<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 1994
REGISTRATION NO. 33-51663
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
AMETEK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-4923320
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
STATION SQUARE
PAOLI, PENNSYLVANIA 19301
(215) 647-2121
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ALLAN KORNFELD
EXECUTIVE VICE PRESIDENT--CHIEF FINANCIAL OFFICER
AMETEK, INC.
STATION SQUARE
PAOLI, PENNSYLVANIA 19301
(215) 647-2121
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
David L. Finkelman, Esq. Alan J. Sinsheimer, Esq.
STROOCK & STROOCK & LAVAN SULLIVAN & CROMWELL
Seven Hanover Square 125 Broad Street
New York, New York 10004-2696 New York, New York 10004-2498
(212) 806-5400 (212) 558-4000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
----------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 25, 1994
$150,000,000
LOGO OF AMETEK, Inc.
% SENIOR NOTES DUE 2006
-----------
Interest on the Notes is payable on and of each year, commencing
, 1994. The Notes are redeemable at the option of the Company, in whole or
in part, at any time on or after , 1999, at the redemption prices set forth
herein, plus accrued interest to the date of redemption. The Company is
required to offer to purchase all outstanding Notes at 101% of their principal
amount, plus accrued interest to the date of purchase, in the event of a Change
of Control. The Notes will be issued only in registered form in denominations
of $1,000 and integral multiples thereof. See "Description of the Notes."
The Notes have been approved for listing on the New York Stock Exchange,
subject to notice of issuance.
The proceeds of this offering, together with borrowings under the Company's
new secured credit agreement and available cash, will be used (a) to retire
existing debt of the Company, (b) to repurchase outstanding shares of the
Company's Common Stock for an aggregate purchase price of up to $150 million
and (c) to pay fees and expenses related to the sale of the Notes offered
hereby and the Company's new secured credit agreement. See "Use of Proceeds."
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE NOTES.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT (2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per Note.......................... % % %
Total............................. $ $ $
</TABLE>
- -------
(1) Plus accrued interest, if any, from , 1994.
(2) The Company has agreed to indemnify Goldman, Sachs & Co. against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting estimated expenses of $ payable by the Company.
-----------
The Notes are offered by Goldman, Sachs & Co., as specified herein, subject
to receipt and acceptance by them and subject to their right to reject any
order in whole or in part. It is expected that the Notes will be ready for
delivery in New York, New York on or about , 1994.
GOLDMAN, SACHS & CO.
-----------
The date of this Prospectus is , 1994.
<PAGE>
AVAILABLE INFORMATION
AMETEK, Inc. (the "Company" or "Ametek") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices located at Seven World
Trade Center, New York, New York 10048, and Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such materials can also be inspected at the New York Stock Exchange, 20
Broad Street, New York, New York 10005 or The Pacific Stock Exchange, 301 Pine
Street, San Francisco, California 94104-7065.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement,
including the exhibits filed as part thereof and otherwise incorporated
therein. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily
complete; with respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to such
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. Copies
of the Registration Statement and the exhibits may be inspected, without
charge, at the offices of the Commission, or obtained at prescribed rates from
the Public Reference Section of the Commission at the address set forth above.
----------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission pursuant to the
Exchange Act are incorporated by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992;
2. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1993, June 30, 1993 and September 30, 1993;
3. The Company's Current Report on Form 8-K dated November 18, 1993;
4. The Company's Current Report on Form 8-K dated February 10, 1994; and
5. All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof
and prior to the termination of the offering of the Notes offered
hereby.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to the extent
that a statement contained herein or in any subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy
of any or all of the documents which have been incorporated by reference in
this Prospectus, other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference into the documents so incorporated.
Requests for such copies should be directed to Secretary, AMETEK, Inc.,
Station Square, Paoli, Pennsylvania 19301 (telephone number: (215) 647-2121).
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this Prospectus. Unless the context
otherwise requires, all references herein to the "Company" or "Ametek" include
AMETEK, Inc. and its subsidiaries. See "Risk Factors" for a discussion of
certain considerations associated with investment in the Notes.
THE COMPANY
Ametek is an international manufacturer of high quality, engineered products
for industrial and commercial markets. The Company has a significant market
share for many of its products and a leading market share in electric motors
for vacuum cleaners and other floor care products, the Company's most
significant business. Many of the Company's products have a technological
component and are engineered to customer specifications. The Company employs
approximately 6,000 individuals and operates 32 manufacturing facilities
located in 12 states, as well as in Italy, Denmark, England and Mexico.
The Company's products are produced and sold worldwide through the Company's
Electro-mechanical, Precision Instruments and Industrial Materials Groups. The
principal products of each of the Groups include:
. Electro-mechanical Group--fractional horsepower electric motors and
blowers for vacuum cleaners and other floor care products, as well as for
furnaces, lawn tools, computer equipment, photocopiers and other
applications.
. Precision Instruments Group--instruments for commercial and military
aircraft and engines, devices for measuring, monitoring and controlling
industrial manufacturing processes, pressure gauges, and instrumentation
for heavy trucks.
. Industrial Materials Group--specialty metal products for electronics,
general industry and consumer goods, water filtration systems,
temperature and corrosion resistant materials, plastic compounds for
automotive and appliance markets and protective foam wrap for furniture
and fruit.
The Company's business has grown over the years through a combination of
acquisitions and internal growth into a diversified manufacturing company
serving a wide range of markets. The Company has concentrated on identifying,
developing and marketing high quality, technology-based products which hold, or
have the potential for gaining, a significant share of one or more niche
markets.
In November 1993, the Company completed a broad strategic review and
announced a plan intended to enhance shareholder value over the long term. From
an operational point of view, the Company will seek to increase the
profitability of its existing businesses through (i) growth and reinvestment,
particularly in its electro-mechanical, specialty metal and water filtration
operations, (ii) continued emphasis on controlling costs and (iii) an increased
focus on foreign sales, especially in the Pacific Rim and Europe, through a
combination of direct selling efforts and joint ventures. The Company also
intends to pursue strategic acquisitions on a selective basis. In addition, the
Company intends to continue its policy of reviewing, from time to time,
possible divestitures of existing businesses.
From a financial point of view, the Company's plan, which takes advantage of
the Company's historically strong cash flow, involves repurchasing outstanding
shares of its Common Stock for an aggregate purchase price of up to $150
million and refinancing existing debt with the net proceeds from the sale of
the Notes offered hereby, borrowings under a new secured credit agreement and
3
<PAGE>
available cash. The resulting increased leverage will reduce the Company's
financial and operating flexibility. Accordingly, the plan also calls for a
reduction in the quarterly per share dividend rate on the Company's Common
Stock from $.17 to $.06 and a decrease in the Company's leverage over time. See
"Risk Factors--Increased Leverage" and "--Ranking."
The Company also recorded certain after tax charges against earnings of $28.6
million during the fourth quarter of 1993, resulting in aggregate charges of
$33.5 million for the year. A substantial portion of these charges relates to
the restructuring of several businesses and the remainder reflects asset write-
downs and other unusual charges against income. The restructuring charges
primarily result from actions taken or planned due to the unwillingness of the
union at a Precision Instruments facility in Sellersville, Pennsylvania to
agree on wage and work rule concessions requested by the Company necessary to
make such operation competitive. These actions include relocating, outsourcing
and downsizing various manufacturing functions at this facility. See "Risk
Factors--Business Restructuring" and "--Labor Relations" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
Company will also record an extraordinary after tax charge of approximately $13
million in 1994 for the early retirement of existing debt after completion of
the sale of the Notes offered hereby and the application of the proceeds
thereof.
THE OFFERING
<TABLE>
<C> <S>
Securities Offered.......... $150 million principal amount of % Senior
Notes due
2006 (the "Notes").
Interest Payment Dates...... and , commencing , 1994.
Maturity.................... , 2006.
Redemption.................. The Notes are redeemable at the option of the
Company, in whole or in part, on or after ,
1999, at the redemption prices set forth herein,
plus accrued interest to the redemption date.
The Notes are not entitled to the benefit of any
sinking fund.
Ranking..................... The Notes will be unsubordinated, unsecured
obligations of the Company and will rank pari
passu with all other unsubordinated and
unsecured obligations of the Company. The Notes
will be effectively subordinated to secured
indebtedness of the Company with respect to the
assets securing such secured indebtedness to the
extent of the security. After giving pro forma
effect to the transactions described under "Use
of Proceeds," as of December 31, 1993, the
Company would have had secured indebtedness of
approximately $175.0 million. The Indenture
relating to the Notes (the "Indenture") permits
the Company to incur additional secured
indebtedness under certain circumstances.
Additionally, the Notes will be effectively
subordinated to liabilities of subsidiaries of
the Company. As of December 31, 1993, the
subsidiaries of the Company had liabilities of
approximately $94.8 million. The Indenture
permits the Company's subsidiaries to incur
additional indebtedness under certain
circumstances. See "Description of the Notes."
</TABLE>
4
<PAGE>
<TABLE>
<C> <S>
Certain Covenants........... The Indenture contains certain covenants that,
among other things, limit the ability of the
Company and its subsidiaries to incur
indebtedness, make restricted payments, incur
liens, enter into sale and leaseback
transactions, restrict subsidiaries from paying
dividends or making other payments to the
Company and merge or consolidate with other
entities. See "Description of the Notes."
Change in Control........... In the event of a Change of Control (as defined
in the Indenture), the Company is required to
offer to purchase all outstanding Notes at 101%
of their principal amount plus accrued interest
to the date of purchase.
Use of Proceeds............. The proceeds of the Notes offered hereby,
together with borrowings under the Company's new
$250 million secured credit agreement (the
"Credit Agreement") and available cash, will be
used (a) to retire (i) $106.8 million aggregate
principal amount of outstanding 8.95% Senior
Notes of the Company due September 15, 2001 (the
"8.95% Notes") held by institutional investors,
(ii) $75.0 million aggregate principal amount of
outstanding 9.35% Senior Notes of the Company
due September 15, 2004 (the "9.35% Notes") held
by institutional investors and (iii) $3.6
million aggregate principal amount of
outstanding 8.05% Senior Secured Notes of the
Company due July 15, 2004 (the "8.05% Notes"
and, collectively with the 8.95% Notes and the
9.35% Notes, the "Institutional Notes") held by
an institutional investor, (b) to repurchase
outstanding shares of the Company's Common
Stock, $1.00 par value per share (the "Common
Stock"), for an aggregate purchase price of up
to $150 million, and (c) to pay fees and
expenses related to the sale of the Notes
offered hereby and the Credit Agreement. See
"Use of Proceeds."
Listing..................... The Notes have been approved for listing on the
New York Stock Exchange, subject to notice of
issuance.
</TABLE>
5
<PAGE>
SUMMARY FINANCIAL DATA
The following tables set forth summary historical and supplemental pro forma
financial data of the Company. The historical financial data are derived from
the Company's consolidated financial statements which have been audited by
Ernst & Young, independent auditors.
The summary financial data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Consolidated Financial Statements and related Notes shown in
the index on page F-1 and other financial data included herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
HISTORICAL DATA
INCOME STATEMENT DATA:
Net sales.............. $587,844 $660,745 $715,099 $769,550 $732,195
Cost and expenses...... 527,618 592,375 648,794 690,407 687,037
Resizing and
restructuring
charges(1)............ -- -- -- -- 45,089
-------- -------- -------- -------- --------
Operating income....... 60,226 68,370 66,305 79,143 69
Other income (expense):
Interest expense...... (15,234) (20,818) (22,079) (19,721) (17,603)
Other, net............ 15,691 9,103 8,152 7,297 6,337
-------- -------- -------- -------- --------
Income (loss) before
income taxes(2)....... 60,683 56,655 52,378 66,719 (11,197)
Provision for (benefit
from) income taxes.... 22,387 19,317 14,392 22,362 (3,865)
-------- -------- -------- -------- --------
Net income (loss)...... $ 38,296 $ 37,338 $ 37,986 $ 44,357 $ (7,332)
======== ======== ======== ======== ========
Ratio of earnings to
fixed charges(3)...... 4.5x 3.3x 3.2x 4.0x --
OPERATING AND OTHER
DATA:
Depreciation and
amortization.......... $25,273 $33,542 $36,455 $37,263 $ 35,907
Capital expenditures... 25,684 35,683 18,808 23,990 38,324
Dividends paid......... 27,415 28,221 28,990 29,991 25,095
EBITDA(4).............. 91,180 100,707 103,520 117,584 92,368
Ratio of EBITDA to
interest expense(4)... 5.9x 4.8x 4.7x 5.9x 5.2x
Ratio of debt to
EBITDA(4)............. 2.5x 2.5x 2.1x 1.8x 2.0x
BALANCE SHEET DATA (END
OF PERIOD):
Working capital........ $215,072 $184,397 $181,449 $190,205 $134,163
Total assets........... 563,313 615,170 612,473 603,089 562,663
Long-term debt
(including current
portion).............. 229,518 248,078 220,911 206,922 186,972
Stockholders' equity... 194,879 199,412 211,479 210,272 165,326
SUPPLEMENTAL PRO FORMA
DATA (5)
INCOME STATEMENT DATA:
Operating income........................................... $ 54,979
Interest expense........................................... (24,247)
Other income, net.......................................... 3,785
Income before income taxes................................. 34,517
Net income................................................. 20,553
Ratio of earnings to fixed charges(6)...................... 2.2x
OPERATING AND OTHER
DATA:
Dividends paid............................................. $ 10,536
Ratio of EBITDA to interest expense(4)..................... 3.7x
Ratio of debt to EBITDA(4)................................. 3.5x
BALANCE SHEET DATA (END
OF PERIOD):
Working capital............................................ $114,546
Total assets............................................... 538,221
Long-term debt (including current portion)................. 326,622
Stockholders' equity....................................... 1,660
</TABLE>
See notes on following page.
6
<PAGE>
(1) The resizing and restructuring charges relate to the restructuring of
several businesses and include charges for work force reductions, both
planned and those which occurred in 1993, asset write-downs, relocation of
product lines and the overall consolidation of the Company's aerospace
operations. Approximately 75% of these charges relate to the Company's
Sellersville facility and result from actions taken or planned due to the
unwillingness of the union at such facility to agree on wage and work rule
concessions requested by the Company necessary to make that operation
competitive. These actions include relocating, outsourcing and downsizing
various manufacturing functions at this facility. See "Risk Factors--
Business Restructuring" and "--Labor Relations" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
(2) Includes unusual charges of $9.8 million in 1993 for asset write-downs and
other unusual items.
(3) For purposes of calculating the ratio of earnings to fixed charges,
earnings represents income before income taxes and fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and the estimated component of operating lease expenses representing
interest (assumed to be one-third). Earnings were insufficient to cover
fixed charges by $12.2 million in 1993.
(4) EBITDA represents income before income taxes, interest expense, interest
income, amortization of deferred financing costs, depreciation and
amortization expenses and the charges referred to in notes 1 and 2 above.
EBITDA is presented as additional information relating to the Company's
ability to service its debt but is not presented as being representative of
operating results or cash flows for the period. See "Consolidated
Statements of Cash Flows" for each of the three years in the period ended
December 31, 1993 included elsewhere in this Prospectus.
The ratio of EBITDA to interest expense represents the ratio of EBITDA to
the sum of interest expense plus amortization of deferred financing costs.
The ratio of debt to EBITDA for each period represents the ratio of debt at
the end of such period to EBITDA for such period.
(5) The Supplemental Pro Forma Data represent historical data for 1993 and as
of December 31, 1993, adjusted to give effect to the following events as
though they had occurred at the beginning of the period, in the case of pro
forma Income Statement Data and Operating and Other Data, and as of
December 31, 1993, in the case of pro forma Balance Sheet Data:
(a) the issuance of $150 million principal amount of Notes being
offered hereby at an assumed interest rate of 8.75%;
(b) the borrowing of $125 million under the floating rate term
facility of the Credit Agreement, a portion of which is assumed to be
converted through interest rate swaps into a fixed rate borrowing
resulting in an assumed effective interest rate of 6.6%;
(c) the borrowing of $50 million under the floating rate revolving
credit facility of the Credit Agreement at an assumed interest rate of
5.0%;
(d) the application of the proceeds of the foregoing and $33.4 million
of available cash, as described under "Use of Proceeds," to (i) retire
approximately $185.4 million of Institutional Notes, (ii) repurchase
outstanding shares of the Company's Common Stock for an aggregate
purchase price of $150 million and (iii) pay the estimated fees and
expenses related to the foregoing;
(e) with respect to the pro forma Income Statement Data and Operating
and Other Data only, the elimination of the charges referred to in notes
1 and 2 above; and
(f) with respect to the pro forma Balance Sheet Data only, the
recording of a $13 million (after tax) extraordinary charge which the
Company expects to record against income in 1994 in connection with the
early retirement of the Institutional Notes, in addition to the write-
off of related deferred financing costs.
Additionally, the pro forma dividends paid reflects the annualized fourth
quarter 1993 rate of $.06 per share (as compared to the prior quarterly rate
of $.17 per share) without giving effect to the share repurchase.
The Supplemental Pro Forma Data are based on certain assumptions that may
not prove to be accurate and do not purport to represent what the Company's
results of operations or financial position actually would have been had the
events referred to above in fact occurred for the periods or as of the dates
indicated or to project the Company's results of operations or financial
condition for any future period or date. For each 1/8 of 1% change in
assumed interest rates on the Notes being offered hereby and on borrowings
under the new Credit Agreement, pro forma interest expense would change by
$408,000 and pro forma net income would change by $249,000, for the year
ended December 31, 1993.
(6) For purposes of calculating the supplemental pro forma ratio of earnings to
fixed charges, earnings represents pro forma income before income taxes,
fixed charges and the charges referred to in notes 1 and 2 above. Fixed
charges consist of interest expense, amortization of deferred financing
costs and the estimated component of operating lease expenses representing
interest (assumed to be one-third).
7
<PAGE>
RISK FACTORS
INCREASED LEVERAGE
As a result of the transactions described under "Use of Proceeds," the
Company's indebtedness will increase while at the same time its stockholders'
equity will decrease. On the pro forma basis described in Note 5 to "Selected
Financial Data," the Company's long-term debt (including the current portion
thereof) as of December 31, 1993 would have been approximately $326.6 million,
or 74.7% higher than the actual long-term debt of approximately $187.0 million
at such date, and its stockholders' equity would have been approximately $1.7
million, or $163.6 million less than the actual stockholders' equity of $165.3
million at that date. This increased level of indebtedness could have
important consequences to holders of the Notes, including the following: (i)
the Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other general corporate
purposes will be reduced; (ii) a significant portion of the Company's cash
flow from operations will be required to service debt, and, as a result, these
funds will not be available for working capital, capital expenditures,
acquisitions or other general corporate purposes; and (iii) the Company's
increased level of indebtedness will make it more vulnerable in the event of a
further downturn in its various businesses. Moreover, financial and other
covenants contained in the Indenture and the Credit Agreement will restrict
the Company's ability to engage in certain transactions, such as making
certain capital expenditures, incurring further indebtedness and selling and
purchasing assets or businesses outside the ordinary course of business. See
"The Credit Agreement" and "Description of the Notes." There can be no
assurance that the Company's leverage and these restrictions will not
adversely affect the Company's ability to finance its future operations or
capital needs or to engage in other business activities, such as acquisitions,
which may be in the interest of the Company. The Company believes that cash
flow from operations and the retention of a substantially greater portion
thereof under the Company's new policy regarding the payment of dividends on
its Common Stock will enable it to make all required payments on its
indebtedness when due, including under the Notes. However, if future cash
provided by operations is less than expected, the Company could experience
difficulty in meeting the payments due on such indebtedness.
BUSINESS RESTRUCTURING
The Company is in the process of restructuring several of its businesses
and, in connection with this process, has taken charges for resizing,
restructuring and other unusual items against income of $33.5 million (after
tax) during 1993.
Approximately $27.5 million of the charges relates to the restructuring.
Most of the charges for restructuring relates to the Company's aerospace and
pressure gauge operations at its facility in Sellersville, Pennsylvania. The
union at Sellersville was unwilling to agree on wage and work rule concessions
which were requested by the Company in order to make the operation
competitive. As a result, the Company has decided to move its Sellersville
aerospace manufacturing operation to another location. These restructuring
charges are intended to cover certain pension and severance costs, the costs
of the planned relocation and other costs that are expected to result from the
transition. The overall restructuring charges also cover relocating,
outsourcing, downsizing and other restructuring actions related to the
pressure gauge business at Sellersville. The balance of the restructuring
charges relates to the resizing of the Company's other aerospace operations
and other businesses to correspond with prevailing market conditions. The
remaining $6.0 million of the charges relates to asset write-downs and other
unusual charges against income.
While the Company believes that these restructuring charges should reflect
substantially all of the costs of the Sellersville relocation, the downsizing
of the aerospace operations and other components
8
<PAGE>
of its restructuring, there can be no assurance that these charges will prove
adequate or that additional charges will not be necessary in 1994 or
thereafter to account for the effects of this restructuring.
DEPENDENCE ON GENERAL ECONOMIC CONDITIONS
The demand for the Company's products is subject to general economic
conditions, such as rates of inflation, fluctuations in general business
conditions, governmental regulation and the availability of financing at
favorable rates, which factors are outside the control of the Company. In
addition, a weak economy (particularly in the aerospace industry, which has
been adversely affected by the reduced profitability of the deregulated
commercial airline industry and reduced military spending) has adversely
affected the Company's results, particularly results of the Precision
Instruments Group. There can be no assurance that the current general economic
conditions will not continue or worsen.
RANKING
The Notes are unsecured and thus, in effect, would rank junior to any
secured indebtedness, including borrowings under the Credit Agreement, of the
Company to the extent of the security. Subject to certain de minimis and other
exceptions, all assets owned by the Company and the Company's subsidiaries
that are guarantors under the Credit Agreement will be pledged to the Banks
(as defined) to secure the Company's obligations under the Credit Agreement.
See "The Credit Agreement." On the pro forma basis described in Note 5 to
"Selected Financial Data," as of December 31, 1993, the Company would have had
secured indebtedness of approximately $175.0 million. The Indenture permits
the Company to incur secured indebtedness in addition to indebtedness under
the Credit Agreement under certain circumstances. See "Description of the
Notes."
LIABILITIES OF SUBSIDIARIES
Certain of the Company's business activities are operated or held by
subsidiaries. The Company's ability to meet its financial obligations,
including its obligations under the Notes, depends in part upon the receipt of
cash dividends, advances and other payments from its subsidiaries. The Notes
are effectively subordinated to all existing and future liabilities, including
trade payables, of the Company's subsidiaries with respect to the assets of
such subsidiaries. Any right of the Company to participate in any distribution
of the assets of any of the Company's subsidiaries upon the liquidation,
reorganization or insolvency of such subsidiaries (and the consequent right of
the holders of the Notes to participate in such distributions) will be subject
to the claims of the creditors (including trade creditors) of such
subsidiaries. As of December 31, 1993, the assets and liabilities (excluding
intercompany receivables and payables) of the Company's subsidiaries
aggregated approximately $259.7 million and $94.8 million, respectively. The
Indenture permits the Company's subsidiaries to incur additional indebtedness
under certain circumstances. See "Description of the Notes."
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
During 1993, approximately 13.3% of the Company's revenues were derived from
its foreign operations (and another 14.4% of the Company's revenues were
derived from export sales from the United States). Assets of these foreign
operations were $84.4 million and represented 15.0% of the Company's total
assets at December 31, 1993. Such operations are subject to the customary
risks of operating in an international environment, including the potential
imposition of trade or foreign exchange restrictions, tariff and other tax
increases, fluctuations in exchange rates and unstable political situations.
The Company has significant operations in Italy, the currency of which has
been unstable in the recent past. There can be no assurance that there will
not be further instability in the Italian lire which could have a material
adverse effect on the Company's results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
9
<PAGE>
CHANGE OF CONTROL
Upon the occurrence of a Change of Control (as defined in the Indenture),
subject to certain limitations, holders of the Notes have the right to require
the Company to repurchase their Notes. However, a Change of Control would
constitute an event of default under the Credit Agreement and the Company is
required under the terms thereof to insure that the date for payment of the
purchase price for all Notes that must be repurchased as a result of such
Change of Control is no earlier than the date on which the loans under the
Credit Agreement become due and payable as a result thereof, unless otherwise
agreed to by the lenders thereunder. See "The Credit Agreement". Accordingly,
the right of holders of the Notes to require the Company to repurchase the
Notes may be of limited value if the Company cannot obtain sufficient funding
to repay the loans under the Credit Agreement or obtain the requisite consent
of the lenders thereunder. Failure to offer to repurchase the Notes under such
circumstances, however, would constitute an Event of Default under the
Indenture.
DEPENDENCE ON SEVERAL CUSTOMERS
While the Company as a whole is not dependent on any single customer such
that the loss of such customer would have a material adverse effect on its
operations, during 1993 approximately 15.8% of the Company's total revenues
were derived from sales to the Company's five largest customers, including the
United States government. The Company expects that revenues from major
customers will continue to constitute significant percentages of the Company's
total revenues for the foreseeable future. There can be no assurance, however,
that major customers will continue to purchase the Company's products. The loss
of major customers could have a material adverse effect on the Company's
financial condition or results of operations.
ENVIRONMENTAL MATTERS
The Company is subject to extensive environmental and occupational health and
safety laws and regulations concerning, among other things, air emissions,
discharges to waters and the generation, handling, storage, transportation and
disposal of hazardous substances and wastes. Environmental risks are inherent
in many of the Company's manufacturing operations. In addition, the
Comprehensive Environmental Response, Compensation and Liability Act and
similar state laws generally impose joint and several liability for clean-up
costs, without regard to fault or the legality of the original conduct, on
parties contributing hazardous substances to sites from which there is a
release or threats of release of hazardous substances. The Company has been
named a potentially responsible party at several sites which are the subject of
government-mandated clean-ups. While it is not possible to accurately quantify
the potential financial impact of pending environmental matters, the Company
believes that the outcome of these matters is not likely to have a material
adverse effect on the financial position or future results of operations of the
Company. However, there can be no assurance that future environmental
liabilities will not occur or that environmental damages arising from prior or
present practices will not result in future liabilities or that such
liabilities will not have a material adverse effect on the Company's financial
condition or results of operations.
LABOR RELATIONS
Of the Company's approximately 6,000 employees, approximately 2,400 are
covered by collective bargaining agreements. Although the Company believes that
its relations with its union employees are generally good, there is no
assurance that the Company will not at some point be subject to work stoppages
and possibly a strike by some of its employees and, if such events were to
occur, that there would be no material adverse effect on the Company's
financial condition or results of operations. Recently, the union at a
Precision Instruments facility in Sellersville, Pennsylvania was unwilling to
agree on wage and work rule concessions requested by the Company necessary to
make such
10
<PAGE>
operation competitive. As a result, the Company has decided to move a major
portion of its manufacturing operations to another location. Although the
Company believes its 1993 restructuring charges will be adequate to provide for
this relocation (see "Risk Factors--Business Restructuring"), there can be no
assurance that this amount will be adequate to cover any disruptions that could
arise from the move of such operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
FRAUDULENT CONVEYANCE
Under applicable provisions of the Federal Bankruptcy Code or comparable
provisions of state fraudulent transfer or conveyance law, if the Company, at
the time it issued the Notes, (a) incurred such indebtedness with the intent to
hinder, delay or defraud creditors, or (b)(i) received less than reasonably
equivalent value or fair consideration for incurring such indebtedness and (ii)
either (A) was insolvent at the time of the incurrence, (B) was rendered
insolvent by reason of such incurrence (and the application of the proceeds
thereof), (C) was engaged or was about to engage in a business or transaction
for which the assets remaining with the Company constituted unreasonably small
capital to carry on its business, or (D) intended to incur, or believed that it
would incur, debts beyond its ability to pay such debts as they mature, then,
in each such case, a court of competent jurisdiction could avoid, in whole or
in part, the Notes or, in the alternative, subordinate the Notes to existing
and future indebtedness of the Company. The avoidance or subordination of all
or part of the Notes could result in an event of default with respect to other
indebtedness of the Company which could result in acceleration of such
indebtedness. The measure of insolvency for purposes of the foregoing will vary
depending upon the law applied in such case. Generally, the Company would be
considered insolvent if the sum of its debts, including contingent liabilities,
was greater than all of its assets at a fair valuation or if the present fair
saleable value of its assets was less than the amount that would be required to
pay the probable liability on its existing debts, including contingent
liabilities, as they become absolute and matured.
Management of the Company believes that, although a substantial portion of
the net proceeds from the sale of the Notes and borrowings under the Credit
Agreement may be used to repurchase outstanding shares of the Company's Common
Stock, for purposes of the Federal Bankruptcy Code and state fraudulent
transfer or conveyance laws, the Notes are being issued without the intent to
hinder, defraud or delay creditors, for proper purposes and in good faith and
that the Company is and, after the issuance of the Notes and the application of
the proceeds thereof, will be, solvent, will have sufficient capital for
carrying on its business and will be able to pay its debts as they mature.
There can be no assurance, however, that a court passing on such questions
would agree with management's view.
ABSENCE OF PUBLIC MARKET
There is no existing market for the Notes. Although the Notes have been
approved for listing, subject to notice of issuance, on the New York Stock
Exchange, there can be no assurance as to the liquidity of any market that may
develop for the Notes, the ability of holders to sell their Notes or the price
at which holders will be able to sell their Notes. If such a market develops,
the Notes may trade at a discount from their initial offering price, depending
on prevailing interest rates, the Company's operating results, the market for
similar securities and other factors. The market for high yield debt, such as
the Notes, has fewer participants and involves a smaller amount of securities
than certain other capital markets. It has historically, and particularly in
recent periods, been subject to disruptions that have caused volatility in the
prices of securities similar to the Notes. There can be no assurance that the
market for the Notes will not be subject to similar disruptions that will
render them difficult to sell. Goldman, Sachs & Co. have indicated that they
intend to make a market in the Notes but they are not obligated to do so and
may discontinue market making at any time.
11
<PAGE>
THE COMPANY
Ametek is an international manufacturer of high quality, engineered products
for industrial and commercial markets. The Company has a significant market
share for many of its products and a leading market share in electric motors
for vacuum cleaners and other floor care products, the Company's most
significant business. Many of the Company's products have a technological
component and are engineered to customer specifications. The Company employs
approximately 6,000 individuals and operates 32 manufacturing facilities
located in 12 states, as well as in Italy, Denmark, England and Mexico.
The Company's products are produced and sold worldwide through the Company's
Electro-mechanical, Precision Instruments and Industrial Materials Groups. The
principal products of each of the Groups include:
. Electro-mechanical Group--fractional horsepower electric motors and
blowers for vacuum cleaners and other floor care products, as well as for
furnaces, lawn tools, computer equipment, photocopiers and other
applications.
. Precision Instruments Group--instruments for commercial and military
aircraft and engines, devices for measuring, monitoring and controlling
industrial manufacturing processes, pressure gauges, and instrumentation
for heavy trucks.
. Industrial Materials Group--specialty metal products for electronics,
general industry and consumer goods, water filtration systems,
temperature and corrosion resistant materials, plastic compounds for
automotive and appliance markets and protective foam wrap for furniture
and fruit.
The Company's business has grown over the years through a combination of
acquisitions and internal growth into a diversified manufacturing company
serving a wide range of markets. The Company has concentrated on identifying,
developing and marketing high quality, technology-based products which hold,
or have the potential for gaining, a significant share of one or more niche
markets.
In November 1993, the Company completed a broad strategic review and
announced a plan intended to enhance shareholder value over the long term.
From an operational point of view, the Company will seek to increase the
profitability of its existing businesses through (i) growth and reinvestment,
particularly in its electro-mechanical, specialty metal and water filtration
operations, (ii) continued emphasis on controlling costs and (iii) an
increased focus on foreign sales, especially in the Pacific Rim and Europe,
through a combination of direct selling efforts and joint ventures. The
Company also intends to pursue strategic acquisitions on a selective basis. In
addition, the Company intends to continue its policy of reviewing, from time
to time, possible divestitures of existing businesses.
From a financial point of view, the Company's plan, which takes advantage of
the Company's historically strong cash flow, involves repurchasing outstanding
shares of its Common Stock for an aggregate purchase price of up to $150
million and refinancing existing debt with the net proceeds from the sale of
the Notes offered hereby, borrowings under the Credit Agreement and available
cash. The resulting increased leverage will reduce the Company's financial and
operating flexibility. Accordingly, the plan also calls for a reduction in the
quarterly per share dividend rate on the Company's Common Stock from $.17 to
$.06 and a decrease in the Company's leverage over time. See "Risk Factors--
Increased Leverage" and "--Ranking."
The Company also recorded certain after tax charges against earnings of
$28.6 million during the fourth quarter of 1993, resulting in aggregate
charges of $33.5 million for the year. A substantial portion of these charges
relates to the restructuring of several businesses and the remainder reflects
asset write-downs and other unusual charges against income. The restructuring
charges primarily result from
12
<PAGE>
actions taken or planned due to the unwillingness of the union at a Precision
Instruments facility in Sellersville, Pennsylvania to agree on wage and work
rule concessions requested by the Company necessary to make such operation
competitive. These actions include relocating, outsourcing and downsizing
various manufacturing functions at this facility. See "Risk Factors--Business
Restructuring" and "--Labor Relations" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The Company will
also record an extraordinary after tax charge of approximately $13 million in
1994 for the early retirement of the Institutional Notes after completion of
the sale of the Notes offered hereby and the application of the proceeds
thereof.
AMETEK, Inc. was incorporated in Delaware in 1930 under the name of American
Machine and Metals, Inc. and maintains its principal executive offices at
Station Square, Paoli, Pennsylvania 19301, telephone number (215) 647-2121.
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby are estimated to
be $ (after deducting the underwriting discount and other expenses related
to the sale of the Notes). The proceeds, together with borrowings under the
Company's Credit Agreement and available cash, will be used (a) to retire the
Institutional Notes, (b) to repurchase outstanding shares of its Common Stock
(pursuant to open market or privately negotiated purchases, a tender offer or
a combination of the foregoing) for an aggregate purchase price of up to $150
million and (c) to pay fees and expenses related to the sale of the Notes and
the Credit Agreement.
The following table illustrates the Company's current expectation as to the
sources and uses of funds in connection with the transactions described above:
<TABLE>
<CAPTION>
SOURCES OF FUNDS DOLLARS IN THOUSANDS
---------------- --------------------
<S> <C>
1. Credit Agreement
Secured Term Loan Facility.............................. $125,000
Secured Revolving Credit Facility....................... 50,000
2.Gross Proceeds from sale of the Notes offered hereby.... 150,000
3.Available Cash.......................................... 33,350
--------
Total Sources.......................................... $358,350
========
<CAPTION>
USES OF FUNDS
-------------
<S> <C>
1. Retirement of the aggregate principal amount of the
Institutional Notes.................................... $185,350
2.Repurchase of outstanding shares of Common Stock........ 150,000
3. Fees and expenses (including underwriting discount)
related to the sale of the Notes and the Credit
Agreement and premiums for early retirement of the
Institutional Notes.................................... 23,000
--------
Total Uses............................................. $358,350
========
</TABLE>
See "Capitalization" and "Selected Financial Data--Supplemental Pro Forma
Data" for the pro forma effects of the foregoing transactions and "The Credit
Agreement" for a description of the terms of the Credit Agreement.
13
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at December
31, 1993, and as adjusted to reflect the impact of the matters described in
Note 5 to "Selected Financial Data." See "Risk Factors--Increased Leverage"
and "--Ranking."
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Debt:
8.95% Notes due September 15, 2001.................... $106,750 $ --
9.35% Notes due September 15, 2004.................... 75,000 --
8.05% Notes due July 15, 2004......................... 3,600 --
Other................................................. 1,622 1,622
Credit Agreement(2):
Secured Term Loan Facility.......................... -- 125,000
Secured Revolving Credit Facility................... -- 50,000
Notes offered hereby.................................. -- 150,000
-------- --------
Total debt.............................................. 186,972 326,622
Stockholders' equity.................................... 165,326 1,660(3)
-------- --------
Total capitalization.................................. $352,298 $328,282
======== ========
</TABLE>
- --------
(1) For an explanation of the adjustments, see Note 5 to "Selected Financial
Data."
(2) See "The Credit Agreement" for a description of the interest rates and
other terms and conditions of borrowings under the Credit Agreement.
(3) Stockholders' equity is reduced by $150 million for the assumed repurchase
of Common Stock and by the $13 million (after tax) extraordinary charge to
be incurred in 1994 in connection with the early retirement of the
Institutional Notes, in addition to the write-off of deferred financing
costs.
14
<PAGE>
SELECTED FINANCIAL DATA
The following tables set forth selected historical and supplemental pro
forma financial data of the Company. The historical financial data are derived
from the Company's consolidated financial statements which have been audited
by Ernst & Young, independent auditors.
The unaudited supplemental pro forma financial data for the year ended
December 31, 1993 represents the historical data as of and for the year ended
December 31, 1993 adjusted for the items described in Note 5 below. The
supplemental pro forma adjustments described in Note 5 are based upon
estimates and assumptions that management believes are reasonable.
The selected financial data set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" which follows this section, the Consolidated Financial
Statements and related Notes shown in the index on page F-1 and other
financial data included herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL DATA
INCOME STATEMENT DATA:
Net sales.............. $587,844 $660,745 $715,099 $769,550 $732,195
Expenses:
Cost of sales
(excluding
depreciation)........ 444,004 498,749 546,479 583,357 582,001
Selling, general and
administrative....... 66,057 69,563 74,038 77,690 76,759
Depreciation.......... 17,557 24,063 28,277 29,360 28,277
Resizing and restruc-
turing charges(1).... -- -- -- -- 45,089
-------- -------- -------- -------- --------
Operating income....... 60,226 68,370 66,305 79,143 69
Other income (expense):
Interest expense...... (15,234) (20,818) (22,079) (19,721) (17,603)
Other, net............ 15,691 9,103 8,152 7,297 6,337
-------- -------- -------- -------- --------
Income (loss) before
income taxes(2)....... 60,683 56,655 52,378 66,719 (11,197)
Provision for (benefit
from) income taxes.... 22,387 19,317 14,392 22,362 (3,865)
-------- -------- -------- -------- --------
Net income (loss)...... $ 38,296 $ 37,338 $ 37,986 $ 44,357 $ (7,332)
======== ======== ======== ======== ========
Ratio of earnings to
fixed charges(3)...... 4.5x 3.3x 3.2x 4.0x --
OPERATING AND OTHER DA-
TA:
Depreciation and amor-
tization.............. $ 25,273 $ 33,542 $ 36,455 $ 37,263 $ 35,907
Capital expenditures... 25,684 35,683 18,808 23,990 38,324
Dividends paid......... 27,415 28,221 28,990 29,991 25,095
EBITDA(4).............. 91,180 100,707 103,520 117,584 92,368
Ratio of EBITDA to
interest expense(4)... 5.9x 4.8x 4.7x 5.9x 5.2x
Ratio of debt to
EBITDA(4)............. 2.5x 2.5x 2.1x 1.8x 2.0x
BALANCE SHEET DATA (END
OF PERIOD):
Working capital........ $215,072 $184,397 $181,449 $190,205 $134,163
Total assets........... 563,313 615,170 612,473 603,089 562,663
Long-term debt
(including current
portion).............. 229,518 248,078 220,911 206,922 186,972
Stockholders' equity... 194,879 199,412 211,479 210,272 165,326
SUPPLEMENTAL PRO FORMA DATA(5)
INCOME STATEMENT DATA:
Operating income............................................ $ 54,979
Interest expense............................................ (24,247)
Other income, net........................................... 3,785
Income before income taxes.................................. 34,517
Net income.................................................. 20,553
Ratio of earnings to fixed charges(6)....................... 2.2x
OPERATING AND OTHER DA-
TA:
Dividends paid.............................................. $ 10,536
Ratio of EBITDA to interest expense(4)...................... 3.7x
Ratio of debt to EBITDA(4).................................. 3.5x
BALANCE SHEET DATA (END
OF PERIOD):
Working capital............................................. $114,546
Total assets................................................ 538,221
Long-term debt (including current portion).................. 326,622
Stockholders' equity........................................ 1,660
</TABLE>
15
<PAGE>
(1) The resizing and restructuring charges relate to the restructuring of
several businesses and include charges for work force reductions, both
planned and those which occurred in 1993, asset write-downs, relocation of
product lines and the overall consolidation of the Company's aerospace
operations. Approximately 75% of these charges relate to the Company's
Sellersville facility and result from actions taken or planned due to the
unwillingness of the union at such facility to agree on wage and work rule
concessions requested by the Company necessary to make that operation
competitive. These actions include relocating, outsourcing and downsizing
various manufacturing functions at this facility. See "Risk Factors--
Business Restructuring" and "--Labor Relations" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
(2) Includes unusual charges of $9.8 million in 1993 for asset write-downs and
other unusual items.
(3) For purposes of calculating the ratio of earnings to fixed charges,
earnings represents income before income taxes and fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and the estimated component of operating lease expenses representing
interest (assumed to be one-third). Earnings were insufficient to cover
fixed charges by $12.2 million in 1993.
(4) EBITDA represents income before income taxes, interest expense, interest
income, amortization of deferred financing costs, depreciation and
amortization expenses and the charges referred to in notes 1 and 2 above.
EBITDA is presented as additional information relating to the Company's
ability to service its debt but is not presented as being representative
of operating results or cash flows for the period. See "Consolidated
Statements of Cash Flows" for each of the three years in the period ended
December 31, 1993 included elsewhere in this Prospectus.
The ratio of EBITDA to interest expense represents the ratio of EBITDA to
the sum of interest expense plus amortization of deferred financing costs.
The ratio of debt to EBITDA for each period represents the ratio of debt at
the end of such period to EBITDA for such period.
(5) The Supplemental Pro Forma Data represent historical data for 1993 and as
of December 31, 1993, adjusted to give effect to the following events as
though they had occurred at the beginning of the period, in the case of
pro forma Income Statement Data and Operating and Other Data, and as of
December 31, 1993, in the case of pro forma Balance Sheet Data:
(a) the issuance of $150 million principal amount of Notes being
offered hereby at an assumed interest rate of 8.75%;
(b) the borrowing of $125 million under the floating rate term
facility of the Credit Agreement, a portion of which is assumed to be
converted through interest rate swaps into a fixed rate borrowing
resulting in an assumed effective interest rate of 6.6%;
(c) the borrowing of $50 million under the floating rate revolving
credit facility of the Credit Agreement at an assumed interest rate of
5.0%;
(d) the application of the proceeds of the foregoing and $33.4
million of available cash, as described under "Use of Proceeds," to (i)
retire approximately $185.4 million of Institutional Notes, (ii)
repurchase outstanding shares of the Company's Common Stock for an
aggregate purchase price of $150 million and (iii) pay the estimated
fees and expenses related to the foregoing;
(e) with respect to the pro forma Income Statement Data and Operating
and Other Data only, the elimination of the charges referred to in
notes 1 and 2 above; and
(f) with respect to the pro forma Balance Sheet Data only, the
recording of a $13 million (after tax) extraordinary charge which the
Company expects to record against income in 1994 in connection with the
early retirement of the Institutional Notes, in addition to the write-
off of related deferred financing costs.
Additionally, the pro forma dividends paid reflects the annualized fourth
quarter 1993 rate of $.06 per share (as compared to the prior quarterly
rate of $.17 per share) without giving effect to the share repurchase.
The Supplemental Pro Forma Data are based on certain assumptions that may
not prove to be accurate and do not purport to represent what the Company's
results of operations or financial position actually would have been had
the events referred to above in fact occurred for the periods or as of the
dates indicated or to project the Company's results of operations or
financial condition for any future period or date. For each 1/8 of 1%
change in assumed interest rates on the Notes being offered hereby and on
borrowings under the new Credit Agreement, pro forma interest expense would
change by $408,000 and pro forma net income would change by $249,000, for
the year ended December 31, 1993.
(6) For purposes of calculating the supplemental pro forma ratio of earnings
to fixed charges, earnings represents pro forma income before income
taxes, fixed charges and the charges referred to in notes 1 and 2 above.
Fixed charges consist of interest expense, amortization of deferred
financing costs and the estimated component of operating lease expenses
representing interest (assumed to be one-third).
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Management's discussion and analysis of the Company's financial condition
and results of operations set forth below should be read in conjunction with
the Consolidated Financial Statements of the Company and the related Notes
included elsewhere in this Prospectus.
RECENT DEVELOPMENTS
Weakened market conditions in some of the markets in which the Company
operates, particularly in the aerospace and process industries, have resulted
in recent declines in sales and income.
In November 1993, the Company completed a broad strategic review and
announced a plan intended to enhance shareholder value over the long term.
From an operational point of view, the Company will seek to increase the
profitability of its existing businesses through (i) growth and reinvestment,
particularly in its electro-mechanical, specialty metal and water filtration
operations, (ii) continued emphasis on controlling costs and (iii) an
increased focus on foreign sales, especially in the Pacific Rim and Europe,
through a combination of direct selling efforts and joint ventures. The
Company also intends to pursue strategic acquisitions on a selective basis.
From a financial point of view, the Company's plan, which takes advantage of
the Company's historically strong cash flow, involves repurchasing outstanding
shares of its Common Stock for an aggregate purchase price of up to $150
million and refinancing existing debt with the net proceeds from the sale of
the Notes offered hereby, borrowings under the Credit Agreement and available
cash. The resulting increased leverage will reduce the Company's financial and
operating flexibility. Accordingly, the plan also calls for a reduction in the
quarterly per share dividend rate on the Company's Common Stock from $.17 to
$.06 and a decrease in the Company's leverage over time. See "Risk Factors--
Increased Leverage" and "--Ranking."
In 1993, the Company recorded pre-tax charges of $54.9 million ($33.5
million after tax, or $.77 per share) for costs associated with resizing and
restructuring several of its businesses and other unusual expenses. Of the
$54.9 million total charge, $46.9 million, or $.66 per share, was recorded in
the fourth quarter of 1993. The total charges, on a pre-tax basis, were for
(1) work force reductions, both planned and those which occurred in 1993
(including certain pension related costs) ($21.4 million); (2) asset write-
downs ($15.0 million); (3) the relocation of certain product lines from a
Precision Instruments facility in Sellersville, Pennsylvania and the overall
consolidation of the Company's aerospace operations ($14.2 million); and (4)
other unusual expenses ($4.3 million). The charges for resizing and
restructuring are primarily related to the Company's Sellersville operations
and result from actions taken or planned due to the unwillingness of the union
at such facility to agree on wage and work rule concessions requested by the
Company necessary to make that operation competitive. See "Risk Factors--
Business Restructuring" and "--Labor Relations." Also, the Company has reached
an agreement regarding the prepayment premiums to be paid, subject to an
interest rate adjustment, for early retirement of the Institutional Notes and
will record an extraordinary charge of approximately $13 million (after tax)
in 1994 after completion of the sale of the Notes offered hereby and the
retirement of the Institutional Notes.
17
<PAGE>
SEGMENT INFORMATION
The Company classifies its operations into three principal business
segments: Electro-mechanical, Precision Instruments, and Industrial Materials.
The following table sets forth summary sales and income information for the
Company's business segments for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1991 1992 1993
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
NET SALES (1):
Electro-mechanical........................... $249,763 $309,556 $280,732
Precision Instruments........................ 309,901 297,025 275,351
Industrial Materials......................... 155,435 162,969 176,112
-------- -------- --------
Total net sales............................ $715,099 $769,550 $732,195
======== ======== ========
INCOME (LOSS):
Electro-mechanical........................... $ 35,363 $ 49,912 $ 35,018
Precision Instruments........................ 32,914 28,045 (30,643)(2)
Industrial Materials......................... 20,332 22,096 18,284 (3)
-------- -------- --------
Total segment operating profit (4)......... 88,609 100,053 22,659
Corporate and other expenses (5)............. (36,231) (33,334) (33,856)
-------- -------- --------
Income (loss) before taxes................. $ 52,378 $ 66,719 $(11,197)
======== ======== ========
</TABLE>
- --------
(1) After elimination of intersegment sales, which are not significant in
amount.
(2) Reflects charges of $47.8 million primarily for resizing and restructuring
costs associated with planned work force reductions and those which
occurred in 1993, asset write-downs, relocation of product lines and the
overall consolidation of the Company's Aerospace operations and other
unusual charges.
(3) Reflects charge of $3.9 million primarily for asset write-downs.
(4) Segment operating profit represents sales less all direct costs and
expenses (including certain administrative and other expenses) applicable
to each segment, but does not include interest expense.
(5) Includes unallocated administrative expenses, interest expense and net
other income and, in 1993, $2.8 million of restructuring and other unusual
charges.
YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1992
Results of Operations
Sales for 1993 were $732.2 million, a decrease of $37.4 million or 4.9% from
1992. The sales decrease was attributable to reduced domestic and European
demand for electric motor products and the negative effect of translating
sales of the Company's Italian operations from the weaker Italian lire to U.S.
dollars. Sales by the Precision Instruments group also declined as a result of
continued poor market conditions for aerospace products and process and
analytical instruments. A sales improvement was reported by the Industrial
Materials group due to the strength of demand for liquid filtration products,
specialty metal products and compounded plastics. Sales by all business
segments to foreign markets totalled $202.9 million in 1993 compared to $233.7
million in 1992, a decrease of 13.2%. Export shipments from the United States
in 1993 were $105.7 million, a decrease of 11.4% from 1992, primarily as a
result of weak economic conditions in Europe.
New orders during 1993 were approximately $703.9 million, a decrease of
$31.6 million or 4.3% from 1992. The backlog of orders was $212.6 million at
year-end, an 11.8% decrease from 1992, reflecting the lower level of business
in the Electro-mechanical and Precision Instruments groups.
18
<PAGE>
Business segment operating profit before restructuring and other unusual
operating charges was $74.8 million in 1993, compared to $100.1 million in
1992, a decrease of 25.3%. Along with the reduction due to the lower sales
volume, this decline reflects operating inefficiencies (primarily within the
Electro-mechanical and the Precision Instruments groups) and higher expenses
caused by a plant start-up and a plant rearrangement in the Electro-mechanical
group. In 1993, business segment results also reflect charges totalling $52.1
million for resizing and restructuring certain operations and other unusual
expenses. After reflecting these charges, business segment operating profit
for 1993 was $22.7 million.
Corporate expenses (including unallocated administrative expenses, interest
expense and net other income) were $33.9 million in 1993, substantially
unchanged from $33.3 million in 1992.
The effective rate of income tax benefit for 1993 of 34.5% reflects the new
U.S. federal statutory income tax rate of 35% for all of 1993. The overall
effective rate of the tax benefit was reduced somewhat by a tax provision on
foreign pre-tax earnings.
After tax earnings for 1993, before restructuring and other unusual charges,
were $26.2 million or $.60 per share. This compares to net income of $44.4
million or $1.01 per share earned in 1992. After restructuring and other
unusual charges totalling $33.5 million (after tax), the Company reported a
net loss of $7.3 million, or $.17 per share for 1993.
Business Segment Results
The Electro-mechanical group's sales decreased $28.8 million or 9.3% to
$280.7 million primarily because of Italian lire currency translation and
because of reduced customer demand for domestically produced electric motor
products during the year. Before currency translation, the Italian operations
reported 2.6% higher sales over 1992. Operating profit of this group decreased
29.8% to $35.0 million due to lower sales volume, higher costs related to new
product introductions, a plant start-up and a plant rearrangement, less
favorable product mix and negative foreign currency translation effects.
Precision Instruments group sales in 1993 were $275.4 million, a decrease of
$21.7 million or 7.3% from 1992. The sales decline reflects the continuing
weakness in demand for aircraft instruments and engine sensors from commercial
airlines and poor conditions in the aerospace industry and in process control
markets. The sales decline was partially offset by increased sales of truck
instruments, flight reference systems and sales by a new business acquired in
the first quarter of 1993. Operating profit of this group before restructuring
and other unusual charges was $17.1 million in 1993 compared to $28.0 million
in 1992, a $10.9 million or 39.0% decline. This decrease was due to the sales
decline, production inefficiencies and changes in product mix. This group's
profits were further reduced by restructuring and unusual operating charges of
$47.8 million in 1993, of which $39.8 million was recorded in the fourth
quarter, and resizing charges of $8 million which were recorded in the first
nine months of the year. These charges were primarily for work force
reductions planned or which occurred in 1993 (including certain pension
related costs), asset write-downs, product line relocations of certain gauge
manufacturing operations, and consolidation of the Company's aerospace
businesses. Most of these actions were necessary due to the unwillingness of
the union at the Company's Sellersville facility to agree to wage and work
rule concessions requested by the Company necessary to make that operation
competitive. After restructuring and other unusual operating charges, this
group reported an operating loss of $30.6 million for 1993.
Industrial Materials group sales in 1993 were $176.1 million, an increase of
$13.1 million or 8.1% from 1992 largely due to increased sales of liquid
filtration products, compounded plastics and specialty metal products. Group
operating profit before restructuring and other unusual charges was $22.2
million, a slight improvement over operating profit of $22.1 million reported
for 1992. An increase
19
<PAGE>
in profits by the Specialty Metal Products division was substantially offset
by lower profits from the other businesses in this group due to operating
inefficiencies and changes in product mix at certain divisions. After fourth
quarter 1993 restructuring and other unusual charges of $3.9 million,
primarily for certain asset write-downs, the group operating profit was $18.3
million for 1993. In February 1994, a warehouse attached to a plant in this
group collapsed under the weight of heavy snow. The Company expects the plant
to return to full operation by mid-March 1994; the damages and related losses
are covered by insurance.
YEAR ENDED DECEMBER 31, 1992 COMPARED TO YEAR ENDED DECEMBER 31, 1991
Results of Operations
For 1992, Ametek achieved record sales of $769.6 million, exceeding sales in
1991 by $54.5 million or 7.6%. The increase occurred primarily in the Electro-
mechanical Group and was the result of increased worldwide demand for electric
motors, the introduction of new products and increased market penetration.
Sales were also enhanced by the acquisition of an electric motor business in
the first quarter of 1992. A sales increase by the Industrial Materials Group
was more than offset by lower sales by the Precision Instruments Group, which
suffered from a sharp decline in demand for aircraft instruments and engine
sensors in the commercial and military markets. Sales by all business segments
to foreign markets totalled $233.7 million in 1992 compared to $211.8 million
in 1991, an increase of 10.3%. Export sales from the United States totalled
$119.3 million in 1992 compared to $111.6 million in 1991, a 6.9% increase.
New orders during 1992 were approximately $735.5 million, an increase of
$26.2 million, or 3.7% over 1991. The backlog of orders was approximately
$240.9 million at year-end, a 12.4% decrease from the end of 1991, reflecting
the lower level of business in the Precision Instruments Group.
Business segment operating profit was $100.1 million in 1992, an increase of
$11.5 million or 12.9% over last year's $88.6 million. The improved operating
results for 1992 came mainly from the overall higher sales volume in the
Electro-mechanical and Industrial Materials Groups and improved performance by
the Company's three Italian motor divisions.
Corporate expenses (including unallocated administrative expenses, interest
expense and net other income) of $33.3 million in 1992 were $2.9 million lower
than last year's $36.2 million, primarily due to lower interest expense
resulting from the reduced level of debt.
The effective tax rate for 1992 was 33.5% compared to 1991's rate of 27.5%.
Both periods benefitted from favorable income tax adjustments. The 1992 rate
reflects a net favorable settlement of certain tax years for United States
operations, while the 1991 rate included the recognition of tax benefits from
combining certain foreign operations.
Net income was $44.4 million or $1.01 per share for 1992, compared to
earnings of $38.0 million or $.87 per share for 1991.
Business Segment Results
Electro-mechanical Group sales in 1992 were $309.6 million, an increase of
$59.8 million or 23.9% from 1991 largely due to improved demand and market
penetration for electric motors aided somewhat by the acquisition of a new
business in the first quarter of 1992. Group operating profit increased 41.1%
to $49.9 million due to the higher sales volume, a more favorable product mix,
and improved operating performance by the Italian motor divisions.
In the Precision Instruments Group, sales were $297.0 million for 1992, a
decrease of $12.9 million or 4.2% from 1991. The sales decline reflects
continuing weak demand for aircraft and aerospace instruments, sensors and
spare parts for commercial airlines and the military, caused by the deepening
20
<PAGE>
recession in this market. The overall sales decline was partially offset by
increased sales of truck instruments. The group's operating profit of $28.0
million fell 14.8% from $32.9 million in 1991, largely because of the steep
sales decline in some of the group's more profitable products.
The Industrial Materials Group's 1992 sales increased $7.5 million or 4.8%
to $163.0 million, due to increased sales of water filtration products and
metal powders. Operating profit of the group totalled $22.1 million in 1992,
compared to $20.3 million in 1991, an 8.7% increase, reflecting the increase
in the group's sales volume and lower operating expenses in the Company's
plastics compounding and foam packaging businesses.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Working capital at December 31, 1993 amounted to $134.2 million, a decrease
of $56.0 million from December 31, 1992, caused largely by the provisions for
resizing, restructuring and other unusual items. The ratio of current assets
to current liabilities at December 31, 1993 was 1.80 to 1, compared to 2.38 to
1 at December 31, 1992.
Cash generated by the Company's operating activities totalled $65.3 million
in 1993 compared to $78.6 million in 1992. The decrease reflects the lower
level of earnings, after adding back $50.9 million of restructuring and other
unusual charges not requiring the use of cash in 1993. Cash flows from
operating activities, less cash used for investing and financing activities of
$83.9 million, resulted in a decrease in cash and cash equivalents of $18.7
million since the beginning of 1993. Cash used in 1993 included $38.3 million
for the purchase of property, plant and equipment, $25.1 million for the
payment of dividends, $19.4 million for the repayment of long-term debt, $16.6
million for the purchase of a business and investments and $8.9 million for
the purchase of 683,400 shares of the Company's Common Stock in the second
quarter of 1993. Cash and cash equivalents and short-term marketable
securities totalled $84.7 million at December 31, 1993, a decrease of $31.0
million from December 31, 1992.
Of the $54.9 million of resizing, restructuring and other unusual charges
recorded in 1993, certain items require cash expenditures which are expected
to be funded by normal operations. Approximately $4.0 million was expended in
1993, and the Company anticipates that approximately $25.3 million will be
expended over the next two years. After all the restructuring actions are in
place, the Company expects to realize continuing benefits resulting from
reduced labor costs, improved productivity and other lower operating costs
which, the Company believes, should more than offset these cash expenditures
over time. Certain asset write-downs, provisions for pension curtailments and
other unusual items totaling $25.6 million will not require the use of cash,
or incremental cash, during the next five years.
The proceeds of the Notes offered hereby, together with borrowings under the
Credit Agreement and available cash, will be used (a) to retire (i) $106.8
million aggregate principal amount of the 8.95% Notes, (ii) $75.0 million
aggregate principal amount of the 9.35% Notes and (iii) $3.6 million aggregate
principal amount of the 8.05% Notes, (b) to repurchase outstanding shares of
the Company's Common Stock for an aggregate purchase price of up to $150
million and (c) to pay fees and expenses related to the sale of the Notes
offered hereby and the Credit Agreement. See "Use of Proceeds."
The Company's future interest costs are expected to increase because of the
higher outstanding total debt. The Company's quarterly Common Stock dividend
was recently reduced from $.17 per share to $.06 per share. This reduction,
without giving effect to the intended repurchase of Common Stock, will result
in an annual saving of approximately $19.4 million. This saving should more
than offset the higher interest cost.
The Company believes that the amounts to be available under the new Credit
Agreement and the proceeds of the sale of the Notes offered hereby, together
with cash on hand and cash flows generated
21
<PAGE>
from operations, will provide sufficient capital resources to service all debt
obligations, fund the share repurchase program and finance working capital,
the new lower dividend and capital expenditure requirements in the foreseeable
future. See "Selected Financial Data--Supplemental Pro Forma Data" and "Risk
Factors--Increased Leverage."
Capital Expenditures
Capital expenditures (excluding acquisitions) were $38.3 million during
1993. The majority of the expenditures were for additional manufacturing
equipment and an additional production facility in the Electro-mechanical
Group to provide expanded production capacity. The 1993 capital spending level
is approximately 60% higher than 1992. The Company expects to continue its
high level of capital spending in 1994, with special emphasis on the Electro-
mechanical Group. The projected 1994 capital expenditures are approximately
$37 million, of which $10 million has been rescheduled from 1993.
Acquisitions
In 1992, the Company acquired a producer of small electric motors and
injection-molded components, a United Kingdom industrial filtration business,
an instrument manufacturer located in Germany, and two small product lines for
a total of $11.7 million in cash. The motor company acquisition was a factor
in the Company's recent decision to form the Technical Motor Division in the
Electro-mechanical Group. On March 31, 1993, the Company purchased certain
assets of Revere Aerospace Inc. ("Revere"), a United States subsidiary of
Dobson Park Industries PLC, for approximately $7 million in cash. Revere is a
producer of thermocouple and fiber optic cable assemblies. These acquisitions
have complemented the Company's existing businesses and broadened its global
marketing efforts.
ENVIRONMENTAL MATTERS
The Company is subject to environmental laws and regulations, as well as
stringent clean-up requirements, and has also been named a potentially
responsible party at several sites which are the subject of government-
mandated clean-ups. Provisions for environmental clean-up at these sites and
other sites were approximately $4.9 million in 1993 ($1.4 million in 1992).
While it is not possible to accurately quantify the potential financial impact
of actions regarding environmental matters, the Company believes that, based
upon past experience and current evaluations, the outcome of these actions is
not likely to have a material adverse effect on future results of operations
of the Company.
ACCOUNTING STANDARDS RECENTLY ADOPTED
The Company adopted two Financial Accounting Standards Board ("FASB")
Statements in 1991 and 1992. In 1991, the Company adopted the provisions of
Statement No. 106 relating to employers' accounting for employee post-
retirement benefits other than pensions. The Company only provides limited
post-retirement benefits, other than pensions, to certain retirees and a small
number of employees. In 1992, the Company adopted the provisions of Statement
No. 109 relating to accounting for income taxes. Prior to 1992, the Company
followed the provisions of Statement No. 96, Accounting for Income Taxes,
which contained substantially the same requirements as Statement No. 109, but
which was modified for balance sheet classification of deferred taxes, among
other things. The effect of adopting these accounting standards was not
material to the Company's consolidated financial statements.
In November 1992 the FASB issued Statement No. 112 relating to accounting
for post-employment benefits. In March 1993, Statement No. 115 relating to
accounting for marketable securities was issued. The Company has adopted both
of these Statements effective as of January 1, 1994. Adoption of these
accounting standards did not have a material effect on the Company's results
of operations.
22
<PAGE>
BUSINESS
Ametek is an international manufacturer of high quality, engineered products
for industrial and commercial markets. The Company has a significant market
share for many of its products and a leading market share in electric motors
for vacuum cleaners and other floor care products, the Company's most
significant business. Many of the Company's products have a technological
component and are engineered to customer specifications. The Company employs
approximately 6,000 individuals and operates 32 manufacturing facilities
located in 12 states, as well as in Italy, Denmark, England and Mexico.
The Company's products are produced and sold worldwide through the Company's
Electro-mechanical, Precision Instruments and Industrial Materials Groups. The
principal products of each of the Groups include:
. Electro-mechanical Group--fractional horsepower electric motors and
blowers for vacuum cleaners and other floor care products, as well as for
furnaces, lawn tools, computer equipment, photocopiers and other
applications.
. Precision Instruments Group--instruments for commercial and military
aircraft and engines, devices for measuring, monitoring and controlling
industrial manufacturing processes, pressure gauges, and instrumentation
for heavy trucks.
. Industrial Materials Group--specialty metal products for electronics,
general industry and consumer goods, water filtration systems,
temperature and corrosion resistant materials, plastic compounds for
automotive and appliance markets and protective foam wrap for furniture
and fruit.
The Company's business has grown over the years through a combination of
acquisitions and internal growth into a diversified manufacturing company
serving a wide range of markets. The Company has concentrated on identifying,
developing and marketing high quality, technology-based products which hold,
or have the potential for gaining, a significant share of one or more niche
markets.
In November 1993, the Company completed a broad strategic review and
announced a plan intended to enhance shareholder value over the long term.
From an operational point of view, the Company will seek to increase the
profitability of its existing businesses through (i) growth and reinvestment,
particularly in its electro-mechanical, specialty metal and water filtration
operations, (ii) continued emphasis on controlling costs and (iii) an
increased focus on foreign sales, especially in the Pacific Rim and Europe,
through a combination of direct selling efforts and joint ventures. The
Company also intends to pursue strategic acquisitions on a selective basis. In
addition, the Company intends to continue its policy of reviewing, from time
to time, possible divestitures of existing businesses.
From a financial point of view, the Company's plan, which takes advantage of
the Company's historically strong cash flow, involves repurchasing outstanding
shares of its Common Stock for an aggregate purchase price of up to $150
million and refinancing existing debt with the proceeds from the sale of the
Notes offered hereby, borrowings under the Credit Agreement and available
cash. The resulting increased leverage will reduce the Company's financial and
operating flexibility. Accordingly, the plan also calls for a reduction in the
quarterly per share dividend rate on the Company's Common Stock from $.17 to
$.06 and a decrease in the Company's leverage over time. See "Risk Factors--
Increased Leverage" and "--Ranking."
The Company also recorded certain after tax charges against earnings of
$28.6 million during the fourth quarter of 1993, resulting in aggregate
charges of $33.5 million for the year. A substantial portion of these charges
relates to the restructuring of several businesses and reflects asset write-
downs and other unusual charges against income. The restructuring charges
primarily result from actions taken or planned due to the unwillingness of the
union at a Precision Instruments facility in Sellersville,
23
<PAGE>
Pennsylvania to agree on wage and work rule concessions requested by the
Company necessary to make such operation competitive. These actions include
relocating, outsourcing and downsizing various manufacturing functions at this
facility. See "Risk Factors--Business Restructuring" and "--Labor Relations"
and "Management's Discussion and Analysis of Financial Condition and Results
of Operations." The Company will also record an extraordinary charge of
approximately $13 million (after tax) in 1994 for the early retirement of the
Institutional Notes after completion of the sale of the Notes offered hereby
and the application of the proceeds thereof.
The Company classifies its operations into three principal business
segments: Electro-mechanical, Precision Instruments, and Industrial Materials.
The following table sets forth summary sales and income information for the
Company's business segments for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1991 1992 1993
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
NET SALES (1):
Electro-mechanical........................... $249,763 $309,556 $280,732
Precision Instruments........................ 309,901 297,025 275,351
Industrial Materials......................... 155,435 162,969 176,112
-------- -------- --------
Total net sales.............................. $715,099 $769,550 $732,195
======== ======== ========
INCOME (LOSS):
Electro-mechanical........................... $ 35,363 $ 49,912 $ 35,018
Precision Instruments........................ 32,914 28,045 (30,643)(2)
Industrial Materials......................... 20,332 22,096 18,284 (3)
-------- -------- --------
Total segment operating profit (4)........... 88,609 100,053 22,659
Corporate and other expenses (5)............. (36,231) (33,334) (33,856)
-------- -------- --------
Income (loss) before taxes................... $ 52,378 $ 66,719 $(11,197)
======== ======== ========
</TABLE>
- --------
(1) After elimination of intersegment sales, which are not significant in
amount.
(2) Reflects charges of $47.8 million primarily for resizing and restructuring
costs associated with planned work force reductions and those which
occurred in 1993, asset write-downs, relocation of product lines and the
overall consolidation of the company's aerospace operation and other
unusual charges.
(3) Reflects charge of $3.9 million primarily for asset write-downs.
(4) Segment operating profit represents sales less all direct costs and
expenses (including certain administrative and other expenses) applicable
to each segment, but does not include interest expense.
(5) Includes unallocated administrative expenses, interest expense and net
other income and, in 1993, $2.8 million of restructuring and other unusual
charges.
ELECTRO-MECHANICAL GROUP
Ametek's Electro-mechanical Group ("EMG") is the world's leading supplier of
fractional horsepower electric motors and blowers for vacuum cleaners and
other floor care products. EMG also manufactures electric motors and blowers
for furnaces, lawn tools, photocopiers, computer equipment and other
applications. EMG accounted for $280.7 million of the Company's net sales and
$35.0 million of the Company's segment operating profit for 1993.
Through its six plants in the United States, three in Italy and one in
Mexico, EMG produced approximately 20 million motors in 1992 and approximately
18 million motors in 1993. Each of these facilities is equipped with efficient
state-of-the-art production lines designed to maximize manufacturing
flexibility. Because of its high production volume, flexible manufacturing
capability and technological know-how, EMG offers its customers cost
competitive and custom designed products on a timely basis.
24
<PAGE>
Floor Care Products
EMG participates in the production of motors and blowers for the full range
of floor care products from the hand held, canister, upright and central
vacuums for household use to the more sophisticated vacuum products for
commercial and industrial applications.
EMG's sales have expanded in recent years due to strong sales by vacuum
cleaner manufacturers resulting primarily from the proliferation of
specialized vacuum products, although sales for 1993 declined because of
reduced domestic and European demand for electric motor products and the
negative effect of foreign currency translation. New product development and
short production lead times are critical to vacuum cleaner manufacturers who
face shifting consumer preferences and intense retail competition. Many of
EMG's long-standing customer relationships have resulted from EMG's ability to
address these concerns. With EMG's flexible manufacturing capacity and
established technical expertise, it is able to produce a wide variety of high
quality motor products in a short time frame. EMG's involvement with key
customers begins in the early stages of their product's design. This allows
EMG's technically sophisticated and highly trained sales force to work with
its customers in developing product specifications for customized applications
in the floor care market.
In recent years, EMG has also expanded its sales in the floor care industry
by marketing its motors to vertically integrated vacuum cleaner manufacturers
who elect to curtail or discontinue their own motor production and instead use
EMG's motors. By using EMG's motors, vacuum cleaner manufacturers are able to
reduce the substantial capital expenditures they would otherwise have to make
to maintain their own motor production, with frequent design changes, at
acceptable levels.
EMG's floor care product development activities have recently focused on
improving motor-blower cost-performance through advances in power, efficiency
and quieter operation. EMG has recently developed a 1200 watt brushless motor
blower for high-end floor care applications in commercial vacuum cleaners and
central vacuum systems, as well as a new low cost motor designed for export
markets with price-sensitive, high volume vacuum applications.
EMG currently maintains a significant position in the European market for
floor care products based on exports from the United States and production
from its Italian operations. Two of EMG's plants in Italy are dedicated to
producing electric motors for vacuum cleaner manufacturers throughout Western
Europe and, to a more limited extent, Eastern Europe. These motors are similar
to those produced in the United States.
EMG believes that its technological and manufacturing know-how, its
expertise in product development and its specialized and flexible production
capacity provide it with a competitive advantage in the low cost design and
manufacture of motors for vacuum cleaners and other air moving devices.
EMG's business development will seek to capitalize on this competitive
advantage through three strategies. First, the Company will continue to
participate in the overall growth of the floor care market by responding to
the demands created by product proliferation and differentiation. Second, EMG
intends to pursue opportunities to increase its sales to additional vertically
integrated manufacturers, domestic or foreign, who continue to manufacture
some or all of their own motors. EMG believes that it can offer cost and
production advantages to these potential customers similar to those it has
provided its existing customers. Third, EMG intends to expand its foreign
sales volume through direct exports from the United States and joint ventures
with local parties, with particular emphasis on the Pacific Rim and Eastern
Europe. EMG is currently pursuing joint venture opportunities in each of these
regions. In addition, EMG is utilizing its operating base in Italy to pursue
additional market opportunities in Eastern Europe and Russia.
25
<PAGE>
Consistent with its strategy for long term growth, EMG is in the process of
increasing its unit production capacity for floor care products by
approximately 50%, primarily to meet anticipated growth in customer demand for
smaller size motors over the next several years. This is being accomplished
primarily by adding new production lines at the existing Graham, North
Carolina facility.
Technical Motor Products
In order to make greater use of its technological expertise developed in the
floor care products area, EMG recently formed its Technical Motor Division to
consolidate and expand its production of motors and blowers used in certain
non-floor care applications, particularly in the market for brushless motor
technology where EMG is seeking to establish a significant position.
EMG's technical motor products include motors for furnaces, lawn tools,
photocopiers, computer equipment, other business machines, medical equipment
and evaporative cooling equipment. Its brushless motors, which are free of
static charges, are becoming increasingly popular in medical and other
applications where flammability is a concern. Recent product developments in
this area include the use of EMG's brushless motors in systems designed to
assist patients with sleep-breathing disorders, systems which help bedridden
patients avoid bedsores and systems to recover gasoline fumes at automotive
refueling stations.
In addition, EMG will begin producing induction motors, which were
previously purchased by EMG, for use in conjunction with its blower products.
The ability to produce its own induction motors offers EMG new opportunities
in the high efficiency furnace, water heating and induction motor pump
markets.
EMG's strategy in its technical motor products is to build a strong position
in the global market, especially in Europe where its heating industry customer
base is expanding. In 1993, EMG dedicated one of its Italian plants to the
manufacture of technical motor products. Through the Company's Singapore sales
subsidiary and its Shanghai office, EMG is seeking to build a presence in the
Pacific Rim.
Consistent with its strategy for long term growth, EMG has recently
increased its unit production capacity for technical motor products by
approximately 25% to meet anticipated growth in customer demand for the next
several years by commencing production at its new Rock Creek, North Carolina
plant.
Customers
Although EMG is not dependent on any single customer such that its loss
would have a material adverse effect on its operations, approximately 26.4% of
EMG's sales for 1993 were made to its five largest customers.
PRECISION INSTRUMENTS GROUP
The Precision Instruments Group ("PI") serves a diverse group of markets,
the largest of which are the aerospace, pressure gauge, process and refining
and heavy-duty truck markets. In many cases, PI has the number one or two
position in the niche markets it serves. PI produces cockpit instruments,
process monitoring and display systems, process control gas and liquid
analyzers, moisture and emissions monitoring systems, force and speed
measuring instruments, air and noise monitors, pressure and temperature
calibrators, pressure gauges and automotive products. PI accounted for $275.4
million of the Company's net sales and reported a $30.6 million operating loss
for 1993, which included charges of $47.8 million for resizing, restructuring
and other unusual items.
26
<PAGE>
Aerospace Products
PI designs and manufactures cockpit instruments/displays, engine sensors and
monitoring systems, fuel/liquid quantity measurement devices and
electrical/thermocouple cables for aircraft and aircraft engines. These
products record, process and display information for use by flight and ground
crews. PI serves all segments of the commercial aerospace industry, including
business and commuter aircraft and the commercial airlines, as well as the
defense industry. PI's products are also marketed as spares. PI's products are
designed to customer specifications and must be certified as meeting stringent
operational and reliability requirements.
PI's strategy in aerospace products is to operate in niche categories where
it has a technological or cost advantage. PI believes that its extensive
experience and technological expertise in the aerospace field, together with
its long-standing relationships with several leading international
manufacturers of commercial aircraft, provide it with a competitive advantage.
PI was recently selected by Boeing to supply an engine vibration monitoring
system for Boeing's new 777 model. Variations of this product will be marketed
to other aircraft manufacturers. In addition, PI's strategic effort to expand
its product line has recently yielded new orders for an advanced aircraft
engine sensor, an advanced cockpit display system featuring active matrix
liquid crystal display and a business jet fuel quantity system. In early 1993,
PI acquired certain assets of Revere Aerospace Inc., which added a high-
performance electrical and optical interconnecting cable business as a
complement to its existing product lines.
As a result of the overall weakness in the aerospace industry, PI sales to
the military and commercial OEM aircraft markets declined significantly in
1992 and 1993. In addition, PI's sales of aerospace products for use as spares
were reduced significantly as airlines lowered spare parts inventories and
utilized excess equipment from surplus aircraft. In response to these
conditions, PI embarked on an aggressive program to reduce costs through
significant consolidation and downsizing. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Recent
Developments." PI also recently restructured and consolidated its management
team for all aerospace activities. These actions are designed to enhance PI's
long term operating efficiency and profit potential. It is PI's intention to
continue to manage its cost structure aggressively and to selectively expand
and develop its product lines, with a particular emphasis on the development
of advanced technology instruments.
PI also intends to expand its marketing presence and distribution channels
for the aerospace and industrial process control markets in Europe and the
Pacific Rim in 1994.
Industrial Process Control and Pressure Gauge Products
PI serves the process industry by designing and manufacturing process
control products, including gas and liquid analyzers, emission monitors,
process annunciators and control room graphic displays. PI serves numerous
segments of the process industry, including refining and petrochemical
processing and power and steel plants. PI also produces a wide variety of
pressure gauge products for numerous industrial and commercial uses. PI has a
leading position in many of the niche areas where it competes in the domestic
process control market and in the North American pressure gauge market.
In recent years, domestic market conditions have been, and continue to be,
soft due primarily to adverse conditions in the refining and petrochemical
industry. These conditions have been affected by environmental regulations
which have severely reduced new refinery and petrochemical plant construction
and refinery and petrochemical operating rates in the United States.
PI's business strategy is to concentrate on new markets where it has a
technological or cost advantage. PI develops or customizes products around
core technologies to meet customer
27
<PAGE>
requirements. For example, PI's oxygen and combustion analyzers have a leading
market position and are designed to meet customer specific applications. PI
has also recently succeeded in marketing one of its aerospace based products,
thermocouples, for use with land gas turbines.
Pressure gauges are produced by PI's U.S. Gauge Division, a leader in the
North American pressure gauge market. Pressure gauges are used in a wide
variety of industrial and manufacturing processes. The general pressure gauge
market has been adversely affected by poor domestic economic conditions and
competition from low cost offshore producers. PI has responded to these market
conditions by reducing costs and refocusing its domestic manufacturing to
concentrate on higher priced pressure gauge applications. In addition, through
a distributorship relationship with a Taiwanese company, PI is currently
distributing in the United States low cost pressure gauges manufactured in the
People's Republic of China, a product segment in which PI is not currently
competitive.
Automotive Products
PI is the leading domestic producer and supplier of electronic instrument
panels and instruments to the heavy truck market and is currently expanding
into the agricultural and construction vehicle markets. In recent years, the
heavy truck market has been strong. Domestic truck manufacturers have faced a
growing demand for more fuel efficient trucks that satisfy applicable air
pollution guidelines. PI has participated in this market by working closely
with several manufacturers to develop solid state instruments to monitor
engine efficiency and emissions. PI's strategy with this product line is to
expand into international markets with products similar to those currently
produced for United States manufacturers.
Customers
Although the Precision Instruments Group is not dependent on any single
customer such that its loss would have a material adverse effect on its
operations, approximately 28.9% of its 1993 sales were made to its five
largest customers.
INDUSTRIAL MATERIALS GROUP
The Industrial Materials Group ("IMG") manufactures the following principal
products: water filtration products, high-purity engineered metals, high-
temperature fabrics, compounded plastics and plastic packaging materials. Each
of IMG's five businesses is technology-based, stressing mechanical,
metallurgical or plastic processing skills. IMG accounted for $176.1 million
of the Company's net sales and $18.3 million of the Company's segment
operating profit for 1993. IMG consists of five divisions: Plymouth Products,
Specialty Metal Products, Haveg, Microfoam and Westchester Plastics.
IMG's strategic focus is to target niche markets by differentiating its
products on the basis of quality, price and/or services and to pursue new
product development by exploiting proprietary technologies and specialized
manufacturing processes.
The Plymouth Products Division and a United Kingdom subsidiary produce water
filtration products for residential, commercial and industrial uses in the
United States and 80 other countries. Plymouth Products sells its products in
both the retail and wholesale markets. With its acquisition in late 1992 of
the Kleen Plus (R) retail water filter line, Plymouth Products believes it now
has the broadest cartridge filtration product line in the world, offering
complete water filtration systems, 25 special-purpose filter housings and 60
different replacement cartridges. Plymouth's filter cartridges and housings
are used in such diverse applications as water filtration and food and
beverage, cosmetics
28
<PAGE>
and chemical production. Plymouth's point-of-use drinking water filters are
used for the removal of objectionable taste and odor, hazardous chemicals and
heavy metals. In addition, Plymouth Products produces a faucet-mounted filter,
as well as filters, housings and cartridges for use by plumbing professionals
for residential and commercial customers. Because of the widespread concern
with the quality of municipal water supplies, Plymouth Products believes it
has important growth opportunities in the commercial and industrial markets
for water filtration products. The Company has identified the water filtration
market as a key opportunity for expansion and, accordingly, has commenced a $4
million plant expansion. This capacity increase is the fifth such expansion in
the last 13 years.
The Specialty Metal Products Division uses its powder metallurgy to produce
strip and wire and uses its cladding technologies to make a variety of
products with multiple metallurgical properties. Specialty Metal Products
sells its products for use in the manufacture of appliances, electronic
connectors, rechargeable batteries and TV cathode ray tubes. Its clad metals
are used in gourmet cookware and chemical and pressure vessels, and its metal
matrix composites are used for thermal management in high power electronic
circuits.
The Haveg Division manufactures products for high temperature applications
and highly corrosive environments. Haveg's products are made of silicas,
phenolic resins and Teflon (R) (a registered trademark of the DuPont Company).
Haveg's silica yarn, which maintains strength and flexibility at high
temperatures, is used for protective welding curtains, as a textile
replacement for asbestos and as a laminate for printed circuit boards. Two
other Haveg products are Flexsil (R), made from Haveg's woven Siltemp (R)
fabric and used in foundries to filter molten metal as it is poured into
casting molds, and Teflon (R) heat exchangers, used in a number of different
industrial applications because of its chemically inert construction and high
purity. Additionally, Haveg produces storage tanks and pipes, made of phenolic
resins, which are able to withstand highly corrosive environments.
The Microfoam Division is the world's only producer of a very low density
polypropylene foam used primarily for packaging items, such as furniture and
agricultural products, that require cushioning, surface protection and
insulation. CouchPouch (TM), one of Microfoam's products made from the
division's MicroTuff (TM) composite material is stitched into various size
bags large enough to protect furniture. Because they are made of pure
polypropylene, the products are suitable for reuse and recycling.
The Westchester Plastics Division is engaged in the toll processing and
formulation of plastics compounds, including developing processing techniques
that enhance such properties as fire retardance and adhesion. In addition,
Westchester Plastics has state-of-the-art twin-screw extruder lines used to
produce custom thermoplastics for a variety of industries.
Customers
Although IMG is not dependent on any single customer such that its loss
would have a material adverse effect on its operations, approximately 13.1% of
IMG's sales for 1993 were made to its five largest customers.
FOREIGN OPERATIONS
In response to increasing globalization of the world economy and perceived
opportunities for growth, the Company has expanded over the past several years
its foreign sales and operations. International sales, as a percentage of
total consolidated sales, amounted to 27.7% in 1993. This expansion has
resulted from a combination of increasing export sales of products
manufactured in the United States and overseas acquisitions and strategic
alliances.
29
<PAGE>
Ametek's strategy for growth in global markets is driven by requirements for
global cost-competitiveness and especially by economic growth in the Pacific
Rim. Ametek Singapore Private, Ltd. was established as a regional headquarters
to enable the Company to locate more favorable supply arrangements and to
expand its product sales throughout the Pacific Rim.
International operations of the Company are subject to certain risks which
are inherent in conducting business outside the United States, such as
fluctuation in currency exchange rates and controls, restrictions on the
movement of funds, import and export controls, and other economic, political
and regulatory policies of the countries in which business is conducted. See
"Risk Factors--Risks Associated with International Operations."
The following table sets forth summary sales information by geographic area
for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1991 1992 1993
------------ ------------ ------------
$ % $ % $ %
-------- --- -------- --- -------- ---
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
SALES
Europe.................. $157,990 22% $178,243 23% $147,209 20%
Other foreign........... 53,854 8 55,496 7 55,730 8
-------- --- -------- --- -------- ---
Total international (1). 211,844 30 233,739 30 202,939 28
Domestic................ 503,255 70 535,811 70 529,256 72
-------- --- -------- --- -------- ---
Total Consolidated...... $715,099 100% $769,550 100% $732,195 100%
======== === ======== === ======== ===
- -------
(1) Total international consists of:
Foreign operations..... $100,209 14% $114,436 15% $ 97,260 13%
Exports................ 111,635 16 119,303 15 105,679 15
-------- --- -------- --- -------- ---
Total international.... $211,844 30% $233,739 30% $202,939 28%
======== === ======== === ======== ===
</TABLE>
MARKETING
Generally, the Company's marketing efforts are organized and carried out at
the divisional level. However, a few functions are centralized at the
corporate level for reasons of cost and efficiency.
Given the basic similarity of its various products, its significant market
share worldwide and the technical nature of its products, EMG conducts most of
its domestic and international marketing activities through its highly trained
and technically sophisticated direct sales force. EMG makes limited use of
sales agents in those foreign countries where its sales activity is relatively
low.
Because of their relatively diverse product lines, both PI and IMG make
significant use of distributors and sales agents in the marketing efforts of
most of their divisions. With its specialized customer base of aircraft
manufacturers and airlines, PI's aerospace division relies primarily on its
direct selling efforts.
COMPETITION
Generally, most markets in which the Company operates are highly
competitive. The principal elements of competition for the products
manufactured in each of the Company's business segments are price, product
features, distribution, quality and service.
The primary competition in the United States in the floor care market is
from a few competitors, each of which has a smaller market share but is part
of a company which is larger and has greater
30
<PAGE>
resources than Ametek. Additional competition could come from vertically
integrated manufacturers of floor care products which produce their own motors
and blowers. In Europe, competition is from a small group of very large
competitors and numerous small competitors.
In the markets served by the Precision Instruments Group, the Company
believes that it is one of the world's largest pressure gauge manufacturers
and a leading producer of annunciator systems. The Company also ranks among
the top ten producers of certain measuring and control instruments in the
United States. It is one of the leading instrument and sensor suppliers, with
a broad product offering in both the military and commercial aviation
industries. As a result of the continuing decline in demand for aircraft
instruments and engine sensors due to the consolidation and deregulation of
the airline industry and reduced military spending, competition is strong and
is expected to intensify with respect to certain of the products in the
aerospace markets. In the pressure gauge and automotive markets served by PI,
there are a limited number of companies competing on price and technology.
With respect to process measurement and control niche markets, there are
numerous competitors in each niche competing, for the most part, on the basis
of product quality and innovation.
Many of the products sold by the Industrial Materials Group are made by few
competitors and competition is mainly from producers of substitute materials.
The Company's Westchester Plastics division is one of the nation's largest
independent plastics compounders. In this market, the Company's competition is
from other independent toll compounders and those customers which have similar
compounding capabilities. Plymouth Products is one of the major suppliers of
household water filtration systems, a market in which it has numerous
competitors. In the industrial and commercial filtration markets which
Plymouth Products serves, it does not have a major market share and faces
competition from numerous sources.
BACKLOG AND SEASONAL VARIATIONS OF BUSINESS
The Company's approximate backlog of unfilled orders at the dates specified
by business segment was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1991 1992 1993
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Electro-mechanical................................ $ 79.8 $ 80.8 $ 66.0
Precision Instruments............................. 170.8 137.3 121.8
Industrial Materials.............................. 24.4 22.8 24.8
------ ------ ------
Total......................................... $275.0 $240.9 $212.6
====== ====== ======
</TABLE>
Of the total backlog of unfilled orders at December 31, 1993, approximately
88% is expected to be shipped by December 31, 1994.
The Company believes that neither its business as a whole nor any of its
business segments is subject to significant seasonal variations, although
certain individual operations experience some seasonal variability.
RESEARCH AND DEVELOPMENT
Notwithstanding the recent economic recession, the Company continues to be
committed to appropriate research and development activities designed to
identify and develop potential new and improved products. Company-funded
research and development costs were $15.1 million for 1993. Research
activities are conducted by the various businesses of the Company in the areas
in which they operate.
31
<PAGE>
ENVIRONMENTAL COMPLIANCE
The Company is subject to environmental laws and regulations. The Company
has been named as a potentially responsible party at several sites which are
the subject of government-mandated clean-ups. Provisions for environmental
clean-up at these sites and other sites were approximately $1.4 million in
1992 and approximately $4.9 million in 1993. Additional charges for these
purposes may be required in the future. It is not possible to accurately
quantify the potential financial impact of future environmental matters, laws
and regulations and there can be no assurance that such matters will not have
a material adverse effect on the Company. However, based upon past experience
and current evaluations, the Company believes that the costs of environmental
compliance are not likely to have a material adverse effect on results of
operations of the Company. See "Risk Factors--Environmental Matters" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
PATENTS, LICENSES AND TRADEMARKS
The Company owns numerous unexpired United States patents, United States
design patents and foreign patents, including counterparts of its more
important United States patents, in the major industrial countries of the
world. The Company is a licensor or licensee under patent agreements of
various types and its products are marketed under various registered United
States and foreign trademarks and trade names. However, the Company does not
consider any single patent or trademark, or any group thereof, essential to
its business as a whole, or to any of its business segments. The annual
royalties received or paid under license agreements are not significant to any
single business segment or to the Company's overall operations.
EMPLOYEES
At December 31, 1993, the Company employed approximately 6,000 individuals,
of whom approximately 2,400 are covered by collective bargaining agreements.
Ametek believes its relations with employees and their unions are generally
good. Recently, Ametek requested the union at its U.S. Gauge operation in
Sellersville, Pennsylvania to reopen existing labor agreements for the purpose
of considering wage concessions and work rule changes. The union has not been
willing to accept these changes. Accordingly, the Company has announced its
intention to move certain of its operations at Sellersville to another
location. See "Risk Factors--Business Restructuring" and "--Labor Relations."
PROPERTIES
The Company has 32 plant facilities in 12 states and five foreign countries.
Of these facilities, 26 are owned by the Company and six are leased. The
properties owned by the Company consist of approximately 441 acres in total,
of which approximately 3,447,000 square feet are under roof. Under lease is a
total of approximately 413,000 square feet. The leases expire over a range of
years from 1994 to 1999 with renewal options for varying terms contained in
most of the leases. The Company also has an idle facility and certain parcels
of land available for sale. The Company's executive offices in Paoli,
Pennsylvania occupy approximately 32,000 square feet under a lease which will
expire in 1997. Additional offices of the Company in New York City occupy
approximately 4,000 square feet under a lease which will expire in 1996.
The Company's machinery, plants and offices are in satisfactory operating
condition and are adequate for the uses to which they are put. The operating
facilities of the Company by business segment are summarized in the following
table:
<TABLE>
<CAPTION>
NUMBER OF FACILITIES SQUARE FEET UNDER ROOF
---------------------- ------------------------
OWNED LEASED OWNED LEASED
---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Electro-mechanical....... 9 1 1,143,000 66,000
Precision Instruments.... 8 5 856,000 347,000
Industrial Materials..... 9 - 1,448,000 --
---------- ---------- ------------ ----------
Total................ 26 6 3,447,000 413,000
========== ========== ============ ==========
</TABLE>
32
<PAGE>
THE CREDIT AGREEMENT
On November 17, 1993, the Company received a commitment letter (the
"Commitment") from The Chase Manhattan Bank, N.A. ("Chase") to provide the
Company with senior bank financing sufficient to finance, together with
available cash, the Company's repayment of the Institutional Notes and
repurchases of Common Stock and to provide working capital for general
corporate purposes. Subject to the completion of the sale of the Notes offered
hereby, the Commitment is expected to be replaced by a definitive $250 million
Credit Agreement having the terms summarized below. The Commitment is subject
to certain conditions set forth in such letter including, among other things,
the negotiation, execution and delivery of satisfactory definitive
documentation with respect to the Credit Agreement. Because the terms,
conditions and covenants of the Credit Agreement are subject to the
negotiation, execution and delivery of definitive documentation, certain of
the actual terms, conditions and covenants thereof may be more or less
restrictive or otherwise differ from those described below. Chase has reserved
the right to syndicate all or a part of its Commitment to one or more other
lenders (together with Chase, the "Banks"). Chase has agreed to act as the
lead agent for the Banks under the Credit Agreement (in such capacity, the
"Agent").
The Credit Agreement will provide for up to $125 million of availability
under a Term Loan Facility (the "Term Loan Facility") and up to $125 million
of availability under a Revolving Credit Facility (the "Revolving Credit
Facility"). Although the final terms of the Credit Agreement are still under
negotiation, set forth below is a summary of the material terms of the
proposed Credit Agreement based on the terms of the Commitment and the present
status of such negotiations, which summary is subject to and qualified by
reference to all of the provisions of the Commitment. It is contemplated that
on the effective date of the Registration Statement of which this Prospectus
forms a part, the Company will enter into the definitive Credit Agreement with
Chase, for itself and as Agent for the Banks.
Borrowings under the Revolving Credit Facility will not exceed a borrowing
base equal to 85% of Eligible Receivables and 50% of FIFO-calculated Eligible
Inventory, as such terms are to be defined in the Credit Agreement. Up to $30
million of the Revolving Credit Facility will be available for the issuance of
Letters of Credit to support obligations of the Company. Each of the Company's
domestic subsidiaries will guarantee the obligations under the Credit
Agreement.
The loans under the Term Loan Facility (the "Term Loans") may be incurred in
not more than three drawings on the date of the initial borrowing under the
Credit Agreement (the "Closing Date") and within 90 days thereafter. The Term
Loans will mature seven years from the Closing Date and be subject to equal
semi-annual amortization payments, commencing six months after the Closing
Date. Amounts repaid on the Term Loans may not be reborrowed.
The loans under the Revolving Credit Facility (the "Revolving Loans") may be
borrowed, repaid and reborrowed at any time during the period of five years
from the Closing Date (the "Revolving Credit Final Maturity"), subject to
satisfaction of certain conditions on the date of any such borrowing, and must
be repaid in full at, and all Letters of Credit will be terminated prior to,
the Revolving Credit Final Maturity.
The Term Loans and the Revolving Loans will bear interest either (i) at the
Base Rate, as defined below, plus the applicable Interest Margin, as defined
below, payable quarterly in arrears (the "Base Rate Option") or (ii) subject
to certain limitations, at an annual rate equal to the London Interbank
Offered Rate ("LIBOR") as determined by the Agent for the corresponding
deposits of United States Dollars plus the applicable Interest Margin, payable
at the end of each Interest Period, as defined below, or quarterly, whichever
is earlier (the "LIBOR Option"). In either case, interest will be calculated
on the basis of the actual number of days elapsed in a year of 360 days.
Interest under the LIBOR Option will be determined for periods ("Interest
Periods") of one, two, three or six months, as selected by the Company. The
Base Rate is defined as the higher of the Federal Funds Effective Rate, as
33
<PAGE>
published by the Federal Reserve Bank of New York, plus 1/2 of 1%, or the
prime commercial lending rate of Chase, as announced from time to time. The
applicable Interest Margin will be as follows: 1% for a Term Loan at the Base
Rate Option and 2% for a Term Loan at the LIBOR Option; and .75% for Revolving
Loans at the Base Rate Option and 1.75% for Revolving Loans at the LIBOR
Option. Interest Margins will be subject to adjustment after the first
anniversary of the Closing Date resulting in possible reductions of up to 1%
and increases of up to .25% based on specified changes in the credit ratings
assigned to the Company's senior long term unsecured debt by Standard & Poor's
and Moody's Investors Service, Inc.
The Credit Agreement will provide for the payment of commitment fees of 3/8
of 1% per annum on the unused amounts of the Term Loan Facility in the 90 day
period following the Closing Date and on the unused amounts of the Revolving
Credit Facility payable quarterly in arrears (calculated on the basis of
actual days elapsed in a year of 360 days), and Letter of Credit fees equal to
the per annum rate of the then applicable Interest Margin for LIBOR Option
Revolving Loans on aggregate outstanding stated amounts thereof, plus a fee
for the bank issuing the Letter of Credit, plus customary issuance and drawing
charges.
Borrowings under the Credit Agreement will be mandatorily prepayable in an
amount equal to (a) 75% of the net cash proceeds received from the sale or
other disposition of all or, subject to certain permitted exceptions to be set
forth in the Credit Agreement, any part of the assets of the Company or any
subsidiary of the Company, (b) 50% of the net cash proceeds received from the
issuance of equity securities (subject to certain exceptions) and 75% of the
net cash proceeds from the issuance of certain debt securities, (c) 75% of net
property insurance proceeds and of net proceeds of pension plan reversions (to
the extent not reinvested as permitted by the Credit Agreement) and (d) for
each fiscal year of the Company, an amount equal to 75% of Excess Cash Flow
(as defined in the Credit Agreement). Such mandatory prepayments will, subject
to certain permitted exceptions, be applied as follows: (i) first, to repay
outstanding Term Loans, pro rata among the remaining installments thereof and
(ii) second, to reduce permanently the Banks' commitments under the Revolving
Credit Facility (provided that a prepayment of Revolving Loans pursuant to
this clause (ii) as a result of Excess Cash Flow will not reduce commitments
under the Revolving Credit Facility and provided further that in no event
shall any mandatory prepayments reduce the Banks' commitment under the
Revolving Credit Facility to less than $100 million) and/or cash
collateralized Letters of Credit. The balance of such proceeds and Excess Cash
Flow not so required to be applied will be available to the Company for
general corporate purposes. In addition, outstanding loans and Letters of
Credit under the Credit Agreement will be required to be prepaid (and/or cash
collateralized in the case of Letters of Credit) under certain other
circumstances set forth in the Credit Agreement.
Borrowings under the Credit Agreement may be voluntarily prepaid, in whole
or in part, with prior notice but without premium or penalty, subject to
limitations as to the minimum amounts of prepayments, except that prepayments
of LIBOR Option loans will only be permitted on the last day of an Interest
Period applicable thereto. All voluntary prepayments of Term Loans shall apply
pro rata among the remaining principal installments thereof.
Borrowings under the Credit Agreement will be secured by (i) pledges of all
capital stock of, and intercompany notes issued by, the Company's subsidiaries
and (ii) perfected first priority security interests in all other assets
(including capital stock) owned by the Company and the subsidiaries that are
guarantors under the Credit Agreement subject to certain de minimis and other
exceptions, to be set forth in the Credit Agreement. If the Company obtains
credit ratings for its senior long-term unsecured debt assigned by Standard &
Poor's of BBB+ or above and by Moody's Investors Service, Inc. of Baa1 or
above (a "Prime Rating"), all of the foregoing security will be released,
although a covenant restricting liens, among others, will be retained, subject
to an exception for liens on certain foreign assets.
34
<PAGE>
The Credit Agreement will contain affirmative and negative covenants
customary for transactions of this nature, including, but not limited to: (i)
limitations on capital distributions, including dividends, distributions and
advances; (ii) limitations on transactions with affiliates; (iii) limitations
on the sale or purchase of assets (subject to certain permitted exceptions)
and fundamental changes in its business; (iv) restrictions on mergers,
acquisitions, investments and other related transactions (subject to certain
permitted exceptions); (v) restrictions on capital expenditures, with certain
exceptions; (vi) incurrence of indebtedness (including contingent
obligations); (vii) restrictions on liens; and (viii) requirements for
obtaining interest rate protection in certain amounts. Upon reaching a "Prime
Rating," various of the foregoing restrictions will be eliminated. The Credit
Agreement will also require the Company to maintain financial covenants
relating to leverage, fixed charge coverage and interest coverage.
Events of Default under the Credit Agreement will include, without
limitation: (i) payment defaults; (ii) misrepresentations; (iii) covenant
defaults; (iv) bankruptcy; (v) ERISA defaults; (vi) certain judgments; (vii) a
Change of Control (as defined in the Credit Agreement); and (viii) material
cross defaults, subject, in certain cases, to notice and grace period
provisions. An Event of Default may result in the immediate termination of all
commitments under the Credit Agreement, the acceleration of the principal of
and any accrued interest on all loans and notes and obligations under the
Credit Agreement, the termination of all Letters of Credit and the
reimbursement by the Company with respect to all outstanding Letters of
Credit. For purposes of the Credit Agreement, a "Change of Control" shall be
defined as meaning (a) the occurrence of any "change of control" or similar
event under the Notes offered hereby or any other agreements governing or
evidencing debt of the Company or any of its subsidiaries or (b) any Person or
group (as such term is defined in Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended) acquiring, directly or indirectly,
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
said Act) of 35% or more of the outstanding voting stock of the Company.
The obligation to fund the Credit Agreement is subject to certain
conditions, including, without limitation, the execution and delivery of
satisfactory definitive documentation, the absence of any material adverse
change in the financial markets generally or in the business, property,
assets, liabilities or condition (financial or otherwise) of the Company or of
the Company and its subsidiaries taken as a whole, the absence of competing
transactions sponsored by, or on behalf of, the Company or any of its
subsidiaries in the loan syndication market and certain other matters.
35
<PAGE>
MANAGEMENT
The following table sets forth certain information regarding the Directors
and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITIONS AND OFFICES WITH THE COMPANY
---- --- --------------------------------------
<S> <C> <C>
Walter E. Blankley........ 58 Chairman of the Board and Chief Executive Officer
Roger K. Derr............. 62 Executive Vice President--Chief Operating Officer
Allan Kornfeld............ 56 Executive Vice President--Chief Financial Officer
Murray A. Luftglass....... 62 Senior Vice President--Corporate Development
Peter A. Guercio.......... 65 Group Vice President
Frank S. Hermance......... 45 Group Vice President
George E. Marsinek........ 56 Group Vice President
John J. Molinelli......... 47 Vice President and Comptroller
Deirdre D. Saunders....... 46 Treasurer and Assistant Secretary
Robert W. Yannarell....... 60 Secretary
Lewis G. Cole............. 63 Director
Helmut N. Friedlaender.... 80 Director
Sheldon S. Gordon......... 58 Director
Charles D. Klein.......... 55 Director
David P. Steinmann........ 52 Director
Elizabeth R. Varet........ 50 Director
</TABLE>
WALTER E. BLANKLEY has been Chairman of the Board since April 1993. He was
elected a Director and the President and Chief Executive Officer of the
Company in April 1990. Mr. Blankley had served as a Senior Vice President
since 1982. He was elected a Vice President of Ametek in 1971. Mr. Blankley
was appointed General Manager of the Company's precision spring business in
1966, six years after joining Ametek in 1960. Mr. Blankley was also elected a
Director of AMCAST Industrial Corporation in February 1994.
ROGER K. DERR has been Executive Vice President--Chief Operating Officer
since April 1990. He had served as a Senior Vice President of Ametek since
1982. Mr. Derr was elected a Group Vice President in 1978 and a Vice President
in 1972. He was named General Manager of the Company's electric motor business
in 1970, having joined Ametek in 1958.
ALLAN KORNFELD has been Executive Vice President--Chief Financial Officer
since April 1990. He has been Chief Financial Officer of Ametek since April
1986. Mr. Kornfeld was elected a Senior Vice President in 1984 and a Vice
President in 1982. He joined Ametek in 1975 as Comptroller.
MURRAY A. LUFTGLASS has been Senior Vice President--Corporate Development
since May 1984. He was elected Vice President--Corporate Development in 1976.
Mr. Luftglass joined the Company's Westchester Plastics business in 1969.
PETER A. GUERCIO has been a Group Vice President since April 1990. He was
elected a Vice President of Ametek in 1989. Mr. Guercio joined the Company in
1988 as General Manager of Specialty Metal Products, a business that Ametek
acquired from Pfizer Inc. He had managed Specialty Metal Products since 1963.
36
<PAGE>
FRANK S. HERMANCE joined the Company as a Group Vice President in November
1990. Previously he worked for Tektronix, Inc. and Taylor Instrument Company.
GEORGE E. MARSINEK has been a Group Vice President since April 1990. He was
elected a Vice President in 1988. Mr. Marsinek was appointed General Manager
of Ametek's electric motor business in 1988, having joined the Company in
1964.
JOHN J. MOLINELLI has served as a Vice President and Comptroller of Ametek
since April 1993. He was elected Comptroller in 1991 and General Auditor in
1989. Mr. Molinelli was appointed Director of the Company's Internal Audit
group in 1986, having joined Ametek in 1969.
DEIRDRE D. SAUNDERS has served as Treasurer and Assistant Secretary since
April 1993. Ms. Saunders joined Ametek in 1987 as Assistant Treasurer.
Previously she served in financial and treasury positions with Exide
Corporation and Buckeye Pipe Line Company.
ROBERT W. YANNARELL has served as Secretary of the Company since April 1993.
He was elected Treasurer and Assistant Secretary in 1987. Mr. Yannarell was
appointed Director of Ametek's Internal Audit group in 1979, having joined the
Company in 1955.
LEWIS G. COLE has been a Director since 1987. He is a member of Stroock &
Stroock & Lavan, which he joined in 1958.
HELMUT N. FRIEDLAENDER has been a Director since 1955. He is a private
investor. Mr. Friedlaender was a financial adviser to Mr. William Rosenwald
and his family and a director of American Securities Corporation.
SHELDON S. GORDON has been a Director since 1989. Mr. Gordon has been a
General Partner of The Blackstone Group and Chairman of Blackstone Europe
since 1991. He is a Director of Anangel-American Shipholdings Ltd., and The
New York Eye & Ear Infirmary and was formerly Chairman and Chief Executive
Officer of Stamford Capital Group and a Director of American Express Bank Ltd.
CHARLES D. KLEIN has been a Director since 1980. Since 1987, Mr. Klein has
been a financial adviser to Mr. William Rosenwald and his family and a
director of American Securities Corporation.
DAVID P. STEINMANN has been a Director since 1993. He is an executive
officer of American Securities Corporation. Mr. Steinmann is Chief
Administrative Officer of the organization responsible for management of the
investment and philanthropic activities of the William Rosenwald family.
ELIZABETH R. VARET has been a Director since 1987. Ms. Varet is Chief
Executive Officer of the organization responsible for management of the
investment and philanthropic activities of the William Rosenwald family.
37
<PAGE>
DESCRIPTION OF THE NOTES
The Notes are to be issued under an Indenture, to be dated as of
, 1994 (the "Indenture"), between the Company and Corestates Bank, N.A., as
Trustee (the "Trustee"). The Indenture is subject to and governed by the Trust
Indenture Act of 1939, as amended. The statements under this caption relating
to the Notes and the Indenture are summaries and do not purport to be
complete, and where reference is made to particular provisions of the
Indenture, such provisions, including the definition of certain terms, are
incorporated by reference as a part of such summaries or terms, which are
qualified in their entirety by such reference. Unless otherwise indicated,
references under this caption to sections, "(S)" or articles are references to
the Indenture which has been filed with the Commission as an exhibit to the
Registration Statement of which this Prospectus is a part.
GENERAL
The Notes will be unsecured obligations of the Company, will be limited to
$150 million aggregate principal amount and will mature on ,
2006. The Notes will bear interest at the rate per annum shown on the front
cover of this Prospectus from , 1994 or from the most recent
Interest Payment Date to which interest has been paid or provided for, payable
semi-annually on and of each year, commencing
, 1994, to the Person in whose name the Note (or any predecessor
Note) is registered at the close of business on the preceding or
, as the case may be. Interest on the Notes will be computed on
the basis of a 360-day year of twelve 30-day months. ((S)(S) 301, 307 and 310)
Principal of and premium, if any, and interest on the Notes will be payable,
and the Notes may be presented for registration of transfer and exchange, at
the office or agency of the Company maintained for that purpose in the Borough
of Manhattan, the City of New York, provided that at the option of the
Company, payment of interest on the Notes may be made by check mailed to the
address of the Person entitled thereto as it appears in the Note Register.
((S)(S) 310, 305 and 1002)
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. ((S) 301) No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. ((S) 305)
Initially, the Trustee will act as Paying Agent and Registrar. The Notes may
be presented for registration of transfer and exchange at the offices of the
Registrar. ((S) 305)
REDEMPTION
The Notes will be subject to redemption, at the option of the Company, in
whole or in part, at any time on or after , 1999 and prior to
maturity, upon not less than 30 nor more than 60 days' notice mailed to each
Holder of Notes to be redeemed at his address appearing in the Note Register,
in amounts of $1,000 or an integral multiple of $1,000, at the following
Redemption Prices (expressed as percentages of principal amount) plus accrued
interest to but excluding the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date), if redeemed
during the 12-month period beginning of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
1999........................................................... %
2000........................................................... %
2001 and thereafter............................................ 100.0%
</TABLE>
If less than all the Notes are to be redeemed, the Trustee shall select, in
such manner as it shall deem fair and appropriate, the particular Notes to be
redeemed or any portion thereof that is an integral multiple of $1,000.
((S)(S) 203, 1101, 1104, 1105 and 1107)
The Notes will not have the benefit of any sinking fund obligations.
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<PAGE>
COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Company Debt
The Company may not Incur any Debt unless after giving effect to the
Incurrence of such Debt and the receipt and application of the proceeds
thereof, the Consolidated Cash Flow Ratio of the Company for the last four
full fiscal quarters for which quarterly or annual financial statements are
available next preceding the Incurrence of such Debt, calculated on a pro
forma basis as if such Indebtedness had been Incurred at the beginning of such
four full fiscal quarters, would be greater than 2.5 to 1.
Notwithstanding the foregoing limitation, the Company may Incur the
following: (i) Debt under the Credit Agreement in an aggregate principal
amount at any one time not to exceed $250 million, less principal payments
actually made by the Company on any term Debt facility under the Credit
Agreement (other than principal payments made in connection with or pursuant
to a refinancing or refunding of the Credit Agreement), and any renewal,
refinancing, refunding or extension thereof in an amount which, together with
any amount remaining outstanding or available under the Credit Agreement
immediately after such renewal, refinancing, refunding or extension does not
exceed the sum of (x) the amount outstanding under the Term Debt Facilities
and (y) the amount outstanding or available under the Revolving Credit
Facilities immediately prior to such renewal, refinancing, refunding or
extension, plus the amount of any premium required to be paid in connection
with such renewal, refinancing, refunding or extension pursuant to the terms
of the Debt renewed, refinanced, refunded or extended and the expenses of the
Company Incurred in connection with such renewal, refinancing, refunding or
extension; (ii) Debt owed by the Company to any Wholly Owned Subsidiary of the
Company; provided, however, that upon either (x) the transfer or other
disposition by such Wholly Owned Subsidiary of any Debt so permitted to a
Person other than the Company or another Wholly Owned Subsidiary of the
Company or (y) the issuance (other than directors' qualifying shares), sale,
lease, transfer or other disposition of shares of Capital Stock (including by
consolidation or merger) of such Wholly Owned Subsidiary to a Person other
than the Company or another such Wholly Owned Subsidiary, the provisions of
this Clause (ii) shall no longer be applicable to such Debt and such Debt
shall be deemed to have been Incurred at the time of such transfer or other
disposition; (iii) Debt in respect of letters of credit issued in the ordinary
course of the Company's business not to exceed $15 million at any one time
outstanding; (iv) Debt under any Interest Rate, Currency or Commodity
Protection Agreements; (v) renewals, refinancings, refundings or extensions of
any outstanding Debt Incurred in compliance with the provisions of the
Indenture described in the first paragraph of "Limitation on Company Debt"
above or of the Notes; provided, however, that such Debt does not exceed the
principal amount of Debt so renewed, refinanced, refunded or extended plus the
amount of any premium required to be paid in connection with such renewal,
refinancing, refunding or extension pursuant to the terms of the Debt renewed,
refinanced, refunded or extended and the expenses of the Company Incurred in
connection with such renewal, refinancing, refunding or extension; and
provided further, that Debt the proceeds of which are used to renew,
refinance, refund or extend Debt which is pari passu to the Notes or Debt
which is subordinate in right of payment to the Notes shall only be permitted
if (A) in the case of any renewal, refinancing, refunding or extension of Debt
which is pari passu to the Notes, the renewal, refinancing, refunding or
extension Debt is made pari passu to the Notes or subordinated to the Notes,
and, in the case of any renewal, refinancing, refunding or extension of Debt
which is subordinated to the Notes, the renewal, refinancing, refunding or
extension Debt constitutes Subordinated Debt and (B) in either case, the
renewal, refinancing, refunding or extension Debt by its terms, or by the
terms of any agreement or instrument pursuant to which such Debt is issued,
(x) does not provide for payments of principal of such Debt at the stated
maturity thereof or by way of a sinking fund applicable thereto or by way of
any mandatory redemption, defeasance, retirement or repurchase thereof by the
Company (including any redemption, retirement
39
<PAGE>
or repurchase which is contingent upon events of circumstances, but excluding
any retirement required by virtue of acceleration of such Debt upon any event
of default thereunder), in each case prior to the stated maturity of the Debt
being refinanced or refunded and (y) does not permit redemption or other
retirement (including pursuant to an offer to purchase made by the Company) of
such debt at the option of the holder thereof prior to the final stated
maturity of the Debt being refinanced or refunded, other than a redemption or
other retirement at the option of the holder of such Debt (including pursuant
to an offer to purchase made by the Company) which is conditioned upon the
change of control of the Company pursuant to provisions substantially similar
to those described under "Change of Control"; (vi) Debt consisting of
borrowings against the cash value of Corporate Owned Life Insurance Policies;
and (vii) Debt not otherwise permitted to be Incurred pursuant to clauses (i)
through (vi) above (which Debt may be incurred under the Credit Agreement),
which, together with any other outstanding Debt Incurred pursuant to this
Clause (vii), has an aggregate principal amount not in excess of $35 million
at any time outstanding. ((S) 1008)
Limitation on Debt and Preferred Stock of Subsidiaries
The Company may not permit any Subsidiary of the Company to Incur or suffer
to exist any Debt or issue any Preferred Stock except: (i) Debt or Preferred
Stock outstanding on the date of the Indenture; (ii) Guarantees of Debt of the
Company under the Credit Agreement and any renewal, refinancing, refunding or
extension thereof permitted by the provisions of the Indenture described in
Clause (i) under "Limitation on Company Debt"; (iii) Debt of a Foreign
Subsidiary Incurred solely to fund such Foreign Subsidiary's working capital
requirements which, together with any other outstanding Debt of such Foreign
Subsidiary Incurred pursuant to this Clause (iii), has an aggregate principal
amount not in excess of the greater of $20 million or 65% of the aggregate
book value of receivables and inventories of such Foreign Subsidiary at the
time of Incurrence of such Debt; (iv) Debt Incurred or Preferred Stock issued
to and held by the Company or a Wholly Owned Subsidiary of the Company;
provided, however, that upon either (x) the transfer or other disposition by
the Company or such Wholly Owned Subsidiary of any Debt so permitted to a
Person other than the Company or another Wholly Owned Subsidiary of the
Company or (y) the issuance (other than directors' qualifying shares), sale,
lease, transfer or other disposition of shares of Capital Stock (including by
consolidation or merger) of such Wholly Owned Subsidiary to a Person other
than the Company or another such Wholly Owned Subsidiary, the provisions of
this Clause (iv) shall no longer be applicable to such Debt and such Debt
shall be deemed to have been Incurred at the time of such transfer or other
disposition; (v) Debt Incurred or Preferred Stock issued by a Person prior to
the time (A) such Person became a Subsidiary of the Company, (B) such Person
merges into or consolidates with a Subsidiary of the Company or (C) another
Subsidiary of the Company merges into or consolidates with such Person (in a
transaction in which such Person becomes a Subsidiary of the Company), which
Debt or Preferred Stock was not Incurred or issued in anticipation of such
transaction and was outstanding prior to such transaction; provided, however,
that the Company would be permitted to Incur such Debt pursuant to the
provisions of the Indenture described in the first paragraph of "Limitation on
Company Debt" above; (vi) Debt secured by a Lien on real or personal property
or improvements thereon which Debt (a) constitutes all or a part of the
purchase price of such property or the cost of construction or improvement of
such property or (b) is Incurred prior to, at the time of or within 270 days
after the acquisition of such property for the purpose of financing all or any
part of the purchase price or the cost of construction or improvement thereof
and which property was not owned by the Company and/or any Subsidiary of the
Company prior to such acquisition; provided, however, the Debt so secured does
not exceed the purchase price, or the cost of construction or improvement, of
such property and provided, further, that the Company would be permitted to
Incur such Debt pursuant to the provisions of the Indenture described in the
first paragraph of "Limitation on Company Debt" above; (vii) Guarantees of
Debt Incurred pursuant to Clause (vii) of "Limitation on Company Debt" above;
(viii) Debt under any Interest Rate, Currency or Commodity Protection
Agreement; (ix) Guarantees of Debt under an Interest Rate Protection Agreement
Incurred pursuant to Clause (iv) of "Limitation on Company Debt" above,
provided, however that the Debt which is being hedged by such
40
<PAGE>
Interest Rate Protection Agreement is Guaranteed by a Subsidiary of the
Company; and (x) Debt or Preferred Stock which is exchanged for, or the
proceeds of which are used to refinance or refund, any Debt or Preferred Stock
permitted to be outstanding pursuant to Clauses (v) and (vi) hereof (or any
extension or renewal thereof), in an aggregate principal amount, in the case
of Debt, or liquidation preference, in the case of Preferred Stock, not to
exceed the principal amount or liquidation preference of the Debt or Preferred
Stock, respectively, so exchanged, refinanced or refunded plus the amount of
any premium required to be paid in connection with such refinancing pursuant
to the terms of the Debt refinanced and the expenses of the Company or such
Subsidiary Incurred in connection with such refinancing and provided such
refinancing or refunding Debt or Preferred Stock by its terms, or by the terms
of any agreement or instrument pursuant to which such Debt or Preferred Stock
is issued, (x) does not provide for payments of principal or liquidation value
at the stated maturity of such Debt or Preferred Stock or by way of a sinking
fund applicable to such Debt or Preferred Stock or by way of any mandatory
redemption, defeasance, retirement or repurchase of such Debt or Preferred
Stock by the Company (including any redemption, retirement or repurchase which
is contingent upon events or circumstances, but excluding any retirement
required by virtue of acceleration of such Debt upon an event of default
thereunder), in each case prior to the stated maturity of the Debt or
Preferred Stock being refinanced or refunded and (y) does not permit
redemption or other retirement (including pursuant to an offer to purchase
made by the Company) of such Debt or Preferred Stock at the option of the
holder thereof prior to the stated maturity of the Debt or Preferred Stock
being refinanced or refunded, other than a redemption or other retirement at
the option of the holder of such Debt or Preferred Stock (including pursuant
to an offer to purchase made by the Company) which is conditioned upon the
change of control of the Company pursuant to provisions substantially similar
to those contained in the Indenture described under "Change of Control".
((S) 1009)
Limitation on Restricted Payments
The Company (i) may not, directly or indirectly, declare or pay any
dividend, or make any distribution, in respect of its Capital Stock or to the
holders thereof, excluding any dividends or distributions payable solely in
shares of its Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to acquire its Capital Stock (other than Disqualified
Stock), (ii) may not, and may not permit any Subsidiary to, purchase, redeem,
or otherwise retire or acquire for value (a) any Capital Stock of the Company
or any Related Person of the Company or (b) any options, warrants or rights to
purchase or acquire shares of Capital Stock of the Company or any Related
Person of the Company or any securities convertible or exchangeable into
shares of Capital Stock of the Company or any Related Person of the Company,
(iii) may not make, or permit any Subsidiary to make, any Investment (other
than a Permitted Investment) in, or payment on a Guarantee of any obligation
of, any Unrestricted Subsidiary or any other Person (other than (x) the
Company, (y) a Subsidiary of the Company (or a Person that becomes a
Subsidiary as a result of such Investment) or (z) any other Affiliate of the
Company which is not a Related Person of the Company (or a Person that becomes
an Affiliate as a result of such Investment)), and (iv) may not, and may not
permit any Subsidiary to, redeem, defease, repurchase, retire or otherwise
acquire or retire for value prior to any scheduled maturity, repayment or
sinking fund payment Debt of the Company which is subordinate in right of
payment to the Notes (each of clauses (i) through (iv) being a "Restricted
Payment") if: (1) an Event of Default, or an event that with the passing of
time or the giving of notice, or both, would constitute an Event of Default,
shall have occurred and is continuing, or (2) upon giving effect to such
Restricted Payment, the Company could not Incur at least $1.00 of additional
Debt pursuant to the terms of the Indenture described in the first paragraph
of "Limitation on Company Debt" above, or (3) upon giving effect to such
Restricted Payment, the aggregate of all Restricted Payments from the date of
the Indenture exceeds the sum of: (a) 50% of cumulative Consolidated Net
Income (or, in the case Consolidated Net Income shall be negative, less 100%
of such deficit) since January 1, 1994 through the last day of the last full
fiscal quarter ending immediately preceding the date of such Restricted
Payment; plus (b) 100% of the aggregate net proceeds received after the date
of the Indenture,
41
<PAGE>
including the fair value of property other than cash (determined in good faith
by the Board of Directors as evidenced by a resolution of the Board of
Directors filed with the Trustee), from the issuance (other than to a
Subsidiary of the Company) of Capital Stock (other than Disqualified Stock) of
the Company and warrants, rights or options on Capital Stock (other than
Disqualified Stock) of the Company and the principal amount (or accreted value
of Debt issued at a discount) of Debt of the Company that has been converted
into Capital Stock (other than Disqualified Stock) of the Company after the
date of the Indenture; plus (c) 100% of the aggregate amount of all Restricted
Payments that are returned, without restriction, in cash to the Company or any
Subsidiary if and to the extent that such payments are not included in
Consolidated Net Income; plus (d) $75 million; plus (e) in the event that the
Company does not pay an aggregate of $150 million or more to repurchase Common
Stock of the Company pursuant to the second succeeding paragraph, the amount
which, together with the amount paid to repurchase Common Stock pursuant to
the second succeeding paragraph, equals $150 million.
The foregoing provision will not be violated by reason of the payment of any
dividend on Capital Stock of any class within 60 days after the declaration
thereof if, on the date when the dividend was declared, the Company could have
paid such dividend in accordance with the provisions of the Indenture.
Notwithstanding the foregoing, the Company may from time to time pay up to
$150 million in the aggregate from the date of the Indenture to repurchase
Common Stock of the Company pursuant to open market or privately negotiated
transactions, tender offers or otherwise, and such purchases shall not be
deemed Restricted Payments for purposes of calculating the aggregate amount of
all Restricted Payments pursuant to clause (3) above. ((S) 1010)
Limitations Concerning Distributions by and Transfers to Subsidiaries
The Company may not, and may not permit any Subsidiary to, suffer to exist
any consensual encumbrance or restriction on the ability of any Subsidiary of
the Company, (i) to pay directly or indirectly dividends or make any other
distributions in respect of its Capital Stock or pay any Debt or other
obligation owed to the Company or any other Subsidiary; (ii) to make loans or
advances to the Company or any Subsidiary; or (iii) to transfer any of its
property or assets to the Company or any Subsidiary. Notwithstanding the
foregoing, the Company may, and may permit any Subsidiary to, suffer to exist
any such encumbrance or restriction (a) pursuant to any agreement in effect on
the date of the Indenture (including the Credit Agreement), or (b) pursuant to
an agreement relating to any Debt Incurred by such Subsidiary prior to the
date on which such Subsidiary was acquired by the Company and outstanding on
such date and not Incurred in anticipation of becoming a Subsidiary, or (c)
pursuant to an agreement effecting a renewal, refinancing, refunding or
extension of Debt Incurred pursuant to an agreement referred to in clause (a)
or (b) above; provided, however, that the provisions contained in such
renewal, refinancing, refunding or extension agreement relating to such
encumbrance or restriction are no more restrictive in any material respect
than the provisions contained in the agreement the subject thereof, as
determined in good faith by the Board of Directors of the Company and
evidenced by a resolution of the Board of Directors filed with the Trustee or
(d) in the case of a Foreign Subsidiary, pursuant to an agreement governing
the terms of any Debt to fund such Foreign Subsidiary's working capital
requirements permitted by clause (iii) of "Limitation of Debt and Preferred
Stock of Subsidiaries" above, provided that such encumbrance or restriction
relates only to the payment of dividends or other cash distributions and,
provided, further, that such encumbrance or restriction does not, in the
reasonable judgment of the Board of Directors of the Company, impact the
Company's ability to make all payments when due on the Notes, as determined in
good faith by the Board of Directors of the Company and evidenced by a
resolution of the Board of Directors filed with the Trustee. ((S) 1013)
42
<PAGE>
Limitation on Liens
The Company may not, and may not permit any Subsidiary to, Incur or suffer
to exist any Lien on or with respect to any property or assets of the Company
or any such Subsidiary now owned or hereinafter acquired to secure any Debt
without making, or causing such Subsidiary to make, effective provision for
securing the Notes (and, if the Company shall so determine, any other Debt of
the Company which is not subordinate to the Notes or of such Subsidiary) (x)
equally and ratably with such Debt or (y) in the event such Debt is
subordinate in right of payment to the Notes, prior to such Debt, as to such
property or assets for so long as such Debt shall be so secured. The foregoing
restrictions shall not apply to Liens in respect of Debt existing at the date
of the Indenture or to: (i) Liens in favor of the Company or a Wholly Owned
Subsidiary of the Company (but only so long as such Person is a Wholly Owned
Subsidiary of the Company); (ii) Liens to secure Debt and other obligations
under the Credit Agreement and any renewal, refinancing, refunding or
extension thereof, provided, however that the Incurrence of such Debt is
permitted by the provisions described in "Limitation on Company Debt" above;
(iii) Liens securing only the Notes; (iv) Liens on property existing at the
time of acquisition thereof (and not in anticipation of the financing of such
acquisition); (v) Liens to secure Debt Incurred for the purpose of financing
all or any part of purchase price or the cost of construction or improvement
of the property subject to such Liens, provided, however, that (a) the
principal amount of any Debt secured by such a Lien does not exceed 100% of
such purchase price or cost, (b) such Lien does not extend to or cover any
other property other than such item of property and any improvements on such
item and (c) the Incurrence of such Debt is permitted by the provisions
described under "Limitation on Company Debt" or "Limitation on Debt and
Preferred Stock of Subsidiaries"; (vi) Liens on property of a Person existing
at the time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company; (vii) Liens to secure Debt and other obligations
Incurred pursuant to Clause (vii) of "Limitation on Company Debt" above;
(viii) Liens to secure Debt under an Interest Rate Protection Agreement
Incurred pursuant to Clause (iv) of "Limitation on Company Debt" above,
provided, however that the Debt which is being hedged by such Interest Rate
Protection Agreement is secured by a Lien; and (ix) Liens to secure any
renewal, refinancing, refunding or extension (or successive renewals,
refinancings, refundings or extensions), in whole or in part, of any Debt
secured by Liens referred to in the foregoing clauses (iii) through (vi) so
long as such Liens do not extend to any other property and the Debt so secured
is not increased.
In addition to the foregoing, the Company and its Subsidiaries may Incur a
Lien to secure any Debt or enter into a Sale and Leaseback Transaction,
without securing the Notes equally and ratably with or prior to such Debt, if
the sum of: (i) the amount of Debt subject to Liens entered into after the
date of the Indenture and otherwise prohibited by the Indenture, and (ii) the
Attributable Value of Sale and Leaseback Transactions entered into after the
date of the Indenture and otherwise prohibited by the Indenture does not
exceed 5% of Consolidated Tangible Assets of the Company at the time of
Incurrence of such Lien or the entering into of such Sale and Leaseback
Transaction. ((S) 1011)
Limitation on Sale and Leaseback Transactions
The Company may not, and may not permit any Subsidiary of the Company to,
enter into any Sale and Leaseback Transaction (except for a period not
exceeding 30 months) unless: (i) the Company or such Subsidiary would be
entitled to Incur a Lien to secure Debt in accordance with the provision of
the Indenture described in the second paragraph under "Limitation on Liens"
above equal in amount to the Attributable Value of the Sale and Leaseback
Transaction without securing the Notes; or (ii) the Company or such Subsidiary
applies or commits to apply within 60 days an amount equal to the net proceeds
of the property sold pursuant to the Sale and Leaseback Transaction to the
permanent repayment or reduction of outstanding Debt to the extent required
or, to the extent not so required, to the redemption of the Notes or, if the
Notes are not redeemable, to the repayment of other Company Debt which is pari
passu to the Notes or Subsidiary Debt or, if no such Debt is then outstanding,
other Company Debt. ((S) 1012)
43
<PAGE>
Transactions with Affiliates
The Company may not, and may not permit any Subsidiary of the Company to,
enter into any transaction (or series of related transactions) not in the
ordinary course of business of the Company or such Subsidiary with an
Affiliate of the Company (other than the Company or a Wholly Owned Subsidiary
of the Company), including any loan, advance or investment, either directly or
indirectly, involving aggregate consideration in excess of $5 million unless
such transaction (i) is, in the opinion of the Board of Directors, as
evidenced by a resolution of the Board of Directors filed with the Trustee,
(A) on terms no less favorable to the Company or such Subsidiary than those
that could be obtained in a comparable arm's length transaction with an entity
that is not an Affiliate and (B) in the best interests of the Company or such
Subsidiary and (ii) is approved by the independent members of the Board of
Directors of the Company. ((S) 1014)
Change of Control
Upon the occurrence of a Change of Control, the Company will be required to
make an Offer to Purchase all Outstanding Notes at a purchase price equal to
101% of their principal amount plus accrued interest to the date of purchase.
A "Change of Control" will be deemed to have occurred in the event that, after
the date of the Indenture, either (a) any Person or any Persons acting
together that would constitute a group (for purposes of Section 13(d) of the
Securities Exchange Act of 1934, or any successor provision thereto) (a
"Group"), together with any Affiliates or Related Persons thereof (other than
an employee benefit plan of the Company or any Subsidiary) that files a
Schedule 13D or 14D-1 under the Securities Exchange Act of 1934 disclosing
that such Person or Group beneficially owns (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, or any successor provision thereto) at
least 50% of the aggregate voting power of all classes of Capital Stock of the
Company entitled to vote generally in the election of directors of the
Company; or (b) any Person or Group, together with any Affiliates or Related
Persons thereof, shall succeed in having a sufficient number of its nominees
elected to the Board of Directors of the Company such that such nominees, when
added to any existing director remaining on the Board of Directors of the
Company after such election who is an Affiliate or Related Person of such
Group, will constitute a majority of the Board of Directors of the Company,
provided that in no event shall any Continuing Director be included in such
majority, whether or not such Continuing Director was nominated by such Person
or Group or is an Affiliate or Related Person of such Group. "Continuing
Director" shall mean (i) any Person who is a member of the Board of Directors
of the Company as of the date of the Indenture, at any time that such Person
is a member of the Board, or (ii) any Person who subsequently becomes a member
of the Board, at any time that such Person is a member of the Board, provided
that such Person's nomination for election or election to the Board is
recommended or approved by a majority of the Continuing Directors. ((S) 1015)
In the event that the Company makes an Offer to Purchase the Notes, the
Company intends to comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1
under, the Securities Exchange Act of 1934.
PROVISION OF FINANCIAL INFORMATION
Whether or not the Company is required to be subject to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, or any successor provision
thereto, the Company shall file with the Commission, to the extent permitted,
the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to such Section
13(a) or 15(d) or any successor provision thereto if the Company were so
required, such documents to be filed with the Commission on or prior to the
respective dates (the "Required Filing Dates") by which the Company would have
been required so to file such documents if the Company were so required. The
Company shall also in any event (a) within 15 days of each Required Filing
Date (i) transmit by mail to all Holders, as their names and addresses appear
in the Security Register, without cost to such Holders, and (ii)
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file with the Trustee copies of the annual reports, quarterly reports and
other documents which the Company would have been required to file with the
Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 or any successor provisions thereto if the Company were required to be
subject to such Sections and (b) if filing such documents by the Company with
the Commission is not permitted under the Securities Exchange Act of 1934,
promptly upon written request supply copies of such documents to any
prospective Holder. ((S) 1016)
MERGERS, CONSOLIDATIONS AND CERTAIN SALES OF ASSETS
The Company (i) may not consolidate with or merge into any other Person
(other than a Wholly Owned Subsidiary) or permit any other Person (other than
a Wholly Owned Subsidiary) to consolidate with or merge into the Company and
(ii) may not, directly or indirectly, transfer, sell, lease or otherwise
dispose of all or substantially all of its assets unless: (1) in a transaction
in which the Company does not survive or in which the Company sells, leases or
otherwise disposes of all or substantially all of its assets, the successor
entity to the Company is organized under the laws of the United States of
America or any State thereof or the District of Columbia and shall expressly
assume, by a supplemental indenture executed and delivered to the Trustee in
form satisfactory to the Trustee, all of the Company's obligations under the
Indenture; (2) immediately before and after giving effect to such transaction
and treating any Debt which becomes an obligation of the Company or a
Subsidiary as a result of such transaction as having been Incurred by the
Company or such Subsidiary at the time of the transaction, no Event of Default
or event that with the passing of time or the giving of notice, or both, would
constitute an Event of Default shall have occurred and be continuing; (3)
immediately after giving effect to such transaction and treating any Debt
which becomes an obligation of the Company as a result of such transaction as
having been Incurred by the Company at the time of the transaction, the
Company or the successor entity to the Company could Incur at least $1.00 of
additional Debt pursuant to the provisions of the Indenture described in the
first paragraph under "Limitation on Company Debt" above; (4) if, as a result
of any such transaction, property or assets of the Company would become
subject to a Lien prohibited by the provisions of the Indenture described
under "Limitation on Liens" above, the Company or the successor entity to the
Company shall have secured the Notes as required by said covenant; and (5)
certain other conditions are met. ((S) 801)
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided. ((S) 101)
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition by such Person or any of its Subsidiaries
(including a consolidation or merger or other sale of any such Subsidiary
with, into or to another Person in a transaction in which such Subsidiary
ceases to be a Subsidiary, but excluding a disposition by a Subsidiary of such
Person to such Person or a Wholly Owned Subsidiary of such Person or by such
Person to a Wholly Owned Subsidiary of such Person) of (i) shares of Capital
Stock (other than directors' qualifying shares) or other ownership interests
of a Subsidiary of such Person, (ii) substantially all of the assets of such
Person or any of its
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Subsidiaries representing a division or line of business or (iii) other assets
or rights of such Person or any of its Subsidiaries outside of the ordinary
course of business.
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capital Lease Obligation, and at any
date as of which the amount thereof is to be determined, the total net amount
of rent required to be paid by such Person under such lease during the initial
term thereof as determined in accordance with generally accepted accounting
principles, discounted from the last date of such initial term to the date of
determination at a rate per annum equal to the discount rate which would be
applicable to a Capital Lease Obligation with like term in accordance with
generally accepted accounting principles. The net amount of rent required to
be paid under any such lease for any such period shall be the aggregate amount
of rent payable by the lessee with respect to such period after excluding
amounts required to be paid on account of insurance, taxes, assessments,
utility, operating and labor costs and similar charges. In the case of any
lease which is terminable by the lessee upon the payment of a penalty, such
net amount shall also include the amount of such penalty, but no rent shall be
considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated. "Attributable Value" means, as to a
Capital Lease Obligation under which any Person is at the time liable and at
any date as of which the amount thereof is to be determined, the capitalized
amount thereof that would appear on the face of a balance sheet of such Person
in accordance with generally accepted accounting principles.
"Capital Lease Obligation" of any Person means the obligation to pay rent or
other payment amounts under a lease of (or other Debt arrangements conveying
the right to use) real or personal property of such Person which is required
to be classified and accounted for as a capital lease or a liability on the
face of a balance sheet of such Person in accordance with generally accepted
accounting principles. The stated maturity of such obligation shall be the
date of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be terminated by the lessee
without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of corporate stock of
such Person.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.
"Consolidated Cash Flow Available for Fixed Charges" of any Person means for
any period the Consolidated Net Income for such period increased by the sum of
(i) Consolidated Interest Expense of such Person for such period, plus (ii)
Consolidated Income Tax Expense of such Person for such period, plus (iii) the
consolidated depreciation and amortization expense included in the income
statement of such Person for such period, plus (iv) other non-cash charges of
such Person for such period deducted from consolidated revenues in determining
Consolidated Net Income for such period, minus (v) non-cash items of such
Person for such period increasing consolidated revenues in determining
Consolidated Net Income for such period.
"Consolidated Cash Flow Ratio" of any Person means for any period the ratio
of (i) Consolidated Cash Flow Available for Fixed Charges of such Person for
such period to (ii) the sum of (A) Consolidated Interest Expense of such
Person for such period, plus (B) the interest expense for such period
(including the amortization of debt discount) with respect to any Debt
proposed to be Incurred by such Person or its Subsidiaries, minus (C)
Consolidated Interest Expense of such Person to the extent included in Clause
(ii)(A) with respect to any Debt that will no longer be outstanding as a
result of the Incurrence of the Debt proposed to be Incurred, plus (D) the
interest expense for such period (including the amortization of debt discount)
with respect to any other Debt Incurred by such Person
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or its Subsidiaries since the end of such period to the extent not included in
Clause (ii)(A) minus (E) Consolidated Interest Expense of such Person to the
extent included in Clause (ii)(A) with respect to any Debt that no longer is
outstanding as a result of the Incurrence of the Debt referred to in clause
(ii)(D); provided, however, that in making such computation, the Consolidated
Interest Expense of such Person attributable to interest on any Debt bearing a
floating interest rate shall be computed on a pro forma basis as if the rate
in effect on the date of computation had been the applicable rate for the
entire period, provided further that, in the event such Person or any of its
Subsidiaries has made Asset Dispositions or acquisitions of assets not in the
ordinary course of business (including acquisitions of other Persons by
merger, consolidation or purchase of Capital Stock) during or after such
period, such computation shall be made on a pro forma basis as if the Asset
Dispositions or acquisitions had taken place on the first day of such period.
"Consolidated Income Tax Expense" of any Person means for any period the
consolidated provision for income taxes of such Person for such period
calculated on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom the tax
effect of any of the items described in Clauses (a) through (f) of the
definition of Consolidated Net Income.
"Consolidated Interest Expense" for any Person means for any period the
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person for such period
calculated on a consolidated basis in accordance with generally accepted
accounting principles, including without limitation or duplication (or, to the
extent not so included, with the addition of), (i) the amortization of Debt
discounts; (ii) any payments or fees with respect to letters of credit,
bankers' acceptances or similar facilities; (iii) fees with respect to
interest rate swap or similar agreements or foreign currency hedge, exchange
or similar agreements; (iv) Preferred Stock dividends of such Person (other
than with respect to Disqualified Stock) declared and paid or payable; (v)
accrued Disqualified Stock dividends of such Person and all accrued Preferred
Stock dividends of Subsidiaries of such Person, in each case whether or not
declared or paid; (vi) interest on Debt guaranteed by such Person; and (vii)
the portion of any rental obligation treated as interest expense in accordance
with generally accepted accounting principles.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person for such period determined on
a consolidated basis in accordance with generally accepted accounting
principles; provided that there shall be excluded therefrom (a) the net income
(or loss) of any Person acquired by such Person or a Subsidiary of such Person
in a pooling-of-interests transaction for any period prior to the date of such
transaction, (b) the net income (but not net loss) of any Subsidiary of such
Person which is subject to restrictions which prevent the payment of dividends
or the making of distributions to such Person to the extent of such
restrictions, provided that there shall not be excluded the net income of a
Foreign Subsidiary which is subject to an encumbrance or restriction on the
payment of dividends and other cash distributions permitted by the provisions
of the Indenture described under Clause (d) of "Limitations Concerning
Distributions by and Transfers to Subsidiaries" in all cases except for
purposes of the provisions of the Indenture described under "Limitation on
Restricted Payments", in which case the net income of such a Subsidiary shall
be excluded in accordance with this Clause (b), (c) the net income (or loss)
of any Person that is not a Subsidiary of such Person except to the extent of
the amount of dividends or other distributions actually paid to such Person by
such other Person during such period, (d) gains or losses on Asset
Dispositions by such Person or its Subsidiaries, (e) all extraordinary or
nonrecurring gains and extraordinary or nonrecurring losses, (f) the
cumulative effect of changes in accounting principles in the year of adoption
of such changes, and (g) the tax effect of any of the items described in
Clauses (a) through (f) above.
"Consolidated Tangible Assets" of any Person means the sum of the Tangible
Assets of such Person, determined on a consolidated basis in accordance with
generally accepted accounting
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principles, including appropriate deductions for any minority interest in
Tangible Assets of such Person's Subsidiaries; provided, however, that
adjustments following the date of the Indenture to the accounting books and
records of the Company in accordance with Accounting Principles Board Opinions
Nos. 16 and 17 (or successor opinions thereto) or otherwise resulting from the
acquisition of control of the Company by another Person shall not be given
effect to.
"Corporate Owned Life Insurance Policies" means corporate owned life
insurance policies held by the Company with respect to certain of its
employees.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or
not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations Incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v) every Capital
Lease Obligation of such Person, (vi) the maximum fixed redemption or
repurchase price of Disqualified Stock of such Person at the time of
determination, (vii) every obligation under Interest Rate, Currency or
Commodity Protection Agreements of such Person and (viii) every obligation of
the type referred to in Clauses (i) through (vii) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has Guaranteed or is responsible or liable, directly or indirectly, as
obligor, Guarantor or otherwise.
"Disqualified Stock" of any Person means any Capital Stock of such Person
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the Company, any
Subsidiary of the Company or the holder thereof, in whole or in part, on or
prior to the final Stated Maturity of the Securities.
"Foreign Subsidiary" means with respect to any Person, any Subsidiary of
such Person that is incorporated in a country other than the United States.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing, or having the economic effect of guaranteeing, any
Debt of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, and including, without limitation, any obligation of
such Person, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of such Debt, (ii) to
purchase property, securities or services for the purpose of assuring the
holder of such Debt of the payment of such Debt, or (iii) to maintain working
capital, equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such Debt (and
"Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings correlative
to the foregoing); provided, however, that the Guaranty by any Person shall
not include endorsements by such Person for collection or deposit, in either
case, in the ordinary course of business.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other
obligation or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Debt or other obligation on
the balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable"
and "Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that
results
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in an obligation of such Person that exists at such time becoming Debt shall
not be deemed an Incurrence of such Debt.
"Interest Rate, Currency or Commodity Protection Agreement" means any
interest rate swap agreement, interest rate cap agreement, currency swap
agreement, commodity swap or cap agreement or other financial agreement or
arrangement designed to protect the Company against fluctuations in interest
rates, or currency exchange or commodity prices and which shall have a
notional amount no greater than the amount of the underlying obligation being
hedged thereby.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise) to, or purchase or acquisition of
Capital Stock, bonds, notes, debentures or other securities or evidence of
Debt issued by, any other Person.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Offer to Purchase" means a written offer (the "Offer") sent by the Company
by first class mail, postage prepaid, to each Holder at his address appearing
in the Security Register on the date of the Offer offering to purchase up to
the principal amount of Notes specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to the Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration
date (the "Expiration Date") of the Offer to Purchase which shall be, subject
to any contrary requirements of applicable law, not less than 30 days or more
than 60 days after the date of such Offer and a settlement date (the "Purchase
Date") for purchase of Notes within five Business Days after the Expiration
Date. The Company shall notify the Trustee at least 15 Business Days (or such
shorter period as is acceptable to the Trustee) prior to the mailing of the
Offer of the Company's obligation to make an Offer to Purchase, and the Offer
shall be mailed by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company. The Offer shall contain
information concerning the business of the Company and its Subsidiaries which
the Company in good faith believes will enable such Holders to make an
informed decision with respect to the Offer to Purchase (which at a minimum
will include (i) the most recent annual and quarterly financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained in the documents required to be filed with the Trustee
pursuant to the Indenture (which requirements may be satisfied by delivery of
such documents together with the Offer), (ii) a description of material
developments in the Company's business subsequent to the date of the latest of
such financial statements referred to in Clause (i) (including a description
of the events requiring the Company to make the Offer to Purchase), (iii) if
applicable, appropriate pro forma financial information concerning the Offer
to Purchase and the events requiring the Company to make the Offer to Purchase
and (iv) any other information required by applicable law to be included
therein). The Offer shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Offer to Purchase. The
Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer to Purchase
is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Notes offered to be
purchased by the Company pursuant to the Offer to Purchase (including, if
less than 100%, the manner by which
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such has been determined pursuant to the Section of the Indenture requiring
the Offer to Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Notes accepted for payment (as specified
pursuant to the Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Notes registered
in the name of such Holder and that any portion of a Note tendered must be
tendered in an integral multiple of $1,000 principal amount;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not purchased
by the Company pursuant to the Offer to Purchase will continue to accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Note being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each Holder electing to tender a Note pursuant to the Offer to
Purchase will be required to surrender such Note at the place or places
specified in the Offer prior to the close of business on the Expiration
Date (such Note being, if the Company or the Trustee so requires, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of
Notes tendered if the Company (or its Paying Agent) receives, not later
than the close of business on the Expiration Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder tendered, the certificate number of
the Note the Holder tendered and a statement that such Holder is
withdrawing all or a portion of his tender;
(11) that if Notes in an aggregate principal amount less than or equal to
the Purchase Amount are duly tendered and not withdrawn pursuant to the
Offer to Purchase, the Company shall purchase all such Notes; and
(12) that in the case of any Holder whose Note is purchased only in part,
the Company shall execute, and the Trustee shall authenticate and deliver
to the Holder of such Note without service charge, a new Note or Notes, of
any authorized denomination as requested by such Holder, in an aggregate
principal amount equal to and in exchange for the unpurchased portion of
the Note so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
"pari passu", when used with respect to the ranking of any Debt of any
Person in relation to other Debt of such Person, means that each such Debt (a)
either (i) is not subordinated in right of payment to the same Debt of such
Person or (ii) is subordinate in right of payment to the same Debt of such
Person as is the other and is so subordinate to the same extent and (b) is not
subordinate in right of payment to the other or to any Debt of such Person as
to which the other is not so subordinate.
"Permitted Investments" means (a) certificates of deposit with final
maturities of one year or less issued by a U.S. commercial bank or a U.S.
branch of a foreign bank or, in the case of a Foreign Subsidiary, a reputable
bank in the country in which such Foreign Subsidiary operates, having capital
and surplus in excess of $100 million and, in the case of a U.S. commercial
bank or a U.S. branch of a foreign bank, having a peer group rating of C or
better (or the equivalent thereof) by Thompson BankWatch Inc. or outstanding
long-term debt rated BBB or better (or the equivalent thereof) by
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Standard & Poor's Baa or better (or the equivalent thereof) by Moody's
Investors Service, Inc.; (b) commercial paper rated A-1 (or the equivalent
thereof) by Standard & Poor's or P-1 (or the equivalent thereof) by Moody's
Investors Service, Inc.; (c) direct obligations of the United States
government or a U.S. government agency; (d) repurchase agreements in respect
of direct U.S. government obligations; (e) in the case of a Foreign
Subsidiary, direct obligations of the sovereign and the government agencies of
the country in which such foreign subsidiary operates; (f) shares of money
market or equity mutual or similar funds having assets in excess of $100
million; (g) equity or debt securities rated A or better (or the equivalent
thereof) by Standard & Poor's or Moody's Investors Service, Inc. of public
companies which (x) are freely tradeable without restriction on a stock
exchange or through a nationally recognized automated quotation system and (y)
are purchased and held as current assets and not for investment and (h) any
Investments made by AMETEK (Bermuda) Ltd., provided that such Investments are
made as part of such Subsidiary's normal self-insurance activities and only so
long as the sole business of such Subsidiary is the insuring of risks of only
the Company and its other Subsidiaries.
"Preferred Stock" of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares
of Capital Stock of any other class of such Person.
"Related Person" of any Person means any other Person directly or indirectly
owning (a) 5% or more of the Outstanding Common Stock of such Person (or, in
the case of a Person that is not a corporation, 5% or more of the equity
interest in such Person) or (b) 5% or more of the combined voting power of the
Voting Stock of such Person.
"Sale and Leaseback Transaction" of any Person means an arrangement with any
lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which
has been or is being sold or transferred by such Person more than 270 days
after the acquisition thereof or the completion of construction or
commencement of operation thereof to such lender or investor or to any person
to whom funds have been or are to be advanced by such lender or investor on
the security of such property or asset. The stated maturity of such
arrangement shall be the date of the last payment of rent or any other amount
due under such arrangement prior to the first date on which such arrangement
may be terminated by the lessee without payment of a penalty.
"Significant Subsidiary" of any Person means any Subsidiary which, together
with all of its Subsidiaries, would be a Significant Subsidiary within the
meaning of Regulation S-X under the United States securities laws.
"Subordinated Debt" means Debt of the Company as to which the payment of
principal of (and premium, if any) and interest and other payment obligations
in respect of such Debt shall be subordinate to the prior payment in full of
the Notes to at least the following extent: (i) no payments of principal of
(or premium, if any) or interest on or otherwise due in respect of such Debt
may be permitted for so long as any default in the payment of principal (or
premium, if any) or interest on the Notes exists; (ii) in the event that any
other default that with the passing of time or the giving of notice, or both,
would constitute an event of default exists with respect to the Notes, upon
notice by 25% or more in principal amount of the Notes to the Trustee, the
Trustee shall have the right to give notice to the Company and the holders of
such Debt (or trustees or agents therefor) of a payment blockage, and
thereafter no payments of principal of (or premium, if any) or interest on or
otherwise due in respect of such Debt may be made for a period of 179 days
from the date of such notice; and (iii) such Debt may not (x) provide for
payments of principal of such Debt at the stated maturity thereof or by way of
a sinking fund applicable thereto or by way of any mandatory redemption,
defeasance, retirement or repurchase thereof by the Company (including any
redemption, retirement or repurchase which is
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contingent upon events or circumstances, but excluding any retirement required
by virtue of acceleration of such Debt upon an event of default thereunder),
in each case prior to the final Stated Maturity of the Notes or (y) permit
redemption or other retirement (including pursuant to an offer to purchase
made by the Company) of such other Debt at the option of the holder thereof
prior to the final Stated Maturity of the Notes, other than a redemption or
other retirement at the option of the holder of such Debt (including pursuant
to an offer to purchase made by the Company) which is conditioned upon the
change of control of the Company pursuant to provisions substantially similar
to those contained in the Indenture.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof.
For purposes of Clause (iii) of "Limitation on Restricted Payments," a joint
venture of which the Company, directly or indirectly, owns 50% of the equity
and voting interests and another Person (or group of Persons which acts
together in relation to such joint venture) owns the other 50% of the equity
and voting interests shall be deemed a Subsidiary of the Company. "Subsidiary"
shall not include an Unrestricted Subsidiary created in accordance with the
definition of "Unrestricted Subsidiary".
"Tangible Assets" of any Person means, at any date, the gross book value as
shown by the accounting books and records of such Person of all its property,
both real and personal, less (i) the net book value of all its licenses,
patents, patent applications, copyrights, trademarks, trade names, goodwill,
non-compete agreements or organizational expenses and other like intangibles,
(ii) unamortized Debt discount and expense, (iii) all reserves for
depreciation, obsolescence, depletion and amortization of its properties and
(iv) all other proper reserves which in accordance with generally accepted
accounting principles should be provided in connection with the business
conducted by such Person; provided, however, that, with respect to the Company
and its Consolidated Subsidiaries, effect shall not be given to adjustments
following the date of the Indenture to the accounting books and records of the
Company and its Consolidated Subsidiaries in accordance with Accounting
Principles Board Opinions Nos. 16 and 17 (or successor opinions thereto) or
otherwise resulting from the acquisition of control of the Company by another
Person.
"Unrestricted Subsidiary" means (1) any Subsidiary designated as such by the
Board of Directors as set forth below where (a) neither the Company nor any of
its other Subsidiaries (other than another Unrestricted Subsidiary) (i)
provides credit support for, or Guarantee of, any Debt of such Subsidiary
(including any undertaking, agreement or instrument evidencing such Debt) or
(ii) is directly or indirectly liable for any Debt of such Subsidiary, and (b)
no default with respect to any Debt of such Subsidiary (including any right
which the holders thereof may have to take enforcement action against such
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Debt of the Company and its other Subsidiaries (other than another
Unrestricted Subsidiary) to declare a default on such other Debt or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity, and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any newly acquired or newly formed Subsidiary to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, any other Subsidiary of the Company
which is not a Subsidiary of the Subsidiary to be so designated or otherwise
an Unrestricted Subsidiary, provided, that (x) the Subsidiary to be so
designated has total assets of $1 million or less or (y) immediately after
giving effect to such designation, the Company could Incur at least $1.00 of
additional Debt pursuant to the first paragraph under "Limitation on Company
Debt" and provided, further, that the Company could make a Restricted Payment
in an amount equal to the fair market value of such Subsidiary pursuant to the
provisions of the Indenture described under
52
<PAGE>
"Limitation on Restricted Payments" and such amount is thereafter treated as a
Restricted Payment for the purpose of calculating the aggregate amount
available for Restricted Payments thereunder. The Board of Directors may
designate any Unrestricted Subsidiary to be a Subsidiary, provided that,
immediately after giving effect to such designation, the Company could Incur
at least $1.00 of additional Debt pursuant to the first paragraph under
"Limitation on Company Debt." Any such designation by the Board of Directors
shall be evidenced to the Trustee by filing with the Trustee a certified copy
of the resolution of the Board of Directors giving effect to such designation
and an Officers' Certificate certifying that such designation complied with
the foregoing conditions.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person. For purposes
of this definition, AMETEK Hong Kong shall be deemed to be a Wholly Owned
Subsidiary of the Company so long as the Company owns, directly or indirectly,
at least 98% of the outstanding capital stock and voting interests thereof.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (a) failure to
pay principal of (or premium, if any, on) any Note when due; (b) failure to
pay any interest on any Note when due, continued for 30 days; (c) default in
the payment of principal and interest on Notes required to be purchased
pursuant to an Offer to Purchase as described under "Change of Control" when
due and payable; (d) failure to perform or comply with the provisions
described under "Merger, Consolidation and Certain Sales of Assets"; (e)
failure to perform any other covenant or agreement of the Company under the
Indenture or the Notes continued for 30 days after written notice to the
Company by the Trustee or Holders of at least 25% in aggregate principal
amount of Outstanding Notes; (f) default under the terms of any instrument
evidencing or securing Debt for money borrowed by the Company or any
Significant Subsidiary having an outstanding principal amount of $10 million
individually or in the aggregate which results in the acceleration of the
payment of such Debt which acceleration remains uncured for 10 days or
constitutes the failure to pay any portion of principal of such Debt when due
at the final maturity of such Debt; (g) the rendering of a final judgment or
judgments (not subject to appeal) against the Company or any Significant
Subsidiary in an amount in excess of $10 million which remains undischarged or
unstayed for a period of 60 days after the date on which the right to appeal
has expired; and (h) certain events of bankruptcy, insolvency or
reorganization affecting the Company or any Significant Subsidiary. ((S) 501)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default (as defined) shall occur and be
continuing, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity. ((S) 603) Subject to such provisions for the indemnification of the
Trustee, the Holders of a majority in aggregate principal amount of the
Outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. ((S) 512)
If an Event of Default (other than an Event of Default described in Clause
(h) above) shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Notes may
accelerate the maturity of all Notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the
Holders of a majority in
53
<PAGE>
aggregate principal amount of Outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the non-payment of accelerated principal, have been cured or waived
as provided in the Indenture. If an Event of Default specified in Clause (h)
above occurs, the Outstanding Notes will ipso facto become immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. ((S) 502) For information as to waiver of defaults, see "Modification
and Waiver".
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder
shall have previously given to the Trustee written notice of a continuing
Event of Default (as defined) and unless also the Holders of at least 25% in
aggregate principal amount of the Outstanding Notes shall have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee, and the Trustee shall not have received from the
Holders of a majority in aggregate principal amount of the Outstanding Notes a
direction inconsistent with such request and shall have failed to institute
such proceeding within 60 days. ((S) 507) However, such limitations do not
apply to a suit instituted by a Holder of a Note for enforcement of payment of
the principal of and premium, if any, or interest on such Note on or after the
respective due dates expressed in such Note. ((S) 508)
The Company will be required to furnish to the Trustee annually a statement
as to the performance by it of certain of its obligations under the Indenture
and as to any default in such performance. ((S) 1017)
DEFEASANCE
The Indenture provides that (A) if applicable, the Company will be
discharged from any and all obligations in respect of the outstanding Notes
other than certain obligations to transfer the Notes or (B) if applicable, the
Company may omit to comply with certain restrictive covenants in the Indenture
and that such omission will not be deemed to be an Event of Default under the
Indenture and the Notes, in either case (A) or (B), upon irrevocable deposit
with the Trustee, in trust, of money and/or U.S. Government Obligations which
will provide money in an amount sufficient in the opinion of a nationally
recognized firm of independent certified public accountants to pay the
principal of and premium, if any, and each installment of interest, if any, on
the outstanding Notes. With respect to Clause (B), the obligations under the
Indenture other than with respect to such covenants and the Events of Default
other than the Events of Default relating to such covenants above will remain
in full force and effect. Such trust may only be established if, among other
things (i) with respect to Clause (A), the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or there has been
a change in law, which in the opinion of counsel provides that Holders of the
Notes will not recognize gain or loss for Federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to
Federal income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit, defeasance and discharge
had not occurred; or, with respect to Clause (B), the Company has delivered to
the Trustee an opinion of counsel (which may be based on an IRS Ruling) to the
effect that the Holders of the Notes will not recognize gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and
will be subject to Federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and
defeasance had not occurred; (ii) no Event of Default or event that with the
passing of time or the giving of notice, or both, shall constitute an Event of
Default shall have occurred or be continuing; (iii) the Company has delivered
to the Trustee an opinion of counsel to the effect that such deposit shall not
cause the Trustee or the trust so created to be subject to the Investment
Company Act of 1940; and (iv) certain other customary conditions precedent are
satisfied. (Article Twelve)
GOVERNING LAW
The Indenture and the Notes will be governed by the laws of the State of New
York.
54
<PAGE>
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Notes; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of (or the premium) or interest on, any Note, (c) change the
place or currency of payment of principal of (or premium) or interest on, any
Note, (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any Note, (e) reduce the above-stated percentage
of Outstanding Notes necessary to modify or amend the Indenture, (f) reduce
the percentage of aggregate principal amount of Outstanding Notes necessary
for waiver of compliance with certain provisions of the Indenture or for
waiver of certain defaults, (g) modify any provisions of the Indenture
relating to the modification and amendment of the Indenture or the waiver of
past defaults or covenants, except as otherwise specified, or (h) following
the mailing of any Offer to Purchase, modify any Offer to Purchase for the
Notes required under the "Change of Control" covenant contained in the
Indenture in a manner materially adverse to the Holders thereof. ((S) 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Notes, on behalf of all Holders of Notes, may waive compliance by the Company
with certain restrictive provisions of the Indenture. ((S) 1018) Subject to
certain rights of the Trustee, as provided in the Indenture, the Holders of a
majority in aggregate principal amount of the Outstanding Notes, on behalf of
all Holders of Notes, may waive any past default under the Indenture, except a
default in the payment of principal, premium or interest or a default arising
from failure to purchase any Note tendered pursuant to an Offer to Purchase.
((S) 513)
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it under the Indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. ((S)(S) 601 and 605)
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or to realize on certain property received by it in respect of any such claim
as security or otherwise. The Trustee is permitted to engage in other
transactions with the Company or any Affiliate, provided, however, that if it
acquires any conflicting interest (as defined in the Indenture or in the Trust
Indenture Act), it must eliminate such conflict or resign. ((S) 608) It is
contemplated that the Trustee will be among the lenders and one of the co-
agents for the lenders under the Credit Agreement.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to Goldman, Sachs & Co. ("Goldman Sachs"), and
Goldman Sachs have agreed to purchase from the Company, the entire principal
amount of the Notes.
Under the terms and conditions of the Underwriting Agreement, Goldman Sachs
are committed to take and pay for all of the Notes, if any are taken.
55
<PAGE>
Goldman Sachs propose to offer the Notes in part directly to retail
purchasers at the initial public offering price set forth on the cover page of
this Prospectus and in part to certain dealers at such price less a concession
of % of the principal amount of the Notes. Goldman Sachs may allow, and such
dealers may reallow, a concession not to exceed % of the principal amount of
the Notes to certain brokers and dealers. After the Notes are released for
sale to the public, the offering price and other selling terms may from time
to time be varied by Goldman Sachs.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by Goldman Sachs that they intend to make a
market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes. The Notes have been approved
for listing on the New York Stock Exchange, subject to notice of issuance.
The Company has agreed to indemnify Goldman Sachs against certain
liabilities, including liabilities under the Securities Act.
If the Company proceeds with a tender offer in connection with the
repurchase of its outstanding shares of Common Stock, Goldman Sachs may serve
as Dealer Managers for such tender offer.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by Stroock &
Stroock & Lavan, New York, New York, general counsel to the Company, and for
Goldman Sachs by Sullivan & Cromwell, New York, New York. Such counsel will
express no opinion as to federal or state laws relating to fraudulent
transfers. See "Risk Factors--Fraudulent Conveyance."
Lewis G. Cole, a Director of the Company, is a member of Stroock & Stroock &
Lavan and beneficially owns 10,000 shares and is a co-trustee of trusts
owning, collectively, 682,088 shares of the Company's Common Stock. See
"Management." Wallace E. Cowan, Of Counsel to Stroock & Stroock & Lavan,
retired as a Director and Secretary of the Company, effective April 27, 1993,
and is the beneficial owner of 16,000 shares of the Company's Common Stock.
EXPERTS
The consolidated financial statements of Ametek at December 31, 1993 and
1992, and for each of the three years in the period ended December 31, 1993,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young, independent auditors, as set forth in their reports thereon
appearing elsewhere herein and in the Registration Statement, and are included
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
56
<PAGE>
AMETEK, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors........................................... F-2
Consolidated Statement of Income for the years ended December 31, 1993,
1992 and 1991........................................................... F-3
Consolidated Balance Sheet at December 31, 1993 and 1992................. F-4
Consolidated Statement of Cash Flows for the years ended December 31,
1993, 1992 and 1991..................................................... F-5
Notes to Consolidated Financial Statements............................... F-6
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying consolidated balance sheets of AMETEK, Inc.
as of December 31, 1993 and 1992, and the related consolidated statements of
income 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of AMETEK, Inc. at December 31, 1993 and 1992, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1993, in conformity with generally accepted accounting
principles.
Ernst & Young
Philadelphia, PA
February 9, 1994
F-2
<PAGE>
AMETEK, INC.
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Net sales............................... $ 732,195 $ 769,550 $ 715,099
----------- ----------- -----------
Expenses:
Cost of sales, excluding depreciation
(Note 2)............................. 582,001 583,357 546,479
Selling, general and administrative... 76,759 77,690 74,038
Depreciation.......................... 28,277 29,360 28,277
Resizing and restructuring charges
(Note 2)............................. 45,089 -- --
----------- ----------- -----------
732,126 690,407 648,794
----------- ----------- -----------
Operating income........................ 69 79,143 66,305
Other income (expenses):
Interest expense...................... (17,603) (19,721) (22,079)
Other, net (Note 11) 6,337 7,297 8,152
----------- ----------- -----------
Income (loss) before income taxes....... (11,197) 66,719 52,378
Provision for (benefit from) income
taxes (Note 8)......................... (3,865) 22,362 14,392
----------- ----------- -----------
Net income (loss)....................... $ (7,332) $ 44,357 $ 37,986
=========== =========== ===========
Earnings (loss) per share............... $ (.17) $ 1.01 $ .87
=========== =========== ===========
Average common shares outstanding....... 43,901,767 44,095,057 43,887,631
=========== =========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE>
AMETEK, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1993 1992
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Notes 1 and 10)............... $ 40,468 $ 59,138
Marketable securities (Notes 1 and 10)................... 44,191 56,480
Receivables, less allowance for possible losses of $2,399
in 1993 and $2,392 in 1992.............................. 108,068 107,130
Inventories (Notes 1 and 4).............................. 91,894 91,043
Deferred income taxes (Note 8)........................... 13,346 8,350
Other current assets..................................... 4,100 5,684
-------- --------
Total current assets................................... 302,067 327,825
Property, plant and equipment, net (Note 4)................ 184,809 185,997
Other assets (Notes 4, 9 and 10)........................... 75,787 89,267
-------- --------
$562,663 $603,089
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ 54,374 $ 55,558
Income taxes (Note 8).................................... 11,136 8,333
Accrued liabilities (Note 4)............................. 87,851 53,980
Current portion of long-term debt........................ 14,543 19,749
-------- --------
Total current liabilities.............................. 167,904 137,620
Long-term debt (Notes 5, 10 and 12)........................ 172,429 187,173
Deferred income taxes and credits (Note 8)................. 27,948 42,731
Other long-term liabilities (Note 9)....................... 29,056 25,293
Stockholders' equity: (Notes 6 and 12)
Preferred stock, $1.00 par value, authorized: 5,000,000
shares; none issued..................................... -- --
Common stock, $1.00 par value, authorized: 100,000,000
shares; issued: 1993 and 1992--46,414,317 shares........ 46,414 46,414
Capital in excess of par value........................... 6,389 5,679
Retained earnings........................................ 161,297 193,724
-------- --------
214,100 245,817
Net unrealized losses.................................... (21,632) (16,429)
Less: Cost of shares held in treasury: 1993--2,774,672;
1992--2,199,672 shares.................................. (27,142) (19,116)
-------- --------
Total stockholders' equity............................. 165,326 210,272
-------- --------
$562,663 $603,089
======== ========
</TABLE>
See accompanying notes.
F-4
<PAGE>
AMETEK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Cash provided by (used for):
Operating activities:
Net income (loss).............................. $ (7,332) $ 44,357 $ 37,986
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization................. 35,907 37,263 36,455
Deferred income taxes and credits............. (19,970) 1,814 2,850
Resizing, restructuring and other unusual
charges...................................... 50,898 -- --
Changes in operating working capital:
(Increase) decrease in receivables........... (633) 2,940 (11,754)
(Increase) decrease in inventories and other
current assets.............................. (1,035) 2,969 10,310
Increase (decrease) in payables, accruals and
income taxes................................ 8,704 (5,228) 11,374
Other......................................... (1,288) (5,529) (4,034)
-------- -------- --------
Total operating activities................... 65,251 78,586 83,187
-------- -------- --------
Investing activities:
Additions to property, plant and equipment..... (38,324) (23,990) (18,808)
Purchase of businesses and investments......... (16,585) (16,992) (25,526)
Decrease (increase) in marketable securities... 14,998 15,965 (40,118)
Proceeds from sale of investments.............. 7,795 12,806 9,778
Other.......................................... 244 781 (2,984)
-------- -------- --------
Total investing activities................... (31,872) (11,430) (77,658)
-------- -------- --------
Financing activities:
Cash dividends paid............................ (25,095) (29,991) (28,990)
Additional long-term borrowings................ -- 3,755 --
Repayment of long-term debt.................... (19,411) (20,041) (23,785)
Net change in short-term borrowings............ -- -- (5,608)
Purchase of treasury stock..................... (8,878) -- --
Proceeds from issuance of common stock......... 1,335 3,388 831
-------- -------- --------
Total financing activities................... (52,049) (42,889) (57,552)
-------- -------- --------
(Decrease) increase in cash and cash equivalents. (18,670) 24,267 (52,023)
Cash and cash equivalents:
Beginning of year.............................. 59,138 34,871 86,894
-------- -------- --------
End of year.................................... $ 40,468 $ 59,138 $ 34,871
======== ======== ========
</TABLE>
See accompanying notes.
F-5
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements include the accounts of the Company
and subsidiaries, after elimination of all significant intercompany
transactions in consolidation.
Cash Equivalents, Securities and Other Investments
All highly liquid investments with maturities of three months or less when
purchased are cash equivalents. Cash equivalents and fixed income marketable
securities (primarily U.S. Government securities), are carried at the lower of
cost or market. Marketable equity investments of an insurance subsidiary are
carried at market value, and unrealized gains and losses are recognized in
stockholders' equity. Other fixed income investments are carried at cost,
which approximates market.
Inventories
Inventories are stated at the lower of cost or market, cost being determined
principally by the last-in, first-out (LIFO) method of inventory valuation,
and market on the basis of the lower of replacement cost or estimated net
proceeds from sales. The excess of the first-in, first-out (FIFO) method over
the LIFO value was $29.4 million and $29.9 million at December 31, 1993 and
1992.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Expenditures for additions
to plant facilities, or which extend their useful lives, are capitalized. The
cost of tools, jigs and dies, and maintenance and repairs are charged to
operations as incurred. Depreciation of plant and equipment is calculated
principally on a straight-line basis over the estimated useful lives of the
related assets.
Research and Development
Company-funded research and development costs are charged to operations as
incurred and during the past three years were: 1993-$15.1 million, 1992-$14.7
million, and 1991-$12.1 million.
Foreign Currency Translation
Assets and liabilities of foreign operations are translated using exchange
rates in effect at the balance sheet date, and their operations are translated
using average exchange rates for the period.
Some transactions of the Company and its subsidiaries are made in currencies
other than their own. Gains and losses from these transactions (not material
in amount) are included in operating results for the period. Additionally,
foreign exchange contracts and foreign currency options are sometimes used to
hedge firm commitments for certain export sales transactions. Gains and losses
from these agreements are deferred and reflected as adjustments of the
associated export sales.
Earnings Per Share
Earnings per share are based on the average number of common shares
outstanding during the period. No material dilution of earnings per share
would result for the periods if it were assumed that all outstanding stock
options were exercised.
Reclassifications
Certain amounts in the prior years' financial statements and supporting
footnote disclosures have been reclassified to conform to the current year's
presentation.
F-6
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. BUSINESS RESTRUCTURING AND OTHER UNUSUAL CHARGES
Results of operations for 1993 includes charges of $45.1 million ($27.5
million after tax, or $.63 per share) for costs associated with resizing and
restructuring several of the Company's businesses and a charge of $9.8 million
($6 million after tax, or $.14 per share) for other unusual expenses. Most of
the charges were recorded in the fourth quarter of 1993. These charges were
for planned work force reductions and those which occurred in 1993 (including
certain pension related costs) ($21.4 million); asset write-downs ($15.0
million); relocation of certain product lines and overall consolidation of the
Company's aerospace operations ($14.2 million); and other unusual expenses
($4.3 million). The resizing and restructuring charges primarily relate to the
unwillingness of the union at a Precision Instruments facility in
Sellersville, Pennsylvania to agree on wage and work rule concessions
requested by the Company necessary to make that operation competitive.
3. ACQUISITIONS
In March 1993, the Company purchased certain assets of Revere Aerospace Inc.
("Revere"), a United States subsidiary of Dobson Park Industries PLC, United
Kingdom, for approximately $7.0 million in cash. Revere is a producer of
thermocouple and fiber optic cable assemblies.
In February 1992, the Company purchased the Tencal operations of Cambridge-
Lee Industries. Tencal is a producer of small electric motors and injection-
molded plastic components. In August 1992, the Company purchased the
industrial filtration operation of Eurofiltec, Ltd. Early in October 1992, the
Company purchased Debro Messtechnik GmbH, an instrument manufacturer located
in Germany. Also, during 1992, the Company acquired two product lines
consisting of silica fiber technology, and consumer filtration products. The
cost of these acquisitions was $11.7 million and the Company assumed $3.8
million in debt.
In April 1991, the Company purchased Jofra Instruments, a Danish producer of
temperature calibration equipment, and acquired the remaining 38% interest in
Elettromotori Crema, one of its Italian electric motor manufacturers. Also,
during 1991, the Company purchased product lines of consumer drinking water
filters and custom-shaped alloy wire. The aggregate cost of these acquisitions
was $10.5 million in cash and a two-year, 10% installment obligation of $4.5
million.
All of the above acquisitions have been accounted for by the purchase method
and, accordingly, the results of their operations are included from the
respective acquisition dates. The above acquisitions would not have had a
material effect on sales or earnings for 1993, 1992 or 1991 had they been made
at the beginning of the year prior to their acquisition.
F-7
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------
1993 1992
-----------------------
<S> <C> <C>
INVENTORIES
Finished goods and parts................................ $ 32,410 $ 35,064
Work in process......................................... 23,683 22,873
Raw materials and purchased parts....................... 35,801 33,106
---------- ----------
$ 91,894 $ 91,043
========== ==========
PROPERTY, PLANT AND EQUIPMENT
Land.................................................... $ 7,926 $ 7,799
Buildings............................................... 95,393 89,211
Machinery and equipment................................. 281,116 269,189
---------- ----------
384,435 366,199
Less accumulated depreciation........................... (199,626) (180,202)
---------- ----------
$ 184,809 $ 185,997
========== ==========
OTHER ASSETS
Intangibles, at cost:
Patents................................................ $ 28,083 $ 27,993
Excess of cost over net assets acquired................ 15,976 18,767
Other acquired intangibles............................. 40,284 39,127
Less accumulated amortization.......................... (46,358) (38,980)
---------- ----------
37,985 46,907
Investments............................................. 23,755 19,919
Other................................................... 14,047 22,441
---------- ----------
$ 75,787 $ 89,267
========== ==========
Patents are being amortized on a straight-line basis over 7 to 14 years. The ex-
cess of cost over net assets acquired is being amortized on a straight-line ba-
sis over 20 to 30 years. Other acquired intangibles are being amortized on a
straight-line basis over 2 to 30 years.
ACCRUED LIABILITIES
Accrued employee compensation and benefits.............. $ 19,109 $ 19,657
Resizing and restructuring.............................. 24,471 --
Accrued interest........................................ 4,928 5,744
Other................................................... 39,343 28,579
---------- ----------
$ 87,851 $ 53,980
========== ==========
5. LONG-TERM DEBT
At December 31, 1993 and 1992, long-term debt consisted of:
<CAPTION>
(IN THOUSANDS)
-----------------------
1993 1992
-----------------------
<S> <C> <C>
8.95% notes payable due 1995 to 2001...................... $ 93,500 $ 106,750
9.35% notes payable due 1995 to 2004...................... 75,000 75,000
Other, due in varying amounts to 2004..................... 3,929 5,423
---------- ----------
$ 172,429 $ 187,173
========== ==========
</TABLE>
F-8
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The annual future payments required by the terms of the long-term debt for
the following years are: 1995-$21.3 million; 1996-$21.3 million; 1997-$21.1
million; and 1998-$21.1 million. The Company's debt agreements contain
restrictions relating to total debt, working capital, dividends and capital
stock repurchases. At December 31, 1993, the Company was in compliance with
these restrictions. (See Note 12 "Other Matters.")
The Company has a revolving credit agreement with a group of banks providing
for up to $83 million effective until June 30, 1995. No borrowings are
outstanding under this agreement. The agreement provides for various interest
alternatives and a commitment fee on the unused portion of the credit line.
(See Note 12 "Other Matters.") In addition, the Company maintains lines of
credit in other currencies with various European banks in amounts equivalent
to $12.1 million, in the aggregate, at December 31, 1993.
At December 31, 1993, the Company was a party to a currency and interest
rate swap agreement related to debt (not material in amount), which matures in
1997, of a European subsidiary.
6. STOCKHOLDERS' EQUITY
The Company has a Shareholder Rights Plan, under which the Board of
Directors declared a dividend of one Right for each share of Company common
stock owned. The Plan provides, under certain conditions involving acquisition
of the Company's common stock, that holders of Rights, except for the
acquiring entity, would be entitled (i) to purchase shares of preferred stock
at a specified exercise price, or (ii) to purchase shares of common stock of
the Company, or the acquiring company, having a value of twice the Rights
exercise price. The Rights under the Plan expire in 1999.
The Company provides, among other things, for restricted stock awards of
common stock to eligible employees and nonemployee directors of the Company at
such cost to the recipient as the Stock Incentive Plan Committee of the Board
of Directors may determine. These shares are issued subject to certain
conditions, and transfer and other restrictions as prescribed by the Plan. In
1993 and 1991, respectively, the Company awarded 20,000 shares and 100,000
shares of restricted common stock to certain directors under the Plan. No
restricted stock was awarded during 1992. Also, in 1991, a total of 68,272
shares of restricted common stock was awarded to certain executives of the
Company in accordance with a supplemental pension benefit arrangement. Upon
issuance of restricted stock, unearned compensation, equivalent to the excess
of the market value of the shares awarded over the price paid by the recipient
at the date of the grant, is charged to stockholders' equity and is amortized
to expense over the periods until the restrictions lapse. Amortization charged
to expense in 1993, 1992, and 1991 was not significant.
At December 31, 1993, 4,732,053 (5,442,993 in 1992) shares of common stock
were reserved under the Company's incentive and nonqualified stock option
plans. The options are exercisable at prices not less than market value on
dates of grant, and in installments over five- to seven-year periods from such
dates.
Information on options for 1993 follows:
<TABLE>
<CAPTION>
PRICE RANGE SHARES
------------- ---------
<S> <C> <C>
Outstanding at beginning of year...................... $ 8.94-$16.50 2,116,289
Granted............................................... 13.13- 14.94 93,000
Exercised............................................. 11.69- 14.06 (136,973)
Cancelled............................................. 11.69- 15.75 (26,091)
------------- ---------
Outstanding at end of year (expiring from 1994 through
2000)................................................ $ 8.94-$16.50 2,046,225
============= =========
Exercisable at end of year............................ $ 8.94-$16.50 1,344,215
============= =========
</TABLE>
F-9
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Options on 259,486 shares were exercised in 1992 and no options were
exercised in 1991.
The Company also has outstanding 293,502 stock appreciation rights
exercisable for cash and/or shares of the Company's common stock when the
related option is exercised. Subject to certain limitations, each right
relates to the excess of the market value of the Company's stock over the
exercise price of the related option. Charges and credits, immaterial in
amount, are made to income for these rights and certain related options.
Changes in stockholders' equity are summarized below (In thousands):
<TABLE>
<CAPTION>
COMMON CAPITAL IN NET
STOCK, EXCESS OF RETAINED UNREALIZED TREASURY
$1 PAR VALUE PAR VALUE EARNINGS GAINS (LOSSES) STOCK
------------ ---------- -------- -------------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31,
1990................... $46,414 $3,598 $170,362 $ 1,498 $(22,460)
------- ------ -------- -------- --------
Employee savings plan
(59,000 shares)........ 236 494
Net income.............. 37,986
Cash dividends paid
($.66 per share)....... (28,990)
Currency translation.... 1,179
Restricted stock awards
(168,272 shares)....... 594 379
Adjustment of pension
liability in excess of
unrecognized prior
service cost, net of
deferred taxes......... 189
------- ------ -------- -------- --------
BALANCE, DECEMBER 31,
1991................... 46,414 4,428 179,358 2,866 (21,587)
------- ------ -------- -------- --------
Employee stock options
and savings plan
(255,151 shares)....... 1,251 2,137
Net income.............. 44,357
Cash dividends paid
($.68 per share)....... (29,991)
Currency translation.... (16,127)
Amortization of
restricted stock
awards................. 334
Adjustment of pension
liability in excess of
unrecognized prior
service cost, net of
deferred taxes......... (3,168)
------- ------ -------- -------- --------
BALANCE, DECEMBER 31,
1992................... 46,414 5,679 193,724 (16,429) (19,116)
------- ------ -------- -------- --------
Employee Stock Options
and Savings Plan
(88,400 shares)........ 571 744
Net loss................ (7,332)
Cash dividends paid
($.57 per share)....... (25,095)
Currency translation.... (7,958)
Restricted stock awards
(20,000 shares)........ 139 (119)
Amortization of
restricted stock
awards................. 227
Purchase of treasury
stock (683,400 shares). (8,878)
Appreciation in
marketable securities
and other financial
instruments, net of
deferred taxes......... 3,262
Adjustment of pension
liability in excess of
unrecognized prior
service cost, net of
deferred taxes......... (507)
------- ------ -------- -------- --------
BALANCE AT DECEMBER 31,
1993................... $46,414 $6,389 $161,297 $(21,632) $(27,142)
======= ====== ======== ======== ========
</TABLE>
F-10
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. LEASES
Minimum aggregate rental commitments under noncancellable leases in effect
at December 31, 1993 (principally for real property, office space and
equipment) amounted to $4.9 million consisting of annual payments of $2.4
million due in 1994, $1.8 million in 1995 and decreasing amounts thereafter.
Rental expense of $5 million, $4 million and $4.1 million was charged to
income in 1993, 1992 and 1991.
8. INCOME TAXES
In 1993, income before income taxes from foreign operations amounted to $6.7
million ($9.1 million in 1992 and $4.9 million in 1991).
The details of the provision for (benefit from) income taxes follow:
<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Federal.............................................. $(7,125) $16,357 $13,288
State................................................ (863) 1,327 2,547
Foreign.............................................. 4,123 4,678 (1,443)*
------- ------- -------
$(3,865) $22,362 $14,392
======= ======= =======
</TABLE>
- --------
*Includes the favorable tax effect of combining certain foreign operations.
The provision for (benefit from) income taxes shown above includes a current
provision of $14,791, $20,435 and $14,284 and a deferred provision (benefit)
of $(18,656), $1,927 and $108 for 1993, 1992 and 1991.
Prior to January 1, 1992, the Company followed the provisions of SFAS No.
96, Accounting for Income Taxes. Effective January 1, 1992, the Company
adopted the provisions of a new accounting standard for income taxes (SFAS No.
109). The effect of adopting this standard was not material.
Significant components of the Company's deferred tax (asset) liability as of
December 31 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------
1993 1992
-------- -------
<S> <C> <C>
Current deferred tax assets:
Reserves not currently deductible......................... $(13,235) $(8,142)
Other..................................................... (111) (208)
-------- -------
Net current deferred tax asset.......................... (13,346) (8,350)
-------- -------
Long-term deferred tax (assets) liabilities:
Differences in basis of property and accelerated deprecia-
tion..................................................... 23,056 23,220
Purchased tax benefits.................................... 17,654 18,452
Reserves not currently deductible......................... (17,015) (3,763)
Other..................................................... 4,253 4,822
-------- -------
Net long-term deferred tax liability.................... 27,948 42,731
-------- -------
Net deferred tax liability.............................. $ 14,602 $34,381
======== =======
</TABLE>
F-11
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The effective rate of the provision for (benefit from) income taxes
reconciles to the statutory rate as follows:
<TABLE>
<CAPTION>
1993 1992 1991
----- ---- ----
<S> <C> <C> <C>
Statutory rate.............................................. (35.0)% 34.0% 34.0%
State income taxes, net of federal income tax benefit....... (5.0) 2.2 2.8
Foreign Sales Corporation and other tax credits............. (15.0) (2.4) (2.9)
Effect of foreign operations................................ 15.0 1.1 (6.8)
Effect of U.S. federal statutory tax rate increase
on prior years' deferred taxes............................. 5.9 -- --
Other....................................................... (0.4) (1.4) 0.4
----- ---- ----
(34.5)% 33.5% 27.5%
===== ==== ====
</TABLE>
9. RETIREMENT AND PENSION PLANS
The Company maintains noncontributory defined benefit retirement and pension
plans, with benefits for eligible United States salaried and hourly employees
funded through trusts established in conjunction with these plans. Employees
of certain foreign operations participate in various local plans which in the
aggregate are not significant.
The Company also has nonqualified unfunded retirement plans for its
directors and certain retired employees, and contractual arrangements with
certain executives that provide for supplemental pension benefits in excess of
those provided by the Company's primary pension plan. Fifty percent of the
projected benefit obligation of the supplemental pension benefit arrangements
with the executives has been funded by grants of restricted shares of the
Company's common stock. The remaining 50% is unfunded. The Company is
providing for these arrangements by charges to earnings over the periods to
age 65 of the participants.
The Company's funding policy with respect to its qualified plans is to
contribute amounts determined annually on an actuarial basis that provides for
current and future benefits in accordance with funding requirements of federal
law and regulations. Assets of funded benefit plans are invested in a variety
of equity and debt instruments and in pooled temporary funds.
Net pension expense, excluding plan administrative expenses, consists of the
following components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Service cost for benefits earned during the peri-
od.............................................. $ 6,902 $ 6,601 $ 5,662
Interest cost on projected benefit obligation.... 14,374 13,106 12,108
Actual return on plan assets..................... (15,605) (14,452) (26,254)
Net amortization and deferrals................... 652 673 15,025
-------- -------- --------
Net pension expense.............................. $ 6,323 $ 5,928 $ 6,541
======== ======== ========
</TABLE>
In addition to pension expense shown above, in 1993 the Company also
recorded a charge for curtailments of $7.6 million related to an hourly
pension plan as part of the resizing and restructuring of its general gauge
and aerospace operations (see Note 2).
The charge to income for all retirement and pension plans, including the
1993 curtailment provision, was $14.4 million in 1993, $6.7 million in 1992
and $7.2 million in 1991.
F-12
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Net pension expense reflects an expected long-term rate of return on plan
assets of 9 1/2% for 1993, 1992 and 1991. The actual return has been adjusted
to defer gains or losses which differ from the expected return. The present
value of projected benefit obligations was determined using an assumed
discount rate of 7 1/4% for 1993, 8.0% for 1992 and 8 1/4% for 1991. The
assumed rate of compensation increase used in determining the present value of
projected benefit obligations was 5 1/2% for 1993 and 1992 and 6.0% for 1991.
For pension plans with accumulated benefits in excess of assets at December
31, 1993, the balance sheet reflects an additional long-term pension liability
of $11.0 million ($17.2 million--1992), a long-term intangible asset of $3.7
million ($10.8 million--1992), and a charge to stockholders' equity of $4.7
million ($4.2 million--1992 and $1.1 million--1991), net of a deferred tax
benefit, representing the excess of the additional long-term liability over
unrecognized prior service cost. No balance sheet recognition is given to
pension plans with assets in excess of accumulated benefits.
The Company provides limited postretirement benefits other than pensions to
certain retirees, and a small number of employees. These benefits are
accounted for on the accrual basis, thereby meeting accounting requirements of
the new accounting standard for postretirement benefits other than pensions.
The following table sets forth the funded status of the plans:
<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------------------------------
DECEMBER 31, 1993 DECEMBER 31, 1992
----------------------- -----------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of ben-
efit obligations:
Vested benefit obligation.... $113,823 $ 72,070 $ 95,563 $ 63,872
-------- -------- -------- --------
Accumulated benefit obliga-
tion........................ $117,875 $ 76,147 $ 98,433 $ 67,379
-------- -------- -------- --------
Projected benefit obligation. $136,340 $ 76,437 $113,988 $ 70,250
Plan assets at fair value...... 136,923 57,839 114,229 51,924
-------- -------- -------- --------
Plan assets in excess of (less
than) projected benefit obli-
gation........................ 583 (18,598) 241 (18,326)
Unrecognized prior service
cost.......................... 2,160 2,294 1,892 6,319
Unrecognized net loss.......... 9,214 8,275 11,518 8,350
Unrecognized net transition
(asset) obligation, net of am-
ortization.................... (5,433) 781 (6,637) 4,538
-------- -------- -------- --------
Prepaid (accrued) pension ex-
pense......................... $ 6,524 $ (7,248) $ 7,014 $ 881
======== ======== ======== ========
</TABLE>
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The recorded amount of cash, cash equivalents and marketable securities, and
a derivative equity instrument approximates fair value.
F-13
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The estimated fair values of the Company's other financial instruments are
compared below to the recorded amounts at December 31.
<TABLE>
<CAPTION>
ASSET (LIABILITY) (IN THOUSANDS)
-------------------------------------------
DECEMBER 31, 1993 DECEMBER 31, 1992
--------------------- ---------------------
RECORDED ESTIMATED RECORDED ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Other investments.................. $ 23,755 $ 28,000 $ 19,919 $ 23,000
Long-term debt (including current
portion).......................... (186,972) (208,000) (206,922) (212,000)
Forward currency and commodity con-
tracts............................ -- 1,600 -- 11,000
</TABLE>
The fair values of securities and other investments are based on quoted
market value. The fair value of long-term debt is estimated based on borrowing
rates currently available to the Company for loans with similar terms and
maturities. The fair value of forward currency and commodity contracts (used
for hedging purposes) is based on quotes from brokers for comparable
contracts. See also Note 12.
11. ADDITIONAL INCOME STATEMENT AND CASH FLOW INFORMATION
Included in other income, net, is interest and other investment income of
$8.4 million, $8.6 million and $11.2 million for 1993, 1992 and 1991. Income
taxes paid in 1993, 1992 and 1991 were $13.8 million, $21.8 million, and $13.0
million. Cash paid for interest for each of the three years approximated
interest expense.
12. OTHER MATTERS
The Company is in the process of implementing a plan intended to enhance
shareholder value, announced in November 1993. The financial elements of the
plan involve the Company 1) completing an offering of $150 million in
principal amount of Senior Notes to the public, 2) borrowing $175 million
under a proposed $250 million secured credit agreement with a group of banks
which will replace an existing revolving credit agreement, 3) retiring
existing debt aggregating $185.4 million in principal amount for a payment
equal to the principal amount thereof plus a prepayment premium of
approximately $13 million (after tax), 4) repurchasing outstanding shares of
its common stock for an aggregate purchase price of up to $150 million and 5)
reducing its quarterly dividend rate on its common stock from $.17 per share
to $.06 per share.
In contemplation of its repurchase of common stock, the Company has, from
time to time, entered into derivative instruments with a third party. Under
the terms of the derivative instruments, for a specific number of shares, the
Company is at risk for a decline in the market price of the Company's common
stock from the inception to the expiration date, at which time the instruments
will be settled in cash. As of December 31, 1993, the Company had entered into
derivative instruments which were measured by the movement in market value of
3,184,500 shares of common stock. At December 31, 1993, the Company has
recorded, in its equity, the effect of marking the derivative instruments to
market.
In February 1994, the Company settled all open derivative instruments for
approximately $330,000 (including those entered into in January 1994) and
entered into a new derivative instrument which will expire on May 31, 1994.
Under the new derivative instrument, the Company, prior to April 5, 1994, may
exercise an option to purchase 3,924,200 shares of its common stock from the
counterparty for $12.125 per share plus certain costs. If the option is not
exercised, the Company is at risk for a decline in the average market price,
as defined, of its common stock based upon 3,924,200 shares of common stock.
F-14
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. SEGMENT AND GEOGRAPHIC INFORMATION
The Company classifies its operations into three business segments: Electro-
mechanical, Precision Instruments and Industrial Materials.
The Electro-mechanical Group produces motor-blower systems and injection-
molded components for manufacturers of floor care appliances, and fractional
horsepower motors and motor-blowers for computer, business machine, medical
equipment and high-efficiency heating equipment producers. Sales of fractional
horsepower electric motors and blowers represented 38% in 1993 (39% in 1992
and 35% in 1991) of the Company's consolidated net sales.
The Precision Instruments Group produces aircraft cockpit instruments and
displays, and pressure, temperature, flow and liquid level sensors for
aircraft and jet engine manufacturers and for airlines, as well as airborne
electronics systems to monitor and record flight and engine data. The group
also produces instruments and complete instrument panels for heavy truck
builders, process monitoring and display systems, combustion, gas analysis,
moisture and emissions monitoring systems, force and speed measuring
instruments, air and noise monitors, pressure and temperature calibrators and
pressure-indicating and digital manometers. The Precision Instruments Group
has for many years been a leading producer of the widely used mechanical
pressure gauge.
The Industrial Materials Group produces high-temperature-resistant materials
and textiles, corrosion-resistant heat exchangers, tanks and piping for
process systems; ultralightweight foam sheet packaging material; drinking
water filter and treatment systems; industrial and commercial filters for
other liquids; replacement filter cartridges, liquid bag filters and multiple
cartridge filter housings, high-purity metals and alloys in powder, strip and
wire form for high-performance aircraft, automotive and electronics
requirements; and thermoplastic compounds and concentrates for automotive,
appliance and telecommunication applications.
F-15
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEGMENT AND GEOGRAPHIC FINANCIAL INFORMATION
(IN THOUSANDS)
Business Segments
<TABLE>
<CAPTION>
ELECTRO- PRECISION INDUSTRIAL TOTAL
MECHANICAL INSTRUMENTS MATERIALS CORPORATE CONSOLIDATED
---------- ----------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales(1) 1993 $280,732 $275,351 $176,112 $732,195
1992 309,556 297,025 162,969 769,550
1991 249,763 309,901 155,435 715,099
------------------------------------------------------------------
-
Segment operating profit 1993 35,018 (30,643)(3) 18,284(4) $(33,856)(5) (11,197)
(loss) and consolidated 1992 49,912 28,045 22,096 (33,334)(5) 66,719
income (loss) before 1991 35,363 32,914 20,332 (36,231)(5) 52,378
income taxes(2)
------------------------------------------------------------------
-
Identifiable assets 1993 164,826 150,122 103,941 143,774 562,663
1992 157,158 177,143 102,385 166,403 603,089
1991 169,173 189,164 101,240 152,896 612,473
------------------------------------------------------------------
-
Additions to 1993 25,343 6,513 9,048 218 41,122
property, plant and 1992 20,706 7,417 5,170 236 33,529
equipment(6) 1991 11,735 6,917 5,969 82 24,703
------------------------------------------------------------------
-
Depreciation and 1993 11,582 15,432 8,726 167 35,907
amortization 1992 12,107 15,979 8,976 201 37,263
1991 11,169 15,705 9,399 182 36,455
</TABLE>
Geographic Areas
<TABLE>
<CAPTION>
INTERNATIONAL
---------------------
UNITED CANADA, ASIA TOTAL
STATES EUROPE AND OTHER CORPORATE CONSOLIDATED
-------- -------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales(1)............ 1993 $634,935 $ 96,030 $ 1,230 $732,195
1992 655,114 113,111 1,325 769,550
1991 614,890 98,378 1,831 715,099
------------------------------------------------------
-
Income (loss) before
income taxes........... 1993 15,473 7,357 (171) $(33,856) (11,197)
1992 87,665 12,601 (213) (33,334) 66,719
1991 81,531 6,855 223 (36,231) 52,378
------------------------------------------------------
-
Identifiable assets..... 1993 334,538 83,774 577 143,774 562,663
1992 342,226 93,580 880 166,403 603,089
1991 337,171 121,170 1,236 152,896 612,473
------------------------------------------------------
-
United States export
sales(7)............... 1993 51,179 54,500 105,679
1992 65,132 54,171 119,303
1991 59,612 52,023 111,635
</TABLE>
- --------
(1) After elimination of intersegment sales and intercompany sales between
geographic areas, which are not significant in amount. Such sales are
generally priced based on prevailing market prices.
(2) Segment operating profit represents sales less all direct costs and
expenses (including certain administrative and other expenses) applicable
to each segment, but does not include interest expense.
(3) Reflects charges of $47.8 million for resizing and restructuring costs
associated with planned work force reductions and those which occurred in
1993, asset write-downs, relocation of product lines and the overall
consolidation of the Company's aerospace operations, and other unusual
charges.
F-16
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(4) Reflects charge of $3.9 million primarily for asset write-downs.
(5) Includes unallocated administrative expenses, interest expense and net
other income and, in 1993, $2.8 million of restructuring and other unusual
charges.
(6) Includes $2.8 million in 1993, $9.5 million in 1992, and $5.9 million in
1991 from acquired businesses.
(7) Included in total United States sales above.
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1993
Net sales.................. $187,114 $186,820 $175,003 $183,258 $732,195
Operating income (loss).... $ 12,514 $ 12,629 $ 6,490 $(31,564)(a) $ 69
Net income (loss).......... $ 6,096 $ 6,222 $ 1,980 $(21,630)(a) $(7,332)
Earnings (loss) per share.. $ 0.14 $ 0.14 $ 0.05 $ (0.50)(a) $ (0.17)
Dividends paid per share... $ 0.17 $ 0.17 $ 0.17 $ 0.06 $ 0.57
Common stock trading
range:(b)
High...................... 17 1/2 17 1/2 14 1/8 14 1/8 17 1/2
Low....................... 14 1/4 12 7/8 12 5/8 10 5/8 10 5/8
1992
Net sales.................. $196,759 $195,323 $185,996 $191,472 $769,550
Operating income........... $ 21,460 $ 20,618 $ 18,017 $ 19,048 $ 79,143
Net income................. $ 11,261 $ 11,808 $ 10,708 $ 10,580 $ 44,357
Earnings per share......... $ 0.26 $ 0.26 $ 0.25 $ 0.24 $ 1.01
Dividends paid per share... $ 0.17 $ 0.17 $ 0.17 $ 0.17 $ 0.68
Common stock trading
range:(b)
High...................... 17 3/8 18 1/8 16 16 3/8 18 1/8
Low....................... 13 1/8 15 1/8 14 5/8 13 7/8 13 1/8
</TABLE>
- --------
(a) Includes pre-tax charges of $46.9 million ($28.6 million after tax or $.66
per share) for restructuring and other unusual items.
(b) Trading ranges are based on the New York Stock Exchange composite tape.
F-17
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFOR-
MATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
The Company............................................................... 12
Use of Proceeds........................................................... 13
Capitalization............................................................ 14
Selected Financial Data................................................... 15
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 17
Business.................................................................. 23
The Credit Agreement...................................................... 33
Management................................................................ 36
Description of the Notes.................................................. 38
Underwriting.............................................................. 55
Validity of the Notes..................................................... 56
Experts................................................................... 56
Index to Consolidated Financial Statements................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$150,000,000
[LOGO OF AMETEK, INC. APPEARS HERE]
% SENIOR NOTES
DUE 2006
------------
PROSPECTUS
------------
GOLDMAN, SACHS & CO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The fees and expenses in connection with the issuance and distribution of
the securities being registered hereunder, other than underwriting discounts
and commissions, are estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 51,724.50
National Association of Securities Dealers, Inc. filing fee...... 15,500.00
Rating Agency fees............................................... 82,500.00
Printing and engraving expenses.................................. 222,500.00
Legal fees and expenses.......................................... 275,000.00
Accounting fees and expenses..................................... 168,000.00
Blue Sky fees and expenses....................................... 18,000.00
Trustee's fees and expenses...................................... 15,750.00
Miscellaneous.................................................... 51,025.50
-----------
Total........................................................ $900,000.00
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides, in summary, that directors and officers of Delaware
corporations are entitled, under certain circumstances, to be indemnified
against all expenses and liabilities (including attorneys' fees) incurred by
them as a result of suits brought against them in their capacity as a director
or officer, if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe their conduct was unlawful; provided, that no indemnification
may be made against expenses in respect of any claim, issue or matter as to
which they shall have been adjudged to be liable to the corporation, unless
and only to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, they are fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper. Any such indemnification may be made by the corporation only as
authorized in each specific case upon a determination by the stockholders or
disinterested directors that indemnification is proper because the indemnitee
has met the applicable standard of conduct.
Article Eighth of the Registrant's Certificate of Incorporation provides
that no director shall have any personal liability to the Registrant or its
stockholders for any monetary damages for breach of fiduciary duty as a
director, provided, however, that such provision does not limit or eliminate
the liability of any director (i) for breach of such director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL (involving certain unlawful
dividends or stock repurchases) or (iv) for any transaction from which such
director derived an improper personal benefit.
The Registrant maintains directors' and officers' liability insurance which
covers the directors and officers of the Registrant with policy limits of $75
million.
Pursuant to Indemnity Agreements between the Registrant and its directors
and officers, the Registrant has agreed to indemnify such directors and
officers to the fullest extent permitted by Delaware law, as the same may be
amended from time to time.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<C> <S>
1 --Form of Underwriting Agreement between the Registrant and the
Underwriters.
4.1 --Form of Indenture to be dated as of , 1994 between the Registrant
and Corestates Bank N.A., as Trustee (including the form of %
Senior Notes due 2006).
5 --Opinion of Stroock & Stroock & Lavan as to the legality of the Notes.
12.1 --Statement Regarding Computation of Ratio of Earnings to Fixed
Charges.
23.1 --Consent of Stroock & Stroock & Lavan (included in Exhibit 5).
23.2 --Consent of Ernst & Young.
24 --Power of attorney (included on p. II-4 of the Registration
Statement).
25.1 --Form T-1 Statement of Eligibility and Qualification of Corestates
Bank N.A.
</TABLE>
(b) Financial Statement Schedules
Schedules for each of the three years in the period ended December 31, 1993
(except where otherwise indicated):
Report of Independent Auditors on Schedules
<TABLE>
<C> <S>
I Marketable securities--Other investments at December 31, 1993
V Property, plant and equipment
VI Accumulated depreciation of property, plant and equipment
VIII Allowance for possible losses
IX Short-term borrowings
X Supplementary income statement information
</TABLE>
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedules, or because the information is included in the consolidated
financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
II-2
<PAGE>
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
BOROUGH OF PAOLI, STATE OF PENNSYLVANIA, ON FEBRUARY 25, 1994.
Ametek, Inc.
/s/ Allan Kornfeld
By: _________________________________
ALLAN KORNFELD, EXECUTIVE
VICEPRESIDENT--CHIEF FINANCIAL
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
* Chairman of the Board
- ------------------------------------- and Chief Executive February 25,
WALTER E. BLANKLEY Officer (Principal 1994
Executive Officer)
* Executive Vice
- ------------------------------------- President-- Chief February 25,
ROGER K. DERR Operating Officer 1994
* Executive Vice
- ------------------------------------- President-- Chief February 25,
ALLAN KORNFELD Financial Officer 1994
(Principal Financial
Officer)
*
- ------------------------------------- Vice President and
JOHN J. MOLINELLI Comptroller February 25,
(Principal 1994
Accounting Officer)
* Director
- ------------------------------------- February 25,
LEWIS G. COLE 1994
* Director
- ------------------------------------- February 25,
HELMUT N. FRIEDLAENDER 1994
* Director
- ------------------------------------- February 25,
SHELDON S. GORDON 1994
*
- ------------------------------------- Director
CHARLES D. KLEIN February 25,
1994
* Director
- ------------------------------------- February 25,
DAVID P. STEINMANN 1994
* Director
- ------------------------------------- February 25,
ELIZABETH R. VARET 1994
* Allan Kornfeld hereby signs this Amendment No. 1 on February 25, 1994 on his
own behalf and on behalf of each of the indicated persons for whom he is
Attorney-in-fact pursuant to a power of attorney filed herewith.
/s/ Allan Kornfeld
By: ____________________________
ALLAN KORNFELD
II-4
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of AMETEK, Inc. as of
December 31, 1993 and 1992, and for each of the three years in the period
ended December 31, 1993, and have issued our report thereon dated February 9,
1994 (included elsewhere in this Registration Statement). Our audits also
included the financial statement schedules listed in Item 16(b) of this
Registration Statement. These schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
Ernst & Young
Philadelphia, PA February 9, 1994
S-1
<PAGE>
AMETEK, INC.
(B) FINANCIAL STATEMENT SCHEDULES
SCHEDULE I-- MARKETABLE SECURITIES--OTHER INVESTMENTS
DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
AMOUNT AT
PRINCIPAL WHICH CARRIED
AMOUNT COST IN BALANCE SHEET
--------- ------- ----------------
<S> <C> <C> <C>
MARKETABLE SECURITIES:
United States Government.................. $27,750 $27,454 $27,778
Common Stock Held by Captive Insurance
Subsidiary............................... 13,640 16,413
------- -------
$41,094 $44,191(A)
======= =======
OTHER INVESTMENTS:
U.S. and Eurodollar Bonds and Debentures.. $10,154 $ 9,640 $ 9,808(B)
Equity Investments........................ 13,947 13,947(C)
------- -------
$23,587 $23,755
======= =======
</TABLE>
- --------
(A) Market value approximates carrying value.
(B) Market value approximates $10.9 million.
(C) Market value approximates $17.5 million.
S-2
<PAGE>
AMETEK, INC.
(B) FINANCIAL STATEMENT SCHEDULES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
SALES OR
BALANCE AT RETIREMENTS BALANCE AT
CLASSIFICATION BEGINNING OF YEAR ADDITIONS AND OTHER (A) END OF YEAR
-------------- ----------------- --------- ------------- -----------
<S> <C> <C> <C> <C>
1993:
Buildings:
Buildings............. $ 78,427 $ 6,069 $ 3,566 $ 80,930
Improvements on land
and leasehold........ 9,481 790 63 10,208
Construction in proc-
ess.................. 1,303 2,952 -- 4,255
-------- ------- ------- --------
89,211 9,811 3,629 95,393
-------- ------- ------- --------
Machinery and equip-
ment:
Machinery and equip-
ment................. 230,023 20,024 13,847 236,200
Delivery equipment and
automobiles.......... 1,087 446 494 1,039
Furniture and fix-
tures................ 26,047 3,729 2,770 27,006
Construction in proc-
ess.................. 12,032 6,778 1,939 16,871
-------- ------- ------- --------
269,189 30,977 19,050 281,116
-------- ------- ------- --------
Land................... 7,799 334 207 7,926
-------- ------- ------- --------
$366,199 $41,122(B) $22,886 $384,435
======== ======= ======= ========
1992:
Buildings:
Buildings............. $ 75,791 $ 6,272 $ 3,636 $ 78,427
Improvements on land
and leasehold........ 8,788 711 18 9,481
Construction in proc-
ess.................. 261 1,044 2 1,303
-------- ------- ------- --------
84,840 8,027 3,656 89,211
-------- ------- ------- --------
Machinery and equip-
ment:
Machinery and equip-
ment................. 227,117 16,312 13,406 230,023
Delivery equipment and
automobiles.......... 826 393 132 1,087
Furniture and fix-
tures................ 22,828 4,748 1,529 26,047
Construction in proc-
ess.................. 9,458 2,595 21 12,032
-------- ------- ------- --------
260,229 24,048 15,088 269,189
-------- ------- ------- --------
Land................... 6,793 1,454 448 7,799
-------- ------- ------- --------
$351,862 $33,529(B) $19,192 $366,199
======== ======= ======= ========
</TABLE>
Schedule V continues on next page.
- --------
See notes to Schedule V and VI on page S-4.
S-3
<PAGE>
AMETEK, INC.
(B) FINANCIAL STATEMENT SCHEDULES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
SALES OR
BALANCE AT RETIREMENTS BALANCE AT
CLASSIFICATION BEGINNING OF YEAR ADDITIONS AND OTHER (A) END OF YEAR
-------------- ----------------- --------- ------------- -----------
<S> <C> <C> <C> <C>
1991:
Buildings:
Buildings............. $ 67,877 $ 8,603 $ 689 $ 75,791
Improvements on land
and leasehold........ 7,424 1,408 44 8,788
Construction in proc-
ess.................. 4,255 (3,993) 1 261
-------- ------- ------ --------
79,556 6,018 734 84,840
-------- ------- ------ --------
Machinery and equip-
ment:
Machinery and equip-
ment................. 215,913 14,766 3,562 227,117
Delivery equipment and
automobiles.......... 537 425 136 826
Furniture and fix-
tures................ 18,789 4,200 161 22,828
Construction in proc-
ess.................. 10,242 (766) 18 9,458
-------- ------- ------ --------
245,481 18,625 3,877 260,229
-------- ------- ------ --------
Land................... 7,140 60 407 6,793
-------- ------- ------ --------
$332,177 $24,703(B) $5,018 $351,862
======== ======= ====== ========
</TABLE>
Depreciation of property, plant and equipment is determined principally on a
straight-line basis over the estimated useful lives of the assets.
The annual ranges of depreciation rates for the above periods were:
<TABLE>
<S> <C>
Buildings and improvements................................. 2 1/2% to 15%
Machinery and equipment.................................... 10% to 33 1/3%
</TABLE>
- --------
Notes to Schedules V and VI
(A) Other includes foreign currency translation gains (losses) for 1993, 1992
and 1991 of $(8,063), $(16,659) and $(516) for property, plant and
equipment, and $(3,059), $(4,583) and $399 for accumulated depreciation of
property, plant and equipment. Also in 1993, includes $7,782 for asset
write-downs in connection with restructuring and other unusual operating
activities.
(B) Includes $2,798, $9,539 and $5,895 in connection with businesses acquired
in 1993, 1992 and 1991, respectively.
S-4
<PAGE>
AMETEK, INC.
(B) FINANCIAL STATEMENT SCHEDULES
SCHEDULE VI--ACCUMULATED DEPRECIATION OF
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
PROVISIONS SALES OR
BALANCE AT CHARGED TO RETIREMENTS BALANCE AT
CLASSIFICATION BEGINNING OF YEAR INCOME AND OTHER (A) END OF YEAR
-------------- ----------------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
1993:
Buildings:
Buildings............. $ 27,131 $ 2,434 $ 508 $ 29,057
Improvements on land
and leasehold........ 4,087 945 45 4,987
-------- ------- ------ --------
31,218 3,379 553 34,044
-------- ------- ------ --------
Machinery and equip-
ment:
Machinery and equip-
ment................. 132,367 21,140 5,633 147,874
Delivery equipment and
automobiles.......... 640 135 208 567
Furniture and fix-
tures................ 15,977 3,623 2,459 17,141
-------- ------- ------ --------
148,984 24,898 8,300 165,582
-------- ------- ------ --------
$180,202 $28,277 $8,853 $199,626
======== ======= ====== ========
1992:
Buildings:
Buildings............. $ 24,603 $ 2,881 $ 353 $ 27,131
Improvements on land
and leasehold........ 3,221 878 12 4,087
-------- ------- ------ --------
27,824 3,759 365 31,218
-------- ------- ------ --------
Machinery and equip-
ment:
Machinery and equip-
ment................. 116,638 20,891 5,162 132,367
Delivery equipment and
automobiles.......... 507 351 218 640
Furniture and fix-
tures................ 12,781 4,359 1,163 15,977
-------- ------- ------ --------
129,926 25,601 6,543 148,984
-------- ------- ------ --------
$157,750 $29,360 $6,908 $180,202
======== ======= ====== ========
1991:
Buildings:
Buildings............. $ 22,124 $ 2,610 $ 131 $ 24,603
Improvements on land
and leasehold........ 2,388 880 47 3,221
-------- ------- ------ --------
24,512 3,490 178 27,824
-------- ------- ------ --------
Machinery and equip-
ment:
Machinery and equip-
ment................. 97,576 20,807 1,745 116,638
Delivery equipment and
automobiles.......... 276 250 19 507
Furniture and fix-
tures................ 9,108 3,730 57 12,781
-------- ------- ------ --------
106,960 24,787 1,821 129,926
-------- ------- ------ --------
$131,472 $28,277 $1,999 $157,750
======== ======= ====== ========
</TABLE>
- --------
See notes to Schedules V and VI on page S-4.
S-5
<PAGE>
AMETEK, INC.
(B) FINANCIAL STATEMENT SCHEDULES
SCHEDULE VIII -- ALLOWANCE FOR POSSIBLE LOSSES
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Allowance for possible losses on ac-
counts and notes receivable:
Balance at beginning of year......... $ 2,392 $ 2,451 $ 2,079
Additions charged to expense......... 1,320 1,308 908
Recoveries credited to allowance..... 113 25 158
Write-offs........................... (1,337) (888) (716)
Currency translation adjustment...... (89) (504) 22
----------- ----------- -----------
Balance at end of year............... $ 2,399 $ 2,392 $ 2,451
=========== =========== ===========
SCHEDULE IX -- SHORT-TERM BORROWINGS
YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(DOLLARS IN THOUSANDS)
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Notes payable to banks at December 31.. -- -- --
Weighted average interest rate at De-
cember 31............................. -- -- --
Maximum amount outstanding at any
month-end............................. -- -- $ 5,333
Average amount outstanding during the
year (A).............................. -- -- $ 2,990
Weighted average interest rate for the
year (B).............................. -- -- 12.97%
- -------
- -
(A) Computed by dividing the total of the daily balances outstanding by 360.
(B) Computed by dividing the interest expense on short-term borrowings by the
average amount outstanding during the year.
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<CAPTION>
CHARGED TO COSTS AND EXPENSES (A)
-------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Maintenance and repairs................ $ 15,865 $ 15,455 $ 14,490
=========== =========== ===========
</TABLE>
- --------
(A) Royalties, advertising expenses and taxes other than payroll and income
taxes do not exceed one percent of consolidated net sales and,
accordingly, are not included herein.
S-6
<PAGE>
(This page is to be included only in the Edgar version.)
GRAPHICS APPENDIX LIST
EDGAR Version Typeset Version
- ------------- ---------------
Graphic #1 on Inside Graphic #1 - Pictured, on a grey reflective
Front Cover surface, are products manufactured by the
Company's Electro-mechanical Group. These
products include a thru-flow vacuum cleaner
motor, a computer memory drive, direct
current brushless motor, a direct current
motor - blower designed for medical equipment
and a permanent magnet motor for business
machines.
Graphic #2 on Inside Graphic #2 - Pictured, on a grey reflective
Front Cover surface, are products manufactured by the
Company's Precision Instruments Group. These
products include an oxygen analyzer
controller, an electronic truck instrument
panel, a multi-instrument flat panel for an
aircraft cockpit and three pressure gauges.
Graphic #3 on Inside Graphic #3 - Pictured, on a grey reflective
Front Cover surface, are products manufactured by the
Company's Industrial Materials Group. These
products include: a white protective glove
made of temperature resistant Siltemp(R), a
coil of shiny metal strip wrought from a
precision alloy of pure copper, nickel and
steel powders; and, in the foreground of the
picture, examples of engineered color
concentrates granules in green, yellow and
magenta. Positioned on top of the granules
are the clear plastic filter housing and
inlet cover of the Company's Plymouth
Products Division patented residential water
filter.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION PAGE
-------- ----------- ----
<C> <S> <C>
1 --Form of Underwriting Agreement between the Registrant and
the Underwriters.
4.1 --Form of Indenture to be dated as of , 1994 between the
Registrant and Corestates Bank N.A., as Trustee (including
the form of % Senior Notes
due 2006).
5 --Opinion of Stroock & Stroock & Lavan as to the legality of
the Notes.
12.1 --Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.
23.1 --Consent of Stroock & Stroock & Lavan (included in Exhibit
5).
23.2 --Consent of Ernst & Young.
24 --Power of attorney (included on p. II-4 of the Registration
Statement).
25.1 --Form T-1 Statement of Eligibility and Qualification of
Corestates Bank N.A.
</TABLE>
<PAGE>
EXHIBIT 1
AMETEK, INC.
_% SENIOR NOTES DUE ________
Underwriting Agreement
----------------------
. . . . . . . . . . . . , 19 . .
Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Dear Sirs:
AMETEK, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to Goldman,
Sachs & Co. (the "Underwriters") an aggregate of $ principal amount of
the Notes of the Company specified above (the "Securities").
1. The Company represents and warrants to, and agrees with, the
Underwriters that:
(a) A registration statement in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, have been declared effective by the
Commission in such form; no other document with respect to such
registration statement or document incorporated by reference therein has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424 (a) of the
rules and regulations of the Commission under the Securities Act of 1933,
as amended (the "Act"), being hereinafter called a "Preliminary
Prospectus"; the various parts of such registration statement, including
all exhibits thereto but excluding Form T-1 and including (i) the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with Section
5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of
the registration statement at the time it was declared effective and (ii)
the documents incorporated by reference in the prospectus contained in the
registration statement at the time such part of the registration statement
became effective, each as amended at the time such part of the registration
statement became effective, being hereinafter called the "Registration
Statement"; such form of final prospectus, in the form first filed pursuant
to Rule 424(b) under the Act, being hereinafter called the "Prospectus";
any reference herein to any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of
<PAGE>
such Preliminary Prospectus or Prospectus, as the case may be); and any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement;
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Underwriters
expressly for use therein;
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the Prospectus
or any further amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Underwriters
expressly for use therein;
(d) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust-Indenture Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment thereto
and as of the applicable filing date as to the Prospectus and any amendment
or supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by the Underwriters expressly for use therein;
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(e) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus;
(f) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries;
(g) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and each
subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(h) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying
shares [and except as otherwise set forth in the Prospectus]) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(i) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the
Indenture to be dated as of , 1994 (the "Indenture") between
the Company and as Trustee (the "Trustee"), under which they
are to be issued, which will be substantially in the form filed as an
exhibit to the Registration Statement; the Indenture has been duly
authorized and duly qualified under the Trust Indenture Act and, when
executed and delivered by the Company and the Trustee, the Indenture will
constitute a valid and legally binding
3
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instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and the Securities and the Indenture will
conform to the descriptions thereof in the Prospectus;
(j) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture and
this Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, sale/leaseback agreement, loan
agreement or other similar financing agreement or instrument or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Securities or the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture, except the registration
under the Act of the Securities, such as have been obtained under the Trust
Indenture Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities by
the Underwriters;
(k) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(l) The Subsidiaries listed in Schedule I hereto are hereinafter
referred to as the "Significant Subsidiaries." For the year ended December
31, 1992, each Significant Subsidiary accounted for at least 10% of the
Company's consolidated assets or consolidated income, and all other
subsidiaries of the Company in the aggregate did not account for more than
10% of the Company's consolidated assets or consolidated income;
(m) Ernst & Young who have certified certain financial statements of
the Company and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the Underwriters, and the Underwriters agree to
purchase from the Company, at a purchase price of % of the principal amount
thereof, plus accrued interest from , 1994 to the Time of Delivery
hereunder, the Securities.
4
<PAGE>
3. Upon the authorization by the Underwriters of the release of the
Securities, the Underwriters propose to offer the Securities for sale upon the
terms and conditions set forth in the Prospectus.
4. Securities to be purchased by the Underwriters hereunder, in
definitive form, and in such authorized denominations and registered in such
names as the Underwriters may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to you
for the account of the Underwriters against payment by the Underwriters or on
its behalf of the purchase price therefor by certified or official bank check or
checks, payable to the order of the Company in New York Clearing House funds,
all at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York
10004, at 9:30 a.m., New York City time, on , 1994 or at such
other time and date as the Underwriters and the Company may agree upon in
writing, such time and date being herein called the "Time of Delivery." Such
certificates will be made available for checking and packaging at least twenty-
four hours prior to the Time of Delivery at the offices of Goldman, Sachs & Co.,
85 Broad Street, New York, New York 10004.
5. The Company agrees with the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 43OA(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus which shall be disapproved by the Underwriters promptly after
reasonable notice thereof; to advise the Underwriters, promptly after it
receives notice thereof, of the time when the Registration Statement, or
any amendment thereto, has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish the Underwriters with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Securities; to advise the Underwriters,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information; and, in
the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) Promptly from time to time to take such action as the Underwriters
may reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as the Underwriters may
request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Securities, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any jurisdiction;
5
<PAGE>
(c) To furnish the Underwriters with copies of the Prospectus in such
quantities as the Underwriters may from time to time reasonably request,
and, if the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus in
connection with the offering or sale of the Securities and if at such time
any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, it for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Act, the Exchange Act or the Trust Indenture Act, to notify the
Underwriters and upon the request of the Underwriters to file such document
and to prepare and furnish without charge to the Underwriters and to any
dealer in securities as many copies as the Underwriters may from time to
time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance; and in case the Underwriters are required to deliver a
prospectus in connection with sales of any of the Securities at any time
nine months or more after the time of issue of the Prospectus, upon request
of the Underwriters but at the expense of the Underwriters, to prepare and
deliver to the Underwriters as many copies as the Underwriters may request
of an amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158 (c)),
an earnings statement of the Company and its subsidiaries (which need not
be audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158);
(e) During the period beginning from the date hereof to and including
the 90th day after the date hereof not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company which mature more
than one year after the Time of Delivery and which are substantially
similar to the Securities, without the prior written consent of the
Underwriters;
(f) To furnish to the holders of the Securities as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail; and to furnish to the
holders of the Securities all other documents specified in Section of
the Indenture all in the manner so specified; and
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to the Underwriters copies of all
reports or other communications (financial or other) furnished to
stockholders, and deliver to the Underwriters (i) as soon as they are
available, copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange on which the
Securities or any class of securities of the Company is listed and (B) the
documents specified in
6
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Section of the Indenture, as in effect at the Time of Delivery; and
(ii) such additional information concerning the business and financial
condition of the Company as the Underwriters may from time to time
reasonably request (such financial statements to be on a consolidated basis
to the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its stockholders generally or to the
Commission); and
(h) To apply the net proceeds from the sale of the Securities for the
purposes set forth in the Prospectus.
6. The Company covenants and agrees with the Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing this Agreement,
the Indenture, the Blue Sky and Legal Investment Memoranda and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities, including any corporate histories or bound volumes prepared for the
Company, its counsel and its accountants; (iii) all expenses in connection with
the qualification of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky and legal investment surveys; (iv) any fees charged
by securities rating services for rating the Securities; (v) the filing fees
incident to any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of
preparing the Securities; (vii) the fees and expenses of the Trustee and any
agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Securities; and (viii) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, Section 8 and Section 10
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel, transfer taxes on resale of any of the Securities by
them, and any advertising expenses connected with any offers they may make. The
Underwriters covenant and agree with the Company that the Underwriters will
reimburse the Company up to an amount not to exceed $___ for the financial
advisory fee which the Company has agreed to pay its financial advisor in
connection with the transaction contemplated by this Agreement.
7. The obligations of the Underwriters hereunder shall be subject,
in their sole discretion, to the condition that all representations and
warranties and other statements of the Company herein are, at and as of the Time
of Delivery, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with
Section 5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of
the Underwriters;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to the Underwriters such opinion or opinions, dated the Time of
Delivery, with respect to the incorporation of the Company, the validity of
the Indenture, the Securities, the
7
<PAGE>
Registration Statement, the Prospectus, and other related matters as the
Underwriters may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them
to pass upon such matters;
(c) Stroock & Stroock & Lavan, counsel for the Company, shall have
furnished to the Underwriters their written opinion, dated the Time of
Delivery, in form and substance satisfactory to the Underwriters to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction
(such counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters of
fact upon certificates of officers of the Company, provided that such
counsel shall state that they believe that both the Underwriters and
they are justified in relying upon such opinions and certificates);
(iv) Each Significant Subsidiary has been duly incorporated and
is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation; and all of the issued shares of
capital stock of each such Significant Subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable, and
(except for directors' qualifying shares [and except as otherwise set
forth in the Prospectus]) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims
(such counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters of
fact upon certificates of officers of the Company or its subsidiaries,
provided that such counsel shall state that they believe that both the
Underwriters and they are justified in relying upon such opinions and
certificates);
(v) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is
a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
8
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(vi) This Agreement has been duly authorized, executed and
delivered by the Company;
(vii) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company entitled to the benefits provided
by the Indenture; and the Securities and the Indenture conform to the
descriptions thereof in the Prospectus;
(viii) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, fraudulent conveyance,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Indenture has been duly qualified under the Trust Indenture Act;
(ix) After giving effect to the application of the net proceeds
from the sale of the Securities and borrowings under the Credit
Agreement (as defined in the Prospectus) for the purposes set forth in
the Prospectus, the issue and sale of the Securities and the
compliance by the Company with all of the provisions of the
Securities, the Indenture and this Agreement and the consummation of
the transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, sale/leaseback agreement, loan agreement or other
financing agreement or any other agreement or instrument known to such
counsel to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or By-laws of
the Company or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties;
(x) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by this
Agreement or the Indenture except such as have been obtained under the
Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Underwriters;
(xi) The documents incorporated by reference in the Prospectus or
any further amendment or supplement thereto made by the Company prior
to the Time of Delivery (other than the financial statements and
related schedules and the other financial data included therein, as to
which such counsel need express no opinion), when they were filed with
the Commission, complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder, and they have no reason to believe that, except
as any statement therein may have been modified or superseded in the
Prospectus, any of such documents, when such documents were so filed,
contained an untrue statement of a material fact or
9
<PAGE>
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made when such documents were so filed, not misleading; and
(xii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to the Time of Delivery (other than the financial statements and
related schedules and the other financial data included or
incorporated by reference therein, the form T-1 and the exhibits to
the Registration Statement, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the Trust Indenture Act and the rules and
regulations thereunder.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent certified public accountants of the
Company and the Underwriters at which the contents of the Registration
Statement, the Prospectus and any amendment thereof or supplement thereto
and related matters were discussed and, although such counsel has not
undertaken to investigate or verify independently, and does not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus or any
amendment thereof or supplement thereto, (except as to matters referred to
in clause (vii) above), on the basis of the foregoing, such counsel has no
reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to the
Time of Delivery (other than the financial statements and related schedules
and the other financial data included or incorporated by reference therein,
the form T-1 and the exhibits to the Registration Statement, as to which
such counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that,
as of its date, the Prospectus or any further amendment or supplement
thereto made by the Company prior to the Time of Delivery (other than the
financial statements and related schedules and the other financial data
included or incorporated by reference therein, as to which such counsel
need express no opinion) contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading or that, as of the Time of Delivery, either the Registration
Statement or the Prospectus or any further amendment or supplement thereto
made by the Company prior to the Time of Delivery (other than the financial
statements and related schedules and the other financial data included or
incorporated by reference therein, the form T-1 and the exhibits to the
Registration Statement, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; and such counsel
does not know of any amendment to the Registration Statement required to be
filed or of any contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to be described
in the Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required;
(d) At 10:00 a.m., New York City time, on the effective date of the
Registration Statement and the effective date of the most recently filed
post-effective amendment to the Registration Statement and also at the Time
of Delivery, Ernst &
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Young shall have furnished to the Underwriters a letter or letters, dated
the respective date of delivery thereof, in form and substance satisfactory
to the Underwriters to the effect set forth in Annex I hereto;
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been
any change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in Clause (i)
or (ii), is in the judgment of the Underwriters so material and adverse as
to make it impracticable or inadvisable to proceed with the public offering
or the delivery of the Securities on the terms and in the manner
contemplated in the Prospectus;
(f) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act and (ii) no such
organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of the
Company's debt securities;
(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; (iii) the outbreak or escalation of
hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this clause (iii) in the judgment of the Underwriters makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated by
the Prospectus; or (iv) the occurrence of any material adverse change in
the existing financial, political or economic conditions in the United
States or elsewhere which, in the judgment of the Underwriters, would
materially and adversely affect the financial markets or the market for the
Securities and other debt securities; and
(h) The Company shall have furnished or caused to be furnished to the
Underwriters at the Time of Delivery certificates of officers of the
Company satisfactory to the Underwriters as to the accuracy of the
representations and warranties of the Company herein at and as of such Time
of Delivery, as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to such Time of Delivery, as to the
matters set forth in subsections (a) and (e) of this Section and as to such
other matters as the Underwriters may reasonably request.
8. (a) The Company will indemnify and hold harmless the Underwriters
against any losses, claims, damages or liabilities, joint or several, to which
the Underwriters may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or
11
<PAGE>
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Underwriters for any legal or other expenses reasonably incurred by the
Underwriters in connection with investigating or defending any such action or
claim; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the Underwriters
expressly for use therein.
(b) The Underwriters will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Underwriters expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party to the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the
12
<PAGE>
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party failed
to give the notice required under subsection (c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters less the
amount paid by the Underwriters to reimburse the Company pursuant to the last
sentence of Section 6 hereof, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), the Underwriters shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities
underwritten by the Underwriters and distributed to the public were offered to
the public exceeds the amount of any damages which the Underwriters have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriters within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Underwriters, as set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Underwriters or any controlling person of the Underwriters, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Securities.
10. If for any reason the Securities are not delivered by or on
behalf of the Company as provided herein, the Company will reimburse the
Underwriters for all out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities, but
13
<PAGE>
the Company shall then be under no further liability to any Underwriter except
as provided Section 6 and Section 8 hereof.
11. All statements, requests, notices, and agreements hereunder shall
be in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to the Underwriters at 85 Broad Street, New
York, New York 10004, Attention: Registration Department; and if to the Company
shall be delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Registration Statement, Attention:
Secretary. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
12. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in Section
8 and Section 9 hereof, the officers and directors of the Company and each
person who controls the Company, the Underwriters, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from the Underwriters shall be deemed a successor or
assign by reason merely of such purchase.
13. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon the acceptance hereof by the
Underwriters, this letter and such acceptance hereof shall constitute a binding
agreement between the Underwriters and the Company.
Very truly yours,
AMETEK, Inc.
By:............................
Name:
Title
Accepted as of the date hereof:
...........................................
(Goldman, Sachs & Co.)
14
<PAGE>
Schedule I
Significant Subsidiaries
------------------------
Company Jurisdiction of Incorporation
- ------- -----------------------------
AmeSpace, Inc. Delaware
AMETEK Aerospace Products Inc. Delaware
AMETEK (Bermuda) Ltd. Bermuda
AMETEK (Italia) S.r.l. Italy
EMA Corp. Delaware
<PAGE>
Annex I
Pursuant to Section (d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, prospective
financial statements and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the related published rules and regulations thereunder;
and, if applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data, pro
forma financial information, prospective financial statements and/or
condensed financial statements derived from audited financial statements of
the Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been furnished to the Underwriters;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 6 of the Company's Annual
Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for such five fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included or incorporated by reference in the Company's Quarterly
Reports on Form 10-Q incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form 10-Q
and the related published rules and regulations thereunder or are not
in conformity with generally accepted accounting principles applied on
a basis substantially consistent with the basis for the audited
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included or incorporated by
<PAGE>
reference in the Company's Annual Report on Form 10-K for the most
recent fiscal year;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
net assets or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in each case as
compared with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(E) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (D) there were any decreases
in consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Underwriters, or any increases in any items specified by the
Underwriters, in each case as compared with the comparable period of
the preceding year and with any other period of corresponding length
specified by the Underwriters, except in each case for increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (iv) above, they have carried out
certain specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Underwriters which are derived from the general accounting records of the
Company and its
2
<PAGE>
subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference) or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Underwriters or in
documents incorporated by reference in the Prospectus specified by the
Underwriters, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
3
<PAGE>
EXHIBIT 4.1
____________________________________________________________
AMETEK, INC.
TO
CORESTATES BANK, N.A.
Trustee
________________
Indenture
Dated as of ____________, 1994
________________
$150,000,000
___% Senior Notes Due 2006
____________________________________________________________
<PAGE>
AMETEK, INC.
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of ___________, 1994
Trust Indenture Indenture
Act Section Section
--------------- ---------
Section 310(a)(1) ............................... 609
(a)(2) ............................... 609
(a)(3) ............................... Not
Applicable
(a)(4) ............................... Not
Applicable
(a)(5) ............................... Not
Applicable
(b) ............................... 608
610
(c) ............................... Not
Applicable
Section 311(a) ............................... 613(a)
(b) ............................... 613(b)
(b)(2) ............................... 703(a)(2)
703(b)
(c) ............................... Not
Applicable
Section 312(a) ............................... 701
702(a)
(b) ............................... 702(b)
(c) ............................... 702(c)
Section 313(a) ............................... 703(a)
(b) ............................... 703(b)
(c) ............................... 703(a)
703(b)
(d) ............................... 703(c)
Section 314(a) ............................... 704
(b) ............................... Not
Applicable
(c)(1) ............................... 102
(c)(2) ............................... 102
(c)(3) ............................... Not
Applicable
(d) ............................... Not
Applicable
(e) ............................... 102
(f) ............................... Not
Applicable
Section 315(a) ............................... 601(a)
(b) ............................... 602
703(a)(6)
-i-
<PAGE>
(c) ............................... 601(b)
(d) ............................... 601(c)
(d)(1) ............................... 601(a)(1)
(d)(2) ............................... 601(c)(2)
(d)(3) ............................... 601(c)(3)
(e) ............................... 514
Section 316(a) ............................... 101
(a)(1)(A) ............................... 502
512
(a)(1)(B) ............................... 513
(a)(2) ............................... Not
Applicable
(b) ............................... 508
(c) ............................... 104(c)
Section 317(a)(1) ............................... 503
(a)(2) ............................... 504
(b) ............................... 1003
Section 318(a) ............................... 107
______________
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
-ii-
<PAGE>
TABLE OF CONTENTS
Page
----
Parties................................................ 1
Recitals of the Company................................ 1
ARTICLE ONE
Definitions and Other Provisions of
General Application
SECTION 101. Definitions:
Act..................................... 2
Affiliate............................... 2
Asset Disposition....................... 2
Attributable Value...................... 3
Board of Directors...................... 3
Board Resolution........................ 3
Business Day............................ 4
Capital Lease Obligation................ 4
Capital Stock........................... 4
Change of Control....................... 4
Commission.............................. 4
Common Stock............................ 4
Company................................. 4
Company Request; Company Order.......... 4
Consolidated Cash Flow
Available for Fixed Charges........... 5
Consolidated Cash Flow Ratio............ 5
Consolidated Income Tax Expense......... 6
Consolidated Interest Expense........... 6
Consolidated Net Income................. 6
Consolidated Subsidiaries............... 7
Consolidated Tangible Assets............ 7
Corporate Owned Life Insurance Policies. 7
Corporate Trust Office.................. 7
Corporation............................. 7
Debt.................................... 7
___________
Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
-iii-
<PAGE>
Page
----
Defaulted Interest....................... 8
Disqualified Stock....................... 8
Event of Default......................... 8
Exchange Act............................. 8
Expiration Date.......................... 8
Foreign Subsidiary....................... 8
Guarantee................................ 8
Holder................................... 9
Incur.................................... 9
Indenture................................ 9
Interest Rate or Currency Protection
Agreement.............................. 9
Interest Payment Date.................... 9
Investment............................... 9
Lien..................................... 9
Maturity................................. 10
Offer.................................... 10
Offer to Purchase........................ 10
Officers' Certificate.................... 12
Opinion of Counsel....................... 12
Outstanding.............................. 12
pari passu............................... 13
----------
Paying Agent............................. 14
Permitted Investments.................... 14
Person................................... 14
Predecessor Security..................... 14
Preferred Stock.......................... 15
Purchase Amount.......................... 15
Purchase Date............................ 15
Purchase Price........................... 15
Redemption Date.......................... 15
Redemption Price......................... 15
Regular Record Date...................... 15
Related Person........................... 15
Restricted Payments...................... 15
Sale and Leaseback Transaction........... 15
Securities............................... 16
Security Register
Security Registrar....................... 16
Special Record Date...................... 16
Stated Maturity.......................... 16
Subordinated Debt........................ 16
Subsidiary............................... 17
Tangible Assets.......................... 17
Trustee.................................. 18
Trust Indenture Act...................... 18
Unrestricted Subsidiary................... 18
Vice President........................... 19
Voting Stock............................. 19
-iv-
<PAGE>
Page
----
Wholly Owned Subsidiary.................. 19
SECTION 102. Compliance Certificates and Opinions.... 19
SECTION 103. Form of Documents Delivered
to Trustee............................ 20
SECTION 104. Acts of Holders; Record Date............ 21
SECTION 105. Notices, Etc., to Trustee and Company... 22
SECTION 106. Notice to Holders; Waiver............... 23
SECTION 107. Conflict with Trust Indenture Act....... 23
SECTION 108. Effect of Headings and
Table of Contents..................... 23
SECTION 109. Successors and Assigns.................. 24
SECTION 110. Separability Clause..................... 24
SECTION 111. Benefits of Indenture................... 24
SECTION 112. Governing Law........................... 24
SECTION 113. Legal Holidays.......................... 24
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally......................... 25
SECTION 202. Form of Face of Security................ 25
SECTION 203. Form of Reverse of Security............. 27
SECTION 204. Form of Trustee's
Certificate of Authentication......... 30
ARTICLE THREE
The Securities
SECTION 301. Title and Terms......................... 31
-v-
<PAGE>
Page
----
SECTION 302. Denominations........................... 31
SECTION 303. Execution, Authentication,
Delivery and Dating................... 32
SECTION 304. Temporary Securities.................... 32
SECTION 305. Registration, Registration of
Transfer and Exchange................. 33
SECTION 306. Mutilated, Destroyed,
Lost and Stolen Securities............ 34
SECTION 307. Payment of Interest;
Interest Rights Preserved............. 35
SECTION 308. Persons Deemed Owners................... 37
SECTION 309. Cancellation............................ 37
SECTION 310. Computation of Interest................. 38
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and
Discharge of Indenture................ 38
SECTION 402. Application of Trust Money.............. 39
ARTICLE FIVE
Remedies
SECTION 501. Events of Default....................... 40
SECTION 502. Acceleration of Maturity;
Rescission and Annulment.............. 43
SECTION 503. Collection of Indebtedness and
Suits for Enforcement by
Trustee............................... 44
SECTION 504. Trustee May File Proofs of Claim........ 45
-vi-
<PAGE>
Page
----
SECTION 505. Trustee May Enforce Claims
Without Possession of
Securities............................ 46
SECTION 506. Application of Money Collected.......... 46
SECTION 507. Limitation on Suits..................... 46
SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium
and Interest.......................... 47
SECTION 509. Restoration of Rights and Remedies...... 48
SECTION 510. Rights and Remedies Cumulative.......... 48
SECTION 511. Delay or Omission Not Waiver............ 48
SECTION 512. Control by Holders...................... 48
SECTION 513. Waiver of Past Defaults................. 49
SECTION 514. Undertaking for Costs................... 49
SECTION 515. Waiver of Stay or Extension Laws........ 50
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and
Responsibilities...................... 50
SECTION 602. Notice of Defaults...................... 50
SECTION 603. Certain Rights of Trustee............... 51
SECTION 604. Not Responsible for Recitals
or Issuance of Securities............. 52
SECTION 605. May Hold Securities..................... 53
SECTION 606. Money Held in Trust..................... 53
SECTION 607. Compensation and Reimbursement.......... 53
SECTION 608. Disqualification; Conflicting
Interests............................. 54
-vii-
<PAGE>
Page
----
SECTION 609. Corporate Trustee Required;
Eligibility........................... 54
SECTION 610. Resignation and Removal;
Appointment of Successor.............. 55
SECTION 611. Acceptance of Appointment by
Successor............................. 56
SECTION 612. Merger, Conversion, Consolidation
or Succession to Business............. 57
SECTION 613. Preferential Collection of
Claims Against Company................ 57
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names
and Addresses of Holders.............. 57
SECTION 702. Preservation of Information;
Communications to Holders............. 58
SECTION 703. Reports by Trustee...................... 58
SECTION 704. Reports by Company...................... 59
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc.,
Only on Certain Terms................. 59
SECTION 802. Successor Substituted................... 61
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without
Consent of Holders.................... 61
-viii-
<PAGE>
Page
----
SECTION 902. Supplemental Indentures with
Consent of Holders.................... 62
SECTION 903. Execution of Supplemental
Indentures............................ 63
SECTION 904. Effect of Supplemental Indentures....... 64
SECTION 905. Conformity with Trust Indenture Act..... 64
SECTION 906. Reference in Securities to
Supplemental Indentures............... 64
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium
and Interest.......................... 64
SECTION 1002. Maintenance of Office or Agency......... 64
SECTION 1003. Money for Security Payments to
be Held in Trust...................... 65
SECTION 1004. Existence............................... 67
SECTION 1005. Maintenance of Properties............... 67
SECTION 1006. Payment of Taxes and Other Claims....... 67
SECTION 1007. Maintenance of Insurance................ 68
SECTION 1008. Limitation on Consolidated Debt......... 68
SECTION 1009. Limitation on Subsidiary Debt
and Preferred Stock................... 70
SECTION 1010. Limitation on Restricted Payments....... 73
SECTION 1011. Limitation on Liens..................... 76
SECTION 1012. Limitation on Sale and
Leaseback Transactions................ 78
SECTION 1013. Limitations Concerning Distributions
By Subsidiaries, etc.................. 79
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Page
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SECTION 1014. Limitation on Transactions
With Affiliates ...................... 80
SECTION 1015. Change of Control....................... 80
SECTION 1016. Provision of Financial Information...... 82
SECTION 1017. Statement by Officers as to
Default; Compliance
Certificates.......................... 83
SECTION 1018. Waiver of Certain Covenants............. 83
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption..................... 84
SECTION 1102. Applicability of Article................ 84
SECTION 1103. Election to Redeem; Notice
to Trustee............................ 84
SECTION 1104. Selection by Trustee of
Securities to Be Redeemed............. 84
SECTION 1105. Notice of Redemption.................... 85
SECTION 1106. Deposit of Redemption Price............. 86
SECTION 1107. Securities Payable on
Redemption Date....................... 86
SECTION 1108. Securities Redeemed in Part............. 86
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance
or Covenant Defeasance................ 87
SECTION 1202. Defeasance and Discharge................ 87
SECTION 1203. Covenant Defeasance..................... 88
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Page
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SECTION 1204. Conditions to Defeasance or Covenant
Defeasance............................ 88
SECTION 1205. Deposited Money and U.S. Government
Obligations to be Held in Trust;
Other Miscellaneous Provisions........ 91
SECTION 1206. Reinstatement........................... 92
TESTIMONIUM............................................ 93
SIGNATURES AND SEALS................................... 94
ACKNOWLEDGMENTS........................................ 94
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<PAGE>
INDENTURE, dated as of __________, 1994 between AMETEK, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal office at Station Square,
Paoli, Pennsylvania 19301, and CORESTATES BANK, N.A., a national banking
association duly organized and existing under the laws of the United States of
America, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its Senior
Notes due 2006 of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execu- tion and delivery
of this Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
<PAGE>
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles (whether or not such is indicated herein), and, except as
otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or per-
mitted hereunder shall mean such accounting principles as are generally
accepted as consistently applied by the Company at the date of such
computation but shall not include the accounts of Unrestricted
Subsidiaries, except to the extent of dividends and distributions actually
paid to the Company or one of its Wholly Owned Subsidiaries;
(4) unless otherwise specifically set forth herein, all calculations
or determinations of a Person shall be performed or made on a consolidated
basis in accordance with generally accepted accounting principles; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" by any Person means any transfer, conveyance,
sale, lease or other disposition by such Person or any of its Subsidiaries
(including a consolidation or merger or other sale of any such Subsidiary with,
into or to another Person in a transaction in which such Subsidiary
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<PAGE>
ceases to be a Subsidiary, but excluding a disposition by a Subsidiary of such
Person to such Person or a Wholly Owned Subsidiary of such Person or by such
Person to a Wholly Owned Subsidiary of such Person) of (i) shares of Capital
Stock (other than directors' qualifying shares) or other ownership interests of
a Subsidiary of such Person, (ii) substantially all of the assets of such Person
or any of its Subsidiaries representing a division or line of business or (iii)
other assets or rights of such Person or any of its Subsidiaries outside of the
ordinary course of business.
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capital Lease Obligation, and at any
date as of which the amount thereof is to be determined, the total net amount of
rent required to be paid by such Person under such lease during the initial term
thereof as determined in accordance with generally accepted accounting
principles, discounted from the last date of such initial term to the date of
determination at a rate per annum equal to the discount rate which would be
applicable to a Capital Lease Obligation with like term in accordance with
generally accepted accounting principles. The net amount of rent required to be
paid under any such lease for any such period shall be the aggregate amount of
rent payable by the lessee with respect to such period after excluding amounts
required to be paid on account of insurance, taxes, assessments, utility,
operating and labor costs and similar charges. In the case of any lease which
is terminable by the lessee upon the payment of a penalty, such net amount shall
also include the amount of such penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated. "Attributable Value" means, as to a Capital Lease
Obligation under which any Person is at the time liable and at any date as of
which the amount thereof is to be determined, the capitalized amount thereof
that would appear on the face of a balance sheet of such Person in accordance
with generally accepted accounting principles.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
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<PAGE>
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York,
New York are authorized or obligated by law or executive order to close.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with generally accepted
accounting principles. The stated maturity of such obligation shall be the date
of the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person.
"Change of Control" has the meaning specified in Section 1015.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture and thereafter "Company"
shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.
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<PAGE>
"Consolidated Cash Flow Available for Fixed Charges" of any Person
means for any period the Consolidated Net Income for such period increased by
the sum of (i) Consolidated Interest Expense of such Person for such period,
plus (ii) Consolidated Income Tax Expense of such Person for such period, plus
(iii) the consolidated depreciation and amortization expense included in the
income statement of such Person for such period, plus (iv) other non-cash
charges of such Person for such period deducted from consolidated revenues in
determining Consolidated Net Income for such period, minus (v) non-cash items of
such Person for such period increasing consolidated revenues in determining
Consolidated Net Income for such period.
"Consolidated Cash Flow Ratio" of any Person means for any period the
ratio of (i) Consolidated Cash Flow Available for Fixed Charges of such Person
for such period to (ii) the sum of (A) Consolidated Interest Expense of such
Person for such period, plus (B) the interest expense for such period (including
the amortization of debt discount) with respect to any Debt proposed to be
Incurred by such Person or its Subsidiaries, minus (C) Consolidated Interest
Expense of such Person to the extent included in Clause (ii)(A) with respect to
any Debt that will no longer be outstanding as a result of the Incurrence of the
Debt proposed to be Incurred, plus (D) the interest expense for such period
(including the amortization of debt discount) with respect to any other Debt
Incurred by such Person or its Subsidiaries since the end of such period to the
extent not included in Clause (ii)(A) minus (E) Consolidated Interest Expense of
such Person to the extent included in Clause (ii)(A) with respect to any Debt
that no longer is outstanding as a result of the Incurrence of the Debt referred
to in clause (ii)(D); provided, however, that in making such computation, the
-------- -------
Consolidated Interest Expense of such Person attributable to interest on any
Debt bearing a floating interest rate shall be computed on a pro forma basis as
if the rate in effect on the date of computation had been the applicable rate
for the entire period; provided further that, in the event such Person or any of
-------- -------
its Subsidiaries has made Asset Dispositions or acquisitions of assets not in
the ordinary course of business (including acquisitions of other Persons by
merger, consolidation or purchase of Capital Stock) during or after such period,
such computation shall be made on a pro forma basis as if the Asset Dispositions
or acquisitions had taken place on the first day of such period.
"Consolidated Income Tax Expense" of any Person means for any period
the consolidated provision for income taxes of such Person for such period
calculated on a con-
-5-
<PAGE>
solidated basis in accordance with generally accepted accounting principles;
provided that there shall be excluded therefrom the tax effect of any of the
items described in Clauses (a) through (f) of the definition of Consolidated Net
Income.
"Consolidated Interest Expense" for any Person means for any period
the consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person for such period
calculated on a consolidated basis in accordance with generally accepted
accounting principles, including without limitation or duplication (or, to the
extent not so included, with the addition of), (i) the amortization of Debt
discounts; (ii) any payments or fees with respect to letters of credit, bankers'
acceptances or similar facilities; (iii) fees with respect to interest rate
swap or similar agreements or foreign currency hedge, exchange or similar
agreements; (iv) Preferred Stock dividends of such Person (other than with
respect to Disqualified Stock) declared and paid or payable; (v) accrued
Disqualified Stock dividends of such Person and all accrued Preferred Stock
dividends of Subsidiaries of such Person, in each case whether or not declared
or paid; (vi) interest on Debt guaranteed by such Person; and (vii) the portion
of any rental obligation treated as interest expense in accordance with
generally accepted accounting principles.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person for such period determined on a
consolidated basis in accordance with generally accepted accounting principles;
provided that there shall be excluded therefrom (a) the net income (or loss) of
- --------
any Person acquired by such Person or a Subsidiary of such Person in a pooling-
of-interests transaction for any period prior to the date of such transaction,
(b) the net income (but not net loss) of any Subsidiary of such Person which is
subject to restrictions which prevent the payment of dividends or the making of
distributions to such Person to the extent of such restrictions provided that
--------
there shall not be excluded the net income of a Foreign Subsidiary which is
subject to an encumbrance or restriction on the payment of dividends and other
cash distributions permitted by Clause (d) of Section 1013 in all cases except
for purposes of Section 1010, in which case the net income of such a Subsidiary
shall be excluded in accordance with this Clause (b), (c) the net income (or
loss) of any Person that is not a Subsidiary of such Person except to the extent
of the amount of dividends or other distributions actually paid to such Person
by such other Person during such period, (d) gains or losses on Asset
Dispositions by such Person or its Subsidiaries, (e) all extraordinary or
nonrecurring gains and extraordinary or nonrecurring losses, (f) the cumulative
effect of changes in accounting principles in the year of adoption of such
changes, and (g) the tax effect of any of the items described in Clauses (a)
through (f) above.
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<PAGE>
"Consolidated Subsidiaries" of any Person means all corporations in
which such Person has an interest that would be accounted for on a consolidated
basis in such Person's financial statements in accordance with generally
accepted accounting principles.
"Consolidated Tangible Assets" of any Person means the sum of the
Tangible Assets of such Person after eliminating inter-company items,
determined on a consolidated basis in accordance with generally accepted
accounting principles, including appropriate deductions for any minority
interest in Tangible Assets of such Person's Subsidiaries; provided, however,
-------- -------
that, with respect to the Company, adjustments following the date of this
Indenture to the accounting books and records of the Company in accordance with
Accounting Principles Board Opinions Nos. 16 and 17 (or successor opinions
thereto) or otherwise resulting from the acquisition of control of the Company
by another Person shall not be given effect to.
"Corporate Owned Life Insurance Policies" means corporate owned
life insurance policies held by the Company with respect to certain of its
employees.
"Corporate Trust Office" means the principal office of the Trustee in
Philadelphia, Pennsylvania at which at any particular time its corporate trust
business shall be administered.
"corporation" means a corporation, association, company, joint-stock
company, partnership or business trust.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations Incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v) every Capital Lease
Obligation of such Person, (vi) the maximum fixed redemption or repurchase price
of Disqualified Stock of such Person at the time of determination, (vii) every
obligation under Interest Rate, Currency or Commodity Protection Agreements of
such Person and (viii) every obligation of the type referred to in Clauses (i)
through (vii) of another Person and all dividends of another Person the payment
of which, in either case, such
-7-
<PAGE>
Person has Guaranteed or is responsible or liable, directly or indirectly, as
obligor, Guarantor or otherwise.
"Defaulted Interest" has the meaning specified in Section 307.
"Disqualified Stock" of any Person means any Capital Stock of such
Person which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the Company, any
subsidiary of the Company or the holder thereof, in whole or in part, on or
prior to the final Stated Maturity of the Securities.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" refers to the Securities Exchange Act of 1934 as it may
be amended and any successor act thereto.
"Expiration Date" has the meaning specified in the definition of Offer
to Purchase.
"Foreign Subsidiary" means with respect to any Person, any Subsidiary
of such Person that is incorporated in a country other than the United States.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities or services for the purpose of assuring
the holder of such Debt of the payment of such Debt, or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Debt (and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings
correlative to the fore-going); provided, however, that the Guaranty by any
-------- -------
Person shall not include endorsements by such Person for collection or deposit,
in either case, in the ordinary course of business.
-8-
<PAGE>
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
or the recording, as required pursuant to generally accepted accounting
principles or otherwise, of any such Debt or other obligation on the balance
sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and "Incurring"
shall have meanings correlative to the fore-going); provided, however, that a
-------- -------
change in generally accepted accounting principles that results in an obligation
of such Person that exists at such time becoming Debt shall not be deemed an
Incurrence of such Debt.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Interest Rate, Currency or Commodity Protection Agreement" means any
interest rate swap agreement, interest rate cap agreement, currency swap
agreement or other financial agreement or arrangement designed to protect the
Company against fluctuations in interest rates or currency exchange rates or
commodity prices and which shall have a notional amount no greater than the
amount of the underlying obligation being hedged thereby.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Securities.
"Investment" by any Person means any direct or indirect loan, advance
or other extension of credit or capital contribution (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise) to, or purchase or acquisition of
Capital Stock, bonds, notes, debentures or other securities or evidence of Debt
issued by any other Person.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including, without
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<PAGE>
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Offer" has the meaning specified in the definition of Offer to
Purchase.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Company by first class mail, postage prepaid, to each Holder at his address
appearing in the Security Register on the date of the Offer offering to purchase
up to the principal amount of Securities specified in such Offer at the purchase
price specified in such Offer (as determined pursuant to this Indenture).
Unless otherwise required by applicable law, the Offer shall specify an
expiration date (the "Expiration Date") of the Offer to Purchase which shall be,
subject to any contrary requirements of applicable law, not less than 30 days
or more than 60 days after the date of such Offer and a settlement date (the
"Purchase Date") for purchase of Securities within five Business Days after the
Expiration Date. The Company shall notify the Trustee at least 15 Business Days
(or such shorter period as is acceptable to the Trustee) prior to the mailing of
the Offer of the Company's obligation to make an Offer to Purchase, and the
Offer shall be mailed by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. The Offer shall contain
information concerning the business of the Company and its Subsidiaries which
the Company in good faith believes will enable such Holders to make an informed
decision with respect to the Offer to Purchase (which at a minimum will include
(i) the most recent annual and quarterly financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in the documents required to be filed with the Trustee pursuant to
Section 1016 (which requirements may be satisfied by delivery of such documents
together with the Offer), (ii) a description of material developments in the
Company's business subsequent to the date of the latest of such financial
statements referred to in Clause (i) (including a description of the events
requiring the Company to make the Offer to Purchase), (iii) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase
and the events requiring the Company to make the Offer to Purchase and (iv) any
other information required by
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<PAGE>
applicable law to be included therein). The Offer shall contain all
instructions and materials necessary to enable such Holders to tender Securities
pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of this Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Securities
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such has been determined
pursuant to the Section hereof requiring the Offer to Purchase) (the
"Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Securities accepted for payment (as
specified pursuant to this Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Securities
registered in the name of such Holder and that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Securities are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest on any Security not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will continue to
accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Security accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each Holder electing to tender a Security pursuant to the
Offer to Purchase will be required to surrender such Security at the place
or places specified in the Offer prior to the close of business on the
Expiration Date (such Security being, if the Company or the Trustee so
requires, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the
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<PAGE>
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of
Securities tendered if the Company (or its Paying Agent) receives, not
later than the close of business on the Expiration Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security the Holder tendered, the
certificate number of the Security the Holder tendered and a statement that
such Holder is withdrawing all or a portion of his tender;
(11) that if Securities in an aggregate principal amount less than or
equal to the Purchase Amount are duly tendered and not withdrawn pursuant
to the Offer to Purchase, the Company shall purchase all such Securities;
and
(12) that in the case of any Holder whose Security is purchased only
in part, the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in an aggregate principal amount equal to and in exchange for the
unpurchased portion of the Security so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company, or other counsel who shall be acceptable
to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
------
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
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<PAGE>
(ii) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such Securities are to be
--------
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
and
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor.
"pari passu", when used with respect to the ranking of any Debt of
---- -----
any Person in relation to other Debt of such Person, means that each such Debt
(a) either (i) is not subordinated in right of payment to the same Debt of such
Person or (ii) is subordinate in right of payment to the same Debt of such
Person as is the other and is so subordinate to the same extent and (b) is not
subordinate in right
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<PAGE>
of payment to the other or to any Debt of such Person as to which the other is
not so subordinate.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Permitted Investments" means (a) certificates of deposit with final
maturities of one year or less issued by a U.S. commercial bank or a U.S. branch
of a foreign bank or, in the case of a Foreign Subsidiary, a reputable bank in
the country in which such Foreign Subsidiary operates, having capital and
surplus in excess of $100 million and, in the case of a U.S. commercial bank or
a U.S. branch of a foreign bank, having a peer group rating of C or better (or
the equivalent thereof) by Thompson BankWatch Inc. or outstanding long-term debt
rated BBB or better (or the equivalent thereof) by Standard & Poor's or Baa or
better (or the equivalent thereof) by Moody's Investors Service, Inc.; (b)
commercial paper rated A-1 (or the equivalent thereof) by Standard & Poor's or
P-1 (or the equivalent thereof) by Moody's Investors Service, Inc.; (c) direct
obligations of the United States government or a U.S. government agency; (d)
repurchase agreements in respect of direct U.S. government obligations; (e) in
the case of a Foreign Subsidiary, direct obligations of the sovereign and the
government agencies of the country in which such foreign subsidiary operates;
(f) shares of money market or equity mutual or similar funds having assets in
excess of $100 million; and (g) equity or debt securities rated A or better (or
the equivalent thereof) by Standard & Poor's or Moody's Investors Service, Inc.
of public companies which (x) are freely tradeable without restriction on a
stock exchange or through a nationally recognized automated quotation system and
(y) are purchased and held as current assets and not for investment; (h) any
Investments made by AMETEK (Bermuda) Ltd., provided that such Investments are
made as part of such Subsidiary's normal self-insurance activities and only so
long as the sole business of such Subsidiary is the insuring of risks of only
the Company and its other Subsidiaries
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
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<PAGE>
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment
of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Purchase Amount" has the meaning specified in the definition of Offer
to Purchase.
"Purchase Date" has the meaning specified in the definition of Offer
to Purchase.
"Purchase Price" has the meaning specified in the definition of Offer
to Purchase.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the __________ or __________ (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Related Person" of any Person means any other Person directly or
indirectly owning (a) 5% or more of the outstanding Common Stock of such Person
(or, in the case of a Person that is not a corporation, 5% or more of the equity
interest in such Person) or (b) 5% or more of the combined voting power of the
Voting Stock of such Person.
"Restricted Payments" has the meaning specified in Section 1010.
"Sale and Leaseback Transaction" of any Person means an arrangement
with any lender or investor or to which such lender or investor is a party
providing for the leasing by such Person of any property or asset of such Person
which has been or is being sold or transferred by such Person more than 270 days
after the acquisition thereof or the comple-
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<PAGE>
tion of construction or commencement of operation thereof to such lender or
investor or to any person to whom funds have been or are to be advanced by such
lender or investor on the security of such property or asset. The stated
maturity of such arrangement shall be the date of the last payment of rent or
any other amount due under such arrangement prior to the first date on which
such arrangement may be terminated by the lessee without payment of a penalty.
"Securities" means securities designated in the first paragraph of the
RECITALS OF THE COMPANY.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Significant Subsidiary" of any Person means any Subsidiary which,
together with all of its Subsidiaries, would be a Significant Subsidiary within
the meaning of Regulation S-X under the U.S. securities laws.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal or interest of such Security is due and
payable.
"Subordinated Debt" means Debt of the Company as to which the payment
of principal of (and premium, if any) and interest and other payment obligations
in respect of such Debt shall be subordinate to the prior payment in full of the
Securities to at least the following extent: (i) no payments of principal of
(or premium, if any) or interest on or otherwise due in respect of such Debt may
be permitted for so long as any default in the payment of principal (or premium,
if any) or interest on the Securities exists; (ii) in the event that any other
default that with the passing of time or the giving of notice, or both, would
constitute an event of default exists with respect to the Securities, upon
notice by 25% or more in principal amount of the Securities to the Trustee, the
Trustee shall have the right to give notice to the Company and the holders of
such Debt (or trustees or agents therefor) of a payment blockage, and thereafter
no payments of principal of (or premium, if any) or interest on or otherwise due
in respect of such Debt may be made for a period of 179 days from the date of
such notice; and (iii) such Debt may not (x) provide for payments of principal
of such Debt at the stated maturity thereof or
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<PAGE>
by way of a sinking fund applicable thereto or by way of any mandatory
redemption, defeasance, retirement or repurchase thereof by the Company
(including any redemption, retirement or repurchase which is contingent upon
events or circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in each case
prior to the final Stated Maturity of the Securities or (y) permit redemption or
other retirement (including pursuant to an offer to purchase made by the
Company) of such other Debt at the option of the holder thereof prior to the
final Stated Maturity of the Securities, other than a redemption or other
retirement at the option of the holder of such Debt (including pursuant to an
offer to purchase made by the Company) which is conditioned upon the change of
control of the Company pursuant to provisions substantially similar to those
contained in Section 1015 hereof.
"Subsidiary" of any Person means (i) a corporation more than 50% of
the combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other Subsid-
iaries thereof, directly or indirectly, has at least a majority ownership and
power to direct the policies, management and affairs thereof. "Subsidiary"
shall not include an Unrestricted Subsidiary created in accordance with the
definition of "Unrestricted Subsidiary". For purposes of Clause (iii) of
Section 1010, a joint venture of which the Company, directly or indirectly, owns
50% of the equity and voting interests and another Person (or group of Person
acts together in relation to such joint venture) owns the other 50% of the
equity and voting interests shall be deemed a Subsidiary of the Company.
"Tangible Assets" of any Person means, at any date, the gross book
value as shown by the accounting books and records of such Person of all its
property both real and personal, less (i) the net book value of all its
licenses, patents, patent applications, copyrights, trademarks, trade names,
goodwill, non-compete agreements or organizational expenses and other like
intangibles, (ii) unamortized Debt discount and expense, (iii) all reserves for
depreciation, obsolescence, depletion and amortization of its properties and
(iv) all other proper reserves which in accordance with generally accepted
accounting principles should be provided in connection with the business
conducted by such Person; provided, however, that, with respect to the Company
-------- -------
and its
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<PAGE>
Consolidated Subsidiaries, adjustments following the date of this Indenture to
the accounting books and records of the Company and its Consolidated
Subsidiaries in accordance with Accounting Principles Board Opinions Nos. 16 and
17 (or successor opinions thereto) or otherwise resulting from the acquisition
of control of the Company by another Person shall not be given effect to.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as provided
in Section 905; provided, however, that in the event the Trust Indenture Act of
--------- -------
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Unrestricted Subsidiary" means (1) any Subsidiary designated as such
by the Board of Directors as set forth below where (a) neither the Company nor
any of its other Subsidiaries (other than another Unrestricted Subsidiary) (i)
provides credit support for, or Guarantee of, any Debt of such Subsidiary
(including any undertaking, agreement or instrument evidencing such Debt) or
(ii) is directly or indirectly liable for any Debt of such Subsidiary, and (b)
no default with respect to any Debt of such Subsidiary (including any right
which the holders thereof may have to take enforcement action against such
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Debt of the Company and its other Subsidiaries (other than another
Unrestricted Subsidiary) to declare a default on such other Debt or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity, and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any newly acquired or newly formed Subsidiary to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, any other Subsidiary of the Company
which is not a Subsidiary of the Subsidiary to be so designated or otherwise an
Unrestricted Subsidiary, provided, that (x) the Subsidiary to be so designated
has total assets of $1 million or less or (y) immediately after giving effect to
such designation, the Company could Incur at least $1.00 of additional Debt
pursuant to the first paragraph under Section 1008 and provided, further, that
--------- --------
the Company could make a Restricted Payment pursuant to Section 1010 in an
amount equal to the fair market value of such Subsidiary pursuant Clause (3) of
Section 1010 and such amount is thereafter treated as a Restricted Payment for
the purpose of calculating the aggregate amount available for Restricted
Payments, under Section 1010 The Board of Directors may designate any
Unrestricted Subsidiary
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<PAGE>
to be a Subsidiary, provided that, immediately after giving effect to such
designation, the Company could Incur at least $1.00 of additional Debt pursuant
to the first paragraph under Section 1008. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person. For
purposes of this definition, AMETEK Hong Kong shall be deemed to be a Wholly
Owned Subsidiary of the Company so long as the Company owns, directly or
indirectly, at least 98% of the outstanding capital stock and voting interests
thereof.
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirement set forth in
this Indenture.
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<PAGE>
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with
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<PAGE>
respect to such factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Date.
----------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to
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<PAGE>
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action, or to vote on any action, authorized or permitted to be
given or taken by Holders. If not set by the Company prior to the first
solicitation of a Holder made by any Person in respect of any such action, or,
in the case of any such vote, prior to such vote, the record date for any such
action or vote shall be the 30th day (or, if later, the date of the most recent
list of Holders required to be provided pursuant to Section 701) prior to such
first solicitation or vote, as the case may be. With regard to any record date,
only the Holders on such date (or their duly designated proxies) shall be
entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made
upon such Security.
SECTION 105. Notices, Etc., to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention:
Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address
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<PAGE>
previously furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be part
of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
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<PAGE>
SECTION 109. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 113. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date, Purchase
Date or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date or Purchase
Date, or at the Stated Maturity, provided that no interest shall accrue for the
--------
period from and after such Interest Payment Date, Redemption Date or Purchase
Date or Stated Maturity, as the case may be.
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ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
---------------
The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may, consis-
tently herewith, be determined by the officers executing such Securities, as
evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods on steel engraved borders or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 202. Form of Face of Security.
------------------------
___% SENIOR NOTES DUE 2006
No. __________ $________
AMETEK, Inc., a corporation duly organized and existing under the laws
of Delaware (herein called the "Company", which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to __________________, or registered assigns, the principal sum
of _____________________ Dollars on ________, 2006, and to pay interest thereon
from ________, 1994 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on ___________ and
___________ in each year, commencing ___________, at the rate of ___% per annum,
until the principal hereof is paid or made available for payment, and (to the
extent that the payment of such interest shall be legally enforceable) at the
rate of [2% over coupon]% per annum on any overdue principal and premium and on
any overdue installment of interest until paid. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture,
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<PAGE>
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the or
------------------- ------------------
(whether or not a Business Day), as the case may be,
- --------------------------
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, New York in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
-------- -------
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
AMETEK, Inc.
[Seal]
By__________________
_____
Title:
Attest:
______________________________
Title:
SECTION 203. Form of Reverse of Security.
---------------------------
This Security is one of a duly authorized issue of Securities of the
Company designated as its __ % Senior Notes due 2006 (herein called the
"Securities"), limited in aggregate principal amount to $150,000,000, issued and
to be issued under an Indenture, dated as of _________, 1994 (herein called the
"Indenture"), between the Company and CoreStates Bank, N.A., as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Securities are subject to redemption upon not less than 30 nor
more than 60 days' notice by mail, at any time on or after __________, 1999, as
a whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed during
the 12-month period beginning ________ of the years indicated,
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<PAGE>
Redemption
Year Price
---- ----------
1999 _____%
2000 _____%
2001 and thereafter 100%
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
The Securities do not have the benefit of any sinking fund obligations.
In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder, or the Person designated by such Holder, hereof upon the cancellation
hereof.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture provides that if a Change of Control occurs the Company
shall be required to make an Offer to Purchase all of the Securities.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
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<PAGE>
hereof, whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, New York duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
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The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Company pursuant to Section 1015, of the Indenture, check the box:
[_]
If you want to elect to have only a part of this Security purchased by
the Company pursuant to Section 1015, of the Indenture, state the amount: $
Dated: Your Signature:____________________
(Sign exactly as name appears
on the other side of this Security)
Signature Guarantee:___________________________________
(Signature must be guaranteed by
a member firm of the New York Stock
Exchange or a commercial bank or
trust company)
SECTION 204. Form of Trustee's Certificate of
--------------------------------
Authentication.
--------------
This is one of the Securities referred to in the within-mentioned
Indenture.
_________________________
as Trustee
By _________________________
Authorized Officer
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ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
---------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $150,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 304,
305, 306, 906 or 1108 or in connection with an Offer to Purchase pursuant to
Section 1015.
The Securities shall be known and designated as the " __ % Senior
Notes due 2006" of the Company. Their Stated Maturity shall be _________, 2006
and they shall bear interest at the rate of ____% per annum, from _________,
1994 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, as the case may be, payable semi- annually on
_____________ and ________, commencing _________, 1994, until the principal
thereof is paid or made available for payment.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Company in the Borough of
Manhattan, The City of New York, New York maintained for such purpose and at any
other office or agency maintained by the Company for such purpose; provided,
--------
however, that at the option of the Company payment of interest may be made by
- -------
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
The Securities shall be subject to repurchase by the Company pursuant
to an Offer to Purchase as provided in Section 1015.
The Securities shall be redeemable as provided in Article Eleven.
SECTION 302. Denominations.
-------------
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
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<PAGE>
SECTION 303. Execution, Authentication, Delivery
-----------------------------------
and Dating.
----------
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 304. Temporary Securities.
--------------------
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the
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officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities
of authorized denominations. Until so exchanged the temporary Securities shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities.
SECTION 305. Registration, Registration of Transfer and
------------------------------------------
Exchange.
--------
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
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<PAGE>
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form satis-
factory to the Company and the Security Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1108 or in accordance with any Offer
to Purchase pursuant to Section 1015 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of Securities
selected for redemption under Section 1104 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 306. Mutilated, Destroyed, Lost and
------------------------------
Stolen Securities.
-----------------
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the
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<PAGE>
Company shall execute and upon its request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
If after the delivery of such new Security, a bona fide purchaser of
the original Security in lieu of which such new Security was issued presents for
payment such original Security, the Company and the Trustee shall be entitled to
recover such new Security from the person to whom it was delivered or any
transferee thereof, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Company or the Trustee in
connection therewith.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest
-----------------------------
Rights Preserved.
----------------
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is regis-
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<PAGE>
tered at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in
the Security Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor hav-
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<PAGE>
ing been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Securities (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. Cancellation.
------------
All Securities surrendered for payment, redemption, registration of
transfer or exchange or any Offer to Purchase pursuant to Section 1015 shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner whatso-
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<PAGE>
ever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee shall
be disposed of in accordance with the Trustee's customary practices unless
otherwise directed by a Company Order.
SECTION 310. Computation of Interest.
-----------------------
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and there-
after repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
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<PAGE>
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for that purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture pursuant to
this Article Four, the obligations of the Company to the Trustee under Section
607 and, if money shall have been deposited with the Trustee pursuant to sub-
clause (B) of Clause (1) of this Section, the obligations of the Trustee under
Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
(without liability for the payment of interest thereon or the investment
thereof)
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<PAGE>
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may deter-
mine, to the Persons entitled thereto, of the principal (and premium, if any)
and interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of the principal of (or premium, if any,
on) any Security at its Maturity; or
(2) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(3) default, on the applicable Purchase Date, in the purchase of
Securities required to be purchased by the Company pursuant to an Offer to
Purchase as to which an Offer has been mailed to Holders; or
(4) default in the performance, or breach, of Section 801; or
(5) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 30 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and
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<PAGE>
the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(6) a default or defaults under any bond(s), debenture(s), note(s) or
other evidence(s) of Debt by the Company or any Significant Subsidiary of
the Company or under any mortgage(s), indenture(s) or instrument(s) under
which there may be issued or by which there may be secured or evidenced any
Debt of such type by the Company or any such Significant Subsidiary with a
principal amount then outstanding, individually or in the aggregate, in
excess of $10 million, whether such Debt now exists or shall hereafter be
created, which default or defaults shall constitute a failure to pay any
portion of the principal of such Debt when due at the final maturity of
such Debt or shall have resulted in such Debt becoming or being declared
due and payable prior to the date on which it would otherwise have become
due and payable, which acceleration remains uncured for 10 days; or
(7) a final judgment or final judgments for the payment of money are
entered against the Company or any Significant Subsidiary of the Company in
an aggregate amount in excess of $10 million by a court or courts of compe-
tent jurisdiction, which judgments remain undischarged or unbonded for a
period (during which execution shall not be effectively stayed) of 60 days
after the right to appeal all such judgments has expired; or
(8) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company or any Significant
Subsidiary of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company or any such
Significant Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization,
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<PAGE>
arrangement, adjustment or composition of or in respect of the Company or
any such Significant Subsidiary under any applicable Federal or State law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any such
Significant Subsidiary or of any substantial part of the property of the
Company or any such Significant Subsidiary, or ordering the winding up or
liquidation of the affairs of the Company or any such Significant Subsi-
diary, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days; or
(9) the commencement by the Company or any Significant Subsidiary of
the Company of a voluntary case or proceeding under any applicable Federal
or State bankruptcy, insolvency, reorganization or other similar law or of
any other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by the Company or any such Significant Subsidiary to the entry
of a decree or order for relief in respect of the Company or any
Significant Subsidiary of the Company in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Company or any
Significant Subsidiary of the Company, or the filing by the Company or any
such Significant Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the
consent by the Company or any such Significant Subsidiary to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Company or any Significant Subsidiary of the Company or of any
substantial part of the property of the Company or any Significant
Subsidiary of the Company, or the making by the Company or any Significant
Subsidiary of the Company of an assignment for the benefit of creditors, or
the admission by the Company
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<PAGE>
or any such Significant Subsidiary in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Company or any such Significant Subsidiary in furtherance of any such
action.
SECTION 502. Acceleration of Maturity; Rescission
------------------------------------
and Annulment.
-------------
If an Event of Default (other than an Event of Default specified in
Section 501(8) or (9)) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal and
any accrued interest shall become immediately due and payable. If an Event of
Default specified in Section 501(8) or (9) occurs, the principal of and any
accrued interest on the Securities then Outstanding shall ipso facto become
---- -----
immediately due and payable without any declaration or other Act on the part of
the Trustee or any Holder.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the Holders of a
majority in principal amount of the Outstanding Securities, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of
acceleration (including any Securities required to have been pur-
chased on the Purchase Date pursuant to an Offer to Purchase made by
the Company) and, to the extent that payment of such interest is
lawful, interest thereon at the rate provided by the Securities,
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<PAGE>
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate provided by the Securities,
and
(D) all sums paid or advanced by the Trustee hereunder and all
amounts owing under Section 607;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits
------------------------------------
for Enforcement by Trustee.
--------------------------
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof or, with respect to any
Security required to have been purchased pursuant to an Offer to Purchase
made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
provided by the Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection and all
amounts owing the Trustee under Section 607.
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<PAGE>
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
--------------------------------
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee all amounts due it under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
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<PAGE>
SECTION 505. Trustee May Enforce Claims
--------------------------
Without Possession of Securities.
--------------------------------
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of all amounts owing the Trustee under Section
607, be for the ratable benefit of the Holders of the Securities in respect of
which such judgment has been recovered.
SECTION 506. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium, if
any) and interest, respectively.
SECTION 507. Limitation on Suits.
-------------------
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
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(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to
---------------------------------
Receive Principal, Premium and
---------------------------------
Interest.
--------
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to Sec-
tion 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date or, in the case of an Offer to Purchase made by the Company and required to
be accepted as to such Security, on the Purchase Date) and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
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SECTION 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. Control by Holders.
------------------
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
--------
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(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may, but shall not be obligated, to take any other
action deemed proper by the Trustee which is not inconsistent with such
direction, and
(3) such direction shall not involve the Trustee in personal
liability or be unjustly prejudicial to Holders not joining therein (it
being understood that the Trustee shall have no responsibility to determine
such prejudice).
SECTION 513. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to have
been purchased pursuant to an Offer to Purchase which has been made by the
Company), or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and
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may assess costs against any such party litigant, in the manner and to the
extent provided in the Trust Indenture Act; provided, that neither this Section
--------
nor the Trust Indenture Act shall be deemed to authorize any court to require
such an undertaking or to make such an assessment in any suit instituted by the
Trustee or the Holders of at least 10% in aggregate principal amount of
Outstanding Securities.
SECTION 515. Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
-----------------------------------
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
------------------
The Trustee shall give the Holders notice of any default hereunder as
and to the extent provided by the Trust
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Indenture Act; provided, however, that in the case of any default of the
-------- -------
character specified in Section 501(5), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default.
SECTION 603. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the
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request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 604. Not Responsible for Recitals
----------------------------
or Issuance of Securities.
-------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity, enforceability against
the Company or sufficiency of this Indenture or of the Securities. The Trustee
shall not be accountable for the use or application by the Company of Securities
or the proceeds thereof.
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SECTION 605. May Hold Securities.
-------------------
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 608 and 613, may other-
wise deal with the Company with the same rights it would have if it were not
Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on or investment of any money received by it
hereunder except as otherwise agreed with the Company and any such interest or
investment shall be for the exclusive benefit of the Company.
SECTION 607. Compensation and Reimbursement.
------------------------------
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except to the extent any such
expense, disbursement or advance may be attributable to its negligence or
bad faith; and
(3) to indemnify the Trustee for, and to defend and hold it harmless
against, any loss, liability or expense, arising out of or in connection
with the acceptance or administration of this trust or the performance of
its duties hereunder, including the costs and
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expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder,
except to the extent any such loss, liability or expense is attributable
to its negligence or bad faith.
To secure the Company's payment of obligations in this Section 607,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of, premium, if any, and interest on the Securities.
The Company's payment obligations pursuant to this Section 607 shall
survive the discharge of this Indenture.
"Trustee" for purposes of this Section 607 includes the Trustee, every
predecessor Trustee, any Paying Agent, Security Registrar or other agent of the
Company appointed hereunder, but the negligence or bad faith of any such person
shall not affect the rights of any other such person under this Section 607.
SECTION 608. Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
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SECTION 610. Resignation and Removal;
------------------------
Appointment of Successor.
------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Company or the suc-
cessor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
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No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation
---------------------------------
or Succession to Business.
-------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection
-----------------------
of Claims Against Company.
-------------------------
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee
--------------------------
Names and Addresses of Holders.
------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of
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the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
- ---------
capacity as Security Registrar.
SECTION 702. Preservation of Information;
----------------------------
Communications to Holders.
-------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities and the
corresponding rights and duties of the Trustee, shall be provided by the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to the names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
------------------
(a) The Trustee shall transmit to Holders such reports, if any,
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto; provided, that reports pursuant to Section 313(a) of the
--------
Trust Indenture Act, if any, shall be transmitted on or before each July 15 and
dated as of the preceding May 15.
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(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 704. Reports by Company.
------------------
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
--------
information, documents or reports required to be filed with Commission pursuant
to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee
within 15 days after the same is so required to be filed with the Commission.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate,
------------------------
Etc., Only on Certain Terms.
---------------------------
The Company (a) shall not consolidate with or merge into any other
Person (other than a Wholly Owned Subsidiary); (b) shall not permit any other
Person (other than a Wholly Owned Subsidiary) to consolidate with or merge into
the Company; and (c) shall not, directly or indirectly, transfer, convey, sell,
lease or otherwise dispose of all or substantially all of its properties and
assets as an entirety unless, in any such transaction:
------
(1) immediately before and after giving effect to such transaction
and treating any Debt Incurred by the Company or a Subsidiary of the
Company as a result of such transaction as having been Incurred by the
Company or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(2) in the case the Company shall consolidate with or merge into
another Person or
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shall directly or indirectly transfer, convey, sell, lease or otherwise
dispose of all or substantially all of its properties and assets as an
entirety, the Person formed by such consolidation or into which the Company
is merged or the Person which acquires by transfer, conveyance, sale, lease
or other disposition all or substantially all of the properties and assets
of the Company as an entirety (for purposes of this Article Eight, a
"Successor Company") shall be a corporation, partnership or trust, shall
be organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall expressly
assume by an indenture supplemental hereto executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest on all the
Securities and the performance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(3) immediately after giving effect to such transaction, and treating
any Debt Incurred by the Company as a result of such transaction as having
been Incurred at the time of such transaction, the Company or the Successor
Company could Incur at least $1.00 of additional Debt in compliance with
the first paragraph of Section 1008;
(4) if, as a result of any such transaction, property and assets of
the Company would become subject to a Lien which would not be permitted by
Section 1012, the Company or, if applicable, the Successor Company, as the
case may be, shall take such steps as shall be necessary effectively to
secure the Securities equally and ratably with (or prior to) Debt secured
by such Lien; or
(5) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer, lease or acquisition and, if a supplemental indenture
is required in connection with such transaction, such supplemental
indenture,
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complies with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with, and,
with respect to such Officers' Certificate, setting forth the manner of
determination of the ability to Incur Debt in accordance with Clause (3) of
Section 801, the Company or, if applicable, of the Successor Company as
required pursuant to the foregoing.
SECTION 802. Successor Substituted.
---------------------
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any transfer, conveyance, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Company as an entirety in accordance with Section 801, the Successor Company
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures
-----------------------
Without Consent of Holders.
--------------------------
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
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(3) to secure the Securities pursuant to the requirements of Section
1012 or otherwise; or
(4) to comply with any requirements of the Commission in order to
effect and maintain the qualification of this Indenture under the Trust
Indenture Act; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided such action pursuant to this Clause (5) shall
--------
not adversely affect the interests of the Holders in any material respect.
SECTION 902. Supplemental Indentures
-----------------------
with Consent of Holders.
-----------------------
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
- -------- -------
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any instalment
of interest on, any Security, or reduce the principal amount thereof or the
rate of interest thereon, or any premium payable thereon, or change the
place of payment where, or the coin or currency in which, any Security or
any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date or, in the case of an Offer to
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Purchase which has been made, on or after the applicable Purchase Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture,
or
(3) modify any of the provisions of this Section, Section 513 or
Section 1018, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, or
(4) following the mailing of an Offer with respect to an Offer to
Purchase pursuant to Section 1015, modify the provisions of this Indenture
with respect to such Offer to Purchase in a manner adverse to such Holder.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities
-----------------------
to Supplemental Indentures.
--------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and
---------------------------------
Interest.
--------
The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in the Borough of Manhattan, The City of New
York, New York an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registra-
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tion of transfer or exchange and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of New
York, New York) where the Securities may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
--------
however, that no such designation or rescission shall in any manner relieve the
- -------
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, New York, for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
SECTION 1003. Money for Security
------------------
Payments to be Held in Trust.
----------------------------
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of (and premium, if any) or interest
on any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
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The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease.
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SECTION 1004. Existence.
---------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
-------- -------
Company shall not be required to preserve any such right or franchise if the
Board of Directors in good faith shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and that
the loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. Maintenance of Properties.
-------------------------
The Company will cause all properties used or useful in the conduct of
its business or the business of any Subsidiary of the Company to be maintained
and kept in reasonably good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all reasonably necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Company may be necessary so that the business carried on
in connection therewith may be conducted at all times; provided, however, that
-------- -------
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is,
as determined by the Board of Directors in good faith, desirable in the conduct
of its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 1006. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries, and (2) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the Company or
any of its Subsidiaries; provided, however, that the Company shall not be
-------- -------
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
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SECTION 1007. Maintenance of Insurance.
------------------------
The Company shall, and shall cause its Subsidiaries to, keep at all
times all of their properties which are of an insurable nature insured against
loss or damage with insurers believed by the Company to be responsible to the
extent that property of similar character is usually so insured by corporations
similarly situated and owning like properties in accordance with good business
practice. The Company shall, and shall cause its Subsidiaries to, use the
proceeds from any such insurance policy to repair, replace or otherwise restore
the property to which such proceeds relate or, to the extent that any such
proceeds are not used to repair, replace or otherwise restore such property
(all such proceeds "remaining proceeds"), to use at least 75% of remaining
proceeds to prepay outstanding Debt.
SECTION 1008. Limitation on Consolidated Debt.
-------------------------------
The Company shall not Incur any Debt unless, immediately after giving
------
effect to the Incurrence of such Debt and the receipt and application of the
proceeds thereof, the Consolidated Cash Flow Ratio for the last four full fiscal
quarters for which quarterly or annual financial statements are available next
preceding the Incurrence of such Debt, calculated on a pro forma basis as if
such Debt had been Incurred at the beginning of such four full fiscal quarters,
would be greater than 2.5 to 1.
Notwithstanding the foregoing paragraph, the Company may Incur the
following Debt:
(i) Debt under the Credit Agreement in an aggregate principal amount
at any one time not to exceed $250 million, less principal payments
actually made by the Company on any term Debt facility under the Credit
Agreement (other than principal payments made in connection with or
pursuant to a refinancing or refunding of the Credit Agreement), and any
renewal, refinancing, refunding or extension thereof in an amount which,
together with any amount remaining outstanding or available under the
Credit Agreement immediately after such renewal, refinancing, refunding or
extension does not exceed the sum of (x) the amount outstanding under the
Term Debt Facilities and (y) the amount outstanding or available under the
Revolving Credit Facilities immediately prior to such renewal, refinancing,
refunding or extension, plus the amount of any premium required to be paid
in connection with such renewal, refinancing, refunding or extension
pursuant to the terms of the Debt renewed, refinanced, refunded or extended
and the expenses of the Company Incurred in
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connection with such renewal, refinancing, refunding or extension;
(ii) Debt owed by the Company to any Wholly Owned Subsidiary of the
Company; provided, however, that for purposes of this Section 1008, upon
-------- -------
either (x) the transfer or other disposition by such Wholly Owned
Subsidiary of any Debt so permitted to a Person other than the Company or
another Wholly Owned Subsidiary of the Company or (y) the issuance (other
than directors' qualifying shares), sale, lease, transfer or other
disposition of shares of Capital Stock (including by consolidation or
merger) of such Wholly Owned Subsidiary to a Person other than the Company
or another such Wholly Owned Subsidiary, the provisions of this Clause (ii)
shall no longer be applicable to such Debt and such Debt shall be deemed to
have been Incurred at the time of such transfer or other disposition;
(iii) Debt in respect of letters of credit issued in the ordinary
course of the Company's business not to exceed $15 million at any one time
outstanding;
(iv) Debt under any Interest Rate, Currency or Commodity Protection
Agreements;
(v) Debt consisting of borrowings against the cash value of Corporate
Owned Life Insurance Policies;
(vi) renewals, refinancings, refundings or extensions of any
outstanding Debt Incurred in compliance with the first paragraph of this
Section 1008 or of the Securities; provided, however, that such Debt does
-------- -------
not exceed the principal amount of Debt so renewed, refinanced, refunded
or extended plus the amount of any premium required to be paid in
connection with such renewal, refinancing, refunding or extension pursuant
to the terms of the Debt renewed, refinanced, refunded or extended and the
expenses of the Company Incurred in connection with such renewal,
refinancing, refunding or extension; and provided further, that Debt the
-------- -------
proceeds of which are used to renew, refinance, refund or extend Debt which
is pari passu to the Securities or Debt which is subordinate in right of
---- -----
payment to the Securities shall only be permitted if (A) in the case of
any renewal, refinancing, refunding or extension of Debt which is pari
----
passu to the Securities, the renewal, refinancing, refunding or extension
-----
Debt is made pari passu to the Securities or subordinated to the Securi-
---- -----
ties, and, in the case of any renewal, refinancing, refunding or extension
of Debt which is subordinated to the Securities, the renewal, refinancing,
refunding or extension Debt constitutes Subordinated Debt and (B) in either
case, the renewal, refinancing, refunding or
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<PAGE>
extension Debt by its terms, or by the terms of any agreement or instrument
pursuant to which such Debt is issued, (x) does not provide for payments of
principal of such Debt at the stated maturity thereof or by way of a
sinking fund applicable thereto or by way of any mandatory redemption,
defeasance, retirement or repurchase thereof by the Company (including any
redemption, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon any event of default thereunder), in each
case prior to the stated maturity of the Debt being refinanced or refunded
and (y) does not permit redemption or other retirement (including pursuant
to an offer to purchase made by the Company) of such debt at the option of
the holder thereof prior to the final stated maturity of the Debt being
refinanced or refunded, other than a redemption or other retirement at the
option of the holder of such Debt (including pursuant to an offer to
purchase made by the Company) which is conditioned upon the change of
control of the Company pursuant to provisions substantially similar to
those contained in Section 1015; and
(vii) Debt not otherwise permitted to be Incurred pursuant to clauses
(i) through (vi) above (which Debt may be Incurred under the Credit
Agreement), which, together with any other outstanding Debt Incurred
pursuant to this clause (vii), has an aggregate principal amount not in
excess of $35 million at any time outstanding.
SECTION 1009. Limitation on Subsidiary Debt and
---------------------------------
Preferred Stock.
---------------
The Company shall not permit any Subsidiary of the Company to Incur or
suffer to exist any Debt or issue any Preferred Stock except:
(i) Debt or Preferred Stock outstanding on the date of this
Indenture;
(ii) Guarantees of Debt of the Company under the Credit Agreement and
any renewal, refinancing, refunding or extension thereof permitted by
Clause (i) of Section 1008;
(iii) Debt of a Foreign Subsidiary Incurred solely to fund such
Foreign Subsidiary's working capital requirements which,
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together with any other outstanding Debt of such Foreign Subsidiary
Incurred pursuant to this Clause (iii), has an aggregate principal amount
not in excess of the greater of $20 million or 65% of the aggregate book
value of receivables and inventories of such Foreign Subsidiary at the time
of Incurrence of such Debt;
(iv) Debt Incurred or Preferred Stock issued to and held by the
Company or a Wholly Owned Subsidiary of the Company; provided, however,
-------- -------
that for purposes of this Section 1009, upon either (x) the transfer or
other disposition by the Company or such Wholly Owned Subsidiary of any
Debt so permitted to a Person other than the Company or another Wholly
Owned Subsidiary of the Company or (y) the issuance (other than directors'
qualifying shares), sale, lease, transfer or other disposition of shares of
Capital Stock (including by consolidation or merger) of such Wholly Owned
Subsidiary to a Person other than the Company or another such Wholly Owned
Subsidiary, the provisions of this Clause (iv) shall no longer be appli-
cable to such Debt and such Debt shall be deemed to have been Incurred at
the time of such transfer or other disposition;
(v) Debt Incurred or Preferred Stock issued by a Person prior to the
time (A) such Person became a Subsidiary of the Company, (B) such Person
merges into or consolidates with a Subsidiary of the Company or (C) another
Subsidiary of the Company merges into or consolidates with such Person (in
a transaction in which such Person becomes a Subsidiary of the Company),
which Debt or Preferred Stock was not Incurred or issued in anticipation of
such transaction and was outstanding prior to such transaction; provided,
---------
however, that the Company would be permitted to Incur such Debt in
-------
compliance with the first paragraph of Section 1008;
(vi) Debt secured by a Lien on real or personal property or
improvements thereon which Debt (a) constitutes all or a part of the
purchase price of such property or the cost of construction or improvement
of such
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property or (b) is Incurred prior to, at the time of or within 270 days
after the acquisition of such property for the purpose of financing all or
any part of the purchase price or the cost of construction or improvement
thereof and which property was not owned by the Company and/or any
Subsidiary of the Company prior to such acquisition; provided, however, the
-------- -------
Debt so secured does not exceed the purchase price or the cost of
construction or improvement of such property and provided, further, that
-------- -------
the Company would be permitted to Incur such debt in compliance with the
first paragraph of Section 1008;
(vii) Guarantees of Debt Incurred pursuant to Clause (vii) of Section
1008 above;
(viii) Debt under any Interest Rate, Currency or Commodity Protection
Agreement;
(ix) Guarantees of Debt under an Interest Rate Protection Agreement
Incurred pursuant to Clause (iv) of Section 1008, provided, however that
-------- -------
the Debt which is being hedged by such Interest Rate Protection Agreement
is Guaranteed by a Subsidiary of the Company;
(x) Debt or Preferred Stock which is exchanged for, or the proceeds of
which are used to refinance or refund, any Debt or Preferred Stock
permitted to be outstanding pursuant to Clauses (v) and (vi) hereof (or any
extension or renewal thereof), in an aggregate principal amount, in the
case of Debt, or liquidation preference, in the case of Preferred Stock,
not to exceed the principal amount or liquidation preference of the Debt or
Preferred Stock, respectively, so exchanged, refinanced or refunded plus
the amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Debt refinanced and the expenses
of the Company or such Subsidiary Incurred in connection with such
refinancing and provided such refinancing or refunding Debt or Preferred
Stock by its terms, or by the terms of any agreement or instrument pur-
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<PAGE>
suant to which such Debt or Preferred Stock is issued, (x) does not provide
for payments of principal or liquidation value at the stated maturity of
such Debt or Preferred Stock or by way of a sinking fund applicable to such
Debt or Preferred Stock or by way of any mandatory redemption, defeasance,
retirement or repurchase of such Debt or Preferred Stock by the Company
(including any redemption, retirement or repurchase which is contingent
upon events or circumstances, but excluding any retirement required by
virtue of acceleration of such Debt upon an event of default thereunder),
in each case prior to the stated maturity of the Debt or Preferred Stock
being refinanced or refunded and (y) does not permit redemption or other
retirement (including pursuant to an offer to purchase made by the Company)
of such Debt or Preferred Stock at the option of the holder thereof prior
to the stated maturity of the Debt or Preferred Stock being refinanced or
refunded, other than a redemption or other retirement at the option of the
holder of such Debt or Preferred Stock (including pursuant to an offer to
purchase made by the Company) which is conditioned upon the change of
control of the Company pursuant to provisions substantially similar to
those contained in Section 1015.
SECTION 1010. Limitation on Restricted Payments.
---------------------------------
The Company (i) shall not, directly or indirectly, declare or pay any
dividend, or make any distribution, of any kind or character (whether in cash,
property or securities) in respect of any class of its Capital Stock or to the
holders of any class of its Capital Stock, excluding any dividends or
distributions payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to acquire its
Capital Stock (other than Disqualified Stock), (ii) shall not, and shall not
permit any Subsidiary of the Company, directly or indirectly, to purchase,
redeem or otherwise acquire or retire for value (a) any Capital Stock of the
Company or any Related Person of the Company or (b) any options, warrants or
rights to purchase or acquire shares of Capital Stock of the Company or any
Related Person of the Company or any securities convertible or exchangeable into
shares of Capital Stock of the Company or any Related Person of the Company,
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(iii) shall not make, or permit any Subsidiary of the Company to make, any
Investment (other than a Permitted Investment) in, or payment on a Guarantee of
any obligation of, any Unrestricted Subsidiary or any other Person (other than
(x) the Company, (y) a Subsidiary of the Company (or a Person that becomes a
Subsidiary as a result of such Investment) or (z) any other Affiliate of the
Company which is not a Related Person of the Company (or a Person that becomes
an Affiliate as a result of such Investment)), and (iv) shall not, and shall not
permit any Subsidiary of the Company to, redeem, defease (including, but not
limited to, legal or covenant defeasance), repurchase, retire or otherwise
acquire or retire for value prior to any scheduled maturity, repayment or
sinking fund payment, Debt of the Company which is subordinate in right of
payment to the Securities (the transactions described in Clauses (i) through
(iv) being referred to herein as "Restricted Payments"), if at the time
thereof:
(1) an Event of Default, or an event that with the lapse of time or
the giving of notice, or both, would constitute an Event of Default, shall
have occurred and is continuing, or
(2) upon giving effect to such Restricted Payment, the Company could
not Incur at least $1.00 of additional Debt in compliance with the first
paragraph of Section 1008, or
(3) upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments from the date of this Indenture exceeds the sum of:
(a) 50% of cumulative Consolidated Net Income of the Company (or, in
the case Consolidated Net Income of the Company shall be
negative, less 100% of such deficit) since January 1, 1994
through the last day of the last full fiscal quarter immediately
preceding such Restricted Payment for which quarterly or annual
financial statements of the Company are available; plus
(b) 100% of the aggregate net proceeds after the date of this
Indenture,
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including the fair value of property other than cash (determined
in good faith by the Board of Directors and evidenced by a Board
Resolution), from the issuance (other than to a Subsidiary of the
Company) of Capital Stock (other than Disqualified Stock) of the
Company and options, warrants or other rights on Capital Stock
(other than Disqualified Stock) of the Company and the principal
amount (or accreted value of Debt issued at a discount) of Debt
of the Company that has been converted into Capital Stock (other
than Disqualified Stock) of the Company after the date of the
Indenture; plus
(c) 100% of the aggregate amount of all Restricted Payments that are
returned, without restriction, in cash to the Company or any
Subsidiary if and to the extent that such payments are not
included in Consolidated Net Income; plus
(d) $75 million; plus
(e) in the event that the Company does not pay an aggregate of $150
million or more to repurchase Common Stock of the Company
pursuant to the second succeeding paragraph, the amount which,
together with the amount paid to repurchase Common Stock pursuant
to the second succeeding paragraph, equals $150 million.
The foregoing provision shall not be violated by reason of the payment
of any dividend on Capital Stock of any class within 60 days after declaration
thereof if at the declaration date such payment would have complied with the
foregoing provision.
Notwithstanding the foregoing, the Company may from time to time pay
up to $150 million in the aggregate from the date of this Indenture to
repurchase Common Stock of the Company pursuant to open market or privately
negoti-
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<PAGE>
ated transactions, tender offers or otherwise, and such purchases shall not be
deemed Restricted Payments for purposes of calculating the aggregate amount of
all Restricted Payments pursuant to Clause (3) above.
SECTION 1011. Limitation on Liens.
-------------------
(a) The Company shall not, and shall not permit any Subsidiary of the
Company to, Incur any Lien upon any of its property or assets, now owned or
hereinafter acquired, to secure any Debt without making, or causing such
Subsidiary to make, effective provision for securing the Securities (and, if
the Company shall so determine, any other Debt of the Company which is not
subordinate to the Securities or of such Subsidiary) (x) equally and ratably
with such Debt as to such property for so long as such Debt shall be so secured
or (y) in the event such Debt is subordinate in right of payment to the
Securities, prior to such Debt as to such property or assets for so long as such
Debt shall be so secured.
The foregoing restrictions will not apply to Liens in respect of Debt
existing at the date of this Indenture or to:
(i) Liens in favor of the Company or a Wholly Owned Subsidiary of the
Company provided that upon the issuance (other than directors' qualifying
--------
shares), sale, lease, transfer or other disposition of shares of Capital
Stock (including by consolidation or merger) of such Wholly Owned
Subsidiary to a Person other than the Company or another Wholly Owned
Subsidiary, the provisions of this clause (i) shall no longer be applicable
to such Lien, and such Lien shall be deemed to have been Incurred at the
time of such transfer or other distribution;
(ii) Liens to secure Debt and other obligations under the Credit
Agreement and any renewal, refinancing, refunding or extension thereof,
provided, however that such the Incurrence of such Debt is permitted by
-------- -------
Section 1008;
(iii) Liens securing only the Securities;
(iv) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Subsidiary of the
Company;
(v) Liens on property existing immediately at the time of
acquisition thereof (and not in anticipation of the financing of such
acquisition);
(vi) Liens to secure Debt Incurred for the purpose of financing all or
any part of the purchase price or the cost of construc-
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tion or improvement of the property subject to such Liens; provided,
--------
however, that (a) the principal amount of any Debt secured by such a Lien
-------
does not exceed 100% of such purchase price or cost, (b) such Lien does not
extend to or cover any other property other than such item of property and
any improvements on such item and (c) the Incurrence of such Debt is
permitted by Section 1008 or 1009;
(vii) Liens to secure Debt and other obligations Incurred pursuant to
Clause (vii) of Section 1008;
(viii) Liens to secure Debt under an Interest Rate Protection Agreement
Incurred pursuant to Clause (iv) of Section 1008, provided, however that
-------- -------
the Debt which is being hedged by such Interest Rate Protection Agreement
is secured by a Lien;
(ix) Liens to secure Debt Incurred to renew, refinance, refund, extend
(or successive renewals, refinancings, refundings or extensions), in whole
or in part, Debt secured by any Lien referred to in the foregoing Clauses
(iii) to (vi) so long as such Lien does not extend to any other property
and the Debt so secured is not increased; and
(x) Liens to secure Debt owing by the Company to a Wholly Owned
Subsidiary of the Company (provided that such Debt is at all times held by
a Person which is a Wholly Owned Subsidiary of the Company); provided,
however, that for purposes of this Section 1011 and Section 1012, upon
either (x) the transfer or other disposition of a Debt secured by a Lien so
permitted to a Person other than the Company or another Wholly Owned
Subsidiary of the Company or (y) the issuance (other than directors'
qualifying shares), sale, lease, transfer or other disposition of shares of
Capital Stock of any such Wholly Owned Subsidiary to a Person other than
the Company or another Wholly Owned Subsidiary of the Company, the
provisions of this Clause (viii) shall no longer be applicable to such Lien
and such
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Lien shall be subject (if otherwise subject) to the requirements of this
Section 1012 without regard to this Clause (viii).
(b) In addition to the foregoing, the Company and its Subsidiaries
may Incur a Lien to secure any Debt or enter into a Sale and Leaseback
Transaction, without securing the Securities equally and ratably with or prior
to such Debt, as the case may be, if the sum of (i) the amount of Debt secured
by a Lien entered into after the date of this Indenture and otherwise prohibited
by this Indenture and (ii) the Attributable Value of all Sale and Leaseback
Transactions entered into after the date of this Indenture and otherwise
prohibited by this Indenture does not exceed 5% of Consolidated Tangible Assets
at the time of Incurrence of such Lien or the entering into such Sale and
Leaseback Transaction.
SECTION 1012. Limitation on Sale and Leaseback
--------------------------------
Transactions.
------------
The Company shall not, and shall not permit any Subsidiary of the
Company to, enter into any Sale and Leaseback Transaction (except for a period
not exceeding 30 months) unless:
------
(1) the Company or such Subsidiary would be entitled to enter into
such Sale and Leaseback Transaction pursuant to the provisions of Section
1011(b) hereof without equally and ratably securing the Securities; or
(2) the Company or such Subsidiary applies or commits to apply within
60 days after the sale or transfer, an amount equal to the net proceeds of
the sale pursuant to the Sale and Leaseback Transaction to the permanent
repayment or reduction of outstanding Debt to the extent required or, to
the extent not so required, to the redemption of the Securities pursuant to
Article Eleven or, if the Securities are not redeemable, to the repayment
of other Company Debt which is pari passu to the Securities or Subsidiary
---- -----
Debt or, if no such Debt is then outstanding, other Company Debt.
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SECTION 1013. Limitations Concerning Distri-
------------------------------
butions By Subsidiaries, etc.
-----------------------------
The Company shall not, and shall not permit any Subsidiary of the
Company to, suffer to exist any consensual encumbrance or restriction on the
ability of any Subsidiary of the Company (i) to pay, directly or indirectly,
dividends or make any other distributions in respect of its Capital Stock or pay
any Debt or other obligation owed to the Company or any other Subsidiary of the
Company; (ii) to make loans or advances to the Company or any Subsidiary of the
Company; or (iii) to transfer any of its property or assets to the Company,
except, in any such case, any encumbrance or restrictions:
(a) pursuant to any agreement in effect on the date of this Indenture
(including the Credit Agreement), or
(b) pursuant to an agreement relating to any Debt Incurred by such
Subsidiary prior to the date on which such Subsidiary was acquired by the
Company and outstanding on such date and not Incurred in anticipation of
becoming a Subsidiary, or
(c) pursuant to an agreement effecting a renewal, refinancing,
refunding or extension of Debt Incurred pursuant to an agreement referred
to in Clause (a) or (b) above; provided, however, that the provisions con-
-------- -------
tained in such renewal, refinancing, refunding or extension agreement
relating to such encumbrance or restriction are no more restrictive in any
material respect than the provisions contained in the agreement the subject
thereof, as determined in good faith by the Board of Directors and
evidenced by a Board Resolution, or
(d) in the case of a Foreign Subsidiary, pursuant to an agreement
governing the terms of any Debt to fund such Foreign Subsidiary's working
capital requirements permitted by clause (iii) of Section 1009, provided
--------
that such encumbrance or restriction relates only to the payment of
dividends or other cash distributions and, provided, further, that such
-------- -------
encumbrance or restriction does not, in the reasonable judgment of the
Board of Directors of the
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Company, impact the Company's ability to make all payments when due on the
Notes, as determined in good faith by the Board of Directors of the Company
and evidenced by a Board Resolution.
SECTION 1014. Limitation on Transactions with
-------------------------------
Affiliates.
----------
The Company shall not, and shall not permit any Subsidiary of the
Company to, directly or indirectly, enter into any transaction or series of
related transactions (including, without limitation, the purchase, sale, lease
or exchange of property, the rendering of any service or the making of any loan
or advance) not in the ordinary course of business of the Company or such
Subsidiary with an Affiliate of the Company (other than the Company or a Wholly
Owned Subsidiary of the Company) involving aggregate consideration in excess of
$5 million unless
------
(i) the Board of Directors shall determine in its good faith judgment
and evidenced by a Board Resolution that:
(A) such transaction (or series of related transactions) is on terms
no less favorable to the Company or such Subsidiary than those that could
be obtained in a comparable arm's length transaction with an entity that
is not an Affiliate; and
(B) such transaction (or series of related transactions) is in the
best interests of the Company or such Subsidiary; and
(ii) such transaction is approved by the independent members of the
Board of Directors of the Company in their good faith judgment as evidenced by
a Board Resolution.
SECTION 1015. Change of Control.
-----------------
(a) Upon the occurrence of a Change in Control, each Holder of a
Security shall have the right to have such Security repurchased by the Company
on the terms and conditions precedent set forth in this Section 1015 and this
Indenture. The Company shall, within 10 days following the date of the
consummation of a transaction resulting in a Change of Control, mail an Offer
with respect to an Offer to
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Purchase all Outstanding Securities at a purchase price equal to 101% of their
aggregate principal amount plus accrued interest to the Purchase Date (provided,
--------
however, that installments of interest whose Stated Maturity is on or prior to
- -------
the Purchase Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307). Each Holder shall be entitled to tender all or any portion of the
Securities owned by such Holder pursuant to the Offer to Purchase, subject to
the requirement that any portion of a Security tendered must be tendered in an
integral multiple of $1,000 principal amount.
(b) The Company and the Trustee shall perform their respective
obligations specified in the Offer for the Offer to Purchase. Prior to the
Purchase Date, the Company shall (i) accept for payment Securities or portions
thereof tendered pursuant to the Offer, (ii) deposit with the Paying Agent (or,
if the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) money sufficient to pay the purchase price of all
Securities or portions thereof so accepted and (iii) deliver or cause to be
delivered to the Trustee all Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security or Securities equal in principal amount to any unpurchased portion of
the Security surrendered as requested by the Holder. Any Security not accepted
for payment shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Offer on or as
soon as practicable after the Purchase Date.
(c) A "Change of Control" shall be deemed to have occurred in the
event that, after the date of this Indenture, either (A) any Person or any
Persons acting together which would constitute a "group" (a "Group") for
purposes of Section 13(d) of the Exchange Act, or any successor provision
thereto, together with any Affiliates or Related Persons thereof (other than an
employee benefit plan of the Company or any Subsidiary) that files a Schedule
13D or 14D-1 under the Exchange Act disclosing that such Person or Group
beneficially owns (as defined in Rule 13d-3 of the Exchange Act or any successor
provision thereto) at least 50% of the aggregate voting power of all classes of
Capital Stock of the Company entitled to vote generally in the
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election of directors of the Company; or (B) any Person or Group, together with
any Affiliates or Related Persons thereof, shall succeed in having a sufficient
number of its or their nominees elected to the Board of Directors of the Company
such that such nominees, when added to any existing director remaining on the
Board of Directors of the Company after such election who is an Affiliate or
Related Person of such Group, shall constitute a majority of the Board of
Directors of the Company, provided that in no event shall any Continuing
Director be included in such majority, whether or not such Continuing Director
was nominated by such Person or Group or is an Affiliate or Related Person of
such Group. "Continuing Director" shall mean (i) any Person who is member of
the Board of Directors of the Company as of the date of this Indenture, at any
time that such Person is a member of the Board, or (ii) any Person who
subsequently becomes a member of the Board, at any time that such Person is a
member of the Board, provided that such Person's nomination for election or
election to the Board is recommended or approved by a majority of the Continuing
Directors.
SECTION 1016. Provision of Financial Information.
----------------------------------
Whether or not the Company is required to be subject to Section 13(a)
or 15(d) of the Exchange Act, or any successor provision thereto, the Company
shall file with the Commission, to the extent permitted, the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to such Section 13(a) or 15(d) or any
successor provision thereto if the Company were so required, such documents to
be filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so to file such
documents if the Company were so required. The Company shall also in any event
(a) within 15 days of each Required Filing Date (i) transmit by mail to all
Holders, as their names and addresses appear in the Security Register, without
cost to such Holders, and (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act or any successor provisions thereto if the Company were required to
be subject to such Sections and (b) if filing such documents by the Company with
the Commission is not permitted under the Exchange Act, promptly upon written
request supply copies of such documents to any prospective Holder.
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SECTION 1017. Statement by Officers as to Default;
-------------------------------------
Compliance Certificates.
-----------------------
(a) The Company will deliver to the Trustee, within 90 days after the
end of each fiscal year, and within 60 days after the end of each fiscal quarter
(other than the fourth fiscal quarter), of the Company ending after the date
hereof an Officers' Certificate, stating whether or not to the best knowledge of
the signers thereof the Company is in default in the performance and observance
of any of the terms, provisions and conditions of Section 801 or Sections 1004
to 1016, inclusive, and if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as possible and
in any event within 10 days after the Company becomes aware or should reasonably
become aware of the occurrence of an Event of Default or an event which, with
notice or the lapse of time or both, would constitute an Event of Default, an
Officers' Certificate setting forth the details of such Event of Default or
default, and the action which the Company proposes to take with respect thereto.
(c) The Company shall deliver to the Trustee within 90 days after the
end of each fiscal year a written statement by the Company's independent public
accountants stating (A) that their audit examination has included a review of
the terms of this Indenture and the Securities as they relate to accounting
matters, and (B) whether, in connection with their audit examination, any event
which, with notice or the lapse of time or both, would constitute an Event of
Default has come to their attention and, if such a default has come to their
attention, specifying the nature and period of the existence thereof.
SECTION 1018. Waiver of Certain Covenants.
---------------------------
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Section 801 and Sections 1004 to 1015, if
before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in
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respect of any such covenant or condition shall remain in full force and effect;
provided, however, with respect to an Offer to Purchase as to which an Offer has
- -------- -------
been mailed, no such waiver may be made or shall be effective against any Holder
tendering Securities pursuant to such Offer, and the Company may not omit to
comply with the terms of such Offer as to such Holder.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption.
-------------------
The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time on or after ____________, 1999
and prior to maturity, at the Redemption Prices specified in the form of
Security hereinbefore set forth together with accrued interest to the Redemption
Date.
SECTION 1102. Applicability of Article.
------------------------
Redemption of Securities at the election of the Company, as permitted
by any provision of this Indenture, shall be made in accordance with such
provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company of less than all the Securities, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities to
be redeemed.
SECTION 1104. Selection by Trustee of Securities to Be
----------------------------------------
Redeemed.
--------
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previ-
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ously called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Securities of a denomination larger than $1,000.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and any accrued interest,
(3) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption, the principal
amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price and any accrued
interest will become due and payable upon each such Security to be redeemed
and that interest thereon will cease to accrue on and after said date, and
(5) the place or places where such Securities are to be surrendered
for payment
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of the Redemption Price and any accrued interest.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1106. Deposit of Redemption Price.
---------------------------
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1107. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that installments of
-------- -------
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Security.
SECTION 1108. Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose pursuant to
Section 1002 (with,
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if the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance or
----------------------------------------
Covenant Defeasance.
-------------------
The Company may at its option by Board Resolution, at any time, elect
to have either Section 1202 or Section 1203 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
Twelve.
SECTION 1202. Defeasance and Discharge.
------------------------
Upon the Company's exercise of the option provided in Section 1201
applicable to this Section, the Company shall be deemed to have been discharged
from its obligations with respect to the Outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities
and to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 1204 and as more fully
set forth in such Section, payments in respect of the principal of (and premium,
if any) and interest on such Securities when such payments are due, (B) the
Company's obligations with respect to such Securities under Sections 304, 305,
306, 1002 and 1003, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (D) this Article Twelve. Subject to compliance with this
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Article Twelve, the Company may exercise its option under this Section 1202
notwithstanding the prior exercise of its option under Section 1203.
SECTION 1203. Covenant Defeasance.
-------------------
Upon the Company's exercise of the option provided in Section 1201
applicable to this Section, (i) the Company shall be released from its
obligations under Sections 1005 through 1015, inclusive, and Clauses (3) and (4)
of Section 801 and (ii) the occurrence of an event specified in Sections 501(3),
501(4) (with respect to Clauses (3) and (4) of Section 801), 501(5) (with
respect to any of Sections 1005 through 1015, inclusive), 501(6) and 501(7)
shall not be deemed to be an Event of Default on and after the date the
conditions set forth below are satisfied (hereinafter, "covenant defeasance").
For this purpose, such covenant defeasance means that the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section or Clause, whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or
Clause or by reason of any reference in any such Section or Clause to any other
provision herein or in any other document, but the remainder of this Indenture
and such Securities shall be unaffected thereby.
SECTION 1204. Conditions to Defeasance or
---------------------------
Covenant Defeasance.
-------------------
The following shall be the conditions to application of either
Section 1202 or Section 1203 to the then Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 609 who shall agree to comply with the provisions of this Arti-
cle Twelve applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
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due date of any payment, money in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, the principal
of, premium, if any, and each instalment of interest on the Securities on
the Stated Maturity of such principal or instalment of interest in accor-
dance with the terms of this Indenture and of such Securities. For this
purpose, "U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the payment of which its
full faith and credit is pledged or (y) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United
States of America the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as
custodian with respect to any such U.S. Government Obligation or a specific
payment of principal of or interest on any such U.S. Government Obligation
held by such custodian for the account of the holder of such depository
receipt, provided that (except as required by law) such custodian is not
--------
authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of
principal of or interest on the U.S. Government Obligation evidenced by
such depository receipt.
(2) In the case of an election under Section 1202, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or
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(y) since the date of this Indenture there has been a change in the
applicable Federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of the
Outstanding Securities will not recognize gain or loss for Federal income
tax purposes as a result of such deposit, defeasance and discharge and will
be subject to Federal income tax on the same amount, in the same manner and
at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred.
(3) In the case of an election under Section 1203, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities will not recognize gain or loss for
Federal income tax purposes as a result of such deposit and covenant
defeasance and will be subject to Federal income tax on the same amount,
in the same manner and at the same times as would have been the case if
such deposit and covenant defeasance had not occurred.
(4) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit.
(5) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 608 and for
purposes of the Trust Indenture Act with respect to any securities of the
Company.
(6) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as subsections 501(8)
and (9) are concerned, at any time during the period ending on the 121st
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
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(7) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 1202
or the covenant defeasance under Section 1203 (as the case may be) have
been complied with.
(9) Such defeasance or covenant defeasance shall not result in the
trust arising from such deposit constituting an investment company as
defined in the Investment Company Act of 1940, as amended, or such trust
shall be qualified under such act or exempt from regulation thereunder.
SECTION 1205. Deposited Money and U.S. Government
-----------------------------------
Obligations to be Held in Trust;
-------------------------------
Other Miscellaneous Provisions.
------------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee--collectively, for
purposes of this Section 1205, the "Trustee") pursuant to Section 1204 in
respect of the Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities, of all sums due and to become due thereon in respect of
principal (and premium, if any) and any interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1204 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
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Anything in this Article Twelve to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in Sec-
tion 1204 which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance.
SECTION 1206. Reinstatement.
-------------
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 1202 or 1203 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Twelve until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 1202 or 1203;
provided, however, that if the Company makes any payment of principal of (and
- -------- -------
premium, if any) or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
the Paying Agent.
____________________
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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
AMETEK, INC.
By___________________________
Attest:
__________________________
CORESTATES BANK, N.A.
By____________________________
Attest:
___________________________
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STATE OF NEW YORK ) \\ss.:\\
COUNTY OF NEW YORK )
On the _____ day of __________, 1994, before me personally came
___________________________, to me known, who, being by me duly sworn, did
depose and say that he --she is __________________________________________ of
AMETEK, Inc.; one of the corporations described in and which executed the
foregoing instrument; that he -- she knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that
he -- she signed his -- her name thereto by like authority.
______________________________
COMMONWEALTH OF PENNSYLVANIA ) \\ss.:\\
COUNTY OF PHILADELPHIA )
On the _____ day of __________, 1994, before me personally came
___________________________, to me known, who, being by me duly sworn, did
depose and say that he --she is _____________________________________ of
CORESTATES BANK, N.A., one of the corporations described in and which executed
the foregoing instrument; that he --she knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that
he -- she signed his -- her name thereto by like authority.
______________________________
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EXHIBIT 5
February 25, 1994
Ametek, Inc.
Station Square
Paoli, Pennsylvania 19301
Ladies and Gentlemen:
We have acted as counsel to Ametek, Inc., a Delaware corporation (the
"Company"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), of a Registration Statement on Form S-3 (Registration No.
33-51663), as amended by Amendment No. 1 thereto (the "Registration Statement"),
relating to the proposed public offering (the "Offering") of $150,000,000
principal amount of the Company's __% Senior Notes Due 2006 (the "Notes").
As such counsel, we have examined copies of (i) the Certificate of Incorporation
and Bylaws of the Company, each as in effect as of the date hereof, (ii) the
Registration Statement and the exhibits thereto, (iii) the form of Indenture
pursuant to which the Notes are proposed to be issued and (iv) the Prospectus
which forms a part of the Registration Statement. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records of the Company, and such documents, records, agreements,
instruments, certificates of officers and representatives of the Company and
others and have made such examinations of law as we have deemed necessary to
form the basis for the opinion hereinafter expressed. In our examinations, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all documents submitted to us as copies. As to various questions of fact
material to such opinion, we have relied upon statements and certificates of
officers and representatives of the Company and others.
Attorneys involved in the preparation of this opinion are admitted to practice
law in the State of New York and we do not purport to be experts on, or to
express any opinion herein concerning, any law other than the laws of the State
of New York, the federal laws of the United States of America and the General
Corporation Law of the State of Delaware.
<PAGE>
Ametek, Inc.
February 25, 1994
Page 2
Based upon and subject to the foregoing, we are of the opinion that the Notes,
when sold in accordance with the Registration Statement, will be validly issued
and outstanding.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Validity of Notes" in the Prospectus. In giving such consent, we do not admit
hereby that we come within the category of persons whose consent is required
under Section 7 of the Act or the Rules and Regulations of the Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
<PAGE>
EXHIBIT 12.1
AMETEK, INC.
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1989 1990 1991 1992 1993
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
EARNINGS:
Net income (loss)............... $38,296 $37,338 $37,986 $44,357 $ (7,332)
Income tax expense (benefit).... 22,387 19,317 14,392 22,362 (3,865)
Interest expense--gross......... 15,734 21,951 22,252 20,197 18,580
Capitalized interest............ (500) (1,133) (173) (476) (977)
Debt financing expense.......... 137 171 170 196 173
Interest portion of rentals
(1)............................ 1,482 1,656 1,348 1,345 1,614
------- ------- ------- ------- --------
Adjusted earnings............. $77,536 $79,300 $75,975 $87,981 $ 8,193
======= ======= ======= ======= ========
FIXED CHARGES:
Interest expenses--net.......... $15,234 $20,818 $22,079 $19,721 $ 17,603
Capitalized interest............ 500 1,133 173 476 977
Debt financing expense.......... 137 171 170 196 173
Interest portion of rentals
(1)............................ 1,482 1,656 1,348 1,345 1,614
------- ------- ------- ------- --------
Fixed charges................. $17,353 $23,778 $23,770 $21,738 $ 20,367
======= ======= ======= ======= ========
Ratio of adjusted earnings to
fixed charges (2)............ 4.5x 3.3x 3.2x 4.0x --
======= ======= ======= ======= ========
</TABLE>
- --------
(1) Estimated to be one-third of rental expense.
(2) Earnings were insufficient to cover fixed charges by approximately $12.2
million in 1993.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Summary
Financial Data", "Selected Financial Data", and "Experts" and to the use of
our reports dated February 9, 1994, in the Registration Statement (Amendment
No 1 to Form S-3, No. 33-51663) and related Prospectus of AMETEK, Inc. for the
registration of $150 million, % Senior Notes due 2006.
/s/ Ernst & Young
Philadelphia, PA
February 25, 1994
<PAGE>
Securities Act of 1933
Registration No. 33-51663
--------
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED,
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY PURSUANT
TO SECTION 305 (b)(2) X
---------
_________________
CORESTATES BANK, NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its Charter)
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19101 23-0972337
(Address of Principal Executive Offices) (I.R.S. Employer Identification No.)
CoreStates Bank, N.A.
Attn: Office of Resident Counsel
Broad and Chestnut Streets
Philadelphia, PA 19101
(215) 973-3810
(Name, address, and telephone number of agent for service)
----------------
AMETEK, Inc.
(Exact name of Obligor as specified in its charter)
Delaware 13-4923320
(State of Incorporation) (I.R.S. Employer Identification No.)
---------------
Station Square 19302
Paoli, PA
(Address of principal executive offices) (Zip code)
-----------------
___% Senior Notes Due __________, 2006
(Title of Indenture Securities)
- --------------------------------------------------------------------------------
<PAGE>
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
The Office of the Comptroller of the Currency, Washington,
D.C. 20220.
Federal Reserve Bank of Philadelphia, Pennsylvania 19105.
The Board of Governors of the Federal Reserve Systems,
Washington, D.C. 20551.
Federal Deposit Insurance Corporation, Washington, D.C.
20429.
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations With The Obligor. If the obligor is an affiliate of the
Trustee, describe each such affiliation.
None.
Item 13. Defaults By The Obligor.
(a) State whether there is or has been a default with respect to the
securities under the indenture. Explain the nature of any such
default.
None.
(b) If the Trustee is a trustee under another indenture under which
any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, or is trustee for more than one outstanding series
of securities under the indenture, state whether there has been a
default under any such indenture or series, identify the
indenture or series affected, and explain the nature of such
default.
None.
2 OF 4
<PAGE>
Item 15. Foreign Trustee.
Identify the order or rule pursuant to which the foreign trustee
is authorized to act as sole trustee under indentures qualified
or to be qualified under the Act.
Not applicable.
Item 16. List of Exhibits. List below all exhibits filed as part of this
statement of eligibility.
(1) Copy of Articles of Association of the trustee as now in effect.*
(2) Copy of the certificate of authority of the trustee to commence
business.*
(3) Copy of authorization of the trustee to exercise corporate trust
powers.*
(4) Copy of existing Bylaws of the trustee.*
(5) Copy of Indenture referred to in Item 4, if the obligor is in
default. Not applicable.
(6) The consents of the United States institutional trustees required by
Section 321(b) of the Trust Indenture Act of 1939, as amended.
(7) Copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervisory of examining
authority.
(8) Copy of any order pursuant to which the foreign trustee is authorized
to act as sole trustee under indentures qualified or to be qualified
under the Trust Indenture Act of 1939, as amended. Not applicable.
(9) Foreign trustee's consent to service of process on Form F-X. Not
applicable.
________________________
Exhibits followed by an asterisk are incorporated herein by reference
pursuant to Rule 7a-29.
Exhibit 16(1) - Exhibit 16(1) to Form T-1 filed in registration statement
of November 1, 1993 of Bell Telephone Company of Pennsylvania, No.
33-50869.
Exhibit 16(2) - Exhibit 16(2) to Form T-1 filed in registration statement
of February 9, 1956 of Bell Telephone Company of Pennsylvania, No.
22-12266.
Exhibit 16(3) - Exhibit 16(3) to Form T-1 filed in registration statement
of February 9, 1956 of Bell Telephone Company of Pennsylvania, No.
22-12266.
Exhibit 16(4) - Exhibit 16(4) to Form T-1 filed in registration statement
of November 1, 1993 of Bell Telephone Company of Pennsylvania, No.
33-50869.
3 OF 4
<PAGE>
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, CoreStates Bank, N.A., a national banking association duly
caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Philadelphia and Commonwealth of Pennsylvania, on
the 25th day of January , 1994 .
--------- ------------ ------
CORESTATES BANK, N.A.
By: \S\ Cathy Wiedecke
------------------------------
Name: Cathy Wiedecke
Title: Corporate Trust Officer
[Seal]
Attest:
By: \S\ Con Hromych
----------------------
Name: Con Hromych
Title: Assistant Vice President
4 OF 4
<PAGE>
EXHIBIT 16(6)
CONSENT OF TRUSTEE REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED
CoreStates Bank, N.A. hereby consents, subject to the terms and conditions
of Section 321(b) of the Trust Indenture Act of 1939, as amended, that reports
of examinations of its affairs by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request of such Commission therefor.
CORESTATES BANK, N.A.
By: \s\ Cathy Wiedecke
--------------------------
Name: Cathy Wiedecke
Title: Corporate Trust Officer
<PAGE>
EXHIBIT 16(7)
<TABLE>
<S> <C>
Legal Title of Bank: CoreStates Bank, National Association Call Date: 9/30/93 ST-BK: 42-0204 FFIEC 031
Address: P.O. Box 7618 Page RC-1
City, State Zip: Philadelphia, PA 19101-7618
FDIC Certificate No.: |0|0|7|1|9|
-----------
</TABLE>
Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for September 30,1993
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
-------
| C400 | --
--------------------
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS | |
1. Cash and balances due from depository institutions (from Schedule RC-A): | |
a. Noninterest-bearing balances and currency and coin(1) ......................................... | 0081 1,808,157 | 1.a.
b. Interest-bearing balances(2) .................................................................. | 0071 1,081,230 | 1.b.
2. Securities (from Schedule RC-B) .................................................................. | 0390 1,831,031 | 2.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices | |
of the bank and of its Edge and Agreement subsidiaries and in IBFs: | |
a. Federal funds sold ............................................................................ | 0276 267,300 | 3.a.
b. Securities purchased under agreements to resell ............................................... | 0277 2,377 | 3.b.
4. Loans and lease financing receivables | |
----------------------------| |
a. Loans and leases, net of unearned income (from Schedule RC-C)...... | RCFD 2322 | 10,992,859 | | 4.a.
b. LESS: Allowance for loan and lease losses ......................... | RCFD 3123 | 246,428 | | 4.b.
c. LESS: Allocated transfer risk reserve ............................. | RCFD 3128 | 0 | | 4.c.
----------------------------| |
d. Loans and leases, net of unearned income, | |
allowance, and reserve (item 4.a minus 4.b and 4.c) ........................................... | 2125 10,746,431 | 4.d.
5. Assets held in trading accounts .................................................................. | 2146 6,743 | 5.
6. Premises and fixed assets (including capitalized leases) ......................................... | 2145 275,631 | 6.
7. Other real estate owned (from Schedule RC-M) ..................................................... | 2150 27,616 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ......... | 2130 86 | 8.
9. Customers' liability to this bank on acceptances outstanding ..................................... | 2155 629,269 | 9.
10. Intangible assets (from Schedule RC-M) ........................................................... | 2143 21,395 | 10.
11. Other assets (from Schedule RC-F) ................................................................ | 2160 387,433 | 11.
12. Total assets (sum of items 1 through 11) ......................................................... | 2170 17,084,599 | 12.
---------------------
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: CoreStates Bank, National Association Call Date: 9/30/93 ST-BK: 42-0204 FFIEC 031
Address: P.O. Box 7618 Page RC-2
City, State Zip: Philadelphia, PA 19101-7618
FDIC Certificate No.: |0|0|7|1|9|
-----------
</TABLE>
Schedule RC--Continued
<TABLE>
---------------------------
Dollar Amounts in Thousands | Bil Mil Thou |
- -----------------------------------------------------------------------------------------------|-------------------------|
<S> <C> <C> <C> <C>
Liabilities | |
13. Deposits: | |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) ..... | RCON 2200 11,400,264 | 13.a.
-----------------------------| |
(1) Noninterest-bearing(1) ............................... | RCON 6631 4,739,190 | | 13.a.(1)
(2) Interest-bearing ..................................... | RCON 6636 6,661,074 | | 13.a.(2)
-----------------------------| |
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | |
part II) .............................................................................. | RCFN 2200 1,507,317 | 13.b
-----------------------------| |
(1) Noninterest-bearing .................................. | RCFN 6631 380,429 | | 13.b.(1)
(2) Interest-bearing ..................................... | RCFN 6636 1,126,888 | | 13.b.(2)
-----------------------------| |
14. Federal funds purchased and securities sold under agreements to repurchase in domestic | |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs; | |
a. Federal funds purchased ............................................................... | RCFD 0278 964,589 | 14.a.
b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 165,320 | 14.b.
15. Demand notes issued to the U.S. Treasury ................................................. | RCON 2840 386,930 | 15.
16. Other borrowed money ..................................................................... | RCFD 2850 49,962 | 16.
17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 228 | 17.
18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 631,285 | 18.
19. Subordinated notes and debentures ........................................................ | RCFD 3200 218,648 | 19.
20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 495,141 | 20.
21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 15,819,684 | 21.
| |
22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22.
EQUITY CAPITAL | |
23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 0 | 23.
24. Common stock ............................................................................. | RCFD 3230 37,308 | 24.
25. Surplus (exclude all surplus related to preferred stock) ................................. | RCFD 3839 700,539 | 25.
26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 528,826 | 26.a.
b. LESS: Net unrealized loss on marketable equity securities ............................. | RCFD 0297 0 | 26.b.
27. Cumulative foreign currency translations adjustments ..................................... | RCFD 3284 (1,760)| 27.
28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 1,264,915 | 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | |
and 28) .................................................................................. | RCFD 3300 17,084,599 | 29.
---------------------------
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
------------------
auditors as of any date during 1992 .............................................................. | RCFD 6724 N/A | M.1.
------------------
1 - Independent audit of the bank conducted in accordance 4 - Directors' examination of the bank performed by other
with generally accepted auditing standards by a external auditors (may be required by state chartering
certified public accounting firm which submits a authority)
report on the bank 5 - Review of the bank's financial statements by external
2 - Independent audit of the bank's parent holding auditors
company conducted in accordance with generally 6 - Compilation of the bank's financial statements by
accepted auditing standards by a certified external auditors
public accounting firm which submits a report 7 - Other audit procedures (excluding tax preparation work)
on the consolidated holding company (but not on the 8 - No external audit work
bank separately)
3 - Directors' examination of the bank conducted in
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required
by state chartering authority)
- -----------------
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>
