevant Banks pro rata in accordance with the amounts
of interest on such Loans then due and payable to the respective Banks.
4.03 Computations. Interest on Money Market Loans and LIBOR Loans
(other than LIBOR Loans denominated in Pounds Sterling) and facility
fee shall be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day)
occurring in the period for which payable and interest on Base Rate
Loans and LIBOR Loans denominated in Pounds Sterling shall be computed
on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable. Notwithstanding the
foregoing, for each day that the Base Rate is calculated by reference
to the Federal Funds Rate, interest on Base Rate Loans shall be
computed on the basis of a year of 360 days and actual days elapsed.
4.04 Minimum Amounts. Except for Conversions or prepayments made
pursuant to Section 5.04 hereof, each borrowing and partial prepayment
of principal of Loans shall be in an aggregate amount at least equal to
$1,000,000, in the case of Base Rate Loans, and $5,000,000, in the case
of LIBOR Loans, (or, in either case, a larger multiple of $1,000,000)
(borrowings or prepayments of or into Loans of different Types or, in
the case of LIBOR Loans, having different Interest Periods at the same
time hereunder to be deemed separate borrowings and prepayments for
purposes of the foregoing, one for each Type or Interest Period).
Anything in this Agreement to the contrary notwithstanding, the
aggregate principal amount of LIBOR Loans having the same Interest
Period shall be in an amount at least equal to $10,000,000 (or a larger
multiple of $1,000,000) and, if any LIBOR Loans would otherwise be in a
lesser principal amount for any period, such Loans shall be Base Rate
Loans during such period.
4.05 Certain Notices. Except as otherwise provided in Section 2.03
hereof with respect to Money Market Loans, notices by the Company to
the Agent of terminations or reductions of the Commitments, of
borrowings and optional prepayments of Loans and of Classes of Loans,
of Types of Loans and of the duration of Interest Periods shall be
irrevocable and shall be effective only if received by the Agent not
later than 10:00 a.m. New York time on the number of Business Days
prior to the date of the relevant termination, reduction, borrowing, or
prepayment or the first day of such Interest Period specified below:
<TABLE>
<CAPTION>
Number of
Business
Notice Days Prior
<S> <C>
Termination or reduction of Commitments 3
Borrowing or prepayment of Base Rate Loans 1
Borrowing or prepayment of, or duration
of Interest Period for, LIBOR Loans 3
</TABLE>
Each such notice of termination or reduction shall specify the amount
and the Class of the Commitments to be terminated or reduced. Each
such notice of borrowing or optional prepayment shall specify the Class
of Loans to be borrowed or prepaid, (subject to Section 4.04 hereof)
the amount in Dollars (or, in the case of Loans in Alternative
Currencies, the Dollar Equivalent) and Type of each Loan to be borrowed
or prepaid, the date of borrowing or optional prepayment (which shall
be a Business Day) and, in the case of Eurocurrency Loans, the Currency
or Currencies in which such Loans are to be made and the account of the
relevant Borrower maintained with a commercial bank in the country in
whose Currency such Eurocurrency Loans are denominated at which such
Loans are to be made available to such Borrower. Each such notice of
the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate. The Agent shall promptly notify the
Banks of the contents of each such notice. In the event that the
relevant Borrower fails to select the Type of Loan, or the duration of
any Interest Period for any Eurocurrency Loan, within the time period
and otherwise as provided in this Section 4.05, such Loan will be made
as a Base Rate Loan. Anything in this Agreement to the contrary
notwithstanding, in the event that any Borrower shall have outstanding
any Base Rate Loans and at least one Business Day prior to the maturity
thereof the Company (on behalf of the relevant Borrower) shall have
failed to notify the Agent (in compliance with the foregoing provisions
of this Section 4.05) that such Borrower intends to reborrow the
aggregate amount of such Base Rate Loans on the maturity thereof, then
the Company and such Borrower shall be deemed to have requested a new
borrowing of Base Rate Loans in the same aggregate principal amount as
the maturing Base Rate Loans then outstanding, and the proviso to
Section 4.01(a) hereof shall be applicable thereto.
4.06 Non-Receipt of Funds by the Agent. Unless the Agent shall have
been notified by a Bank or any Borrower (the "Payor") prior to the date
on which the Payor is to make payment to the Agent of (in the case of a
Bank) the proceeds of a Loan to be made by such Bank hereunder or (in
the case of any Borrower) a payment to the Agent for account of one or
more of the Banks hereunder (such payment being herein called the
"Required Payment"), which notice shall be effective upon receipt, that
the Payor does not intend to make the Required Payment to the Agent,
the Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make
the amount thereof available to the intended recipient(s) on such date;
and, if the Payor has not in fact made the Required Payment to the
Agent, the recipient(s) of such payment shall, on demand, repay to the
Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date (the
"Advance Date") such amount was so made available by the Agent until
the date the Agent recovers such amount at a rate per annum equal to
the Federal Funds Rate for such day and, if such recipient(s) shall
fail promptly to make such payment, the Agent shall be entitled to
recover such amount, on demand, from the Payor, together with interest
as aforesaid, provided that if neither the recipient(s) nor the Payor
shall return the Required Payment to the Agent within three Business
Days of the Advance Date, then, retroactively to the Advance Date, the
Payor and the recipient(s) shall each be obligated to pay interest on
the Required Payment as follows:
(i) if the Required Payment shall represent a payment to be made by
any Borrower to the Banks, such Borrower and the recipient(s) shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment at the Post-Default Rate (and, in case
the recipient(s) shall return the Required Payment to the Agent,
without limiting the obligation of such Borrower under Section 3.02
hereof to pay interest to such recipient(s) at the Post-Default Rate in
respect of the Required Payment) and
(ii) if the Required Payment shall represent proceeds of a Loan to be
made by the Banks to any Borrower, the Payor and such Borrower shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment at the rate of interest provided for
such Required Payment pursuant to Section 3.02 hereof (and, in case
such Borrower shall return the Required Payment to the Agent, without
limiting any claim such Borrower may have against the Payor in respect
of the Required Payment).
4.07 Sharing of Payments, Etc.
(a) Each Obligor agrees that, in addition to (and without limitation
of) any right of set-off, banker's lien or counterclaim a Bank may
otherwise have, each Bank shall be entitled, at its option, to offset
balances held by it for account of such Obligor at any of its offices,
in Dollars or in any other currency, against any principal of or
interest on any of such Bank's Loans or any other amount payable to
such Bank hereunder, that is not paid when due (regardless of whether
such balances are then due to such Obligor) in which case it shall
promptly notify such Obligor (through notification to the Company) and
the Agent thereof, provided that such Bank's failure to give such
notice shall not affect the validity thereof.
(b) If any Bank shall obtain from any Obligor payment of any principal
of or interest on any Loan of any Class owing to it or payment of any
other amount under this Agreement through the exercise of any right of
set-off, banker's lien or counterclaim or similar right or otherwise
(other than from the Agent as provided herein), and, as a result of
such payment, such Bank shall have received a greater percentage of the
principal of or interest on the Loans of such Class or such other
amounts then due hereunder by such Obligor to such Bank than the
percentage received by any other Bank, it shall promptly purchase from
such other Banks participations in (or, if and to the extent specified
by such Bank, direct interests in) the Loans of such Class or such
other amounts, respectively, owing to such other Banks (or in interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that
all the Banks shall share the benefit of such excess payment (net of
any reasonable expenses that may be incurred by such Bank in obtaining
or preserving such excess payment) pro rata in accordance with the
unpaid principal of and/or interest on the Loans of such Class or such
other amounts, respectively, owing to each of the Banks. To such end
all the Banks shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(c) Each Obligor agrees that any Bank so purchasing such a
participation (or direct interest) may exercise all rights of set-off,
banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Bank were a direct holder of Loans or
other amounts (as the case may be) owing to such Bank in the amount of
such participation.
(d) Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and
retain the benefits of exercising, any such right with respect to any
other indebtedness or obligation of the Company. If, under any
applicable bankruptcy, insolvency or other similar law, any Bank
receives a secured claim in lieu of a set-off to which this Section
4.07 applies, such Bank shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the
rights of the Banks entitled under this Section 4.07 to share in the
benefits of any recovery on such secured claim.
Section 5. Yield Protection, Etc.
5.01 Additional Costs.
(a) Each Borrower shall pay directly to each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate
such Bank for any costs that such Bank determines are attributable to
its making or maintaining of any LIBOR Loans or its obligation to make
any LIBOR Loans hereunder, or any reduction in any amount receivable by
such Bank hereunder in respect of any of such Loans or such obligation
(such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change
that:
(i) shall subject any Bank (or its Applicable Lending Office for any
of such Loans) to any tax, duty or other charge in respect of such
Loans or its Notes or changes the basis of taxation of any amounts
payable to such Bank under this Agreement or its Notes in respect of
any of such Loans (excluding changes in the rate of tax on the overall
net income of such Bank or of such Applicable Lending Office by the
jurisdiction in which such Bank has its principal office or such
Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the LIBO Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Bank (including, without limitation, any of such
Loans or any deposits referred to in the definition of "LIBO Base Rate"
in Section 1.01 hereof), or any commitment of such Bank (including,
without limitation, the Commitments of such Bank hereunder); or
(iii) imposes any other condition affecting this Agreement or its
Notes (or any of such extensions of credit or liabilities) or its
Commitments.
If any Bank requests compensation from any Borrower under this Section
5.01(a), the Company may, by notice to such Bank (with a copy to the
Agent), suspend the obligation of such Bank thereafter to make Loans of
the Type with respect to which compensation is requested to such
Borrower until the Regulatory Change giving rise to such request ceases
to be in effect (in which case the provisions of Section 5.04 hereof
shall be applicable), provided that such suspension shall not affect
the right of such Bank to receive the compensation so requested.
(b) Without limiting the effect of the provisions of paragraph (a) of
this Section 5.01, in the event that, by reason of any Regulatory
Change, any Bank either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a
category of deposits or other liabilities of such Bank that includes
deposits by reference to which the interest rate on LIBOR Loans is
determined as provided in this Agreement or a category of extensions of
credit or other assets of such Bank that includes LIBOR Loans or (ii)
becomes subject to restrictions on the amount of such a category of
liabilities or assets that it may hold, then, if such Bank so elects by
notice to the Company (with a copy to the Agent), the obligation of
such Bank to make LIBOR Loans of such Type hereunder shall be suspended
until such Regulatory Change ceases to be in effect (in which case the
provisions of Section 5.04 hereof shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Company shall pay directly
to each Bank from time to time on request such amounts as such Bank may
determine to be necessary to compensate such Bank (or, without
duplication, the bank holding company of which such Bank is a
subsidiary) for any costs that it determines are attributable to the
maintenance by such Bank (or any Applicable Lending Office or such bank
holding company), pursuant to any law or regulation or any
interpretation, directive or request (whether or not having the force
of law and whether or not failure to comply therewith would be
unlawful) of any court or governmental or monetary authority (i)
following any Regulatory Change or (ii) implementing any risk-based
capital guideline or other requirement (whether or not having the force
of law and whether or not the failure to comply therewith would be
unlawful) heretofore or hereafter issued by any government or
governmental or supervisory authority implementing at the national
level the Basle Accord (including, without limitation, the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal
Reserve System (12 C.F.R. Part 208, Appendix A; 12 C.F.R. Part 225,
Appendix A) and the Final Risk-Based Capital Guidelines of the Office
of the Comptroller of the Currency (12 C.F.R. Part 3, Appendix A)), of
capital in respect of its Commitments or Loans (such compensation to
include, without limitation, an amount equal to any reduction of the
rate of return on assets or equity of such Bank (or any Applicable
Lending Office or such bank holding company) to a level below that
which such Bank (or any Applicable Lending Office or such bank holding
company) could have achieved but for such law, regulation,
interpretation, directive or request). For purposes of this Section
5.01(c), "Basle Accord" shall mean the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence
of Capital Measurement and Capital Standards" dated July 1988, as
amended, modified and supplemented and in effect from time to time or
any replacement thereof.
(d) Each Bank shall notify the Company of any event occurring after
the date of this Agreement entitling such Bank to compensation under
paragraph (a) or (c) of this Section 5.01 as promptly as practicable,
but in any event within 45 days, after such Bank obtains actual
knowledge thereof; provided that (i) if any Bank fails to give such
notice within 45 days after it obtains actual knowledge of such an
event, such Bank shall, with respect to compensation payable pursuant
to this Section 5.01 in respect of any costs resulting from such event,
only be entitled to payment under this Section 5.01 for costs incurred
from and after the date 45 days prior to the date that such Bank does
give such notice and (ii) each Bank will designate a different
Applicable Lending Office for the Loans of such Bank affected by such
event if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the sole opinion of such Bank,
be disadvantageous to such Bank, except that such Bank shall have no
obligation to designate an Applicable Lending Office located in the
United States of America. Each Bank will furnish to the Company a
certificate setting forth the basis and amount of each request by such
Bank for compensation under paragraph (a) or (c) of this Section 5.01.
Determinations and allocations by any Bank for purposes of this Section
5.01 of the effect of any Regulatory Change pursuant to paragraph (a)
or (b) of this Section 5.01, or of the effect of capital maintained
pursuant to paragraph (c) of this Section 5.01, on its costs or rate of
return of maintaining Loans or its obligation to make Loans, or on
amounts receivable by it in respect of Loans, and of the amounts
required to compensate such Bank under this Section 5.01, shall be
conclusive, provided that such determinations and allocations are made
on a reasonable basis.
5.02 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBO Base
Rate for any Interest Period:
(a) the Agent determines, which determination shall be conclusive,
that quotations of interest rates for the relevant deposits referred to
in the definition of "LIBO Base Rate" in Section 1.01 hereof are not
being provided in the relevant amounts or for the relevant maturities
for purposes of determining rates of interest for either Type of LIBOR
Loans as provided herein; or
(b) if the related Loans are Revolving Credit Loans, the Majority
Revolving Credit Banks or, if the related Loans are Eurocurrency Loans,
the Majority Eurocurrency Banks determine (or any Bank that has
outstanding a Money Market Quote with respect to a LIBOR Market Loan
determines), which determination shall be conclusive, and notify (or
notifies, as the case may be) the Agent that the relevant rates of
interest referred to in the definition of "LIBO Base Rate" in Section
1.01 hereof upon the basis of which the rate of interest for LIBOR
Loans (or LIBOR Market Loans, as the case may be) for such Interest
Period is to be determined are not likely adequately to cover the cost
to such Banks (or to such quoting Bank) of making or maintaining LIBOR
Loans for such Interest Period; or
(c) in the case of Eurocurrency Loans denominated in an Alternative
Currency, any Bank shall determine (which determination shall be
conclusive) and notify the Agent that the relevant Alternative Currency
is not available in the relevant amounts or for the relevant periods,
or that a change in national or international financial, political or
economic conditions or exchange controls has occurred which would, in
the opinion of such Bank, make it impracticable for such Bank to make,
fund or maintain its Loans to be made in such Alternative Currency or
for the relevant Borrower to pay the principal of or interest on such
Loans as provided in this Agreement;
then the Agent shall give the Company and each Bank prompt notice
thereof and, so long as such condition remains in effect, the Banks (or
such quoting Bank) shall be under no obligation to make additional
Loans of the affected Type or Currency, as the case may be.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to honor its obligation to make or maintain
LIBOR Loans or LIBOR Market Loans hereunder, then such Bank shall
promptly notify the Company thereof (with a copy to the Agent) and such
Bank's obligation to make LIBOR Loans shall be suspended until such
time as such Bank may again make and maintain LIBOR Loans (in which
case the provisions of Section 5.04 hereof shall be applicable), and
such Bank shall no longer be obligated to make any LIBOR Market Loan
that it has offered to make.
5.04 Treatment of Affected Loans. If the obligation of any Bank to
make LIBOR Loans shall be suspended pursuant to Section 5.01 or 5.03
hereof, such Bank's LIBOR Loans shall be Converted into Base Rate Loans
denominated in Dollars (at the Dollar Equivalent if Converted from a
LIBOR Loan denominated in an Alternative Currency) on such date as such
Bank may specify to the Company (with a copy to the Agent) and, unless
and until such Bank gives notice as provided below that the
circumstances specified in Section 5.01 or 5.03 hereof that gave rise
to such Conversion no longer exist:
(a) to the extent that such Bank's LIBOR Loans have been so Converted,
all payments and prepayments of principal that would otherwise be
applied to such Bank's LIBOR Loans shall be applied instead to its Base
Rate Loans; and
(b) all Loans that would otherwise be made as LIBOR Loans shall be
made instead as Base Rate Loans in the Dollar Equivalent of the LIBOR
Loan that would otherwise be made.
Each Bank agrees to give prompt notice to the Company with a copy to
the Agent that the circumstances specified in Section 5.01 or 5.03
hereof that gave rise to the Conversion of such Bank's LIBOR Loans
pursuant to this Section 5.04 no longer exist.
5.05 Compensation. Each Borrower shall pay to the Agent for account of
each Bank, upon the request of such Bank through the Agent, such amount
or amounts as shall be sufficient (in the reasonable opinion of such
Bank) to compensate it for any loss, cost or expense that such Bank
determines is attributable to:
(a) any payment, optional prepayment or Conversion of a LIBOR Loan or
a Set Rate Loan made by such Bank to such Borrower for any reason
(including, without limitation, the acceleration of the Loans pursuant
to Section 10 hereof) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by such Borrower for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 7 hereof to be satisfied) to borrow a LIBOR Loan or a Set Rate
Loan (with respect to which, in the case of a Money Market Loan, the
Company has accepted a Money Market Quote) from such Bank on the date
for such borrowing specified in the relevant notice of borrowing given
pursuant to Section 2.02 or 2.03(b) hereof.
Without limiting the effect of the preceding sentence, such
compensation shall include an amount equal to the excess, if any, of
(i) the amount of interest that otherwise would have accrued on the
principal amount so paid, prepaid or Converted or not borrowed for the
period from the date of such payment, prepayment, Conversion or failure
to borrow to the last day of the then current Interest Period for such
Loan (or, in the case of a failure to borrow, the Interest Period for
such Loan that would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the amount of interest that otherwise would have
accrued on such principal amount at a rate per annum equal to the
interest component of the amount such Bank would have bid in the London
interbank market for deposits in the applicable currency of leading
banks (if such Loan is a LIBOR Loan or a LIBOR Market Loan) or in the
United States certificate of deposit market for issuance at face value
of certificates of deposit for Dollar deposits (if such Loan is a Set
Rate Loan) in amounts comparable to such principal amount and with
maturities comparable to such period (as reasonably determined by such
Bank).
5.06 U.S. Taxes.
(a) The Company and each other Borrower. that is a U.S. Person agrees
to pay to each Bank that is not a U.S. Person such additional amounts
as are necessary in order that the net payment of any amount due to
such non-U.S. Person hereunder after deduction for or withholding in
respect of any U.S. Taxes imposed with respect to such payment (or in
lieu thereof, payment of such U.S. Taxes by such non-U.S. Person), will
not be less than the amount stated herein to be then due and payable,
provided that the foregoing obligation to pay such additional amounts
shall not apply:
(i) to any payment to a Bank hereunder unless such Bank is, on the
date hereof (or on the date it becomes a Bank as provided in Section
11.06(b) hereof) and on the date of any change in the Applicable
Lending Office of such Bank, either entitled to submit a Form 1001
(relating to such Bank and entitling it to a complete exemption from
withholding on all interest to be received by it hereunder in respect
of the Loans) or Form 4224 (relating to all interest to be received by
such Bank hereunder in respect of the Loans), or
(ii) to any U.S. Taxes imposed solely by reason of the failure by such
non-U.S. Person to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States
of America of such non-U.S. Person if such compliance is required by
statute or regulation of the United States of America as a precondition
to relief or exemption from such U.S. Taxes.
For the purposes of this Section 5.06(a), (w) "Form 1001" shall mean
Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the
Department of the Treasury of the United States of America, (x) "Form
4224" shall mean Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the
United States) of the Department of the Treasury of the United States
of America (or in relation to either such Form such successor and
related forms as may from time to time be adopted by the relevant
taxing authorities of the United States of America to document a claim
to which such Form relates), (y) "U.S. Person" shall mean a citizen,
national or resident of the United States of America, a corporation,
partnership or other entity created or organized in or under any laws
of the United States of America, or any estate or trust that is subject
to Federal income taxation regardless of the source of its income and
(z) "U.S. Taxes" shall mean any present or future tax, assessment or
other charge or levy imposed by or on behalf of the United States of
America or any taxing authority thereof or therein.
(b) Within 30 days after paying any amount to the Agent or any Bank
from which it is required by law to make any deduction or withholding,
and within 30 days after it is required by law to remit such deduction
or withholding to any relevant taxing or other authority, the Company
(on its own behalf and on behalf of the other Borrowers that are U.S.
Persons) shall deliver to the Agent for delivery to such non-U.S.
Person evidence satisfactory to such Person of such deduction,
withholding or payment (as the case may be).
5.07 Foreign Taxes. Each Approved Borrower that is not a U.S. Person
agrees to pay to each Bank such additional amounts as are necessary in
order that the net payment of any amount payable by such Approved
Borrower to such Bank hereunder and under its Notes, after deduction
for or withholding in respect of any present or future tax, assessment
or other charge or levy imposed by or on behalf of the government of
the country in which such Approved Borrower is organized, domiciled or
resident (or any taxing authority thereof or therein) ("Foreign Taxes")
on or with respect to such payment, will not be less than the amount
stated herein and in such Notes to be payable. Without in any way
affecting any Approved Borrower's obligations under this Section 5.07,
if any such Approved Borrower is required by applicable law or
regulation to make any deduction or withholding of any Foreign Taxes in
respect of any payment hereunder to any Bank, such Approved Borrower
agrees to furnish to such Bank (i) within 45 days of such payment, the
originals or certified copies of all governmental tax receipts in
respect of such Foreign Taxes and (ii) promptly at the request of such
Bank, any other information, documents and receipts that such Bank may
reasonably require (and that such Approved Borrower can obtain with
reasonable efforts) to establish to its satisfaction the full and
timely payment of such Foreign Taxes and to permit such Bank to claim
such Foreign Taxes as a credit or a deduction in the computation of the
income taxes imposed on such Bank by or on behalf of the government of
the country in which such Bank is organized, domiciled or resident.
5.08 Replacement Banks. Provided that no Default shall have occurred
and be continuing, the Company may, at any time, replace any Bank that
has requested compensation from the Company or any Approved Borrower
pursuant to Section 5.01 hereof or who shall have delivered the
notification referred to in Section 5.02(c) hereof or whose obligation
to make additional LIBOR Loans or LIBOR Market Loans has been suspended
pursuant to Section 5.03 hereof or that is entitled to payment of
additional amounts under Section 5.06 or Section 5.07 hereof or that
has failed, and such failure has continued for two Business Days, to
make payment to the Agent of the proceeds of a Loan to be made by such
Bank hereunder after satisfaction of all conditions precedent to such
Loan (any such Bank being herein called an "Affected Bank"), by giving
not less than ten Business Days' prior written notice to the Agent
(which shall promptly notify such Affected Bank and each other Bank),
that it intends to replace such Affected Bank with one or more banks
(including, but not limited to, any other Bank under this Agreement)
selected by the Company and acceptable to the Agent (which shall not
unreasonably withhold its acceptance). The method (whether by
assignment or otherwise) of and documentation for such replacement
shall be acceptable to the Affected Bank and the Agent (which shall not
unreasonably withhold their acceptance and shall cooperate with the
Company in effecting such replacement). Upon the effective date of any
replacement pursuant to this Section 5.08 (and as a condition thereto),
the Company shall, or shall cause the replacement bank(s) to, pay to
the Affected Bank being replaced any amounts owing to such Affected
Bank hereunder (including, without limitation, principal, interest,
facility fees, compensation and additional amounts under this Section
5, in each case accrued to the effective date of such replacement),
whereupon each replacement bank shall for all purposes of this
Agreement become a "Revolving Credit Bank" having a Revolving Credit
Commitment in the amount of such Affected Bank's Revolving Credit
Commitment assumed by it, and/or a "Eurocurrency Bank" having a
Eurocurrency Commitment in the amount of such Affected Bank's
Eurocurrency Commitment assumed by it, as the case may be, in each case
holding Loans acquired by it, and such Revolving Credit Commitment or
Eurocurrency Commitment of the Affected Bank being replaced shall be
terminated upon such effective date and all of such Affected Bank's
rights and obligations under this Agreement shall terminate (provided
that the obligations of the Company under Sections 5.01, 5.05, 5.06,
5.07 and 12.03 hereof to such Affected Bank and the obligations of such
Affected Bank under Section 11.05 hereof to the Agent shall, in either
case, survive such replacement as provided in Section 12.07 hereof).
Section 6. Guarantee.
6.01 Guarantee. The Guarantor hereby guarantees to each Bank and the
Agent and their respective successors and assigns the prompt payment in
full when due (whether at stated maturity, by acceleration, by optional
prepayment or otherwise) of the principal of and interest on the Loans
made by the Banks to, and the Notes held by each Bank of, any Approved
Borrower and all other amounts from time to time owing to the Banks or
the Agent by any Approved Borrower under this Agreement pursuant to its
Designation Letter and under the Notes, in each case strictly in
accordance with the terms thereof (such obligations being herein
collectively called the "Guaranteed Obligations"). The Guarantor
hereby further agrees that if any Approved Borrower shall fail to pay
in full when due (whether at stated maturity, by acceleration, by
optional prepayment or otherwise) any of the Guaranteed Obligations,
the Guarantor will promptly pay 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, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
6.02 Obligations Unconditional. The obligations of the Guarantor under
Section 6.01 hereof are absolute and unconditional irrespective of the
value, genuineness, validity, regularity or enforceability of the
obligations of any Approved Borrower under this Agreement, the Notes or
any other agreement or instrument referred to herein or therein
(including, without limitation, any Designation Letter), or any
substitution, release or exchange of any other guarantee of or security
for any of the Guaranteed Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance
whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of
this Section 6.02 that the obligations of the Guarantor hereunder shall
be absolute and unconditional under any and all circumstances. Without
limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not affect the
liability of the Guarantor hereunder:
(i) at any time or from time to time, without notice to the Guarantor,
the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of this
Agreement or the Notes or any other agreement or instrument referred to
herein or therein shall be done or omitted; or
(iii) the maturity of any of the Guaranteed obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this
Agreement or the Notes or any other agreement or instrument referred to
herein or therein shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with.
The Guarantor hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that
the Agent or any Bank exhaust any right, power or remedy or proceed
against any Approved Borrower under this Agreement or the Notes or any
other agreement or instrument referred to herein or therein, or against
any other Person under any other guarantee of, or security for, any of
the Guaranteed Obligations.
6.03 Reinstatement. The obligations of the Guarantor under this
Section 6 shall be automatically reinstated if and to the extent that
for any reason any payment by or on behalf of any Approved Borrower in
respect of the Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of any of the Guaranteed Obligations, whether as
a result of any proceedings in bankruptcy or reorganization or
otherwise and the Guarantor agrees that it will indemnify the Agent and
each Bank on demand for all reasonable costs and expenses (including,
without limitation, fees of counsel) incurred by the Agent or such Bank
in connection with such rescission or restoration.
6.04 Subrogation. The Guarantor hereby irrevocably waives all rights
of subrogation or contribution, whether arising by operation of law
(including, without limitation, any such right arising under the
Federal Bankruptcy Code) or otherwise, by reason of any payment by it
pursuant to the provisions of this Section 6 and further agrees that
for the benefit of each of its creditors (including, without
limitation, each Bank and the Agent) that any such payment by it of the
Guaranteed Obligations of any Approved Borrower shall constitute a
contribution of capital by the Guarantor to such Approved Borrower.
6.05 Remedies. The Guarantor agrees that, as between the Guarantor and
the Banks, the obligations of any Approved Borrower under this
Agreement and the Notes may be declared to be forthwith due and payable
as provided in Section 10 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said
Section 10) for purposes of Section 6.01 hereof notwithstanding any
stay, injunction or other prohibition preventing such declaration (or
such obligations from becoming automatically due and payable) as
against any Approved Borrower and that, in the event of such
declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due
and payable by such Approved Borrower) shall forthwith become due and
payable by the Guarantor for purposes of said section 6.01.
6.06 Continuing Guarantee. The guarantee in this Section 6 is a
continuing guarantee, and shall apply to all Guaranteed Obligations
whenever arising.
Section 7. Conditions Precedent.
7.01 Conditions to Effectiveness. The effectiveness of the amendment
and restatement of the Original Credit Agreement provided for hereby is
subject to the receipt by the Agent (with sufficient copies for each
Bank) of the following documents, each of which shall be satisfactory
to the Agent (and to the extent specified below, to each Bank) in form
and substance:
(a) Corporate Documents. Certified copies of the charter and by-laws
(or equivalent documents) of the Company and of all corporate authority
for the Company (including, without limitation, board of director
resolutions and evidence of the incumbency of officers) with respect to
the execution, delivery and performance of this Agreement and the Notes
of the Company and each other document to be delivered by the Company
from time to time in connection herewith and the Loans hereunder (and
the Agent and each Bank may conclusively rely on such certificate until
it receives notice in writing from the Company).
(b) Officer's Certificate. A certificate of a senior officer of the
Company, dated the Amendment Effective Date, to the effect set forth in
the first sentence of Section 7.03 hereof.
(c) Opinion of Counsel to the Company. An opinion, dated the
Amendment Effective Date, of Mudge Rose Guthrie Alexander & Ferdon,
counsel to the Company, substantially in the form of Exhibit B hereto
and covering such other matters as the Agent or any Bank may reasonably
request (and the Company hereby instructs such counsel to deliver such
opinion to the Banks and the Agent).
(d) Opinion of Special New York Counsel to Chase. An opinion, dated
the Amendment Effective Date, of Milbank, Tweed, Hadley & McCloy,
special New York counsel to Chase, substantially in the form of Exhibit
C hereto.
(e) Notes. A Revolving Credit Note, Money Market Note and
Eurocurrency Note for each Bank, duly completed and executed by the
Company dated in accordance with Section 2.08, hereof in exchange for
the Original Notes.
(f) Other Documents. Such other documents as the Agent or any Bank or
special New York counsel to Chase may reasonably request.
The effectiveness of the amendment and restatement of the Original
Credit Agreement provided for hereby is also subject to (a) the payment
by each Bank (other than Chase) to the Agent for account of Chase of an
amount equal to the principal amount of the Eurocurrency Loan deemed to
be acquired by such Bank pursuant to the second sentence of Section
2.01(b) hereof, (b) the payment by the Company to the Agent for account
of Chase of interest on the Existing Term Loan, and facility fee under
Section 2.05 of the Original Credit Agreement, in each case accrued to
the Amendment Effective Date and (c) the payment by the Company of such
fees as the Company shall have agreed to pay or deliver to any Bank or
the Agent in connection herewith, including, without limitation, the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy,
special New York counsel to Chase in connection with the negotiation,
preparation, execution and delivery of this Agreement and the Notes and
the making of the Loans hereunder (to the extent that statements for
such fees and expenses have been delivered to the Company).
7.02 Initial Loan to any Approved Borrower. The obligation of any Bank
to make its initial Loan hereunder to any Approved Borrower is subject
to the following additional conditions precedent, each of which shall
have been fulfilled to the satisfaction of such Bank:
(a) Corporate Documents. The Agent shall have received (with
sufficient copies for each Bank) certified copies of the charter and
by-laws (or equivalent documents) of such Approved Borrower and of all
corporate authority for such Approved Borrower (including, without
limitation, board of director resolutions and evidence of the
incumbency of officers) with respect to the execution, delivery and
performance of the Designation Letter delivered by such Approved
Borrower, this Agreement and the Notes of such Approved Borrower and
each other document to be delivered by such Approved Borrower from time
to time in connection with any of the foregoing documents and
instruments and the Loans hereunder (and the Agent and each Bank may
conclusively rely on such certificate until it receives notice in
writing from the Company).
(b) Opinion of Counsel to such Approved Borrower. The Agent shall
have received (with sufficient copies for each Bank) an opinion of
counsel (satisfactory to the Agent) to such Approved Borrower,
substantially in the form of Exhibit B-2 hereto, with such changes
therein as the Agent or any Bank may reasonably request to address
matters of foreign law, and covering such other matters as the Agent or
any Bank may reasonably request.
(c) Notes. The Agent shall have received for each Bank its Revolving
Credit Note, Money Market Note and Eurocurrency Note duly completed and
executed by such Approved Borrower.
(d) Designation Letter. The Agent shall have received (with
sufficient copies for each Bank) a Designation Letter, duly executed by
such Approved Borrower and the Company and acknowledged by the Agent.
(e) Financial Statements. The Agent shall have received (with
sufficient copies for each Bank) the financial statements of such
Approved Borrower required pursuant to the fourth paragraph of such
Approved Borrower's Designation Letter.
(f) Other Documents. The Agent shall have received such other
documents as the Agent and or any Bank or special New York counsel to
Chase may reasonably request.
7.03 Initial and Subsequent Loans. The obligation of any Bank to make
any Loan (including any Money Market Loan and such Bank's initial
Syndicated Loan) hereunder is subject to the further conditions
precedent that, both immediately prior to the making of such Loan and
also after giving effect thereto and to the intended use thereof: (a)
no Event of Default (and, if such borrowing will increase the aggregate
outstanding principal amount of Loans of any Bank, no Default) shall
have occurred and be continuing; and (b) the representations and
warranties made by the Company in Section 8 hereof (other than, if such
borrowing will not increase the aggregate outstanding principal amount
of Loans of any Bank, the last sentence of Section 8.02 hereof and
Section 8.03 hereof) shall be true and complete on and as of the date
of the making of such Loan with the same force and effect as if made on
and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date). Each notice of borrowing by the Company hereunder
shall constitute a certification by the Company to the effect set forth
in the preceding sentence (both as of the date of such notice and,
unless the Company otherwise notifies the Agent prior to the date of
such borrowing, as of the date of such borrowing).
Section 8. Representations and Warranties. The Company represents and
warrants to the Agent and the Banks that:
Part A. Representations and Warranties or the Company.
8.01 Corporate Existence. Each of the Company and its Subsidiaries:
(a) is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate or
other power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and
(c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where failure so to qualify could
(either individually or in the aggregate) have a Material Adverse
Effect.
8.02 Financial Condition. The Company has heretofore furnished to each
of the Banks a consolidated balance sheet of the Company and its
Subsidiaries as at December 31, 1992 and the related consolidated
statements of income, cash flows and changes in shareholders' equity of
the Company and its Subsidiaries for the fiscal year ended on said
date, with the opinion thereon of Coopers & Lybrand, and the unaudited
consolidated balance sheet of the Company and its Subsidiaries as at
June 30, 1993 and the related consolidated statements of income and
cash flows of the Company and its Subsidiaries for the six-month period
ended on such date. All such financial statements present fairly, in
all material respects, the consolidated financial condition of the
Company and its Subsidiaries as at said dates and the consolidated
results of their operations for the fiscal year and six-month period
ended on said dates (subject, in the case of such financial statements
as at June 30, 1993, to normal year-end audit adjustments), all in
accordance with generally accepted accounting principles and practices
applied on a consistent basis. None of the Company nor any of its
Subsidiaries has on the date hereof any material contingent
liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in said
balance sheets as at said dates (or the notes thereto in the case of
such yearend financial statements). Since December 31, 1992, there has
been no material adverse change in the consolidated financial
condition, operations, business or prospects taken as a whole of the
Company and its Subsidiaries from that set forth in said financial
statements as at said date (or the notes thereto).
8.03 Litigation. Except as disclosed in Schedule III hereto, there are
no legal or arbitral proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending or (to the
knowledge of the Company) threatened against the Company or any of its
Subsidiaries that, if adversely determined could (either individually
or in the aggregate) have a Material Adverse Effect.
8.04 No Breach. None of the execution and delivery of this Agreement
and the Notes, the consummation of the transactions herein contemplated
or compliance with the terms and provisions hereof will conflict with
or result in a breach of, or require any consent under, the charter or
by-laws of the Company, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental
authority or agency, or any agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them
or any of their Property is bound or to which any of them is subject,
or constitute a default under any such agreement or instrument.
8.05 Action. The Company has all necessary corporate power, authority
and legal right to execute, deliver and perform its obligations under
this Agreement and the Notes; the execution, delivery and performance
by the Company of this Agreement and the Notes have been duly
authorized by all necessary corporate action on its part (including,
without limitation, any required shareholder approvals); and this
Agreement has been duly and validly executed and delivered by the
Company and constitutes, and each of the Notes when executed and
delivered for value will constitute, its legal, valid and binding
obligation, enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b)
the application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
8.06 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority
or agency, or any securities exchange, are necessary for the execution,
delivery or performance by the Company of this Agreement or the Notes
or for the legality, validity or enforceability hereof.
8.07 Use of Credit. None of the Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the
business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying Margin Stock, and no part
of the proceeds of the Loans hereunder will be used to buy or carry any
Margin Stock.
8.08 ERISA. Each Plan, and, to the knowledge of the Company, each
Multiemployer Plan, is in compliance in all material respects with, and
has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other Federal or State
law, and no event or condition has occurred and is continuing as to
which the Company would be under an obligation to furnish a report to
the Banks under Section 9.01(e) hereof.
8.09 Taxes. As of the Amendment Effective Date, the Company and its
Domestic Subsidiaries are members of an affiliated group of
corporations filing consolidated returns for Federal income tax
purposes, of which the Company is the "common parent" (within the
meaning of Section 1504 of the Code) of such group. The Company and
its Subsidiaries have filed all Federal income tax returns and all
other material tax returns that are required to be filed by them and
have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Company or any of its Subsidiaries. The
charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of taxes and other governmental charges are, in
the opinion of the Company, adequate. The Company has not given or
been requested to give a waiver of the statute of limitations relating
to the payment of Federal, state, local and foreign taxes or other
impositions.
8.10 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company", or a company "controlled" by
an "investment company", within the meaning of the Investment Company
Act of 1940, as amended.
8.11 Public Utility Holding Company Act. Neither the Company nor any
of its Subsidiaries is a "holding company", or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
8.12 Material Agreements and Liens.
(a) Part A of Schedule I hereto is a complete and correct list, as of
the Restatement Date, of each credit agreement, loan agreement,
indenture, guarantee, letter of credit or other arrangement providing
for or otherwise relating to any Indebtedness or any extension of
credit (or commitment for any extension of credit) to, or guarantee by,
the Company or any of its Subsidiaries the aggregate principal or face
amount of which equals or exceeds (or may equal or exceed) $5,000,000,
and the aggregate principal or face amount outstanding or that may
become outstanding under each such arrangement is correctly described
in Part A of said Schedule I.
(b) Part B of Schedule I hereto is a complete and correct list, as of
the Restatement Date, of each Lien securing Indebtedness of any Person
the aggregate principal or face amount of which equals or exceeds (or
may equal or exceed) $5,000,000 and covering any Property of the
Company or any of its Subsidiaries, and the aggregate Indebtedness
secured (or that may be secured) by each such Lien and the Property
covered by each such Lien is correctly described in Part B of said
Schedule I.
8.13 Environmental Matters. Each of the Company and its Subsidiaries
has obtained all environmental, health and safety permits, licenses and
other authorizations required under all Environmental Laws to carry on
its business as now being or as proposed to be conducted, except to the
extent failure to have any such permit, license or authorization would
not (either individually or in the aggregate) have a Material Adverse
Effect. Each of such permits, licenses and authorizations is in full
force and effect and each of the Company and its Subsidiaries is in
compliance with the terms and conditions thereof, and is also in
compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply therewith would not (either
individually or in the aggregate) have a Material Adverse Effect.
There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or that are in the
possession of the Company or any of its Subsidiaries in relation to any
site or facility now or previously owned, operated or leased by the
Company or any of its Subsidiaries that have not been made available to
the Banks.
8.14 Subsidiaries, Etc. Set forth in Schedule II hereto is a complete
and correct list, as of the Restatement Date, of all of the
Subsidiaries of the Company, together with, for each such Subsidiary,
(i) the jurisdiction of organization of such Subsidiary, (ii) each
Person holding ownership interests in such Subsidiary and (iii) the
nature of the ownership interests held by each such Person and the
percentage of ownership of such Subsidiary represented by such
ownership interests.
8.15 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or
on behalf of the Company to the Agent or any Bank in connection with
the negotiation, preparation or delivery of this Agreement or included
herein or delivered pursuant hereto, when taken as a whole, do not
contain any untrue statement of material fact or omit to state any
material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
All written information furnished after the date hereof by the Company
and its Subsidiaries to the Agent and the Banks in connection with this
Agreement and the transactions contemplated hereby will be true,
complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which
such information is stated or certified. There is no fact known to the
Company that could have a Material Adverse Effect that has not been
disclosed herein or in a report, financial statement, exhibit,
schedule, disclosure letter or other writing furnished to the Banks for
use in connection with the transactions contemplated hereby.
Part B. Representations and Warranties of the Approved Borrowers.
Each Approved Borrower represents and warrants to the Banks that:
8.16 Corporate Existence of Approved Borrower. It and each of its
Subsidiaries: (a) is a corporation, partnership or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate or
other power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and
(c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where failure so to qualify would have
a Material Adverse Effect.
8.17 No Breach. None of the execution and delivery of its Designation
Letter, this Agreement and its Notes, the consummation of the
transactions therein and herein contemplated and compliance with the
terms and provisions thereof and hereof will conflict with or result in
a breach of, or require any consent under, the charter or by-laws or
other organizational documents of such Approved Borrower, or any
applicable law or regulation, or any order, writ, injunction or decree
of any court or governmental authority or agency, or any agreement or
instrument to which such Approved Borrower or any of its Subsidiaries
is a party or by which any of them or their Property is bound or to
which any of them is subject, or constitute a default under any such
agreement or instrument.
8.18 Action. Such Approved Borrower has all necessary corporate or
other power and authority to execute, deliver and perform its
obligations under its Designation Letter, this Agreement and its Notes,
to perform its obligations hereunder and thereunder; the execution and
delivery by such Approved Borrower of its Designation Letter, its Notes
and the performance by such Approved Borrower hereof and thereof have
been duly authorized by all necessary corporate or other action on its
part (including, without limitation, any required shareholder
approvals); and each of its Notes when executed and delivered for value
and its Designation Letter when executed and delivered by such Approved
Borrower, will constitute, the legal, valid and binding obligation of
such Approved Borrower, enforceable against such Approved Borrower in
accordance with its terms, except as such enforceability may be limited
by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors'
rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
8.19 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority
or agency are necessary for the execution, delivery or performance by
such Approved Borrower of its Designation Letter, this Agreement or its
Notes or for the validity or enforceability thereof.
8.20 Taxes on Payments of Approved Borrowers. Except as disclosed to
the Banks in writing prior to the delivery of such Approved Borrower's
Designation Letter, there is no income, stamp or other tax of any
country, or of any taxing authority thereof or therein, imposed by or
in the nature of withholding or otherwise, which is imposed on any
payment to be made by such Approved Borrower pursuant hereto or on its
Notes, or is imposed on or by virtue of the execution, delivery or
enforcement of its Designation Letter, this Agreement or its Notes.
Section 9. Covenants of the Company. The Company covenants and agrees
with the Banks and the Agent that, so long as any Commitment or Loan is
outstanding and until payment in full of all amounts payable by each
Obligor hereunder:
9.01 Financial Statements, Etc. The Company shall deliver to each of
the Banks:
(a) as soon as available and in any event within 45 days after the end
of each quarterly fiscal period of each fiscal year of the Company,
consolidated statements of income, cash flows and shareholders' equity
of the Company and its Subsidiaries for such period and for the period
from the beginning of the respective fiscal year to the end of such
period, and the related consolidated balance sheet of the Company and
its Subsidiaries as at the end of such period, setting forth in each
case in comparative form the corresponding consolidated figures for the
corresponding periods in the preceding fiscal year, accompanied by a
certificate of a senior financial officer of the Company, which
certificate shall state that said consolidated financial statements
present fairly, in all material respects, the consolidated financial
condition and results of operations of the Company and its Subsidiaries
in accordance with generally accepted accounting principles,
consistently applied (except that not all financial statements are
accompanied by notes), as at the end of, and for, such period (subject
to normal year-end audit adjustments);
(b) as soon as available and in any event within 90 days after the end
of each fiscal year of the Company, consolidated statements of income,
cash flows and shareholders' equity of the Company and its Subsidiaries
for such fiscal year and the related consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal year, setting
forth in each case in comparative form the corresponding consolidated
figures for the preceding fiscal year, and accompanied by an opinion
thereon of independent certified public accountants of recognized
national standing, which opinion shall state that said consolidated
financial statements and the notes thereto present fairly, in all
material respects, the consolidated financial condition and results of
operations of the Company and its Subsidiaries as at the end of, and
for, such fiscal year in accordance with generally accepted accounting
principles, and a report of such accountants stating that, in
connection with their audit, nothing came to their attention, except as
specifically stated, that caused them to believe that the Company
failed to comply with the terms, covenants, provisions or conditions of
Section 9.07, 9.08, 9.09, 10(a) or 10(b) hereof (in the case of such
Section 10(b), as such Section relates to any payment default by the
Company or any of its Subsidiaries with respect to the principal of or
interest on any of its Indebtedness (other than the Loans) aggregating
$11,000,000 or more) insofar as they relate to accounting matters;
(c) promptly upon their becoming available, copies of all registration
statements and regular periodic reports, if any, that the Company shall
have filed with the Securities and Exchange Commission (or any
governmental agency substituted therefor) or any national securities
exchange;
(d) promptly upon the mailing thereof to the shareholders of the
Company generally or to holders of Subordinated Indebtedness generally,
copies of all financial statements, reports and proxy statements so
mailed;
(e) as soon as possible, and in any event within ten days after the
Company knows or has reason to believe that any of the events or
conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a senior financial
officer of the Company setting forth details respecting such event or
condition and the action, if any, that the Company or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to PBGC by the
Company or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to which
PBGC has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such
event (provided that a failure to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA, including, without
limitation, the failure to make on or before its due date a required
installment under Section 412(m) of the Code or Section 302(e) of
ERISA, shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code); and any request
for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or any action taken by the Company or an
ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan by
the Company or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt
by the Company or any ERISA Affiliate of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section
4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed within
30 days; and
(vi) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in
the loss of tax-exempt status of the trust of which such Plan is a part
if the Company or an ERISA Affiliate fails to timely provide security
to the Plan in accordance with the provisions of said Sections;
(f) promptly after the Company knows or has reason to believe that any
Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter
as possible, a description of the action that the Company has taken or
proposes to take with respect thereto; and
(g) from time to time such other information regarding the financial
condition, operations, business or prospects of the Company or any of
its Subsidiaries (including, without limitation, any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA) as any Bank or the Agent may reasonably request.
The Company will furnish to each Bank, at the time it furnishes each
set of financial statements pursuant to paragraph (a) or (b) above, a
certificate of a senior financial officer of the Company (i) to the
effect that no Default has occurred and is continuing (or, if any
Default has occurred and is continuing, describing the same in
reasonable detail and describing the action that the Company has taken
or proposes to take with respect thereto) and (ii) setting forth in
reasonable detail the computations necessary to determine whether the
Company is in compliance with Sections 9.07, 9.08 and 9.09 hereof as of
the end of the respective quarterly fiscal period or fiscal year.
9.02 Litigation. The Company will promptly give to each Bank notice of
all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, and any material
development in respect of such legal or other proceedings, affecting
the Company or any of its Subsidiaries, except proceedings that, if
adversely determined, would not (either individually or in the
aggregate) have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Company will give to each Bank notice
of the assertion of any Environmental Claim by any Person against, or
with respect to the activities of, the Company or any of its
Subsidiaries and notice of any alleged violation of or non-compliance
with any Environmental Laws or any permits, licenses or authorizations,
other than any Environmental Claim or alleged violation that, if
adversely determined, would not (either individually or in the
aggregate) have a Material Adverse Effect.
9.03 Existence, Etc. The Company will, and will cause each of its
Subsidiaries to:
(a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (provided that nothing in
this Section 9.03 shall prohibit any transaction expressly permitted
under Section 9.05 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if
failure to comply with such requirements could (either individually or
in the aggregate) have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained;
(d) maintain all of its Properties used or useful in its business in
good working order and condition, ordinary wear and tear excepted;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistently applied; and
(f) permit representatives of any Bank or the Agent, during normal
business hours, to examine, copy and make extracts from its books and
records, to inspect any of its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested
by such Bank or the Agent (as the case may be).
9.04 Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain insurance with financially sound and
reputable insurance companies (which insurance companies shall, in any
event, have an A.M. Best rating of "B+" or better), and with respect to
Property and risks of a character usually maintained by corporations
engaged in the same or similar business similarly situated, against
loss, damage and liability of the kinds and in the amounts customarily
maintained by such corporations.
9.05 Prohibition of Fundamental Chances. The Company will not, nor
will it permit any of its Subsidiaries to, enter into any transaction
of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution). The
Company will not, nor will it permit any of its Subsidiaries to,
Dispose of, in one transaction or a series of transactions, all or a
substantial part of its business or Property (for which purpose, the
Disposition of all or a substantial part of the capital stock of a
Subsidiary shall be deemed to be the Disposition of all or a
substantial part of the Property of such Subsidiary), whether now owned
or hereafter acquired (including, without limitation, receivables and
leasehold interests, but excluding (i) obsolete or worn-out tools,
equipment or other Property no longer used or useful in its business
and (ii) any inventory or other Property sold or disposed of in the
ordinary course of business and on ordinary business terms).
Notwithstanding the foregoing provisions of this Section 9.05:
(a) any Subsidiary of the Company may be merged or consolidated with
or into: (i) the Company if the Company shall be the continuing or
surviving corporation or (ii) any other such Subsidiary; provided that
(x) if any such transaction shall be between a Subsidiary and a Wholly
Owned Subsidiary, the Wholly Owned Subsidiary shall be the continuing
or surviving corporation;
(b) any Subsidiary of the Company may Dispose of any or all of its
Property (upon voluntary liquidation or otherwise) to the Company or a
Wholly Owned Subsidiary of the Company;
(c) the Company or any Subsidiary of the Company may merge or
consolidate with any other Person if (i) in the case of a merger or
consolidation of the Company, the Company is the surviving corporation
and, in any other case, the surviving corporation is a Wholly Owned
Subsidiary of the Company and (ii) after giving effect thereto no
Default would exist hereunder;
(d) The Company may effect the Disposition of its BMY-Combat Systems
Division to a joint venture (the "BMY Joint Venture") as described in
its Annual Report for the fiscal year of the Company ended December 31,
1992 and on terms and conditions substantially similar to those set
forth in the Company's letter to Chase dated August 19, 1993; and
(e) The Company or any of its Subsidiaries may effect any other
Disposition (the "Subject Disposition") so long as (i) the aggregate
book value of the Property that is the subject of the Subject
Disposition and of all other Property Disposed of pursuant to this
paragraph (e) during the period of twelve months ending on the date of
the Subject Disposition minus the aggregate principal amount of Loans
repaid with cash received by the Company or any of its Subsidiaries in
connection with the Subject Disposition and such other Dispositions
during such period (provided that the Commitments shall have been
reduced by a like amount) does not exceed 5% of Total Assets as at the
date of the Subject Disposition and (ii) the aggregate book value of
all Property Disposed of pursuant to this paragraph (e) during the
period commencing on the date of this Agreement and ending on the date
of the Subject Disposition minus the aggregate principal amount of
Loans repaid with cash received by the Company or any of its
Subsidiaries in connection with the Subject Disposition and such other
Dispositions during such period (provided that the Commitments shall
have been reduced by a like amount) does not exceed 15% of Total Assets
as at the date of the Subject Disposition.
9.06 Limitation on Liens. The Company will not, nor will it permit any
of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired,
except:
(a) Liens in existence on the date hereof and listed in Part B of
Schedule I hereto;
(b) Liens imposed by any governmental authority for taxes, assessments
or charges not yet due or that are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or the affected Subsidiaries, as
the case may be, in accordance with GAAP;
(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business that are
not overdue for a period of more than 30 days or that are being
contested in good faith and by appropriate proceedings and Liens
securing judgments but only to the extent for an amount and for a
period not resulting in an Event of Default under Section 10(h) hereof;
(d) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(e) deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Property or minor imperfections in title
thereto that, in the aggregate, are not material in amount, and that do
not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the business
of the Company or any of its Subsidiaries;
(g) Liens on Property of any corporation that becomes a Subsidiary of
the Company after the date of this Agreement, provided that such Liens
are in existence at the time such corporation becomes a Subsidiary of
the Company and were not created in anticipation thereof;
(h) Liens upon real and/or tangible personal Property acquired after
the date hereof (by purchase, construction or otherwise) by the Company
or any of its Subsidiaries, each of which Liens either (A) existed on
such Property before the time of its acquisition and was not created in
anticipation thereof or (B) was created solely for the purpose of
securing Indebtedness representing, or incurred to finance, refinance
or refund, the cost (including the cost of construction) of such
Property; provided that no such Lien shall extend to or cover any
Property of the Company or such Subsidiary other than the Property so
acquired and improvements thereon;
(i) additional Liens upon real and/or personal Property created after
the date hereof, provided that the aggregate Indebtedness secured
thereby and incurred on and after the date hereof shall not exceed
$5,000,000 in the aggregate at any one time outstanding; and
(j) any extension, renewal or replacement of the foregoing; provided
that the Liens permitted hereunder shall not be spread to cover any
additional Indebtedness or Property (other than a substitution of like
Property).
9.07 Interest Coverage Ratio. The Company will not permit the Interest
Coverage Ratio for any period of four consecutive fiscal quarters
ending during any period set forth below to be less than the ratio set
forth opposite such period:
<TABLE>
<CAPTION>
Period Ratio
<S> <C>
From the Closing Date
through December 30, 1994 3.50 to 1
From December 31, 1994
and at all times thereafter 4.00 to 1
</TABLE>
9.08 Tangible Net Worth. The Company will not at any time on and after
the date hereof to but excluding September 30, 1993 permit Tangible Net
Worth to be less than $175,000,000 and the Company will not at any time
on and after September 30, 1993 permit Tangible Net Worth to be less
than $175,000,000 plus the sum of 50% of Net Income for each fiscal
quarter of the Company from and including the fiscal quarter ending on
September 30, 1993 to the fiscal quarter ending on or most recently
ended prior to such time (for which purpose a net loss shall be deemed
to be Net Income of zero).
9.09 Total Debt to Total Capital Ratio. The Company will not permit
the ratio of Total Debt to Total Capital at any time during any period
set forth below to exceed the ratio set forth opposite such period:
<TABLE>
<CAPTION>
Period Ratio
<S> <C>
From the Closing Date
through December 31, 1994 0.55 to 1
From January 1, 1995
through December 31, 1995 0.50 to 1
From January 1, 1996
and at all times thereafter 0.45 to 1
</TABLE>
9.10 Lines of Business. Neither the Company nor any of its
Subsidiaries will engage to any substantial extent in any line or lines
of business activity other than the business of manufacturing,
providing, distributing and selling such diverse goods and industrial
services, principally for defense, industrial, commercial and
construction applications, the same or similar to those goods and
services as are manufactured, provided, distributed and sold by the
Company on the date hereof.
9.11 Transactions with Affiliates. Except as expressly permitted by
this Agreement, the Company will not, nor will it permit any of its
Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of
any Property to an Affiliate; (c) merge into or consolidate with or
purchase or acquire Property from an Affiliate; or (d) enter into any
other transaction directly or indirectly with or for the benefit of an
Affiliate (including, without limitation, Guarantees and assumptions of
obligations of an Affiliate); provided that (w) any Affiliate who is an
individual may serve as a director, officer or employee of the Company
or any of its Subsidiaries and receive reasonable compensation for his
or her services in such capacity, (x) the Company and its Subsidiaries
may enter into transactions (other than extensions of credit by the
Company or any of its Subsidiaries to an Affiliate) providing for the
leasing of Property, the rendering or receipt of services or the
purchase or sale of inventory and other Property in the ordinary course
of business if the monetary or business consideration arising therefrom
would be substantially as advantageous to the Company and its
Subsidiaries as the monetary or business consideration that would
obtain in a comparable transaction with a Person not an Affiliate, (y)
the Company may Guarantee the obligations of an Affiliate (other than
the BMY Joint Venture) so long as (I) the fraction, expressed as a
percentage, the numerator of which is the aggregate amount of such
Affiliate's obligations Guaranteed by the Company and the denominator
of which is the aggregate amount of such Affiliate's
obligations that are Guaranteed by any Person (including by the
Company) does not exceed the fraction, expressed as a percentage, the
numerator of which is the number of shares of capital stock or
partnership or other ownership interests of such Affiliate owned
directly or indirectly by the Company and the denominator of which is
the total number of shares of capital stock or partnership or other
ownership interests of such Affiliate owned by any Person (including,
directly or indirectly, by the Company) and (II) the aggregate amount
of obligations of Affiliates Guaranteed by the Company as permitted by
this clause (y) does not exceed $25,000,000 and (z) the Company may
Guarantee the obligations of the BMY Joint Venture in the ordinary
course of business.
9.12 Use of Proceeds. The proceeds of the Loans hereunder will be used
solely for general corporate purposes (in compliance with all
applicable legal and regulatory requirements) of the Company and its
Subsidiaries; provided that neither the Agent nor any Bank shall have
any responsibility as to the use of any of such proceeds.
Section 10. Events of Default. If one or more of the following events
(herein called "Events of Default") shall occur and be continuing:
(a) Any Borrower shall default in the payment when due (whether at
stated maturity or upon optional prepayment) of any principal of or
interest on any Loan, any fee or any other amount payable by it
hereunder; or
(b) The Company or any of its Subsidiaries shall default in the
payment when due of any principal of or interest on any of its other
Indebtedness aggregating $11,000,000 or more, or in the payment when
due of any amount under any Interest Rate Protection Agreement for a
notional principal amount exceeding $5,000,000; or any event specified
in any note, agreement, indenture or other document evidencing or
relating to any such Indebtedness or any event specified in any
Interest Rate Protection Agreement shall occur if the effect of such
event is to cause, or (with the giving of any notice or the lapse of
time or both) to permit the holder or holders of such Indebtedness (or
a trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be prepaid in full (whether by
redemption, purchase, offer to purchase or otherwise), prior to its
stated maturity or to have the interest rate thereon reset to a level
so that securities evidencing such Indebtedness trade at a level
specified in relation to the par value thereof or, in the case of an
Interest Rate Protection Agreement, to permit the payments owing under
such Interest Rate Protection Agreement to be liquidated; or
(c) Any representation, warranty or certification made or deemed made
herein (or in any modification or supplement hereto) by any Borrower,
or any certificate furnished to any Bank or the Agent pursuant to the
provisions hereof, shall prove to have been false or misleading as of
the time made or furnished in any material respect; or
(d) The Company shall default in the performance of any of its
obligations under any of Sections 9.01(f), 9.05, 9.06, 9.07, 9.08 or
9.09 hereof; or the Company shall default in the performance of any of
its other obligations in this Agreement and such default shall continue
unremedied for a period of thirty or more days after notice thereof to
the Company by the Agent or the Majority Banks (through the Agent); or
(e) The Company or any of its Subsidiaries shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts
become due; or
(f) The Company or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner or liquidator of itself or of
all or a substantial part of its Property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary
case under the Bankruptcy Code, (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under the Bankruptcy Code or
(vi) take any corporate action for the purpose of effecting any of the
foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the Company or any of its Subsidiaries, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition of
readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the Company or
such Subsidiary or of all or any substantial part of its Property, or
(iii) similar relief in respect to the Company or such Subsidiary under
any law relating to bankruptcy, insolvency, reorganization, winding-up,
or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving
or ordering any of foregoing shall be entered and continue unstaying
and in effect, for a period of 60 or more days; or an order for relief
against the Company or such Subsidiary shall be entered in an
involuntary case under the Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money in excess
of $5,000,000 in the aggregate (exclusive or judgment amounts fully
covered by insurance where the insurer has admitted liability in
respect of judgment) or in excess of $10,000,000 in the aggregate
(regardless of insurance coverage) shall be rendered by one or more
courts, administrative tribunals or other bodies having jurisdiction
against the Company or any of its Subsidiaries and the same shall not
be discharged (or provision shall not be made for such discharge), or a
stay of execution thereof shall not be procured, within 30 days from
the date of entry thereof and the Company or the relevant Subsidiary
shall not, within said period of 30 days, or such longer period during
which execution of the same shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal; or
(i) An event or condition specified in Section 9.01(e) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event of condition, together with all other such events
or conditions, the Company or any ERISA Affiliate shall incur or in the
opinion of the Majority Banks notified to the Company shall be
reasonably likely to incur a liability to a Plan, a Multiemployer Plan
or PBGC (or any combination of the foregoing) that, in the
determination of the Majority Banks notified to the Company, would
either individually or in the aggregate) have a Material Adverse
Effect; or
(j) A reasonable basis shall exist for the assertion against the
Company or any of its Subsidiaries or (or there shall have been
asserted against the Company or any of its Subsidiaries) claims or
liabilities, whether accrued, absolute or contingent, based on or
arising from the generation, storage, transport, handling or disposal
of Hazardous Materials by the Company or any of its Subsidiaries or
Affiliates, or any predecessor in interest of the Company or any of its
Subsidiaries or Affiliates, or relating to any site or facility owned,
operated or leased by the Company or any of its Subsidiaries or
Affiliates, which claims or liabilities (insofar as they are payable by
the Company or any of its Subsidiaries but after deducting any portion
thereof that is reasonably expected to be paid by other creditworthy
Persons jointly and severally liable therefor), in the judgment of the
Majority Banks notified to the Company are reasonably likely to be
determined adversely to the Company or any of its Subsidiaries, and the
amount thereof (either individually or in the aggregate) is reasonably
likely to have a Material Adverse Effect; or
(k) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
is or becomes the "beneficial owner" (as defined in Rules 13d-3-and
13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all shares that any such person has the
right to acquire without condition, other than the passage of time,
whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 20% or more of the common stock of
the Company (on a fully diluted basis);
THEREUPON: (1) in the case of an Event of Default other than one
referred to in clause (f) or (g) of this Section 10 with respect to the
Company, (A) the Agent may, by notice to the Company, terminate the
Commitments and they shall thereupon terminate, and (B) the Agent may
and, upon request of Banks holding more than 50% of the aggregate
unpaid principal amount of the Loans shall, by notice to the Company
declare the principal amount then outstanding of, and the accrued
interest on, the Loans made to any Borrower and all other amounts
payable by the Company hereunder and under the Notes (including,
without limitation, any amounts payable under Section 5.05 hereof) to
be forthwith due and payable (provided that (x) if so requested by the
Majority Revolving Credit Banks, the Agent shall take such action with
respect to the Revolving Credit Commitments and/or the Revolving Credit
Loans, Money Market Loans and such interest and other amounts to the
extent owed to the Revolving Credit Banks and (y) if so requested by
the Majority Eurocurrency Banks, the Agent shall take such action with
respect to the Eurocurrency Commitments and the Eurocurrency Loans and
such interest and other amounts to the extent owed to the Eurocurrency
Banks), whereupon such amounts shall be immediately due and payable
without presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by each Obligor; and (2) in
the case of the occurrence of an Event of Default referred to in clause
(f) or (g) of this Section 10 with respect to the Company, the
Commitments shall automatically be terminated and the principal amount
then outstanding of, and the accrued interest on, the Loans made to
each Borrower and all other amounts payable by the Company hereunder
and under the Notes (including, without limitation, any amounts payable
under Section 5.05 hereof) shall automatically become immediately due
and payable without presentment, demand, protest or other formalities
of any kind, all of which are hereby expressly waived by each Obligor.
Section 11. The Agent.
11.01 Appointment, Powers and Immunities. Each Bank hereby irrevocably
appoints and authorizes the Agent to act as its agent hereunder with
such powers as are specifically delegated to the Agent by the terms of
this Agreement, together with such other powers as are reasonably
incidental thereto. The Agent (which term as used in this sentence and
in Section 11.05 and the first sentence of Section 11.06 hereof shall
include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement,
and shall not by reason of this Agreement be a trustee for any Bank;
(b) shall not be responsible to the Banks for any recitals, statements,
representations or warranties contained in this Agreement, or in any
certificate or other document referred to or provided for in, or
received by any of them under, this Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, any Note or any other document referred to or provided
for herein or for any failure by the Company or any other Person to
perform any of its obligations hereunder or thereunder; (c) shall not
be required to initiate or conduct any litigation or collection
proceedings hereunder; and (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any other
document or instrument referred to or provided for herein or in
connection herewith, except for its own gross negligence or willful
misconduct. The Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it in good faith. The Agent
may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a notice of the assignment or transfer
thereof shall have been filed with the Agent, together with the consent
of the Company to such assignment or transfer (to the extent provided
in Section 12.06(b) hereof).
11.02 Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice or other communication (including, without
limitation, any thereof by telephone, telecopy, telex, telegram or
cable) believed by it to be genuine and correct and to have been signed
or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. As to any matters not expressly
provided for by this Agreement, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in
accordance with instructions given by the Majority Banks or, if
provided herein, in accordance with the instructions given by the
Majority Revolving Credit Banks, the Majority Eurocurrency Banks or all
of the Banks as is required in such circumstance, and such instructions
of such Banks and any action taken or failure to act pursuant thereto
shall be binding on all of the Banks.
11.03 Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default unless the Agent has received
notice from a Bank or the Company specifying such Default and stating
that such notice is a "Notice of Default". In the event that the Agent
receives such a notice of the occurrence of a Default, the Agent shall
give prompt notice thereof to the Banks. The Agent shall (subject to
Sections 11.01 and 11.07 hereof) take such action with respect to such
Default as shall be directed by the Majority Banks or, if provided
herein, the Majority Revolving Credit Banks or the Majority
Eurocurrency Banks, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action,
with respect to such Default as it shall deem advisable in the best
interest of the Banks except to the extent that this Agreement
expressly requires that such action be taken, or not be taken, only
with the consent or upon the authorization of the Majority Banks, the
Majority Revolving Credit Banks, the Majority Eurocurrency Banks or all
of the Banks.
11.04 Rights as a Bank. With respect to its Commitments and the Loans
made by it, Chase (and any successor acting as Agent) in its capacity
as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not acting
as the Agent, and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include the Agent in its individual capacity.
Chase (and any successor acting as Agent) and its affiliates may
(without having to account therefor to any Bank) accept deposits from,
lend money to, make investments in and generally engage in any kind of
banking, trust or other business with the Company (and any of its
Subsidiaries or Affiliates) as if it were not acting as the Agent, and
Chase and its affiliates may accept fees and other consideration from
the Company for services in connection with this Agreement or otherwise
without having to account for the same to the Banks.
11.05 Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed under Section 12.03 hereof, but without limiting
the obligations of the Company under said Section 12.03) ratably in
accordance with their respective Commitments, for any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits or reasonable costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Agent (including by any Bank) arising out of or by
reason of any investigation in or in any way relating to or arising out
of this Agreement or any other documents contemplated by or referred to
herein or the transactions contemplated hereby (including, without
limitation, the reasonable costs and expenses that the Company is
obligated to pay under Section 12.03 hereof but excluding, unless a
Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or
the enforcement of any of the terms hereof or of any such other
documents, provided that no Bank shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
11.06 Non-Reliance on Agents and Other Banks. Each Bank agrees that it
has, independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Company and its
Subsidiaries and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement. The
Agent shall not be required to keep itself informed as to the
performance or observance by the Company of this Agreement or any other
document referred to or provided for herein or to inspect the
Properties or books of the Company or any of its Subsidiaries. Except
for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder, the Agent
shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the affairs, financial condition
or business of the Company or any of its Subsidiaries (or any of their
affiliates) that may come into the possession of the Agent or any of
its affiliates.
11.07 Failure to Act. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall receive further
assurances to its satisfaction from the Banks or their indemnification
obligations under Section 11.05 hereof against any and all liability
and expense that may be incurred by it by reason of taking or
continuing to take any such action.
11.08 Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign
at any time by giving notice thereof to the Banks and the Company, and
the Agent may be removed at any time with or without cause by the
Majority Banks. Upon any such resignation or removal, the Majority
Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation or the Majority Banks' removal
of the retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, that shall be a bank that has an
office in New York, New York with a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Section 11 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 the Agent.
Section 12. Miscellaneous.
12.01 Waiver. No failure on the part of the Agent or any Bank to
exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or any
Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement or any
Note preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
Each Obligor irrevocably waives, to the fullest extent permitted by
applicable law, any claim that any action or proceeding commenced by
the Agent or any Bank relating in any way to this Agreement should be
dismissed or stayed by reason, or pending the resolution, of any action
or proceeding commenced by such Obligor relating in any way to this
Agreement whether or not commenced earlier. To the fullest extent
permitted by applicable law, each Obligor shall take all measures
necessary for any such action or proceeding commenced by the Agent or
any Bank to proceed to judgment prior to the entry of judgment in any
such action or proceeding commenced by such Obligor.
12.02 Notices. All notices, requests and other communications provided
for herein (including, without limitation, any modifications of, or
waivers, requests or consents under, this Agreement) shall be given or
made in writing (including, without limitation, by telecopy), or, with
respect to notices given pursuant to Section 2.03 hereof, by telephone,
confirmed in writing by telecopier by the close of business on the day
the notice is given, delivered (or telephoned, as the case may be) to
the intended recipient at the "Address for Notices" specified below its
name on the signature pages hereof); or, as to any party, at such other
address as shall be designated by such party in a notice to each other
party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted
by telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
Each Approved Borrower hereby agrees that each notice or other
communication provided for herein may be furnished to the Company or by
the Company on its behalf in the manner specified above and each
Approved Borrower further agrees that failure of the Company to deliver
to such Approved Borrower any notice furnished in accordance with this
Section 12.02 shall not affect the validity of such notice.
12.03 Expenses, Etc. The Company agrees to pay or reimburse each of
the Banks and the Agent for: (a) all reasonable out-of-pocket costs
and expenses of the Agent (including, without limitation, the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy,
special New York counsel to Chase) in connection with (i) the
negotiation, preparation, execution and delivery of this Agreement and
the Notes and the making of the Loans hereunder and (ii) the
negotiation or preparation of any modification, supplement or waiver of
any of the terms of this Agreement or any of the Notes (whether or not
consummated); (b) all reasonable out-of-pocket costs and expenses of
each Bank and the Agent (including, without limitation, the reasonable
fees and expenses of legal counsel, including allocated costs of
in-house counsel) in connection with (i) any Default and any
enforcement or collection proceedings resulting therefrom, including,
without limitation, all manner of participation in or other involvement
with (x) bankruptcy, insolvency, receivership, foreclosure, winding up
or liquidation proceedings, (y) judicial or regulatory proceedings and
(z) workout, restructuring or other negotiations or proceedings
(whether or not the workout, restructuring or transaction contemplated
thereby is consummated) and (ii) the enforcement of this Section 12.03;
and (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority
in respect of this Agreement or any of the Notes or any other document
referred to herein.
The Company hereby agrees to indemnify the Agent and each Bank and
their respective directors, officers, employees, attorneys and agents
from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by any of them
(including, without limitation, any and all losses, liabilities,
claims, damages or expenses incurred by the Agent to any Bank, whether
or not the Agent or any Bank is a party thereto) arising out of or by
reason of any investigation or litigation or other proceedings
(including any threatened investigation or litigation or other
proceedings) relating to the Loans hereunder or any actual or proposed
use by the Company or any of its Subsidiaries of the proceeds of any of
the Loans hereunder, including, without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any such
investigation or litigation or other proceedings (but excluding any
such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to
be indemnified). Without limiting the generality of the foregoing, the
Company will indemnify the Agent and each Bank from, and hold the Agent
and each Bank harmless against, any losses, liabilities, claims,
damages or expenses described in the preceding sentence (but excluding,
as provided in the preceding sentence, any loss, liability, claim,
damage or expense incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified) arising under any
Environmental Law as a result of the past, present or future operations
of the Company or any of its Subsidiaries (or any predecessor in
interest to the Company or any of its Subsidiaries), or the past,
present or future condition of any site or facility owned, operated or
leased by the Company or any of its Subsidiaries (or any such
predecessor in interest), or any Release or threatened Release of any
Hazardous Materials from any such site or facility, including any such
Release or threatened Release that shall occur during any period when
the Agent or any Bank shall be in possession of any such site or
facility following the exercise by the Agent or any Bank of any of its
rights and remedies hereunder.
12.04 Amendments. Etc. Except as otherwise expressly provided in this
Agreement, any provision of this Agreement may be modified or
supplemented only by an instrument in writing signed by the Company (on
its own behalf and on behalf of the other Borrowers), the Agent and the
Majority Banks, or by the Company (on its own behalf and on behalf of
the other Borrowers) and the Agent acting with the consent of the
Majority Banks, and any provision of this Agreement may be waived by
the Majority Banks or by the Agent acting with the consent of the
Majority Banks; provided that: (a) no modification, supplement or
waiver shall, unless by an instrument signed by all of the Banks or by
the Agent acting with the consent of all of the Banks: (i) increase,
or extend the term of any of the Commitments, or extend the time or
waive any requirement for the reduction or termination of any of the
Commitments, (ii) extend the date fixed for the payment of principal of
or interest on any Loan or any fee hereunder, (iii) reduce the amount
of any such payment of principal, (iv) reduce the rate at which
interest is payable thereon or any fee is payable hereunder, (v) alter
the terms of Section 6 hereof or this Section 12.04, (vi) modify the
definition of the term "Majority Banks", "Majority Revolving Credit
Banks" or "Majority Eurocurrency Banks", or modify in any other manner
the number or percentage of the Banks required to make any
determinations or waive any rights hereunder or to modify any provision
hereof, or (vii) in the case of the initial Loan hereunder to any
Borrower, waive any of the conditions precedent set forth in Section
7.01 or 7.02 hereof, as the case may be, and Section 7.03 hereof; (b)
any modification or waiver of the conditions precedent specified in
Section 7.03 hereof shall require, in the case of Revolving Credit
Loans, the consent of the Majority Revolving Credit Banks only and, in
the case of Eurocurrency Loans, the consent of the Majority
Eurocurrency Banks only; and (c) any modification or supplement
altering the rights or obligations of the Agent or of Section 11 hereof
shall require the consent of the Agent.
12.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
12.06 Assignments and Participations.
(a) The Company may not assign any of its rights or obligations
hereunder or under the Notes without the prior consent of all of the
Banks and the Agent.
(b) Each Bank may assign any of its Loans, its Notes, and its
Commitments (but only with the consent of, in the case of its
Commitments, the Company and the Agent, which consent will not be
unreasonably withheld); provided that (i) no such consent by the
Company or the Agent shall be required in the case of any assignment to
another Bank; (ii) any such partial assignment shall be in an amount at
least equal to $10,000,000; (iii) each such assignment by a Bank of its
Revolving Credit Loans, Revolving Credit Note or Revolving Credit
Commitment shall be made in such manner so that the same portion of its
Revolving Credit Loans, Revolving Credit Note and Revolving Credit
Commitment is assigned to the respective assignee; and (iv) each such
assignment by a Bank of its Eurocurrency Loans, Eurocurrency Note and
Eurocurrency Commitment shall be made in such manner so that the same
portion of its Eurocurrency Loans, Eurocurrency Note and Eurocurrency
Commitment is assigned to the respective assignee. Upon execution and
delivery by the assignee to the Company and the Agent of an instrument
in writing pursuant to which such assignee agrees to become a "Bank"
hereunder (if not already a Bank) having the Commitment(s) and Loans
specified in such instrument, and upon consent thereto by the Company
and the Agent, to the extent required above, the assignee shall have,
to the extent of such assignment (unless otherwise provided in such
assignment with the consent of the Company and the Agent), the
obligations, rights and benefits of a Bank hereunder holding the
Commitment(s) and Loans (or portions thereof) assigned to it (in
addition to the Commitment(s) and Loans, if any, theretofore held by
such assignee) and the assigning Bank shall, to the extent of such
assignment, be released from the Commitment(s) (or portion(s) thereof)
so assigned. Upon each such assignment the assigning Bank shall pay
the Agent an assignment fee of $3,000.
(c) A Bank may sell or agree to sell to one or more other Persons a
participation in all or any part of any Loans held by it, or in its
Commitments, in which event each purchaser of a participation (a
"Participant") shall not, except as otherwise provided in Section
4.07(c) hereof, have any rights or benefits under this Agreement or any
Note (the Participant's rights against such Bank in respect of such
participation to be those set forth in the agreements executed by such
Bank in favor of the Participant). All amounts payable by the Company
to any Bank under Section 5 hereof in respect of Loans held by it, and
its Commitments, shall be determined as if such Bank had not sold or
agreed to sell any participations in such Loans and Commitments, and as
if such Bank were funding each of such Loan and Commitments in the same
way that it is funding the portion of such Loan and Commitments in
which no participations have been sold. In no event shall a Bank that
sells a participation agree with the Participant to take or refrain
from taking any action hereunder except that such Bank may agree with
the Participant that it will not, without the consent of the
Participant, agree to (i) increase or extend the term, or extend the
time or waive any requirement for the reduction or termination, of such
Bank's related Commitment, (ii) extend the date fixed for the payment
of principal of or interest on the related Loan or Loans or any portion
or any fee hereunder payable to the Participant, (iii) reduce the
amount of any such payment of principal, (iv) reduce the rate at which
interest is payable thereon, or any fee hereunder payable to the
Participant, to a level below the rate at which the Participant is
entitled to receive such interest or fee or (v) consent to any
modification, supplement or waiver hereof to the extent that the same,
under Section 12.04 hereof, requires the consent of each Bank.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 12.06, any Bank may (without
notice to the Company, the Agent or any other Bank and without payment
of any fee) (i) assign and pledge all or any portion of its Loans and
its Notes to any Federal Reserve Bank as collateral security pursuant
to Regulation A and any Operating Circular issued by such Federal
Reserve Bank and (ii) assign all or any portion of its rights under
this Agreement and its Loans and its Notes to an affiliate. No such
assignment shall release the assigning Bank from its obligations
hereunder.
(e) A Bank may furnish any information concerning the Company or any
of its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 12.13(b)
hereof.
(f) Anything in this Section 12.06 to the contrary notwithstanding, no
Bank may assign or participate any interest in any Loan held by it
hereunder to the Company or any of its Affiliates or Subsidiaries
without the prior consent of each Bank.
12.07 Survival. The obligations of the Obligors under Sections 5.01,
5.05, 5.06, 5.07 and 12.03 hereof, and the obligations of the Banks
under Section 11.05 hereof, shall survive the repayment of the Loans
and the termination of the Commitments. In addition, each
representation and warranty made, or deemed to be made by a notice of
any Loan, herein or pursuant hereto shall survive the making of such
representation and warranty, and no Bank shall be deemed to have
waived, by reason of making any Loan, any Default that may arise by
reason of such representation or warranty proving to have been false or
misleading, notwithstanding that such Bank or the Agent may have had
notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such Loan was made.
12.08 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any
provision of this Agreement.
12.09 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this
Agreement by signing any such counterpart.
12.10 Governing Law: Submission to Jurisdiction. This Agreement and
the Notes shall be governed by, and construed in accordance with, the
law of the State of New York. Each Obligor hereby submits to the
nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting
in New York City for the purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated
hereby. Each Obligor irrevocably waives, to the fullest extent
permitted by applicable law, any objection that it may now or hereafter
have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum. Each Approved Borrower
hereby agrees that service of process if any such action or proceeding
brought in New York may be made upon such Approved Borrower by service
upon the Company at the "Address for Notices" specified below its name
on the signature pages hereof and each Approved Borrower hereby
irrevocably appoints the Company as its authorized agent ("Process
Agent") to accept, on behalf of its property such service of process in
New York.
12.11 Waiver of Jury Trial. EACH OF THE OBLIGORS, THE AGENT AND THE
BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
12.12 Judgment Currency. This is an international loan transaction in
which the specification of Dollars or an Alternative Currency, as the
case may be (the "Specified Currency"), any payment in New York City or
the country of the Specified Currency, as the case may be (the
"Specified Place"), is of the essence, and the Specified Currency shall
be the currency of account in all events relating to Loans denominated
in the Specified Currency. The payment obligations of the Borrowers
under this Agreement and the Notes shall not be discharged by an amount
paid in another currency or in another place, whether pursuant to a
judgment or otherwise, to the extent that the amount so paid on
conversion to the Specified Currency and transfer to the Specified
Place under normal banking procedures does not yield the amount of the
Specified Currency at the Specified Place due hereunder. If for the
purpose of obtaining judgment in any court it is necessary to convert a
sum due hereunder in the Specified Currency into another currency (the
"Second Currency"), the rate of exchange which shall be applied shall
be that at which in accordance with normal banking procedures the Agent
could purchase the Specified Currency with the Second Currency on the
Business Day next preceding that on which such judgment is rendered.
The obligation of each Borrower in respect of any such sum due from it
to the Agent or any Bank hereunder (an "Entitled Person") shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day
following receipt by such Entitled Person of any sum adjudged to be due
hereunder or under the Notes in the Second Currency such Entitled
Person may in accordance with normal banking procedures purchase and
transfer to the Specified Place the Specified Currency with the amount
of the Second Currency so adjudged to be due; and each Borrower hereby,
as a separate obligation and notwithstanding any such judgment, agrees
to indemnify such Entitled Person against, and to pay such Entitled
Person on demand in the Specified Currency, any difference between the
sum originally due to such Entitled Person in the Specified Currency
and the amount of the Specified Currency so purchased and transferred.
12.13 Treatment of Certain Information: Confidentiality.
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or
provided to the Company or one or more of its Subsidiaries (in
connection with this Agreement or otherwise) by any Bank or by one or
more subsidiaries or affiliates of such Bank and the Company hereby
authorizes each Bank to share any information delivered to such Bank by
the Company and its Subsidiaries pursuant to this Agreement, or in
connection with the decision of such Bank to enter into this Agreement,
to any such subsidiary or affiliate, it being understood that any such
subsidiary or affiliate receiving such information shall be bound by
the provisions of clause (b) below as if it were a Bank hereunder.
Such authorization shall survive the repayment of the Loans and the
termination of the Commitments.
(b)Each Bank and the Agent agrees (on behalf of itself and each of its
affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with their
customary procedures for handling confidential information of the same
nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Company pursuant to this
Agreement that is identified by the Company as being confidential at
the time the same is delivered to the Banks or the Agent, provided that
nothing herein shall limit the disclosure of any such information (i)
to the extent required by statute, rule, regulation or judicial
process, (ii) to counsel for any of the Banks or the Agent, (iii) to
bank examiners, auditors or accountants, (iv) to the Agent or any other
Bank (or to Chase Securities, Inc.), (v) in connection with any
litigation to which any one or more of the Banks or the Agent is a
party, (vi) to a subsidiary or affiliate of such Bank as provided in
clause (a) above or (vii) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first executes and
delivers to the respective Bank a Confidentiality Agreement
substantially in the form of Exhibit F hereto; provided, further. that
in no event shall any Bank or the Agent be obligated or required to
return any materials furnished by the Company. The obligations of each
Bank under this Section 12.13 shall supersede and replace the
obligations of such Bank under the confidentiality letter in respect of
this financing signed and delivered by such Bank to the Company prior
to the date hereof; in addition, the obligations of any assignee that
has executed a Confidentiality Agreement in the form of Exhibit F
hereto shall be superseded by this Section 12.13 upon the date upon
which such assignee becomes a Bank hereunder pursuant to Section 12.06
hereof.
12.14 Entire Agreement. This Agreement (including the Schedules and
Exhibits attached hereto) embody the entire agreement and understanding
between the Borrowers, on the one hand, and the Banks, on the other,
and supersedes all prior agreements and understandings relating to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
HARSCO CORPORATION
By: /S/Ronald W. Kaplan
Name: Ronald W. Kaplan
Title: Vice President & Treasurer
Address for Notices:
Harsco Corporation
350 Poplar Church Road
Camp Hill, Pennsylvania 17011-8888
Attention: Treasurer
Telecopier No.: (717) 763-6424
Telephone No.: (717) 763-7064
Revolving Credit Commitment THE CHASE MANHATTAN BANK
$ 6,500,000 (NATIONAL ASSOCIATION)
Eurocurrency Commitment
$20,500,000
By: /S/Elaine Francolino
Name: Elaine Francolino
Title: Managing Director
Lending Office for all Loans:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Address for Notices:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Elaine Francolino
Telecopier No.: (212) 552-7075
Telephone No.: (212) 552-5343
Revolving Credit Commitment CIBC, INC.
$ 9,750,000
Eurocurrency Commitment
$ 9,750,000
By: /S/Brian E. O'Callahan
Name: Brian E. O'Callahan
Title: Authorized Signatory
Lending Office for all Loans:
CIBC, Inc.
2 Paces West, Suite 1200
2727 Paces Ferry Road
Atlanta, GA 30339
Address for Notices:
CIBC, Inc.
425 Lexington Avenue
New York, New York 10017
Attention: Brian E. O'Callahan
Telecopier No.: (212) 856-3991
Telephone No.: (212) 856-3571
Revolving Credit Commitment MELLON BANK, N.A.
$ 9,750,000
Eurocurrency Commitment
$ 9,750,000
By: /S/Gilbert B. Mateer
Name: Gilbert B. Mateer
Title: Assistant Vice President
By: /S/Donald G. Cassidy Jr.
Name: Donald G. Cassidy Jr.
Title: First Vice President
Lending Office for all Loans:
Mellon Bank, N.A.
Loan Administration
Room 153-2332
Pittsburgh, PA 15259
Address for Notices:
Mellon Bank, N.A.
Loan Administration
Room 153-2332
Pittsburgh, PA 15259
Attention: Elaine Wasburn
Telecopier No.: (412) 236-2028
Telephone No.: (412) 234-4748
Revolving Credit Commitment NATIONSBANK OF NORTH CAROLINA, N.A.
$ 9,750,000
Eurocurrency Commitment
$ 9,750,000
By: /S/M. Gregory Seaton
Name: M. Gregory Seaton
Title: Senior Vice President
Lending Office for all Loans:
NationsBank of North Carolina, N.A.
1 NationsBank Plaza (6-19)
Charlotte, NC 28255
Address for Notices:
NationsBank of North Carolina, N.A.
NationsBank Corp. Center 8th Floor
Charlotte, NC 28255
Attention: M. Gregory Seaton
Vice President
Telecopier No.: (704) 386-3271
Telephone No.: (704) 386-8843
Revolving Credit Commitment SHAWMUT BANK, NA
$ 9,750,000
Eurocurrency Commitment
$ 9,750,000
By: /S/Gary P. Kearns
Name: Gary P. Kearns
Title: Senior Vice President
Lending Office for all Loans:
Shawmut Bank, NA
National Banking Group
One Federal Street
OF-0324
Boston, Massachusetts 02211
Address for Notices:
Shawmut Bank, NA
National Banking Group
One Federal Street
OF-0324
Boston, Massachusetts 02211
Attention: Kerry Day
Telecopier No.: (617) 292-4460
Telephone No.: (617) 292-3064
Revolving Credit Commitment UNION BANK OF SWITZERLAND
$ 9,750,000
Eurocurrency Commitment
$ 9,750,000
By: /S/Bruce T. Richards
Name: Bruce T. Richards
Title: First Vice President
By: /S/Jean Claude de Roche
Name: Jean Claude de Roche
Title: Assistant Vice President
Lending Office for all Loans:
Address for Notices:
Union Bank of Switzerland
299 Park Avenue
New York, New York 10171
Attention: Bruce Richards
First Vice President
Telecopier No.:
Telephone No.: (212) 715-3000
Revolving Credit Commitment BANK OF AMERICA NATIONAL TRUST
$ 7,000,000 AND SAVINGS ASSOCIATION
Eurocurrency Commitment
$ 7,000,000
By: /S/W. L. Hess
Name: W. L. Hess
Title: Vice President
Lending Office for all Loans:
Bank of America National Trust
and Savings Association
1850 Gateway Blvd.
Concord, CA 94520
Address for Notices:
Bank of America National Trust
and Savings Association
555 California Street
San Francisco, CA 94137
Attention: Carolyn Alberts
Telecopier No.: (415) 622-2235/7
Telephone No.: (415) 622-2020
Revolving Credit Commitment THE BANK OF NEW YORK
$ 7,000,000
Eurocurrency Commitment
$ 7,000,000
By: /S/Michael Flannery
Name: Michael Flannery
Title: Vice President
Lending Office for all Loans:
The Bank of New York
One Wall Street, 22nd Floor
New York, New York 10286
Address for Notices:
The Bank of New York
One Wall Street, 22nd Floor
New York, New York 10286
Attention: Mike Flannery
Telecopier No.: (212) 635-6397
Telephone No.: (212) 635-6807
Revolving Credit Commitment COMMERZBANK AG NEW YORK BRANCH
$ 7,000,000
Eurocurrency Commitment
$ 7,000,000
By: /S/Robert Ten Have
Name: Robert Ten Have
Title: Vice President
By: /S/W. Niemeyer
Name: W. Niemeyer
Title: Vice President
Lending Office for all Loans:
Commerzbank AG New York Branch
2 World Financial Center
New York, New York 10281-1050
Address for Notices:
Commerzbank AG New York Branch
2 World Financial Center
New York, New York 10281-1050
Attention: Robert Ten Have
Telecopier No.: (212) 266-7315
Telephone No.: (212) 266-7317
Revolving Credit Commitment CORESTATES BANK N.A.
$ 7,000,000
Eurocurrency Commitment
$ 7,000,000
By: /S/Thomas M. Harper
Name: Thomas M. Harper
Title: Vice President
Lending Office for all Loans:
CoreStates Bank N.A.
1500 Market Street
FC 1-3-18-8
Philadelphia, Pennsylvania 19101
Address for Notices:
CoreStates Bank N.A.
FC1-1-82-1
1345 Chestnut Street
Philadelphia, Pennsylvania 19101-7618
Attention: Tom Harper
Vice President
Telecopier No.: 215-973-6745
Telephone No.: 215-973-3645
Revolving Credit Commitment DAUPHIN DEPOSIT BANK & TRUST COMPANY
$14,000,000
Eurocurrency Commitment
$ 0.00
By: /S/Susan L. Davies
Name: Susan L. Davies
Title: Assistant Vice President
Lending Office for all Loans:
Dauphin Deposit & Trust Company
213 Market Street
Harrisburg, Pennsylvania 17105
Address for Notices:
Dauphin Deposit & Trust Company
213 Market Street
Harrisburg, Pennsylvania 17105
Attention: Susan L. Davies
Telecopier No.: (717) 232-5092
Telephone No.: (717) 255-2120
Revolving Credit Commitment THE FIRST NATIONAL BANK OF MARYLAND
$ 7,000,000
Eurocurrency Commitment
$ 7,000,000
By: /S/Steven G. Ricklefs
Name: Steven G. Ricklefs
Title: Vice President
Lending Office for all Loans:
The First National Bank of Maryland
Suite 510
96 South George Street
York, Pennsylvania 17405
Address for Notices:
The First National Bank of Maryland
Suite 510
96 South George Street
York, Pennsylvania 17405
Attention: Steven G. Ricklefs
Telecopier No.: (717) 845-3026
Telephone No.: (717) 848-2265
Revolving Credit Commitment GULF INTERNATIONAL BANK B.S.C.
$ 7,000,000
Eurocurrency Commitment
$ 7,000,000
By: /S/Thomas E. Fitzherbert
Name: Thomas E. Fitzherbert
Title: Vice President
By: /S/Abdel-Fattah Tahoun
Name: Abdel-Fattah Tahoun
Title: Vice President
Lending Office for all Loans:
Gulf International Bank B.S.C.
Grand Cayman Branch
380 Madison Avenue
New York, New York 10017
Address for Notices:
GIB Grand Cayman Branch
c/o GIB New York Branch
380 Madison Avenue
New York, New York 10017
Attention: T.E. Fitzherbert
Telecopier No.: (212) 922-2309
Telephone No.: (212) 922-2320
Revolving Credit Commitment NATIONAL WESTMINSTER BANK PLC
$ 7,000,000 NEW YORK BRANCH
Eurocurrency Commitment
$ 7,000,000
By: /S/G. M. Sherman
Name: G. M. Sherman
Title: Vice President
Lending Office for Base Rate Loans:
National Westminster Bank Plc
New York Branch
175 Water Street
New York, New York 10038
Lending Office for LIBOR Loans:
National Westminster Bank Plc
Nassau Branch
175 Water Street
New York, New York 10038
Address for Notices:
National Westminster Bank Plc
New York Branch
175 Water Street
New York, New York 10038
Attention: Robert Passavello
Telecopier No.: (212) 602-4118
Telephone No.: (212) 602-4149
Revolving Credit Commitment SOCIETE GENERALE
$ 7,000,000
Eurocurrency Commitment
$ 7,000,000
By: /S/Gordon R. Eadon
Name: Gordon R. Eadon
Title: Vice President
Lending Office for all Loans:
Societe Generale
50 Rockefeller Plaza
New York, New York 10020
Address for Notices:
Societe Generale
50 Rockefeller Plaza
New York, New York 10020
Attention: Gordon Eadon
Vice President
Telecopier No.: (212) 531-8752
Telephone No.: (212) 830-6880
(THIS PAGE INTENTIONALLY LEFT BLANK)
Revolving Credit Commitment BANK BRUSSELS LAMBERT,
$ 2,500,000 NEW YORK BRANCH
Eurocurrency Commitment
$ 2,500,000
By: /S/John Kippax
Name: John Kippax
Title: Vice President
By: /S/Eric Hollandera
Name: Eric Hollandera
Title: Senior Vice President
Credit Department
Lending Office for all Loans:
Bank Brussels Lambert,
New York Branch
630 Fifth Avenue
New York, New York 10111
Address for Notices:
Bank Brussels Lambert,
New York Branch
630 Fifth Avenue
New York, New York 10111
Attention: John Kippax
Telecopier No.: (212) 632-5308
Telephone No.: (212) 632-5429
Revolving Credit Commitment BAYERISCHE VEREINSBANK AG
$ 2,500,000
Eurocurrency Commitment
$ 2,500,000
By: /S/James T. Gilland
Name: James T. Gilland
Title: Vice President
By: /S/Mary Power
Name: Mary Power
Title: Vice President
Lending Office for all Loans:
Bayerische Vereinsbank AG
335 Madison Avenue
19th Floor
New York, New York 10017
Address for Notices:
Bayerische Vereinsbank AG
335 Madison Avenue
19th Floor
New York, New York 10017
Attention: James Gilland
Telecopier No.: (212) 297-9724
Telephone No.: (212) 210-0342
Revolving Credit Commitment CREDIT SUISSE
$ 2,500,000
Eurocurrency Commitment
$ 2,500,000
By: /S/Thomas Bosshard
Name: Thomas Bosshard
Title: Associate
By: /S/J. Chall
Name: J. Chall
Title: Member of Senior Management
Lending Office for all Loans:
Credit Suisse
12 East 49th Street
42nd Floor
New York, New York 10017
Address for Notices:
Credit Suisse
12 East 49th Street
42nd Floor
New York, New York 10017
Attention: Thomas Bosshard
Telecopier No.: (212) 238-5363
Telephone No.: (212) 238-5389
Revolving Credit Commitment THE FUJI BANK, LTD., NEW YORK BRANCH
$ 2,500,000
Eurocurrency Commitment
$ 2,500,000
By: /S/Tadayuki Sasaki
Name: Tadayuki Sasaki
Title: Joint General Manager
Lending Office for all Loans:
The Fuji Bank, Ltd., New York Branch
Two World Trade Center
New York, New York 10048
Address for Notices:
The Fuji Bank, Ltd., New York Branch
Two World Trade Center
New York, New York 10048
Attention: Kathleen Barsotti
Telecopier No.: (212) 488-8216
Telephone No.: (212) 898-2065
Revolving Credit Commitment NBD BANK, N.A.
$ 2,500,000
Eurocurrency Commitment
$ 2,500,000
By: /S/John W. Fisher III
Name: John W. Fisher III
Title: First Vice President
Lending Office for all Loans:
NBD Bank, N.A.
611 Woodward Avenue -
National Division-East
Detroit, Michigan 18226
Address for Notices:
NBD Bank, N.A.
611 Woodward Avenue -
National Division-East
Detroit, Michigan 18226
Attention: Thomas W. Doddridge
Telecopier No.: (313) 225-1586
Telephone No.: (313) 225-3346
Revolving Credit Commitment ISTITUTO BANCARIO SAN PAOLO
$ 2,500,000 DI TORINO S.P.A.
Eurocurrency Commitment
$ 2,500,000
By: /S/William J. De Angelo
Name: William J. De Angelo
Title: First Vice President
Lending Office for all Loans:
Istituto Bancario San Paolo
di Torino S.p.A.
245 Park Avenue
35th Floor
New York, New York 10167
Address for Notices:
Istituto Bancario San Paolo
di Torino S.p.A.
245 Park Avenue
35th Floor
New York, New York 10167
Attention:
Telecopier No.:
Telephone No.: (212) 692-3152
Revolving Credit Commitment MORGAN GUARANTY TRUST COMPANY
$ 9,750,000 OF NEW YORK
Eurocurrency Commitment
$ 9,750,000
By: /S/Laura E. Reim
Name: Laura E. Reim
Title: Vice President
Lending Office for Base Rate Loans:
Morgan Guaranty Trust Company
of New York
c/o JP Morgan Services, Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Lending Office for LIBOR Loans:
Morgan Guaranty Trust Company
of New York
Nassau Bahamas Office
c/o JP Morgan Services, Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Contact-Operations (Notice for all Borrowings and/or Repayment
Instructions):
Multi-Option Unit - Loan Department
Telephone No.: 302-634-1800
Morgan Guaranty Trust Company
of New York
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Telex Number/Answerback: 177615 MGT UT
or 620106 MGT UW
Telecopier No.: 302-634-1094
Address for Money Market Notices:
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260-0060
Attention: John Dougar
Telecopier No.: (212) 648-0769
Telephone No.: (212) 648-5918
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By: /S/Elaine Francolino
Name: Elaine Francolino
Title: Managing Director
Address for Notices to
Chase as Agent:
The Chase Manhattan Bank
(National Association)
4 Metrotech Center_13th Floor
Brooklyn, New York 11245
Attention: New York Agency
Telecopier No.: (718) 242-6910
Telephone No.: (718) 242-7979
SCHEDULE I
Material Agreements and Liens
[See Section 8.12]
Part A - Material Agreements
Part B - Liens
Schedule I
SCHEDULE II
Subsidiaries
[See Section 8.14]
Schedule II
SCHEDULE III
Litigation
[See Section 8.03]
Schedule III
EXHIBIT A-l
[Form of Revolving Credit Note]
PROMISSORY NOTE
October , 1993
New York, New York
FOR VALUE RECEIVED, [Insert Name of Borrower], a [State/Country]
corporation (the "Borrower"), hereby promises to pay to [
] (the "Bank"), for account of its respective Applicable Lending
Offices provided for by the Credit Agreement referred to below, at the
principal office of The Chase Manhattan Bank (National Association) at
1 Chase Manhattan Plaza, New York, New York 10081 or at such other
place as required by the Credit Agreement referred to below, the
aggregate unpaid principal amount of the Revolving Credit Loans made by
the Bank to the Borrower under the Credit Agreement, in lawful money of
the United States of America and in immediately available funds, on the
dates and in the principal amounts provided in the Credit Agreement,
and to pay interest on the unpaid principal amount of each such
Revolving Credit Loan, at such office, in like money and funds, for the
period commencing on the date of such Revolving Credit Loan until such
Revolving Credit Loan shall be paid in full, at the rates per annum and
on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate and duration of Interest Period
of each Revolving Credit Loan made by the Bank to the Borrower, and
each payment made on account of the principal thereof, shall be
recorded by the Bank on its books and, prior to any transfer of this
Note, endorsed by the Bank on the schedule attached hereto or any
continuation thereof, provided that the failure of the Bank to make any
such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing under the
Credit Agreement or hereunder in respect of the Revolving Credit Loans
made by the Bank.
This Note is one of the Revolving Credit Notes referred to in the
Credit Agreement dated as of August 24, 1993, amended and restated as
of October 20, 1993 (as modified and supplemented and in effect from
time to time, the "Credit Agreement") between Harsco Corporation, the
lenders named therein and The Chase Manhattan Bank (National
Association), as Agent, and evidences Revolving Credit Loans made by
the Bank thereunder. Terms used but not defined in this Note have the
respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of
Loans upon the terms and conditions specified therein.
Except as permitted by Section 12.06 of the Credit Agreement, this Note
may not be assigned by the Bank to any other Person.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
*[[INSERT NAME OF BORROWER]
BY
Name:
Title:
For value received, Harsco Corporation hereby unconditionally
guarantees to the holder of this Note the prompt payment in full when
due (whether at stated maturity, by acceleration, by optional
prepayment or otherwise) of the principal of and interest on this Note,
hereby expressly waiving diligence, presentment, demand for payment,
protest and all notices whatsoever.]
HARSCO CORPORATION
BY
Name:
Title:
* Use bracketed language if the Borrower named herein is an Approved
Borrower.
SCHEDULE OF REVOLVING CREDIT LOANS
This Note evidences Revolving Credit Loans made or Converted under the
within-described Credit Agreement to the Borrower, on the dates, in the
principal amounts, of the Types, bearing interest at the rates and
having Interest Periods of the durations set forth below, subject to
the payments and prepayments of principal set forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<C>
Principal Duration
Amount Type of Amount Unpaid
Date of of Interest Interest Paid or Principal
Notation
Made Loan Loan Rate Period Prepaid Amount
Made by
</TABLE>
EXHIBIT A-2
[Form of Eurocurrency Note]
PROMISSORY NOTE
October , 1993
New York, New York
FOR VALUE RECEIVED, [Insert Name of Borrower] a [State/Country]
corporation (the "Borrower"), hereby promises to pay to [
](the "Bank"), for account of its respective Applicable Lending Offices
provided for by the Credit Agreement referred to below, at the
principal office of The Chase New York, New York 10081 or at such other
place as required by the Credit Agreement referred to below, the
agreement unpaid principal amount of the Eurocurrency Loans made by the
Bank to the Borrower, in lawful money of the United States of America
or in such other currency as required by said Credit Agreement and in
immediately available funds, on the dates and in the principal amounts
provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Eurocurrency Loan, at such office, in
like money and funds, for the period commencing on the date of such
Eurocurrency Loan until such Eurocurrency Loan shall be paid in full,
at the rates per annum and on the dates provided in the Credit
Agreement.
The date, amount, Type, interest rate, Currency and duration of
Interest Period of each Eurocurrency Loan made by the Bank to the
Borrower, and each payment made on account of the principal thereof,
shall be recorded by the Bank on its books and, prior to any transfer
of this Note, endorsed by the Bank on the schedule attached hereto or
any continuation thereof, provided that the failure of the Bank to make
any such recordation or endorsement shall not affect the obligations of
the Borrower to make a payment when due of any amount owing under the
Credit Agreement or hereunder in respect of the Eurocurrency Loans made
by the Bank.
This Note is one of the Eurocurrency Notes referred to in the Credit
Agreement dated as of August 24, 1993, as amended and restated as of
October 20, 1993 (as modified and supplemented and in effect from time
to time, the "Credit Agreement") between Harsco Corporation, the
lenders named therein and The Chase Manhattan Bank (National
Association), as Agent, and evidences Eurocurrency Loans made by the
Bank thereunder. Terms used but not defined in this Note have the
respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of
Eurocurrency Loans upon the terms and conditions specified therein.
Except as permitted by Section 12.06 of the Credit Agreement, this Note
may not be assigned by the Bank to any other Person.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
*[[INSERT NAME OF BORROWER]
By
Name:
Title:
For value received, Harsco Corporation hereby unconditionally
guarantees to the holder of this Note the prompt payment in full when
due (whether at stated maturity, by acceleration, by optional
prepayment or otherwise) of the principal of and interest on this Note,
hereby expressly waiving diligence, presentment, demand for payment,
protest and all notices whatsoever.]
HARSCO CORPORATION
By
Name:
Title:
* Use bracketed language if the Borrower named herein is an Approved
Borrower.
SCHEDULE OF EUROCURRENCY LOANS
This Note evidences Eurocurrency Loans made, under the within-described
Credit Agreement to the Borrower, on the dates, in the principal
amounts, of the Types, bearing interest at the rates and having
Interest Periods of the durations set forth below, subject to the
payments and prepayments of principal set forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<C>
Principal Duration
Amount of Amount Unpaid
Date of Interest Interest Paid or Principal
Notation
Made Loan Currency Rate Period Prepaid Amount
Made by
</TABLE>
EXHIBIT A-3
[Form of Money Market Note]
PROMISSORY NOTE
October , 1993
New York, New York
FOR VALUE RECEIVED, [Insert Name of Borrower], a [State/Country] (the
"Company"), hereby promises to pay to [ ] (the
"Bank"), for account of its respective Applicable Lending Offices
provided for by the Credit Agreement referred to below, at the
principal office of The Chase Manhattan Bank (National Association) at
1 Chase Manhattan Plaza, New York, New York 10081, the aggregate unpaid
principal amount of the Money Market Loans made by the Bank to the
Borrower under the Credit Agreement, in lawful money of the United
States of America and in immediately available funds, on the dates and
in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Money Market Loan,
at such office, in like money and funds, for the period commencing on
the date of such Money Market Loan until such Money Market Loan shall
be paid in full, at the rates per annum and on the dates provided in
the Credit Agreement.
The date, amount, Type, interest rate and maturity date of each Money
Market Loan made by the Bank to the Borrower, and each payment made on
account of the principal thereof, shall be recorded by the Bank on its
books and, prior to any transfer of this Note, endorsed by the Bank on
the schedule attached hereto or any continuation thereof, provided that
the failure of the Bank to make any such recordation or endorsement
shall not affect the obligations of the Borrower to make a payment when
due of any amount owing under the Credit Agreement or hereunder in
respect of the Money Market Loans made by the Bank.
This Note is one of the Money Market Notes referred to in the Credit
Agreement dated as of August 24, 1993, as amended and restated as of
October 20, 1993 (as modified and supplemented and in effect from time
to time, the "Credit Agreement") between Harsco Corporation, the
lenders named therein (including the Bank) and The Chase Manhattan Bank
(National Association), as Agent, and evidences Money Market Loans made
by the Bank thereunder. Terms used but not defined in this Note have
the respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of
Money Market Loans upon the terms and conditions specified therein.
Except as permitted by Section 12.06 of the Credit Agreement, this Note
may not be assigned by the Bank to any other Person.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
*[[INSERT NAME OF BORROWER]
By
Name:
Title:
For value received, Harsco Corporation hereby unconditionally
guarantees to the holder of this Note the prompt payment in full when
due (whether at stated maturity, by acceleration, by optional
prepayment or otherwise) of the principal of and interest on this Note,
hereby expressly waiving diligence, presentment, demand for payment,
protest and all notices whatsoever.]
HARSCO CORPORATION
By
Name:
Title:
* Use bracketed language if the Borrower named herein is an Approved
Borrower.
SCHEDULE OF MONEY MARKET LOANS
This Note evidences Money Market Loans made under the within-described
Credit Agreement to the Borrower, on the dates, in the principal
amounts, of the Types, bearing interest at the rates and maturing on
the dates set forth below, subject to the payments and prepayments of
principal set forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<C>
Principal
Amount Type Maturity Amount Unpaid
Date of of Interest Date of Paid or Principal
Notation
Made Loan Loan Rate Loan Prepaid Amount
Made by
</TABLE>
EXHIBIT B-l
[Form of Opinion of Counsel to the Company]
[ , 1993]
To the Banks party to the
Credit Agreement referred to
below and The Chase
Manhattan Bank (National Association), as Agent
Ladies and Gentlemen:
We have acted as counsel to Harsco Corporation (the "Company") in
connection with (i) the Credit Agreement (the "Credit Agreement") dated
as of August 24, 1993, as amended and restated as of October 20, 1993,
between the Company, the lenders named therein and The Chase Manhattan
Bank (National Association), as Agent, providing for loans to be made
by said lenders to the Company in an aggregate principal amount not
exceeding $300,000,000 and (ii) the various other agreements and
instruments referred to in the next following paragraph. Terms defined
in the Credit Agreement are used herein as defined therein. This
opinion is being delivered pursuant to Section 7.01(c) of the Credit
Agreement.
In rendering the opinion expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Credit Agreement;
(b) the Notes; and
(c) such corporate records of the Company and such other documents as
we have deemed necessary as a basis for the opinions expressed below.
The agreements, instruments and other documents referred to in the
foregoing lettered clauses (other than clause (c) above) are
collectively referred to as the "Credit Documents".
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted
to us as copies. When relevant facts were not independently
established, we have relied upon statements of governmental officials
and upon representations made in or pursuant to the Credit Documents
and certificates of appropriate representatives of the Company.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter,
that (except, to the extent set forth in the opinions expressed below,
as to the Company):
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or other)
to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the
opinions expressed below, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. The Company has all requisite corporate power to execute and
deliver, and to perform its obligations under, the Credit Documents.
The Company has all requisite corporate power to borrow under the
Credit Agreement.
3. The execution, delivery and performance by the Company of each
Credit Document, and the borrowings by the Company under the Credit
Agreement, have been duly authorized by all necessary corporate action
on the part of the Company.
4. Each Credit Document has been duly executed and delivered by the
Company.
5. Each of the Credit Documents constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting the rights of creditors generally and except as the
enforceability of the Credit Documents is subject to the application of
general principles of equity (regardless of whether considered in a
proceeding in equity or at law), including, without limitation,
(a) the possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
6. No authorization, approval or consent of, and no filing or
registration with, any governmental or regulatory authority or agency
of the United States of America or the State of New York is required on
the part of the Company for the execution, delivery or performance by
the Company of any of the Credit Documents or for the borrowings by the
Company under the Credit Agreement.
7. The execution, delivery and performance by the Company of, and the
consummation by the Company of the transactions contemplated by, the
Credit Documents do not and will not (a) violate any provision of its
charter or by-laws, (b) violate any applicable law, rule or regulation,
(c) violate any order, writ, injunction or decree of any court or
governmental authority or agency or any arbitral award applicable to
the Company or any of its Subsidiaries of which we have knowledge
(after due inquiry) or (d) result in a breach of, constitute a default
under, require any consent under, or result in the acceleration or
required prepayment of any indebtedness pursuant to the terms of, any
agreement or instrument of which we have knowledge (after due inquiry)
to which the Company or any of its Subsidiaries is a party or by which
any of them is bound or to which any of them is subject, or result in
the creation or imposition of any Lien upon any Property of the Company
pursuant to, the terms of any such agreement or instrument.
8. Except as set forth in Schedule III to the Credit Agreement, we
have no knowledge (after due inquiry) of any legal or arbitral
proceedings, or any proceedings by or before any governmental or
regulatory authority or agency, pending or threatened against or
affecting the Company or any of its Subsidiaries or any of their
respective Properties that, if adversely determined, could have a
Material Adverse Effect.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 12.03 of the Credit Agreement may be
limited by laws rendering unenforceable (i) indemnification contrary to
Federal or state securities laws and the public policy underlying such
laws and (ii) the release of a party from, or the indemnification of a
party against, liability for its own wrongful or negligent acts under
certain circumstances.
(B) The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may
be limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Bank is located (other than the State of New
York) that limit the interest, fees or other charges such Bank may
impose, (ii) Sections 4.07(c) or 12.12 of the Credit Agreement and
(iii) the second sentence of Section 12.10 of the Credit Agreement,
insofar as such sentence relates to the subject matter jurisdiction of
the United States District Court for the Southern District of New York
to adjudicate any controversy related to the Credit Documents.
(D) We point out with reference to obligations stated to be payable in
an Alternative Currency that (a) a New York statute provides that a
judgment rendered by a court of the State of New York in respect of an
obligation denominated in a currency other than Dollars would be
rendered in such other currency and would be converted into Dollars at
the rate of exchange prevailing on the date of entry of the judgment
and (b) a judgment rendered by a Federal court sitting in the State of
New York in respect of an obligation denominated in a currency other
than Dollars may be expressed in a currency other than Dollars may be
expressed in Dollars, but we express no opinion as to the rate of
exchange such Federal court would apply.
The foregoing opinions are limited to matters involving the Federal
laws of the United States, the Delaware General Corporation Law and the
law of the State of New York, and we do not express any opinion as to
the laws of any other jurisdiction.
At the request of our client, this opinion letter is, pursuant to
Section 7.01(c) of the Credit Agreement, provided to you by us in our
capacity as counsel to the Company and may not be relied upon by any
Person for any purpose other than in connection with the transactions
contemplated by the Credit Agreement without, in each instance, our
prior written consent.
Very truly yours,
EXHIBIT B-2
[Form of Opinion of Counsel to any Approved Borrower]
[ , 19__]
To the Banks party to the Credit Agreement referred to below, and
The Chase Manhattan Bank (National Association) as Agent
[I/We] have acted as counsel* to [name of Approved Borrower] (the
"Approved Borrower") in connection with the Credit Agreement (the
"Credit Agreement") dated as of August 24, 1993, as amended and
restated as of October 20, 1993, between Harsco Corporation (the
"Company"), the lenders named therein and The Chase Manhattan Bank
(National Association) as Agent, providing for loans to be made by said
lenders to the Company in an aggregate principal amount not exceeding
$300,000,000 at any one time outstanding. Terms defined in the Credit
Agreement are used herein as defined therein. This opinion is being
delivered pursuant to Section 7.02(b) of the Credit Agreement.
In rendering the opinion expressed below, [I/we] have examined the
following agreements, instruments and other documents:
(a) the Designation Letter of the Approved Borrower;
(b) the Credit Agreement;
(c) the Notes; and
(d) such corporate records of the Approved Borrower and such other
documents as [I/we] have deemed necessary as a basis for the opinions
expressed below.
The agreements, instruments and other documents referred to in the
foregoing lettered clauses (other than clause (d) above) are
collectively referred to as the "Credit Documents".
In [my/our] examination, [I/we] have assumed the genuineness of all
signatures, the authenticity of all documents submitted to [me/us] as
originals and the conformity with authentic original documents of all
documents submitted to [me/us] as copies.
* If the Approved Borrower is a domestic Subsidiary, this opinion may
be given by the General Counsel of the Company, who may rely on an
opinion of local counsel to the Approved Borrower in the jurisdiction
of incorporation of the Approved Borrower. If the Approved Borrower is
a foreign Subsidiary, this opinion must be given by counsel,
satisfactory to the Agent, that is admitted to practice in the
jurisdiction of incorporation of the Approved Borrower.
When relevant facts were not independently established, [I/we] have
relied upon statements of governmental officials and upon
representations made in or pursuant to the Credit Documents and
certificates of appropriate representatives of the Approved Borrower.
In rendering the opinions expressed below, [I/we] have assumed, with
respect to all of the documents referred to in this opinion letter,
that (except, to the extent set forth in the opinions expressed below,
as to the Approved Borrower):
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or other)
to execute, deliver and perform such documents.
**[In rendering the opinion expressed below, [I/we] have, with your
permission, assumed that the Credit Agreement, the Designation Letter
of the Approved Borrower and the Notes are, under the laws of the State
of New York (by which they are stated to be governed), legal, valid and
binding agreements, enforceable in accordance with their respective
terms.]
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as [I/we] have deemed necessary as a basis for the
opinions expressed below, [I am/we are] of the opinion that:
1. The Approved Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of [State/Country]. The
Approved Borrower has all requisite corporate power to execute and
deliver, and to perform its obligations under, its Designation Letter,
the Credit Agreement and its Notes. The Approved Borrower has all
requisite corporate power to borrow under the Credit Agreement.
2. The execution, delivery and performance by the Approved Borrower of
its Designation Letter (and the assumption therein of obligations under
the Credit Agreement) and its
**Do not insert bracketed language if counsel is admitted to practice
in the State of New York.
Notes and the borrowings by the Approved Borrower under the Credit
Agreement have been duly authorized by all necessary corporate action
by the Approved Borrower and by all necessary legal action, and do not
and will not (a) violate any provision of its charter or bylaws, (b)
violate any applicable law, rule or regulation, (c) violate any order,
writ, injunction or decree of any court or governmental authority or
agency or any arbitral award applicable to the Approved Borrower or any
of its Subsidiaries of which we have knowledge (after due inquiry) or
(d) result in a breach of, constitute a default under, require any
consent under, or result in the acceleration or required prepayment of
any indebtedness pursuant to the terms of, any agreement or instrument
of which we have knowledge (after due inquiry) to which the Approved
Borrower or any of its Subsidiaries is a party or by which any of them
is bound or to which any of them is subject, or result in the creation
or imposition of any Lien upon any Property of the Approved Borrower
pursuant to, the terms of any such agreement or instrument.
3. Each of the Designation Letter of the Approved Borrower and its
Notes has been duly executed and delivered by the Approved Borrower.
4. The Designation Letter of the Approved Borrower and, pursuant to
the assumption under such Designation Letter, the Credit Agreement,
each constitutes, and the Notes of the Approved Borrower when executed
and delivered for value will constitute, legal, valid and binding
obligations of the Approved Borrower enforceable in accordance with
their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting the rights of creditors generally and except as the
enforceability of the Credit Documents is subject to the application of
general principles of equity (regardless of whether considered in a
proceeding in equity or at law), including, without limitation, (a) the
possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
5. No authorization, consent, approval or license of, or filings or
registrations with, any governmental or regulatory authority or agency
in [State] or the [United States of America/Country] are required in
connection with the execution, delivery or performance by the Approved
Borrower of its Designation Letter (or of the Credit Agreement
obligations assumed therein) or its Notes or for borrowings by the
Approved Borrower under the Credit Agreement].
6. In any action or proceeding in any court in [insert State/Country]
arising out of or relating to the Credit Agreement, the Designation
Letter of the Approved Borrower or the Notes of the Approved Borrower,
such court would recognize and give effect to the provisions of Section
12.10 of the Credit Agreement wherein the parties thereto agree that
the Credit Agreement, each Designation Letter and the Notes shall be
governed by, and construed in accordance with, the law of the State of
New York, United States of America.
7. The appointment of the Company as Process Agent by the Approved
Borrower under Section 12.10 of the Credit Agreement and the
Designation Letter is a valid appointment and the empowerment in the
Approved Borrower's Designation Letter of the Company to act as the
Approved Borrower's representative and attorney-in-fact for the
purposes of signing documents and giving and receiving notices
(including notices of borrowing under Section 2 of the Credit
Agreement) and for the purposes of modifying or amending any provision
of the Credit Agreement is a valid and binding empowerment.
8. It is not necessary under the laws of [insert State/Country] (i) in
order to enable the Agent or any Bank to enforce its rights under the
Credit Agreement or the Notes of the Approved Borrower, or (ii) by
reason of the execution, delivery or performance of the Designation of
the Approved Borrower, the Credit Agreement or the Notes of the
Approved Borrower, that the Agent or any Bank should be licensed,
qualified or entitled to carry on business in [insert State/Country].
9. Neither the Agent nor any Bank is or will be deemed to be resident,
domiciled, carrying on business or subject to taxation in [insert
State/Country] by reason only of the execution, delivery, performance
or enforcement of the Credit Agreement, the Designation Letter of the
Approved Borrower or the Notes of the Approved Borrower.
***[10. If any judgment of a court in or of the State of New York were
rendered against the Approved Borrower in connection with any action
arising out of or relating to the Credit Agreement, the Designation
Letter of the Approved Borrower or the Notes of the Approved Borrower,
such judgment would be recognized and could be sued upon in the courts
of [insert Country], and such courts would grant a judgment which would
be enforceable against the Approved Borrower in [insert Country]
without any retrial or reexamination of the merits of the original
action [,
*** Insert these Paragraphs 10, 11, 12, 13 and 14 if the Approved
Borrower is not a U.S. Person.
provided that the requirements of [insert relevant statutory
provisions] are met.
11. Except as disclosed in writing to the Banks prior to the date of
delivery of the Approved Borrower's Designation Letter, there is no
income, stamp or other tax of any country, or of any taxing authority
thereof or therein, imposed by or in the nature of withholding or
otherwise, which is imposed on any payment to be made by the Approved
Borrower pursuant to the Credit Agreement or on its Notes, or is
imposed on or by virtue of the execution, delivery or enforcement of
its Designation Letter or its Notes. The Approved Borrower is
permitted to take all payments pursuant to the Credit Agreement or its
Notes free and clear of all taxes, and no such payment in the hands of
any Bank under, and as defined in, each of the Credit Agreement and its
Notes, will be subject to any tax.
12. Neither the Approved Borrower nor any of its property has any
immunity (sovereign or otherwise) from jurisdiction of any [insert
Country] court or set-off or any legal process (whether through service
or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) under the laws of [insert Country].
13. To ensure the legality, validity, enforceability or admissibility
in evidence in [insert Country] of the Credit Agreement, the
Designation Letter of the Approved Borrower or the Notes of the
Approved Borrower, it is not necessary that the Credit Agreement, such
Designation Letter or such Notes or any other document be filed or
recorded with any court or other authority in [insert Country] or that
any stamp or similar tax be paid on or in respect of the Credit
Agreement, such Designation Letter or such Notes, or any other document
[other than such filings and recordations that have already been made
and such stamp or similar taxes that have already been paid].
14. Each of the Credit Agreement, the Designation Letter of the
Approved Borrower and the Notes of the Approved Borrower is in proper
legal form under the laws of [insert Country] for the enforcement
thereof against the Approved Borrower.]
****[10. The Approved Borrower is not an "investment company", or a
company "controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended.
**** Insert these Paragraphs 10 and 11 if the Approved Borrower is a
U.S. Person.
11. The Approved borrower is not a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a
"holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.]
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 12.03 of the Credit Agreement may be
limited by laws rendering unenforceable.(i) indemnification contrary to
Federal or state securities laws and the public policy underlying such
laws and (ii) the release of a party from, or the indemnification of a
party against, liability for its own wrongful or negligent acts under
certain circumstances.
(B) The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may
be limited under certain circumstances.
(C) We express no opinion as to (i) Sections 4.07(c) or 12.12 of the
Credit Agreement and (ii) the second sentence of Section 12.10 of the
Credit Agreement and the second sentence of the penultimate paragraph
of the Designation Letter of the Approved Borrower, insofar as such
sentences relate to the subject matter jurisdiction of the United
States District Court for the Southern District of New York to
adjudicate any controversy related to the Credit Documents.
*****(D) We point out with reference to obligations stated to be
payable in an Alternative Currency that (a) a New York statute provides
that judgment rendered by a court of the State of New York in respect
of an obligation denominated in a currency other than Dollars would be
rendered in such other currency and would be converted into Dollars at
the rate of exchange prevailing on the date of entry of the judgment
and (b) a judgment rendered by a Federal court sitting in the State of
New York in respect of an obligation denominated in a currency other
than Dollars may be expressed in Dollars, but we express no opinion as
to the rate of exchange such Federal court would apply.
***** Insert paragraph (D) if counsel is admitted to practice in the
State of New York.
******(E) We also point out that the enforceability of the Credit
Documents may be subject to the possible application by the Federal or
State courts sitting in the State of New York of foreign laws or
governmental action affecting the enforcement of creditors' rights.
[I/We] [am/are] a member of the bar of the [State/Country] and do not
herein express any opinion as to any matters governed by any laws other
than the laws of [[State] and the Federal laws of the United States of
America/Country].
At the request of our client, this opinion letter is, pursuant to
Section 7.02(b) of the Credit Agreement, provided to you by us in our
capacity as counsel to the Approved Borrower and may not be relied upon
by any Person for any purpose other than in connection with the
transactions contemplated by the Designation Letter of the Approved
Borrower and the Credit Agreement without, in each instance, our prior
written consent.
Very truly yours,
****** Insert paragraph (E) if the Approved Borrower is not a U.S.
Person and counsel is admitted to practice in the State of New York.
EXHIBIT C
[Form of Opinion of Special New York Counsel to Chase]
[ , 199_]
To the Banks party to the
Credit Agreement referred to
below and The Chase
Manhattan Bank (National Association), as Agent
Ladies and Gentlemen:
We have acted as special New York counsel to Chase in connection with
(i) the Credit Agreement dated as of August 24, 1993, amended and
restated as of October 20, 1993 (the "Credit Agreement") between Harsco
Corporation (the "Company"), the lenders named therein and The Chase
Manhattan Bank (National Association), as Agent, providing for loans to
be made by said lenders to the Company in an aggregate principal amount
not exceeding $300,000,000 and (ii) the various other agreements and
instruments referred to in the next following paragraph. Terms defined
in the Credit Agreement are used herein as defined therein. This
opinion is being delivered pursuant to Section 7.01(d) of the Credit
Agreement.
In rendering the opinion expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Credit Agreement;
(b) the Notes; and
(c) such corporate records of the Company and such other documents as
we have deemed necessary as a basis for the opinions expressed below.
The agreements, instruments and other documents referred to in the
foregoing lettered clauses (other than clause (c) above) are
collectively referred to as the "Credit Documents".
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted
to us as copies. When relevant facts were not independently
established, we have relied upon statements of governmental officials
and upon representations made in or pursuant to the Credit Documents
and certificates of appropriate representatives of the Company.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter,
that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and (except to the extent set forth in the
opinions below as to the Company) constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or other)
to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the
opinions expressed below, we are of the opinion that each of the Credit
Documents constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability of the Credit
Documents is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including, without limitation, (a) the possible unavailability of
specific performance, injunctive relief or any other equitable remedy
and (b) concepts of materiality, reasonableness, good faith and fair
dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 12.03 of the Credit Agreement may be
limited by laws rendering unenforceable (i) indemnification contrary to
Federal or state securities laws and the public policy underlying such
laws and (ii) the release of a party from, or the indemnification of a
party against, liability for its own wrongful or negligent acts under
certain 1 circumstances.
(B) The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may
be limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Bank is located (other than the State of New
York) that limit the interest, fees or other charges such Bank may
impose, (ii) Sections 4.07(c) or 12.12 of the Credit Agreement, and
(iii) the second sentence of Section 12.10 of the Credit Agreement,
insofar as such sentence relates to the subject matter jurisdiction of
the United States District Court for the Southern District of New York
to adjudicate any controversy related to the Credit Documents.
(D) We point out with reference to obligations stated to be payable in
an Alternative Currency that (a) a New York statute provides that
judgment rendered by a court of the State of New York in respect of an
obligation denominated in a currency other than Dollars would be
rendered in such other currency and would be converted into Dollars at
the rate of exchange prevailing on the date of entry of the judgment
and (b) a judgment rendered by a Federal court sitting in the State of
New York in respect of an obligation denominated in a currency other
than Dollars may be expressed in Dollars, but we express no opinion as
to the rate of exchange such Federal court would apply.
The foregoing opinions are limited to matters involving the Federal
laws of the United States and the law of the State of New York, and we
do not express any opinion as to the laws of any other jurisdiction.
This opinion letter is, pursuant to Section 7.01(d) of the Credit
Agreement, provided to you by us in our capacity as special New York
counsel to Chase and may not be relied upon by any Person for any
purpose other than in connection with the transactions contemplated by
the Credit Agreement without, in each instance, our prior written
consent.
Very truly yours,
EXHIBIT D
[Form of Money Market Quote Request]
[Date]
To: The Chase Manhattan Bank (National Association), as Agent
From: Harsco Corporation
Re: Money Market Quote Request
Pursuant to Section 2.03 of the Credit Agreement dated as of August 24,
1993, as amended and restated as of October 20, 1993 (the "Credit
Agreement") between Harsco Corporation, the lenders named therein and
The Chase Manhattan Bank (National Association), as Agent, we hereby
give notice that we request Money Market Quotes for the following
proposed Money Market Borrowing(s) to be made by the Borrower named
below (if not the Company):
Name of Borrower (if not the Company):
Borrowing Quotation Interest
Date Date[*1] Amount [*2] Type[*3] Period[*4]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
HARSCO CORPORATION
By
Name:
Title:
* All numbered footnotes appear on the last page of this Exhibit.
[1] For use if a Set Rate in a Set Rate Auction is requested to be
submitted before the Borrowing Date.
[2] Each amount must be $25,000,000 or a larger multiple of
$5,000,000.
[3] Insert either "LIBO Margin" (in the case of LIBOR Market Loans) or
"Set Rate" (in the case of Set Rate Loans).
[4] One, two, three or six months, in the case of a LIBOR Market Loan
or, in the case of a Set Rate Loan, a period of up to 180 days after
the making of such Set Rate Loan and ending on a Business Day.
EXHIBIT E
[Form of Money Market Quote]
To: The Chase Manhattan Bank (National Association), as Agent
Attention:
Re: Money Market Quote to
Harsco Corporation (the "Company")
This Money Market Quote is given in accordance with Section 2.03(c) of
the Credit Agreement dated as of August 24, 1993, amended and restated
as of October 20, 1993 (the "Credit Agreement") between Harsco
Corporation, the lenders named therein and The Chase Manhattan Bank
(National Association), as Agent. Terms defined in the Credit
Agreement are used herein as defined therein.
In response to the Company's invitation dated [ ], 199[ ], we
hereby make the following Money Market Quote(s) on the following terms:
1. Quoting Bank:
2. Person to contact at Quoting Bank:
3. We hereby offer to make Money Market Loan(s) to the Borrower named
below (if not the Company) in the following principal amount[s], for
the following Interest Period(s) and at the following rate(s):
Name of Borrower (if not the Company):
Borrowing Quotation Interest
Date Date [*1] Amount [*2] Type [*3] Period [*4] Rate
[*5]
provided that the Company may not accept offers that would result in
the undersigned making Money Market Loans pursuant hereto in excess of
$ in the aggregate (the "Money Market Loan Limit")
* All numbered footnotes appear on the last page of this Exhibit.
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit
Agreement, irrevocably obligate[s] us to make the Money Market Loan(s)
for which any offer(s) (is/are) accepted, in whole or in part (subject
to the third sentence of Section 2.03(e) of the Credit Agreement and
any Money Market Loan Limit specified above).
Very truly yours,
[NAME OF BANK]
By
Name:
Authorized Officer
Dated: [ , ]
[1] As specified in the related Money Market Quote Request.
[2] The principal amount bid for each Interest period may not exceed
the principal amount requested. Bids must be made for at least
$5,000,000 (or a larger multiple of $1,000,000).
[3] Indicate "LIBO Margin" (in the case of LIBOR Market Loans) or "Set
Rate" (in the case of Set Rate Loans).
[4] One, two, three or six months, in the case of a LIBOR Market Loan
or, in the case of a Set Rate Loan, a period of up to 180 days after
the making of such Set Rate Loan and ending on a Business Day, as
specified in the related Money Market Quote Request.
[5] For a LIBOR Market Loan, specify margin over or under the London
interbank offered rate determined for the applicable Interest Period.
Specify percentage (rounded to the nearest 1/10,000 of 1%) and specify
whether "PLUS" or "MINUS". For a Set Rate Loan, specify rate of
interest per annum (rounded to the nearest 1/10,000 of 1%).
EXHIBIT F
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Credit Agreement dated as of August 24, 1993, amended and
restated as of October 20, 1993 (the "Credit Agreement"), between
Harsco Corporation (the "Company"), the lenders named therein and The
Chase Manhattan Bank (National Association), as Agent.
Dear Ladies and Gentlemen:
As a Bank party to the Credit Agreement, we have agreed with the
Company pursuant to Section 12.13 of the Credit Agreement to use
reasonable precautions to keep confidential, except as otherwise
provided therein, all non-public information identified by the Company
as being confidential at the time the same is delivered to us pursuant
to the Credit Agreement.
As provided in said Section 12.13, we are permitted to provide you, as
a prospective [holder of a participation in the Loans (as defined in
the Credit Agreement)] [assignee Bank], with certain of such non-public
information subject to the execution and delivery by you, prior to
receiving such non-public information, of a Confidentiality Agreement
in this form. Such information will not be made available to you until
your execution and return to us of this. Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on behalf of
yourself and each of your affiliates, directors, officers, employees
and representatives and for the benefit of us and the Company) that (A)
such information will not be used by you except in connection with the
proposed [Participation] [assignment] mentioned above and (B) you shall
use reasonable precautions, in accordance with your customary
procedures for handling confidential information and in accordance with
safe and sound banking practices, to keep such information
confidential, provided that nothing herein shall limit the disclosure
of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to your counsel or to counsel for
any of the Banks or the Agent, (iii) to bank examiners, auditors or
accountants, (iv) to the Agent or any other Bank (or to Chase
Securities, Inc.), (v) in connection with any litigation to which you
or any one or more of the Banks or the Agent are a party, (vi) to a
subsidiary or affiliate of yours as provided in Section 12.13(a) of the
Credit Agreement or (vii) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first executes and
delivers to you a Confidentiality Agreement substantially in the form
hereof; provided, further. that in no event shall you be obligated to
return any materials furnished to you pursuant to this Confidentiality
Agreement.
If you are a prospective assignee, your obligations under this
Confidentiality Agreement shall be superseded by Section 12.13 of the
Credit Agreement on the date upon which you become a Bank under the
Credit Agreement pursuant to Section 12.06 thereof.
Please indicate your agreement to the foregoing by signing as provided
below the enclosed copy of this Confidentiality Agreement and returning
the same to us.
Very truly yours,
[INSERT NAME OF BANK]
By
Name:
Title:
The foregoing is agreed to
as of the date of this letter.
[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
By
Name:
Title:
EXHIBIT G-l
[Form of Designation Letter]
[Date]
To The Chase Manhattan Bank
(National Association), as Agent
4 Metrotech Center - 13th Floor
Brooklyn, New York 11245
Attention:
Ladies and Gentlemen:
We make reference to the Credit Agreement (the "Credit Agreement")
dated as of August 24, 1993, amended and restated as of October 20,
1993, between Harsco Corporation, (the "Company"), the lenders named
therein (the "Banks") and The Chase Manhattan Bank (National
Association), as Agent (in such capacity, the Terms defined in the
Credit Agreement are used herein as defined therein.
Subject to the approval of all of the Banks (to be evidenced by your
signing at the place below indicated and returning to the Company the
enclosed copy of this letter) the Company hereby designates
(the "Approved Borrower"), a Wholly Owned Subsidiary of the Company, a
corporation duly incorporated under the laws of [State/Country], as a
Borrower in accordance with Section 2.10 of the Credit Agreement until
such designation is terminated in accordance with said Section 2.10.
The Approved Borrower hereby accepts the above-designation and hereby
expressly and unconditionally accepts the obligations of a Borrower
under the Credit Agreement, adheres to the Credit Agreement and agrees
and confirms that, upon your execution and return to the Company of the
enclosed copy of this letter, it shall be a Borrower for purposes of
the Credit Agreement and agrees to be bound by and to perform and
comply with the terms and provisions of the Credit Agreement applicable
to it as if it had originally executed the Credit Agreement. The
Approved Borrower hereby authorizes and empowers the Company to act as
its representative and attorney-in-fact for the purposes of signing
documents and giving and receiving notices (including notices of
borrowing under Section 2 of the Credit Agreement) and other
communications in connection with the Credit Agreement and the
transactions contemplated thereby and for the purposes of modifying or
amending any provision of the Credit Agreement and further agrees that
the Agent and each Bank may conclusively rely on the foregoing
authorization.
The Approved Borrower hereby submits with this Designation Letter, the
statements of income, cash flows and shareholders' equity (if any) of
the Approved Borrower for each of the most recently completed fiscal
quarter and the most recently completed fiscal year of the Approved
Borrower and the related balance sheets as at the end of such quarter
and such year, respectively; and the Company and the Approved Borrower
each hereby certifies that said financial statements present fairly, in
all material respects, the financial condition and results of
operations of such Approved Borrower in accordance with generally
accepted accounting principles, consistently applied, as at the end of,
and for, such quarter and such year, respectively.
The Company hereby represents and warrants to the Agent and each Bank
that, before and after giving effect to this Designation Letter, (i)
the representations and warranties set forth in Part A of Section 8 of
the Credit Agreement are true and correct on the date hereof as if made
on and as of the date hereof and (ii) no Default has occurred and is
continuing.
The Approved Borrower hereby represents and warrants to the Agent and
each Bank that, after giving effect to this Designation Letter, the
representations and warranties set forth in Part B of Section 8 of the
Credit Agreement are true and correct on the date hereof.
The Approved Borrower hereby instructs its counsel to deliver the
opinion required by Section 7.02(b) of the Credit Agreement.
The Approved Borrower hereby agrees that this Designation Letter, the
Credit Agreement and the Notes shall be governed by, and construed in
accordance with, the law of the State of New York. The Approved
Borrower hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any
New York state court sitting in New York City for the purposes of all
legal proceedings arising out of or relating to this Designation
Letter, the Credit Agreement or the transactions contemplated thereby.
The Approved Borrower irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to
the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. The Approved Borrower further agrees
that service of process in any such action or proceeding brought in New
York may be made upon it by service upon the Company at the "Address
for Notices" specified below its name on the signature pages to the
Credit
Agreement and the Approved Borrower hereby irrevocably appoints the
Company as its authorized agent ("Process Agent") to accept, on behalf
of it and its property such service of process in New York.
THE APPROVED BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS DESIGNATION LETTER, THE
CREDIT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.
HARSCO CORPORATION
By
Name:
Title:
[APPROVED BORROWER]
By
Name:
Title:
[Insert Address]
Consent and Agree:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
As Agent for and on behalf
of the Banks
By
Name:
Title:
Date:
EXHIBIT G-2
[Form of Termination Letter]
[Date]
To The Chase Manhattan Bank
(National Association), as Agent
4 Metrotech Center - 13th Floor
Brooklyn, New York 11245
Attention:
Ladies and Gentlemen:
We make reference to the Credit Agreement (the "Credit Agreement")
dated as of August 24, 1993, as amended and restated as of October 20,
1993 between Harsco Corporation (the "Company"), the Lenders named
therein (the "Banks") and The Chase Manhattan Bank (National
Association) as Agent (in such capacity, the "Agent"). Terms defined
in the Credit Agreement are used herein as defined therein.
The Company hereby terminates the status as an Approved Borrower of
, a corporation incorporated under the laws of
[State/County], in accordance with Section 2.10 of the Credit
Agreement, effective as of the date of receipt of this notice by the
Agent. The undersigned hereby represent and warrant that all principal
and interest on all Notes of the above-referenced Approved Borrower and
all other amounts payable by such Approved Borrower pursuant to the
Credit Agreement have been paid in full on or prior to the date hereof.
Notwithstanding the foregoing, this Termination Letter shall not affect
any obligation which by the terms of the Credit Agreement survives
termination thereof.
HARSCO CORPORATION
By
Name:
Title:
[INSERT NAME OF APPROVED BORROWER]
By
Name:
Title:
RETIREMENT AND CONSULTING AGREEMENT
This Agreement is made by and between Malcolm W. Gambill (hereinafter
sometimes referred to as the "Executive" and Harsco Corporation (the
"Company") as of this 1st day of January 1994.
WHEREAS, the Executive has been employed by the Company since May, 1955
and served in various positions, the last of which has been Chairman and
Chief Executive Officer; and
WHEREAS, the Executive now has advised the Board of Directors that he is
retiring from the Company including his position of Chief Executive
Officer effective January 1, 1994, and will continue to serve as a
director and the nonexecutive Chairman of the Board until April 26,
1994; and
WHEREAS, the Company wishes to retain the Executive as a consultant for
a period of time following his retirement on January 1, 1994;
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth in this Agreement, the parties agree as follows:
1. Retirement - The Executive hereby declares that he is taking normal
retirement from the Company effective January 1, 1994 and in connection
therewith hereby resigns his position of Chief Executive Officer of the
Company effective January 1, 1994, and resigns his positions of Chairman
of the Board of Directors and Director of the Company effective April
26, 1994.
2. Compensation as Chairman - Effective January 1, 1994, the Executive
will cease earning further compensation and benefits as an employee or
officer, and shall not receive any director compensation.
3. Annual and Long-Term Incentive Compensation for Period Ended
December 31, 1993 - The Executive will participate in any Annual and
Long-Term Incentive Compensation award for the periods ending December
31, 1993 in accordance with the terms of the Plans based upon the same
level of goal attainment that is applied to all other corporate
officers.
4. Long-Term Incentive Compensation for Uncompleted Periods Ending in
1994 and 1995 - The Company will pay the Executive on or before February
28, 1994 for the uncompleted Long-Term Incentive Plan periods ending on
December 31, 1994 and 1995 in accordance with the terms of the Plan
applicable to retirement. The relevant part of the Plan provides in
Paragraph 12.5.1:
The Long-Term Incentives shall be determined in accordance with the
provisions of Section 12.3 by assuming that the Achieved Return for the
remaining years of any open Plan Period was the Achieved Return for the
year in which termination occurred and that the Participant's Annualized
Base Salary Earnings were those of the year in which termination
occurred. The amounts thus computed will be multiplied by a fraction,
the numerator of which will be the number of months during the Plan
Period in which the Participant was an employee, and the denominator of
which is 36.
5. Consideration for Vacation, Noncompete, Standstill and Release - In
satisfaction of any accrued vacation pay, and in consideration of the
noncompete agreement and standstill agreement contained herein and the
Release signed pursuant to this Agreement, the Company will accelerate
the exercisability of all options for Harsco stock previously granted to
him under the 1986 Harsco Stock Option Plan not exercisable as of his
retirement date, so that all such options are exercisable as of January
1, 1994.
6. Withholding - On all payments made to the Executive, the Company
will withhold such amounts as are required by applicable tax laws,
subject to the Executive's right to direct that a greater amount be
withheld.
7. Pension - Accrued pension under the Harsco Employees Pension Plan
and the Supplemental Executive Retirement Plan will be calculated as of
January 1, 1994.
8. Stock Options - The stock options currently held by the Executive
will be governed by the terms of the respective option agreements and
the Harsco Corporation 1986 Stock Option Plan, except that the granted
options which have not yet become exercisable will become exercisable as
of the Executive's retirement date as provided in Section 5 above.
9. Consulting -
a. Services - The Company hereby retains the Executive as a consultant
to the Company commencing upon the termination of the Executive's
employment January 1, 1994, and expiring on June 9, 1995. The Executive
will provide the Company with such services as the Chairman or the Chief
Executive Officer may reasonably request relating to any matters
regarding the Company which may be relevant to the knowledge and
expertise which the Executive acquired as an officer. At the request of
the Chairman or the Chief Executive Officer, the Executive will provide
assistance regarding legal matters and provide testimony as needed. The
Executive will be available to provide such periodic consultation and
assistance up to a maximum of ten (10) days per month upon request by
the Company at times which are mutually convenient.
b. Compensation - In consideration of the consulting services, the
Company will pay Consultant a monthly fee of $30,833.34 on or before the
last day of each month during the term of the consultancy, commencing
with the initial payment on January 31, 1994 and ending June 30, 1995.
The fee to be paid on June 30, 1995 or for any other partial month
period will be prorated to the date of expiration or termination.
c. Expenses - During the term of the consultancy agreement, the Company
will reimburse the Executive for actual and reasonable travel expenses
incurred at the specific request of the Chairman or Chief Executive
Officer and submitted with proper supporting documentation in compliance
with the Company's expense reimbursement policies applicable to
employees.
d. Office - The Company will provide the Executive with an office in
the Corporate Office building and will provide reasonable secretarial
services and telephone.
e. Company Car - The Company will transfer to or cause to be
transferred to the Executive, title to the automobile which the Company
has been leasing for his use.
f. COBRA Medical Benefits - The Company will reimburse the Executive
for the cost of continuing his current medical benefits under COBRA
during the term of this consultancy agreement.
g. Memberships - The Executive may in his discretion continue his
membership in the Bipartisan Political Action Committee and on the Board
of the Pennsylvania Chamber of Business and Industry and the Company
will pay his actual expenses for such activities provided that the
cumulative amount of such expenses during the term of the consultancy
shall not exceed $10,000.
h. Independent Contractor - It is understood that as a consultant, the
Executive will be an independent contractor to the Company, and the
Company will not be responsible for withholding any state, local or
federal taxes. The Company will issue an IRS Form 1099 or the
equivalent at the Company's year end accounting for taxable remuneration
paid under this consulting agreement.
10. Confidentiality - The Executive agrees that during the term of this
Agreement, and thereafter, unless authorized in writing or instructed by
the Company, the Executive will not disclose to anyone outside of the
Company or use any of the Company's or the Company's subsidiary's or
affiliate's confidential, secret or proprietary information known to or
acquired by the Executive during his employment or consulting period
relating to administration, strategic business plans, board of directors
or management discussions or activities, acquisitions, divestitures,
finance matters, legal issues, products, pricing, costs, bids,
processes, know-how, customer relations, marketing proposals, profit and
loss information, design proposals and specifications, strategic
marketing proposals, trade secrets, research, development, equipment,
computer software, computer processed data, suppliers or supplies and
services or other information concerning the Company. This Agreement
shall not restrict the disclosure or use of information which is
publicly available.
11. Code of Conduct - A copy of the Company's Code of Conduct is
attached and is incorporated herein. The Executive expressly agrees to
conform to the requirements of the Code during the term of his
consultancy. The Executive will not make an effort to acquire
information for the Corporation to which it is not entitled.
12. Noncompete - The Executive agrees and covenants with the Company
that from the date of this Agreement until three years after the
expiration of the consulting agreement in Section 9, he will not,
directly or indirectly, alone or as a partner, officer, director,
stockholder (of one (1) percent or more of the outstanding stock), or
employee, establish, engage in or become interested in directly or
indirectly any business or trade anywhere in the world which involves
any commercial activity in competition with any part of the current
business of Harsco. During such period, the Executive will not induce,
solicit or procure any licensees, dealers, agents, distributors,
consultants or customers of Harsco to alter or terminate their
agreements, relationships or dealings with the Company. In the event
this paragraph is held to be in any respect an unreasonable restriction
upon the Executive by any court having competent jurisdiction, the court
so holding may reduce the territory to which it pertains, or effect any
change to the extent necessary to render this paragraph enforceable by
said Court. Such decision by a court of competent jurisdiction will not
invalidate this Agreement, but the Agreement will be construed as not
containing said invalidated provision and the rights and obligations of
the parties will be interpreted or construed as not containing said
invalidated provisions and the rights and obligations of the parties
will be interpreted, construed and enforced accordingly.
13. Standstill - For a period of five years from the date of this
Agreement, neither the Executive nor any companies over which the
Executive has control will, excepting for any pension plan securities
investment made in the ordinary course of pension fund management, (1)
directly or indirectly acquire or offer to acquire any equity securities
of the Company aggregating in excess of 1% of all such securities
outstanding or a major portion of the assets of the Company unless such
acquisition or offer shall have been solicited in writing or formally
approved in advance by the Board of Directors of the Company, (2)
directly or indirectly solicit proxies or become a "participant" in a
"solicitation," as such terms are defined in Regulation 14A promulgated
under the Securities Exchange Act of 1934, with respect to any proposed
merger, acquisition or sale of a substantial portion of the assets of
the Company, or (3) directly or indirectly make any public announcement
with respect to or submit any proposal for a recapitalization,
consolidation, extraordinary dividend, restructuring, merger, or
spin-off by the Company unless in any such case the proposal shall have
been solicited in writing or formally approved in advance by the Board
of Directors of the Company.
14. Release - For the consideration set forth in Section 5 of this
Agreement, the Executive is executing the Release incorporated herein.
15. Director and Officer Liability Insurance - The Company currently
has in effect insurance coverage for certain types of liability that
individuals might incur by reason of their activities as directors or
officers of the Company. While it is understood that it is within the
Company's discretion whether to maintain or change this coverage, the
Company agrees that it will not take any action to cause the Executive's
coverage under such insurance to be different than that of other
officers and directors of the Company.
16. Personal Services - This Agreement is for the unique personal
services of the Executive and will not be assignable or delegable by the
Executive. In the event the Executive is disabled in excess of 90 days
or dies, the Company's obligations under this Agreement will terminate.
17. Breach - In the event that the Executive breaches any of his
obligations in Sections 9, 10, 11, 12 or 13 of this Agreement or the
Release referenced in Section 14, the Company will have the right to
terminate the Executive's consulting agreement and terminate all further
compensation and consideration not yet earned by the Executive.
18. Arbitration - Any controversy or claim arising out of or relating
to this contract, or the breach thereof, or any other claim in contract
or tort between the parties shall be settled by arbitration administered
by the American Arbitration Association under its Commercial Arbitration
Rules, and judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof, provided however, that
this provision shall not impair the right of either party to seek
injunctive remedies in any court of competent jurisdiction. The site of
the arbitration will be in the county where the Company maintains its
Corporate Headquarters or such other location as is mutually agreed.
19. Successors and Assigns - This Agreement shall be binding upon the
parties hereto and upon their heirs, administrators, representatives,
executors, successors and assigns and shall inure to the benefit of each
of them and their heirs administrators, representative, executors,
executors and assigns (subject to the limitation on assignment contained
in Section 16).
20. Board of Directors Approval - This Agreement shall not become
effective until authorized by a resolution of the Company's Board of
Directors or its Executive Committee, which authorization shall be
conclusively evidenced by the signature below of the Chairman of the
Management Development and Compensation Committee, R. F. Nation. If
such Board authorization is not granted on or before January 26, 1994,
the Executive may withdraw his agreement by written notice to the
Company received prior to any such authorization.
Intending to be legally bound, the parties have signed below.
WITNESS Malcolm W. Gambill
ATTEST HARSCO CORPORATION
Paul C. Coppock Derek C. Hathaway
Vice President, General President and Chief Executive Officer
Counsel and Secretary
Board Authorization Granted on or Before January 26, 1994
R. F. Nation Date
January 20, 1994
Mr. Barrett W. Taussig
1099 Wyndham Drive
York, PA 17403
Dear Barrett:
This letter outlines and confirms the proposals made to you, regarding
the provision of supplemental pension benefits as the consideration for
you to continue your career with Harsco Corporation. Since you have
indicated that you are interested in so doing only if there is a
meaningful senior management assignment that will utilize your
background and experience to the greatest mutual advantage, we have also
agreed to provide a special severance arrangement, covering the period
of January 1, 1994 - December 31, 1996, which combines the lump sum
dollar amount attributable to the extra years of service granted to you
with a capped cash severance payout that declines over the three-year
period cited above.
For ease of understanding, let us address first, the supplemental
pension benefit, and then, the interaction between its dollar value and
any possible severance payment, should you elect not to continue your
career _ or, should Harsco Corporation determine that there is not a
suitable position available that would be commensurate with your present
status.
I. Special Supplemental Retirement Benefit Agreement (Exhibit #1):
As we discussed, this Agreement provides that you will be eligible for a
Supplemental Pension Benefit as determined by the formula of the current
Harsco Corporation Supplemental Retirement Benefit Plan. This benefit
will be calculated on a basis that treats you as though you have been
continuously employed with the Company since you attained the age of
forty (40) years.
The attached projected pension calculation (Exhibit #2) showing the
difference between your actual years of service at age sixty-five (65)
and the enhanced benefit being offered to you, uses projected
compensation figures. Note that it illustrates your total pension
benefit in the form of a lump sum payment as provided by the
"Tax-Qualified" Pension Plan and the non-Tax-Qualified Supplemental
Retirement Benefit Plan. Please note also that this calculation is
based on a number of variables subject to change without notice, which
may affect the amount of the projected total lump sum value. Therefore,
the lump sum values shown on this example are for illustration purposes
only and do not represent a guarantee of the actual amount payable at
age sixty-five (65) years retirement.
Lastly, it should be pointed out that pension benefits from the
Supplemental Plan do not have the same tax deferral/rollover advantages
that accompany benefits payable from a tax-qualified pension plan. The
Supplemental Retirement Benefit Plan currently provides only for a lump
sum payout upon retirement; as you know, however, the tax-qualified
Harsco Employees Pension Plan allows you to select either a lump sum or
a monthly benefit payment.
II. Severance Arrangement (Exhibit #3):
The example shown in Exhibit #3 shows in Column #2, the hypothetical
lump sum pension monies attributable to an extra 9.75 years of Company
service. Subject to the approval of the Board's Management Development
& Compensation Committee, an actuarially-calculated dollar amount would
be credited to your pension "account" effective January 1, 1994. This
would then serve as the basis for calculating any additional cash
severance payments that would be given to you, if your employment with
the Company was terminated, the objective being to provide a combined
total sum of $600,000 between the extra lump sum pension (Column #2) and
the severance (Column #3).
You will note that as the lump sum pension amount grows over the next
three years, the cash severance declines; and furthermore, the latter is
"capped," as shown in Column #4.
As mentioned earlier, the three-year period of this severance
arrangement ends on December 31, 1996; but this will have no bearing on
the additional pension credits given to you. Your pension benefits upon
retirement or termination of employment will obviously be greatly
enhanced by the 9.75 years of Company service added to your actual years
of service.
If this letter accurately reflects our discussions and subsequent
agreement, please indicate your acceptance by signing both enclosed
copies, retaining one for your personal file and returning the other
copy to me.
Sincerely,
Derek C. Hathaway
President & Chief
Executive Officer
Enclosures:
1. Agreement
2. Pension Calculations
3. Severance Illustration
Accepted and Agreed to:
Barrett W. Taussig
Date
SPECIAL SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
This Agreement by and between HARSCO CORPORATION, a Delaware corporation
(the "Company") and Barrett W. Taussig, an individual (the
"Participant") is made and entered into this 28th day of January, 1994.
W I T N E S S E T H:
WHEREAS, the Company and the Participant wish to enter into an
agreement, in order to formally document the action taken by the
Company's Board of Directors on January 25, 1994, in approving the
provision of a special supplemental retirement benefit for the
Participant to recognize his contemplated future services to the Company
and to insure that he receives an adequate level of continuous income
after his retirement from the Company; and
NOW THEREFORE, in consideration of the promises and agreements contained
herein, intending to be legally bound, the parties hereto agree as
follows:
1. Supplemental Retirement Benefit. The Participant shall be entitled
to receive a supplemental retirement benefit under the Company's
Supplemental Retirement Plan (the "Plan"), the terms and conditions of
which are incorporated herein by reference, with the following
modifications:
(a) For purposes of determining the Participant's years of Credited
Service under the Plan, the Participant shall be treated as if he had
been continuously employed with the Company on and after his attainment
of age 40, and shall be credited with service from date of employment at
assumed age of 40 until the date of his actual termination of employment
or retirement from the Company;
(b) for purposes of determining the Participant's eligibility to elect
voluntary early retirement under the Plan, the Participant must complete
10 years of service based on actual date of employment with the Company;
(c) In the event the Participant (i) is discharged upon conviction of a
felony or other crime involving moral turpitude, or misappropriation of
Company funds or (ii) within two years of terminating employment with
the Company commences employment or becomes connected in any manner with
any business, commercial or professional enterprise, whether in
corporate, partnership or proprietorship form that provides a
significant service or product in competition with the Company's wheeled
vehicle product line or any other significant service or product
primarily for defense purposes provided by the Company, its subsidiaries
or any company or partnership in which the company has at least a 20%
ownership interest, then the additional years of credited service for
periods of time prior to the Participant's actual commencement of
employment with the Company provided under paragraph 1(a) of this
Agreement shall be forfeited and the amount of the Participant's
supplemental retirement benefit under the Plan shall be recalculated
based on his actual employment with the Company and when necessary
reduced accordingly.
2. Funding. The sole obligation of the Company under this Agreement is
a contractual obligation to pay the supplemental retirement benefit
described herein in accordance with the terms of this Agreement and the
Plan. Such benefit shall be paid from the general assets of the
Company, and the Company shall be under no obligation to segregate any
of its assets in respect of such benefit or to fund or otherwise secure
its obligation to pay such benefit. The Company may, in its discretion,
elect to provide for the payment of its obligations under this Agreement
and the Plan through the purchase of a contract with an insurance
company, by funding Harsco's Supplemental Executive Retirement Plan
Trust ("Secular Trust") or by otherwise establishing a trust.
3. Administrative Costs. All administrative costs of providing
supplemental retirement benefits to the Participant under this Agreement
and the Plan shall be borne by the Company.
4. Assignment. The Participant may not assign, transfer, sell,
hypothecate or otherwise encumber any of his rights under this Agreement
and any attempt to do so shall be void. To the maximum extent permitted
by law, the supplemental retirement benefits provided to the Participant
under this Agreement shall not be liable or subject to the debts,
contracts, liabilities, engagements or torts of the Participant, nor
shall they be subject to attachment or garnishment pursuant to legal
process against the Participant.
5. Entire Agreement. This Agreement supersedes any prior
understandings or agreement, oral or written, between the Company and
the Participant, other than the Plan, and represents the entire
agreement between the Company and the Participant with respect to a
supplemental retirement pension benefit. This Agreement may not be
amended in any respect except by a written agreement signed by the
Company and the Participant.
6. Claims Procedure. Any claim for a benefit under this Agreement by
the Participant shall be filed and resolved in accordance with the
Claims Procedure provided under Section 8.3 of the Company's
Administrative Employees Pension Plan. The provisions of that section,
as they may be amended from time to time, are hereby incorporated by
reference.
7. Governing Law. This Agreement has been executed within the
Commonwealth of Pennsylvania. The validity, interpretation and
enforcement of this Agreement shall be governed by the law of the
Commonwealth of Pennsylvania except to the extent that such law is
preempted by the Employee Retirement Income Security Act of 1974, as
amended.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: HARSCO CORPORATION
Paul C. Coppock Derek C. Hathaway
Vice President, General Counsel President and Chief Executive
Officer
and Secretary
Barrett W. Taussig
PROJECTED 5 YEAR AVERAGE COMPENSATION $500,000 YEAR 2000
THROUGH YEAR 2004
Pension Calculation - 15.25 Actual Years of Service @ Age 65
.008 x $ 37,800* = $ 302.40
.016 x $462,200 = $7,395.20
$7,697.60 x 15.25 yrs. = $117,388 Annual 10 C & C
Pension
Total Lump Sum Value at age 65 - PBGC Rate 6.00% $1,268,964
($117,388 x $10.81)
Pension Calculation - Using Years of Service If Hired at Age 40 - 25
Years Service @ Age 65
.008 x $ 37,800* = $ 302.40
.016 x $462,200 = $7,395.20
$7,697.60 x 25 yrs. = $192,440 Annual 10 C & C
Pension
Total Lump Sum Value at age 65 - PBGC Rate 6.00% $2,080,276
($192,440 x $10.81)
Summary of Benefits @ Age 65
Annual Total Lump
Pension Sum Value
Increase
Actual Years - 15.25 Yrs. $117,388 $1,268,964
- -
Credited Years
If Hired At Age 40 25 Yrs. $192,440 $2,080,276
$811,312
Ratio 1.64 1.64 1.64
- -
A portion of these total lump sum values will be paid from the
"tax-qualified" Pension Plan. Proposed government regulations make it
difficult to project the amount of such values more than one or two
years in advance.
VARIABLES:
- PBGC interest rate at retirement or other break in service
- Future Plan design changes approved by Harsco Board of Directors
- Actual compensation covered by Plan at time of retirement or other
break in service
- Actuarial Tables of Factors Subject to Change By Harsco Pension
Committee or By IRS Rules Without Prior Notice
* SUBJECT TO CHANGE BY GOVERNMENT REGULATION.
BARRETT W. TAUSSIG
(1) (2) (3) (4)
(5)
Hypothetical Hypothetical Cash Cap on
Actual
Actuarial Actuarial Severance Cash
Cash
Lump Sum Lump Sum (Subject to Severance
Severance
Pensions Pensions Cap in (4))
Payout
Attributable Attributable ($600,000 -
Considering
to years of to extra (2))
cap
Service from 9.75 yrs of
10/27/79 service
Date (age 40)
Day 1
1/1/94 $630,923 $434,213 $165,787 $600,000
$165,787
6 Months
7/1/94 $667,918 $444,003 $155,997 $500,000
$155,997
1 Year
1/1/95 $706,203 $453,978 $146,022 $400,000
$146,022
18 Months
7/1/95 $746,107 $464,322 $135,678 $300,000
$135,678
2 Years
1/1/96 $787,397 $474,864 $125,136 $200,000
$125,136
3 Years
1/1/97 $874,970 $496,939 $0 $0
$0
- - FAC = $403,234 (Total Accrued Compensation for 1992) used for all
calculations.
- - PBGC Rate = 4.5% for all calculations.
- - DOH 10/27/79
- - Not 100% vested until 7/10/94
HARSCO CORPORATION
Camp Hill, Pennsylvania 17001-8888
Date: April 26, 1993
Option Contract
Nonqualified Stock Option
M. W. Gambill
Chairman & Chief Executive Officer
Harsco Corporation
P. O. Box 8888
Camp Hill, PA 17001-8888
Dear Sir:
1. In lieu of any increase in cash salary compensation for the twelve
months commencing May 1, 1993, and in order to encourage you to acquire
and hold stock in Harsco Corporation (the Company), and as an incentive
to you to devote extra time and effort in furtherance of its interests,
the Company hereby gives and grants to you pursuant to its "1986 Stock
Option Plan," dated May 1, 1986 as amended and restated (the Plan), a
copy of which is annexed hereto and hereby made a part hereof, and
pursuant to a resolution of the Management Development and Compensation
Committee adopted April 26, 1993, and subject to the further provisions
hereof and to the terms and conditions of the Plan, the right and option
(the Option) to purchase up to an aggregate of Five Thousand (5,000)
shares of its Common Stock for the price of Forty Dollars and
Ninety-Four Cents ($40.94) per share, being not less than the Fair
Market Value of the stock at the date of grant of this Option. Subject
to the provisions of Section 2(b), 3, 4, 5 and 6 hereof providing for
early exercise, this Option shall become exercisable in whole or from
time to time in part in two equal increments of 2,500 shares each
according to the following schedule and shall remain exercisable unless
earlier terminated pursuant to Sections 3, 4, 5 or 6 hereof until the
day before ten years from the date of grant or not later than April 25,
2003.
Date First Exercisable Number of Shares
April 26, 1994 2,500
April 26, 1995 2,500
Total 5,000
This option will not be treated as an incentive stock option within the
meaning of the Internal Revenue Code.
2. (a) In order to exercise the Option you must give written notice to
the Company pursuant to Section 13 of this letter stating the number of
shares of Common Stock as to which the Option is being exercised and
accompanied by payment in full in cash, or by bank or certified check,
of the option price for all such shares. At your election you may pay
the option price by delivering to the Company shares of Common Stock of
the Company with a fair market value equal to the option price or by a
combination of cash and shares of Common Stock. For purposes of this
Section the fair market value of the Company's Common Stock shall be the
closing price of the Common Stock on the composite tape or the New York
Stock Exchange on the last trading day preceding the day on which notice
of your exercise is received by the Company.
(b) If at any time there occurs a "change in control" of the Company in
accordance with Section 9 of the Plan, then:
(i) if, at the time of such change in control, six months have elapsed
since the date this Option was granted, this Option shall be exercisable
in full for the remainder of its term with respect to all shares of
Common Stock covered hereby on and after the date of such change in
control, or
(ii) if, at the time of such change in control, fewer than six months
have elapsed since the date this Option was granted, this Option shall
become immediately exercisable in full for the remainder of its term
with respect to all shares of Common Stock covered hereby on the first
day following the end of a six month period after the date this Option
was granted.
3. If you retire while in the employ of the Company or a Subsidiary and
prior to the time you have fully exercised this Option you may exercise
this Option within twelve months after the date your employment with the
Company or a Subsidiary terminates by reason of your retirement to the
extent this Option was exercisable by you on the date your employment so
terminated.
4. If you become disabled while in the employ of the Company or a
Subsidiary and prior to the time you have fully exercised this Option,
this Option shall become immediately exercisable with respect to all
shares covered by this contract and you may exercise this Option within
twelve months after the date your employment with the Company or a
Subsidiary terminates by reason of your disability to the extent this
Option was exercisable by you on the date your employment so terminated.
5. If you die while in the employ of the Company or a Subsidiary and
prior to the time you have fully exercised this Option, this Option
shall become immediately exercisable with respect to all shares covered
by this contract and the executor or administrator of your estate or the
person to whom this Option is transferred by will or the laws of descent
or distribution may exercise this Option within twelve months after the
date of your death to the extent this Option was exercisable by you on
the date of your death.
6. This Option shall terminate, to the extent it has not been
previously exercised, three months after the termination of your
employment with the Company or a Subsidiary for any reason other than
your retirement, disability or death. During such three month period
following your termination of employment you may exercise this Option to
the extent it was exercisable by you on the date your employment
terminated.
7. Your acceptance of the Option will confirm: (1) that you are
familiar with the business and affairs of the Company and its
subsidiaries and (2) that you understand and agree that the granting of
the Option, and any action thereunder, does not involve any statements
or representations of any kind by the Company as to its business,
affairs, earnings or assets, or as to the tax status of the Option or
the tax consequences of any exercise thereof, or otherwise. You further
agree that any action at any time taken by or on behalf of the Company
or a subsidiary thereof, or by its directors or any committee thereof,
which might or shall at any time adversely affect you or the Option, may
be freely taken, notwithstanding any such adverse effect, without your
being thereby or otherwise entitled to any right or claim against the
Company or any other person or party by reason thereof; provided,
however, that exercise rights arising under Section 9 of the Plan due to
a "change in control" shall not be abrogated.
8. The Option is personal to you and except in the event of your death
is not transferable or assignable either by your act or by operation of
law, and no assignee, trustee in bankruptcy, receiver or other party
whomsoever shall have any right to exercise the Option or any other
right with respect to the Option or to the Plan. The Option is
transferable by your will or the laws of descent and distribution, and
in the event of your death the person entitled thereto shall, subject to
the provisions hereof and of the Plan, be entitled to exercise the
Option to the same extent that you were entitled to as of the date of
your death. Unless otherwise indicated by the context or otherwise
required by any term hereof, references herein to "you," or in the Plan
to "the Optionee," shall apply to said person entitled thereto.
9. Nothing herein is intended to or shall give you any right or status
of any kind as a stockholder of the Company in respect of any shares
covered by the Option or entitle you to any dividends or other
distributions thereon unless and until said shares shall have been
delivered to you and registered in your name.
10. Nothing herein shall confer upon you any right to be continued in
the employ of the Company or a Subsidiary or shall prevent the Company
or Subsidiary which employs you from terminating your employment at any
time, with or without cause.
11. If and when any questions arise from time to time as to the intent,
meaning or application of any one of more of the provisions hereof or of
the Plan, such questions will be decided by the Management Development
and Compensation Committee or such other committee of the Board as may
be designated by the Board, or in the event the Company is merged into
or consolidated with any other corporation, by the Board of Directors
(or a Committee appointed by it) of the surviving or resulting
corporation. Subject to the "change in control" provisions of Section 9
of the Plan, the decision of such Board of Directors or Committee, as
the case may be, as to what is a fair and equitable settlement of each
such question or as to what is a fair and proper interpretation of any
provision hereof or thereof, whatever the effect of such a decision may
be, beneficial or adverse, upon the Option or you, shall be conclusive
and binding and you hereby agree that the Option is granted to and
accepted by you subject to such condition and understanding.
12. At such time or times as you may exercise this Option, the Company
may require you to represent in writing that it is your intention to
acquire the shares being acquired for investment only and not with a
view to distribution thereof. In such event, no shares will be issued
unless and until the Company is satisfied as to the correctness of such
representation.
13. Whenever any notice is to be given hereunder by you or by the
Company, such notice (i) if to you, may be given by delivering the same
to you personally or by sending it to you by registered or certified
mail to your last address as shown on the records of the Company, and
(ii) if to the Company, may be given by delivering the same personally
to its President or its Treasurer, or by sending it to the Company by
registered or certified mail directed to it, at its said principal
office, provided that a notice hereunder shall not be deemed given to
the Company unless and until it receives the same at this said principal
office.
14. Except to the extent that counsel to the Company shall render their
opinion that no approval by the New York Stock Exchange is required in
the premises, this Option Contract and all of the obligations of the
Company in connection therewith and under the Plan shall be subject to
and conditioned upon the approval by the New York Stock Exchange of a
Listing Application with respect to all shares of stock of the Company
(other than treasury shares) which may be issued under the Plan with
respect to this particular Option Contract.
15. If the foregoing is acceptable to you, please so confirm by signing
and returning the duplicate of this letter enclosed for the purpose,
whereupon this letter and such confirmation, together with the Plan,
shall constitute an agreement between you and the Company superseding
any and all other understandings in reference to the matter herein,
including among others, the stock Option hereinabove granted, and
binding upon and inuring to the benefit of the Company and, unless
otherwise determined as provided in the Plan, its successors and
assigns, as well as yourself and, to the extent hereinabove provided,
your legal representatives. In the event of a conflict between the
provisions in this Option Contract and in the Plan, the provisions of
the Plan shall govern and control. The laws of the Commonwealth of
Pennsylvania shall control the interpretation and construction of all
your rights hereunder.
HARSCO CORPORATION
By:
Derek C. Hathaway
President and
Chief Operating Officer
I hereby confirm that the foregoing and the Plan annexed hereto are
hereby in all respects accepted and agreed to by the undersigned as
Optionee as aforesaid as of the date of this Option Contract.
Attachment
HARSCO CORPORATION
COMPUTATION OF FULLY DILUTED NET INCOME PER COMMON SHARE
(dollars in thousands except per share)
<TABLE>
<CAPTION>
YEARS ENDED
_______________________________________________________________________________
1993 1992 1991 1990 1989
_____ _____ _____ _____ ____
<S> <C> <C> <C> <C> <C>
Net income $ 87,618 $ 84,332 $ 76,543 $ 72,504 $ 11,362
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
Average shares of common stock
outstanding used to compute
primary earnings per common
share 25,036,893 25,966,755 26,278,384 26,217,027 26,261,017
Additional common shares to be
issued assuming exercise of
stock options, net of shares
assumed reacquired 149,408 198,220 118,208 28,355 9,847
__________ __________ __________ __________ __________
Shares used to compute dilutive
effect of stock options 25,186,301 26,164,975 26,396,592 26,245,382 26,270,864
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
Fully diluted net income per
common share $ 3.48 $ 3.22 $ 2.90 $ 2.76 $ .43
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
Net income per common share
as reported in report to
shareholders $ 3.50 $ 3.25 $ 2.91 $ 2.77 $ .43
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
</TABLE>
HARSCO CORPORATION
Computation of Ratios of Earnings to Fixed Charges
(In Thousands of Dollars)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
_________________________________________________________________
1989 1990 1991 1992 1993
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Consolidated Earnings:
Pre-tax income from continuing
operations <F1> $ 22,173 $115,587 $ 119,647 $140,576 $137,151
Add fixed charges computed below 20,693 21,864 23,544 22,425 23,879
Net adjustments for equity companies (483) (532) (439) (454) (363)
Net adjustments for capitalized
interest (215) (255) (469) (134) (172)
_______ _______ _______ _______ _______
Consolidated Earnings Available for
Fixed Charges $ 42,168 $136,664 $142,283 $162,413 $160,495
_______ _______ _______ _______ _______
_______ _______ _______ _______ _______
Consolidated Fixed Charges:
Interest expense per financial
statements <F2> $ 16,412 $ 17,506 $ 18,925 $ 18,882 $ 19,974
Interest expense capitalized 287 345 574 355 332
Portion of rentals (1/3 ) representing
an interest factor 3,994 4,013 4,045 3,188 3,573
Interest expense for equity companies
whose debt is guaranteed <F3> - - - - -
_______ _______ _______ _______ _______
Consolidated Fixed Charges $ 20,693 $ 21,864 $ 23,544 $ 22,425 $ 23,879
_______ _______ _______ _______ _______
_______ _______ _______ _______ _______
Consolidated Ratio of Earnings to
Fixed Charges 2.04 6.25 6.04 7.24 6.72
_______ _______ _______ _______ _______
_______ _______ _______ _______ _______
<FN>
<F1> 1992 excludes the cumulative effect of change in accounting method
for postretirement benefits other than pensions.
<F2> Includes amortization of debt discount and expense.
<F3> No fixed charges were associated with debt of less than fifty
percent owned companies guaranteed by Harsco during the five year period
1989 through 1993.
</TABLE>
HARSCO CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 1993 and 1992
(All dollars in thousands, except per share)
1993
1992
ASSETS
Current assets:
Cash and cash equivalents $ 58,740 $
50,366
Notes and accounts receivable, less allowance
for uncollectible accounts ($13,479 and $10,244) 322,894
317,319
Inventories 202,426
202,603
Deferred income taxes -
10,653
Other 16,045
17,342
Total current assets 600,105
598,283
Property, plant and equipment, net 491,655
278,686
Cost in excess of net assets of businesses acquired,
less accumulated amortization ($13,995 and $11,665) 221,082
13,527
Insurance related assets 70,153
68,186
Other assets 44,617
32,543
_________
_________
$1,427,612 $
991,225
_________
_________
_________
_________
LIABILITIES
Current liabilities
Short-term borrowings $ 51,884 $
10,564
Current maturities of long-term debt 11,625
663
Accounts payable 98,021
72,082
Accrued compensation 45,546
30,700
Advances on long-term contracts 88,518
74,112
Income taxes 14,905
13,542
Dividends payable 8,739
8,883
Other current liabilities 98,111
70,819
_________
_________
Total current liabilities 417,349
281,365
Long-term debt 364,869
119,841
Deferred income taxes 33,424
16,747
Insurance related liabilities 49,350
50,111
Other liabilities 39,536
28,058
_________
_________
904,528
496,122
_________
_________
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock
Series A junior participating cumulative
preferred stock -
- -
Common stock, par value $1.25, issued 32,114,499 and
31,925,423 shares, respectively 40,143
39,907
Additional paid-in capital 86,436
80,070
Cumulative translation adjustments (16,059)
(8,055)
Cumulative pension liability adjustments (107)
(633)
Retained earnings 603,158
550,486
_________
_________
713,571
661,775
Treasury stock, at cost (7,146,698 and 6,545,864
shares, respectively) (190,487)
(166,672)
523,084
495,103
_________
_________
$1,427,612 $
991,225
_________
_________
_________
_________
See accompanying notes to consolidated financial statements.
HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
for the years 1993, 1992 and 1991
(All dollars in thousands, except per share)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Net sales $ 1,422,308 $ 1,624,939 $ 1,943,083
Operating expenses:
Cost of sales 1,107,187 1,297,090 1,645,590
Selling, administrative and general expenses 180,375 175,092 170,713
Research and development 5,167 4,590 3,647
Provision for facility discontinuances or disposals 2,419 445 1,664
__________ __________ __________
1,295,148 1,477,217 1,821,614
__________ __________ __________
Profit from operations 127,160 147,722 121,469
__________ __________ __________
Other income (expense):
Interest income 7,586 8,198 10,331
Interest expense (19,974) (18,882) (18,925)
Equity in net income of unconsolidated companies 2,415 3,626 3,838
Gain on sale of investment 17,555 - -
Other, net 2,409 (88) 2,934
__________ __________ __________
9,991 (7,146) (1,822)
__________ __________ __________
Income before provision for income taxes and
cumulative effect of accounting changes 137,151 140,576 119,647
Provision for income taxes 56,335 49,060 43,104
__________ __________ __________
Income before cumulative effect of
accounting changes 80,816 91,516 76,543
Cumulative effect of accounting changes:
Accounting for postretirement benefits other
than pensions (net of income tax
benefit of $4.3 million) - (7,184) -
Accounting for income taxes 6,802 - -
__________ __________ __________
Net income $ 87,618 $ 84,332 $ 76,543
__________ __________ __________
__________ __________ __________
Average shares of common stock outstanding 25,036,893 25,966,755 26,278,384
__________ __________ __________
__________ __________ __________
Earnings per common share:
Income before cumulative effect of accounting
changes $ 3.23 $ 3.52 $ 2.91
Cumulative effect of changes in accounting .27 (.27) -
__________ __________ __________
Net income per common share $ 3.50 $ 3.25 $ 2.91
__________ __________ __________
__________ __________ __________
See accompanying notes to consolidated financial statements.
</TABLE>
HARSCO CORPORATION
CONSOLIDATED STATEMENTS
OF CASH FLOWS
for the years 1993, 1992 and 1991
(All dollars in thousands)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 87,618 $ 84,332 $ 76,543
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 69,558 57,064 57,664
Amortization 5,250 2,007 1,975
Cumulative effect of changes in accounting principles (6,802) 7,184 -
Gain on sale of investment (17,555) - -
Other, net (378) (2,617) 1,945
Changes in assets and liabilities, net of
acquisitions and dispositions of businesses:
Notes and accounts receivable.................. 66,562 (43,878) (52,748)
Inventories 9,189 13,566 109,118
Accounts payable 10,371 (26,271) (17,515)
Accrued long-term contract costs (5,669) (5,177) (16,806)
Advances on long-term contracts 13,673 25,030 (35,236)
Other assets and liabilities 403 (3,106) 26,545
__________ __________ __________
Net cash provided by operating activities 232,220 108,134 151,485
__________ __________ __________
Cash flows from investing activities:
Expenditures for property, plant and equipment (83,395) (42,720) (53,846)
Purchase of businesses, net of cash acquired* (337,062) (28,404) (5,344)
Proceeds from sale of businesses - 44,466 -
Proceeds from sale of property, plant and equipment 3,302 2,079 3,245
Proceeds from sale of investment 22,555 - -
Other investing activities (3,066) 61 (2,239)
__________ __________ __________
Net cash (used) by investing activities (397,666) (24,518) (58,184)
__________ __________ __________
Cash flows from financing activities:
Short-term borrowings, net 28,339 (5,444) (25,084)
Current maturities and long-term debt:
Additions 224,248 - 102,124
Reductions (8,222) (82,948) (25,629)
Cash dividends paid on common stock (35,089) (34,373) (31,528)
Common stock issued-options 4,450 7,734 1,188
Common stock acquired for treasury (36,322) (37,587) (2,606)
Other financing activities (3,849) (34) (1,568)
__________ __________ __________
Net cash provided (used) by financing activities 173,555 (152,652) 16,897
__________ __________ __________
Effect of exchange rate changes on cash 265 (796) (452)
Net increase (decrease) in cash and cash equivalents 8,374 (69,832) 109,746
Cash and cash equivalents at beginning of year 50,366 120,198 10,452
__________ __________ __________
Cash and cash equivalents at end of year $ 58,740 $ 50,366 $ 120,198
__________ __________ __________
__________ __________ __________
*Purchase of businesses, net of cash acquired:
Working capital, other than cash $ 5,748 $ (11,863) $ (2,140)
Property, plant and equipment (202,241) (16,513) (2,904)
Cost in excess of net assets of companies acquired, net (215,428) - -
Other assets (7,789) (1,155) (300)
Long-term debt 29,655 - -
Noncurrent liabilities 52,993 1,127 -
__________ __________ __________
Net cash used to acquire businesses $ (337,062) $ (28,404) $ (5,344)
__________ __________ __________
__________ __________ __________
See accompanying notes to consolidated financial statements.
</TABLE>
HARSCO CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
for the years 1993, 1992 and 1991
(All dollars in thousands, except per share)
<TABLE>
<CAPTION>
Additional Cumulative Adjustments
Common Stock Paid-in Pension Retained
Issued Treasury Capital Translation Liability Earnings
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1991 $ 39,411 $(124,875) $ 69,361 $ (3,314) $ - $ 456,528
Net income 76,543
Cash dividends declared, $1.23 per share (32,319)
Translation adjustments (550)
Pension liability adjustments, net of
($689) deferred income taxes (1,153)
Acquired during the year, 92,016 shares (2,606)
Stock options exercised, 47,699 shares 60 1,128
Distribution of common stock under
incentive program, 56,566 shares 1,430 74
Other, 296 shares 7 1
________ ________ ________ ________ ________ ________
Balances, December 31, 1991 39,471 (126,044) 70,564 (3,864) (1,153) 500,752
Net income 84,332
Cash dividends declared, $1.34 per share (34,598)
Translation adjustments (4,191)
Pension liability adjustments, net of
$309 deferred income taxes 520
Acquired during the year, 1,256,662 shares (42,474)
Stock options exercised, 348,606 shares 436 9,504
Distribution of common stock under
incentive program, 51,663 shares 1,836 1
Other, 335 shares 10 1
________ ________ ________ ________ ________ ________
Balances December 31, 1992 39,907 (166,672) 80,070 (8,055) (633) 550,486
Net income 87,618
Cash dividends declared, $1.40 per share (34,946)
Translation adjustments (8,004)
Pension liability adjustments, net of $311
deferred income taxes 526
Acquired during the year, 901,557 shares (34,975)
Stock options exercised, 189,076 shares 236 5,546
Acquisition of a company, 300,297 shares 11,143 818
Other, 426 shares 17 2
________ ________ ________ ________ ________ ________
Balances, December 31, 1993 $ 40,143 $(190,487) $ 86,436 $ (16,059) $ (107) $ 603,158
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
See accompanying notes to consolidated financial statements.
</TABLE>
HARSCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Consolidation:
The consolidated financial statements include those of the Company and
its wholly-owned and majority-owned subsidiaries; investments in
unconsolidated affiliated companies are accounted for on the equity
method.
Cash and Cash Equivalents:
The Company's policy is to maintain its uninvested cash at minimal
levels. Cash and cash equivalents include highly liquid debt
instruments purchased with a maturity of three months or less.
Inventory Valuation:
Inventories are stated at the lower of cost or market, cost being
determined using the last-in, first-out (LIFO), first-in, first-out
(FIFO) and average cost methods.
Property, Plant and Equipment:
Property, plant and equipment is recorded at cost and depreciated over
the estimated useful lives of the assets using principally the
straight-line method. Generally, when property is retired from service,
the cost of the retirement is charged to the allowance for depreciation
to the extent of the accumulated depreciation thereon and the balance is
charged to income.
Cost in Excess of Net Assets of Businesses Acquired:
Cost in excess of net assets of businesses acquired is amortized on a
straight-line basis over periods not to exceed 30 years. The Company's
policy is to record an impairment loss against the net unamortized cost
in excess of net assets of businesses acquired in the period when it is
determined that the carrying amount of the asset may not be recoverable.
This determination is based on an evaluation of such factors as the
occurrence of a significant event, a significant change in the
environment in which the business operates or if the expected future net
cash flows (undiscounted and without interest) would become less than
the carrying amount of the asset.
Long-term Defense Contracts:
Defense contracts are accounted for under the percentage of completion
(units-of-delivery) method, whereby sales and estimated average cost of
the units to be produced under a contract are recognized as deliveries
are made or accepted. Changes in estimates for sales, costs, and
profits are recognized in the period in which they are determinable
using the cumulative catch-up method of accounting. Claims are
considered in the estimated contract performance at such time as
realization is probable. Any anticipated losses on contracts are
charged to operations as soon as they are determinable. Inventory costs
include factory overhead, general and administrative expenses, initial
tooling and other related costs. Internal research and development
costs are charged to expense or allocated to production contracts, as
applicable, when incurred. Under certain arrangements in which a
customer shares in product development costs, the Company's portion of
such costs is expensed as incurred.
Income Taxes:
All U.S. Federal and state income taxes and foreign taxes are provided
currently on the undistributed earnings of foreign subsidiaries and
unconsolidated affiliated companies, giving recognition to current tax
rates and applicable foreign tax credits.
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109 "Accounting for Income Taxes," effective January 1, 1993. The
adoption of SFAS 109 changes the Company's method of accounting for
income taxes from the deferred method under Accounting Principles Board
Opinion No. 11 to an asset and liability approach. Deferred income
taxes are recognized for all temporary differences between the tax and
financial reporting bases of the Company's assets and liabilities based
on enacted tax laws and statutory tax rates applicable to the periods in
which the differences are expected to affect taxable income.
Investment and Other Tax Credits:
United States tax credits are used to reduce federal income taxes
otherwise payable for the year in which they arise. However, for
financial reporting purposes, tax credits are deferred and amortized
into income as a reduction of income tax expense over the average useful
lives of the properties which gave rise to the credits.
Employee Benefits:
The Company has pension and profit sharing retirement plans, most of
which are noncontributory, covering substantially all its employees and
outside directors. The benefits for salaried employees generally are
based on years of service and the employee's level of compensation
during specified periods of employment. Plans covering hourly employees
generally provide benefits of stated amounts for each year of service.
The Company's funding policy for qualified plans is consistent with
federal regulations and customarily equals the amount deducted for
federal income tax purposes. The Company's policy is to amortize prior
service costs over the average future service period of active plan
participants.
The Company has postretirement life insurance benefits for a majority of
employees, and postretirement health care benefits for a limited number
of employees mainly under plans related to acquired companies.
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions" (SFAS 106) for its domestic plans.
Effective January 1, 1993 the Company adopted SFAS 106 for its foreign
plans, the effect of which was immaterial. This accounting standard
requires accrual accounting for all postretirement benefits other than
pensions. Under the prescribed accrual method, the Company's obligation
for these postretirement benefits is to be fully accrued by the date
employees attain full eligibility for such benefits. Prior to the
adoption of SFAS 106, the cost of these benefits was recognized on the
pay-as-you-go method. Under SFAS 106, the cost of life insurance and
health care benefits for current and future retirees are recognized as
determined under the projected unit credit actuarial method. The
Company's postretirement health care and life insurance plans are
unfunded.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" (SFAS 112) for both its domestic and foreign plans, the effect
of which was immaterial. This statement requires companies to accrue
postemployment benefits if the obligation is attributable to employees'
services already rendered, employees' rights to those benefits
accumulate or vest, payment of the benefits is probable and the amount
of the benefits can be reasonably estimated.
Environmental Compliance and Remediation:
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations, and which do not
contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessments and/or remedial
efforts are probable, and the cost can be reasonably estimated.
Generally, the timing of these accruals coincides with the earlier of
completion of a feasibility study or the Company's commitment to a plan
of action based on the then known facts.
Casualty Insurance:
The Company is insured for workers compensation, automobile, general,
and product liability losses through a risk retention program. The
Company accrues for the estimated losses occurring from both asserted
and unasserted claims. The estimate of the liability for unasserted
claims arising from unreported incidents is based on an analysis of
historical claims data. The Company has a wholly-owned captive
insurance company for the payment of its claims under this risk
retention program. Annual contributions are made by the Company to the
captive insurance company to provide funding for its retained risk.
Property Insurance:
The Company generally insures its property on an all-risk basis through
conventional insurers with a minor deductible applicable to each loss.
For certain foreign operations, the Company has a second wholly-owned
captive insurance company for the payment of its claims under such risk
retention program. The captive is funded for expected losses.
Foreign Currency Translation:
The financial statements of the Company's subsidiaries outside the
United States, except for those subsidiaries located in highly
inflationary economies, are generally measured using the local currency
as the functional currency. Assets and liabilities of these
subsidiaries are translated at the rates of exchange at the balance
sheet date. The resultant translation adjustments are included in
equity adjustment from translation, a separate component of
stockholders' equity. Income and expense items are translated at
average monthly rates of exchange. Gains and losses from foreign
currency transactions of these subsidiaries are included in net
earnings. For subsidiaries operating in highly inflationary economies,
gains and losses on foreign currency transactions and balance sheet
translation adjustments are included in net earnings.
Foreign Exchange:
The Company has significant foreign investments. It is the Company's
policy to reduce substantially the effects of fluctuations in foreign
currency exchange rates associated with these investments by managing
its currency exposure which includes foreign currency hedging
activities. The Company enters into foreign exchange forward contracts
to hedge the effect of foreign currency fluctuations on the financial
statements.
The company enters into contracts to buy and sell foreign currencies in
the future only to protect the U.S. dollar value of certain investments
and future foreign currency transactions. The Company does not engage
in speculation. The gains and losses on these contracts are included in
income when the operating revenues and expenses are recognized and, for
assets and liabilities, in the period in which the exchange rates
change. The cash flows from forward contracts accounted for as hedges
of identifiable transactions are classified consistent with the cash
flows from the transactions being hedged.
Reclassifications:
Certain amounts in the 1992 and 1991 financial statements and notes have
been reclassified to conform with the 1993 presentation.
2. MULTISERV INTERNATIONAL, N.V. ACQUISITION:
On August 31, 1993, Harsco Corporation acquired all of the outstanding
capital stock of MultiServ International, N.V., an international leader
in metal reclamation and specialized steel mill services. The
acquisition has been accounted for by the purchase method of accounting,
and operating results of this acquisition are included in the Company's
Consolidated Financial Statements since the date of acquisition.
The total consideration paid by the Company was approximately
$384,000,000 and consisted of: (i) approximately $333,000,000 in cash,
(ii) approximately $12,000,000 in Harsco Corporation Common Stock from
treasury, and (iii) the assumption of certain project financing
indebtedness of MultiServ in the amount of approximately $39,000,000.
Approximately $8,000,000 in closing and acquisition costs were also
incurred. The funds used by the Company to complete the acquisition
consisted of approximately $83,000,000 from current cash balances of
Harsco, and approximately $250,000,000 borrowed from Chase Manhattan
Bank, N.A.
The following represents the unaudited pro forma results of operations
as if the acquisition had occurred at the beginning of 1993 and 1992:
Pro Forma
_______________________________
Year
Year
(Unaudited) Ended
Ended
(In thousands, except per share amounts) Dec. 31, 1993
Dec. 31, 1992
Net Sales $ 1,626,133 $
1,966,696
__________
__________
__________
__________
Income before provision for income taxes,
cumulative effect of accounting changes
and extraordinary item 124,530
141,377
Provision for income taxes 58,839
56,599
__________
__________
Income before cumulative effect of accounting
changes and extraordinary item 65,691
84,778
Cumulative effect of accounting changes:
Accounting for postretirement benefits
other than pensions -
(7,184)
Accounting for income taxes 6,802
1,784
Extraordinary item, net of taxes<F1> (2,277)
- -
__________
__________
Net income $ 70,216 $
79,378
__________
__________
__________
__________
Average shares of common stock outstanding 25,212
26,267
__________
__________
__________
__________
Earnings per common share:
Income before cumulative effect of accounting
changes and extraordinary item $ 2.61 $
3.23
Cumulative effect of changes in accounting .27
(.21)
Extraordinary item<FN1> (.09)
- -
__________
__________
Net income per share $ 2.79 $
3.02
__________
__________
__________
__________
[FN]
<F1> MultiServ's preacquisition extinguishment of debt.
Included in these pro forma results are adjustments to reflect
additional expenses associated with the amortization of the created
goodwill and the write-up of MultiServ fixed assets to fair market
value. Additional provisions for interest and debt expenses on the
acquisition borrowings has also been included. The pro forma financial
statements are not necessarily indicative of the results that actually
would have been obtained had the MultiServ acquisition been consummated
during the periods presented, and it is not intended to be a projection
of future results or trends.
3. INVENTORIES:
Inventories are summarized as follows:
(In thousands) 1993
1992
Classification:
Long-term contract costs (including
general and administrative costs
of $7,576 and $5,922) $ 110,133 $
147,844
Contract loss reserves (4,979)
(4,188)
Progress payments - U.S. Government (16,662)
(30,839)
________
________
88,492
112,817
Finished goods 23,543
21,097
Work in process 25,612
24,370
Raw materials and purchased parts 52,608
38,646
Stores and supplies 12,171
5,673
________
________
$ 202,426 $
202,603
________
________
________
________
Valued at lower of cost or market:
LIFO basis $ 80,786 $
70,738
FIFO basis 16,133
10,547
Average cost basis 105,507
121,318
________
________
$ 202,426 $
202,603
________
________
________
________
The Company has incurred costs that are assignable to units not yet
produced. The aggregate amount incurred, exclusive of raw materials and
purchased parts included in long-term contract costs, was $12,069,000
and $10,041,000 as of December 31, 1993 and 1992, respectively. These
costs relate primarily to U.S. Government contracts for certain tracked
vehicles.
Inventories valued on the LIFO basis at December 31, 1993 and 1992 were
approximately $33,878,000 and $34,903,000, respectively, less than the
amounts of such inventories valued at current costs.
As a result of reducing certain inventory quantities valued on the LIFO
basis, profits from liquidation of inventories were recorded which
increased net income by $246,000, $3,316,000 and $877,000 in 1993, 1992
and 1991, respectively.
4. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, net consists of the following:
(In thousands) 1993
1992
Land $ 12,648 $
11,232
Buildings and improvements 157,528
138,175
Machinery and equipment 857,941
653,928
Uncompleted construction 32,612
12,040
_________
_________
1,060,729
815,375
Less allowance for depreciation 569,074
536,689
_________
_________
$ 491,655 $
278,686
_________
_________
_________
_________
5. INCOME TAXES:
Income before taxes and the provision for income taxes in the
consolidated statements of income consist of:
(In thousands) 1993 1992
1991
Income before provision for income taxes:
Domestic $ 126,521 $ 120,179
$ 96,032
Foreign 10,630 20,397
23,615
________ ________
________
$ 137,151 $ 140,576
$ 119,647
________ ________
________
________ ________
________
Provision for income taxes:
Currently payable:
Federal $ 38,053 $ 34,607
$ 11,715
Foreign 8,882 6,906
10,641
State 7,395 6,527
3,317
________ ________
________
54,330 48,040
25,673
Deferred federal and state 4,195 27
17,828
Deferred foreign (2,190) 993
(397)
________ ________
________
$ 56,335 $ 49,060
$ 43,104
________ ________
________
________ ________
________
Cash payments for income taxes were $55,431,000, $50,526,000 and
$10,872,000, for 1993, 1992 and 1991, respectively.
The following is a reconciliation of the normal expected statutory
federal income tax rates to the effective rates as a percentage of
income before provision for income taxes as reported in the financial
statements:
1993 1992
1991
U.S. federal income tax rate 35.0% 34.0%
34.0%
State income taxes, net of
federal income tax benefit 3.9 3.0
2.8
Export sales corporation benefit (1.0) (1.2)
(.9)
Foreign losses for which no benefit
was recorded 2.1 .5
1.5
Difference in effective tax rates on
foreign earnings and remittances (.5) (2.3)
(1.4)
Nondeductible acquisition costs 1.0 .5
.6
Other, net .6 .4
(.6)
Effective income tax rate 41.1% 34.9%
36.0%
As discussed in Note 1, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes"
effective January 1, 1993. The cumulative effect of this change in
accounting principle increased net income in the first quarter by
$6,802,000, or $.27 per share. For the year ended December 31, 1993,
the effect of the accounting change was immaterial. Prior years'
financial statements have not been restated.
The tax effects of the primary temporary differences giving rise to the
Company's deferred tax assets and liabilities for the year ended
December 31, 1993 are as follows:
(In thousands) 1993
____________________________
Deferred Income Taxes Asset Liability
Depreciation $ - $
50,111
Expense accruals 39,413
- -
Inventories 5,110
- -
Provision for receivables -
22,144
Postretirement benefits 5,637
- -
Deferred revenue -
7,384
Unrelieved tax losses 19,714
- -
Unrealized translation losses 6,247
- -
Pensions -
6,502
Other 578
- -
_________
_________
Subtotal 76,699
86,141
Valuation allowance (25,251)
- -
_________
_________
Total Deferred Income Taxes $ 51,448 $
86,141
_________
_________
_________
_________
Prior to its acquisition by the Company in 1993, MultiServ had
approximately $49,900,000 of net operating loss carryforwards
("preacquisition NOLs"). During 1993, $8,500,000 of these
preacquisition NOLs were utilized by the Company resulting in a
$2,764,000 tax benefit which was allocated to reduce goodwill related to
the acquisition.
At December 31, 1993, certain of the Company's foreign subsidiaries had
total available net operating loss carryforwards of approximately
$51,300,000 of which approximately $15,300,000 will expire by 1998 and
the balance may be carried forward indefinitely.
The valuation allowance of $25,251,000 relates principally to cumulative
unrelieved tax losses and unrealized translation losses which are
uncertain as to realizability at December 31, 1993. To the extent that
preacquisition NOLs, aggregating $38,960,000 at December 31, 1993, are
utilized in the future and the associated valuation allowance reduced,
the tax benefit thereof will be allocated to reduce goodwill related to
the acquisition. The increase in the valuation allowance for 1993
related primarily to the preacquisition NOLs and the increase in the
cumulative unrealized translation losses.
The sources of significant timing differences which gave rise to
deferred taxes and their effects are as follows (disclosure for 1993 is
not required under SFAS 109):
(In thousands) 1992 1991
Depreciation $ 491 $
(2,209)
Expense accruals (1,074)
6,070
Accrued contract costs, net change 1,962
10,482
Other, net (359)
3,088
_________
_________
$ 1,020 $
17,431
_________
_________
_________
_________
6. EMPLOYEE BENEFIT PLANS:
Pensions:
Net pension cost includes the following components:
(In thousands) 1993 1992
1991
Defined benefit plans:
Service cost $ 12,077 $ 11,521 $
8,973
Interest cost 15,468 14,945
14,372
Actual return on plan assets (33,984) (18,072)
(41,969)
Net amortization and deferral 8,547 (6,134)
20,462
________ ________
________
Net periodic pension cost 2,108 2,260
1,838
Multi-employer and defined
contribution plans 5,110 4,649
5,271
________ ________
________
Total pension cost $ 7,218 $ 6,909 $
7,109
________ ________
________
________ ________
________
The Company participated in multi-employer plans, providing defined
benefits for certain unionized employees, the cost of which totaled
$2,474,000, $2,426,000 and $2,155,000, for 1993, 1992 and 1991,
respectively.
The status of defined benefit plans at December 31, 1993 and 1992, is as
follows:
<TABLE>
<CAPTION>
Overfunded Underfunded
(In thousands) 1993 1992 1993 1992
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested $ 152,412 $ 141,719 $ 30,492 $ 32,255
Non-vested 3,881 10,233 995 1,184
________ ________ ________ ________
Accumulated benefit obligation 156,293 151,952 31,487 33,439
Effect of increase in compensation 47,757 43,741 3,717 2,655
________ ________ ________ ________
Projected benefit obligation 204,050 195,693 35,204 36,094
Plan assets at fair value 256,786 227,064 32,858 30,695
________ ________ ________ ________
Plan assets in excess of (less than)
projected benefit obligations 52,736 31,371 (2,346) (5,399)
Unrecognized prior service costs 13,553 13,471 5,647 5,857
Unrecognized net loss (gain) (19,127) 5,941 (443) 4,222
Unrecognized net asset (29,367) (32,242) (3,225) (3,485)
Minimum liability adjustment - - (1,142) (3,939)
________ ________ ________ ________
Prepaid (accrued) pension cost $ 17,795 $ 18,541 $ (1,509) $ (2,744)
________ ________ ________ ________
________ ________ ________ ________
</TABLE>
Plan assets include equity and fixed-income securities. Harsco common
stock with a fair market value of $14,882,000 and $13,874,000 in 1993
and 1992, respectively is included in plan assets.
The actuarial assumptions used for the defined benefit pension plans as
of the end of the year, including foreign plans are as follows:
1993 1992
1991
Assumed discount rate 7.4% 6.9%
7.6%
Expected average rate of return
on plan assets 9.0% 9.2%
9.2%
Assumed average rate of
compensation increase 5.3% 5.9%
6.0%
The changes in the assumed discount and compensation rates had the
effect of decreasing the projected benefit obligation by $31,956,000 in
1993, and increasing the projected benefit obligation by $20,699,000 in
1992. An amendment to the defined benefit plans that became effective
during 1991 increased pension expense in that year by $1,769,000.
Postretirement Benefits:
In the fourth quarter of 1992, the Company adopted Statement of
Financial Accounting Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (SFAS 106), effective
January 1, 1992, for its domestic plans. In conjunction with the
adoption of SFAS 106, the Company elected to immediately recognize the
accumulated postretirement benefit obligations for current and future
retirees, and recognized accrued postretirement benefit cost (transition
obligation), in the amount of $7.2 million, ($.27 per share), net of a
deferred income tax benefit of $4.3 million.
Effective January 1, 1993, the Company adopted SFAS 106 for its foreign
plans, the effect of which was immaterial.
Postretirement benefit (health care and life insurance) costs for the
year include the following components:
<TABLE>
<CAPTION>
(In thousands) 1993 1992
________________________________________ ________________________________________
Health Life Health Life
Care Insurance Total Care Insurance Total
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 235 $ 73 $ 308 $ 289 $ 80 $ 369
Interest cost 532 324 856 560 334 894
Amortization (Gain) (319) - (319) - - -
______ ______ ______ ______ ______ ______
Total postretirement
benefit costs $ 448 $ 397 $ 845 $ 849 $ 414 $ 1,263
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
The accumulated postretirement benefit obligation at December 31 is as follows:
(In thousands) 1993 1992
________________________________________ ________________________________________
Health Life Health Life
Care Insurance Total Care Insurance Total
<S> <C> <C> <C> <C> <C> <C>
Current retirees $ 3,786 $ 3,250 $ 7,036 $ 3,861 $ 3,611 $ 7,472
Future retirees 4,489 1,202 5,691 4,202 1,312 5,514
______ ______ ______ ______ ______ ______
Total 8,275 4,452 12,727 8,063 4,923 12,986
Unrecognized gain 295 938 1,233 411 349 760
______ ______ ______ ______ ______ ______
Accumulated postretirement
benefit obligation $ 8,570 $ 5,390 $13,960 $ 8,474 $ 5,272 $13,746
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
</TABLE>
For the year 1991, postretirement health care and life insurance costs
under the pay as-you-go method were $548,000.
The actuarial assumptions used for plans under SFAS 106 are as follows:
(In thousands) 1993 1992
Assumed Discount Rate 7.0% 7.15%
Health Care Cost Trend Rate 13.0% 13.0%
Decreasing to Ultimate Rate 6.0% 6.0%
Effect of one percent increase in
health care cost trend rate:
On cost components $110 $127
On accumulated benefit obligation $937 $645
Postemployment Benefits:
In 1993, the Company adopted Statement of Financial Accounting Standards
No. 112 "Employers Accounting for Postemployment Benefits" (SFAS 112),
for its domestic and foreign plans. The cumulative effect of the
postemployment benefit obligation recognized in 1993 was immaterial.
Savings Plans:
The Company has defined contribution savings plans designed to comply
with the requirements of the Employee Retirement Income Security Act of
1974 ("ERISA") and Section 401(k) of the Internal Revenue Code. The
plans cover substantially all employees with the exception of any such
employees represented by a collective bargaining agent, unless the
collective bargaining agreement expressly provides otherwise. Employee
contributions are generally determined as a percentage of covered
employee's compensation received. The expense for contributions to the
plans by the Company were $4,213,000, $3,744,000 and $3,018,000 for
1993, 1992 and 1991, respectively.
7. DEBT AND CREDIT AGREEMENTS:
The Company maintains two committed credit facilities with a group of
banks. The first agreement, the Revolving Credit Facility, allows the
Company to borrow up to $150,000,000, and extends to August 1994 and is
subject to successive annual renewals thereafter. The second agreement,
the Eurocurrency Facility, permits the Company to borrow up to
$150,000,000, with borrowing denominated in either U.S. Dollars, Pounds
Sterling, Belgian Francs, French Francs or German Marks and extends to
August 1998. The interest rates under these facilities are either a
negotiated rate, a rate based upon the domestic federal funds interbank
market, prime rate, or a rate based upon the London Interbank Offered
Rate (LIBOR). The Company pays facility fees on the full amount of each
facility that vary based upon its Moody's and Standard and Poor's credit
ratings. As of December 31, 1993, the Revolving Credit Facility fee was
.1875% per annum, and the Eurocurrency Facility fee was .25% per annum.
At December 31, 1993, there were $30,000,000 of outstanding Revolving
Credit Facility borrowings and $68,792,000 of outstanding Eurocurrency
Facility borrowings denominated in Pounds Sterling, Belgian Francs and
French Francs. In addition, the Company has other short-term borrowings
amounting to $21,884,000.
Short-term debt consists of the following:
(In Thousands) 1993 1992
Revolving Credit Facility $ 30,000 $
- -
Overdraft facilities and other
short-term borrowings 21,884
10,564
________
________
$ 51,884 $
10,564
________
________
________
________
Long-term debt consists of the following:
(In thousands) 1993 1992
8.75% Notes due May 15, 1996 $100,000
$100,000
6.0% Notes due September 15, 2003 150,000
- -
Eurocurrency Facility, varying short-term
interest rates to August 1998 68,792
- -
Industrial Development Bonds,
payable in varying amounts to 2004
with interest up to 8.25% 10,890
18,525
Project financing and other,
payable in varying amounts to 2003
with interest up to 17.92% 46,812
1,979
_______
_______
376,494
120,504
Less current maturities 11,625
663
_______
_______
$364,869
$119,841
_______
_______
_______
_______
The Revolving Credit Facility, Eurocurrency Facility and certain notes
payable agreements contain covenants restricting, among other things,
the issuance of new debt. At December 31, 1993, the Company was in
compliance with these covenants.
The maturities of long-term debt for the four years following December
31, 1994, are as follows:
(In thousands)
1995 $ 14,204 1997 $ 5,469
1996 $ 109,624 1998 $74,461
Cash payments for interest on all debt, net of capitalized interest,
were $15,165,000, $20,465,000 and $18,797,000 in 1993, 1992 and 1991,
respectively.
8. CAPITAL STOCK:
The authorized capital stock consists of 70,000,000 shares of common
stock and 4,000,000 shares of preferred stock, both having a par value
of $1.25 per share. The preferred stock is issuable in series with
terms as fixed by the Board of Directors. No preferred stock has been
issued other than the preferred stock rights for a Series A Junior
Participating Cumulative Preferred Stock distributed by the Company in
September 1987 for each outstanding share of common stock. The rights
may be exercised, under certain conditions, to purchase 1/100th share of
a new Series A Junior Participating Cumulative Preferred Stock at a
purchase price of $200. This new preferred stock has a par value of
$1.25 per share and a liquidation price of $150 per share with 400,000
shares authorized and none issued. The rights are not exercisable or
transferable apart from the common stock, until ten days after a public
announcement that a person or group has acquired 20% or more, or intends
to commence a tender offer for 25% or more of the Company's common
stock. The rights, which expire on September 28, 1997, do not have
voting power, and may be redeemed by the Company at a price of $.05 per
right at any time until the 10th business day following public
announcement that a person or group has accumulated 20% or more of the
Company's outstanding shares.
In January 1992, the Board of Directors authorized the purchase, over a
two-year period, of up to 4,000,000 shares of its common stock in
unsolicited open market or privately negotiated transactions at
prevailing market prices. Through December 31, 1993, 2,064,555 shares
of common stock had been purchased under this plan at an aggregate cost
of $73,862,000. In January 1994, the Board of Directors authorized the
purchase, over a one year period, of up to 500,000 shares of its common
stock.
Common Stock Summary
___________________________________________
Shares Treasury
Shares
Balances Issued Shares
Outstanding
December 31, 1990 31,529,118 5,306,046
26,223,072
December 31, 1991 31,576,817 5,341,200
26,235,617
December 31, 1992 31,925,423 6,545,864
25,379,559
December 31, 1993 32,114,499 7,146,698
24,967,801
9. STOCK OPTIONS:
The Company has granted stock options to officers, directors and key
employees for the purchase of its common stock under two shareholder
approved plans, one of which expired in 1985. In April 1993,
stockholders approved an increase in the number of shares that may be
issued under the plan from 1,500,000 to 2,500,000. At December 31, 1993
and 1992, 1,204,560 and 420,850 shares, respectively, were available for
granting of incentive stock options, nonqualified stock options or stock
appreciation rights. Options are granted at fair market value at date
of grant and become exercisable commencing one year later.
At December 31, 1993, options to purchase 475,738 shares were
exercisable. Changes during 1992 and 1993 in options outstanding were
as follows:
Shares Under Option Price
Option Range per Share
Outstanding, January 1, 1992 867,080 $15.75 to $32.13
Granted 215,550 31.88 to 35.44
Exercised (348,606) 15.75 to 32.13
Terminated and expired ( 46,820) 23.44 to 32.13
________
Outstanding, December 31, 1992 687,204 15.75 to 35.44
Granted 220,680 40.94 to
41.56
Exercised (189,076) 23.44 to
32.13
Terminated and expired ( 4,390) 41.56
________
Outstanding, December 31, 1993 714,418 15.75 to
41.56
________
________
During 1993 and 1992 the Company had non-cash transactions related to
stock option swaps of $1,333,000 and $2,206,000, respectively.
10. COMMITMENTS AND CONTINGENCIES:
Federal Excise Tax and Other Matters Related to the Five-ton Truck
Contract:
Subsequent to the award of the five-ton truck contract in 1986, the
Federal Excise Tax (FET) law, which was due to expire on October 1,
1988, was extended. The Company and its legal counsel consider that the
excise tax required to be paid by the extension of the law constitutes
an after-imposed tax and therefore is subject to recovery by a price
adjustment. In January 1993, the Armed Services Board of Contract
Appeals decided in favor of the Company's position, ruling that Harsco
is entitled to a price adjustment to the contract to reimburse FET paid
on vehicles that were to be delivered after October 1, 1988. The
Government filed a motion requesting the Armed Services Board of
Contract Appeals to reopen the proceedings to admit additional evidence
or alternatively to reconsider its decision. On February 25, 1994, the
Armed Services Board of Contract Appeals denied the Government's
motions. The Government may appeal these decisions to the Court of
Appeals for the Federal Circuit or renew the motions on the conclusion
of the continuing investigation described below.
As previously reported, the Company had already anticipated prevailing
on its claims and recorded as an account receivable the amount of the
FET it has paid on these vehicles of approximately $47 million, and the
related claim arising from changes in shipment destinations of
approximately $15 million. The January 1993 decision only rules upon
the Company's claim for reimbursement of the taxes paid without
establishing the specific amount of the reimbursement. Subject to the
Company prevailing against any future Government motions or appeals, the
decision will send the case back to the government contracting officer
to determine the proper amount of the price adjustment consistent with
the ruling. Under applicable law, interest also accrues on the amount
owed. Although the January 1993 decision does not directly deal with
the claim for $15 million on the related destination change issue, the
Company believes that the ruling resolves the key factual issues in that
claim in favor of Harsco as well. The Company continues to anticipate
favorable resolution with respect to both claims. Final resolution of
the issues in favor of the Company would not result in the recording of
additional income other than any interest received, but would have a
positive cash flow effect. To the extent that any portion of the FET
and related claims is not recovered, additional losses on the contract
will have to be recognized which could have a material effect on
quarterly or annual operating results.
As previously reported, the United States Attorney's Office in Detroit
has been conducting a grand jury investigation with respect to the facts
underlying the Company's claim for reimbursement of Federal Excise Tax
payments. In March 1994, the United States Attorney's Office in Detroit
advised the Company that it had made a decision to decline prosecution.
Based on this information, the Company considers the grand jury
investigation to be closed.
The Commercial Litigation Branch of the Department of Justice is
continuing to conduct a similar investigation and in addition is
examining the way the Company charges the Army for sales of certain
cargo truck models for which the Company does not pay Federal Excise
Tax. If the Government files a civil action against the Company as a
result of the civil investigation, it may seek various remedies
including forfeiture by the Company of its claims for reimbursement of
FET and related claims, treble damages, and civil penalties.
In a related matter, the Internal Revenue Service is reviewing Harsco's
position that certain cargo truck models are not taxable due to a
provision in the tax law that exempts trucks having a gross vehicle
weight of 33,000 pounds or less, and has tentatively concluded that they
appear to be taxable. If the Internal Revenue Service asserts that tax
is due on these vehicles, the total claim could be $38 million plus
interest and penalty, if any. The Company plans to vigorously contest
any such tax deficiency. Although there is risk of an adverse outcome,
the Company and its counsel believe that these trucks are not taxable.
Even if they are held to be taxable, the Company and its counsel believe
the Government would be obligated to reimburse the Company for the
majority of the tax because it would constitute an after-imposed tax
that would be subject to the ruling of the Armed Services Board of
Contract Appeals discussed above, resulting in a net maximum liability
for Harsco of $16 million plus interest and penalty, if any.
The Company has also filed or is in the process of filing other claims
relating to the five-ton truck contract in excess of $55 million (the
final amount has not yet been determined) plus interest, with respect to
contract changes, inadequate technical data package, and delays and
disruptions. No recognition of any possible recovery on these claims is
reflected in the accompanying financial statements.
M9 Armored Combat Earthmover Claim:
The Company and its legal counsel are of the opinion that the U.S.
Government did not exercise option three under the M9 Armored Combat
Earthmover (ACE) contract in a timely manner, with the result that the
unit price for options three, four and five are subject to
renegotiation. Claims reflecting the Company's position have been filed
with respect to all options purported to be exercised, which together
with other claims on this program, will be in excess of $70 million (in
excess of $60 million applies to late option exercise) plus interest.
Other than the settlement of a minor claim on this contract, amounting
to approximately $1.4 million, no recognition has been given in the
accompanying financial statements for any recovery on these claims. The
Company is awaiting a decision on its Motion for Summary Judgment
relating to the late option exercise that is now pending before the
Armed Services Board of Contract Appeals.
Government Furnished Equipment Overcharge Claim:
The Company filed a claim in the Armed Services Board of Contract
Appeals asserting that the United States Government has overcharged
Harsco in the sale of government furnished equipment on various
contracts, all of which have been completed. The Company has advised
the Government that the overpayment on these contracts is approximately
$24 million. The Government disputes the Company's position, but the
parties are exploring the possibility of settling this case and similar
issues relating to other completed contracts that are not included in
the litigation.
Other Defense Litigation:
On March 13, 1992, the U.S. Government filed the previously threatened
counterclaim against the Company in a civil suit alleging violations of
the False Claims Act and breach of a contract to supply M109A2
Self-Propelled Howitzers. The counterclaim was filed in the United
States Claims Court along with the Government's answer to the Company's
claim of approximately $5 million against the Government for costs
incurred on this contract relating to the same issue. The Government
claims breach of contract damages of $7.3 million and in addition seeks
treble that amount under the False Claims Act plus unquantified civil
penalties which the Company estimates to be approximately $3.3 million.
The Company and its counsel believe it is unlikely Harsco will incur any
material liability as a result of these claims.
Iran's Ministry of Defense has initiated arbitration procedures against
the Company under the rules of the International Chamber of Commerce for
damages allegedly resulting from breach of various contracts executed by
the Company and the Ministry of Defense between 1970 and 1978. The
contracts were terminated in 1978 and 1979 during the period of civil
unrest in Iran that preceded the Iranian revolution. Iran has asserted
a claim under one contract for repayment of a $7.5 million advance
payment it made to the Company, plus interest at 12% through June 27,
1991 in the amount of $25.3 million. Iran has also asserted a claim for
damages under other contracts for $32.1 million plus interest. The
Company intends to assert various defenses and also has filed
counterclaims against Iran for damages in excess of $7.5 million which
it sustained as a result of Iran's breach of contract, plus interest.
The Company's management and its counsel believe that it is unlikely
Harsco will incur any material liability as a result of these claims.
Environmental:
The Company is involved in a number of environmental remediation
investigations and clean-ups and, along with other companies, has been
identified as a "potentially responsible party" for certain waste
disposal sites. While each of these matters is subject to various
uncertainties, it is probable that the Company will agree to make
payments toward funding certain of these activities and it is possible
that some of these matters will be decided unfavorably to the Company.
The Company has evaluated its potential liability, and its financial
exposure is dependent upon such factors as the continuing evolution of
environmental laws and regulatory requirements, the availability and
application of technology, the allocation of cost among potentially
responsible parties, the years of remedial activity required and the
remediation methods selected. In light of developing facts, the Company
recorded additional provisions during the year 1993 in the amount of
$3,235,000, which when added to the amounts previously recorded reflect
the Company's best estimate of the costs to be incurred for remediation
and clean-ups. The liability for future remediation costs is evaluated
on a quarterly basis and it is the opinion of management that any
liability over the amounts accrued will not have a materially adverse
effect on the Company's financial position or results of operations.
Other:
The Company is subject to various other claims, legal proceedings and
investigations covering a wide range of matters that arose in the
ordinary course of business. In the opinion of management, all such
matters are adequately covered by insurance or by accruals, and if not
so covered, are without merit or are of such kind, or involve such
amounts, as would not have a materially adverse effect on the financial
position or results of operations of the Company.
11. FINANCIAL INSTRUMENTS:
Off-Balance Sheet Risk:
As collateral for performance and advances on long-term contracts and to
ceding insurers, the Company is contingently liable under standby
letters of credit and bonds in the amount of $220.1 million and $219.0
million at December 31, 1993 and 1992, respectively. These standby
letters of credit and bonds are generally in force from one to three
years for which the Company pays fees to various banks and insurance
companies that generally range from .25 to 1 percent per annum of their
face value. If the Company were required to obtain replacement standby
letters of credit and bonds as of December 31, 1993 for those currently
outstanding, it is the Company's opinion that the replacement costs for
such standby letters of credit and bonds would not significantly vary
from the present fee structure.
At December 31, 1993 and 1992, the Company had $34.6 million and $6.0
million, respectively, of forward foreign currency exchange contracts
outstanding. These contracts are part of a worldwide program to
minimize foreign currency exchange operating income and balance sheet
exposure. The unsecured contracts generally mature within 12 months and
are principally with banks. The Company is exposed to credit loss in
the event of non-performance by the other parties to the contracts. The
Company evaluates the creditworthiness of the counterparties' financial
condition and does not expect default by the counterparties.
Concentrations of Credit Risk:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash
investments, insurance related assets and accounts receivable. The
Company places its temporary cash investments ($49.3 million at December
31, 1993 and $39.1 million at December 31, 1992) and insurance related
investments ($67.8 million at December 31, 1993 and $65.4 million at
December 31, 1992) with high quality institutions and, by policy, limits
the amount of credit exposure to any one institution. Except for U.S.
and foreign government agencies, concentrations of credit risk with
respect to accounts receivable are limited, due to the large number of
customers comprising the Company's customer base and their dispersion
across many different industries and geographies. Generally, the
Company does not require collateral or other security to support
customer receivables.
Fair Value:
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable
to estimate that value:
Cash and cash equivalents -
The carrying amount approximates fair value because of the short
maturity of these instruments.
Investments -
The fair values of investments are estimated based on quoted market
prices for those or similar investments.
Long-term debt -
The fair value of the Company's long-term debt is estimated based on the
quoted market prices for the same or similar issues or on the current
rates offered to the Company for debt of the same remaining maturities.
Foreign currency exchange contracts -
The fair value of foreign currency exchange contracts (used for hedging
purposes) is estimated by obtaining quotes from brokers.
The estimated fair values of the Company's financial instruments are as
follows:
(In thousands) 1993
_________________________
Carrying Fair
Amount Value
Cash and cash equivalents $ 58,740 $
58,740
Investments:
Marketable equity securities 1,750
7,766
Other (principally classified as
insurance related assets) 69,066
67,663
Long-term debt 376,494
379,415
Foreign currency exchange contracts 34,577
34,275
12. INFORMATION BY INDUSTRY GROUP AND GEOGRAPHIC AREA:
Financial information by industry group and geographic area for
the years 1993, 1992 and 1991 is presented below:
INDUSTRY GROUP
(In millions) 1993 1992
1991
Net Sales to Unaffiliated Customers
Industrial Services and Building Products $ 395.6 $ 292.7
$ 353.7
Engineered Products 564.6 558.7
534.1
Defense 462.1 773.5
1,055.3
_______ _______
_______
Total $1,422.3 $1,624.9
$1,943.1
_______ _______
_______
_______ _______
_______
Pre-Tax Income
Group Operating Profit
Industrial Services and Building Products $ 34.9 $ 35.6
$ 33.4
Engineered Products 43.5 43.4
38.0
Defense 67.0 83.8
66.8
_______ _______
_______
Total Group Operating Profit 145.4 162.8
138.2
General corporate expense, net (8.4) (9.1)
(9.3)
Interest income, etc., net 17.8 2.2
5.8
Interest expense (20.0) (18.9)
(18.9)
Equity in net income of unconsolidated
companies 2.4 3.6
3.8
_______ _______
_______
Pre-tax income $ 137.2 $ 140.6
$ 119.6
_______ _______
_______
_______ _______
_______
Identifiable Assets
Industrial Services and Building Products $ 728.2 $ 213.8
$ 262.0
Engineered Products 271.6 247.9
239.5
Defense 265.0 353.4
314.0
_______ _______
_______
Subtotal 1,264.8 815.1
815.5
Corporate 156.9 170.9
240.1
Investments in unconsolidated companies 5.9 5.2
4.1
_______ _______
_______
Total assets $1,427.6 $ 991.2
$1,059.7
_______ _______
_______
_______ _______
_______
Depreciation
Industrial Services and Building Products $ 42.6 $ 29.8
$ 32.9
Engineered Products 15.0 14.8
12.9
Defense 11.3 11.7
11.2
Corporate .7 .8
.7
_______ _______
_______
Total depreciation $ 69.6 $ 57.1
$ 57.7
_______ _______
_______
_______ _______
_______
Capital Expenditures<F1>
Industrial Services and Building Products $ 55.1 $ 23.0
$ 24.6
Engineered Products 18.2 14.2
16.1
Defense 9.2 5.4
12.6
Corporate .9 .1
.5
_______ _______
_______
Total capital expenditures $ 83.4 $ 42.7
$ 53.8
_______ _______
_______
_______ _______
_______
[FN]
<F1> Excludes property, plant and equipment from acquired companies of
$202.2 (Industrial Services and Building Products $197.1, Engineered
Products $4.0 and Defense $1.1) in 1993, $16.5 (Engineered Products) in
1992 and $2.9 (Industrial Services and Building Products) in 1991.
Identifiable assets are those assets used in each Group. Corporate
assets include cash, short-term investments, insurance related assets,
prepaid pension costs and deferred taxes. There are no significant
intergroup sales.
GEOGRAPHIC AREA
(In millions) 1993 1992
1991
Net Sales to Unaffiliated Customers
United States $1,181.0 $1,468.1
$1,799.1
Europe 140.9 92.3
89.2
All Other 100.4 64.5
54.8
_______ _______
_______
Total $1,422.3 $1,624.9
$1,943.1
_______ _______
_______
_______ _______
_______
Geographic Operating Profit
United States $ 133.1 $ 146.3
$ 120.7
Europe 11.7 13.3
13.0
All Other .6 3.2
4.5
_______ _______
_______
Total $ 145.4 $ 162.8
$ 138.2
_______ _______
_______
_______ _______
_______
Identifiable Assets
United States $ 655.8 $ 708.8
$ 702.5
Europe 376.6 61.5
62.9
All Other 232.4 44.8
50.1
_______ _______
_______
Total $1,264.8 $ 815.1
$ 815.5
_______ _______
_______
_______ _______
_______
Export Sales and Major Customer Information:
*Export sales from the United States $ 343.5 $ 585.4
$ 533.5
_______ _______
_______
_______ _______
_______
*Sales to U.S. Government agencies,
principally by Defense Group $ 303.3 $ 563.6
$ 860.1
_______ _______
_______
_______ _______
_______
* Includes Foreign Military Sales through U.S. Government agencies of
$137.9, $279.3 and $270.8 in 1993, 1992 and 1991, respectively.
13. SUBSEQUENT EVENT - FORMATION OF DEFENSE BUSINESS PARTNERSHIP:
On January 28, 1994, FMC Corporation and Harsco Corporation announced
the completion of the joint venture, that was first announced in
December 1992, to combine FMC's Defense Systems Group and Harsco's
BMY-Combat Systems Division. The new partnership is known as United
Defense, L.P., and is effective January 1, 1994. United Defense, L.P.
is jointly owned, with FMC holding an interest of 60 percent and Harsco
holding 40 percent. FMC is the managing general partner, and Harsco is
a limited partner. United Defense, L.P. expects to achieve annual sales
of about $1 billion in 1994. Harsco's capital contribution to the
Partnership consists of $29,600,000, which includes $5,200,000 in cash.
The Partnership has an Advisory Committee comprised of ten individuals,
six appointed by FMC and four appointed by Harsco which considers and
discusses Partnership issues. FMC as the managing general partner
exercises management control over the Partnership subject to Harsco's
right to consent to certain actions delineated in the Partnership
Agreement. Additionally, the Partnership Agreement contains certain
exit rights for both Partners any time more than 25 months after the
formation of the Partnership including the right of Harsco to sell its
interest to the partnership (payable by a promissory note from the
Partnership) based upon a calculation of 95% of appraised value, and the
right of FMC or the partnership to buy Harsco's interest (payable in
cash) based upon a calculation of 110% of appraised value. Appraised
value is substantially the fully distributed public equity trading value
of the Partnership as determined by three investment banking firms in
accordance with certain contractual stipulations, multiplied by Harsco's
percentage interest in the Partnership. The Partnership Agreement
provides for certain special capital account allocations and cash
distributions, but otherwise allocates and distributes income in
proportion to the partners' percentage ownership. Harsco has retained
the rights and liabilities associated with certain legal issues
described in Note 10 related to BMY-Combat System Division.
United Defense, L.P. will primarily produce the Bradley Fighting
Vehicle, Armored Gun System, M109 Paladin Self-propelled Howitzer,
Multiple Launch Rocket System, M88A1 and M88IRV Recovery Vehicles, M9
Armored Combat Earthmover, M992 Field Artillery Ammunition Support
Vehicle, the Breacher and M113 Armored Personnel Carrier. The
Partnership also makes naval guns and launching systems, military track
for armored vehicles, and provides overhaul and conversion, as well as
coproduction, training and logistics support.
Harsco will account for its investment on the equity method.
Accordingly, Harsco's investment will be reported as investments in
unconsolidated companies on its balance sheet and its proportionate
share of the Partnership operating results will be reflected as equity
in net income of unconsolidated companies in the Statement of Income.
The following amounts related to the business contributed are included
in Harsco's financial statements as of and for the year ended December
31, 1993.
Sales $347,958,000
Profit from operations 64,054,000
Assets 150,015,000
Liabilities 120,415,000
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Harsco Corporation:
We have audited the accompanying consolidated balance sheets of Harsco
Corporation and Subsidiary companies as of December 31, 1993 and 1992,
and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the three years in the period ended December
31, 1993. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Harsco Corporation and Subsidiary Companies as of December 31, 1993 and
1992, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 1993
in conformity with generally accepted accounting principles.
As discussed in Note 10 to the consolidated financial statements, the
Company is involved in various disputes regarding Federal Excise Tax and
other contract matters primarily relating to the five ton truck
contract. Also, the Company has filed or is in the process of filing
various claims against the Government relating to certain contracts.
The ultimate outcome of these matters cannot presently be determined.
Accordingly, no provision for such potential additional losses or
recognition of possible recovery from such claims (other than relating
to the "after-imposed" Federal Excise Tax and related claims) has been
reflected in the accompanying financial statements.
As discussed in Notes 1, 5 and 6 to the consolidated financial
statements, the Company changed its method of accounting for income
taxes in 1993, and its method of accounting for postretirement benefits
other than pensions in 1992.
Philadelphia, Pennsylvania
February 1, 1994, except as to
the first and third paragraphs
of Note 10, for which the dates
are February 25, 1994 and
March 4, 1994, respectively.
MANAGEMENT'S DISCUSSION
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition
Cash provided by operating activities was $232.2 million for the year
1993, reflecting among other things, a $66.6 million decrease in
receivables due principally to the completed contract for five-ton
trucks, and a $13.7 million increase in advance deposits on long-term
contracts. Included in the Defense Group receivables is $62.4 million
for amounts expended, or income not received, related to the Federal
Excise Tax (FET) and related claims for the completed five-ton truck
contract. Final resolution of the FET and related claims in favor of
the Company would not result in the recording of additional income other
than any interest received, but would have a positive cash flow effect.
To the extent that any portion of the FET and related claims is not
recovered, additional losses on the contract will have to be recognized,
but there would be little impact on cash outflows.
Cash used by investing activities includes $327.5 million for the
purchase of MultiServ International, N.V., an international leader in
metal reclamation and specialized steel mill services; $7.5 million for
the purchase of Electroforjados Nacionales, S.A. de C.V. (ENSA) a
manufacturer of grating products, and $2.1 million for the purchase of
certain assets of the Wayne Corporation, a manufacturer of school buses.
Investment activity also includes capital expenditures of $83.4 million
and $22.6 million of proceeds from the partial sale of an equity
investment. Cash flow from financing activities includes the issuance
of $150 million of Harsco 6% 10-year Notes used to repay a portion of
the $250 million borrowing under the bank credit facility for the
purchase of MultiServ. The long-term debt reduction is principally due
to the early call of $7.5 million of industrial development bonds due
2003. Cash expended under financing activities included $36.3 million
for the repurchase of the Company's common stock under a plan approved
by the Board of Directors in January 1992 to purchase up to 4,000,000
shares over a two-year period, and $35.1 million of cash dividends paid
on common stock. Cash and cash equivalents increased $8.4 million to
$58.7 million at December 31, 1993.
Due to the acquisition of MultiServ the Company recognized non-cash
transactions of $12.0 million with the issuance of Harsco treasury stock
and the assumption of $39.1 million of project financing debt. Also, as
a result of the adoption of Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (SFAS 109), effective January 1,
1993, the Company recognized a non-cash cumulative benefit of $6.8
million, as reported in the Statement of Income.
Other matters which could significantly affect cash flows in the future
are discussed in the financial statements under Note 10, "Commitments
and Contingencies" and Note 13 "Subsequent Event - Formation of Defense
Business Partnership."
Harsco continues to maintain a good financial position with net working
capital of $182.8 million, down from the $316.9 million at December 31,
1992 due to the additional liabilities assumed and cash expended for the
MultiServ acquisition. Current assets amounted to $600.1 million, and
current liabilities were $417.3 million, resulting in a current ratio of
1.4 to 1, lower than the 2.1 to 1 at year-end 1992. With total debt at
$428.4 million and equity at $523.1 million at December 31, 1993, the
total debt as a percent of capital was 45.0% compared with 20.9% at
December 31, 1992.
The stock price range during 1993 was 45 - 35. Harsco's book value per
share at December 31, 1993 was $20.95, compared with $19.51 at year-end
1992. The Company's return on equity for 1993 was 17.3%, compared with
17.2% in 1992. The return on assets, excluding the cumulative effect of
the accounting changes, was 13.4% compared with the 15.2% for 1992.
The Company has available through a group of banks a $150 million 364
day revolving line of credit and a $150 million multi-currency five-year
term line of credit of which $30.0 million and $68.8 million,
respectively, have been used at year-end. Harsco's outstanding notes
are rated A by Standard & Poor's and Baa1 by Moody's.
As indicated by the above, the Company's financial position and debt
capacity should enable it to meet its current and future requirements.
As additional resources are needed, Harsco should be able to obtain
funds at competitive costs.
RESULTS OF OPERATIONS
1993 Compared with 1992
Sales for the year were $1.4 billion, down 12% from 1992. The decrease
is due principally to lower sales of five-ton trucks in the Defense
Group, reflecting reduced production levels in 1993 and completion of
most contracts at midyear. Also contributing to the sales decline were
lower sales of tracked vehicles in the Defense Group, gas control and
containment equipment, and grating. The decline in sales also included
the divestiture of a division and a product line in the first quarter of
1992. These declines were partially offset by sales arising from
acquisitions in 1993, principally MultiServ International, N.V., as well
as an acquisition made in June 1992. Higher sales were recorded for
pipe fittings, process equipment and scaffolding equipment.
Cost of sales decreased at a rate greater than revenues, due principally
to improvement in profit margins on sales of tracked vehicles in the
Defense Group and the favorable impact of profit improvement measures,
including the divestiture of an unprofitable division and a marginally
profitable operation in the first quarter of 1992. Selling and
administrative expenses increased, as a result of the inclusion of
acquired companies which more than offset lower costs associated with
sales in the Defense Group and the collection of previously reserved bad
debts related to discontinued operations.
Profit from operations was lower than last year. Unfavorably affecting
profits were significantly lower results for wheeled vehicles in the
Defense Group, which includes start-up costs associated with the
recently acquired school bus business. Also, earnings were lower in
1993 for metal reclamation and specialized mill services due to start-up
costs at certain locations, particularly Mexico and weaker economic
conditions in Europe, which also contributed to lower earnings for gas
control and containment equipment. On a comparative basis, income was
unfavorably affected in 1993 by larger provisions for facilities
discontinuances compared with a smaller net charge in 1992 which
included profits related to the divestitures of the Company's
unprofitable plastic pipe division and its marginally profitable
hydraulic tool product line. Higher earnings in 1993 were recorded for
tracked vehicles in the Defense Group, and to a lesser extent, for pipe
fittings.
Income benefited significantly from a $17.6 million pre-tax gain ($10.7
million after-tax, $.43 per share) on the sale of a substantial portion
of an equity investment. Interest expense increased, due to the debt
incurred in conjunction with the acquisition and operations of
MultiServ, International, N.V. which was partially offset by lower
interest expense due to the payment of $82.5 million of other nonrelated
debt during the last nine months of 1992. The effective income tax rate
of 41% in 1993 was up from 35% in 1992, due to higher tax rates
associated with international operations and nondeductibility of certain
costs related to the recent acquisition of MultiServ, as well as the
recently enacted U.S. Federal tax legislation that increased the
corporate income tax rate.
Net income of $87.6 million, a record, which included a $6.8 million
noncash reduction of income taxes ($.27 per share) to reflect the
adoption, effective January 1, 1993, of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," was up from
last year which included a $7.2 million non-cash, after-tax charge ($.27
per share) to reflect the adoption of Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions." 1992 also included after-tax profit of $2.3
million ($.09 per share) from the divestiture of the Company's plastic
pipe division and hydraulic tool product line.
The Industrial Services and Building Products Group recorded sales of
$395.6 million which were 35% above those for 1992, due to the
acquisition of MultiServ International, N.V. Sales for the Engineered
Products Group, at $564.6 million, were slightly above 1992, reflecting
reduced demand in gas control and containment equipment, and grating
which was more than offset by higher volume in railway maintenance
equipment due to an acquisition made in June 1992 and increased sales in
pipe fittings. Sales for the Defense Group, at $462.1 million, were
well below the level for the prior year's similar period, reflecting the
completion of most contracts for five-ton trucks at midyear and, to a
lesser extent, lower sales for tracked vehicles.
Operating profit for the Industrial Services and Building Products Group
was slightly below last year, due principally to reduced earnings from
metal reclamation and specialized mill services, which experienced
weaker demand from economic conditions in Europe and start-up costs at
several locations. Results for 1992 included a modest profit on the
sale of an unprofitable division. The Engineered Products Group's
operating profit approximated 1992. Results for 1992 included a modest
profit on the sale of a marginal product line. The Defense Group posted
an operating profit of $67.0 million, significantly below 1992, due to
completion of most contracts for five-ton trucks at midyear. Higher
earnings were recorded for tracked vehicles, which reflected improvement
in margins.
RESULTS OF OPERATIONS
1992 Compared with 1991
Sales for the year were $1.62 billion versus $1.94 billion for 1991.
The decrease is due to lower sales of five-ton trucks in the Defense
Group, reflecting the previously announced reduced production levels.
Also contributing to the sales decline was the divestiture of a division
and a product line in the first quarter of 1992, as well as lower sales
of grating, scaffolding equipment, and process equipment which continue
to be affected by weaknesses in the economy. These declines were
partially offset by increased sales recorded for tracked vehicles in the
Defense Group, railway maintenance equipment, gas control and
containment equipment, metal reclamation and specialized steel mill
services, roofing granules and slag abrasives, and the inclusion of
product sales from an acquisition made in the second quarter of 1992.
Cost of sales decreased at a rate greater than revenues, due to the
improvement in profit margins of five-ton truck sales, lower charges in
1992 for product liability insurance, and the favorable impact of profit
improvement measures, including divestitures of a loss and a marginally
profitable operation. Selling and administrative expenses increased as
a result of higher costs associated with sales in the Defense Group and
the inclusion of an acquisition in 1992. The higher costs, however,
were partially offset by the divestiture of certain operations, lower
compensation costs, and decreased commissions.
Profit from operations was significantly higher than that for the
comparable period last year. Favorably affecting profits were improved
results for both tracked vehicles and wheeled vehicles in the Defense
Group. On a comparative basis, results were favorably affected by
certain nonrecurring expenses incurred in 1991 in conjunction with the
Company's unsuccessful bid on a contract for initial production of the
Family of Medium Tactical Vehicles with the U.S. Government, as well as
abnormally high charges for product liability insurance, which were
recorded particularly in the fourth quarter of 1991. Also contributing
to the increase in profits were higher levels of income for railway
maintenance equipment, metal reclamation and specialized steel mill
services, and roofing granules and slag abrasives, as well as lower net
expenses for facility discontinuances, due principally to profits
related to the divestiture of the Company's plastic pipe division and
the hydraulic tool product line. Earnings benefited from income arising
from an acquisition in the second quarter of 1992. Grating and pipe
fittings recorded lower income in 1992.
Interest income decreased, due to lower investment rates available for
funds. Interest expense approximated the amount recorded in 1991.
Equity in net income of unconsolidated companies decreased as a result
of discontinuing operations at a foreign location. The effective income
tax rate of 35% in 1992 was down from 36% in 1991, due to utilization of
tax loss carryforwards at a foreign subsidiary, and benefits related to
export sales. Net income, after a $7.2 million one-time, non-cash
after-tax charge for the effect of an accounting change, to adopt
Statement of Financial Accounting Standards No. 106, was $84.3 million,
a record, up 10% from last year's record, as a result of the foregoing.
Earnings for the first quarter of 1992 have been restated by $.27 per
share to reflect the additional expense associated with Financial
Accounting Standard No. 106, which was adopted retroactive to January 1,
1992.
The Industrial Services and Building Products Group had sales of $292.7
million, versus $353.7 million for 1991. This decrease resulted from
the divestiture of an unprofitable division in the first quarter of
1992. Engineered Products sales of $558.7 million, which included sales
from an acquisition made in the second quarter of 1992, were slightly
higher than last year. Sales in the Defense Group were $773.5 million
versus $1.1 billion for 1991, as a result of decreased sales of five-ton
trucks, which more than offset a sizable increase in sales of tracked
vehicles.
Operating profit for the Industrial Services and Building Products Group
was $35.6 million versus $33.4 million for last year. The increase
reflects improvement in metal reclamation and specialized steel mill
services, as well as the inclusion in 1992 of a modest profit on the
sale of a division which operated at a loss in 1991. Operating profit
for the Engineered Products Group was up from last year's performance.
The improvement is due to income arising from an acquisition during the
second quarter of 1992, the inclusion in 1992 of profit from the
divestiture of a product line, and lower costs in 1992 than the
abnormally high charges for product liability insurance recorded in
1991. The Defense Group's operating profit was significantly above last
year, as a result of higher levels of profits on sales of five-ton
trucks and tracked vehicles, as well as the inclusion in 1991 of certain
nonrecurring expenses incurred in conjunction with the Company's
unsuccessful bid on a contract for initial product of the Family of
Medium Tactical Vehicles with the U.S. Government.
RESULTS OF OPERATIONS
1991 Compared with 1990
The Company reached final agreement in September with the U.S.
Government on prices of M939A2 five-ton trucks under an order received
in February 1991. As a result of the agreement, Harsco recorded pre-tax
income of $21.7 million ($.52 per share after-tax) for five-ton trucks
sold through December 31, 1991. Based on the current estimated
cost-to-complete the contract, the income recorded through December 31
represents approximately 93% of the total income that Harsco expected to
record as a result of the February order, with the balance of the income
to be recorded in 1992. Through exercise of options, since February
1991, the Company received orders for 3,368 additional trucks, of which
approximately one-third had been sold as of December 31, 1991. These
sales had been recorded on an estimated basis pending completion of
negotiations of the selling prices with the U.S. Army.
Sales for the year of $1.9 billion, a record, were up 10% from 1990.
Sales of five-ton trucks in the Defense Group were significantly higher.
Demand for tracked vehicles in the Defense Group, process equipment,
slag abrasives, composite products and grating also exceeded levels
recorded in 1990. Also contributing to the sales gain was the inclusion
of product sales from acquisitions. These gains more than offset the
divestiture of certain operations, decreased sales of scaffolding
equipment, plastic products and reduced demand for several product
classes, including metal reclamation and specialized steel mill
services, gas control and containment equipment, railway maintenance
equipment, as well as pipe fittings.
As a result of the weakness in the economy, not all of the cost of sales
increases could be passed on to customers, resulting in an adverse
impact on profit margins which were also unfavorably affected by
abnormally high charges for product liability and workmen's compensation
insurance costs, particularly in the fourth quarter of 1991. Selling
and administrative expenses decreased, as a result of lower professional
fees and divesting of operations, which more than offset higher
compensation and pension costs.
Profit from operations approximated that for the comparable period in
1990, despite the continued effects of the economic slowdown and
abnormally high charges for product liability and workmen's compensation
insurance costs. Substantial decreases in profit in several product
classes in both the Industrial Services and Building Products and the
Engineered Products Groups were more than offset by positive
developments in the Defense Group, as discussed above. On a comparative
basis, lower profits in the Industrial Services and Building Products
Group also reflected the inclusion in 1990 of a gain from the sale of a
division.
The increase in interest expense, resulting primarily from the issuance
of $100.0 million principal amount of five-year Notes in May 1991 was
more than offset by the increase in interest income. Equity in net
income of unconsolidated companies increased as a result of Tactical
Truck Corporation, the former joint venture company developing and
testing a new series of medium tactical trucks for the U.S. Armed
Forces, becoming a wholly-owned subsidiary in early March 1991;
subsequent to that date, expenditures by Tactical Truck Corporation are
reflected as operating expenses in the Defense Group. Other income
benefitted in 1990 from a gain arising from the disposal of certain
fixed assets at a foreign subsidiary. The effective income tax rate
decreased to 36.0% in 1991, down from 37.3% in 1990, due principally to
book and tax differences on operations sold in the prior year and
favorable tax adjustments. Net income of $76.5 million, a record, was
up 6% from last year's record of $72.5 million, as a result of the
foregoing.
The Industrial Services and Building Products Group recorded sales of
$353.7 million, 10% below last year's performance, reflecting the
adverse impact of low levels of production in the domestic steel
industry and the stagnant U.S. construction market. Also contributing
to the decrease in sales was the divestiture of a division in the first
quarter of 1990. Engineered Products had sales of $534.1 million,
slightly below last year's sales for the comparable period. Revenues in
the Defense Group were $1.1 billion, a 30% increase over 1990, due
principally to increased sales of five-ton trucks.
Operating profit for the year for the Industrial Services and Building
Products Group was significantly below the comparable period last year.
The decrease reflects market weaknesses for products in the Group as
discussed above, as well as the inclusion in 1990 of a gain on the sale
of a division. Operating profit for the Engineered Products Group in
1991 was also significantly below last year's performance, reflecting
market weaknesses for gas control and containment equipment and pipe
fitting products, as well as the unfavorable impact of abnormally high
product liability and workmen's compensation insurance costs. The
Company's Defense Group showed substantial improvement in operating
profit, due principally to the profit on the five-ton truck program.
The Defense Group also benefited from higher levels of profits on sales
of tracked vehicles.
SELECTED FINANCIAL DATA FOR THE YEARS 1989 THROUGH 1993
<TABLE>
<CAPTION>
1993<F4> 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net Sales $ 1,422,308 $ 1,624,939 $ 1,943,083 $ 1,759,507 $ 1,351,213
Operating Expenses 1,295,148 1,477,217 1,821,614 1,637,669 1,322,170
Income from Operations 127,160 147,722 121,469 121,838 29,043
Interest Expense 19,974 18,882 18,925 17,506 16,412
Other Income 29,965 11,736 17,103 11,255 9,542
Provision for Income Taxes 56,335 49,060 43,104 43,083 10,811
Net Income 80,816<F1> 91,516<F2> 76,543 72,504 11,362
Return on Net Sales 5.7%<F1> 5.6%<F2> 3.9% 4.1% 0.8%
Return on Average Equity 17.3% 17.2% 16.9% 17.5% 2.8%
Return on Average Assets 13.4%<F1> 15.2%<F2> 13.5% 13.1% 4.1%
FINANCIAL DATA
Shareholders' Equity 523,084 495,103 479,726 437,111 394,480
Cash Dividends Declared 34,946 34,598 32,319 31,463 31,464
Depreciation 69,558 57,064 57,664 56,574 56,229
Capital Expenditures 83,395 42,720 53,846 71,127 67,613
Cash Provided by Operating Activities 232,220 108,134 151,485 63,635 129,547
Working Capital 182,756 316,918 284,699 226,522 211,130
Current Ratio 1.4:1 2.1:1 1.8:1 1.6:1 1.5:1
Total Assets 1,427,612 991,225 1,059,708 990,960 978,200
Cost in Excess of Net Assets of
Businesses Acquired 221,082 13,527 15,066 16,627 16,129
Long-term Debt 364,869 119,841 120,451 122,695 127,344
Total Debt 428,378 131,068 221,652 170,732 151,175
Percent of Total Debt to Capital 45.0% 20.9% 31.6% 28.1% 27.7%
PER SHARE DATA
Net Income 3.23<F1> 3.52<F2> 2.91 2.77 .43
Shareholders' Equity 20.95 19.51 18.29 16.67 15.05
Cash Dividends Declared 1.40 1.34 1.23 1.20 1.20
Price/Earnings Ratio, High-Low 13-10 12-9 10-8 10-6 72-52
Market Price of Common Stock
High - Low, by Quarter
1st 45-36 7/8 39 1/2-27 3/4 27 3/4-22/34 28 3/4-21 1/8 29 1/2-24 1/4
2nd 44 1/2-35 38-33 5/8 30 3/8-25 1/4 26 1/2-22 5/8 27-23 7/8
3rd 44 5/8-37 1/2 37 5/8-28 29 5/8-26 3/4 24 1/2-20 1/4 26 3/4-22 1/2
4th 43 3/8-39 1/4 38 3/4-28 1/8 30 1/8-23 5/8 26 1/4-17 3/4 31 1/8-23
Dividends Paid, by Quarter
1st .35 .33 .30 .30 .30
2nd .35 .33 .30 .30 .30
3rd .35 .33 .30 .30 .30
4th .35 .33 .30 .30 .30
OTHER INFORMATION
Average Number of Shares Outstanding 25,036,893 25,966,755 26,278,384 26,217,027 26,261,017
Number of Shareholders of Record 8,069 8,415 8,767 9,308 9,620
Number of Employees 14,200 9,600 10,500 10,300 11,200
Backlog $ 146,751<F3> $ 738,978 $ 1,229,688 $ 1,197,126 $ 1,538,331
<FN>
<F1> Excludes cumulative effect of change in method of accounting for
income taxes, which increased net income by $6.8 million, ($.27 per
share).
<F2> Excludes cumulative effect of change in method of accounting for
postretirement benefits other than pensions, which decreased net income
by $7.2 million, ($.27 per share).
<F3> Excludes $397.9 million contributed to United Defense, L.P.
<F4> Includes MultiServ International, N.V. since date of acquisition.
</TABLE>
THREE-YEAR SUMMARY OF QUARTERLY RESULTS
(All dollars in millions, except per share)
1993 First Second Third
Fourth
Net Sales $ 345.8 $ 354.6 $ 314.9 $
407.0
Profit from Operations 31.3 36.3 27.9
31.7
Net Income 31.0 22.2 18.3
16.1
Net Income per Common Share 1.22 .89 .74
.65
1992 First Second Third
Fourth
Net Sales $ 408.1 $ 386.8 $ 415.9 $
414.1
Profit from Operations 35.4 30.7 43.5
38.1
Net Income 13.6 18.8 26.8
25.1
Net Income per Common Share .52 .72 1.03
.98
1991 First Second Third
Fourth
Net Sales $ 454.5 $ 454.5 $ 447.8 $
586.3
Profit from Operations 22.1 21.7 39.4
38.3
Net Income 12.0 12.1 25.2
27.2
Net Income per Common Share .46 .46 .96
1.03
Notes:
- - The first quarter of 1993 includes the cumulative effect of the
adoption of SFAS 109 for Accounting for Income Taxes (see Notes 1 and 5
to consolidated financial statements) which increased net income by $6.8
million ($.27 per share) and the after-tax gain of $5.4 million ($.21
per share) on the partial sale of an investment.
- - The first quarter of 1992 includes the cumulative effect of the
adoption of SFAS 106 for Postretirement benefits (see Notes 1 and 6 to
consolidated financial statements) which decreased first quarter
after-tax income by $7.2 million ($.27 per share).
- - The third quarter of 1993 includes the after-tax gain of $5.3 million
($.22 per share) on the partial sale of an investment.
- - The third quarter of 1992 reflects $12 million of pre-tax income
($.30 per share after tax) due to final agreement with the U.S.
Government on prices for five-ton trucks sold through September 30, 1992
and the third quarter of 1991 reflects $13.8 million of pre-tax income
($.33 per share after tax) due to final agreement with the U.S.
Government on prices for five-ton trucks sold through September 30,
1991.
- - The fourth quarters of 1993, 1992 and 1991 reflect after tax LIFO
income of $1.4 million, $4.8 million, and $1.4 million, respectively,
representing final determination of price changes and liquidations of
inventories which occurred during the year.
- - The fourth quarters of 1993, 1992 and 1991 reflect reduction in
income taxes of $1.1 million and $2.2 million, and $2.6 million,
respectively, resulting from final determination of income taxes to be
provided for the year.
HARSCO CORPORATION
Subsidiaries of the Registrant:
<TABLE>
<CAPTION>
Country of
Ownership
Name Incorporation
Percentage
______________________________________________ _____________
__________
<S> <C>
<C>
MultiServ SAIC Argentina
100%
MetServ (Australia) Pty. Ltd. Australia
70%
MetServ Victoria Pty. Ltd. Australia
70%
MetServ Pty. Ltd. Australia
55%
Harsco (Australia) Pty. Limited Australia
100%
Tamper (Australia) Pty. Limited Australia
100%
Taylor-Wharton (Australia) Pty. Limited Australia
100%
WRG MultiServ GmbH Austria
90%
MultiServ S.A. Belgium
100%
MultiServ Russia S.A. Belgium
100%
Loyquip Holdings S.A. Belgium
100%
Societe D'Etudes et D'Administration
des Enterprises S.A. Belgium
100%
Somafer Benelux Interim S.A. Belgium
100%
Finauxa S.A. Belgium
100%
Fortuna Insurance Limited Bermuda
100%
Harsco (Bermuda) Limited Bermuda
100%
Sociedade Brasileria de Recuperacao
de Metals (Sobremetal) Ltda Brazil
100%
MultiServ Recuperacao de Metals Ltda Brazil
100%
Comercio de Rejeitos Industriais Ltda Brazil
100%
Harsco Canada Limited Canada
100%
Heckett Technology Services Canada, Inc. Canada
100%
MultiServ S.A. Chile
100%
MultiServ Wuhan Ltd. China
100%
MultiServ Jiangxi Ltd. China
100%
EnviroServ Co. Ltd. China
30%
MultiServ s r.o. Czech Republic
100%
MultiServ Holding S.A. France
100%
Floyequip S.A. France
100%
MultiServ S.A. France
100%
ASVID S.A. France
100%
Chimimeca S.A. France
100%
PyroServ France
100%
MultiServ Rhone Alpes SNC France
100%
Societe Francais D'Interim S.A. France
100%
MultiServ Est SNC France
100%
MultiServ Sud S.A. France
100%
MultiServ Nord SNC France
100%
MultiServ GmbH Germany
100%
Harsco GmbH Germany
100%
Ferro Scrap Nigam Ltd. India
40%
P.T. Purna Baja Heckett Indonesia
40%
Axil International Ltd. Ireland
100%
IMS Servizi Spa Italy
100%
MultiServ Spa Italy
100%
ILSERV Italy
65%
Luxequip Holdings S.A. Luxembourg
100%
MultiServ S.A. Luxembourg
100%
Societe Luxembourgoiese D'Interim S.A. Luxembourg
100%
IKG-Salcon SDN. BHD. Malaysia
50%
Taylor-Wharton Asia (M) SDN. BHD. Malaysia
70%
Irving, S.A. de C.V. Mexico
100%
Heckett Mexicana, S.A. de C.V. Mexico
100%
Andamios Patentados, S.A. de C.V. Mexico
100%
Servicios Industriales Siderurgicos,
S.A. de C.V. Mexico
100%
Electroforjados Nacionales, S.A. de C.V. Mexico
100%
Nutter-Niro Ingenieria S.A. de C.V. Mexico
49%
MultiServ International N.V. Netherlands
100%
MultiServ Finance B.V. Netherlands
100%
MultiServ China B.V. Netherlands
100%
MultiServ Far East B.V. Netherlands
100%
Harsco Europa B.V. Netherlands
100%
Heckett (Holland) B.V. Netherlands
100%
MultiServ AS Norway
100%
Heckett Saudi Arabia Limited Saudi Arabia
55%
MultiServ Slovensko s r.o. Slovakia Republic
100%
FerroServ (Pty.) Limited South Africa
100%
FerroServ Operations (Pty.) Ltd. South Africa
100%
Heckett (South Africa)(Pty.) Ltd. South Africa
50%
MultiServ Lycrete S.A. Spain
95%
Serviequipo S.A. Spain
95%
MultiServ Intermetal S.A. Spain
100%
MultiServ Iberica S.A. Spain
100%
Heckett Reclamet S.A. Spain
100%
MultiServ Nordiska AB Sweden
100%
MultiServ AB Sweden
100%
MultiServ International plc U.K.
100%
MultiServ Ltd. U.K.
100%
MultiServ Overseas Ltd. U.K.
100%
Quipco Ltd. U.K.
100%
Axlebourne Ltd. U.K.
100%
Harsco (U.K.) Ltd. U.K.
100%
The Permanent Way Equipment
Company Limited U.K.
100%
Combat Engineering Limited U.K.
100%
A. L. Hughes Heating Engineers Limited U.K.
100%
Insulation Equipments Limited U.K.
100%
Tamper Corp. (U.K.) Limited U.K.
100%
Heckett International Services Limited U.K.
100%
Heckett Limited U.K.
100%
MultiServ Inc. U.S.A.
100%
MultiServ U.S. Corp. U.S.A.
100%
MultiServ Operations Ltd. U.S.A.
100%
IMS General Corp. U.S.A.
100%
MultiServ Intermetal Inc. U.S.A.
100%
Heckett Technology Services Inc. U.S.A.
100%
Harsco Investment Corporation U.S.A.
100%
Harsco Tamper Acquisition Corporation U.S.A.
100%
Tactical Truck Corporation U.S.A.
100%
Harsco Foreign Sales Corporation U.S. Virgin Islands
100%
MultiServ MV + MS Venezuela
100%
Heckett Yugoslavia Ltd. Yugoslavia
100%
</TABLE>
Companies in which Harsco Corporation does not have majority ownership
are not consolidated and are omitted because in the aggregate they would
not constitute a significant subsidiary.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the following
Registration Statements of Harsco Corporation and subsidiary companies
of our reports dated February 1, 1994 except as to the first and third
paragraphs of Note 10, for which the dates are February 25, 1994 and
March 4, 1994, respectively on our audits of the consolidated financial
statements and consolidated financial statement schedules of Harsco
Corporation as of December 31, 1993 and 1992 and for each of the three
years in the period ended December 31, 1993. Our reports, which include
explanatory paragraphs regarding (i) uncertainties concerning the
Company's involvement in various disputes regarding Federal Excise Tax
and other contract matters primarily relating to the five-ton truck
contract and the ultimate outcome of the Company's claims against the
Government relating to certain contracts and (ii) changes in the
Company's method of accounting for income taxes and postretirement
benefits other than pensions, appear on page 56 of the Company's Annual
Report to Shareholders and under Item 14(a) 2 on page 28 of this Annual
Report on Form 10-K:
- - Post Effective Amendment No. 6 to Form S-8 Registration Statement
(Registration No. 2-57876), effective May 21, 1982.
- - Post Effective Amendment No. 2 to Form S-8 Registration Statement
(Registration No. 33-5300), dated March 26, 1987.
- - Form S-8 Registration Statement (Registration No. 33-14064), dated
May 6, 1987.
- - Amendment No. 2 to Form S-8 Registration Statement (Registration No.
33-24854), dated October 31, 1988.
COOPERS & LYBRAND
Philadelphia, Pennsylvania
March 28, 1994
