<PAGE>
FORM 1O-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-898.
AMPCO-PITTSBURGH CORPORATION
Incorporated in Pennsylvania.
I.R.S. Employer Identification No. 25-1117717.
600 Grant Street, Pittsburgh, Pennsylvania 15219
Telephone Number 412/456-4400
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter periods that the registrant was required
to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
On August 13, 1997, 9,577,621 common shares were outstanding.
- 1 -
<PAGE>
AMPCO-PITTSBURGH CORPORATION
INDEX
Page No.
Part I - Financial Information:
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Income -
Six Months Ended June 30, 1997 and 1996;
Three Months Ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
Part II - Other Information:
Item 6 - Exhibits and Reports on Form 8-K 11
Signatures 12
Exhibits
Exhibit 1
Exhibit 2
Exhibit 27
- 2 -
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<S> <C> <C>
June 30, December 31,
1997 1996
Assets
Current assets:
Cash and cash equivalents $ 35,808,682 $ 25,510,231
Receivables, less allowance for
doubtful accounts of $662,254 in
1997 and $629,362 in 1996 28,865,151 32,043,626
Inventories 33,125,192 33,223,110
Investments available for sale 2,141,671 4,409,320
Deferred income taxes 2,634,642 1,901,383
Other 2,098,191 2,155,397
Total current assets 104,673,529 99,243,067
Property, plant and equipment,
at cost 125,366,874 118,463,362
Accumulated depreciation (63,902,551) (61,134,960)
Net property, plant and equipment 61,464,323 57,328,402
Unexpended industrial revenue
bond proceeds 4,126,791 9,766,938
Prepaid pension 13,794,592 13,989,592
Other noncurrent assets 7,110,692 7,842,345
$191,169,927 $188,170,344
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 8,595,397 $ 8,631,404
Accrued payrolls and employee
benefits 7,996,742 7,819,253
Other 8,685,493 9,718,430
Total current liabilities 25,277,632 26,169,087
Employee benefit obligations 16,770,539 17,122,983
Industrial revenue bond debt 12,586,000 12,586,000
Deferred income taxes 9,816,702 9,944,670
Other noncurrent liabilities 2,778,052 2,680,581
Total liabilities 67,228,925 68,503,321
Shareholders' equity:
Preference stock - no par value;
authorized 3,000,000 shares: none
issued - -
Common stock - par value $1; authorized
20,000,000 shares; issued and
outstanding 9,577,621 in 1997
and 1996 9,577,621 9,577,621
Additional paid-in capital 102,555,980 102,555,980
Retained earnings 9,625,493 2,648,036
121,759,094 114,781,637
Cumulative translation and other
adjustments 1,007,188 2,364,607
Unrealized holding gains on
securities 1,174,720 2,520,779
Total shareholders' equity 123,941,002 119,667,023
$191,169,927 $188,170,344
See Notes to Consolidated Financial Statements.
</TABLE>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<S> <C> <C> <C> <C>
Six Months Ended June 30, Three Months Ended June 30,
1997 1996 1997 1996
Net sales $ 83,925,317 $ 81,865,465 $ 43,091,163 $ 40,767,130
Operating costs and expenses:
Cost of products sold
(excluding depreciation) 57,549,037 57,905,652 29,688,005 28,524,592
Selling and administrative 11,849,597 12,087,492 5,929,734 6,112,944
Depreciation 3,336,127 3,150,481 1,664,923 1,577,523
72,734,761 73,143,625 37,282,662 36,215,059
Income from operations 11,190,556 8,721,840 5,808,501 4,552,071
Other income (expense):
Gain on sale of investments 936,575 - 721,910 -
Other income (expense)-net 409,647 186,898 131,035 108,375
Income before taxes 12,536,778 8,908,738 6,661,446 4,660,446
Provision for taxes on income 4,410,000 3,350,000 2,330,000 1,750,000
Net income $ 8,126,778 $ 5,558,738 $ 4,331,446 $ 2,910,446
Net income per common share $ .85 $ .58 $ .45 $ .30
Cash dividends declared
per share $ .12 $ .05 $ .06 $ .025
Weighted average number of
common shares outstanding 9,577,621 9,577,621 9,577,621 9,577,621
</TABLE>
See Notes to Consolidated Financial Statements
- 4 -
<PAGE>
<TABLE>
<CAPTION>
AMPCO-PITTSBURGH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,126,778 $ 5,558,738
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 3,336,127 3,150,481
Gain on sale of investments (936,575) -
Deferred income taxes 89,300 3,050,000
Other - net 105,983 144,457
(Increase) decrease in assets:
Receivables 2,520,563 (3,537,316)
Inventories (298,731) (601,340)
Other assets 79,132 (358,413)
Increase (decrease) in liabilities:
Accounts payable (171,973) (367,567)
Accrued payrolls and employee benefits 89,990 181,975
Other liabilities 714,315 (1,520,539)
Net cash flows from operating
activities 13,654,909 5,700,476
Cash flows from investing activities:
Purchases of property, plant and
equipment (8,004,687) (3,816,852)
Reduction in unexpended industrial revenue
bond proceeds 5,640,147 -
Proceeds from sales of investments 1,258,613 582,122
Net cash flows from investing activities (1,105,927) (3,234,730)
Cash flows from financing activities:
Dividends paid (2,107,077) (957,763)
Net cash flows from financing activities (2,107,077) (957,763)
Effect of exchange rate changes on cash (143,454) (105,748)
Net increase in cash 10,298,451 1,402,235
Cash at beginning of year 25,510,231 15,553,263
Cash at end of period $ 35,808,682 $ 16,955,498
Supplemental information:
Income tax payments $ 3,397,744 $ 795,958
Interest payments 268,623 77,017
</TABLE>
See Notes to Consolidated Financial Statements.
- 5 -
<PAGE>
AMPCO-PITTSBURGH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Unaudited Consolidated Financial Statements
The consolidated balance sheet as of June 30, 1997, the
consolidated statements of income for the six and three
month periods ended June 30, 1997 and 1996 and the
consolidated statements of cash flows for the six month
periods then ended have been prepared by the Corporation
without audit. In the opinion of management, all
adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial
position, results of operations and cash flows for the
periods presented have been made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction
with the consolidated financial statements and notes
thereto included in the Corporation's annual report to
shareholders for the year ended December 31, 1996. The
results of operations for the periods ended June 30,
1997 are not necessarily indicative of the operating
results for the full year.
2. Inventory
Inventories, principally valued on the LIFO method, are
comprised of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1997 1996
Raw materials $ 5,847,912 $ 6,384,104
Work-in-process 21,656,102 20,945,337
Finished goods 3,619,551 3,885,851
Supplies 2,001,627 2,007,818
$ 33,125,192 $ 33,223,110
</TABLE>
3. Investments
In connection with the sale of investments previously
classified as available for sale, the Corporation
recognized pre-tax gains of $936,575 and $721,910 during
the six and three month periods ended June 30, 1997,
respectively.
4. Net Income Per Common Share
Net income per common share is computed on the basis of
the weighted number of shares of Ampco-Pittsburgh
Corporation's common stock outstanding, which has
remained unchanged at 9,577,621 shares for the periods
presented.
- 6 -
<PAGE>
5. Post Balance Sheet Events
Effective July 1, 1997, the Corporation acquired F. R.
Gross Co., a small manufacturer of heat transfer rolls
for the plastics, packaging, printing and other
industries. The acquisition, for approximately
$9,400,000 cash, including debt assumed and retired,
will be accounted for as a purchase transaction in the
third quarter.
Effective August 1, 1997, the Corporation acquired
Atlantic Grinding & Welding Inc. This small
manufacturer of feed screws, with operations in New
Hampshire and South Carolina, will expand New Castle
Industries' market coverage to the plastics processing
industry. The acquisition, for approximately $2,600,000
cash, including debt assumed and retired, will be
accounted for as a purchase transaction in the third
quarter.
6. Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings per Share". SFAS
No. 128 establishes new standards for computing and
presenting earnings per share. The Company is required
to adopt the provisions of SFAS No. 128 for its
consolidated financial statements beginning with the
year ending December 31, 1997. Upon adoption, the
standard also requires the restatement of all prior
period earnings per share information presented.
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income", and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related
Information". SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its
components. The Company is required to adopt the
provisions of SFAS No. 130 beginning with its
consolidated financial statements for the three months
ending March 31, 1998. SFAS No. 131 requires certain
disclosures about segment information in interim and
annual financial statements and related information
about products and services, geographic areas and major
customers. The Company must adopt the provisions of
SFAS No. 131 for its consolidated financial statements
for the year ending December 31, 1998.
The adoptions of SFAS No. 128, SFAS No. 130, and SFAS
No. 131 are not expected to have a material effect on
the measurement of the Company's financial position,
results of operations or cash flows; the Company is
reviewing possible changes in disclosures that may be
called for.
- 7 -
<PAGE>
AMPCO-PITTSBURGH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operations for the Six and Three Month Periods Ended
June 30, 1997 and 1996
Net sales for the six and three month periods of 1997 were
$83,925,000 and $43,091,000 compared to $81,865,000 and
$40,767,000 for the same periods of the prior year.
Overall sales increased by 2.5% and 5.7% for the first half
and second quarter of 1997, respectively, as several of the
Corporation's operations experienced higher shipment levels
due to continued growth in export business and improved
economic activity in the markets served. The order backlog
stood at $107,400,000 at June 30, 1997 compared to
$114,100,000 at December 31, 1996. The decline in the
backlog is due primarily to a decrease in forged hardened
steel roll orders.
The cost of products sold relationships for the six and
three months ended June 30, 1997 were 68.6% and 68.2%,
respectively. This compares with the prior comparable
periods at 70.7% and 70.0%, respectively. A more
profitable sales mix together with increased margins
resulted in improved ratios of cost of products sold to
sales in 1997.
Selling and administrative expenses in 1997 decreased by
$238,000 or 2% for the year-to-date period and $183,000 or
3% for the second quarter, both compared to the prior year.
The decrease is principally due to lower sales commission
costs as a result of a mix change towards sales on which
no commission is payable. The relationships of selling and
administrative expenses to net sales for the six and three
months ended June 30, 1997 were 14.1% and 13.8%,
respectively. This compares with the prior comparable
periods at 14.7% and 15.0%, respectively.
Depreciation expense of $3,336,000 and $1,665,000 for the
six and three months ended June 30, 1997 increased
approximately 6% compared to the prior year due principally
to an increase in capital expenditures.
Income from operations increased 28% for both the six and
three month periods ended June 30, 1997 compared to the
comparable 1996 periods. These increases are principally a
result of improved margins, a more profitable sales mix and
slightly higher volumes.
- 8 -
<PAGE>
Gains of $937,000 and $722,000 were recognized in the six
and three month periods ended June 30, 1997, respectively,
from the sale of investments.
The Corporation had net income for the six and three months
ended June 30, 1997 of $8,127,000 and $4,331,000,
respectively. This compares with net income for the prior
year comparable periods of $5,559,000 and $2,910,000,
respectively.
Liquidity and Capital Resources
Net cash flow from operating activities was positive in
1997 and 1996 at $13,655,000 and $5,700,000, respectively.
The increased cash flow in 1997 resulted primarily from a
$2,469,000 increase in income from operations and a
decrease in working capital requirements. A reduction in
the level of accounts receivable during the 1997 period
compared to an increase in accounts receivable during the
1996 period accounted for $6,000,000 of the difference in
cash flow.
Capital expenditures for 1997 totaled $8,005,000 compared
to $3,817,000 in 1996. The Corporation anticipates capital
expenditures for 1997 to approximate $16,000,000 with the
major expenditure being for plant and equipment at Union
Electric Steel's plants to be completed by the end of the
year. Unexpended industrial revenue bond proceeds of
$9,767,000 were available to fund a portion of this capital
program and $5,640,000 of these proceeds were drawn down
during the first half of 1997. Funds generated internally
are expected to be sufficient to finance the balance of the
capital expenditures.
Cash outflows with respect to financing activities in 1997
reflect an increase in the quarterly dividend rate to $.06
per share compared to $.025 per share in 1996, and an
additional prior year-end dividend of $960,000 in 1997 or
$.10 per share, as compared to $.05 per share paid in 1996.
The Corporation maintains short-term lines of credit and a
revolving credit agreement in excess of the cash needs of
its businesses. The total available at June 30, 1997 was
$14,500,000.
Subsequent to June 30, 1997, the Corporation expended
$11,800,000 of its cash holdings to acquire two businesses
(also see Notes to Consolidated Financial Statements -
Note 5).
- 9 -
<PAGE>
With respect to environmental concerns, the Corporation has
been named a potentially responsible party at certain third
party sites. The Corporation has accrued its share of the
estimated cost of remedial actions it would likely be
required to contribute. While it is not possible to
quantify with certainty the potential cost of actions
regarding environmental matters, particularly any future
remediation and other compliance efforts, in the opinion of
management, compliance with the present environmental
protection laws and the potential liability for all
environmental proceedings will not have a material adverse
effect on the financial condition, results of operations or
liquidity of the Corporation.
The nature and scope of the Corporation's business brings
it into regular contact with a variety of persons,
businesses and government agencies in the ordinary course
of business. Consequently, the Corporation and its
subsidiaries from time to time are named in various legal
actions. The Corporation does not anticipate that its
financial condition, results of operations or liquidity
will be materially affected by the costs of known, pending
or threatened litigation.
- 10 -
<PAGE>
PART II - OTHER INFORMATION
AMPCO-PITTSBURGH CORPORATION
Items 1-5.None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
1. Severance Agreement dated 7/1/97 between the
Corporation and Robert J. Reilly (10)
2. Severance Agreement dated 7/1/97 between the
Corporation and Rose Hoover (10)
27. Financial Data Schedule
(b) Reports on Form 8-K
None
- 11 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMPCO-PITTSBURGH CORPORATION
DATE: August 13, 1997 BY: s/Robert A. Paul
Robert A. Paul
President and
Chief Executive Officer
DATE: August 13, 1997 BY: s/Robert J. Reilly
Robert J. Reilly
Vice President - Finance
and Treasurer
- 12 -
<TABLE> <S> <C>
<PAGE>
<S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 35,808,682
<SECURITIES> 2,141,671
<RECEIVABLES> 29,527,405
<ALLOWANCES> 662,254
<INVENTORY> 33,125,192
<CURRENT-ASSETS> 104,673,529
<PP&E> 125,366,874
<DEPRECIATION> 63,902,551
<TOTAL-ASSETS> 191,169,927
<CURRENT-LIABILITIES> 25,277,632
<BONDS> 12,586,000
0
0
<COMMON> 9,577,621
<OTHER-SE> 114,363,381
<TOTAL-LIABILITY-AND-EQUITY> 191,169,927
<SALES> 83,925,317
<TOTAL-REVENUES> 84,248,884
<CGS> 57,549,037
<TOTAL-COSTS> 72,734,761
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 323,567
<INCOME-PRETAX> 12,536,778
<INCOME-TAX> 4,410,000
<INCOME-CONTINUING> 8,126,778
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,126,778
<EPS-PRIMARY> .85
<EPS-DILUTED> .85
</TABLE>
<PAGE>
AMPCO PITTSBURGH
600 Grant St., Suite 4600
Pittsburgh, Pennsylvania 15219
(412) 456-4400
Fax (412) 456-4404
July 1, 1997
Ms. Rose Hoover
c/o Ampco-Pittsburgh Corporation
600 Grant St., Suite 4600
Pittsburgh, Pennsylvania 15219
Dear Rose:
Ampco-Pittsburgh Corporation (the "Corporation") recognizes that
your contribution to the success of the Corporation has been substantial and
desires to assure the Corporation of your continued employment. In this
connection, the Board of Directors of the Corporation (the "Board") recognizes
that, as is the case with other publicly held corporations, the possibility of a
change in control may exist and that such possibility, and the uncertainty that
it may raise among the Company's management, may result in the departure or
distraction of management personnel to the detriment of the Corporation and its
stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in the employ of the Corporation,
the Corporation agrees that you shall receive the severance benefits set forth
in this letter agreement ("Agreement") in the event your employment with the
Corporation is
<PAGE>
Ms. Rose Hoover 2
terminated subsequent to a "Change in Control" (as defined in Section 2 hereof)
under the circumstances described below.
1. TERM OF AGREEMENT. This Agreement will commence on the date
hereof and shall continue in effect for twenty-four (24) months from the date
hereof; PROVIDED, HOWEVER, that commencing on July 1, 1999 and on each
anniversary thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than thirty (30) days prior
to such date, the Corporation shall have given notice that it does not wish to
extend this Agreement; PROVIDED, FURTHER, HOWEVER, that if a Change in Control
shall have occurred during the original or extended term of this Agreement, this
Agreement cannot be cancelled.
2. CHANGE IN CONTROL.
(a) No benefits shall be payable hereunder unless there shall
have been a Change in Control as set forth below. For purposes of this
Agreement, a "Change in Control" shall be deemed to have occurred if:
(i) any "Person" (as defined in Sections 13(d) and 14(d)
of the Exchange Act) other than the persons or the group of persons in
control of the Corporation on the date hereof is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the corporation representing
fifty percent (50%) or more of the combined voting power of the
Corporation's then outstanding securities;
<PAGE>
Ms. Rose Hoover 3
(ii) within any period of two consecutive years (not
including any period prior to the execution of this Agreement) there shall
cease to be a majority of the Board comprised as follows: individuals who
at the beginning of such period constitute the Board and any new
director(s) whose election was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election
was previously so approved;
(iii) the shareholders of the Corporation approve a
merger of, or consolidation involving, the Corporation in which (A) the
Corporation's Common Stock, par value $1.00 per share (such stock, or any
other securities of the Corporation into which such stock shall have been
converted through a reincorporation, recapitalization or similar
transaction, hereinafter called "Common Stock of the Corporation"), is
converted into shares or securities of another corporation, or into cash
or other property, or (B) the Common Stock of the Corporation is not
converted as described in Clause (A), but in which more than forty percent
(40%) of the Common Stock of the surviving corporation in the merger is
owned by shareholders other than those who owned such amount prior to the
merger; or any other transaction after which the Corporation's Common
Stock is no longer to be publicly traded; in each case, other than a
transaction solely for the purpose of reincorporating the Corporation in
another jurisdiction or recapitalizing the Common Stock of the
Corporation; or
<PAGE>
Ms. Rose Hoover 4
(iv) the shareholders of the Corporation approve a plan
of complete liquidation of the Corporation, or an agreement for the sale
or disposition by the Corporation of all or substantially all the
Corporation's assets, either of which is followed by a distribution of all
or substantially all of the proceeds to the shareholders.
3. AGREEMENT OF EMPLOYEE. You agree that in the event of a
Potential Change in Control of the Corporation, you will not terminate
employment with the Corporation for any reason until the occurrence of a Change
in Control of the Corporation.
For purposes of this Agreement, a "Potential Change in Control of
the Corporation" shall be deemed to have occurred if (i) the Corporation enters
into an agreement, the consummation of which would result in the occurrence of a
Change in Control, (ii) any person (including the Corporation) publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control, or (iii) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control of the Corporation has occurred.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL OF THE
CORPORATION.
(a) If any of the events described in Section 2 hereof
constituting a Change in Control shall have occurred, you shall be entitled to
the benefits provided in Section 5(d) upon the termination of your employment
within twenty-four (24) months after the Change in Control has occurred, unless
such
<PAGE>
Ms. Rose Hoover 5
termination is (i) because of your death or Disability, (ii) by the Corporation
for Cause, or (iii) by you other than for Good Reason.
(b) For purposes of this Agreement, "Disability" shall mean
that if, as a result of your incapacity due to physical or mental illness, you
shall have been absent from the full-time performance of your duties with the
Corporation for six (6) consecutive months, and within thirty (30) days after
written notice of termination shall have been given to you, you shall not have
returned to the full-time performance of your duties.
(c) For purposes of this Agreement, termination by the
Corporation of your employment for "Cause" shall mean termination upon:
(i) the willful and continued failure by you to
substantially perform duties consistent with your position with the
Corporation (other than any such failure resulting from incapacity due to
physical or mental illness or termination by you for Good Reason), after a
demand for substantial performance is delivered to you by the Board,
together with a copy of the resolution of the Board that specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, which resolution must be passed by at
least two-thirds (2/3) of the entire Board at a meeting called for the
purpose and after an opportunity for you and your counsel to be heard by
the Board, and you have failed to resume substantial performance of your
duties on a continuous basis within fourteen (14) days of receiving such
demand,
<PAGE>
Ms. Rose Hoover 6
(ii) the willful engaging by you in conduct that is
demonstrably and materially injurious to the Corporation, monetarily or
otherwise, as set forth in a resolution of the Board, which resolution
must be passed by at least two-thirds (2/3) of the entire Board at a
meeting called for the purpose and after an opportunity for you and your
counsel to be heard by the Board, or
(iii) your conviction of a felony, or conviction of a
misdemeanor involving assets of the Corporation.
For purposes of this Section 4(c), no act, or failure to act, on your part shall
be deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your action or omission was in the best
interest of the Corporation.
(d) For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any one or more of the following:
(i) the assignment to you of duties inconsistent with
your duties, responsibilities and status immediately before the Change in
Control or a reduction or alteration in the nature or status of your
responsibilities from those in effect immediately before the Change in
Control;
(ii) a reduction by the Corporation in your base salary
as in effect immediately before the Change in Control, a failure to
increase such base salary at the same intervals as prevailed before the
Change in
<PAGE>
Ms. Rose Hoover 7
Control in an amount at least equal to the same percentage increase as the
last increase prior to the Change in Control, or a reduction in bonus
after the Change in Control over the last bonus paid before the Change in
Control unless there are equivalent reductions in bonuses for all
executives of the Corporation;
(iii) the requirement that you be based at a location in
excess of twenty-five (25) miles from the location where you are currently
based;
(iv) the failure by the Corporation to continue in
effect any of the Corporation's employee benefit plans, policies,
practices or arrangements in which you participate or under which you are
entitled to benefits, or the failure by the Corporation to continue your
participation therein or benefits thereunder on substantially the same
basis, both in terms of the amount of benefits provided and the level of
your participation relative to other participants, as existed immediately
prior to the Change in Control; or
(v) the failure of the Corporation to obtain a
satisfactory agreement from any successor to the Corporation to assume and
agree to perform this Agreement, as contemplated in Section 6.
(e) "Good Reason" may be established notwithstanding your
possible incapacity due to physical or mental illness, provided that Disability
has not been established pursuant to Section 4(b). Your continued employment
following the Change in Control shall not constitute a waiver of any rights
hereunder, including,
<PAGE>
Ms. Rose Hoover 8
but not limited to, rights with respect to any circumstance constituting Good
Reason or rights under Section 6.
5. COMPENSATION UPON TERMINATION OR DURING INCAPACITY.
Following
a Change in Control, upon termination of your employment or during a period of
incapacity but before termination for Disability, you shall be entitled to the
following benefits:
(a) During any period prior to termination for Disability in
which you fail to perform your full-time duties with the Corporation as a result
of incapacity due to physical or mental illness, you shall continue to receive
your Base Salary at the rate in effect at the commencement of any such period.
Following termination for Disability, your benefits shall be determined in
accordance with the Corporation's retirement, insurance and other applicable
programs and plans then in effect.
(b) If your employment shall be terminated by the Corporation
for Cause or by you other than for Good Reason, the Corporation shall pay to you
your full Base Salary through the date of termination of your employment at the
rate then in effect, plus all other amounts to which you are entitled under any
compensation or benefit plans of the Corporation at the time such amounts are
due, and the Corporation shall have no further obligations to you under this
Agreement.
(c) If your employment terminates by reason of your death,
your benefits shall be determined in accordance with the Corporation's
retirement, survivor's benefits, insurance and other applicable programs and
plans then in effect.
<PAGE>
Ms. Rose Hoover 9
(d) If your employment by the corporation shall be terminated
within twenty-four (24) months after the Change in Control, unless such
termination is (i) by the Corporation for Cause, (ii) because of your death or
Disability, or (iii) by you other than for Good Reason, you shall be entitled to
the following benefits (the "Severance Payments"):
(A) the Corporation shall pay to you your full Base
Salary through the date of termination of your employment at the
rate then in effect;
(B) the Corporation shall pay to you, as severance
benefits, a lump sum severance payment equal to (i) the sum of two
times your annual base salary either at the time of the Change in
Control or at termination, whichever is higher, and (ii) two times
your bonus paid for the prior year;
(C) in lieu of shares of Common Stock of the Corporation
("Shares") issuable upon exercise of outstanding options
("Options"), if any, granted to you under the Corporation's
Incentive Stock Option Plan, or under any additional, substitute or
successor option program or plan as may be in effect from time to
time (which Options shall be cancelled upon the making of the
payment referred to below), you shall receive an amount in cash
equal to the product of (i) the higher of the closing price per
Share as reported on the New York Stock Exchange on the date of
termination of your employment or
<PAGE>
Ms. Rose Hoover 10
the highest price per Share actually paid in connection with any
Change in Control, over the exercise price per Share of each Option
held by you, times (ii) the number of Shares covered by each such
Option;
(D) for a twenty-four (24) month period after such
termination, the Corporation will arrange to provide you at the
Corporation's expense with benefits under the Corporation's health,
dental, disability, life insurance, and other similar plans, or
benefits substantially similar to the benefits you were receiving
under such plans immediately prior to the termination of your
employment; and
(E) the opportunity to purchase the leased company car,
which has been assigned to you, at its then book value under the
Corporation's leasing arrangements.
(e) Notwithstanding the foregoing provisions of this Section
5, in the event you are determined by the Board to be a "disqualified
individual" (within the meaning of Section 280G(c) of the Internal Revenue Code
of 1986, as amended (the "Code")) with respect to the Company, the amount of the
payments hereunder, which are determined to be "parachute payments" (within the
meaning of Section 280G(b) of the Code), shall be reduced to the extent
necessary so that the total of (i) such payments and (ii) any other payment or
the value of any benefit received or to be received by you in connection with a
Change in Control remains deductible by the Company for federal income tax
purposes. If any payments payable hereunder or under any other agreement with
the Corporation are required to
<PAGE>
Ms. Rose Hoover 11
be reduced pursuant to the preceding sentence, such reduction shall be made to
such payments in the order elected by you.
(f) The payments provided for in Section 5(d) shall be made
not later than the fifth day following your termination pursuant to the
provisions of Section 5(d); PROVIDED, HOWEVER, that if the amounts of such
payments cannot be finally determined on or before such day, the Corporation
shall pay to you on such day an estimate as determined in good faith by the
Corporation of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but
in no event later than the thirtieth day after the date of such termination. If
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Corporation to you
payable on the fifth day after demand by the Corporation (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to you all legal fees and
expenses incurred by you as a result of such termination of your employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 of the
Code to any payment or benefit provided hereunder).
<PAGE>
Ms. Rose Hoover 12
(h) You shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Agreement be reduced by
any compensation earned by you as the result of employment by another employer
after the date of termination of your employment, or otherwise.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Corporation will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation or of any
division or subsidiary thereof employing you to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform if no such succession had taken place.
Failure of the Corporation to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Corporation in the same amount and on
the same terms as you would be entitled hereunder if you terminated your
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed to be the date of termination of your employment.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
<PAGE>
Ms. Rose Hoover 13
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, or to any
changed address, notice of which either of us shall have given to the other.
8. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania.
9. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. EFFECTIVE DATE. This Agreement shall become effective as of the
date signed by you.
* * *
<PAGE>
Ms. Rose Hoover 14
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
AMPCO-PITTSBURGH CORPORATION
By: /s/ Robert A. Paul
---------------------------------
Accepted and Agreed to
this 15th day of July, 1997.
/s/ Rose Hoover
- ---------------------------------
<PAGE>
AMPCO PITTSBURGH
600 Grant St., Suite 4600
Pittsburgh, Pennsylvania 15219
(412) 456-4400
Fax (412) 456-4404
July 1, 1997
Mr. Robert J. Reilly
c/o Ampco-Pittsburgh Corporation
600 Grant St., Suite 4600
Pittsburgh, Pennsylvania 15219
Dear Robert:
Ampco-Pittsburgh Corporation (the "Corporation") recognizes that
your contribution to the success of the Corporation has been substantial and
desires to assure the Corporation of your continued employment. In this
connection, the Board of Directors of the Corporation (the "Board") recognizes
that, as is the case with other publicly held corporations, the possibility of a
change in control may exist and that such possibility, and the uncertainty that
it may raise among the Company's management, may result in the departure or
distraction of management personnel to the detriment of the Corporation and its
stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Corporation.
In order to induce you to remain in the employ of the Corporation,
the Corporation agrees that you shall receive the severance benefits set forth
in this letter agreement ("Agreement") in the event your employment with the
Corporation is
<PAGE>
Mr. Robert J. Reilly 2
terminated subsequent to a "Change in Control" (as defined in Section 2 hereof)
under the circumstances described below.
1. TERM OF AGREEMENT. This Agreement will commence on the date
hereof and shall continue in effect for twenty-four (24) months from the date
hereof; PROVIDED, HOWEVER, that commencing on July 1, 1999 and on each
anniversary thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than thirty (30) days prior
to such date, the Corporation shall have given notice that it does not wish to
extend this Agreement; PROVIDED, FURTHER, HOWEVER, that if a Change in Control
shall have occurred during the original or extended term of this Agreement, this
Agreement cannot be cancelled.
2. CHANGE IN CONTROL.
(a) No benefits shall be payable hereunder unless there shall
have been a Change in Control as set forth below. For purposes of this
Agreement, a "Change in Control" shall be deemed to have occurred if:
(i) any "Person" (as defined in Sections 13(d) and 14(d)
of the Exchange Act) other than the persons or the group of persons in
control of the Corporation on the date hereof is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the corporation representing
fifty percent (50%) or more of the combined voting power of the
Corporation's then outstanding securities;
<PAGE>
Mr. Robert J. Reilly 3
(ii) within any period of two consecutive years (not
including any period prior to the execution of this Agreement) there shall
cease to be a majority of the Board comprised as follows: individuals who
at the beginning of such period constitute the Board and any new
director(s) whose election was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election
was previously so approved;
(iii) the shareholders of the Corporation approve a
merger of, or consolidation involving, the Corporation in which (A) the
Corporation's Common Stock, par value $1.00 per share (such stock, or any
other securities of the Corporation into which such stock shall have been
converted through a reincorporation, recapitalization or similar
transaction, hereinafter called "Common Stock of the Corporation"), is
converted into shares or securities of another corporation, or into cash
or other property, or (B) the Common Stock of the Corporation is not
converted as described in Clause (A), but in which more than forty percent
(40%) of the Common Stock of the surviving corporation in the merger is
owned by shareholders other than those who owned such amount prior to the
merger; or any other transaction after which the Corporation's Common
Stock is no longer to be publicly traded; in each case, other than a
transaction solely for the purpose of reincorporating the Corporation in
another jurisdiction or recapitalizing the Common Stock of the
Corporation; or
<PAGE>
Mr. Robert J. Reilly 4
(iv) the shareholders of the Corporation approve a plan
of complete liquidation of the Corporation, or an agreement for the sale
or disposition by the Corporation of all or substantially all the
Corporation's assets, either of which is followed by a distribution of all
or substantially all of the proceeds to the shareholders.
3. AGREEMENT OF EMPLOYEE. You agree that in the event of a
Potential Change in Control of the Corporation, you will not terminate
employment with the Corporation for any reason until the occurrence of a Change
in Control of the Corporation.
For purposes of this Agreement, a "Potential Change in Control of
the Corporation" shall be deemed to have occurred if (i) the Corporation enters
into an agreement, the consummation of which would result in the occurrence of a
Change in Control, (ii) any person (including the Corporation) publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control, or (iii) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control of the Corporation has occurred.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL OF THE
CORPORATION.
(a) If any of the events described in Section 2 hereof
constituting a Change in Control shall have occurred, you shall be entitled to
the benefits provided in Section 5(d) upon the termination of your employment
within twenty-four (24) months after the Change in Control has occurred, unless
such
<PAGE>
Mr. Robert J. Reilly 5
termination is (i) because of your death or Disability, (ii) by the Corporation
for Cause, or (iii) by you other than for Good Reason.
(b) For purposes of this Agreement, "Disability" shall mean
that if, as a result of your incapacity due to physical or mental illness, you
shall have been absent from the full-time performance of your duties with the
Corporation for six (6) consecutive months, and within thirty (30) days after
written notice of termination shall have been given to you, you shall not have
returned to the full-time performance of your duties.
(c) For purposes of this Agreement, termination by the
Corporation of your employment for "Cause" shall mean termination upon:
(i) the willful and continued failure by you to
substantially perform duties consistent with your position with the
Corporation (other than any such failure resulting from incapacity due to
physical or mental illness or termination by you for Good Reason), after a
demand for substantial performance is delivered to you by the Board,
together with a copy of the resolution of the Board that specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, which resolution must be passed by at
least two-thirds (2/3) of the entire Board at a meeting called for the
purpose and after an opportunity for you and your counsel to be heard by
the Board, and you have failed to resume substantial performance of your
duties on a continuous basis within fourteen (14) days of receiving such
demand,
<PAGE>
Mr. Robert J. Reilly 6
(ii) the willful engaging by you in conduct that is
demonstrably and materially injurious to the Corporation, monetarily or
otherwise, as set forth in a resolution of the Board, which resolution
must be passed by at least two-thirds (2/3) of the entire Board at a
meeting called for the purpose and after an opportunity for you and your
counsel to be heard by the Board, or
(iii) your conviction of a felony, or conviction of a
misdemeanor involving assets of the Corporation.
For purposes of this Section 4(c), no act, or failure to act, on your part shall
be deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your action or omission was in the best
interest of the Corporation.
(d) For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any one or more of the following:
(i) the assignment to you of duties inconsistent with
your duties, responsibilities and status immediately before the Change in
Control or a reduction or alteration in the nature or status of your
responsibilities from those in effect immediately before the Change in
Control;
(ii) a reduction by the Corporation in your base salary
as in effect immediately before the Change in Control, a failure to
increase such base salary at the same intervals as prevailed before the
Change in
<PAGE>
Mr. Robert J. Reilly 7
Control in an amount at least equal to the same percentage increase as the
last increase prior to the Change in Control, or a reduction in bonus
after the Change in Control over the last bonus paid before the Change in
Control unless there are equivalent reductions in bonuses for all
executives of the Corporation;
(iii) the requirement that you be based at a location in
excess of twenty-five (25) miles from the location where you are currently
based;
(iv) the failure by the Corporation to continue in
effect any of the Corporation's employee benefit plans, policies,
practices or arrangements in which you participate or under which you are
entitled to benefits, or the failure by the Corporation to continue your
participation therein or benefits thereunder on substantially the same
basis, both in terms of the amount of benefits provided and the level of
your participation relative to other participants, as existed immediately
prior to the Change in Control; or
(v) the failure of the Corporation to obtain a
satisfactory agreement from any successor to the Corporation to assume and
agree to perform this Agreement, as contemplated in Section 6.
(e) "Good Reason" may be established notwithstanding your
possible incapacity due to physical or mental illness, provided that Disability
has not been established pursuant to Section 4(b). Your continued employment
following the Change in Control shall not constitute a waiver of any rights
hereunder, including,
<PAGE>
Mr. Robert J. Reilly 8
but not limited to, rights with respect to any circumstance constituting Good
Reason or rights under Section 6.
5. COMPENSATION UPON TERMINATION OR DURING INCAPACITY.
Following
a Change in Control, upon termination of your employment or during a period of
incapacity but before termination for Disability, you shall be entitled to the
following benefits:
(a) During any period prior to termination for Disability in
which you fail to perform your full-time duties with the Corporation as a result
of incapacity due to physical or mental illness, you shall continue to receive
your Base Salary at the rate in effect at the commencement of any such period.
Following termination for Disability, your benefits shall be determined in
accordance with the Corporation's retirement, insurance and other applicable
programs and plans then in effect.
(b) If your employment shall be terminated by the Corporation
for Cause or by you other than for Good Reason, the Corporation shall pay to you
your full Base Salary through the date of termination of your employment at the
rate then in effect, plus all other amounts to which you are entitled under any
compensation or benefit plans of the Corporation at the time such amounts are
due, and the Corporation shall have no further obligations to you under this
Agreement.
(c) If your employment terminates by reason of your death,
your benefits shall be determined in accordance with the Corporation's
retirement, survivor's benefits, insurance and other applicable programs and
plans then in effect.
<PAGE>
Mr. Robert J. Reilly 9
(d) If your employment by the corporation shall be terminated
within twenty-four (24) months after the Change in Control, unless such
termination is (i) by the Corporation for Cause, (ii) because of your death or
Disability, or (iii) by you other than for Good Reason, you shall be entitled to
the following benefits (the "Severance Payments"):
(A) the Corporation shall pay to you your full Base
Salary through the date of termination of your employment at the
rate then in effect;
(B) the Corporation shall pay to you, as severance
benefits, a lump sum severance payment equal to (i) the sum of two
times your annual base salary either at the time of the Change in
Control or at termination, whichever is higher, and (ii) two times
your bonus paid for the prior year;
(C) in lieu of shares of Common Stock of the Corporation
("Shares") issuable upon exercise of outstanding options
("Options"), if any, granted to you under the Corporation's
Incentive Stock Option Plan, or under any additional, substitute or
successor option program or plan as may be in effect from time to
time (which Options shall be cancelled upon the making of the
payment referred to below), you shall receive an amount in cash
equal to the product of (i) the higher of the closing price per
Share as reported on the New York Stock Exchange on the date of
termination of your employment or
<PAGE>
Mr. Robert J. Reilly 10
the highest price per Share actually paid in connection with any
Change in Control, over the exercise price per Share of each Option
held by you, times (ii) the number of Shares covered by each such
Option;
(D) for a twenty-four (24) month period after such
termination, the Corporation will arrange to provide you at the
Corporation's expense with benefits under the Corporation's health,
dental, disability, life insurance, and other similar plans, or
benefits substantially similar to the benefits you were receiving
under such plans immediately prior to the termination of your
employment; and
(E) the opportunity to purchase the leased company car,
which has been assigned to you, at its then book value under the
Corporation's leasing arrangements.
(e) Notwithstanding the foregoing provisions of this Section
5, in the event you are determined by the Board to be a "disqualified
individual" (within the meaning of Section 280G(c) of the Internal Revenue Code
of 1986, as amended (the "Code")) with respect to the Company, the amount of the
payments hereunder, which are determined to be "parachute payments" (within the
meaning of Section 280G(b) of the Code), shall be reduced to the extent
necessary so that the total of (i) such payments and (ii) any other payment or
the value of any benefit received or to be received by you in connection with a
Change in Control remains deductible by the Company for federal income tax
purposes. If any payments payable hereunder or under any other agreement with
the Corporation are required to
<PAGE>
Mr. Robert J. Reilly 11
be reduced pursuant to the preceding sentence, such reduction shall be made to
such payments in the order elected by you.
(f) The payments provided for in Section 5(d) shall be made
not later than the fifth day following your termination pursuant to the
provisions of Section 5(d); PROVIDED, HOWEVER, that if the amounts of such
payments cannot be finally determined on or before such day, the Corporation
shall pay to you on such day an estimate as determined in good faith by the
Corporation of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but
in no event later than the thirtieth day after the date of such termination. If
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Corporation to you
payable on the fifth day after demand by the Corporation (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to you all legal fees and
expenses incurred by you as a result of such termination of your employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 of the
Code to any payment or benefit provided hereunder).
<PAGE>
Mr. Robert J. Reilly 12
(h) You shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Agreement be reduced by
any compensation earned by you as the result of employment by another employer
after the date of termination of your employment, or otherwise.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Corporation will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation or of any
division or subsidiary thereof employing you to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform if no such succession had taken place.
Failure of the Corporation to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Corporation in the same amount and on
the same terms as you would be entitled hereunder if you terminated your
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed to be the date of termination of your employment.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
<PAGE>
Mr. Robert J. Reilly 13
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, or to any
changed address, notice of which either of us shall have given to the other.
8. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania.
9. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. EFFECTIVE DATE. This Agreement shall become effective as of the
date signed by you.
* * *
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
<PAGE>
Mr. Robert J. Reilly 14
AMPCO-PITTSBURGH CORPORATION
By: /s/ Robert A. Paul
---------------------------------
Accepted and Agreed to
this 15th day of July, 1997.
/s/ Robert J. Reilly
- ---------------------------------
