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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 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 1-1274-2
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MEDUSA CORPORATION
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(Exact name of registrant as specified in its charter)
OHIO 34-0394630
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3008 MONTICELLO BLVD., CLEVELAND HTS., OHIO 44118
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 371-4000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common shares without par value New York Stock Exchange
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Securities registered pursuant to Section 12 (G) of the Act:
None
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [x]
As of February 27, 1998, the number of shares of common stock outstanding was
16,671,699. As of such date, the aggregate value of voting stock held by
nonaffiliates, based upon the closing price of these shares on the New York
Stock Exchange, Inc. was approximately $722,338,200.
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PART I
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Item 1. BUSINESS
GENERAL
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The company operates in three business segments. The company's Cement Group
produces and sells gray portland cement and masonry cement. Its Aggregates Group
mines, processes and sells construction aggregates, home and garden and
industrial limestone products. Its James H. Drew Corporation subsidiary provides
construction services for highway safety. The company's operations are conducted
principally in the eastern half of the United States. See additional information
relating to financial and operating data on a segment basis contained in Part
II, Item 8.
The company's business is seasonal, particularly in northern markets, with
stronger sales during the spring, summer and fall and lower sales during the
winter. Additional information relating to the company's quarterly results is
contained in Part II, Item 8.
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements are based on
current expectations, estimates and projections concerning the general state of
the economy and the industry and market conditions in certain geographical
locations in which the company operates. These statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions
which are difficult to predict. Therefore, actual results and outcomes may
differ materially from what is expressed or forecasted in such forward-looking
statements. The company undertakes no obligation to update publicly any
forward-looking statements as a result of new information, future events or
other factors.
THE CEMENT GROUP
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CEMENT INDUSTRY OVERVIEW
Portland cement is the essential binding material used in making concrete, which
is widely used in residential and non-residential construction and in public
works and infrastructure projects. Cement is sold primarily in bulk form to
producers of ready-mix concrete and manufacturers of concrete products.
Cement is made in a multi-stage process that begins with the crushing, grinding
and mixing of calcium carbonate (usually in the form of quarried limestone),
sand, alumina, iron oxide and other materials. This raw materials mixture is
then reacted in rotary kilns at extremely high temperatures. The resulting
marble-size pellet material (called "clinker") is cooled and ground with a small
amount of gypsum to produce cement having the consistency of fine powder.
There are two basic methods of clinker production. The older "wet" process
involves mixing the raw materials with water to form a slurry that is reacted in
the kiln. This process involves the use of a large amount of fuel, but enables
the raw materials to be handled and mixed easily. In the more fuel-efficient
"dry" process, the slurrying step is eliminated and clinker is produced by
reacting only the dry raw materials. Even more fuel-efficient processes involve
preheater and preheater/precalciner techniques that recycle excess heat from the
kiln to either preheat or to enhance chemical reaction of the raw materials
prior to their
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PART I
Item 1. BUSINESS (continued)
introduction into the kiln. The company estimates that, in general, the energy
consumed to produce cement from a dry process preheater/precalciner kiln is
approximately 40% less than a wet process kiln. All the company's kilns use the
dry process.
Based on the most current data available from the U. S. Geological Survey
Department, the average price of a ton of portland cement in 1997, F.O.B. the
point of sale, was $59.69. Cement markets tend to be regional because of the low
price of cement relative to its weight, making cost of transportation an
important factor in the industry. The company estimates that the approximate
distance that one ton of cement can be transported for the same relative cost is
500 miles by water vessel, 60 miles by rail and 20 miles by truck. As a result,
cement plants whose products can be transported only by truck or rail tend to
serve relatively small geographic markets (typically not in excess of a 200 mile
radius of the plant), while plants with access to water transportation are able
to efficiently serve considerably larger geographic markets. The market served
by a cement plant may be extended through the use of distribution terminals to
which cement is transferred in bulk and inventoried for sale to customers in
surrounding areas.
DEMAND
Demand for cement is correlated to cyclical construction activity, which, in
turn, is influenced largely by national and regional economic conditions,
including (particularly in the case of residential construction) prevailing
interest rates. In addition, levels of government spending on infrastructure
improvement affect cement consumption. Demand for cement has traditionally been
seasonal, particularly in northern markets where inclement weather affects
construction activity. According to the Portland Cement Association ("PCA"),
total annual cement consumption (i.e.: the total demand for both portland and
masonry cements) in the United States over the past 20 years has ranged from a
low of 66 million tons in 1982 to a high of 106 million tons in 1997, generally
corresponding to the prevailing economic conditions and construction activity.
Portland cement consumption in the United States in 1997 was about 102 million
tons, of which approximately 21% was used in residential construction, 24% in
non-residential construction, and the remainder in public construction, such as
infrastructure.
The company believes increased government spending on infrastructure improvement
should have a favorable impact on future cement demand. Enactment of the
Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), which
authorized the appropriation of federal funds primarily for construction and
improvement of highways, bridges and mass transit systems, reflected
Congressional recognition of the need for national infrastructure repair and
replacement. Future demand for cement for infrastructure improvement will depend
on the level of funding made available for such purpose by federal, state and
local governments. ISTEA expired in 1997 and legislation is currently before the
Congress to enact similar legislation for the 1998-2003 period at higher levels
of spending.
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PART I
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Item l. BUSINESS (continued)
SUPPLY
According to current statistics published by the PCA, United States clinker
production capacity decreased from 91.1 million tons to 83.1 million tons, or by
approximately 8%, from 1975 to 1995. Statistics published by the U. S.
Geological Survey Department and the PCA indicate that from 1975 to 1995 the
number of cement companies operating in the United States has dropped from 57 to
46, and in 1995 the 10 largest of such companies accounted for approximately 59%
of total United States production capacity for clinker. The company believes
that domestic production will remain inadequate to meet demand going into the
next century. With an approximate 18.5 million ton shortfall between supply and
demand, imports will continue to be needed to supplement domestic demand. That
shortfall, the company believes, is due principally to the unfair dumping of
imports into the United States during the 1980's, when the domestic industry was
forced to divest itself of a significant portion of its capacity. Presently,
with the dumping duties imposed against offenders by the International Trade
Commission in 1990 and 1991, the United States industry is becoming healthier
and is now able to afford to reinvest in itself. However, because of the extent
of capital investment required and the long lead times associated with
establishing new or re-opening closed facilities, the company only expects about
7 million tons of incremental domestic cement production capacity will be added
over the next three to five years unless cement prices increase significantly on
a sustained basis over current levels.
Imports of cement and clinker, which have had the most impact on markets along
coastal and southern border areas of the United States, with ripple effects
elsewhere, have varied from a high of 19% of total United States consumption in
1987 to a low of 8% in 1992, to an estimated 18% in 1997, according to the
latest U. S. Geological Survey Department figures. Factors influencing imports
have included the effect of anti-dumping actions brought against several foreign
importers, which resulted in the imposition of substantial duties on cement and
clinker imports from various countries beginning in 1990, changes in domestic
and foreign demand and rising ocean shipping rates. Increased ownership of
import facilities by domestic producers has also contributed to a more orderly
flow of imports into the United States. Cement production is capital-intensive
and involves high fixed costs. As a result, plant capacity utilization levels
are an important measure of a plant's profitability, since incremental sales
volumes tend to generate increasing profit margins. The PCA has estimated that
total United States cement plant capacity utilization was 96.0% for 1997.
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PART I
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Item l. BUSINESS (continued)
PRICE TRENDS
Due to the lack of product differentiation, competition in the cement industry
is based largely on price. Service and location of plants and terminals are also
competitive factors. Notwithstanding favorable construction activity during the
1980's, cement prices remained relatively low due to the impact of lower-priced
imported cement. Until 1993, United States portland cement prices remained flat
due to the downturn in general economic conditions and consequent declines in
construction activity. However, gradual improvement in the United States
economy, coupled with reduced domestic production capacity, have led to supply
and demand relationships more favorable to cement producers, resulting in
increased cement prices. In 1996, heavy demand coupled with limited domestic
supply enabled the company to increase prices by 5% over 1995 levels. Then in
1997, with continued strong demand, price increases that were effective April 1,
1997, and April 1, 1996, allowed the company's average price of cement to rise
2% over 1996. The company expects these favorable market conditions to continue
in 1998 and has announced cement price increases of up to $4.00 per ton in its
northern market and up to $3.00 per ton in its southern markets, effective April
1, 1998.
GENERAL
As the economy experienced its sixth consecutive year of expansion in 1997 that
featured modest growth and low inflation, the current construction cycle
followed in tandem. The housing sector retained its resiliency due to steadily
falling mortgage rates, high levels of consumer confidence and favorable
demographics. Nonresidential building (retail, industrial and office building)
continued to show strength reflected by lower vacancy rates and public
construction remained at historical high levels.
Modest increases in all three construction sectors last year resulted in the
fourth consecutive year of record-setting cement consumption in the United
States, estimated at about 102 million short tons compared to 100 million short
tons in 1996. Cement supply was adequate to meet domestic requirements, as U.S.
plants again operated at near capacity and imports were readily available (up
almost 21% over 1996 levels) to supplement domestic production shortfalls.
The construction outlook for 1998 is encouraging. With economic expansion
expected to extend for its seventh consecutive year and with very few signs of
overbuilding, the company expects construction activity to remain at or near
current high levels. Housing should reflect a modest decline, reflecting a
slight slowdown in the economy and some abatement to pent-up demand. However,
low vacancy rates and favorable demographic trends should translate into
increased activity for office building and institutional construction.
The company is optimistic that new highway legislation (ISTEA) will be passed
this year which will authorize high levels of funding compared to the former
bill (on average $20.5 billion annually). The pending House highway measure
calls for 33% increase in funding over the expired levels, compared to a 20%
funding increase from a comparable Senate measure. Highway and bridge building
activity is the largest segment of public construction, which accounts for more
than 50% of total domestic cement demand.
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PART I
Item 1. BUSINESS (continued)
As U.S. construction markets remain at lofty heights, cement consumption should
remain close to its record levels of the past four years. In spite of plant
expansions expected to come on line over the next several years, cement industry
fundamentals are not expected to change very much. Demand is expected to remain
at high levels and domestic production will still be inadequate to meet
consumption requirements, which generates additional pricing and profit
potential.
In an effort to satisfy the strong product demand, our four cement plants
achieved a 94.3% capacity utilization in 1997. The company's focused business
strategy enables the company to position itself to capitalize upon favorable
market conditions. The principal elements of this strategy are: a concentration
on its core business, a constant drive to lower operating costs, centralization
of pricing decisions and the maintenance of a lean management organization. In
furtherance of that strategy, the company realized the benefits from the
completion in 1997 of several projects designed to incrementally increase cement
capacity, as its Clinchfield, Charlevoix and Demopolis plants had record
production years.
OPERATIONS
The company ranks eighth in capacity among all United States cement companies
and fourth in capacity among those domestically owned. The company's cement
operations serve markets in portions of the Great Lakes, the Southeast and the
Western Pennsylvania/Northeastern Ohio portions of the United States.
REGIONAL MARKETS
Great Lakes. The Great Lakes regional market, consisting of portions of
Michigan, Wisconsin, Ohio, Illinois, Indiana and Ontario, is served by the
company's Charlevoix plant and its distribution network of nine terminals, eight
of which are water-based. The water-based terminals provide a very low cost
alternative versus rail and/or trucking costs. Demand in the Great Lakes region
has been steady, with very little new production capacity added in recent years.
Management believes that the Charlevoix plant is among the lowest cost cement
production facilities in the Great Lakes region. This is due to its use of a
single modern preheater/precalciner kiln which provides significant energy
savings over other dry and wet process kilns. In 1995, Charlevoix implemented an
artificial intelligence kiln control system and an automated process control
instrumentation system to enhance productivity and reduce operating costs. The
layout of the plant also results in an efficient utilization of manpower.
Charlevoix's deep-water shipping location and water-based terminals enable about
90% of cement produced to be shipped by water, the lowest cost method of
long-distance distribution, via the Medusa Conquest or the Medusa Challenger.
These company owned vessels have a combined capacity of 20,000 tons per load.
Southeast. The company has two plants and ten terminals in the Southeast
regional market: the Clinchfield, Georgia plant, acquired from Penn Dixie
Corporation and extensively rebuilt in 1972, and the Demopolis, Alabama plant,
built in 1977. The Demopolis plant serves water-based terminals in Chattanooga,
Tennessee and Decatur, Alabama with up to six river barges.
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PART I
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Item l. BUSINESS (continued)
Together, the two plants also serve eight rail/truck terminals in Alabama,
Florida and Georgia. The two plants have benefited from the 1996 completion of
the cement terminal in Forest Park, Georgia. Since the plants are located 240
miles apart, a number of marketing and manufacturing synergies exist, including
the ability to alternatively ship to eight terminals, to specialize in certain
cement products and packaging, and to rationalize distribution in what are the
two plants' overlapping markets.
Largely because both the Demopolis and Clinchfield plants operate
energy-efficient preheater kilns, management believes that they are among the
lowest cost production facilities in the region. In 1997, the Demopolis plant
burned waste derived liquid fuel (WDLF) for about 35% of its current fuel needs.
The Clinchfield plant burns waste whole tires as an alternative kiln fuel and
has been able to reduce its coal usage by up to 20%.
In 1997, the company began a $56.0 million dollar modernization and expansion
project at its Clinchfield plant and related distribution facilities. The
project is expected to increase clinker capacity by 175,000 tons to 760,000 tons
annually and lower cash costs at the plant by more than 20%. Project completion
is targeted for early 1999, with full production anticipated in mid-1999. The
project includes two new distribution terminals to accommodate the additional
tonnage. The terminals are expected to be operational in late 1998.
Western Pennsylvania/Northeastern Ohio. Significant steps were taken in 1996 to
improve the long-term profitability of the company's Wampum plant, located
between Pittsburgh, Pennsylvania and Youngstown, Ohio, serving markets as far
east in Pennsylvania as State College, as far south as Wheeling, West Virginia,
and as far west in Ohio as Columbus and Toledo. The Wampum plant services its
Columbus terminal by both rail and truck. A new three-year labor agreement that
contained a reduction-in-force agreement allows for lower cost quarry stripping
and stone hauling. The quarry operation was combined with the company's West
Pittsburg aggregate operation allowing for further work force reductions,
reduced capital spending, quarry development costs and better utilization of the
dragline. This 40-cubic yard dragline was placed in service in April 1994 and
replaced two smaller less efficient units. Demand in this region continues to
grow slowly. Supply has remained relatively constant, with no new plants or
major capacity expansions having occurred in the last six years or expected by
management in the foreseeable future.
Management believes that the Wampum plant's three dry kilns give it an operating
cost advantage over its wet process competitors in the region. The Wampum plant
also had the advantage in 1997 of obtaining about 17% of its coal needs from its
nearby limestone quarry which contains coal reserves. Since 1985, the Wampum
plant has burned WDLF, supplying about 33% of its fuel needs in 1997.
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PART I
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Item l. BUSINESS (continued)
ENERGY
Cement manufacturing is an energy intensive process, using fuel to fire kilns
and electricity to grind raw materials into kiln fuel and clinker into finished
cement. The company has been an innovator in burning alternative fuels, such as
WDLF and whole tires at its plants as a coal replacement. The company has burned
whole tires at its Clinchfield plant since 1990. The company has entered into
arrangements with independent contractors (which, in turn, contract with
suppliers of alternative fuel) which allow the company to reduce its energy
costs by receiving WDLF either at a profit through tipping fees or at a nominal
charge. In 1985, at its Wampum cement plant, the company became one of the first
such facilities to burn WDLF. The company also burns WDLF at its Demopolis
plant. The favorable economics of burning WDLF are significantly influenced by
the tipping fees and the cost of environmental regulation, which has been
increasing. The company is constantly evaluating the potential for and use of
alternative fuels in its ongoing effort to help conserve scarce natural
resources, utilize waste in a productive manner and reduce materials that might
otherwise take up valuable space in landfills. The company will use alternative
fuels where it is environmentally and economically prudent and provided it
continues to permit the company to maintain the safe and profitable operation of
its facilities. The company also seeks to minimize its energy costs by running
its grinding mills, whenever possible, during off-peak demand periods.
RAW MATERIALS
The principal raw materials used by the company in the manufacture of cement are
limestone or other calcareous materials, clay or shale, sand, iron ore, and
gypsum. Owned reserves of limestone and clay or shale are available at or near
all of the company's cement plants, while other raw materials are readily
available for local purchase by the company at all of its plant locations.
CUSTOMERS AND MARKETING
The company's cement operations have over 1,400 customers which are primarily
ready-mix concrete dealers. No single customer accounts for more than 4% of
total consolidated sales. The company's marketing efforts are focused on
maximizing profitability, rather than market share. This sales strategy is
facilitated by the company's policy that pricing decisions (including the
decision whether to meet lower competitive prices) are made only in the
company's Cleveland headquarters. Further, decisions whether to extend credit
are made centrally by financial management. Sales personnel are critical in
developing and maintaining relationships with, and providing technical
assistance to, customers. They also facilitate production planning by meeting
with customers regularly to discuss future requirements. Distribution management
plays a critical role in helping to maximize production output and shipment
volumes.
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PART I
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Item l. BUSINESS (continued)
COMPETITION
Generally, market conditions in the cement industry are cyclical and highly
price-competitive. Because there is generally no product differentiation, cement
is marketed as a commodity, with price as the principal method of competition.
To some extent, factors other than price, such as service, delivery time and
proximity to the customer, are competitively important. The number and size of
the company's competitors differ from market area to market area. The company
estimates that it competes with 28 cement manufacturers in its overall market
areas and between 5 and 10 producers within each sales region. Competitors
include domestic and foreign producers and importers. Because cement has a low
value-to-weight ratio, cement companies with access to water-based
transportation have a significant advantage in shipping over land-locked plants
and terminals.
THE AGGREGATES GROUP
The Aggregates Group mines, processes, packages and sells three types of
product: construction aggregates, home and garden products, and industrial
limestone. In 1997 and 1998, the company has taken steps that will give it a
significant added presence in the home and garden and industrial limestone
markets in the eastern half of the United States.
In January 1997, the company acquired Lime Crest Corporation, who's operations
include a quarry, processing facility and pelletizing plant in Sparta, New
Jersey and a quarry in Franklin, New Jersey. Products include construction
aggregates, bulk and packaged agricultural limestone, decorative stone, washed
sand, water conditioning products and industrial fillers.
In August 1997, the company acquired White Stone Company of Southwest Virginia,
an industrial limestone and aggregates producer with operations in Castlewood,
Virginia and a limestone pelletizing plant in Paradise, Pennsylvania. Products
include home and garden pelletized limestone and gypsum, pulverized limestone,
Micro-pellet limestone and gypsum, industrial limestone and construction
aggregates.
In October 1997, the company acquired Lee Lime Corporation, a producer of
limestone, quicklime, hydrated lime and packaged cement mixes based in Lee,
Massachusetts. Products include home and garden and other industrial,
construction and agricultural limestone.
In January 1998, the company acquired Commonwealth Stone, a producer of crushed
stone in Bowling Green, Kentucky. Operations include a 200 acre quarry that
produces about 400,000 tons of construction aggregates per year.
The combination of these newly acquired operations with the company's previously
owned nine crushed stone plants (in Bardstown, Butler, North and South Bowling
Green and Hartford, Kentucky; Columbia, Missouri; Lenoir, North Carolina; and
West Pittsburg, Pennsylvania) and the company's high calcium limestone operation
in Thomasville, Pennsylvania have measurably increased the market presence in
each of the Aggregates Group's three lines of business. The company now expects
the Aggregates Group will represent approximately one-quarter of Medusa's future
consolidated sales.
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PART I
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Item l. BUSINESS (continued)
CONSTRUCTION AGGREGATES
The company expects that approximately 45% of Aggregates Group future sales will
be in the construction aggregates product line. These operations mine, crush,
screen, and sell various sizes of aggregates to the construction industry,
primarily concrete for use in asphalt and concrete applications, such as roads,
base material, drainage blankets, erosion control and other applications. The
company estimates its annual capacity at about 7 million tons. Construction
aggregates are marketed as commodities and as such pricing is the principal
method of competition. Most aggregates are sold within a radius of 35 miles from
the plant and are shipped to the customer by truck. The company estimates that
it has approximately a 20% market share of the estimated $200 million combined
market size it serves. The company's construction aggregates business has
approximately 3,000 customers. The company believes that it is the among the
low-cost producers in its primary markets. The company maintains its low-cost
position through cost-improving plant and quarry modifications and through other
continuous cost improvement programs.
HOME AND GARDEN
The company expects that approximately 40% of the Aggregates Group future sales
will be in the home and garden product line. The current operations mine,
process, package and distribute to both consumer and commercial markets
throughout the eastern half of the U.S. Over 150 products for lawn care,
gardening, landscaping and do-it-yourself construction are shipped directly to
over 3,500 retail garden centers and home improvement outlets. Commercial
markets including golf course, lawn care, grounds maintenance, water
conditioning, and agriculture are served with over 60 specialty products.
Limestone is applied to lawns and crop fields to correct soil acidity primarily
in states east of the Mississippi river, where soil acidity is a problem. The
company believes it has approximately a 38% share of the pelletized limestone
market it serves. The company estimates that its three pelletizing operations
have combined annual capacity of over 200,000 tons. Other core products include
pelletized gypsum, hydrated lime, white marble chips, natural colored
landscaping stone, and packaged concrete mixes. The U.S. lawn and garden
industry reached $76 billion sales at retail in 1997 and expects growth to
continue at approximately 7-10% on average annually.
INDUSTRIAL LIMESTONE
The company expects that approximately 15% of the Aggregates Group future sales
will be in the industrial limestone product line. Chemical grade limestone is
sold to industrial customers for use in the manufacture of white cement, to
supply calcium for livestock and poultry feeds, and to neutralize acidic soil
for more efficient crop growth. White stone is pulverized to a fine powder and
used in joint compounds, caulk, carpet padding, floor tile, paints, plastics and
paper. Limestone not meeting chemical and color specifications is reduced to
powder and sold as filler to manufacturers of asphalt shingles.
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PART I
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Item l. BUSINESS (continued)
RESERVES
Plant by plant, and at current construction aggregates production levels, 95% of
the company's various mineral reserves will last from 10 years to over 50 years,
while 5% will last less than 10 years. At current limestone production levels
almost 100% of the company's various mineral reserves will last from 30 years to
over 100 years.
HIGHWAY SAFETY CONSTRUCTION
The James H. Drew Corporation ("Drew"), a wholly-owned subsidiary of the
company, operates generally in the mid-western states installing highway safety
systems such as guard rails, traffic signals, signs, and highway lighting.
Although Drew functions primarily as a subcontractor to paving and bridge
contractors, approximately 30% of its work is bid directly to state highway
departments and municipalities.
BACKLOG
Management does not believe that backlog is material to an understanding of
Medusa's business, because long-term contracts generally comprise only a small
portion of total sales.
EMPLOYEES
As of December 31, 1997, the company had about 1,300 employees. The company's
business is seasonal and employment therefore declines from August 31 to
December 31 of each year. Most of the company's hourly employees in its cement
operations are represented by labor unions. Labor agreements with the local
union of the United Cement, Lime, Gypsum and Allied Workers Division
(International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths,
Forgers and Helpers, AFL-CIO) covering the hourly workers at the Clinchfield and
Charlevoix plants expire on April 30, 1998. Management anticipates orderly
negotiations resulting in a new collective bargaining agreement by the
expiration date noted above. Contracts with the locals of the same union
covering the hourly workers at the Wampum plant expire on April 30, 1999, at the
Demopolis plant expire on April 30, 2000 and at the Lee plant expire on May 31,
1999. The contract with the United Steel Workers of America Local #13051-7
covering the Thomasville hourly employees expires on April 30, 2000.
ENVIRONMENTAL MATTERS
See "Environmental Matters" in Part II, Item 7 "Management's Discussion and
Analysis of Results of Operations and Financial Condition" below.
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PART I
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Item 2. PROPERTIES
Medusa's principal physical properties are utilized by its Cement and Aggregates
Groups.
Cement operations consist of four cement plants and a total of 20 distribution
terminals. All four of the company's plants are fully integrated, from limestone
mining through bulk cement production, and all possess at least 50 years of
limestone reserves. The annual rated cement and clinker capacities of Medusa as
of February 28, 1998, are shown in the following table:
<TABLE>
<CAPTION>
Regional Capacity in Tons
Market Plant Location Clinker Cement Kiln Type
- ----------- -------------- -------- ------ ---------
<S> <C> <C> <C> <C>
Great Lakes Charlevoix, Michigan 1,426,000 1,500,000 Preheater/precalciner
Southeast Demopolis, Alabama 824,000 868,000 Preheater
Southeast Clinchfield, Georgia 620,000 809,000 Preheater
W. PA/N.E. OH Wampum, Pennsylvania 750,000 750,000 Long-Dry
--------- ---------
3,620,000 3,927,000
========= =========
</TABLE>
"Annual rated capacity" is defined as the annual output of cement or clinker
theoretically to be achieved from full operation of a facility after giving
consideration to such factors as down-time for regular maintenance, location and
climatic conditions bearing upon the number of days per year during which the
particular plant may be expected to operate, and actual historical performance.
Cement plant capacities are evaluated periodically taking into account actual
experience in producing cement, plant modifications and innovations, and other
factors.
The company's cement plants, as a group, operated at 94.3% of annual rated
clinker capacity in 1997 (93.7% in 1996).
The Wampum and Clinchfield cement manufacturing plants are equipped to ship
products by either rail or truck. The Charlevoix plant can ship products by
water or truck. The Demopolis plant can ship products by water, rail or truck.
The plants are well maintained and in good operating condition. There have been
no physical changes in quarrying techniques over the past several years, nor is
it anticipated that there will be any changes which would materially affect the
cost of production. All plants operate their own quarries, located adjacent to
each of the plants.
The Aggregates Group primary facilities consist of quarries, crushing,
processing, pelletizing, packaging, storage and warehousing facilities. Location
and further description of these facilities is included in Item 1.
During 1997, the company operated at 43 total locations in 16 states and Canada.
Property, including those described above, is as follows:
Number of buildings 339
Square feet of buildings 1,726,720
Total acreage 16,321
Of the total acreage above, approximately 958 acres are leased.
12
<PAGE> 13
PART I
------
Item 3. LEGAL PROCEEDINGS
See "Environmental Matters" section under Part II, Item 7. "Management's
Discussion of Results of Operations and Financial Condition" below.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth
quarter of 1997.
PART II
-------
Item 5. MARKET FOR REGISTRANT'S COMMON SHARES AND RELATED
STOCKHOLDER MATTERS
<TABLE>
<CAPTION>
New York Stock Exchange Composite Price Per Share Dividends Per Share
- ----------------------------------------------------------------------- ----------------------------------
1997 1996 1997 1996
- ----------------------------------------------------------------------- -----------------------------------
HIGH LOW High Low
<S> <C> <C> <C> <C> <C> <C>
1st 41 1/8 33 1/4 31 1/4 25 1/4 $ .15 $ .15
2nd 41 35 1/4 31 1/4 28 1/4 .15 .15
3rd 50 1/2 38 3/8 32 5/8 27 1/4 .15 .15
4th 48 15/16 35 9/16 35 1/8 30 5/8 .15 .15
------- ------
$ .60 $ .60
</TABLE>
The number of shareholders of record is 4,439 as of February 27, 1998. On
February 23, 1998, the Board of Directors announced a quarterly dividend of $.15
per common share.
13
<PAGE> 14
Item 6. SELECTED FINANCIAL DATA
Five-year summary of financial data as of and for the Year Ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data, percents and ratios)
<S> <C> <C> <C> <C> <C>
NET SALES $375,958 $323,377 $293,327 $276,293 $248,038
OPERATING PROFIT 85,007 81,579 69,390 52,107 33,141
NET INTEREST EXPENSE (1,318) (2,519) (5,350) (6,264) (5,916)
MISCELLANEOUS 147 145 (193) (6) (500)
-------- -------- -------- -------- --------
INCOME BEFORE PROVISION FOR
TAXES 83,836 79,205 63,847 45,837 26,725
INCOME TAXES 26,807 24,945 20,635 15,957 8,526
-------- -------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY
ITEM AND A CHANGE IN
ACCOUNTING PRINCIPLE 57,029 54,260 43,212 29,880 18,199
EXTRAORDINARY ITEM, NOTE H (1996),
CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING FOR
INCOME TAXES(1993) - (1,770) - - 711
-------- -------- -------- -------- --------
NET INCOME $ 57,029 $ 52,490 $ 43,212 $ 29,880 $ 18,910
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE:
BASIC $3.44 $3.38(A) $2.70 $1.83 $1.12(B)
DILUTED $3.41 $3.15(A) $2.54 $1.76 $1.09(B)
- ------------------------------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING
BASIC 16,579 16,054 16,018 16,334 16,268
DILUTED 16,723 17,894 17,960 18,215 16,677
- ------------------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL INFORMATION
Capital expenditures $ 24,560 19,806 $ 25,345 $ 14,694 $ 15,372
Payments for businesses
acquired 30,204 - - - 50,511
Depreciation and amortization 18,153 13,354 14,772 13,369 11,625
Total assets 306,513 223,446 219,578 218,600 204,177
Interest-bearing debt 36,242 4,125 61,665 96,300 96,300
Shareholders' equity 190,676 153,970 95,548 59,973 51,477
Capital employed 226,918 158,095 157,213 156,273 147,777
Return on average capital
employed 30% 33%(C) 28% 20% 16%(C)
Current ratio 1.7 2.6 2.8 1.5 3.2
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
- -----------------
(A) Excluding ($.11) basic, ($.10) diluted for extraordinary charge from
redemption of convertible subordinated notes.
(B) Excluding non-cash credit of $.04 per common share for cumulative effect
of a change in accounting for income taxes.
(C) Calculated on income after extraordinary item (1996) and before cumulative
effect of a change in accounting (1993).
</TABLE>
14
<PAGE> 15
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
YEAR 1997 COMPARED WITH 1996
Net sales for the year ended December 31, 1997, increased to $375.9 million from
$323.4 million in 1996. Cement net sales rose 7% over last year on 5% unit
volume increases and price increases implemented in April of 1997 and 1996 which
resulted in 2% higher cement prices over 1996. Charlevoix and Wampum volume rose
8.7% and 8.2%, respectively, while Demopolis' and Clinchfield's volumes remained
flat. These increases are chiefly attributed to the record U.S. demand as it
affected the company's markets.
Aggregate's Group net sales for the year rose 71% over 1996. Approximately 58%
of the increase is due to three acquisitions made during the year. Including the
acquisitions, unit volume increased 39% with a 23% unit price increase. Without
the acquisitions sales increased 13% over 1996 with a 14% increase in volume and
flat prices.
Overall, cost of sales increased from year to year due to variable costs of
increased sales.
Cost of sales as a percent of sales rose from 62.2% in 1996 to 63.2% in 1997.
This increase is due primarily to the fourth quarter approximately $4 million
pretax ($2.7 million after tax) charge related to environmental matters at the
Charlevoix, Michigan cement plant. This was partially offset by increased cement
volumes and prices and the continued high capacity utilization of 94.3% in 1997
compared to 93.7% in 1996.
Selling and administrative expense as a percent of sales increased to 9.3% from
8.5% in 1996. Of this $7.6 million increase over 1996, $3.1 million is due to
higher restricted stock award vesting and related benefits in 1997 than in 1996.
Additional personnel due to the acquisitions, higher salaries, related personnel
costs and outside service costs and other inflationary pressures caused the
remaining increase.
Depreciation and amortization expense increased $4.8 million to $18.2 million
from $13.4 million in 1996. The increase related primarily to additional
amortization of goodwill and property depreciation due to the acquisitions made
in 1997. Increased capital spending added to this number.
As a result of the above factors operating profit increased to $85.0 million for
1997 compared with $81.6 million for 1996.
Interest income decreased $1 million resulting from lower average cash and
short-term investment balances as well as lower overall interest rates.
Interest expense of $1.5 million decreased $2.2 million from $3.7 million in
1996 due to the redemption of the 6% convertible subordinated notes on December
2, 1996.
The company's effective tax rate of 32.0% for 1997 was lower than the federal
statutory rate of 35.0% primarily due to percentage depletion deductions.
Per share amounts are all presented on a diluted basis, and for 1996, after the
extraordinary charge. Net income for 1997 of $57.0 million, or $ 3.41 per common
share, compares with a net income of $52.5 million, or $3.05 per common share in
1996.
15
<PAGE> 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION (continued)
YEAR 1996 COMPARED WITH 1995
Net sales for the year ended December 31, 1996, increased to $323.4 million from
$293.3 million in 1995. Cement net sales rose 11% over last year as 6% unit
volume increases and price increases implemented April 1, 1996 and April 1,
1995, resulted in 5% higher cement prices over 1995. U.S. cement demand in 1996
exceeded 1995's record levels. Charlevoix, Clinchfield and Demopolis volume rose
7.9%, 7.3% and 6.5%, respectively, while Wampum's volume was flat. These
increases are chiefly attributed to the record U.S. demand as it affected the
company's markets.
Aggregate's net sales for the year rose 6% over 1995 on 4% higher unit volume
and 2% price increases. Net sales at the company's highway and safety
construction operation rose 16% over 1995.
Cost of sales as a percent of sales fell to 62.2% in 1996 compared with 63.1% in
1995. The reduction was due primarily to increased cement volumes and prices and
continued high capacity utilization of 93.7% in 1996 compared to 92.3% in 1995.
Fourth quarter 1996 cost of sales were also reduced by favorable physical
inventory adjustments of $1.4 million, principally from higher than estimated
production realized at three of four cement plants. However, a second quarter
$1.2 million one-time pretax charge, $.8 million after-tax, or $.04 per common
share, for the company's voluntary early retirement incentive program negotiated
at the Wampum plant and higher annual worker's compensation costs partially
offset the favorable impacts on cost of sales.
Selling and administrative expense as a percent of sales increased to 8.5% in
1996 from 8.0% in 1995. Higher salaries, wages, related personnel costs, outside
service costs, increased bad debt expenses and other inflationary pressures
caused this overall increase.
Depreciation and amortization expense decreased $1.4 million to $13.4 million
from $14.8 million in 1995. Lower levels of capital expenditures and the closure
of Edinburg in 1995 which added $.9 million of depreciation that year account
for the decrease.
Operating profit for 1996 of $81.6 million compares with $69.4 million in 1995.
Interest income decreased $1.1 million resulting from lower average cash and
short-term investment balances as well as lower overall interest rates. Interest
expense of $3.7 million decreased $3.9 million from $7.6 million in 1995
resulting from both the payment of $35.0 million of 10% unsecured Senior Notes
on December 15, 1995 and the redemption of the 6% convertible subordinated notes
on December 2, 1996.
The company's effective tax rate of 31.5% for 1996 was lower than the federal
statutory rate of 35% and the 32.3% in 1995 principally due to a higher
percentage depletion deduction and lower effective state tax rates.
Net income for 1996 of $52.5 million, or $3.05 per common share, compares with a
net income of $43.2 million, or $2.54 per common share, in 1995.
ENVIRONMENTAL MATTERS
In common with other producers engaged in similar operations, the company is
subject to a wide range of federal, state and local environmental laws and
regulations pertaining to air and water quality, as well as the handling,
treatment, storage and disposal of waste materials. Compliance with increasingly
stringent standards has resulted in higher expenditures for both capital
16
<PAGE> 17
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION (continued)
improvements and operating costs. Capital expenditures for environmental
compliance were $1.6 million in 1997 and $1.2 million in 1996, and are estimated
to be $4.4 million in 1998.
CEMENT KILN DUST
Cement kiln dust ("CKD"), a by-product of cement manufacturing, is currently
excluded from federal regulation as a hazardous waste under the "Bevill
Amendment" to the Resource Conservation and Recovery Act of 1976 ("RCRA"). CKD
is collected in air pollution control devices, and is usually stored at plant
sites. In December 1993, the U.S. Environmental Protection Agency ("EPA") issued
a Report to Congress on CKD in which the EPA concluded that the risks associated
with CKD management are generally low, but that there is potential under certain
circumstances for CKD to pose a danger to human health and the environment. The
EPA reported that until new regulations are promulgated, CKD will remain exempt
from regulation as a hazardous waste by virtue of the Bevill Amendment. Though
the EPA originally intended to conduct a typical rule-making process which would
involve information gathering, eventually followed by the development of a
proposed rule and the promulgation of a final rule, the EPA is now believed to
be considering two alternatives to the full rule-making process. Under the first
alternative, a state with a federally-approved hazardous waste program would be
able to oversee the management of CKD on a site-by-site basis, either through
regulation, permit, or enforceable agreement. The second alternative would be to
create federal rules that would set contingent "tailored management standards"
for CKD to meet before being exempt from Subtitle C of RCRA. The company
believes it to be unlikely at this time that the EPA will create "management
standards" under Subtitle C, which would be more stringent than contingent
"tailored management standards". Key components of tailored management
conditions would be based on the design of the waste management unit, dust
control practices, and other factors. The process is expected to take at least
two years to complete. The company has concluded that based upon current
regulation that CKD regulation is unlikely to have a material effect on the
operations of the Demopolis, Alabama; Clinchfield, Georgia; or Wampum,
Pennsylvania plants. However, the company can be expected to incur some
additional capital costs and operational expenses related to management of CKD
at Demopolis and Wampum, which could be material if the EPA ultimately decided
to create federal rules under Subtitle C of RCRA.
With respect to the Charlevoix, Michigan plant, the company is presently working
with a consultant and the Michigan Department of Environmental Quality ("MDEQ")
on the design and licensing of an on-site CKD landfill. The company is also
investigating potential contamination associated with past disposal of CKD. Nine
separate CKD piles have been identified on site. During 1997, the company
proposed construction of a new landfill for the disposal of CKD generated in the
future and for the disposal of CKD piles 6 and 7. This landfill would also be
constructed to cover existing CKD pile 9 and to serve as a cap and remedy for
that CKD pile. Public notice of this proposed plan was issued in December 1997.
It is expected that final approval for the construction of this landfill will be
issued by MDEQ in 1998. The company's environmental consultant has estimated
that construction of the landfill will cost in excess of $2 million. The company
has also submitted plans to MDEQ concerning the remediation of CKD piles 1, 2,
3, 4, 5 and 8. These plans are currently under review by MDEQ. Total costs
associated with these plans are estimated to be in the range of $4 million to $9
million. An investigation continues with respect to piles 4 and 5 and further
field investigation will be conducted in early 1998.
17
<PAGE> 18
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION (continued)
CLEAN AIR ACT
The Clean Air Act Amendments of 1990 provided comprehensive federal regulation
of various sources of air pollutants, and established a new federal operating
permit and fee program for virtually all manufacturing operations. In addition,
the EPA is developing air toxics regulations for a broad spectrum of industries,
including portland cement manufacturing. The EPA has indicated that new maximum
available control technology ("MACT") standards could require significant
reduction of air pollutants below existing levels prevalent in the cement
industry. Although it is possible that compliance with the new standards could
entail significant expenditures by the company, management has no reason to
believe that these new standards would place the company at a disadvantage with
respect to its competitors.
BIF COMPLIANCE
The company currently operates two U.S. cement plants using waste - derived
liquid fuels (Wampum, Pennsylvania and Demopolis, Alabama) ("WDLF") that are
subject to emission limits and other requirements under RCRA and the Boiler and
Industrial Furnaces ("BIF") regulations promulgated under RCRA. The BIF
regulations are applicable to plants operating under "interim status" during the
RCRA Part B permitting process. The company's two BIF cement plants have
submitted formal Part B permit applications, which is the first step in the
permitting process. Both plants could conduct trial burns in 1998, which is the
second step in establishing permit limitations for incorporation into a draft of
the final Part B permit. Proposed Part B permits will be subject to public
hearing and comments, which would not be expected to occur before 1999. The BIF
regulations are extremely complex, and certain provisions have been subject to
varying interpretations. Pursuant to the BIF regulations, the company is
required to perform periodic BIF compliance tests and submit certificates of
compliance which are subject to monitoring and review by the EPA. The company
believes its certificates of compliance are substantially in compliance with the
BIF regulations. However, there can be no assurance that upon EPA's review of
the submissions, the EPA would concur with the company and not require a new BIF
test or levy fines for non-compliance. There can be no assurance that the
results of future BIF tests will be successful or that future certificates of
compliance will provide favorable operating parameters for burning WDLF. Should
the company fail a BIF test, it could continue to utilize WDLF for a total of
720 hours, including hours spent conducting a new BIF test.
PENNSYLVANIA EPA
On May 27, 1997, the company's Wampum, Pennsylvania cement plant received a
Notice of Violation ("NOV") from the EPA, Region III. The NOV alleges violations
intermittently since July 1, 1995 of opacity emission limitations under
Pennsylvania and federal law from emissions by the gravel bed filter and the
main kiln stack, as well as violations of fugitive air emission requirements
under Pennsylvania and federal law since at least March 25, 1997. In accordance
with its operating permit the company maintains continuous opacity monitors
which record opacity data from the plant's air emissions sources. These data are
submitted to the Pennsylvania Department of Environmental Protection ("PADEP")
on a quarterly basis. As provided by PADEP policy, the company is penalized by
PADEP for violations of opacity emission limitations detected by the continuous
opacity monitors. The company previously paid penalties totaling $212,175 to
PADEP for the opacity violations alleged by EPA in its May 27, 1997 NOV. At a
meeting in June 1997, the company advised representatives of EPA and PADEP that
it had implemented changes in March 1997 to improve control of opacity emissions
from the gravel bed filter, and that it plans to replace the electrostatic
precipitator ("ESP") for kilns 1 and 2 in early 1998 to improve control of
opacity emissions from the main kiln stack. The company preliminarily estimates
that the replacement
18
<PAGE> 19
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (continued)
of the ESP will cost between $2.5 million and $3.5 million. The company is
unable to predict what penalties or other compliance measures EPA may seek for
the alleged violations.
On February 19, 1998, the company's Wampum, Pennsylvania plant received a second
NOV from EPA. The February 19, 1998 NOV alleges violations of Pennsylvania and
federal law between December 28, 1996 and November 21, 1997, relating to a
condition in the plant's air quality plan approval requiring automatic cessation
of flow of waste-derived liquid fuel upon exceeding certain opacity levels. The
interlock system which changes fuel sources is a computerized system. The
firmware installed for the company in December of 1996 to calculate opacity
emissions for purposes of the automatic cut-off was improperly configured so
that the cut-off would not operate to change fuel sources at the specified
opacity level. The firmware has been reconfigured to operate in accordance with
the opacity level specified by PADEP. The NOV also alleges that the company is
using an incorrect opacity level cut-off for this interlock system. On November
14, 1996, in response to a request from the company, PADEP issued a letter which
stated a change to the opacity level specified in the plant's plan approval
waste fuel cut-off condition. EPA's NOV alleges that PADEP's action did not
modify the company's plan approval condition, and that the company is obligated
to comply with the opacity level stated in the plant's original plan approval.
The company is formulating a response to EPA's February 19, 1998 NOV. The NOV
did not make a demand for any civil penalties, however it indicated that such
penalties were available. At this time, the company is unable to predict what
penalties or other compliance measures EPA may seek for the violations alleged
in the NOV. Therefore the company cannot estimate the final cost, but the
company does not believe at this time that it will have a material impact on the
company's results of operations.
ACQUISITIONS
During 1997, the company assumed $6.6 million in estimated environmental
liabilities related to three acquisitions during 1997. The liabilities relate to
estimated environmental cleanup, containment and compliance matters including
waste lime, coal ash and kiln brick issues, wetland considerations, underground
and above ground storage tank removal and other environmental matters related to
the acquired properties.
GENERAL COMPLIANCE
The company believes that it is in material compliance with environmental laws.
There can be no assurance, however, that a review of the company's past, present
or future operations by courts or federal, state, or local regulatory
authorities will not result in determinations that could have a material adverse
effect on the company's financial condition or results of operations. In
addition, the company cannot predict what environmental laws will be enacted or
adopted in the future or how such future environmental laws will be administered
or interpreted with respect to the company's historic or current actions. As a
result of the foregoing uncertainties, the company cannot determine at this time
if capital expenditures and other remedial actions that the company in the
future may be required to implement will have a material effect on its
operations, financial condition or liquidity. However, with respect to current
known environmental contingencies, the company has accrued for estimated
probable liabilities and does not believe that the ultimate resolution of these
matters will have a material effect on its operations, financial condition or
liquidity. See Note J to Notes to Consolidated Financial Statements.
PENDING MERGER
On March 17, 1998, the company entered into a definitive agreement to merge with
Southdown, Inc. ("Southdown"), a publicly held corporation with its headquarters
located in Houston, Texas whose primary lines of business are the production and
sale of portland cement and concrete.
19
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION (continued)
The agreement specifies, among other things, that Southdown will exchange .88 of
its common shares for each share of the company's common shares in an exchange
that is expected to be tax-free for income tax purposes. Based on the closing
prices of Southdown and the company's common stock on Tuesday, March 17, 1998,
the transaction results in an implied value for the company's common stock of
$61.22 per share and a 17% premium for the company's common shares. On that
basis, the total value of the proposed transaction is $1.0 billion. It is
expected that the merger will be accounted for as a pooling of interests. See
Note Q "Pending Merger" in the Notes to Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the company had $13.8 million of cash and short-term
investments. The company has available an unsecured $180.0 million five-year
revolving credit facility for short-term working capital needs that expires
December 31, 2002, and unsecured bank lines of credit totaling $25.0 million. At
December 31, 1997, no amounts were outstanding under any of these facilities.
On December 31, 1997 and 1996, the company had no short-term borrowings
outstanding from its Revolving Credit Agreement. Current portions of long-term
debt totaled $12.1 million and $41,000 at December 31, 1997 and 1996,
respectively.
Working capital at December 31, 1997, decreased $20.6 million from December 31,
1996, due principally to an increase in the current maturity of long term debt
and various accruals and accounts payable. Increases in receivable and inventory
balances were offset by an $11.2 million reduction in cash balances which is
principally related to the acquisitions made for cash in 1997. The increases in
the asset and liability accounts are related to the increases in profits and
general business activities of the business. The ratio of current assets to
current liabilities was 1.7:1 at December 31, 1997, and 2.6:1 at December 31,
1996.
Capital expenditures for 1997 were $24.6 million compared with $19.8 million for
1996. The continued high level of expenditures relate primarily to capital
improvements to maintain current capacities of facilities, environmental
compliance, enhance productivity and reduce operating costs. The company
announced in the third quarter that it is starting a $56 million expansion
project at the Clinchfield, Georgia cement plant and related distribution
facilities. The full effects of the modernization will begin to be realized in
the second half of 1999. Funding for the project is expected to be generated
from internally generated cash or the existing credit facilities.
On March 17, 1998, the company signed a definitive agreement with Southdown
Corporation, a Houston, Texas based cement company, under which the companies
will merge in a stock-for-stock transaction. Refer to Note Q "Pending Merger" in
the Notes to Consolidated Financial Statements.
The company's Board of Directors has authorized the purchase of outstanding
shares, under which the company, in its discretion, makes open market purchases
from time to time. The company purchased 500,288 shares for $19.2 million during
1997. Effective as of March 17, 1998, the company has terminated all prior share
repurchase authorities.
As a result of a 1996 conversion, the company is reliant on packaged software
products for its financial and other systems. The company has in place software
or has plans to update to newer versions of these software products in 1998,
that are believed to be year 2000 compliant. In addition, the company is
actively
20
<PAGE> 21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION (continued)
engaged with vendors, customers and financial institutions in assessing any
problems that might occur in this area. The third-party cost of upgrading to
year 2000 compliant versions of its software and hardware is included either in
software maintenance contracts with these vendors, which is an ongoing cost of
doing business, or is part of an ongoing program of hardware replacement. The
company does not anticipate significant incremental cost as a result of year
2000 compliance at the present time.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Section
Consolidated Statements of Income for the years ended December 31, 1997, 1996
and 1995
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995
Consolidated Statements of Shareholders' Equity for the years ended December 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements:
Note A - Summary of Significant Accounting Policies........26
Note B - Acquisitions......................................28
Note C - Inventories.......................................28
Note D - Property, Plant and Equipment - At Cost...........28
Note E - Other Current Assets..............................29
Note F - Other Assets......................................29
Note G - Other Accrued Liabilities.........................29
Note H - Short- And Long-Term Financing....................29
Note I - Leases............................................30
Note J - Environmental Matters.............................31
Note K - Postretirement Health Benefits....................31
Note L - Income Taxes......................................32
Note M - Pensions and Employee Benefit Plans...............33
Note N - Stock-Based Compensation Plans....................35
Note O - Segment Data......................................37
Note P - Earnings Per Share................................38
Note Q - Pending Merger....................................39
Note R - Subsequent Event..................................39
Note S - Quarterly Results (Unaudited).....................39
Management's Responsibility for Financial Reporting........40
Independent Auditors' Report...............................41
21
<PAGE> 22
MEDUSA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended December 31, 1997 1996 1995
------ -------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
NET SALES $ 375,958 $ 323,377 $ 293,327
COSTS AND EXPENSES:
Cost of sales 237,720 200,999 184,997
Selling and administrative expense 35,078 27,445 24,168
Depreciation and amortization 18,153 13,354 14,772
--------- --------- ---------
290,951 241,798 223,937
--------- --------- ---------
OPERATING PROFIT 85,007 81,579 69,390
OTHER INCOME (EXPENSE):
Interest income 164 1,155 2,225
Interest expense (1,482) (3,674) (7,575)
Miscellaneous-net 147 145 (193)
--------- --------- ---------
(1,171) (2,374) (5,543)
INCOME BEFORE TAXES AND EXTRAORDINARY ITEM 83,836 79,205 63,847
PROVISION FOR INCOME TAXES 26,807 24,945 20,635
--------- --------- ---------
INCOME BEFORE EXTRAORDINARY ITEM 57,029 54,260 43,212
EXTRAORDINARY ITEM, LESS APPLICABLE
INCOME TAX REDUCTION (NOTE H) -- (1,770) --
--------- --------- ---------
NET INCOME $ 57,029 $ 52,490 $ 43,212
---------
- ------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE:
BASIC:
Income before extraordinary item $ 3.44 $ 3.38 $ 2.70
Extraordinary item -- (.11) --
--------- --------- ---------
$ 3.44 $ 3.27 $ 2.70
========= ========= =========
DILUTED:
Income before extraordinary item $ 3.41 $ 3.15 $ 2.54
Extraordinary item -- (.10) --
--------- --------- ---------
$ 3.41 $ 3.05 $ 2.54
========= ========= =========
AVERAGE COMMON SHARES OUTSTANDING:
Basic 16,579 16,054 16,018
Diluted 16,723 17,894 17,960
</TABLE>
See Notes to Consolidated Financial Statements
22
<PAGE> 23
MEDUSA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1997 1996
--------- -------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and short-term investments $ 13,813 $ 25,045
Accounts receivable, less allowances
of $1,095 ($351 in 1996) 32,786 28,708
Inventories 33,013 31,177
Other current assets 5,908 4,490
--------- ---------
TOTAL CURRENT ASSETS 85,520 89,420
PROPERTY, PLANT AND EQUIPMENT 161,473 125,729
GOODWILL 45,488 2,676
OTHER ASSETS 14,032 5,621
--------- ---------
TOTAL ASSETS $ 306,513 $ 223,446
- ----------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 12,134 $ 41
Accounts payable 16,348 15,575
Accrued compensation and payroll taxes 8,198 7,014
Other accrued liabilities 14,380 9,247
Income taxes payable 337 2,728
--------- ---------
TOTAL CURRENT LIABILITIES 51,397 34,605
LONG-TERM DEBT 24,108 4,084
ACCRUED POSTRETIREMENT HEALTH BENEFIT COST 28,450 27,760
RESERVES AND OTHER LIABILITIES 11,882 2,745
ACCRUED PENSION LIABILITY 0 282
SHAREHOLDERS' EQUITY:
Preferred shares, without par value-3,000,000
shares authorized:
1,000,000 shares each of Class A Serial
Preferred; Class B Serial Preferred;
and Class C Preferred Shares -- --
Common shares, without par value:
Authorized-50,000,000 shares
Outstanding-16,664,949 shares (16,924,006 in 1996) 1 1
Paid in capital 72,077 57,159
Retained earnings 186,921 140,124
Unvested restricted common shares (28) (39)
Unearned restricted common shares (8,835) (7,516)
Currency translation adjustment (1,167) (930)
--------- ---------
248,969 188,799
Less Cost of Treasury Shares-1,960,807 shares
(1,367,440 shares in 1996) (58,293) (34,829)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 190,676 153,970
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 306,513 $ 223,446
</TABLE>
See Notes to Consolidated Financial Statements
23
<PAGE> 24
MEDUSA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
(IN THOUSANDS)
---------------------------------------------
1997 1996 1995
-------- -------- ------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 57,029 $ 52,490 $ 43,212
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation and amortization 18,153 13,354 14,772
Noncash selling and administrative charges 2,007 898 676
Provision (benefit) for deferred income
taxes 1,218 10 (944)
Postretirement health benefit cost 288 232 222
Loss (gain) on sale of capital assets 48 (181) (33)
Accounts receivable 118 (7,298) 2,626
Inventories and other current assets (24) (1,800) (7,793)
Accounts payable and other current
liabilities (2,988) 2,998 220
Other assets (2,297) 1,841 (231)
Accrued pension, reserves and other
liabilities 3,340 1,368 (46)
-------- -------- --------
NET CASH PROVIDED FROM OPERATING
ACTIVITIES 76,892 63,912 52,681
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (24,560) (19,806) (25,345)
Payments for businesses acquired (30,204) - -
Proceeds from sale of capital assets 380 239 359
-------- -------- --------
NET CASH USED BY INVESTING ACTIVITIES: (54,384) (19,567) (24,986)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury shares (19,233) (13,599) (1,878)
Dividends paid (10,232) (9,881) (8,152)
Stock options exercised 1,708 1,882 1,649
Proceeds from issuance of long-term debt - - 365
Payments on long-term debt (5,983) (30,868) (35,000)
-------- -------- --------
NET CASH USED BY
FINANCING ACTIVITIES (33,740) (52,466) (43,016)
-------- -------- --------
DECREASE IN CASH AND SHORT-TERM
INVESTMENTS (11,232) (8,121) (15,321)
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF YEAR 25,045 33,166 48,487
-------- -------- --------
CASH AND SHORT-TERM INVESTMENTS AT END OF YEAR $ 13,813 $ 25,045 $ 33,166
- -------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (net of $26 capitalized
in 1995) $ 1,002 $ 4,064 $ 7,566
Income taxes 27,543 24,707 20,896
</TABLE>
See Notes to Consolidated Financial Statements
24
<PAGE> 25
MEDUSA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT SHARE DATA)
----------------------------------------------------------------------------------
UNVESTED UNEARNED
RESTRICTED RESTRICTED
COMMON PAID IN RETAINED COMMON COMMON
SHARES CAPITAL EARNINGS SHARES SHARES
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1995 $ 1 $19,724 $62,455 $ (26) $(3,511)
Net income 43,212
Dividends paid-$.50 per
common share (8,152)
Issuance of 117,940 restricted
common shares 2,851 (120) (2,731)
Exercise of 149,417 stock options 2,000
Acquisition of 82,402 treasury shares
Retirement of 35,697 treasury shares (1,142)
Amortization for vesting of
restricted common shares 106 570
Currency translation adjustment
------- ------- ------- ------- -------
BALANCE AT DECEMBER 31, 1995 1 23,433 97,515 (40) (5,672)
Net income 52,490
Dividends paid-$.60 per
common share (9,881)
Issuance of 95,080 restricted
common shares 2,741 (119) (2,622)
Exercise of 225,537 stock options 4,313
Acquisition of 454,693 treasury shares
Conversion of subordinated notes
to 805,161 common shares 26,672
Amortization for vesting of
restricted common shares 120 778
Currency translation adjustment
------- ------- ------- ------- -------
BALANCE AT DECEMBER 31, 1996 1 57,159 140,124 (39) (7,516)
Net income 57,029
Income tax benefit from stock option
exercise 5,664
Dividends paid-$.60 per
common share (10,232)
Issuance of 108,120 restricted
common shares 3,985 (113) (3,872)
Exercise of 251,350 stock options 5,939
Acquisition of 500,288 treasury shares
Forfeiture of 25,160 restricted
common shares (670) 670
Amortization for vesting of
restricted common shares 124 1,883
Currency translation adjustment
------- ------- ------- ------- -------
BALANCE AT DECEMBER 31, 1997 $ 1 $72,077 $186,921 $ (28) $ (8,835)
<CAPTION>
(IN THOUSANDS, EXCEPT SHARE DATA)
--------------------------------------------------
CURRENCY TOTAL
TRANSLATION TREASURY SHAREHOLDERS'
ADJUSTMENT SHARES EQUITY
<S> <C> <C> <C>
BALANCE AT JANUARY 1, 1995 $(1,101) $(17,569) $59,973
Net income 43,212
Dividends paid-$.50 per
common share (8,152)
Issuance of 117,940 restricted
common shares
Exercise of 149,417 stock options (494) 1,506
Acquisition of 82,402 treasury shares (1,878) (1,878)
Retirement of 35,697 treasury shares 1,142
Amortization for vesting of
restricted common shares 676
Currency translation adjustment 211 211
------- -------- --------
BALANCE AT DECEMBER 31, 1995 (890) (18,799) 95,548
Net income 52,490
Dividends paid-$.60 per
common share (9,881)
Issuance of 95,080 restricted
common shares
Exercise of 225,537 stock options (2,431) 1,882
Acquisition of 454,693 treasury shares (13,599) (13,599)
Conversion of subordinated notes
to 805,161 common shares 26,672
Amortization for vesting of
restricted common shares 898
Currency translation adjustment (40) (40)
------- -------- --------
BALANCE AT DECEMBER 31, 1996 (930) (34,829) 153,970
Net income 57,029
Income tax benefit from stock option
exercise 5,664
Dividends paid-$.60 per
common share (10,232)
Issuance of 108,120 restricted
common shares
Exercise of 251,350 stock options (4,231) 1,708
Acquisition of 500,288 treasury shares (19,233) (19,233)
Forfeiture of 25,160 restricted
common shares
Amortization for vesting of
restricted common shares 2,007
Currency translation adjustment (237) (237)
------- --------- --------
BALANCE AT DECEMBER 31, 1997 $ (1,167) $ (58,293) $190,676
</TABLE>
See Notes to Consolidated Financial Statements.
25
<PAGE> 26
MEDUSA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the company and its wholly-owned
subsidiaries. All significant intercompany items have been eliminated.
The company processes mineral deposits, principally limestone, by converting
these material resources through physical and chemical methods to intermediate
products (cement and aggregates) sold to the construction industry principally
in the eastern half of the United States. Sales of such products constitute more
than 90% of consolidated net sales and net income.
CASH AND SHORT-TERM INVESTMENTS
For purposes of the statement of cash flows, the company considers cash
equivalents to be all highly liquid securities with an original maturity of
three months or less. Estimated fair value approximates the carrying amount.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by the
following methods: (1) cement, aggregate quarries, highway safety and
construction, LIFO; (2) home & garden and industrial minerals, FIFO. The
average cost method is used for substantially all supplies.
PROPERTY, PLANT AND EQUIPMENT
Depreciation of property, plant and equipment for financial reporting purposes
is provided over the estimated useful lives of the assets principally by the
straight-line method.
GOODWILL
Goodwill, which represents the cost of purchased companies in excess of the fair
value of their net assets at dates of acquisition, is being amortized on the
straight-line method over a period of 40 years. This period was selected based
upon the expected lives of the mineral reserve quarries which are integral to
each of the acquired businesses. Accumulated amortization was $12.7 million,
$12.0 million and $11.9 million at December 31, 1997, 1996 and 1995,
respectively.
The company regularly reviews the carrying value of long-lived assets, certain
identifiable intangibles and goodwill related to those assets to determine if
any impairment has occurred requiring financial adjustment.
NET INCOME PER SHARE
The company adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS No. 128"). All prior-period earnings per share data
presented has been restated to conform with the provisions of SFAS 128. Basic
net income per share is computed by dividing net income by the weighted average
number of common shares outstanding during the period. Diluted net income per
share is computed based on the weighted average number of common shares and
equivalent common shares outstanding during the period.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
26
<PAGE> 27
The company estimates its quarries' end-of-life-cycle closing costs and
amortizes them based on actual annual stone production over the quarries' total
estimated stone reserves.
ENVIRONMENTAL MATTERS
The company's policy is to accrue environmental and related costs of a
non-capital nature when it is both probable that a liability has been incurred
and the amount can be reasonably estimated, whether or not a claim has been
asserted or this coincides with the completion of a remediation
investigation/feasibility study or the company's commitment to a formal plan of
action. If an amount is likely to fall within a range and no amount within the
range can be determined to be the better estimate, the minimum amount of the
range is recorded. No discounting is applied in the recording of these
liabilities and estimates are revised as additional information becomes known.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue generation, are expensed.
Environmental expenditures that extend the life, increase the capacity, improve
the safety or efficiency of property owned by the company, mitigate or prevent
environmental contamination that has yet to occur, or that are incurred in
anticipation of a sale of property are capitalized.
RECENTLY ISSUED ACCOUNTING STANDARDS
In July 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
130, "Reporting Comprehensive Income" which establishes standards for reporting
and presentation of comprehensive income and its components in a full set of
general-purpose financial statements. This statement requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is presented with
the same prominence as other financial statements. The standard requires that
companies (i) classify terms of other comprehensive income by their nature in a
financial statement and (ii) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of the statement of financial condition. The
statement is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comprehensive purposes is required.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which standardizes the disclosures
for pensions and other postretirement benefits to the extent practicable,
requires additional information on changes in the benefit obligations and fair
values of plan assets that will facilitate financial analysis, and eliminates
certain disclosures that are no longer useful as they were when SFAS No. 87,
"Employers' Accounting for Pensions," SFAS No. 88, "Employers" Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits," and SFAS 106, "Employers Accounting for Postretirement
benefits Other than Pensions," were issued. SFAS No. 132 suggests combined
formats for presentation of pension and other postretirement benefit
disclosures. The statement does not change the measurement or recognition of
those plans. It is effective for fiscal years beginning after December 15, 1997.
Restatements of disclosures for earlier periods provided for comparative
purposes is required.
The company has not completed its process of evaluating the impact that will
result from adopting either standard and therefore is unable to disclose the
impact that adopting them will have on its financial position and results of
operations when such statements are adopted.
27
<PAGE> 28
NOTE B-ACQUISITIONS
During 1997, the company completed two cash acquisitions at a cost of $30.2
million, net of cash and liabilities assumed of $19.4 million. In January 1997
the company acquired Lime Crest Corporation, a leading producer of home and
garden products, industrial limestone and construction aggregates based in
Sparta, New Jersey. In October 1997 the company acquired Lee Lime Corporation, a
producer of limestone, quicklime, hydrated lime, packaged cement mixes and a
leading producer of home and garden products based in Lee, Massachusetts.
In August, 1997 the company purchased all of the capital stock of White Stone
Company ("Castlewood") of Southwest Virginia as specified in the purchase
agreement for $30.0 million. In consideration of the purchase price as well as
an election by the company to step up the basis of the assets acquired for
income tax purposes, the company assumed liabilities and issued notes to the
seller shareholders for $31.5 million.
Net liabilities assumed were as follows:
Fair value of assets acquired: $ 34,716
Notes issued to seller shareholders 31,528
--------
Net liabilities assumed $ 3,188
========
Castlewood is a producer of industrial limestone and aggregates in Castlewood,
Virginia with a limestone pelletizing plant in Paradise, Pennsylvania.
All acquisitions were accounted for by the purchase method. The purchase prices
have been allocated to assets acquired and liabilities assumed based on fair
market value at the dates of acquisition and certain amounts estimated are
subject to revision. The results of operations for all acquisitions have been
included in the financial statements from their respective dates of purchase.
On an unaudited proforma basis, assuming the company had completed the three
acquisitions as of the beginning of 1996, net sales for 1997 and 1996 would have
increased $20.3 million and $36.1 million, respectively, whereas net income and
net income per Common Share would not have been significantly different from
reported amounts for either period.
NOTE C-INVENTORIES At December 31 (in thousands):
<TABLE>
<CAPTION>
1997 1996
- ---------------------------------------------------------
<S> <C> <C>
Finished goods $16,555 $13,594
Work in process 1,644 3,424
Raw materials 1,366 1,124
Supplies 13,448 13,035
------- -------
$33,013 $31,177
</TABLE>
Use of the first-in, first-out (FIFO) cost method would have increased
inventories from the amounts reported at December 31 by $7,595,000 in 1997 and
$7,590,000 in 1996.
NOTE D-PROPERTY, PLANT AND EQUIPMENT-AT COST
<TABLE>
<CAPTION>
At December 31 (in thousands):
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Land $ 16,237 $ 10,989
Buildings and improvements 39,151 22,169
Machinery and equipment 364,554 343,028
--------- ---------
419,942 376,186
Less accumulated depreciation (258,469) (250,457)
--------- ---------
$ 161,473 $ 125,729
</TABLE>
28
<PAGE> 29
NOTE E-OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
At December 31 (in thousands):
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Prepaid deferred taxes $ 3,957 $ 2,816
Prepaid insurance 651 654
Other 1,300 1,020
-------- --------
$ 5,908 $ 4,490
</TABLE>
NOTE F-OTHER ASSETS
<TABLE>
<CAPTION>
At December 31 (in thousands):
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Refundable income taxes $ 5,227 $ -
Deferred income taxes 4,458 2,390
Prepaid pension 997 294
Pension intangible asset - 903
Other 3,350 2,034
-------- --------
$ 14,032 $ 5,621
</TABLE>
NOTE G-OTHER ACCRUED LIABILITIES
At December 31 (in thousands):
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Accrued retrospective
general and liability insurance $ 2,472 $ 2,368
Accrued environmental 2,102 301
Taxes other than income 1,496 699
Current portion postretirement
health benefit cost 1,255 1,110
Accrued employee medical
insurance 1,005 1,108
Billings in excess of cost 988 277
Accrued interest payable 709 229
Other 4,353 3,155
-------- --------
$ 14,380 $ 9,247
</TABLE>
NOTE H-SHORT AND LONG-TERM FINANCING
The company has an unsecured $180 million Revolving Credit Agreement
("Revolver") with four banks that expires on December 31, 2002. The Revolver has
a commitment fee of .125% to .35% per annum on the unused portion. The Revolver
has performance-based pricing which provides the company with reduced interest
rates and commitment fees upon achievement of certain financial performance
targets. On January 15, 1998, the company used proceeds of $20 million under
this facility for payment of notes payable to third parties. This amount has
been classified as long-term because it is not expected to be repaid during
1998. The company also has unsecured bank lines of credit totaling $25.0
million. At December 31, 1997, no amount was outstanding under any of these
credit facilities.
The Revolver contains certain covenants which, among other things, require
maintenance of certain specified ratios of current assets to liabilities,
interest coverage and debt to total capital. At December 31, 1997 the company
was in compliance with all covenants.
29
<PAGE> 30
The company has available bank stand-by letter of credit facilities of $10.0
million of which $7.6 million was being utilized at December 31, 1997. These
facilities bear a fee of .5% per annum on the used portion. These instruments,
the fair value of which approximates market, are considered off-balance sheet
risk and represent conditional commitments issued to guarantee the company's
performance to various third parties. Long-term debt consists of the following
at December 31 (in thousands):
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Notes payable to third parties,
principal and interest due
January 15, 1998, interest at 6.15% $31,528 $ -
Capitalized leases 3,800 3,800
Other 914 325
------- -------
36,242 4,125
Less current portion (12,134) (41)
------- -------
$24,108 $ 4,084
</TABLE>
The notes payable to third parties represent debt incurred in connection with
the purchase of White Stone Company of Southwest Virginia. These notes were
backed by a bank letter of credit which bears a commitment fee of .35% per
annum. These notes were paid in full at maturity.
The company redeemed its 6% convertible subordinated notes ("Notes") effective
December 2, 1996. Note holders converted $26.7 million in Notes into 805,161
common shares, with the balance receiving cash of $30.8 million. This
redemption, including the write-off of unamortized debt issuance costs, was
$1,770,000 net of income tax benefit of $787,000 and is reflected as an
extraordinary item.
The average interest rate on all borrowings was 6.5% in 1997, 6.7% in 1996 and,
7.5% in 1995.
NOTE I-LEASES
The company leases various cement storage facilities, vehicles and various other
equipment under capital and operating leases with terms from one to forty years.
Future minimum payments, by year, and in the aggregate, under capitalized leases
and operating leases with initial or remaining terms of one year or more are as
follows at December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
- -----------------------------------------------------------
<S> <C> <C>
1998 $ 181 $ 1,725
1999 181 1,568
2000 181 979
2001 181 842
2002 181 827
Thereafter 4,508 9,155
------- -------
Total minimum
lease payments 5,413 $15,096
=======
Less interest (1,613)
Present value of
future minimum
lease payments $ 3,800
</TABLE>
30
<PAGE> 31
The costs of assets capitalized under leases at December 31 are as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Machinery and equipment $ 4,035 $ 4,035
Less accumulated
depreciation (2,571) (1,880)
------- -------
$ 1,464 $ 2,155
</TABLE>
The weighted average interest rate for capital leases was 4.43% in 1997.
The capital lease agreements contain certain covenants which, among other
things, require the company to meet certain consolidated financial tests,
including tests relating to minimum net worth, financial leverage, fixed
obligation coverage and cash flow coverage. At December 31, 1997, the minimum
required level of net worth under these covenants was $25.0 million.
Rental expense was $2,134,000, $1,942,000, and $1,828,000 for 1997, 1996 and
1995, respectively.
NOTE J-ENVIRONMENTAL MATTERS
<TABLE>
<CAPTION>
At December 31 (in thousands):
1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Accrued estimated environmental liability $ 9,795 $ 770
Other 2,087 1,975
-------- --------
$ 11,882 $ 2,745
</TABLE>
Accrued liabilities specifically related to environmental matters were $11.6
million and $1.1 million at December 31, 1997 and 1996.
In December 1997, the company accrued $4.0 million for environmental matters
principally related to cement kiln dust ("CKD") at its Charlevoix Plant. The
accruals relate to various noncapital costs associated with nine separate CKD
piles including costs for the operation and maintenance of monitoring wells,
ground water monitoring and recovery, capping and maintenance of the cap. Costs
associated with the design and licensing of an on-site landfill will be
capitalized as incurred.
Additionally, the company assumed $6.6 million in estimated environmental
liabilities related to its three acquisitions during 1997. The liabilities
relate to estimated environmental cleanup, containment and compliance matters
including waste lime, coal ash and kiln brick issues, wetland considerations,
underground and above ground storage tank removal and other environmental
matters related to the acquired properties.
Until all environmental studies, investigations, remediation work and
negotiations with or litigation against potential sources of recovery have been
completed and reviewed by regulatory authorities, however, the ultimate cost
that might be incurred by the company to resolve these environmental issues can
not be assured.
NOTE K-POSTRETIREMENT HEALTH BENEFITS
The company provides substantially all employees with health care and life
insurance benefits upon retirement through unfunded defined benefit plans.
31
<PAGE> 32
The net periodic postretirement benefit cost was as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 510 $ 539 $ 422
Interest cost on accumulated
postretirement benefit
obligation 1,555 1,495 1,583
Net amortization (523) (521) (702)
------- ------ ------
Net periodic postretirement
benefit cost $1,542 $1,513 $1,303
</TABLE>
The following table sets forth the plans' funded status reconciled with the
amounts shown in the company's balance sheets at December 31 (in thousands):
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Accumulated Postretirement
Benefit Obligation:
Retirees $10,816 $10,670
Eligible active plan
participants 4,931 4,229
Other active plan
participants 7,317 6,795
------- -------
23,064 21,694
Unrecognized net gain 6,641 7,176
------- -------
29,705 28,870
Less current portion (1,255) (1,110)
------- -------
Accrued Postretirement Health
Benefit Cost $28,450 $27,760
</TABLE>
In 1997 and 1996, the cost of benefits was assumed to increase by 9.5% initially
and then decrease gradually to 5% by 2002 and remain at that level thereafter.
In 1995, the cost of benefits was assumed to increase 10.25% annually through
1996 and then decrease gradually to 5% by 2002, and remain at that level
thereafter. An increase in the assumed health care cost trend rate by one
percentage point would increase the accumulated postretirement benefit
obligation as of December 31, 1997 by approximately $2.8 million and the net
periodic postretirement benefit cost by $0.3 million for the year. The discount
rate in determining the accumulated postretirement benefit obligation was 7.0%
in 1997 (7.25% in 1996 and 7.25% in 1995).
NOTE L-INCOME TAXES
A reconciliation between the statutory federal income tax rate and the company's
effective income tax rate is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 35.0%
State income tax, net of
federal income tax benefits 2.5 2.6 3.7
Percentage depletion (6.3) (5.8) (5.6)
Tax exempt interest (.1) (.1) (.2)
Other .9 (.2) (.6)
---- ---- ----
Effective rate 32.0% 31.5% 32.3%
<CAPTION>
Components of the provision for income taxes were as follows (in thousands):
1997 1996 1995
- --------------------------------------------------------------------------------
Deferred income tax
expense (benefit) $ 1,218 $ 10 $ (944)
Current income tax
expense 25,589 24,935 21,579
------- ------- -------
$26,807 $24,945 $20,635
</TABLE>
32
<PAGE> 33
The tax benefit for income tax deductions that differ from compensation expense
under the company's stock plans of $5.7 million in 1997 was credited to
additional paid-in capital.
The income tax provisions include state income tax provisions of $3,383,000,
$3,260,000 and $3,720,000 for 1997, 1996 and 1995, respectively.
Components of the net deferred tax assets shown in the company's balance sheets
at December 31 were as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Net book value of fixed assets
in excess of tax basis $(7,897) $(11,484)
Financial reporting accrual
for postretirement health benefits 9,331 11,707
Other financial reporting
accruals 5,406 4,010
Other taxable temporary
differences (1,004) (636)
Other deductible temporary
differences 2,579 1,609
------- --------
$ 8,415 $ 5,206
</TABLE>
NOTE M-PENSIONS AND EMPLOYEE BENEFIT PLANS
The company has defined benefit pension plans which cover substantially all of
its employees. The plans generally provide benefit payments using a formula
based on length of service and final average compensation, except for most
hourly employees for whom the benefits are a fixed amount per year of service.
The company's policy is to fund at least the minimum required by applicable
regulations.
Net periodic pension cost was as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits
earned during the year $ 1,206 $ 1,193 $ 929
Interest cost on projected
benefit obligation 2,420 2,287 2,059
Actual return on plan
assets (7,020) (4,792) (4,983)
Curtailment effect of early
retirement incentive -- 339 --
Net amortization and
deferral 4,585 2,699 3,225
------- ------- -------
Net periodic pension cost $ 1,191 $ 1,726 $ 1,230
</TABLE>
33
<PAGE> 34
The following table sets forth, by funded status, the amounts recognized in the
company's balance sheets at December 31 for its pension plans (in thousands):
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------------------------------------------
OVER- Over- Under-
FUNDED* FUNDED* FUNDED*
- ------------------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
<S> <C> <C> <C>
Vested $ 30,407 $ 10,239 $ 14,987
Nonvested 5,094 686 4,048
-------- -------- --------
Accumulated benefit
obligation 35,501 10,925 19,035
Effect of future pay
increases 3,895 3,440 --
-------- -------- --------
Projected benefit
obligation 39,396 14,365 19,035
Plan assets at fair
value 42,826 13,862 18,754
-------- -------- --------
Projected benefit
obligation less than
(in excess of) plan assets 3,430 (503) (281)
Unrecognized net (gain)
loss on assets (4,011) 531 (1,146)
Unrecognized net (asset)
obligation 447 (65) 622
Unrecognized prior service
cost 1,131 331 1,427
Additional minimum
liability -- -- (903)
-------- -------- --------
Net recorded pension
asset (liability) $ 997 $ 294 $ (281)
</TABLE>
*Overfunded plans are those in which plan assets at fair value exceed the
accumulated benefit obligation. Underfunded plans are those in which the
accumulated benefit obligation exceeds plan assets at fair value.
As of December 31, 1997 the company combined its various defined benefit pension
plans into a single plan.
Non-cash decreases of $903,000 and $1,359,000 to the pension intangible asset
and accrued pension liability were required to adjust the additional minimum
liability in 1997 and 1996, respectively.
Assumptions used as of December 31 were:
<TABLE>
<CAPTION>
1997 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.00% 7.25% 7.25%
Rate of increase in
compensation levels 5.00% 5.00% 5.00%
Expected long-term rate
of return on assets 8.50% 8.50% 8.50%
</TABLE>
At December 31, 1997 and 1996, plan assets were primarily invested in listed
stocks and bonds.
Certain company employees are covered under multi-employer union pension plans.
Amounts contributed under these plans were approximately $104,000, $102,000, and
$105,000 for 1997, 1996 and 1995, respectively.
Under the company's 401(k) savings plan, the company made contributions of
$484,000, $483,000 and $492,000 for 1997, 1996, and 1995, respectively.
34
<PAGE> 35
NOTE N-STOCK-BASED COMPENSATION PLANS
The company has two stock-based compensation plans: the 1991 Long-Term Incentive
Plan which includes the facility to award both stock options and restricted
stock and the Non-Employee Director Restricted Stock Plan. In accounting for its
employee compensation plans, the company applies APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and related Interpretations. Accordingly as all
stock options are granted at the current market price, no compensation expense
is recognized for the company's stock options. Compensation expense recognized
for its employee restricted stock awards was $4.1 million in 1997 and $1.2
million in 1996. The pro forma net income and earnings per share listed below
reflect the impact of measuring compensation expense for options granted in
1997, 1996 and 1995 in accordance with the fair-value-based method prescribed
by Statement of Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." These amounts may not be representative of the effects on
reported net income for future years as options vest over a three-year period
and generally additional awards are made each year.
<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income As reported $ 57,029 $ 52,490 $43,212
Pro forma 55,531 51,453 42,735
Basic net income per share
As reported $ 3.44 $ 3.27 $ 2.70
Proforma 3.35 3.18 $ 2.67
Diluted net income per share
As reported $ 3.41 $ 3.05 $ 2.54
Proforma 3.32 3.01 $ 2.51
</TABLE>
The weighted-average fair value of options granted was $11.12, $7.90 and $6.58
per share in 1997, 1996 and 1995, respectively. This estimate was based on using
the Black-Scholes multiple option-pricing model with the following
weighted-average assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend yield 1.64% 2.36% 2.46%
Volatility 25.89% 31.79% 31.79%
Risk-free interest rates 6.69% 6.43% 6.35%
Expected lives in years 5.18 3.75 3.73
</TABLE>
Options are granted to officers and other key employees at an exercise price
equal to the fair market value of the shares on the date of grant. Options
become exercisable at a rate of 50% one year, 75% two years and 100% three years
after grant, and expire ten years after the date of grant (five years for
options prior to 1995). A summary of stock option activity follows:
<TABLE>
<CAPTION>
1997 1996 1995
- ---------------------------------------------------------------------------------
NUMBER WEIGHTED Number Weighted Number Weighted
OF AVERAGE of Average of Average
SHARES PRICE Shares Price Shares Price
(000) (000) (000)
- ---------------------------------------------------------------------------------
Outstanding at
<S> <C> <C> <C> <C> <C> <C> <C>
January 1 625 $25.54 615 $21.69 549 $18.15
Granted 308 36.70 263 28.81 247 24.38
Exercised (251) 23.63 (225) 19.14 (149) 13.39
Canceled (47) 32.36 (28) 23.20 (32) 20.40
---- ---- ----
Outstanding at
December 31 635 $31.21 625 $25.54 615 $21.69
Options
exercisable at
December 31 186 $26.17 206 $22.20 240 $18.42
</TABLE>
35
<PAGE> 36
A summary of information regarding stock options outstanding December 31, 1997
follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ------------------------------------------------------- --------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise of Shares Contractual Exercise of Shares Exercise
PRICES (000) LIFE PRICE (000) PRICE
- -------------------------------------------------------- ------------------
<S> <C> <C> <C>
$36.38-$45.16 282 9.33 $36.73 - -
$24.25-$28.81 339 6.12 $27.24 172 $27.00
$16.08 14 .36 $16.08 14 $16.08
</TABLE>
The restricted stock award plan provides for awards of common stock to officers
subject to resale restrictions. The restrictions on outstanding awards are
scheduled to lapse upon the achievement of certain performance objectives. The
company awarded 105,000, 91,000 and 88,000 shares in 1997, 1996 and 1995,
respectively. For both the stock options and restricted stock, as of December
31, 1997, 466,767 shares were available for future awards.
The exercise of stock options which have been granted under the company's stock
option plan and the vesting of restricted stock give rise to compensation which
is deductible by the company and includable in the taxable income of the
applicable employees for federal and state income tax purposes. Such
compensation is not recognized as an expense for financial accounting purposes
and the related tax benefit of $5.7 million was taken directly to additional
paid-in capital in 1997.
Under the Non-Employee Director Restricted Stock Plan, directors who are not
full-time employees of the company receive annual retainers equivalent to
$15,000 in shares of common stock with any fractioned portion paid in cash. The
shares are issued each year after the company's annual meeting, are forfeitable
if the director ceases to remain a director until the company's next annual
meeting, and may not be sold for a period of five years, or until the director
leaves the board. As a group, non-employee directors received 3,120, 4,080 and
5,120 shares in 1997, 1996 and 1995, respectively.
36
<PAGE> 37
NOTE O-SEGMENT DATA
In 1997, the company elected early adoption of Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"). Under SFAS No. 131 disclosed segment information
is based on the way management organizes its segments within the enterprise for
making operating decisions and assessing performance.
<TABLE>
<CAPTION>
Cement Aggregates
Group Group Drew Total
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Net sales $276,618 $ 75,854 $23,486 $375,958
Depreciation/
amortization 12,285 3,815 356 16,456
Operating profit 77,791 11,165 1,418 90,374
Segment assets 181,473 107,927 10,595 299,995
Expenditures for
segment assets 16,075 5,347 711 22,133
1996
Net sales $258,555 $ 44,323 $20,499 $323,377
Depreciation/
amortization 10,878 1,737 322 12,937
Operating profit 75,487 7,189 916 83,592
Segment assets 181,028 27,545 7,564 216,137
Expenditures for
segment assets 13,599 3,568 814 17,981
1995
Net sales $233,755 $ 41,876 $17,696 $293,327
Depreciation/
amortization 10,862 3,423 231 14,516
Operating profit 64,690 5,607 693 70,990
Segment assets 181,603 24,146 7,431 213,180
Expenditures for
segment assets 18,139 3,990 201 22,330
</TABLE>
Medusa Corporation has three segments: Cement Group, Aggregates Group and J. H.
Drew Corporation ("Drew"). The Cement Group produces cements for construction
applications. The Aggregates Group produces construction aggregates, home and
garden and industrial limestone products. Drew provides highway safety
construction services. The segments are identified based on the separate markets
served and the distinct operations required to service the markets.
<TABLE>
<CAPTION>
1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Profit or Loss
Total operating profit
for reportable segments $ 90,374 $ 83,592 $ 70,990
Non-allocated corporate
expenses (5,367) (2,013) (1,599)
Non-operating income
(expense) - primarily
interest expense (1,171) (2,374) (5,544)
--------- --------- ---------
Income before income taxes
and extraordinary items $ 83,836 $ 79,205 $ 63,847
========= ========= =========
Assets
Total assets for reportable
segments $ 299,995 $ 216,137 $ 213,180
Unallocated assets(a) 6,518 7,309 6,398
--------- --------- ---------
Total Assets $ 306,513 $ 223,446 $ 219,578
========= ========= =========
</TABLE>
37
<PAGE> 38
<TABLE>
<S> <C> <C> <C>
Other Significant items
Segment expenditures for
assets $ 22,133 $ 17,981 $ 22,330
Corporate expenditures
for assets 2,427 1,825 3,015
--------- --------- ---------
Total $ 24,560 $ 19,806 $ 25,345
========= ========= =========
Segment depreciation/
amortization $ 16,456 $ 12,937 $ 14,516
Corporate depreciation/
amortization 1,697 417 256
--------- --------- ---------
Total $ 18,153 $ 13,354 $ 14,772
========= ========= =========
</TABLE>
(a) Unallocated assets are the corporate headquarters assets
NOTE P-EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share.
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC EPS
Earnings:
Income before
extraordinary item $57,029 $ 54,260 $43,212
Extraordinary item -- (1,770) --
------- -------- -------
Net income 57,029 52,490 43,212
Shares:
Weighted average number
of common shares outstanding 16,579 16,054 16,018
------- -------- -------
Basic EPS:
Before extraordinary item $ 3.44 $ 3.38 $ 2.70
Extraordinary item -- (.11) --
------- -------- -------
Basic EPS $ 3.44 $ 3.27 $ 2.70
DILUTED EPS
Earnings:
Income before
extraordinary item $57,029 $ 54,260 $43,212
Extraordinary item -- (1,770) --
Interest on convertible
subordinated notes,
net of taxes -- 2,137 2,336
------- -------- -------
Net income available to
common shareholders $57,029 $ 54,627 $45,548
Shares:
Weighted average number
of common shares outstanding 16,579 16,054 16,018
Dilutive Effect of
Potential Common Stock:
Stock options 129 91 84
Restricted stock 15 162 122
Convertible notes -- 1,587 1,736
------- -------- -------
Weighted average number of
common shares after
dilutive effects 16,723 17,894 17,960
------- -------- -------
Diluted EPS:
Before extraordinary item $ 3.41 $ 3.15 $ 2.54
Extraordinary item -- (.10) --
------- -------- -------
Diluted EPS $ 3.41 $ 3.05 $ 2.54
</TABLE>
38
<PAGE> 39
NOTE Q - PENDING MERGER
On March 17, 1998, the company entered into a definitive agreement to merge with
Southdown Corporation ("Southdown"), a publicly held corporation with its
headquarters located in Houston, Texas whose primary lines of business are the
production and sale of portland cement and concrete.
The agreement specifies, among other things, that Southdown will exchange .88 of
its shares for each share of the company in an exchange that is expected to be
tax-free for income tax purposes. It is expected that the merger will be
accounted for as a pooling of interests. The transaction is subject to
shareholder approval by both companies.
The following unaudited pro forma data summarizes the combined operating results
of the company and Southdown as if the merger had occurred at the beginning of
the periods presented.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
- ------------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------------
(In millions, except per share data)
<S> <C> <C> <C>
Revenue $1,095.2 $ 987.8 $ 889.4
Net income 153.7 125.5 90.7
Net income per common share:
Basic 4.10 3.64 2.58
Diluted 3.94 3.21 2.37
Average shares outstanding (1):
Basic 36.9 32.4 31.4
Diluted 39.0 39.8 39.2
</TABLE>
(1) The pro forma weighted average common shares outstanding have been
computed based on the total of the weighted average common shares outstanding of
the company and Southdown (adjusted to equivalent shares of Southdown assumed to
be issued in the pooling) for all periods presented.
NOTE R - SUBSEQUENT EVENT
On February 19, 1998, the company's Wampum, Pennsylvania plant received a second
NOV from the EPA alleging violations of Pennsylvania and federal law between
December 28, 1996 and November 21, 1997, relating to a condition in the plant's
air quality plan approval requiring automatic cessation of flow of waste-derived
liquid fuel upon exceeding certain opacity levels. The company is formulating a
response to this notice. The NOV did not make a demand for any civil penalties,
however it indicated that such penalties were available. At this time, the
company is unable to predict what penalties or other compliance measures EPA may
seek for the violations alleged in the NOV. Therefore the company cannot
estimate the final cost, but the company does not believe at this time that it
will have a material impact on the company's results of operations.
39
<PAGE> 40
NOTE S - QUARTERLY RESULTS (UNAUDITED)
Summarized quarterly financial results for 1997 and 1996 appear in the table
below (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Earnings Per Share
Net Gross Net --------------------------
Sales Profit Income Basic Diluted
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997
1ST $ 56,839 $ 9,615 $ 1,832 $ .11 $ .11
2ND 103,185 38,608 18,308 1.10 1.09
3RD 117,068 43,034 23,746 1.44 1.42
4TH 98,866 30,853 13,143 .80 .79
------- -------- -------- -------- --------
$375,958 $122,110 $ 57,029 $ 3.44 $ 3.41
- ---------------------------------------------------------------------------------------------------------
Earnings Per Share
Net Gross Net --------------------------
Sales Profit Income Basic Diluted
- ---------------------------------------------------------------------------------------------------------
1996
1st $ 45,073 $ 7,999 $ 1,192 $ .07 $ (a)
2nd 85,995 29,489 14,969 .93 .86
3rd 109,295 39,259 22,094 1.39 1.27
4th 83,014 31,378 16,005(b) .99(b) .93(b)
-------- -------- -------- -------- --------
$323,377 $108,125 $ 54,260(b) $ 3.38(b) $ 3.15(b)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(a) Anti-dilutive
(b) Before an extraordinary charge, net of income taxes, of $1,770 or, $(.11)
and $(.10) basic and diluted per share, respectively.
The company's business is highly seasonal and particularly sensitive to weather
conditions. Quarter results are not indicative of annual results.
40
<PAGE> 41
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated financial statements of Medusa Corporation and
subsidiaries have been prepared by management in conformity with generally
accepted accounting principles and, in the judgment of management, present
fairly and consistently the company's financial position and results of
operations. These statements by necessity include amounts that are based on
management's best estimates and judgments and give due consideration to
materiality.
The accounting systems and internal accounting controls of the company are
designed to provide reasonable assurance that the financial records are reliable
for preparing consolidated financial statements and maintaining accountability
for assets and that, in all material respects, assets are safeguarded against
loss from unauthorized use or disposition. Qualified personnel throughout the
organization maintain and monitor these internal accounting controls on an
ongoing basis. Management continually monitors the system of internal control
for compliance. In addition, the company's internal auditor systematically
reviews the adequacy and effectiveness of the controls and reports thereon.
The consolidated financial statements have been audited by Deloitte & Touche
LLP, independent auditors, whose report appears following this page.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets periodically with management, with the company's internal
auditor, and with the independent auditors to review matters relating to the
quality of financial reporting and internal accounting control and the nature,
extent and results of their audits.
The company's internal auditor and independent auditors have free access to the
Audit Committee.
Robert S. Evans, Chairman of the Board
R. Breck Denny, Vice President - Finance & Treasurer
Edward A. Doles, Corporate Controller
41
<PAGE> 42
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF MEDUSA CORPORATION:
We have audited the accompanying consolidated balance sheets of Medusa
Corporation and subsidiaries (the "Company") as of December 31, 1997 and 1996
and the related consolidated statements of income, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1997. Our
audits also included the financial statement schedule listed in the Index at
Item 14. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and the financial statement schedule 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, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1997
and 1996 and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
/s/ Deloitte & Touche LLP
Cleveland Ohio
January 26, 1998
(March 18, 1998 as to notes Q and R)
42
<PAGE> 43
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
--------
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors
The respective ages, positions and periods of service as Directors of the
Company, business experience during the past five years and directorships in
other companies are set forth below:
MONE ANATHAN, III
Age 58; Director since 1992; former President of Filene's Basement
Corp., Wellesley, MA (retailer), 1984 to 1997. Other Directorships:
Filene's Basement Corp., Crane Co., Brookstone, Inc.
E. THAYER BIGELOW, JR.
Age 56; Director since 1988; Chief Executive Officer, Courtroom
Television Network, New York, NY, an affiliate of Time Warner
Entertainment LP, 1997 to present; President and Chief Executive
Officer, Time Warner Cable Programming, Inc., Stamford, CT, a
subsidiary of Time Warner Entertainment LP (basic cable television
program services), 1991 to 1997. Other Directorships: Crane Co., Lord
Abbett Mutual Funds.
R. S. EVANS
Age 54; Director since 1979; Chairman and Chief Executive Officer of
the Company, 1987 to present; Chairman and Chief Executive Officer of
Crane Co., Stamford, CT (diversified manufacturer of engineered
products and an affiliate of the Company), 1984 to present; President
of Crane Co., 1987 to 1991 and 1992 to 1995. Other Directorships:
Crane Co., Fansteel Inc., HBD Industries, Inc.
RICHARD S. FORTE
Age 53; Director since 1988; Chairman, Forte Cashmere Company, Inc.,
Woonsocket, RI (processor and dealer of luxury natural fibers), 1987
to present; President of Forte Cashmere Company, Inc.,
Woonsocket, RI, 1992 to 1996; President, Dawson Forte Cashmere Co.,
1997 to present. Other Directorships: Crane Co., Wilmington Research &
Development Corporation.
DORSEY R. GARDNER
Age 55; Director since 1989; President, Kelso Management Company,
Inc., Boston, MA. (investment management). Other Directorships: Crane
Co., Filene's Basement Corp., Medicus Systems Corp.
JEAN GAULIN
Age 55; Director since 1995; Vice Chairman, President and Chief
Operating Officer of Ultramar Diamond Shamrock Corporation, San
Antonio, TX (petroleum refining and marketing), 1996 to present;
Chairman and Chief Executive Officer of Ultramar Corporation,
Greenwich, CT, 1992 to 1996; Chief Executive Officer of Ultramar PLC
and President, Chief Executive Officer and Chairman of American
Ultramar Limited, 1989 to 1992. Other Directorships: Ultramar Diamond
Shamrock Corporation, Crane Co., Quebec Telephone.
43
<PAGE> 44
PART III
Item 10. (a)IDENTIFICATION OF DIRECTORS (continued)
DWIGHT C. MINTON
Age 63; Director since 1988; Chairman of the Board, Church & Dwight
Co., Inc., Princeton, NJ (manufacturer of consumer and specialty
products). Other Directorships: Church & Dwight Co., Inc., Crane Co.
CHARLES J. QUEENAN, JR.
Age 67; Director since 1988; Senior Counsel, Kirkpatrick & Lockhart
LLP, Pittsburgh, PA (attorneys-at-law). Other Directorships: Crane
Co., Allegheny Teledyne Incorporated.
GEORGE E. UDING, JR.
Age 66; Director since 1993; President and Chief Operating Officer of
the Company, 1994 to present; Consultant, 1992 to 1993; Senior Vice
President, ESSROC Corporation through 1991.
BORIS YAVITZ
Age 74; Director since 1988; Principal, Lear, Yavitz & Associates
(consultants); Paul Garrett Professor Emeritus of Public Policy and
Business Responsibility and Dean Emeritus, Columbia University
Graduate School of Business, New York, NY. Other Directorships: Crane
Co., Israel Discount Bank of New York.
44
<PAGE> 45
Item 10. (b)IDENTIFICATION OF EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
The executive officers of the registrant are as follows:
<S> <C> <C>
Robert S. Evans Chairman and Chief Chairman & Chief Executive 54
Executive Officer Officer of the company
since 1988: Chairman and Chief
Executive Officer, Crane Co.
(diversified manufacturer of
engineered products).
George E. Uding, President and Chief President and Chief Operating 66
Jr. Operating Officer Officer of the company since
1994; former Senior Vice
President, Essroc Corporation
(producer of cement).
Robert J. Kane Senior Vice Senior Vice President of the 48
President Company and President of Medusa
Cement Group since 1994;
previously Vice President of the
company and President of Medusa
Aggregates Group; Vice-President
and Controller of Medusa
Aggregates Company, a subsidiary
Robert D. Vilsack Vice President Vice President, Secretary 37
Secretary and and General Counsel of the
General Counsel company since 1997; former Vice
President, General Counsel
and Secretary - Figgie
International (manufacturer
of diversified products).
Dennis R. Knight Vice President Vice President of the company; 52
and President of Medusa
Aggregates group since 1994;
former Regional Vice President -
General Manager Vulcan Materials
(Wisconsin, Indiana, Central
Illinois and Iowa) (aggregates).
R. Breck Denny Vice President Vice President-Finance and 49
Finance and Treasurer (Chief Financial
Treasurer Officer) of the company since
1994; previously Director of
Strategic Planning, Medusa
Corporation; former Vice
President - Advisory, Mergers
and Acquisitions, J.P. Morgan
(investment banking).
</TABLE>
45
<PAGE> 46
Item 10. (b)IDENTIFICATION OF EXECUTIVE OFFICERS (continued)
<TABLE>
<S> <C> <C>
Alan E. Redeker Vice President Vice President of the company 54
and Vice President
Manufacturing, Medusa Cement
Company, a division since 1994;
former General Manager of
Northern California operations of
Associated Concrete Products
and held various positions at
Kaiser Cement Corporation (producer
of cement).
Richard A. Brown Vice President Vice President - Human 50
Resources of the company since
1994; previously Director of
Human Resources, Medusa
Corporation; former Vice
President-Human Resources and
Corporate Services, Pioneer-
Standard Electronics, Inc.
(manufacturer of electric components).
</TABLE>
All executive officers serve at the pleasure of the Board of Directors with no
fixed term of office.
Item 11. EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The Company's standard retainer payable to each non-employee Director is $15,000
per annum. Pursuant to the Company's 1988 Non-Employee Director Restricted Stock
Plan, non-employee Directors are awarded Common Shares with a fair market value
equal to the annual retainer. All Directors who are not full-time employees of
the Company, of which there are currently eight, are eligible to participate in
the 1988 Non-Employee Director Restricted Stock Plan. Once awarded, the Common
Shares are subject to forfeiture if the Director ceases to remain a Director
until the Company's next annual meeting of shareholders, except in the case of
death, permanent disability or change in control, and may not be sold for a
period of five years thereafter. In April of 1997, each non-employee Director
received 390 restricted Common Shares pursuant to the 1988 Non-Employee Director
Restricted Stock Plan. Non-employee Directors also receive $250 for each Board
of Directors meeting attended. Further, non-employee Directors who are members
of Committees of the Board of Directors receive $250 for each Committee meeting
attended.
46
<PAGE> 47
Item 11. EXECUTIVE COMPENSATION (continued)
The table below shows information concerning annual and long-term compensation
earned during the last three fiscal years by the Chief Executive Officer and the
four other most highly compensated executive officers as of the end of fiscal
year 1997 and one former executive officer (the "Named Executive Officers"):
<TABLE>
<CAPTION>
Long-term Compensation
----------------------
Annual Compensation Awards Payouts
-------------------- ---------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
NAME AND PRINCIPAL Other Annual Underlying All Other
- ------------------ Compensation Restricted Stock Options/ LTIP Compensation
POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS($)(2) SAR'S(#) PAYOUTS($)(3) ($)(4)
- --------- ---- ---------- --------- --------- ------------ -------- ------------- - ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. S. Evans 1997 $285,000 $163,445 $690,106 $92,647 30,000 $844,960 $10,000
Chairman of the Board & 1996 275,000 211,971 342,660 63,762 30,000 323,438 10,000
Chief Executive Officer 1995 250,000 139,466 397,117 59,816 30,000 275,625 8,047
George E. Uding, Jr. 1997 345,000 197,854 345,712 163,324(5) 30,000 379,409 6,707
President & 1996 330,000 254,366 237,124 97,224(5) 30,000 -0- 10,000
Chief Operating Officer 1995 300,000 167,360 169,764 99,182(5) 30,000 -0- 7,536
Robert J. Kane 1997 169,000 96,920 336,222 16,987 15,000 368,993 9,019
Senior Vice President 1996 162,000 124,870 239,258 10,833 15,000 107,813 7,454
1995 155,000 86,469 157,339 10,116 15,000 91,875 5,395
R. Breck Denny 1997 163,020 93,490 161,344 29,282 13,500 177,075 8,711
Vice President-Finance 1996 156,750 120,824 47,693 21,177 13,500 -0- 7,213
and Treasurer 1995 150,000 83,680 37,626 19,817 12,000 -0- -0-
Dennis R. Knight 1997 138,060 79,176 155,938 27,536 15,000 171,136 3,832
Vice President 1996 132,750 98,109 -0- 20,198 12,000 -0- 5,942
1995 127,000 70,849 -0- 17,331 12,000 -0- -0-
John P. Siegfried(6) 1997 128,608 66,380 261,850 80,280 12,000 287,372 4,750
Vice President, Secretary 1996 135,000 104,059 203,986 50,912 12,000 107,813 6,226
and General Counsel 1995 130,000 72,522 173,326 47,385 12,000 91,875 5,527
</TABLE>
(1) With respect to 1997, this column reflects tax gross-up payments payable in
cash when established performance targets with respect to performance
restricted shares ("Performance Restricted Shares") are achieved as of an
established test date and the restrictions on such Performance Restricted
Shares lapse. With respect to fiscal years 1996 and 1995, this amount also
includes non-preferential dividends paid on Performance Restricted Shares
for which the restrictions had not lapsed.
(2) This column reflects the value of Supplemental Executive Retirement Plan
("SERP-Equivalent") shares awarded to each Named Executive Officer as of
the date of grant. The SERP equivalent shares are actuarially-determined
time-vested restricted shares.
47
<PAGE> 48
Item 11. EXECUTIVE COMPENSATION (continued)
(3) This column reflects the value (as of the vesting date) of the
Performance Restricted Shares which vested during the fiscal year as a
result of the attainment of the established performance targets. As of
December 31, 1997, the aggregate number of unvested Performance
Restricted Shares and the value of such shares held by the Named
Executive Officers were as follows: Mr. Evans, 80,672 shares having a
market value of $3,368,056; Mr. Uding, 88,400 shares having a market
value of $3,690,700; Mr. Kane, 35,988 shares having a market value of
$1,502,499; Mr. Denny, 27,471 shares having a market value of
$1,146,914; Mr. Knight, 27,619 shares having a market value of
$1,153,093; and Mr. Siegfried, -0-.
(4) All Other Compensation reported in column (i) includes; a) amounts
contributed by the Company as matching contributions for fiscal 1997
for the Named Executive Officers, except for Mr. Evans, under the
401(k) Plan, and b) the non-qualified matching contributions made by
the Company in fiscal 1997 for the benefit of Messrs. Evans, Uding,
Kane, Denny, Knight and Siegfried of $10,000, $1,957, $4,269, $3,961,
$1,374 and $-0-, respectively.
(5) Under the terms of the plan, Mr. Uding's SERP-Equivalent share
restrictions immediately lapsed upon award because he had attained
age 62.
(6) Mr. Siegfried retired from the Company on December 1, 1997.
STOCK OPTION GRANTS IN LAST FISCAL YEAR:
The table below shows all individual grants of stock options to the Named
Executive Officers during the fiscal year ended December 31, 1997:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
Number of
Securities % of Total
Underlying Options/SAR's (1)
Options/ Granted to Exercise or Grant Date
SAR's(1) Employees in FISCAL Base Price Expiration Present VALUE
Name (#)Granted Year ($/Sh)(2) Date ($)(3)
---- ---------- ---- ---------- ---- ------
<S> <C> <C> <C> <C> <C> <C>
R. S. Evans................. 30,000 10.2% $36.375 04/21/2007 $464,700
George E. Uding, Jr. 30,000 10.2% 36.375 04/21/2007 464,700
Robert J. Kane.............. 15,000 5.1% 36.375 04/21/2007 232,350
R. Breck Denny.............. 13,500 4.6% 36.375 04/21/2007 209,115
Dennis R. Knight............ 15,000 5.1% 36.375 04/21/2007 232,350
John P. Siegfried........... 12,000 4.1% 36.375 04/21/2007 185,880
</TABLE>
48
<PAGE> 49
Item 11. EXECUTIVE COMPENSATION (continued)
(1) Since fiscal 1990, the Company has not granted any stock appreciation
rights (SAR's).
(2) All Stock Options were granted with an exercise price equal to the fair
market value of the Common Shares on the date of grant. Options granted
become exercisable 50% one year, 75% two years and 100% three years
after grant and, unless exercised, expire ten years after grant. Except
with respect to senior executive officers (the Chairman and the
President), whose awards continue to vest and be exercisable on a
post-employment basis for the balance of the vesting period or exercise
period), if employment terminates, the participant may exercise his or
her Stock Options only to the extent they could have been exercised on
the date the participant's employment terminated and within three
months thereafter. In the event a participant's employment terminates
by reason of death, retirement, permanent disability or change in
control, Stock Options become fully vested and exercisable in
accordance with their terms. The exercise price may be paid by delivery
of Common Shares owned by the participant for more than six months and
the participant's income tax obligations related to exercise may be
satisfied by surrender of Common Shares held previously or received
upon exercise, subject to certain conditions.
(3) The Stock Options were valued using the Black-Scholes method which
indicated a value of $15.49 per option. The assumptions used were:
Volatility .259, Risk-Free Interest Rate 6.87% based on the Bear,
Stearns & Co.'s Treasury Strip Rate Maturing May 2007; Dividend Yield
1.65% and a ten-year time of exercise. Since the actual value, if any,
which an optionee may realize depends on the excess of the stock price
over the exercise price on the date the option is exercised, there is
no assurance that the value will be at or near the value estimated
using the Black-Scholes method.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information with respect to Stock
Options exercised by the Named Executive Officers during 1997 under the 1991
LTIP and the value of unexercised in-the-money Stock Options held at
December 31, 1997:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of Unexercised
Number of Securities In-the-Money Options/ SAR's
Underlying Unexercised (1) at DECEMBER 31,
Options/SAR's (1) at -------------
Shares Acquired December 31, 1997(#) 1997($)(3)
On Exercise Value Realized -------------------- ----------
(#) ($)(2) Exercisable Unexercisable Exercisable Unexercisable
--- ---- ---- ------- ----------- ------------- ----------- -------------
NAME
<S> <C> <C> <C> <C> <C> <C>
R. S. Evans.............. 52,500 $1,324,456 15,000 52,500 $194,062 $485,624
George E. Uding, Jr. 30,000 574,453 15,000 52,500 194,062 485,624
Robert J. Kane........... 17,250 343,969 -0- 26,250 -0- 242,812
R. Breck Denny........... 8,250 144,492 9,750 23,250 139,453 212,015
Dennis R. Knight......... 9,000 116,437 2,250 24,000 34,594 244,969
John P. Siegfried........ 17,625 352,477 -0- -0- -0- -0-
</TABLE>
49
<PAGE> 50
Item 11. EXECUTIVE COMPENSATION (continued)
(1) Since fiscal 1990, the Company has not granted any stock appreciation
rights (SAR's).
(2) Since fiscal 1995, no Named Executive Officer has received any value
from any exercise of an SAR.
(3) The fair market value (the average of the high and low prices on the
New York Stock Exchange Composite Transactions Tape) of one Medusa
Corporation Common Share on December 31, 1997 was $41.75. The value is
calculated by determining the difference between the option exercise
price and $41.75, multiplied by the number of shares of Common Stock
underlying the options.
50
<PAGE> 51
Item 11. EXECUTIVE COMPENSATION (continued)
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
The table below shows information with respect to Performance Restricted
Shares awarded pursuant to the 1991 LTIP to the Named Executive Officers during
the fiscal year ended December 31, 1997:
<TABLE>
<CAPTION>
(a) (b) (c)
Number Of Shares, Units Performance Or
Or Other Other Period Until
Name Rights (#)(1) Maturation Or Payout (2)
---- ----------------------- ------------------------
<S> <C> <C>
R. S. Evans ........................ 17,453 20% per year;
from 4/22/98 to 4/21/02
George E. Uding, Jr. 15,510 20% per year;
from 4/22/98 to 4/21/02
Robert J. Kane ..................... 9,533 20% per year;
from 4/22/98 to 4/21/02
R. Breck Denny ..................... 8,195 20% per year;
from 4/22/98 to 4/21/02
Dennis R. Knight.................... 9,243 20% per year,
from 4/22/98 to 4/21/02
John P. Siegfried .................. 5,793 20% per year;
from 4/22/98 to 4/21/02
<FN>
- --------------
(1) This column reflects Performance Restricted Share awards. The fair market
value (the average of the high and low prices on the New York Stock
Exchange Composite Transactions Tape) of one Common Share on the April 21,
1997 award date (the "Award Date") was $36.375.
(2) A 20% portion of the Performance Restricted Share award is tested annually
during the 5-year restriction period on each anniversary of the Award Date
(each, a "Test Date"). In order for the share restrictions to fully lapse,
two requirements must be met: (i) the value of one Common Share (adjusted
for stock distributions, but not reflecting dividends) may not decline from
the Award Date to a Test Date; and (ii) the Common Share growth rate must
meet or exceed 110% of the growth rate of the Cement Industry Peer Group,
when measured from the Award Date to a Test Date. There is also a provision
for "Partial Lapses" with respect to proportionate amounts of the shares in
10% increments, if more than 101%, but less than 110%, of the growth rate
performance objective is attained (i.e., a 101% growth rate causes the
restrictions to lapse with respect to 10% of the shares, etc.). If, when
tested, the restrictions on all or part of a 20% portion of the award fail
to lapse, then such portion or portions are not forfeited until they are
retested, as applicable, during the 5-year restriction period. Upon the
lapse of restrictions on Performance Restricted Shares, the participant
will receive a tax gross-up payable in cash. During the performance period,
the Performance Restricted Shares may be voted and pay non-preferential
dividends to the participant.
</TABLE>
51
<PAGE> 52
Item 11. EXECUTIVE COMPENSATION (continued)
RETIREMENT BENEFITS
The Medusa Corporation Pension Plan for Certain Covered Employees (the "Pension
Plan") is a defined benefit pension plan. The amount of contribution with
respect to a specified person is not, and cannot be, individually calculated.
Benefits under the Pension Plan are based on the participant's base salary, but
excludes annual and long-term incentive compensation and commissions and
reflects credited years of service up to a maximum of 35 years of service. The
table below sets forth estimated annual benefits under the Pension Plan which
are payable to an employee upon normal retirement in 1998 at age 65 with
selected periods of service and assumes payments are made on a straight life
annuity basis:
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Estimated Annual Benefits upon Retirement in 1998
REMUNERATION with Years of Service Indicated(1)
------------- ---------------------------------------------------------------------------------------------------------
5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 6,720 $13,440 $20,160 $26,880 $ 33,600 $ 40,320 $ 47,040
125,000 8,416 16,833 25,249 33,665 42,082 50,498 58,915
150,000 10,113 20,225 30,338 40,451 50,564 60,676 70,789
175,000 11,809 23,618 35,427 47,237 59,046 70,855 82,664
200,000 13,506 27,011 40,517 54,022 67,528 81,034 94,539
225,000 15,202 30,404 45,606 60,808 76,010 91,212 106,414
250,000 16,898 33,797 50,695 67,594 84,492 101,391 118,289
- --------------
(1) The amounts shown exclude any benefits under the Pension Plan provided
solely through optional employee contributions. In accordance with
amendments to the Internal Revenue Code (the "Code") made by the Tax
Reform Act of 1986 and the Omnibus Budget Reconciliation Act of 1993
("OBRA"), the maximum amount of compensation which may be included in
the determination of any participant's benefit under the Pension Plan
in 1998 is $160,000 and the maximum annual benefit payable under the
Pension Plan in 1998 is $130,000. However, these limitations may not
reduce a participant's accrued benefit under the Pension Plan below
such participant's accrued benefit under the Pension Plan as of
December 31, 1988.
</TABLE>
The above table covers all of the Named Executive Officers, other executive
officers and other salaried employees on a non-contributory basis. The Pension
Plan also provides for the payment of benefits to an employee's surviving spouse
or other beneficiary and various other optional methods of payment. The
calculation of retirement benefits under the Pension Plan is based upon average
earnings for the highest five consecutive years in the ten years preceding
retirement. The benefits listed in the above table are not subject to any
deductions for Social Security or other offset amounts. As of March 2, 1998, the
years of credited service for the Named Executive Officers are as follows:
Messrs. Evans, Uding, Kane, Denny and Knight were: 10, 4, 18, 3 and 3 years,
respectively. Mr. Siegfried retired from the Company on December 1, 1997.
52
<PAGE> 53
Item 11. EXECUTIVE COMPENSATION (continued)
In fiscal 1995, the Board of Directors approved a SERP-Equivalent Plan for
executive officers. The value of the SERP-Equivalent Plan awards to the Named
Executive Officers in fiscal 1997 are set forth in the restricted stock award
column of the Annual Compensation table. As stated below in its report, the
Board of Directors or the Organization and Compensation Committee, as
applicable, has annually awarded a comparable number of restricted shares to the
executive officers. From fiscal 1991 through fiscal 1994, these awards were
solely Performance Restricted Shares. However, beginning in fiscal 1995 and
continuing in fiscal 1997, an actuarially-based number of shares were
"carved-out" from the restricted share award and restricted for a period of five
years, or until the participant reaches age 62, whichever occurs sooner. The
SERP-Equivalent Plan awards are designed to supplement the Company qualified
pension plan by providing the maximum pension benefit at 15 rather than 35 years
of service, and are based upon Annual Incentive Plan (the "AIP") compensation in
addition to base salary. In fiscal 1997, the balance of the 1991 LTIP awards to
the Named Executive Officers were in Performance Restricted Shares or Stock
Options (see "Stock Option Grants in Last Fiscal Year").
SEVERANCE AGREEMENTS
The Company has special termination agreements with each of its
executive officers including the Named Executive Officers (other than Mr.
Siegfried who retired on December 1, 1997). Prior to a change of control of
the Company, the beneficiaries are employees at will and as such may be
discharged without being entitled to contractual benefits (change of control
includes tender offers and certain other change of control transactions). The
agreements provide for a lump sum cash payment of three times the amount of the
employee's annual base salary and a pro-rata portion of any annual incentive
compensation from the previous year if: (a) within two years from the date of a
change of control such employee is terminated without cause by the Company; (b)
within such two-year period such employee terminates his or her employment for
good reason; or (c) at the end of a one-year period from the date of a change
of control such employee terminates his or her employment within a 30-day
period for any reason. All of the agreements provide for reimbursement of the
employee on an after-tax basis in the event excise taxes are imposed on
employee benefits under Section 4999 of the Code, irrespective of whether such
benefits are paid by reason of the agreement or otherwise.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows information with respect to the only persons
(including any group) known to the Company to beneficially own five
percent or more of the Common Shares outstanding at March 2, 1998:
<TABLE>
<CAPTION>
Number Of Percent
Name And Address Common Shares Of Class
---------------- -------------- ---------
<S> <C> <C> <C> <C>
FMR Corp.
82 Devonshire St.
Boston, MA 02109.......................... 2,191,804 (1) 13.0%
The Crane Fund
100 First Stamford Place
Stamford, CT 06902........................ 1,560,370 (2) 9.3%
</TABLE>
53
<PAGE> 54
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(continued)
(1) As reported in a Schedule 13G/A received by the Company on March 2,
1998 from FMR Corp. ("FMR"). FMR filed the Schedule 13G/A for certain
affiliates, Fidelity Management & Research Company, Fidelity Management
Trust Company, Fidelity Magellan Fund and Fidelity International
Limited, which entities are the beneficial owners of the Common Shares.
In the Schedule 13G/A, FMR and its principals indicated that they had
filed on a voluntary basis and disclaimed that they were a "group" and
thus, that their shares did not need to be aggregated for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(2) As reported in a Schedule 13D received by the Company on October 31,
1988. The Crane Fund is a charitable trust managed by trustees
appointed by the Board of Directors of Crane Co. On March 2, 1998, the
trustees of The Crane Fund were G. A. Dickoff, A. I. duPont, R. B.
Phillips, M. L. Raithel and D. S. Smith, all of whom are officers of
Crane Co. Pursuant to the trust instrument, Common Shares held by such
trust shall be voted by the trustees as directed by the Board of
Directors of Crane Co., the distribution of the income of the trust for
its charitable purposes is subject to the control of the Crane Co.
Board of Directors, and Common Shares may be sold by the trustees only
upon the direction of the Crane Co. Board of Directors acting by a
two-thirds vote. Messrs. Anathan, Forte, Gardner, Gaulin, Evans,
Minton, Bigelow, Queenan and Yavitz, directors of the Company, are also
directors of Crane Co. and collectively represent 100% of the current
directors of Crane Co.. None of the trustees of The Crane Fund,
Directors of Crane Co. or Directors or Nominees for Director of the
Company have any direct beneficial interest in, and all disclaim
beneficial ownership of, Common Shares held by The Crane Fund.
54
<PAGE> 55
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(continued)
The following table shows beneficial ownership, reported to the Company as of
March 2, 1998 (except as otherwise noted below), of Common Shares by each
Director, nominee for Director and each Executive Officer named in the Summary
Compensation Table (which includes one former Executive Officer) and, as a
group, of such persons and other executive officers:
<TABLE>
<CAPTION>
Common Percent
Name Shares(1)(2) Of
---- ------------ ---------
CLASS(2)(3)
<S> <C> <C>
Mone Anathan, III................................ 3,490 *
E. Thayer Bigelow, Jr. .......................... 7,859 *
R. S. Evans...................................... 741,061 (4)(5)(6) 4.4%
Richard S. Forte................................. 8,424 *
Dorsey R. Gardner................................ 5,342 *
Jean Gaulin ..................................... 3,040 *
Dwight C. Minton................................. 9,047 *
Charles J. Queenan, Jr. ......................... 17,175 *
George E. Uding, Jr. ............................ 161,452 (5)(6) *
Boris Yavitz..................................... 12,115 *
Robert J. Kane................................... 131,965 (5)(6) *
R. Breck Denny................................... 54,658 (5)(6) *
Dennis R. Knight................................. 42,621 (5)(6) *
John P. Siegfried................................ 82,516 (5)(6)(7) *
*
All of the above and other
executive officers as a group 1,404,313 (5)(6) 8.4%
(18 persons).....................................
<FN>
- -----------------------------------
(1) Each person has sole voting and investment power with respect to the Common
Shares listed, unless otherwise indicated. Includes Common Shares held
jointly, or in other capacities, as to which, in some cases, beneficial
ownership is disclaimed.
(2) The number of Common Shares owned by each person, or by the group, has been
adjusted and the percentage owned (where such percentage exceeds 1.0%) has
been computed in accordance with Rule 13d-3(d)(1) of the Securities
Exchange Act.
(3) An asterisk indicates ownership of less than 1.0%.
(4) The shareholdings shown in the above table include 77,200 Common Shares
owned by The Evans Family Foundation, as to which Mr. Evans disclaims
beneficial ownership.
(5) The shareholdings shown in the above table include Common Shares held under
the Medusa Corporation Savings and Investment Plan (the "401(k) Plan") for
Messrs. Evans, Uding, Kane, Denny, Knight, Siegfried and all executive
officers as a group, which are -0-, 1,004, 1,344, 383, 281, 3,450 and
10,794 Common Shares, respectively.
</TABLE>
55
<PAGE> 56
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(continued)
(6) The shareholdings shown in the above table include Common Shares
subject to non-qualified stock options ("Stock Options") exercisable
within 60 days of March 2, 1998 by Messrs. Evans, Uding, Kane, Denny,
Knight, Siegfried and all executive officers as a group, which are
30,000, 30,000, 7,500, 16,500, 9,750, 0 and 130,875 Common Shares,
respectively.
(7) Mr. Siegfried retired from the Company on December 1, 1997, and the
amount indicated represents his beneficial ownership as of that date.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm of Kirkpatrick & Lockhart LLP, of which Mr. Queenan is Senior
Counsel, furnished legal services to the Company in fiscal 1997. Such legal fees
did not exceed five percent of the gross revenues of Kirkpatrick & Lockhart LLP
in 1997. Apart from the director compensation arrangements, which Mr. Queenan
received, he did not personally receive any fees for legal services which
Kirkpatrick & Lockhart LLP provided to the Company in fiscal 1997.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PAGE
(a) 1. Financial Statements and Schedules
Item 8 of this report lists certain consolidated financial statements
and supplementary data of the company and its subsidiaries.
2. Financial Statement Schedules
Schedule II Valuation and Qualifying Accounts..................57
All other statements and schedules for which provision is made in the
applicable regulations of the Securities and Exchange Commission have been
omitted because they are not required under related instructions or are
inapplicable, or the information is shown in the consolidated financial
statements and related financial review.
56
<PAGE> 57
MEDUSA CORPORATION AND SUBSIDIARIES
SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Balance at Additions (deductions) Balance at
beginning charged (credited) to (deductions)- end of
Description Of Year Costs And Expenses Additions Year
- ----------- ------- ------------------ -------------- ----------
<S> <C> <C> <C> <C>
1997
Deducted from Asset Accounts:
Allowances for Doubtful
Accounts $ 350,640 $ 36,694 (A) $ 937,318 (D) $ 1,095,341
(269,869)(C)
40,558 (F)
Reserve for Policy
Adjustments 822,624 775,154 0 1,597,778
Environmental Reserves:
Current 301,000 115,000 894,160 (H) 2,101,160
791,000 (D)
Long-term 770,481 4,386,628 (276,477)(G) 9,795,472
(894,160)(H)
5,809,000 (D)
---------- ---------- ---------- -----------
TOTAL $2,244,745 $5,313,476 $7,031,530 $14,589,751
========== ========== ========== ===========
1996
Deducted from Asset Accounts:
Allowances for Doubtful
Accounts $ 351,257 $ 141,090 (A) $ (141,707) (E) $ 350,640
Reserve for Cash Discounts 185,408 0 (185,408) (B) 0
Reserve for Policy
Adjustments 72,033 750,591 0 822,624
Environmental Reserves:
Current 301,000 301,000
Long-term 808,060 180,000 (217,579) (G) 770,481
---------- ---------- ---------- -----------
TOTAL $1,717,758 $1,071,681 $ (544,694) $ 2,244,745
========== ========== ========== ===========
1995
Deducted from Asset Accounts:
Allowances for Doubtful
Accounts $ 228,503 $ 122,754 (A) $ 0 $ 351,257
Reserve for Cash Discounts 209,570 (24,162) 0 185,408
Reserve for Policy
Adjustments 80,719 (8,686) 0 72,033
Environmental Reserves:
Current 417,000 (116,000) (G) 301,000
Long-term 1,041,339 150,000 (383,279) (G) 808,060
--------- --------- ---------- -----------
TOTAL $1,977,131 $ 239,906 $ (499,279) $ 1,717,758
========= ========= ========== ===========
</TABLE>
Note A - Additional reserve based on receivable balance.
Note B - Adjust company receivables to net vs. gross.
Note C - Portion of reserve no longer considered necessary.
Note D - Reserves acquired at time of acquisition of Sparta, Whitestone and
Lee Lime.
Note E - Receivable written off to reserve
Note F - Miscellaneous adjustments
Note G - Charges against reserve
Note H - Reclassification
57
<PAGE> 58
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(continued)
(a) 1. Financial Statements and Schedules (continued)
3. Exhibits
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
3.1 Articles of Incorporation of Medusa Corporation -
incorporated by reference from Exhibit 3.1 to the
company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988
3.2 Proposed Form of Amended and Restated Articles of Incorpora-
tion of Medusa Corporation - incorporated by reference from
Exhibit 3.2 to the company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1988
3.3 Regulations of Medusa Corporation - incorporated by
reference from Exhibit 3.3 to the company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1988
3.4 Proposed Form of Amended and Restated Regulations of Medusa
Corporation - incorporated by reference from Exhibit 3.4 to
the company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988
10.1 Proposed Form of Right Agreement - incorporated by reference
from Exhibit 10.1 to the company's Annual Report on Form
10-K for the fiscal year ended December 31, 1988
10.3 Proposed Form of Medusa 1988 Restricted Stock Award Plan -
incorporated by reference from Exhibit 10.3 to the company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1988
10.5 Form of Employment Agreement between Medusa Corporation and
certain of its officers (R. S. Evans, G. E. Uding) -
incorporated by reference from Exhibit 10.3 to the company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1988
10.6 Form of Employment Agreement between Medusa Corporation and
certain of its officers (R. J. Kane, R. B. Denny, D. Knight)
- incorporated by reference from Exhibit 10.6 to the
company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988
10.9 Form of Indemnification Agreement between Medusa Corporation
and its directors and certain of its officers - incorporated
by reference from Exhibit 10.9 to the company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1988
58
<PAGE> 59
Exhibit
Number Description Of Exhibit
- ------ ----------------------
11.1 Medusa Corporation 1991 Long-Term Incentive Plan -
incorporated by reference from Amendment to Form S-8 filed
February, 1996, Registration No. 33-46182
11.2 Medusa Corporation 1991 Long-Term Incentive Plan -
incorporated by reference from Form S-8 filed June 13, 1997,
Registration No. 333-29173
*12 Amended and Restated Revolving Credit Agreement, dated as of
January 27, 1993 and as amended and restated as of December
15, 1995, between the company and KeyBank National
Association, Amendment No. 1 dated as of December 16, 1996
and Amendment No. 2 dated as of December 17, 1997
13 Agreement and Plan of Merger dated as of March 17, 1998
between Medusa Corporation, Bedrock Merger Corp., and
Southdown, Inc. - incorporated by reference from Exhibit 2.1
to the company's Reports on Form 8-K filed March 24, 1998
*21 Subsidiaries of the Registrant
*23 Consent of independent auditors
<TABLE>
<CAPTION>
Financial Data Schedules Restated
------------------------ ---------
<S> <C> <C>
*27.1 Fiscal year end 1997 No
*27.2 Fiscal year end 1995 Yes
*27.3 Fiscal year end 1996 and Quarters 1,2,3 of 1996 Yes
*27.4 Quarters 1, 2, 3 of 1997 Yes
</TABLE>
99.1 Press release dated March 18, 1998 - incorporated by
reference to Form 8-K filed March 24, 1998
Registration No. 001 - 01274
*99.2 Shareholders' Letter dated March 25, 1998
- ---------------------
* Filed herewith
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during last quarter of 1997.
<PAGE> 60
PART IV
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
MEDUSA CORPORATION
(Registrant)
ROBERT S. EVANS
Robert S. Evans
Chairman, Chief Executive
Officer and a Director
Date MARCH 23,1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
-OFFICERS-
R. BRECK DENNY GEORGE E. UDING, JR. EDWARD A. DOLES
R. Breck Denny George E. Uding, Jr. Edward A. Doles
Vice President-Finance President, and Chief Corporate Controller
and Treasurer Operating Officer and a
Director
Date March 23, 1998 Date March 23,1998 Date March 23, 1998
----------------- -------------------- ---------------
-DIRECTORS-
Mone Anathan, III E. Thayer Bigelow, Jr. Richard S. Forte'
- -------------------- ----------------------- ------------------
Mone Anathan, III E. Thayer Bigelow, Jr. Richard S. Forte'
Date MARCH 23, 1998 Date MARCH 23, 1998 Date MARCH 23, 1998
--------------- --------------- ---------------
Dorsey R. Gardner
- -------------------- ----------------------- ------------------
Dorsey R. Gardner Jean Gaulin Dwight C. Minton
Date March 23, 1998 Date March 23, 1998 Date March 23, 1998
--------------- --------------- ---------------
Charles J. Queenan, Jr.
- -------------------- -----------------------
Charles J. Queenan, Jr. Boris Yavitz
Date March 23 , 1998 Date March 23, 1998
---------------- ---------------
<PAGE> 1
Exhibit 12
[MEDUSA LOGO]
U.S. $45,000,000
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of January 27, 1993
and amended and restated as of
December 15, 1995
Among
MEDUSA CORPORATION
as Borrower
and
THE BANKS NAMED HEREIN
as Banks
and
SOCIETY NATIONAL BANK
as Agent
<PAGE> 2
U.S. $45,000,000
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of January 27, 1993
and amended and restated as of
December 15, 1995
Among
MEDUSA CORPORATION
as Borrower
and
THE BANKS NAMED HEREIN
as Banks
and
SOCIETY NATIONAL BANK
as Agent
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS................................................................................ 1
SECTION 1.01. Certain Defined Terms................................................................ 1
SECTION 1.02. Computation of Time Periods.......................................................... 10
SECTION 1.03. Accounting Terms..................................................................... 10
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES............................................................................... 11
SECTION 2.01. The Advances......................................................................... 11
SECTION 2.02. Making the Advances.................................................................. 11
SECTION 2.03. Commitment Fee....................................................................... 12
SECTION 2.04. Reduction of the Commitments......................................................... 12
SECTION 2.05. Repayment............................................................................ 12
SECTION 2.06. Interest............................................................................. 12
SECTION 2.07. Additional Interest on Eurodollar Rate Advances...................................... 13
SECTION 2.08. Interest Rate Determination and Protection........................................... 13
SECTION 2.09. Voluntary Conversion of Advances..................................................... 14
SECTION 2.10. Prepayments.......................................................................... 14
SECTION 2.11. Increased Costs...................................................................... 14
SECTION 2.12. Illegality........................................................................... 15
SECTION 2.13. Payments and Computations............................................................ 15
SECTION 2.14. Sharing of Payments, etc............................................................. 15
ARTICLE III
CONDITIONS OF LENDING........................................................................................... 16
SECTION 3.01. Conditions Precedent at Restatement Effective Date................................... 16
SECTION 3.02. Conditions Precedent to Each Borrowing............................................... 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.................................................................................. 17
SECTION 4.01. Representations and Warranties of the Borrower....................................... 17
ARTICLE V
COVENANTS OF THE BORROWER....................................................................................... 20
SECTION 5.01. Financial Statements; Information.................................................... 20
SECTION 5.02. Inspection of Properties and Books................................................... 23
SECTION 5.03. Corporate Existence; Payment of Taxes; Maintenance of Properties;
Insurance; Compliance with Laws, etc............................................... 23
SECTION 5.04. Books and Accounting................................................................. 24
SECTION 5.05. Nature of Business................................................................... 24
SECTION 5.06. Transactions with Affiliates......................................................... 24
SECTION 5.07. Subsidiary Stock and Debt; Subsidiary Dividends...................................... 25
SECTION 5.08. Consolidation, Merger, Sale of Assets, etc........................................... 25
SECTION 5.09. Sale-Leaseback Transactions.......................................................... 26
SECTION 5.10. Maintenance of Consolidated Tangible Net Worth....................................... 26
SECTION 5.11. Current Debt......................................................................... 27
SECTION 5.12. Liens................................................................................ 27
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
Page
SECTION 5.13. Current Ratio........................................................................ 28
SECTION 5.14. Ratio of Consolidated Liabilities to Consolidated Tangible Net Worth................. 28
SECTION 5.15. Interest Coverage Ratio.............................................................. 28
SECTION 5.16. Certain Subsidiaries to Guarantee Advances........................................... 28
SECTION 5.17. Investments, Acquisitions, etc....................................................... 29
ARTICLE VI
EVENTS OF DEFAULT............................................................................................... 29
SECTION 6.01. Events of Default.................................................................... 29
ARTICLE VII
THE AGENT....................................................................................................... 31
SECTION 7.01. Authorization and Action............................................................. 31
SECTION 7.02. Agent's Reliance, etc................................................................ 31
SECTION 7.03. Society and Affiliates............................................................... 32
SECTION 7.04. Bank Credit Decision................................................................. 32
SECTION 7.05. Indemnification...................................................................... 32
SECTION 7.06. Successor Agent...................................................................... 32
ARTICLE VIII
MISCELLANEOUS................................................................................................... 33
SECTION 8.01. Amendments, etc...................................................................... 33
SECTION 8.02. Notices, etc......................................................................... 33
SECTION 8.03. No Waiver; Remedies.................................................................. 33
SECTION 8.04. Costs, Expenses and Taxes............................................................ 33
SECTION 8.05. Right of Set-off..................................................................... 34
SECTION 8.06. Binding Effect....................................................................... 34
SECTION 8.07. Assignments and Participations....................................................... 34
SECTION 8.08. Governing Law........................................................................ 36
SECTION 8.09. Execution in Counterparts............................................................ 36
SECTION 8.10. Indemnification...................................................................... 36
SECTION 8.11. No Margin Stock Collateral........................................................... 36
SECTION 8.12. Jury Trial Waiver.................................................................... 36
Schedule I - List of Applicable Lending Offices
Schedule II - Certain ERISA Disclosures
Schedule III - Outstanding Debt
Exhibit A - Form of Promissory Note
Exhibit B - Notice of Borrowing
Exhibit C - Form of Opinion of Counsel for the Borrower
Exhibit D - Form of Assignment and Acceptance
Exhibit E - Form of Guaranty by Subsidiary
</TABLE>
ii
<PAGE> 5
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of January 27, 1993
and amended and restated as of
December 15, 1995
MEDUSA CORPORATION, an Ohio corporation (the "BORROWER"), the banks
(the "BANKS") listed on the signature pages hereof, and SOCIETY NATIONAL BANK, a
national banking association ("SOCIETY"), as agent (the "AGENT") for the Banks
hereunder, hereby amend and restate in its entirety the Revolving Credit
Agreement, dated as of January 27, 1993, as amended by amendments dated as of
November 1, 1993, May 1, 1994 and December 23, 1994 (as so amended and in effect
prior to the Restatement Effective Date (herein defined), the "ORIGINAL
AGREEMENT"), and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADJUSTED BASE RATE" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the higher of:
(i) the rate of interest announced publicly by Society in
Cleveland, Ohio, from time to time, as Society's base rate; or
(ii) 1-1/2% per annum above the Federal Funds Rate.
"ADJUSTED BASE RATE ADVANCE" means an Advance which bears interest as
provided in section 2.06(a).
"ADVANCE" means an advance by a Bank to the Borrower pursuant to
Article II, and refers to an Adjusted Base Rate Advance or a Eurodollar Rate
Advance (each of which shall be a "TYPE" of Advance).
"AFFILIATE" means with respect to any designated Person, any other
Person (i) directly or indirectly controlling or controlled by or under direct
or indirect common control with such designated Person, (ii) which other Person
beneficially owns or holds 5% or more of the shares of any class of Voting Stock
of such designated Person, or (iii) 5% or more of any class of the Voting Stock
of which is beneficially owned or held by such designated Person. For purposes
of this definition, "CONTROL" (including, with correlative meanings, the terms
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock or by contract or otherwise.
"APPLICABLE LENDING OFFICE" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of an Adjusted Base Rate Advance, and
such Bank's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
<PAGE> 6
"ATTRIBUTABLE DEBT" means in respect of any Sale-Leaseback Transaction,
as at any date of determination, the lesser of (i) the fair market value of the
assets the subject of such Sale-Leaseback Transaction or (ii) the present value
(discounted in accordance with GAAP at the rate of interest implicit in the
terms of the applicable lease) of the obligation of the lessee for net rental
payments during the remaining term of such Sale-Leaseback Transaction (including
any period for which such lease has been extended or may, at the option of the
lessor, be extended). As used in this definition, "net rental payments" under
any lease for any period means the sum of such rental and other payments
required to be paid in such period by the lessee thereunder, but excluding,
however, any amount required to be paid by such lessee (whether or not
designated as rent or additional rent) on account of maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges required to be
paid by such lessee thereunder or any amounts required to be paid by such lessee
thereunder contingent upon the amount of sales, maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges.
"BOARD OF DIRECTORS" means the Board of Directors of the Borrower or a
duly authorized committee of directors or any other officer of the Borrower
pursuant to an express delegation of authority by the Board of Directors, in any
such case lawfully exercising the relevant powers of such Board.
"BORROWING" means a borrowing consisting of Advances of the same Type
made on the same day by the Banks.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in Cleveland, Ohio and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.
"BUSINESS OR CONDITION" means, with respect to any Person, the
business, operations, assets, properties, earnings, reasonably foreseeable
prospects or condition (financial or other) of such Person, PROVIDED that such
term, when used without reference to any particular Person, shall mean the
Business or Condition of the Borrower and its Subsidiaries, taken as a whole.
"CAPITAL LEASE" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which would,
in accordance with GAAP, be required to be classified and accounted for as a
capital lease on the balance sheet of such Person, other than, in the case of
the Borrower or a Restricted Subsidiary, any such lease under which the Borrower
or a Wholly-owned Restricted Subsidiary is the lessor.
"CAPITAL LEASE OBLIGATION" means with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder which would, in accordance
with GAAP, appear on a balance sheet of such lessee (or the notes thereto) in
respect of such Capital Lease.
"CASH EQUIVALENTS" means any of the following, to the extent owned by
any Person free and clear of all Liens and having a maturity of not greater than
90 days from the date of acquisition thereof; (a) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that is a
Bank or is a bank or trust company which is organized under the laws of the
United States or any State thereof, has combined capital and surplus of at least
$500 million, is a member of the Federal Reserve System and which issues (or the
parent of which issues) commercial paper rated as described in clause (c), or
(c) commercial paper in an aggregate amount of no more than $1,000,000 per
issuer outstanding at any time, issued by any corporation organized under the
laws of any State of the United States, rated at least "Prime-1" (or the then
equivalent grade) by Moody's Investors Services, Inc. or "A-1" (or the then
equivalent grade) by Standard & Poor's Corporation.
"CHANGE IN CONTROL" means and includes any of the following:
(i) any Person or related group of Persons determined in
accordance with section 13(d) of the Securities Exchange Act of 1934,
in one or more transactions, together with its or their Affiliates or
2
<PAGE> 7
Associates, is or becomes the beneficial owner, directly or indirectly,
through a purchase, merger or other acquisition transaction or
otherwise, of a majority of the outstanding Voting Stock of the
Borrower;
(ii) a majority of the Board of Directors of the Borrower (or
similar governing body, in the event the Borrower is not a corporation)
are not Continuing Directors; or
(iii) the shareholders of the Borrower adopt a plan of
liquidation with respect to the Borrower or the Borrower sells,
transfers, leases or otherwise disposes of, in one transaction or a
series of related transactions, all or substantially all of its assets.
For purposes of this definition, (a) an "Affiliate" of, or a Person "affiliated"
with, any Person, means any Person directly or indirectly controlling or
controlled by, or under the direct or indirect common control with, such Person;
(b) an "Associate" of, or a Person "associated" with, any Person, means (i) any
trust or other estate in which such Person has a substantial beneficial interest
or as to which such Person serves as a trustee or in a similar fiduciary
capacity and (ii) any relative or spouse of such Person, or any relative of such
spouse, who has the same home as such Person; (c) the term "beneficial owner"
shall be determined in accordance with Rule 13d-3 and Rule 13d-5 of the
Commission under the Securities Exchange Act of 1934 as in effect on the date
hereof; and (d) "Continuing Director" means at any date a member of the Board of
Directors (or similar governing body, in the event the Borrower is not a
corporation) of the Borrower who (i) was a member of the Board of Directors of
the Borrower on the date hereof or (ii) was nominated for election or elected to
the Board of Directors (or similar governing body, in the event the Borrower is
not a corporation) of the Borrower with the affirmative vote of at least a
majority of the directors (or similar Persons) who were Continuing Directors at
the time of such nomination or election (which may be done by approval of the
proxy statement in which such member was named as a nominee for director (or
similar Person) of the Borrower).
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMISSION" means the Securities and Exchange Commission and any other
similar or successor agency of the Federal government administering the
Securities Act.
"COMMITMENT" has the meaning specified in section 2.01.
"COMPANY GROUP MEMBER" means the Borrower, each Subsidiary of the
Borrower, and each of their respective predecessors and (i) each corporation
that is or was at any time a member of the same controlled group of corporations
(within the meaning of section 414(b) of the Code) as the Borrower or any
Subsidiary of the Borrower or any of their respective predecessors, (ii) each
trade or business, whether or not incorporated, that is or was at any time under
common control (within the meaning of section 414(c) of the Code) with the
Borrower or any Subsidiary of the Borrower or any of their respective
predecessors, and (iii) (solely with respect to any provision of the Code or
ERISA with respect to which a liability incurred by an affiliated service group
member (as defined below could attach to or result in a lien upon the assets of
the Borrower or any Subsidiary) each trade or business, whether or not
incorporated, that is or was at any time a member of the same affiliated service
group (within the meaning of section 414(m) and (o) of the Code) as the Borrower
or any Subsidiary of the Borrower or any of their respective predecessors;
PROVIDED, HOWEVER, that the term "Company Group Member" shall not include any
corporation or trade or business for any period during which the termination of
or withdrawal from any employee pension benefit plan (as defined in section 3(2)
of ERISA) by such corporation or trade or business could not subject the
Borrower or any Subsidiary to any liability under the Code or ERISA.
"CONSOLIDATED CURRENT ASSETS" means as at any date of determination all
assets of the Borrower and its Restricted Subsidiaries which would, in
accordance with GAAP on a consolidated basis, after eliminating all
inter-company items, be classified as current assets of a company conducting a
business similar to that of the Borrower, after deducting adequate reserves in
each case in which a reserve is proper in accordance with GAAP.
3
<PAGE> 8
"CONSOLIDATED CURRENT LIABILITIES" means as at any date of
determination all Consolidated Liabilities of the Borrower and its Restricted
Subsidiaries which would, in accordance with GAAP on a consolidated basis, after
eliminating all inter-company items, be classified as current liabilities in
accordance with GAAP.
"CONSOLIDATED INCOME TAX EXPENSE" means for any period, the aggregate
of all expenses for taxes based on net income and all franchise taxes of the
Borrower and its Restricted Subsidiaries, determined in accordance with GAAP on
a consolidated basis, after eliminating all inter-company items.
"CONSOLIDATED INTEREST EXPENSE" means for any period the aggregate
amount of interest in respect of Debt of the Borrower and its Restricted
Subsidiaries, determined in accordance with GAAP on a consolidated basis, after
eliminating all inter-company items, including, without limitation, the
amortization of original issue discount on any such Debt and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting, and the net costs associated with
interest rate protection agreements and all but the principal component of
Rental Obligations, paid, accrued or scheduled to be paid or accrued during such
period. For purposes of this definition, interest on the principal component of
Rental Obligations shall be deemed to accrue at an interest rate reasonably
determined in accordance with GAAP.
"CONSOLIDATED FUNDS FROM OPERATIONS" means for any period, Consolidated
Net Income for such period PLUS, to the extent deducted in determining the
amount thereof, (i) amortization and depreciation PLUS (ii) other non-cash
charges to income of the Borrower and its Restricted Subsidiaries, PROVIDED,
HOWEVER, that Consolidated Funds from Operations shall not include the income
from any Unrestricted Subsidiary except to the extent such income has actually
been received by the Borrower or any Restricted Subsidiary in the form of cash.
"CONSOLIDATED LIABILITIES" means as at any date of determination all
obligations of the Borrower and its Restricted Subsidiaries which would, in
accordance with GAAP on a consolidated basis, after eliminating all
inter-company items, be included in determining total liabilities as shown on
the liabilities side of a consolidated balance sheet of the Borrower and its
Restricted Subsidiaries at such date and, in any event, including all Debt of
the Borrower and its Restricted Subsidiaries on a consolidated basis after
eliminating all inter-company items.
"CONSOLIDATED NET INCOME" means for any period, the net income (or
deficit) of the Borrower and its Restricted Subsidiaries for such period (taken
as a cumulative whole) after deducting, without duplication, all interest
expense, rentals, operating expenses, provisions for all taxes and reserves
(including reserves for deferred income taxes) and all other proper deductions,
all determined in accordance with GAAP on a consolidated basis, after
eliminating all inter-company items; PROVIDED, HOWEVER, that there shall be
excluded from Consolidated Net Income (i) the income (or deficit) of any other
Person accrued prior to the date it becomes a Subsidiary of the Borrower or is
merged into or consolidated with the Borrower or a Subsidiary of the Borrower,
(ii) the income (or deficit) of any Person (other than a Restricted Subsidiary
of the Borrower) in which the Borrower or any of its Restricted Subsidiaries has
an ownership interest, except to the extent that any such income has been
actually received by the Borrower or such Restricted Subsidiary in the form of
cash dividends or similar distributions, and (iii) any item properly classified
as extraordinary in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means as at any date of
determination, the amount of "Total Shareholders' Equity" of the Borrower as
shown on the most recent balance sheet of the Borrower prepared and delivered to
the Banks pursuant to section 5.01, LESS the net book value of all items of the
following character acquired after December 31, 1992, to the extent, if any,
they are included in consolidated assets of the Borrower and its Subsidiaries or
deducted from consolidated liabilities of the Borrower and its Subsidiaries:
franchises, licenses, permits, patents, patent applications, copyrights,
trademarks, trade names, good will, experimental or organizational expense,
unamortized debt discount and expense, deferred charges, and treasury stock, and
less any amounts of deposits, trusts arrangements or similar arrangements made
by the Borrower and its Restricted Subsidiaries in the amount necessary to pay,
satisfy or redeem any obligation of the Borrower and any Restricted Subsidiary
which would, in accordance with GAAP, be classified on its balance sheet as
debt.
4
<PAGE> 9
"CONSOLIDATED TOTAL DEBT" means as at any date of determination, the
aggregate principal amount of all Debt of the Borrower and its Restricted
Subsidiaries outstanding on such date, determined in accordance with GAAP on a
consolidated basis after eliminating all inter-company items.
"CONVERTIBLE SUBORDINATED NOTES" means up to $57,500,000 of the
Borrower's Convertible Subordinated Notes due 2003, issued in an underwritten
public offering, as contemplated by the Registration Statement on Form S-3 filed
by the Borrower with the Securities and Exchange Commission on October 22, 1993,
including any amendments thereto so filed on or before the date such
Registration Statement becomes effective.
"CURRENT DEBT" means as at any date of determination, all Debt maturing
or payable on demand or within one year from the date of the creation thereof
including any Debt that is by its terms or by the terms of any instrument or
agreement relating thereto directly or indirectly renewable or extendible, at
the option of the debtor, to a date beyond such year, including any outstanding
amounts of any revolving credit facility, but excluding any fixed or contingent
payments maturing or required to be made not more than one year after such date
in respect of the principal and premium, if any, on any Funded Debt. Any Debt
that is extended or renewed shall be deemed to have been created at the date of
such extension or renewal.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion of
Advances of one Type into Advances of another Type pursuant to section 2.08 or
2.09.
"DEBT" means, with respect to any Person (i) all obligations (whether
or not represented by bonds, debentures, notes or other securities) of such
Person for borrowed money (and any notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money), (ii) any obligation of such Person for all or any part of the
purchase price of property or other assets or for the cost of property or other
assets constructed or of improvements, other than accounts payable included in
current liabilities and incurred in respect of property purchased in the
ordinary course of business and not required to be classified on its balance
sheet, in accordance with GAAP, as debt, (iii) any obligation secured by any
Lien on or payable out of the proceeds of production from property owned or held
by such Person whether or not such Person has assumed or become liable for the
payment of such obligation, (iv) any Capital Lease Obligation of such Person,
and (v) any Guaranty by such Person of or with respect to Debt of another
Person, except Debt shall not include any Debt which is extinguished in
accordance with GAAP due to deposits, trust arrangements or similar arrangements
made by such Person in the amount necessary to pay, satisfy or redeem such Debt.
"DEFAULT" means any condition or event which, with notice or lapse of
time or both, would become an Event of Default.
"DOMESTIC LENDING OFFICE" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its name on
Schedule I hereto, or such other office of such Bank as such Bank may from time
to time specify to the Borrower and the Agent.
"ELIGIBLE ASSIGNEE": shall mean (a) a commercial bank organized under
the laws of the United States, or any State thereof, which is a Subsidiary of
any Bank or a Subsidiary of any parent corporation of any Bank; (b) any other
commercial bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of $3,000,000,000 and a combined
capital and surplus of at least $150,000,000; (c) a savings and loan association
or savings bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of $3,000,000,000 and a combined
capital and surplus of at least $150,000,000; (d) a finance company or other
financial institution (whether a corporation, partnership, trust or other
entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and having total assets
in excess of $500,000,000; and (e) any other person (other than an Affiliate of
the Borrower) approved by the Agent and, if no Event of Default shall have
occurred and be continuing, the Borrower (whose approval will not be
unreasonably withheld or delayed).
"ENVIRONMENTAL LAW" means any past, present or future Federal, state,
local or foreign statutory or common law, or any regulation, code, plan, order,
decree, judgment, permit, grant, franchise, concession,
5
<PAGE> 10
restriction, agreement or injunction issued, entered, promulgated or approved
thereunder, relating to (i) the environment, human health or safety, including,
without limitation, any law relating to emissions, discharges, releases or
threatened releases of Hazardous Substances into the environment (including,
without limitation, air, surface water, groundwater or land), or (ii) the
manufacture, generation, refining, processing, distribution, use, sale,
treatment, recycling, receipt, storage, disposal, transport, arranging for
transport, or handling of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Bank, the office
of such Bank specified as its "Eurodollar Lending Office" opposite its name on
Schedule I hereto (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Bank as such Bank may from time to time
specify to the Borrower and the Agent.
"EURODOLLAR RATE" means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same Borrowing, an interest rate per annum
equal to the average (rounded upward to the nearest whole multiple of 1/16 of 1%
per annum, if such average is not such a multiple) of the rate per annum at
which deposits in U.S. dollars are offered to the Agent in or through the London
interbank market at or about 11:00 A.M. (London time) two Business Days before
the first day of such Interest Period in an amount substantially equal to the
Eurodollar Rate Advances comprising part of such Borrowing and for a period
equal to such Interest Period. The Eurodollar Rate for the Interest Period for
each Eurodollar Rate Advance comprising part of the same Borrowing shall be
determined by the Agent on the basis of applicable rates furnished to and
received by the Agent two Business Days before the first day of such Interest
Period, SUBJECT, HOWEVER, to the provisions of section 2.08.
"EURODOLLAR RATE ADVANCE" means an Advance which bears interest as
provided in section 2.06(b).
"EURODOLLAR RATE RESERVE PERCENTAGE" of any Bank for the Interest
Period for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Bank with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities having a term equal
to such Interest Period.
"EVENTS OF DEFAULT" has the meaning specified in section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same may be in effect at the time.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System only, arranged by Federal funds brokers. The Federal Funds Rate
shall be determined by the Agent on the basis of reports by Federal funds
brokers to, and published daily by, the Federal Reserve Bank of New York in the
Composite Closing Quotations for U.S. Government Securities. If such publication
is unavailable or the Federal Funds Rate is not set forth therein, the Federal
Funds Rate shall be determined on the basis of any other source reasonably
selected by the Agent. The Federal Funds Rate applicable each day shall be the
Federal Funds Rate reported as applicable to Federal Funds transactions on that
date. In the case of Saturday, Sunday or legal holiday, the Federal Funds Rate
shall be the rate applicable to Federal funds transactions on the immediately
preceding day for which the Federal Funds Rate is reported.
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<PAGE> 11
"FUNDED DEBT" means for any Person, all Debt of such Person which in
accordance with GAAP would be classified on a balance sheet of such Person as of
such date as long-term debt, and including in any event all Debt of such Person,
whether secured or unsecured, having a final maturity (or which, pursuant to its
terms, is renewable or extendible at the option of such Person for a period
ending) more than one year after the date of the creation thereof (including any
portion thereof which is on such date included in current liabilities of such
Person), but excluding Current Debt of such Person.
"GAAP" means generally accepted accounting principles as set forth in
the opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the Financial Accounting
Standards Board.
"GOVERNMENTAL BODY" means any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign.
"GUARANTY" means as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business) or discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect guaranteed by such
Person by reason of the issuance of a letter of credit, surety or performance
bond, or through any agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of the
obligor of such obligation, or to make payment for any products, materials or
supplies or for any transportation or services regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof. The amount of any Guaranty shall be equal to the amount of the
obligation guaranteed.
"HAZARDOUS SUBSTANCES" means collectively, contaminants; pollutants;
toxic or hazardous chemicals, substances, materials, wastes and constituents;
petroleum products; polychlorinated biphenyls; medical wastes; infectious
wastes; asbestos; paint containing lead; and urea formaldehyde.
"INTEREST COVERAGE RATIO" means at any date of determination the ratio
of (i) Consolidated Net Income for the twelve months most recently ended, PLUS
Consolidated Interest Expense and Consolidated Income Tax Expense for such
period, to (ii) Consolidated Interest Expense for such period.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such Advance or
the date of the Conversion of any Advance into such an Advance and ending on the
last day of the period selected by the Borrower pursuant to the provisions below
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below. The duration of each
such Interest Period shall be 1, 2, 3 or 6 months in the case of a Eurodollar
Rate Advance, in each case as the Borrower may, upon notice received by the
Agent not later than 11:00 A.M. (Cleveland, Ohio time) on the third Business Day
prior to the first day of such Interest Period, select; PROVIDED, HOWEVER, that:
(i) the duration of any Interest Period which commences before
the Termination Date and otherwise ends after the Termination Date
shall end on the Termination Date;
(ii) Interest Periods commencing on the same date for Advances
comprising part of the same Borrowing shall be of the same duration;
and
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
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<PAGE> 12
Business Day, PROVIDED, in the case of any Interest Period for a
Eurodollar Rate Advance, that if such extension would cause the last
day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the next
preceding Business Day.
"LIEN" means as to any Person, any mortgage, lien, pledge, adverse
claim, charge, security interest or other encumbrance in or on, or any interest
or title of any vendor, lessor, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or Capital
Lease with respect to, any property or asset of such Person, or the signing or
filing of a financing statement which names such Person as debtor, or the
signing of any security agreement authorizing any other party as the secured
party thereunder to file any financing statement which names such Person as
debtor.
"MAJORITY BANKS" means at any time Banks holding at least 75% of the
then aggregate unpaid principal amount of the Notes held by Banks, or, if no
such principal amount is then outstanding, Banks having at least 75% of the
Commitments.
"MATERIAL ADVERSE CHANGE"; "MATERIAL ADVERSE EFFECT"; "MATERIALLY
ADVERSE" means, as applied in, on or to any Person, as appropriate, a material
adverse change in such Person's Business or Condition, a material adverse effect
on such Person's Business or Condition and an event which is materially adverse
to such Person's Business or Condition; PROVIDED, that any such term, when used
without reference to any particular Person, shall mean such change in or effect
on or to the Borrower and its Subsidiaries, taken as a whole.
"MULTIEMPLOYER PLAN" means a Plan defined as such in section 4001(a)(3)
of ERISA to which any Company Group Member is making or incurring an obligation
to make, or has made or incurred an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" means a Plan to which any Company Group
member, and at least one employer other than any Company Group Member, is making
or accruing an obligation to make contributions or, in the event that any such
plan has been terminated, has made or accrued an obligation to make
contributions during any of the five plan years preceding the date of
termination of such plan.
"NOTE" means a promissory note of the Borrower payable to the order of
any Bank, in substantially the form of Exhibit A hereto, evidencing the
aggregate indebtedness of the Borrower to such Bank resulting from the Advances
made by such Bank.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf of the
Borrower by the Chairman of the Board of Directors (if an officer) or its
President or one of its Vice Presidents or its Chief Financial Officer or its
Treasurer.
"ORDER" means any order, writ, injunction, decree, judgment, award,
determination, direction or demand.
"ORIGINAL AGREEMENT" has the meaning specified in the introductory
paragraph of this Agreement.
"NOTICE OF BORROWING" has the meaning specified in section 2.02.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"PLAN" means any employee pension benefit plan (as defined in section
3(2)of ERISA) maintained at any time, or contributed to, by any Company Group
Member.
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<PAGE> 13
"PREFERRED STOCK" means as applied to any corporation, shares of such
corporation which are entitled to preference or priority over any other shares
of such corporation in respect of either the payment of dividends or the
distribution of assets upon liquidation.
"PRIORITY DEBT" means as at any date of determination after the date
hereof, the sum (without duplication) of (A) the aggregate principal amount
outstanding of all Debt of Restricted Subsidiaries (other than Debt of any
Restricted Subsidiary to the Borrower or to another Restricted Subsidiary)
created or otherwise incurred after the date hereof, PLUS (B) the aggregate
principal amount outstanding of all Debt of the Borrower and Restricted
Subsidiaries (other than Debt of any Restricted Subsidiary to the Borrower or to
another Restricted Subsidiary) created or otherwise incurred after the date
hereof and secured by a Lien not otherwise permitted under clauses (a) through
(i) of section 5.12, PLUS (C) the aggregate amount of Attributable Debt of the
Borrower and Restricted Subsidiaries in effect on such date.
"RENTAL OBLIGATIONS" means for any period, the total amount (whether or
not designated as rentals or additional or supplemental rentals) payable by the
Borrower or any Restricted Subsidiary under any Capital Lease during such period
(in each case exclusive of amounts so payable on account of maintenance,
repairs, insurance, taxes, assessments and other similar charges); if and to the
extent that the amount of any Rental Obligation during any future period is not
definitely determinable under the Capital Lease in question, the amount of such
Rental Obligation shall be estimated in such reasonable manner as the Board of
Directors in good faith may determine.
"REPORTABLE EVENT" means any of the events set forth in section 4043(b)
of ERISA, or the regulations thereunder, other than those events as to which the
thirty-day notice requirement of such section or such regulations is waived
under subsection .13, .14, .18, .19 or .20 of PBGC Reg. ss. 2615.
"RESTATEMENT EFFECTIVE DATE" means the date this Agreement becomes
effective as provided in section 8.06.
"RESTRICTED SUBSIDIARY" means any Subsidiary which is organized under
the laws of, and which at the time in question conducts substantially all of its
business and maintains substantially all of its property and assets within, the
United States of America, or any state thereof, Canada, or any province thereof,
or Mexico, and at least 80% of the Voting Stock of which is at the time owned by
the Borrower or by one or more Wholly-owned Restricted Subsidiaries or by the
Borrower and one or more Wholly-owned Restricted Subsidiaries.
"SALE-LEASEBACK TRANSACTION" means any arrangement with any Person
providing for the leasing by the Borrower or any Restricted Subsidiary, as
lessee, of any property that, or of any property similar to and used for
substantially the same purposes as any other property that, has been or is to be
sold or otherwise transferred by the Borrower or any Restricted Subsidiary to
such Person (or an Affiliate of such Person) with the intention of entering into
such a lease.
"SECURITIES ACT" means the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"SUBSIDIARY" means any Person more than 50% of the Voting Stock of
which is at the time owned by the Borrower or by one or more Wholly-owned
Restricted Subsidiaries or by the Borrower and one or more Wholly- owned
Restricted Subsidiaries.
"TERMINATION DATE" means December 31, 2000 or the earlier date of
termination in whole of the Commitments pursuant to section 2.04 or 6.01.
"TERMINATION EVENT" means (i) with respect to any Plan other than a
Multiemployer Plan, the occurrence or expected occurrence of a Reportable Event
or an event described in section 4062(e) of ERISA, (ii) the withdrawal of any
Company Group Member from a Multiple Employer Plan during a plan year in which
it was a "substantial employer," as such term is defined in section 4001(a)(2)
of ERISA, or the incurrence of liability
9
<PAGE> 14
by any Company Group Member under section 4064 of ERISA upon the termination of
a Multiple Employer Plan, (iii) the distribution of a notice of intent to
terminate a Plan or Multiemployer Plan pursuant to section 4041(a)(2) or 4041A
of ERISA or the treatment of a Plan amendment as a termination under section
4041 or 4041A of ERISA, (iv) the institution of proceedings to terminate a Plan
or Multiemployer Plan by the PBGC under section 4042 of ERISA, (v) any other
event or condition which would reasonably be expected to result in the
termination by the PBGC of, or the appointment by the PBGC of a trustee to
administer, any Plan or Multiemployer Plan under section 4042 of ERISA, or (vi)
the complete or partial withdrawal of any Company Group Member from a
Multiemployer Plan.
"TOTAL CAPITALIZATION" means at any time, the sum of (i) Consolidated
Tangible Net Worth PLUS (ii) Consolidated Total Debt PLUS (iii) the aggregate
amount (without duplication) of deferred income taxes of the Borrower and its
Restricted Subsidiaries at such time.
"UNFUNDED CURRENT LIABILITY" means, with respect to any Plan, the
amount, if any, by which the present value of the accrued benefits under the
Plan (based on those assumptions used to fund such Plan) as of the close of its
most recent plan year exceeds the then current value of the assets of such Plan
allocable to such benefits.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary other than a Restricted
Subsidiary.
"VOTING STOCK" means with respect to (i) any corporation, capital stock
of such corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
persons performing similar functions), and (ii) any other Person (other than a
corporation) any shares, interests, participations or other equivalents (however
designated) representing beneficial interests in such Person or in the capital
or profits of such Person.
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary,
all of the equity securities (except directors' qualifying shares) of which are
owned by the Borrower or another Wholly-owned Restricted Subsidiary.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in section 4.01(d); PROVIDED, HOWEVER, that if
any change in generally accepted accounting principles from those applied in the
preparation of the financial statements referred to in this Agreement (i) is
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions), the initial announcement of which change is
made after the date of this Agreement, and (ii) results in a change in the
method of calculation of financial covenants, standards or terms found in this
Agreement, the parties hereto agree to enter into good faith negotiations in
order to amend such provisions so as to reflect such changes with the desired
result that the criteria for evaluating the Borrower's financial condition shall
be the same after such changes as if such changes had not been made; and
PROVIDED, FURTHER, that until such time as the parties hereto agree upon such
amendments, such financial covenants, standards and terms shall be construed and
calculated as though such change had not taken place. When used herein, the term
"financial statement" shall include the notes and schedules thereto.
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<PAGE> 15
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE ADVANCES. Each Bank severally agrees, on the terms
and conditions hereinafter set forth, to make Advances to the Borrower from time
to time on any Business Day during the period from the date hereof until the
Termination Date in an aggregate amount not to exceed at any time outstanding
the amount set opposite such Bank's name on the signature pages hereof, as such
amount may be reduced pursuant to section 2.04 (such Bank's "COMMITMENT"). Each
Borrowing shall be in an aggregate amount not less than $3,000,000 or an
integral multiple of $1,000,000 in excess thereof and shall consist of Advances
of the same Type made on the same day by the Banks ratably according to their
respective Commitments. Within the limits of each Bank's Commitment, the
Borrower may borrow, prepay pursuant to section 2.10 and reborrow as provided in
this section 2.01.
SECTION 2.02. MAKING THE ADVANCES. (a) Each Borrowing shall be made on
notice, given not later than 11:00 A.M. (Cleveland, Ohio time) on the third
Business Day prior to the date of the proposed Borrowing in the case of
Eurodollar Rate Advances and not later than 11:00 A.M. (Cleveland, Ohio time) on
the Business Day prior to the date of the proposed Borrowing in the case of
Adjusted Base Rate Advances, by the Borrower to the Agent, which shall give to
each Bank prompt notice thereof by telecopier, telex or cable. Each such notice
of a Borrowing (a "NOTICE OF BORROWING") shall be by telecopier, telex or cable,
confirmed immediately in writing, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Type of
Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing,
and (iv) in the case of a Borrowing comprised of Eurodollar Rate Advances, the
initial Interest Period for such Advances. Each Bank shall, before 11:00 A.M.
(Cleveland, Ohio time) on the date of such Borrowing, make available for the
account of its Applicable Lending Office to the Agent at its address referred to
in section 8.02, in same day funds, such Bank's ratable portion of such
Borrowing. After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will make such funds
available to the Borrower at the Agent's aforesaid address.
(b) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Borrowing which the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Bank against any loss, cost or expense incurred by such Bank as a
result of any failure to fulfill on or before the date specified in such Notice
of Borrowing for such Borrowing the applicable conditions set forth in Article
III, including, without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Bank to fund the Advance to be made
by such Bank as part of such Borrowing when such Advance, as a result of such
failure, is not made on such date.
(c) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's ratable portion of such Borrowing, the Agent may assume that such
Bank has made such portion available to the Agent on the date of such Borrowing
in accordance with subsection (a) of this section 2.02 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such ratable portion available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Advances comprising such Borrowing and (ii) in the case of such Bank,
the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Advance as part of
such Borrowing for purposes of this Agreement.
(d) The failure of any Bank to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Bank of its obligation, if
any, hereunder to make its Advance on the date of such
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<PAGE> 16
Borrowing, but no Bank shall be responsible for the failure of any other Bank to
make the Advance to be made by such other Bank on the date of any Borrowing.
SECTION 2.03. COMMITMENT FEE. The Borrower agrees to pay to the Agent
for the account of each Bank a commitment fee on the average daily unused
portion of such Bank's Commitment from the Restatement Effective Date until the
Termination Date at the rate per annum determined in accordance with the Pricing
Grid contained in section 2.06, based on the ratio of the Borrower's
Consolidated Liabilities to Consolidated Tangible Net Worth as of the end of the
Borrower's fiscal quarter ended most recently prior to such Interest Period as
to which the Borrower shall have delivered to the Agent the financial statements
for such quarter (or the fiscal year ended with such fiscal quarter) referred to
in clause (a) or (b) of section 5.01, together with an Officer's Certificate
setting forth in reasonable detail the amounts of Consolidated Liabilities and
Consolidated Tangible Net Worth and the computation of such ratio, with changes
in such rate per annum being effective on the first of the month following such
delivery to the Agent, payable on the last day of each March, June, September
and December during the term of such Bank's Commitment, commencing on the first
such date after the Restatement Effective Date, and on the Termination Date. If
as of the Restatement Effective Date any commitment fees remain payable under
the Original Agreement for the period ending on the Restatement Effective Date,
the Borrower will pay to the Agent for the account of the Banks party to the
Original Agreement the amount of such commitment fees on the first date a
commitment fee is payable hereunder.
SECTION 2.04. REDUCTION OF THE COMMITMENTS. The Borrower shall have the
right, upon at least five Business Days' notice to the Agent, to terminate in
whole or reduce ratably in part the unused portions of the respective
Commitments of the Banks, PROVIDED that each partial reduction shall be in the
aggregate amount of $3,000,000 or an integral multiple thereof.
SECTION 2.05. REPAYMENT. The Borrower shall repay the unpaid
principal amount of each Advance made by each Bank in accordance with the Note
to the order of such Bank.
SECTION 2.06. INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Advance made by each Bank from the date of such Advance
until such principal amount shall be paid in full, at the following rates per
annum:
(a) ADJUSTED BASE RATE ADVANCES. During such periods as such
Advance is an Adjusted Base Rate Advance, a rate per annum equal at all
times to the Adjusted Base Rate in effect from time to time, payable
quarterly on the last day of each March, June, September, and December
during such periods and on the date such Adjusted Base Rate Advance
shall be Converted or paid in full; PROVIDED that any amount of
principal which is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from the date on which
such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to 1% per annum above
the Adjusted Base Rate in effect from time to time.
(b) EURODOLLAR RATE ADVANCES. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (i)
the Eurodollar Rate for such Interest Period for such Advance PLUS (ii)
the Applicable Increment (as defined below) for such Interest Period,
payable on the last day of such Interest Period and, if such Interest
Period has a duration of more than three months, on each day which
occurs during such Interest Period every three months from the first
day of such Interest Period; PROVIDED that any amount of principal
which is not paid when due (whether at stated maturity, by acceleration
or otherwise) shall bear interest, from the date on which such amount
is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the greater of (x) 1% per annum above
the Adjusted Base Rate in effect from time to time and (y) 2% per annum
above the rate per annum required to be paid on such Advance
immediately prior to the date on which such amount became due.
The "APPLICABLE INCREMENT" for any Interest Period commencing after the
Restatement Effective Date shall be equal to percentage rate per annum shown in
the Pricing Grid below in the column entitled Applicable
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<PAGE> 17
Increment corresponding to the ratio of the Borrower's Consolidated Liabilities
to Consolidated Tangible Net Worth as of the end of the Borrower's fiscal
quarter ended most recently prior to such Interest Period as to which the
Borrower shall have delivered to the Agent the financial statements for such
quarter (or the fiscal year ended with such fiscal quarter) referred to in
clause (a) or (b) of section 5.01, together with an Officer's Certificate
setting forth in reasonable detail the amounts of Consolidated Liabilities and
Consolidated Tangible Net Worth and the computation of such ratio.
PRICING GRID
<TABLE>
<CAPTION>
RATIO OF CONSOLIDATED LIABILITIES
TO CONSOLIDATED TANGIBLE NET
WORTH Applicable Increment Commitment Fee Rate
<S> <C> <C>
Equal to or less than 1.50 to 1.00 .35% .20%
Equal to or less than 2.00 to 1.00 .45% .225%
Equal to or less than 2.75 to 1.00 .50% .25%
Greater than 2.75 to 1.00 .75% .35%
</TABLE>
SECTION 2.07. ADDITIONAL INTEREST ON EURODOLLAR RATE ADVANCES. The
Borrower shall pay to each Bank, so long as such Bank shall be required under
regulations of the Board of Governors of the Federal Reserve System to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid principal amount of
each Advance of such Bank during such periods as such Advance is a Eurodollar
Rate Advance, from the date of such Advance until such principal amount is paid
in full, at an interest rate per annum equal at all times to the remainder
obtained by subtracting (i) the Eurodollar Rate for such Interest Period for
such Eurodollar Rate Advance from (ii) the rate obtained by dividing such
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Bank for such Interest Period, payable on each date on which
interest is payable on such Eurodollar Rate Advance. Such additional interest
shall be determined by such Bank and notified to the Borrower through the Agent.
SECTION 2.08. INTEREST RATE DETERMINATION AND PROTECTION. (a) The Agent
shall give prompt notice to the Borrower and the Banks of the applicable
interest rate determined by the Agent for purposes of section 2.06(a) or (b).
(b) If, with respect to any Eurodollar Rate Advances, Banks having at
least 50% of the Commitments notify the Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Banks of making, funding or maintaining their respective Eurodollar Rate
Advances for such Interest Period, the Agent shall forthwith so notify the
Borrower and the Banks, whereupon
(i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into an
Adjusted Base Rate Advance, and
(ii) the obligation of the Banks to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist.
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<PAGE> 18
(c) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in section 1.01, the Agent will
forthwith so notify the Borrower and the Banks and such Advances will
automatically, on the last day of the then existing Interest Period therefor,
Convert into Adjusted Base Rate Advances.
(d) On the date on which the aggregate unpaid principal amount of
Advances comprising any Borrowing shall be reduced, by payment or prepayment or
otherwise, to less than $3,000,000, such Advances shall, if they are Advances of
a Type other than Adjusted Base Rate Advances, automatically Convert into
Adjusted Base Rate Advances, and on and after such date the right of the
Borrower to Convert such Advances into Advances of a Type other than Adjusted
Base Rate Advances shall terminate; PROVIDED, HOWEVER, that if and so long as
each such Advance shall be of the same Type and have the same Interest Period as
Advances comprising another Borrowing or other Borrowings, and the aggregate
unpaid principal amount of all such Advances shall equal or exceed $3,000,000,
the Borrower shall have the right to continue all such Advances as, or to
Convert all such Advances into, Advances of such Type having such Interest
Period.
SECTION 2.09. VOLUNTARY CONVERSION OF ADVANCES. The Borrower may on any
Business Day, upon notice given to the Agent not later than 11:00 A.M.
(Cleveland, Ohio time) on the third Business Day prior to the date of the
proposed Conversion and subject to the provisions of sections 2.08 and 2.12,
Convert all Advances of one Type comprising the same Borrowing into Advances of
another Type; PROVIDED, HOWEVER, that any Conversion of any Eurodollar Rate
Advances into Adjusted Base Rate Advances shall be made on, and only on, the
last day of an Interest Period for such Eurodollar Rate Advances. Each such
notice of a Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if
such Conversion is into Eurodollar Rate Advances, the duration of the Interest
Period for each such Advance.
SECTION 2.10. PREPAYMENTS. The Borrower may, upon at least one Business
Day's notice to the Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amounts of the Advances comprising part of the same
Borrowing in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid; PROVIDED, HOWEVER, that
(x) each partial prepayment shall be in an aggregate principal amount not less
than $3,000,000 and in the event of such prepayment of any Eurodollar Rate
Advance, the Borrower shall be obligated to reimburse the Banks in respect
thereof pursuant to section 8.04(b).
SECTION 2.11. INCREASED COSTS. (a) If, due to either (i) the
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements, in the case of Eurodollar Rate Advances,
included in the Eurodollar Rate Reserve Percentage) in or in the interpretation
of any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to any Bank of agreeing
to make or making, funding or maintaining Eurodollar Rate Advances, then the
Borrower shall from time to time, upon demand by such Bank (with a copy of such
demand to the Agent), pay to the Agent for the account of such Bank additional
amounts sufficient to compensate such Bank for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
and the Agent by such Bank, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If any Bank determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Bank or any
corporation controlling such Bank and that the amount of such capital is
increased by or based upon the existence of such Bank's commitment to lend
hereunder and other commitments of this type, then, upon demand by such Bank
(with a copy of such demand to the Agent), the Borrower shall immediately pay to
the Agent for the account of such Bank, from time to time as specified by such
Bank, additional amounts sufficient to compensate such Bank or such corporation
in the light of such circumstances, to the extent that such Bank reasonably
determines such increase in capital to be allocable to the existence of such
Bank's commitment to lend hereunder. A certificate
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as to such amounts submitted to the Borrower and the Agent by such Bank shall be
conclusive and binding for all purposes, absent manifest error.
SECTION 2.12. ILLEGALITY. Notwithstanding any other provision of this
Agreement, if any Bank shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for any Bank or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, (i) the obligation of the Banks to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower and the Banks that the circumstances causing such suspension
no longer exist and (ii) the Borrower shall forthwith prepay in full all
Eurodollar Rate Advances of all Banks then outstanding, together with interest
accrued thereon, unless the Borrower, within five Business Days of notice from
the Agent, Converts all Eurodollar Rate Advances of all Banks then outstanding
into Adjusted Base Rate Advances in accordance with section 2.09.
SECTION 2.13. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make
each payment hereunder and under the Notes not later than 11:00 A.M. (Cleveland,
Ohio time) on the day when due in U.S. dollars to the Agent at its address
referred to in section 8.02 in same day funds. The Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or commitment fees ratably (other than amounts payable
pursuant to section 2.07 or 2.11) to the Banks for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of
any other amount payable to any Bank to such Bank for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement.
(b) All computations of interest based on the rate referred to in
clause (i) of the definition of Adjusted Base Rate and of commitment fees shall
be made by the Agent on the basis of a year of 365 or 366 days, as the case may
be, and all computations of interest based on the Eurodollar Rate or the Federal
Funds Rate shall be made by the Agent, and all computations of interest pursuant
to section 2.07 shall be made by a Bank, on the basis of a year of 360 days, in
each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest or commitment fees
are payable. Each determination by the Agent (or, in the case of section 2.07,
by a Bank) of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(c) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; PROVIDED, HOWEVER, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(d) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent the
Borrower shall not have so made such payment in full to the Agent, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.14. SHARING OF PAYMENTS, ETC. If any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Advances made by it (other than
pursuant to section 2.07 or 2.11) in excess of its ratable share of payments on
account of the Advances obtained by all the Banks, such Bank shall forthwith
purchase from the other Banks such participations in the Advances made by them
as shall be necessary to cause such purchasing Bank to share the excess payment
ratably with each of them, PROVIDED, HOWEVER, that if all or any portion of such
excess payment is thereafter
15
<PAGE> 20
recovered from such purchasing Bank, such purchase from each Bank shall be
rescinded and such Bank shall repay to the purchasing Bank the purchase price to
the extent of such recovery together with an amount equal to such Bank's ratable
share (according to the proportion of (i) the amount of such Bank's required
repayment to (ii) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. The Borrower agrees that any Bank so purchasing a
participation from another Bank pursuant to this section 2.14 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrower in the amount of such
participation.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. CONDITIONS PRECEDENT AT RESTATEMENT EFFECTIVE DATE. This
Agreement shall not become effective in accordance with section 8.06 hereof
unless, at and as of the Restatement Effective Date, the Agent shall have
received the following, each dated the Restatement Effective Date or as of a
date not more than five days prior thereto, in form and substance satisfactory
to the Agent and the Majority Banks and (except for the Notes) in sufficient
copies for each Bank:
(a) The Notes to the order of the Banks, respectively.
(b) Certified copies of the resolutions of the Board of
Directors of the Borrower approving this Agreement, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement.
(c) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying the names and true signatures of the
officers of the Borrower authorized to sign this Agreement, the Notes
and the other documents to be delivered hereunder.
(d) A favorable opinion of John P. Siegfried, General Counsel
and Secretary of the Borrower, substantially in the form of Exhibit C
hereto and as to such other matters as any Bank through the Agent may
reasonably request.
(e) Federal Reserve Form U-1 provided for in Regulation U
issued by the Board of Governors of the Federal Reserve System, the
statements made in which shall be such as to permit the transactions
contemplated hereby in accordance with said Regulation U.
SECTION 3.02. CONDITIONS PRECEDENT TO EACH BORROWING. The obligation of
each Bank to make an Advance on the occasion of each Borrowing shall be subject
to the conditions precedent that on the date of such Borrowing (i) the following
statements shall be true (and each of the giving of the applicable Notice of
Borrowing and the acceptance by the Borrower of the proceeds of such Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Borrowing such statements are true):
(a) the representations and warranties contained in section
4.01 of this Agreement are correct on and as of the date of such
Borrowing, before and after giving effect to such Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date, and
(b) no event has occurred and is continuing, or would result
from such Borrowing or from the application of the proceeds therefrom,
which constitutes an Event of Default or would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both;
and (ii) the Agent shall have received such other approvals, opinions or
documents as any Bank through the Agent may reasonably request.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE BORROWER. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and has all requisite power and authority to own or hold
under lease, to carry on its business as now conducted and proposed to be
conducted, to enter into this Agreement, to issue the Notes and to perform its
obligations under this Agreement and the Notes. The Borrower has, by all
necessary corporate action (all action of shareholders, if any, required
therefor having been duly taken), duly authorized the execution and delivery of
this Agreement and the Notes and the performance of its obligations under this
Agreement.
(b) SUBSIDIARIES. Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority to own or hold under
lease and to operate the property it purports to own or hold under lease and to
carry on its business as now conducted and as proposed to be conducted. At the
date hereof, each Subsidiary is a Restricted Subsidiary.
(c) QUALIFICATION. Each of the Borrower and its Subsidiaries is duly
qualified or licensed and in good standing as a foreign corporation duly
authorized to do business in each jurisdiction (other than the jurisdiction of
its incorporation) in which the nature of its activities or the character of the
properties it owns or leases makes such qualification necessary and where
failure so to qualify would, in any case, have a Material Adverse Effect.
(d) FINANCIAL STATEMENTS. The Borrower has furnished to each Bank
complete and correct copies of (a) its annual report on Form 10-K for the fiscal
year ended December 31, 1994 and (b) its quarterly report on Form 10-Q for the
fiscal quarter ended September 30, 1995. All financial statements included in
the materials described in the preceding sentence, and all related schedules and
notes, have been prepared in accordance with GAAP, in each case applied on a
consistent basis throughout the periods specified (except for changes
specifically noted therein), and present fairly the financial position of the
corporation or corporations to which they relate as at the respective dates
thereof and the results of operations of such corporation or corporations for
the respective periods specified.
(e) CHANGES, ETC. Since the date of the most recent audited
consolidated balance sheet referred to in section 4.01(d), (i) there has been no
change in the Business or Condition of the Borrower or any Subsidiary from that
reflected in the most recent audited consolidated balance sheet referred to in
section 4.01(d), which change has been, either in any one case or in the
aggregate, Materially Adverse to the Borrower or to the Borrower and its
Subsidiaries taken as a whole, and (ii) neither the business, operations,
properties nor earnings of the Borrower, or of the Borrower and its Subsidiaries
taken as a whole, has been affected as a result of any occurrence or development
(whether or not insured against) to an extent that is Materially Adverse to the
Borrower, or the Borrower and its Subsidiaries taken as a whole.
(f) TITLE TO PROPERTY. The Borrower and its Subsidiaries have good and
marketable title to their respective real properties and good title to the other
material properties they purport to own, including that reflected in the most
recent audited balance sheet referred to in section 4.01(d) or purported to have
been acquired by the Borrower or any of its Subsidiaries after said date (other
than properties disposed of in the ordinary course of business), subject in the
case of all such property to no Liens other than those permitted by section
5.12. The Borrower and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases of all personal and all real property under which
they operate, and all such leases are valid and subsisting and in
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<PAGE> 22
full force and effect and neither the Borrower nor any of its Subsidiaries is in
default in any material respect in the performance and observance of its
obligations under any provisions thereof; PROVIDED that (i) any money due or the
value of any property lost as a result of any default under or termination of
such lease or leases shall not exceed $200,000 in the aggregate, and (ii) the
default under or termination of such lease or leases would not, alone or in the
aggregate, have a Material Adverse Effect.
(g) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the Borrower nor
any Subsidiary is in violation of any term or provision of its corporate charter
or by-laws. Neither the Borrower nor any Subsidiary is in violation of any term
or provision of any agreement, indenture, mortgage or instrument to which it is
a party or by which it or any of its properties may be bound or affected, nor is
it in violation of any existing law, governmental rule or regulation or any
Order of any court, arbitrator or Governmental Body applicable to it (including,
without limitation, any law, rule, regulation or Order relating to environmental
protection, occupational health and safety standards, consumer protection, and
equal employment practice requirements), the consequences of which violation,
either in any one case or in the aggregate, could have a Material Adverse Effect
on the Borrower or on the Borrower and its Subsidiaries taken as a whole.
Neither the execution and delivery of this Agreement and the Notes nor the
consummation of the transactions contemplated hereby nor the performance of the
terms and provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in respect of
any property of the Borrower or any of its Subsidiaries under, any agreement,
indenture, mortgage, instrument, corporate charter or by-law to which the
Borrower or any of its Subsidiaries is a party or by which the Borrower, any of
its Subsidiaries or any of their respective properties may be bound or affected,
or violate any existing law, governmental rule or regulation or any Order of any
court, arbitrator or Governmental Body applicable to the Borrower or any of its
Subsidiaries which could have a Material Adverse Effect on the Borrower or on
the Borrower and its Subsidiaries taken as a whole. Neither the Borrower nor any
Subsidiary is a party to or bound by any instrument or agreement which contains
any restrictions on the incurrence by the Borrower of any Debt other than this
Agreement and the Reimbursement Agreement, dated as of October 1, 1992, between
the Borrower and PNC Bank, National Association.
(h) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Body is required on the part of the Borrower for the valid execution and
delivery of this Agreement or the consummation of the transactions contemplated
thereby, including the issuance and delivery by the Borrower of the Notes, or
for the fulfillment of, or compliance by the Borrower with, the terms and
provisions of this Agreement and the Notes.
(i) LITIGATION. There are no actions, suits or proceedings pending or,
to the knowledge of the Borrower, threatened against or affecting the Borrower,
any Subsidiary or any of their respective properties (or any reasonable basis
therefor known to the Borrower) in any court or before any arbitrator of any
kind or before or by any Governmental Body, which questions the validity of this
Agreement or the Notes or any action taken or to be taken pursuant thereto or
which might result, either in any one case or in the aggregate, in an impairment
of the ability of the Borrower to perform its obligations under the Agreement or
the Notes, or, if determined adversely to the Borrower or a Subsidiary, in a
Material Adverse Change in the Business or Condition of the Borrower or of the
Borrower and its Subsidiaries taken as a whole.
(j) PATENTS, TRADEMARKS, AUTHORIZATIONS, ETC. The Borrower and its
Restricted Subsidiaries own, possess or have the right to use (without any known
conflict with the rights of others) all franchises, patents, trademarks, service
marks, trade names, copyrights, licenses, permits and authorizations which are
necessary to the conduct of their respective businesses as conducted on the date
hereof and as proposed to be conducted the lack of which would have a Material
Adverse Effect.
(k) TAXES. The Borrower and its Subsidiaries have filed all tax returns
which are required by law to have been filed and have paid all taxes,
assessments, fees and charges of each Governmental Body shown to be due and
payable on such returns to the extent the same have become due and payable and
before they have become delinquent other than (i) those presently payable
without penalty or interest, (ii) those being contested in good faith by
appropriate proceedings with respect to which adequate reserves have been
established in
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accordance with GAAP and (iii) those the nonfiling of which would not have a
Material Adverse Effect. The federal income tax returns of the Borrower and its
Subsidiaries have been examined and reported on by the taxing authorities or
closed by applicable statute for all fiscal years through the fiscal year ended
December 31, 1985. In the opinion of the Borrower all tax liabilities are
adequately provided for on the books of the Borrower and its Subsidiaries in
accordance with GAAP.
(l) COMPLIANCE WITH ERISA. (A) Except as provided in Schedule II to
this Agreement, no Termination Event has occurred, and no event or condition has
occurred or exists with respect to which any Termination Event would reasonably
be expected to occur, and no accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived, has
occurred with respect to any Plan. The present value of all accrued benefits
under each Plan other than a Multiemployer Plan (based on those assumptions used
to fund such Plan, which assumptions are reasonable in the aggregate) did not,
as of the most recent valuation date, which for any such Plan was no earlier
than twelve months prior to the date as of which the representation is made,
exceed the then current value of the assets of such Plan allocable to such
benefits.
(B) Except as provided in Schedule II to this Agreement, no Company
Group Member has incurred, or is reasonably expected to incur, any withdrawal
liability to any Multiemployer Plan. No Company Group Member has received any
notification that any Multiemployer Plan is in reorganization (as defined in
section 4241 of ERISA), is insolvent (as defined in section 4245 of ERISA) or
has been terminated, within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization or insolvent
or to be terminated.
(C) No Company Group Member has participated in any prohibited
transaction (as defined in section 406 of ERISA or section 4975 of the Code),
which has subjected it or would reasonably be expected to subject it
to any civil penalty or tax imposed by section 502(i) of ERISA or section 4975
of the Code, respectively. No Company Group Member has incurred any liability or
has been subjected to any civil penalty pursuant to section 409 or 502(1) of
ERISA, respectively, and no event or condition has occurred or exists with
respect to which any such liability or civil penalty would reasonably be
expected to occur. No Company Group Member has incurred, or is reasonably
expected to incur, any liability to the PBGC (other than for insurance premiums,
which have been paid when due).
(D) Full payment has been made on or before the due date thereof of all
amounts which any Company Group Member is or was required under the terms of
each Plan to have paid as contributions to such Plan as of the date hereof.
(E) No lien imposed under the Code or ERISA on the assets of any
Company Group Member exists or would reasonably be expected to arise on account
of any Plan.
(F) The present annual cost to the Company Group Members for providing
post-retirement medical, dental or death benefits to their current and former
employees under all welfare benefit plans (as defined in section 3(1) of ERISA)
does not, in the aggregate, exceed $2,500,000. No event or condition exists or
is reasonably expected to arise which would reasonably be expected to result in
a material increase in such annual cost beyond the increase normally expected in
the normal course of business for the industry in which the Borrower does
business. Each such plan to which sections 601-609 of ERISA and section 4980B of
the Code apply has been administered in material compliance with such sections.
(G) The execution and delivery of this Agreement and the Borrowings
contemplated hereby will not involve any transaction (i) which is subject to the
prohibitions of section 406 of ERISA and with respect to which a civil penalty
pursuant to section 502(i) of ERISA could be imposed, or (ii) in connection with
which a tax could be imposed pursuant to section 4975 of the Code.
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<PAGE> 24
(m) VALIDITY OF THIS AGREEMENT, ETC. This Agreement is, and each Note
when delivered hereunder will be, a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its respective
terms.
(n) USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Advances
made hereunder will be used by the Borrower for general corporate purposes,
including (without limitation) repurchases by the Borrower of shares of its
outstanding Common Stock. Notwithstanding the foregoing, no proceeds of any
Advance will be used, directly or indirectly, to acquire any equity security of
a class which is registered pursuant to Section 12 of the Securities Exchange
Act of 1934, or to make any voluntary prepayment of (or to purchase or otherwise
acquire) any of the Convertible Subordinated Notes, except that the Borrower may
use proceeds of Advances hereunder to directly or indirectly finance the
repurchases by the Borrower of up to $10,000,000 (based on the repurchase
prices) of its Common Stock where such usage would not cause the transactions
hereunder to violate any of the provisions of Regulation U of the Board of
Governors of the Federal Reserve System. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (as such term is defined in such Regulation
U), and no proceeds of any Advance will be used to extend credit to others for
the purpose of purchasing or carrying any margin stock. Following the
application of the proceeds of any Advance, not more than 25% of the value of
the assets (either of the Borrower only or of the Borrower and its Subsidiaries
on a consolidated basis) will be margin stock.
(o) STATUS UNDER CERTAIN STATUTES. The Borrower is not an "investment
company" or a Person directly or indirectly "controlled" by or "acting on behalf
of" an "investment company" within the meaning of the Investment Company Act of
1940, as amended. The Borrower is not a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
(p) DISCLOSURE. Neither this Agreement, nor any other document,
certificate or instrument delivered to the Banks by or on behalf of the Borrower
in connection with the transactions contemplated by this Agreement,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. There is no fact known to the Borrower which Materially Adversely
Affects or in the future may (so far as the Borrower can now reasonably foresee)
Materially Adversely Affect the Business or Condition of the Borrower and its
Subsidiaries taken as a whole, which has not been set forth or reflected in this
Agreement or in the other documents, certificates and instruments referred to
herein and delivered to the Banks by or on behalf of the Borrower in connection
with the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. FINANCIAL STATEMENTS; INFORMATION. So long as any Note
shall remain unpaid or any Bank shall have any Commitment hereunder, unless the
Majority Banks shall otherwise consent in writing, the Borrower will furnish to
each Bank:
(a) as soon as practicable and in any event within 45 days
after the end of each of the first three quarterly fiscal periods in
each fiscal year of the Borrower, an unaudited consolidated balance
sheet of the Borrower and its Restricted Subsidiaries, in each case as
of the end of such quarterly period and the related unaudited
consolidated statements of income, shareholders equity and cash flows
of the Borrower and its Restricted Subsidiaries for such period, and
(in the case of the first, second and third such quarterly periods) for
the portion of the fiscal year ended with the last day of such
quarterly period, setting forth in each case in comparative form the
figures for the corresponding periods of the previous fiscal year, all
in reasonable detail and certified by the principal financial officer
of the Borrower;
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<PAGE> 25
(b) as soon as practicable and in any event within 90 days
after the end of each fiscal year of the Borrower, a consolidated
balance sheet of the Borrower and its Restricted Subsidiaries, in each
case as of the end of such year and the related consolidated statements
of income, shareholders' equity and cash flows of the Borrower and its
Restricted Subsidiaries for such fiscal year, setting forth in each
case in comparative form the respective figures for the previous fiscal
year, all in reasonable detail and accompanied by a report thereon of
independent certified public accountants of recognized national
standing, who may be the present regular auditors of the books of the
Borrower, which report shall not be made in reliance upon the opinion
of any other accountant (other than an opinion regarding the financial
statements of any Person for any fiscal period ending prior to the time
such Person became a Subsidiary), shall be made without qualification
(except for qualifications resulting from changes in accounting
principles and methods agreed to by such accountants), shall comply
with generally accepted auditing standards at the time in effect and
shall state that such financial statements present fairly, in all
material respects, the consolidated financial position of the Borrower
and its Restricted Subsidiaries as at the dates indicated and the
results of their operations for the periods indicated and have been
prepared in accordance with GAAP applied on a basis consistent with
prior years (except for changes in application in which such
accountants concur and which are noted in such financial statements)
and that the examination of such accountants has been made in
accordance with generally accepted auditing standards, and accordingly
included such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;
(c) together with each delivery of financial statements
pursuant to clause (a) or (b) of this section, an Officer's
Certificate:
(i) stating that the officer executing the same on
behalf of the Borrower has reviewed the terms of this
Agreement and of the Notes and has made, or caused to be made
under his supervision, a review in reasonable detail of the
transactions and conditions of the Borrower and its
Subsidiaries during the accounting period covered by such
financial statements, and that such review has not disclosed
the existence during or at the end of such accounting period,
and that such officer does not have knowledge of the existence
as at the date of such Officer's Certificate, of any condition
or event which constitutes a Default or an Event of Default,
or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what
action the Borrower has taken or is taking or proposes to take
with respect thereto;
(ii) setting forth, as of the date of such balance
sheet or for such period, as the case may be, (A) the
respective amounts (showing the calculations thereof) of
Attributable Debt, Consolidated Current Assets, Consolidated
Current Liabilities, Consolidated Income Tax Expense,
Consolidated Interest Expense, Consolidated Funds from
Operations, Consolidated Liabilities, Consolidated Net Income
(determined both with and without reference to clause (iii) of
the definition of such term), Consolidated Tangible Net Worth,
Consolidated Total Debt, Current Debt, Priority Debt, Total
Capitalization and (B) the aggregate principal amount of
outstanding Debt of all Subsidiaries and outstanding Debt
secured by Liens permitted by section 5.13, and
(iii) setting forth, as of the date of such balance
sheet or for such period, as the case may be, facts or
computations in reasonable detail demonstrating compliance
with the restrictions contained in sections 5.07, 5.08, 5.09,
5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16 and 5.17;
(d) together with each delivery of annual financial statements
pursuant to clause (b) of this section, a written statement by the
independent public accountants referred to in said clause (b) who have
reported on such financial statements
(i) stating whether, in the course of their audit
examination or otherwise, anything has come to their attention
concerning the existence during the fiscal year covered by
such
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financial statements (and stating whether they have
knowledge of the existence as of the date of such accountants'
written statement) of any condition or event which constitutes
a Default or an Event of Default, and if so, specifying the
nature and period of existence thereof; and
(ii) stating that they have examined the Officer's
Certificate delivered in connection with such annual financial
statements pursuant to clause (c) of this section and based
upon their audit examination nothing has come to their
attention which causes them to believe that the information
contained in such Officer's Certificate is not correct or that
the matters set forth in such Officer's Certificate in
connection with such annual financial statements have not been
properly stated in accordance with the terms of this
Agreement;
(e) promptly upon receipt thereof (and in any event within
five Business Days thereafter), copies of all reports submitted to the
Borrower by independent public accountants in connection with any
annual, interim or special audit of the Borrower made by such
accountants, but, excluding, subject to clause (k) of this section, the
following:
(1) Management letters;
(2) Management consulting reports;
(3) Reports for a committee of Board of Directors;
(4) Negative assurance comfort letters; and
(5) Special purpose trust funds;
(f) promptly upon their becoming available (and in any event
within five Business Days thereafter), copies of (i) all financial
statements, reports, notices, proxy statements and other information
sent or made available generally by the Borrower to any class of its
security holders or by any Subsidiary to any class of its security
holders other than the Borrower or another Subsidiary, (ii) all regular
and periodic reports (including reports on Form 8-K) and any
registration statements and prospectuses filed by the Borrower or any
of its Subsidiaries with any securities exchange or with the Commission
and (iii) all press releases and other statements made available
generally by the Borrower or any Subsidiary to the public concerning
material developments in the business of the Borrower or its
Subsidiaries;
(g) immediately upon any officer of the Borrower obtaining
knowledge of any condition or event which constitutes a Default or an
Event of Default, or becoming aware that the holder of any Note has
given any notice or taken any other action with respect to a claimed
Default or Event of Default or that any Person has given any notice to
the Borrower or any Restricted Subsidiary or taken any other action
with respect to a claimed default or event or condition under or in
respect of any Debt referred to in section 6.01(e) or with respect to
the occurrence or existence of any event or condition of the type
referred to in section 6.01(f) or (g), an Officers' Certificate
specifying the nature and period of existence thereof and what action
the Borrower has taken or is taking or proposes to take with respect
thereto;
(h) if and when any Company Group Member (i) knows or in good
faith has reason to know of the occurrence of any Termination Event,
(ii) with respect to any Multiemployer Plan, receives notice as
prescribed in ERISA of any withdrawal liability assessed against any
Company Group Member or of a determination that any Multiemployer Plan
is in reorganization or insolvent (both within the meaning of Title IV
of ERISA), (iii) knows or in good faith has reason to know that a
prohibited transaction (as defined in section 406 of ERISA or section
4975 of the Code) has occurred involving any Company Group Member, or
(iv) knows or in good faith has reason to know that there has been a
material adverse change in the funding status of any Plan after which
such Plan shall have an Unfunded Current Liability, a description of
such event or a copy of such notice and a statement by the principal
financial officer of the Borrower of the action which is proposed to be
taken with respect thereto as soon as practicable and in any event
within ten days thereafter;
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<PAGE> 27
(i) promptly (and in any event within five Business Days)
after any officer of the Borrower obtains knowledge of any litigation,
administrative proceeding or judgment affecting the Borrower or any of
its Subsidiaries (whether or not considered by the Borrower to be
covered by insurance) which, in the reasonable opinion of the Borrower,
has a reasonable possibility of being adversely determined or has been
adversely determined in an amount that would have a Material Adverse
Effect, or would materially impair the ability of the Borrower to
perform its obligations under this Agreement or the Notes, an Officer's
Certificate specifying in reasonable detail the facts and circumstances
surrounding such litigation, proceeding or judgment;
(j) promptly (and in any event within five Business Days)
after any officer of the Borrower obtains knowledge of any complaint,
suit, proceeding, penalty assessed, order or request for information
(such request for information having been requested by any Governmental
Body) under any applicable Environmental Law, or of any material
development in respect of any such complaint, suit, proceeding, penalty
assessed, or order, affecting the Borrower or any of its Subsidiaries,
except any such complaint, suit, proceeding, penalty assessed, order,
or development which, in the reasonable opinion of the Borrower, does
not have a reasonable possibility of being adversely determined in an
amount or with an effect that would have a Material Adverse Effect, an
Officers' Certificate specifying such complaint, suit, proceeding,
penalty assessed, order or material development in respect thereof, as
the case may be, and what action the Borrower has taken or is taking or
proposes to take with respect thereto; and
(k) promptly upon request therefor (i) such other financial
information or environmental information concerning the Borrower or any
of its Subsidiaries as any Bank or any other institutional holder of
any Note may from time to time reasonably request, and (ii) in the
event of a reasonable business concern that any Bank or any other
institutional holder of a Note may have concerning the Borrower or any
of its Subsidiaries, any other information as to the Business or
Condition of the Borrower or any of its Subsidiaries as any Bank or any
other institutional holder of a Note may from time to time reasonably
request, EXCLUDING in any case information on pricing, market share and
individual plant costs.
SECTION 5.02. INSPECTION OF PROPERTIES AND BOOKS. Each Bank and its
representatives may visit and inspect any of the properties of the Borrower and
its Subsidiaries, including their respective books of account, records, reports
and other papers, make copies and extracts therefrom, and discuss their affairs,
finances and accounts with their respective officers and independent public
accountants (and the Borrower hereby authorizes and directs each such officer
and independent public accountant to engage in such discussion), during business
hours and upon reasonable notice to the Borrower and as often as may be
reasonably requested; PROVIDED, that it being understood and agreed that if any
Event of Default shall have occurred and be continuing, the expenses incurred in
connection with any visit and inspection pursuant to this section shall be for
the Borrower's account.
SECTION 5.03. CORPORATE EXISTENCE; PAYMENT OF TAXES; MAINTENANCE OF
PROPERTIES; INSURANCE; COMPLIANCE WITH LAWS, ETC. The Borrower will, and will
cause each Restricted Subsidiary to,
(a) do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence (except as
otherwise permitted by section 5.08) and its licenses, rights (charter
and statutory) and franchises, except that, subject to compliance with
section 5.07 and 5.08, the licenses, rights and franchises of the
Borrower or any Restricted Subsidiary may be abandoned, modified or
terminated if, in the good faith judgment of the Board of Directors,
such abandonment, modification or termination is in the best interest
of the Borrower and is not disadvantageous to the holders of the Notes;
(b) pay and discharge or cause to be paid and discharged (i)
all taxes, assessments and governmental charges or levies imposed upon
it or any of its property (real, personal or mixed) or assets or in
respect of any of its franchises, business, income or property before
the same shall become delinquent, and (ii) all claims of landlords,
carriers, warehousemen, mechanics, materialmen and other similar
Persons for labor, materials, supplies and rentals which, if unpaid,
might by law become a Lien
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<PAGE> 28
upon any of its properties or assets; PROVIDED, HOWEVER, that the
failure of the Borrower or any Restricted Subsidiary to pay any such
tax, assessment, charge, levy or claim shall not constitute a default
hereunder if and for so long as the amount, applicability or validity
thereof shall concurrently be contested in good faith by appropriate
and timely proceedings diligently conducted, and if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall
have been made therefor, and if neither the Borrower's nor any such
Restricted Subsidiary's title to or right to the use of any of its
property is impaired in any material respect by reason of such contest;
(c) maintain and keep, or cause to be maintained and kept, in
all material respects all licenses, rights, permits and the like used
or useful in its business, and maintain and keep, or cause to be
maintained and kept, in good repair, working order and condition
(ordinary wear and tear excepted), all properties used or useful in its
business, and from time to time make or cause to be made all needful
and proper repairs, renewals, replacements and improvements thereof so
that the business carried on in connection therewith may be properly
and advantageously conducted in the good faith judgment of the Board of
Directors;
(d) maintain, or cause to be maintained, with financially
sound and reputable insurers, insurance in respect of its properties
and business against loss or damage of the kinds customarily insured
against by prudent corporations of established reputation engaged in
the same or similar business and similarly situated, of such type and
in such amounts as are customarily carried under similar circumstances
by such other corporations; and
(e) comply in all material respects with all applicable (to
it, its properties or its operations) laws, statutes, regulations and
orders of, and all applicable (to it, its properties or its operations)
restrictions imposed by, any Governmental Body, in respect of the
conduct of its business and the ownership of its properties (including,
without limitation, applicable statutes, regulations and orders
relating to equal employment opportunities or environmental standards
or controls) with which the failure to so comply would have a Material
Adverse Effect, except such as are being contested in good faith by
appropriate and timely proceedings diligently conducted, and if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor and neither the Borrower's nor any
such Restricted Subsidiary's title to or right to the use of any of its
property is impaired in any material respect by reason of such contest.
SECTION 5.04. BOOKS AND ACCOUNTING. The Borrower will (a) keep proper
books of record and account in which full, true and correct entries will be made
of all its business transactions in accordance with GAAP; and (b) maintain a
system of accounting established and administered in accordance with GAAP and
set aside on its books from its earnings for each fiscal year all proper
reserves, accruals and provisions which, in accordance with GAAP, should be set
aside from such earnings in connection with its business, including, without
limitation, provisions for depreciation, obsolescence and/or amortization and
accruals for taxes for such period, including all taxes based on or measured by
income or profits.
SECTION 5.05. NATURE OF BUSINESS. The Borrower will not, and will not
permit any Restricted Subsidiary to, engage in any line of business, other than
the business of manufacturing construction materials, supplying construction
services and such other business activities and opportunities related thereto,
which the Board of Directors deems consistent with the business strategy of the
Borrower.
SECTION 5.06. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, engage in
any transaction with any Affiliate of the Borrower, other than transactions
entered into in the ordinary course of business and upon terms that are not less
favorable to the Borrower or such Restricted Subsidiary, as the case may be,
than those which might be obtained at the time on an arm's-length transaction
basis from any Person which is not such an Affiliate.
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<PAGE> 29
SECTION 5.07. SUBSIDIARY STOCK AND DEBT; SUBSIDIARY DIVIDENDS.
The Borrower will not:
(a) directly or indirectly sell, assign, pledge or otherwise
dispose of any Debt of, or claim against, or any shares of stock or
similar interests or other securities of (or warrants, rights or
options to acquire stock or similar interests or other securities of),
any Restricted Subsidiary, except to the Borrower or any other
Wholly-owned Restricted Subsidiary or except as directors' qualifying
shares if required by applicable law;
(b) permit any Restricted Subsidiary directly or indirectly to
sell, assign, pledge or otherwise dispose of any Debt of, or claim
against, or any shares of stock or similar interests or other
securities of (or warrants, rights or options to acquire stock or
similar interests or other securities of), any other Restricted
Subsidiary, except to the Borrower or any other Wholly-owned Restricted
Subsidiary or as directors' qualifying shares if required by applicable
law;
(c) permit any Restricted Subsidiary to have outstanding any
shares of Preferred Stock other than shares of Preferred Stock which
are owned by the Borrower or a Wholly-owned Restricted Subsidiary;
(d) permit any Restricted Subsidiary directly or indirectly to
issue or sell any shares of its stock or similar interests or other
securities (or warrants, rights or options to acquire stock or similar
interests or other securities) except to the Borrower or any other
Wholly-owned Restricted Subsidiary or as directors' qualifying shares
if required by applicable law; or
(e) enter into, and will not permit any Restricted Subsidiary
to enter into, or otherwise be subject to, any agreement, including any
charter or by-law provision, which would limit the amount of, or
otherwise impose any restriction on the payment of, dividends by any
Restricted Subsidiary to the Borrower or to any other Restricted
Subsidiary;
PROVIDED, HOWEVER, that all Debt and stock or similar interests and other
securities of any Restricted Subsidiary owned by the Borrower and its other
Restricted Subsidiaries may be simultaneously sold as an entirety for a cash
consideration at least equal to the fair value thereof (as determined in good
faith by the Board of Directors) at the time of such sale, if (i) such
Restricted Subsidiary being sold does not at the time own any Debt or stock or
similar interests or other securities of (or warrants, rights or options to
acquire stock or similar interests or securities of) any other Restricted
Subsidiary which is not being simultaneously sold as an entirety as permitted by
this section or any Debt of the Borrower, (ii) the assets of such Restricted
Subsidiary represented by the equity interests to be so transferred are such
that the sale of such assets would be permitted by section 5.08 (in which case
such transaction shall be considered and deemed a disposition of assets for the
purposes of section 5.08), and (iii) immediately after the consummation of such
transaction, no Default or Event of Default shall have occurred and be
continuing.
SECTION 5.08. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. (a) The
Borrower will not, and will not permit any Restricted Subsidiary to, consolidate
with or merge into any other Person, or permit any other Person to consolidate
with or merge into it, or sell, lease, transfer or otherwise dispose of any part
of its assets to any Person except in the ordinary course of its business (as
such business is conducted in compliance with section 5.05 hereof), except that
if no Default or Event of Default shall have occurred and be continuing or shall
result therefrom:
(i) any Restricted Subsidiary may merge or consolidate with
(x) any other Restricted Subsidiary and, (y) if the Restricted
Subsidiary is the continuing or surviving corporation, any other
corporation;
(ii) the Borrower may sell, lease, transfer or otherwise
dispose of its assets to any Wholly- owned Restricted Subsidiary; and
any Restricted Subsidiary may sell, lease, transfer or otherwise
dispose
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of its assets to the Borrower or any other Restricted Subsidiary, and
may thereafter liquidate and dissolve;
(iii) the Borrower and any Restricted Subsidiary may sell,
lease, transfer or otherwise dispose of assets in the ordinary course
of its business; and
(iv) the Borrower and any Restricted Subsidiary may sell,
lease, transfer or otherwise dispose (any such sale, lease, transfer or
other disposition, an "EXCESS DISPOSITION") of any of its assets, other
than any sale, lease, transfer or other disposition permitted by
subsections (a)(ii) and (iii) of this section, whether in a single
transaction or a series of related transactions, for a consideration
equal to the greater of the book value or fair market value of such
assets (as determined in good faith by the Board of Directors) at the
time of such Excess Disposition, if the aggregate amount of
Consolidated Funds from Operations attributable to such assets and to
all assets the subject of any Excess Disposition during the
twelve-consecutive-month period immediately preceding such Excess
Disposition, shall not exceed 15% of Consolidated Funds from Operations
determined as of the end of the fiscal quarter immediately preceding
such Excess Disposition, PROVIDED, HOWEVER, there shall be excluded
from any Excess Disposition any sale, lease, transfer or other
disposition of assets the proceeds of which are (i) applied on or
before the first anniversary of such Excess Disposition to purchase
other property or assets which in the judgment of the Board of
Directors of the Borrower is used or useful in carrying on the business
of the Borrower and its Restricted Subsidiaries as permitted by section
5.05 and has, in the judgment of such Board, a fair market value at
least equal to the proceeds received from such sale, lease, transfer or
other disposition or (ii) applied, on a PRO RATA basis, to permanently
reduce the Commitments hereunder and reduce the outstanding principal
amount of any other Funded Debt of the Borrower which is not
subordinate to Debt which may be outstanding hereunder, or to the
extent not so applied on a PRO RATA basis, applied to permanently
reduce the Commitments hereunder.
(b) Nothing contained in this section shall permit the disposition of
assets consisting of stock, Debt or other similar interests in or other
securities of (or warrants, rights or options to acquire stock or other
securities of) any Restricted Subsidiary unless such disposition is also made in
compliance with section 5.07.
SECTION 5.09. SALE-LEASEBACK TRANSACTIONS. The Borrower will not, and
will not permit any of its Restricted Subsidiaries to, enter into any
Sale-Leaseback Transaction, except that if at the time of and immediately after
giving effect to such Sale-Leaseback Transaction no Default or Event of Default
shall have occurred and be continuing, the Borrower and its Restricted
Subsidiaries may enter into Sale-Leaseback Transactions if, (a) immediately
after giving effect to the incurrence of the Attributable Debt in respect of any
such Sale-Leaseback Transaction and the substantially concurrent incurrence or
retirement of other Debt of the Borrower or any Restricted Subsidiary, the
aggregate principal amount outstanding of all Priority Debt does not exceed the
lesser of $5,000,000 and 15% of Total Capitalization or (b) the net proceeds
from the sale of the assets sold in connection with such Sale-Leaseback
Transaction are at least equal to the fair market value of such assets (as
determined in good faith by the Chief Financial Officer and any other executive
officer of the Borrower) and either (i) within one year of such Sale-Leaseback
Transaction, shall be applied or committed (pursuant to a binding commitment in
writing) to the purchase, acquisition or construction of property which is to be
used in the business of the Borrower and its Restricted Subsidiaries as
permitted to be conducted pursuant to section 5.05 or (ii) applied, on a PRO
RATA basis, to permanently reduce the Commitments hereunder and reduce the
outstanding principal amount of any other Funded Debt of the Borrower which is
not subordinate to Debt which may be outstanding hereunder, or to the extent not
so applied on a PRO RATA basis, applied to permanently reduce the Commitments
hereunder.
SECTION 5.10. MAINTENANCE OF CONSOLIDATED TANGIBLE NET WORTH. The
Borrower will not permit Consolidated Tangible Net Worth at any time to be less
than $35,000,000, EXCEPT that effective as of the end of the Borrower's fiscal
quarter ended December 31, 1994, and as of the end of each fiscal quarter
thereafter, the foregoing amount (as it may from time to time be increased as
herein provided), shall be increased by 50% of Consolidated Net Income for the
fiscal quarter ended on such date, if any (there being no reduction in the case
of any such Consolidated Net Income which reflects a deficit). For purposes of
this Section only, Consolidated
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Net Income shall be determined without giving effect to clause (iii) of the
definition of the term Consolidated Net Income.
SECTION 5.11. CURRENT DEBT. The Borrower shall be permitted to incur
Current Debt, PROVIDED that the Borrower will have no Current Debt outstanding
on any day unless during the twelve-consecutive-month period preceding such day,
the aggregate principal amount of the Borrower's Current Debt outstanding shall
have been $5,000,000 or less on each day during a period of at least forty-five
consecutive days. For purposes of this section only, the unpaid principal amount
of the Notes shall be considered Current Debt, and the Borrower's Senior Notes
due 1995, originally issued pursuant to the Note Purchase Agreements, dated as
of December 15, 1990, shall not be considered Current Debt at any time during
the one-year period prior to their scheduled maturity date of December 15, 1995.
SECTION 5.12. LIENS. The Borrower will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any
character of the Borrower or any Restricted Subsidiary (whether held on the date
hereof or hereafter acquired) or any interest therein or any income or profits
therefrom, and except for the following:
(a) Liens for taxes, assessments or governmental charges or
levies either not yet due or the payment of which is not at the time
required by section 5.03(b);
(b) Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other similar Persons incurred in the ordinary course
of business for sums either not yet due or the payment of which is not
at the time required by section 5.03(b);
(c) Liens (other than any Lien created or imposed under ERISA)
incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive in any case of obligations incurred in
connection with the borrowing of money or the obtaining of advances of
credit);
(d) any attachment or judgment Lien arising in connection with
court proceedings, PROVIDED that (i) the execution or other enforcement
of such Lien is effectively stayed and the claims secured thereby are
being actively contested in good faith and by appropriate proceedings
diligently conducted, and (ii) such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefore and neither the Borrower's nor any such Restricted
Subsidiary's title to or right to use any of its property is impaired
in any material respect by reason of such contest;
(e) easements, licenses, rights-of-way and other rights and
privileges in the nature of easements and similar Liens incidental to
the ownership of property and not incurred in connection with the
borrowing of money or the obtaining of advances or credit, and which do
not, individually or in the aggregate, interfere with the ordinary
conduct of the business of the Borrower or any Restricted Subsidiary or
materially detract from the value of the properties subject to any such
Liens;
(f) Liens existing on the date of this Agreement and securing
Debt of the Borrower or a Restricted Subsidiary, as identified on
Schedule III hereto; PROVIDED, HOWEVER, that no such Lien shall be
extended to any other property or asset of the Borrower or any
Restricted Subsidiary; and
(g) any Lien (including a Capital Lease) created solely to
secure the deferred purchase price of property or the cost of
construction on or improvements of property acquired, constructed or
improved by the Borrower or any Restricted Subsidiary after the date
hereof, or any Lien (including a Capital Lease) created to secure Debt
incurred solely for the purpose of financing the acquisition,
construction or improvement, as the case may be, of such property (if
such Debt is incurred at the time
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of or within 120 days after such acquisition or the completion of such
construction or improvement), PROVIDED that
(i) no such Lien shall at any time extend to or cover
any property of the Borrower or any Restricted Subsidiary
other than the acquired assets on which it was originally
imposed and improvements thereto and proceeds thereof, and
(ii) the principal amount of all Debt secured by all
such Liens on any such assets shall not at the time of
acquisition of such assets exceed an amount equal to the
lesser of (A) the cost to the Borrower or such Restricted
Subsidiary (including the principal amount of any pre-existing
Debt secured by such Liens, whether or not the Borrower or
such Restricted Subsidiary has any personal liability with
respect thereto) of such assets and (B) the fair market value
of such asset (as determined in good faith by the chief
financial officer of the Borrower or Restricted Subsidiary) at
the time of acquisition thereof;
(h) any Lien existing on any asset (i) of any Person at the
time such Person becomes a Restricted Subsidiary, (ii) of any Person
existing at the time such Person is merged or consolidated with or into
the Borrower or a Restricted Subsidiary, or (iii) prior to the
acquisition thereof by the Borrower or any Restricted Subsidiary,
PROVIDED that, in any such case, (A) such Lien (1) was not created in
contemplation of such event and (2) is not extended to other property,
and (B) the amount of Debt secured by any such Lien does not exceed the
lesser of (x) the cost to the Borrower or Restricted Subsidiary
(including the principal amount of any pre-existing Debt secured by
such Lien, whether or not the Borrower or such Restricted Subsidiary
has any personal liability with respect thereto) of such asset and (y)
the fair market value of such asset (as determined in good faith by the
chief financial officer of the Borrower or Restricted Subsidiary) at
the time of acquisition thereof;
(i) Liens extending, renewing or replacing any Lien permitted
by clause (f), (g) or (h) of this section, PROVIDED that such Liens are
not extended to other property; and
(j) Liens in addition to those permitted by the foregoing
clauses (a) through (i) of this section incurred after the date hereof
if, immediately after giving effect to the incurrence of such
additional Lien, Priority Debt does not exceed the lesser of $5,000,000
and 15% of Total Capitalization.
SECTION 5.13. CURRENT RATIO. The Borrower will maintain at all times
(i) from January 1 through June 30 of each year a ratio of Consolidated Current
Assets to Consolidated Current Liabilities of at least 1.00 to 1.00, and (ii)
from July 1 through December 31 of each year a ratio of Consolidated Current
Assets to Consolidated Current Liabilities of at least 1.50 to 1.00.
SECTION 5.14. RATIO OF CONSOLIDATED LIABILITIES TO CONSOLIDATED
TANGIBLE NET WORTH. The Borrower will not permit the ratio of Consolidated
Liabilities (exclusive of liabilities for accrued post-retirement health benefit
expenses) to Consolidated Tangible Net Worth to be greater than 3.00 to 1.00 at
any time.
SECTION 5.15. INTEREST COVERAGE RATIO. The Borrower will maintain an
Interest Coverage Ratio greater than 3.00 to 1.00.
SECTION 5.16. CERTAIN SUBSIDIARIES TO GUARANTEE ADVANCES. In the event
any Restricted Subsidiary of the Borrower has at any time assets with a net book
value, or fair market value, whichever is greater, in excess of $5,000,000, the
Borrower will, within 30 days following request therefor from the Agent or any
Bank, cause such Restricted Subsidiary to deliver to the Agent, in sufficient
quantities for the Banks, (i) a guaranty, satisfactory in form and substance to
the Agent and the Majority Banks, duly executed by such Subsidiary,
substantially in the form attached hereto as Exhibit E, pursuant to which such
Restricted Subsidiary unconditionally and absolutely guarantees payment of all
Advances made hereunder, and (ii) resolutions of the Board of Directors of such
Restricted Subsidiary, certified by the Secretary or an Assistant Secretary of
such Restricted Subsidiary as duly adopted and in full force and effect,
authorizing the execution and delivery of such
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<PAGE> 33
guaranty. In the event that any Restricted Subsidiary at any time has assets
which meet or exceed the foregoing value requirement, the Borrower will
promptly, and in any event within 30 days following the occurrence of such
event, notify the Agent in writing of such event, identifying the Restricted
Subsidiary in question and referring specifically to the rights of the Agent and
the Banks under this section.
SECTION 5.17. INVESTMENTS, ACQUISITIONS, ETC. The Borrower will not,
and will not permit any of its Restricted Subsidiaries to, at any time after the
Restatement Effective Date, (i) make any loan or advance to any Person (other
than loans to officers, directors and employees or prospective employees in the
ordinary course of business in an aggregate amount for the Borrower and its
Restricted Subsidiaries not in excess of $500,000 at any one time outstanding),
(ii) purchase or otherwise acquire any stock, obligations or securities of, or
any other interest in, or make any capital contribution to, any other Person, or
acquire from any Person any division, plant or other business unit, or (iii) be
or become a general partner (or the equivalent) in any Person, other than:
(a) investments in Cash Equivalents;
(b) if no Default or Event of Default has occurred and is
continuing or would result therefrom, (i) purchases or other
acquisitions of stock, obligations or securities of, any other Person
which, as a result thereof, becomes a Wholly-owned Subsidiary, and (ii)
acquisitions from any other Person of any division, plant or other
business unit, in each case specified in the foregoing clauses (i) and
(ii) in a negotiated transaction not involving a line of business or
business activities not permitted by section 5.05;
(c) loans, advances and other investments in the Borrower's
existing Wholly-owned Restricted Subsidiaries, and loans, advances and
other investments in Persons which become Wholly-owned Restricted
Subsidiaries in transactions referred to in the foregoing clause (b) or
in transactions referred to in clause (ii) of section 5.08(a);
(d) loans, advances and other investments by Restricted
Subsidiaries in the Borrower;
(e) loans, advances and investments in Unrestricted
Subsidiaries in an aggregate amount which, after giving effect thereto,
are not in excess of 10% of the Borrower's Consolidated Tangible Net
Worth; and
(f) other loans, advances and investments made after the
Restatement Effective Date, not otherwise permitted by the foregoing
clauses of this section, in an aggregate amount not in excess of
$1,000,000.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) default shall be made in the due and punctual payment of
all or any part of the principal of any Note when and as the same shall
become due and payable, whether on a date fixed for a prepayment, at
stated maturity, by acceleration or declaration, or otherwise; or
(b) default shall be made in the payment of any interest on
any Note when and as such interest shall become due and payable, and
such default shall have continued for a period of five days; or
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(c) default shall be made in the payment of any commitment fee
or other amount not specified in clause (a) or (b) above payable by the
Borrower hereunder as and when such fee or other amount shall become
due and payable, and such default shall continue for a period of five
days; or
(d) default shall be made in the performance or observance of
any other covenant, agreement or condition contained in this Agreement
and such default shall have continued for a period of 30 days after any
officer of the Borrower shall become aware of the default or of the
conditions or events giving rise to such default; or
(e) default shall be made in the payment of any part of the
principal or the premium (if any) or the interest on, or any other
payment of, money due under any Debt of the Borrower or any Restricted
Subsidiary (other than the Notes) aggregating more than $10,000,000,
beyond any period of grace provided with respect thereto, or default
shall be made in the performance or observance of any other covenant,
agreement or condition contained in any indenture, credit agreement or
loan agreement or other agreement or instrument under which Debt of the
Borrower or any Restricted Subsidiary is evidenced, for a period of
time sufficient to permit the holder or holders of any such Debt (or
trustee or agent on its or their behalf) to accelerate the maturity
thereof or to enforce any lien provided for by any such indenture,
agreement or instrument, as the case may be; or
(f) the Borrower or any Restricted Subsidiary shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) be generally unable or admit in
writing its inability to pay its debts as such debts become due, (iii)
make a general assignment for the benefit of its creditors, (iv)
commence a voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), (v) file a petition seeking to take advantage of
any bankruptcy, insolvency, moratorium, reorganization or other similar
law affecting the enforcement of creditors' rights generally, (vi)
acquiesce in writing to, or fail to controvert in a timely or
appropriate manner, any petition filed against it in an involuntary
case under such Bankruptcy Code, (vii) take any action under the laws
of any jurisdiction analogous to any of the foregoing, or (viii) take
any corporate action in furtherance of any of the foregoing; or
(g) a proceeding or case shall be commenced, without the
application or consent of the Borrower or any Restricted Subsidiary, in
any court of competent jurisdiction, seeking (i) the liquidation,
reorganization, moratorium, dissolution, winding up, or composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial
part of its assets, or (iii) similar relief in respect of it under any
law providing for the relief of debtors, and such proceeding or case
described in clause (i), (ii), or (iii) shall continue undismissed, or
unstayed and in effect, for a period of 60 days; or
(h) final judgment or judgments for the payment of money in
excess of $1,000,000 (net of insurance coverage as to which the carrier
shall have acknowledged responsibility) for any one or in the aggregate
shall be rendered by a court of competent jurisdiction against the
Borrower or any Restricted Subsidiary and the Borrower or such
Restricted Subsidiary, as the case may be, shall not discharge the same
or provide for its discharge in accordance with its terms, or procure a
stay of execution thereof within 60 days from the date of entry thereof
and within said period of 60 days, or such longer period during which
execution or such judgment shall have been stayed, or appeal therefrom
and cause the execution thereof to be stayed during such appeal; or
(i) any representation or warranty made by the Borrower in
this Agreement or in any certificate or other instrument delivered
hereunder or pursuant thereto or in connection with any provision
thereof shall prove to have been false or incorrect or breached in any
material respect on the date as of which made; or
(j) (i) any Company Group Member shall fail to pay when due
any amount which it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; (ii) any Company Group
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Member shall withdraw from a Multiple Employer Plan during a plan year
in which it is a substantial employer (as such term is defined in
section 4001(a)(2) of ERISA), or shall incur any liability under
section 4064 or 4062(a)of ERISA; (iii) notice of intent to terminate a
Plan or Plans shall be filed under Title IV of ERISA by an Company
Group Member, any plan administrator or any combination of the
foregoing; (iv) the PBGC shall institute proceedings under Title IV of
ERISA to terminate or to cause a trustee to be appointed to administer
any Plan or Plans; (v) any Company Group Member shall incur any
withdrawal liability with respect to any Multiemployer Plan; (vi) any
Plan other than a Multiemployer Plan shall have an Unfunded Current
Liability; or (vii) any Company Group Member shall engage in any
"prohibited transaction" (as defined in section 406 of ERISA or section
4975 of the Code) or any breach of any fiduciary responsibility
(under Part 4 of Title I of ERISA) which may subject such Company Group
Member to any liability for a civil penalty or a tax pursuant to
section 409 or 502(i) or (1) of ERISA, or section 4975 of the Code,
respectively; and there shall result from any such event or events
described in clauses (i) through (vii) above a reasonable risk of
incurring a material liability on the part of any Company Group Member;
or
(k) any Change in Control shall have occurred;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the holders of at least 50% in principal amount of the Notes then
outstanding or, if no Notes are then outstanding, Banks having at least 50% of
the Commitments, by notice to the Borrower, declare the obligation of each Bank
to make Advances to be terminated, whereupon the same shall forthwith terminate,
and (ii) shall at the request, or may with the consent, of the holders of at
least 50% in principal amount of the Notes then outstanding or, if no Notes are
then outstanding, Banks having at least 50% of the Commitments, by notice to the
Borrower, declare the Notes, all interest thereon and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower; PROVIDED, HOWEVER, that in
the event of an actual or deemed entry of an order for relief with respect to
the Borrower or any of its Restricted Subsidiaries under the Federal Bankruptcy
Code, (A) the obligation of each Bank to make Advances shall automatically be
terminated and (B) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
ARTICLE VII
THE AGENT
SECTION 7.01. AUTHORIZATION AND ACTION. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of holders of at least 75% in
principal amount of the Notes then outstanding (or if no Notes are at the time
outstanding, upon the instructions of Banks having at least 75% of the
Commitments), and such instructions shall be binding upon all Banks and all
holders of Notes; PROVIDED, HOWEVER, that the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law. The Agent agrees to give to each
Bank prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement.
SECTION 7.02. AGENT'S RELIANCE, ETC. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat the
payee of any Note as the holder thereof until the Agent
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receives written notice of the assignment or transfer thereof signed by such
payee and including the agreement of the assignee or transferee to be bound
hereby as it would have been if it had been an original Bank party hereto, in
form satisfactory to the Agent; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Bank
and shall not be responsible to any Bank for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (v) shall not be responsible to any Bank for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any other instrument or document furnished
pursuant hereto; and (vi) shall incur no liability under or in respect of this
Agreement by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, telegram, cable or telex) believed by it to
be genuine and signed or sent by the proper party or parties.
SECTION 7.03. SOCIETY AND AFFILIATES. With respect to its Commitment,
the Advances made by it and the Note issued to it, Society shall have the same
rights and powers under this Agreement as any other Bank and may exercise the
same as though it were not the Agent; and the term "BANK" or "BANKS" shall,
unless otherwise expressly indicated, include Society in its individual
capacity. Society and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, the Borrower, any of its subsidiaries and any Person who may do business
with or own securities of the Borrower or any such subsidiary, all as if Society
were not the Agent and without any duty to account therefor to the Banks.
SECTION 7.04. BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to in section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.
SECTION 7.05. INDEMNIFICATION. The Banks agree to indemnify the Agent
(to the extent not reimbursed by the Borrower), ratably according to the
respective principal amounts of the Notes then held by each of them (or if no
Notes are at the time outstanding or if any Notes are held by Persons which are
not Banks, ratably according to the respective amounts of their Commitments),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement or any
action taken or omitted by the Agent under this Agreement, PROVIDED that no Bank
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
counsel fees) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Agent is not reimbursed for such expenses by the Borrower.
SECTION 7.06. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and the Borrower and may be removed
at any time with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Banks, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Majority Banks'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent,
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which shall be a commercial bank organized under the laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or the Notes, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in
writing and signed by all the Banks, do any of the following: (a) waive any of
the conditions specified in Article III, (b) increase the Commitments of the
Banks or subject the Banks to any additional obligations, (c) reduce the
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder (including, without limitation, any such reduction effected by means
of any amendment to the definition of the term Applicable Increment or any of
the other terms defined herein), (d) postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, (e) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action hereunder or (f) amend
this section 8.01; and PROVIDED, FURTHER, that no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to the Banks
required above to take such action, affect the rights or duties of the Agent
under this Agreement or any Note.
SECTION 8.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Borrower, at its address at 3008 Monticello
Boulevard, Cleveland Heights, Ohio 44118, Attention: Chairman of the Board or
President; if to any Bank, at its Domestic Lending Office specified opposite its
name on Schedule I hereto; and if to the Agent, at its address at 127 Public
Square, Cleveland, Ohio 44114-1306, Attention: Commercial Banking
Department-Large Corporate Group, as to the Borrower or the Agent, at such other
address as shall be designated by such party in a written notice to the other
parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the Agent. All
such notices and communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or delivered
to the cable company, respectively, except that notices and communications to
the Agent pursuant to Article II or VII shall not be effective until received by
the Agent.
SECTION 8.03. NO WAIVER; REMEDIES. No failure on the part of any Bank
or the Agent to exercise, and no delay in exercising, any right under this
Agreement or any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. COSTS, EXPENSES AND TAXES. (a) The Borrower agrees to pay
on demand all costs and expenses in connection with the preparation, execution,
delivery, administration, modification and amendment of this Agreement and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent with respect
thereto and with respect to advising the Agent as to its rights and
responsibilities under this Agreement. The Borrower further agrees to pay on
demand all costs and expenses, if any (including, without limitation, reasonable
counsel fees and
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expenses), of the Banks and the Agent in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Agreement
and the other documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this section 8.04(a). In addition, the Borrower
shall pay any and all stamp and other similar taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement and the
Notes and the other documents to be delivered hereunder, and agrees to save the
Agent and each Bank harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes.
(b) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made other than on the last day of an Interest Period relating
to such Advance, as a result of a payment or Conversion pursuant to section 2.10
or 2.08(d) or acceleration of the maturity of the Notes pursuant to section 6.01
or for any other reason, the Borrower shall, upon demand by any Bank (with a
copy of such demand to the Agent), pay to the Agent for the account of such Bank
any amounts required to compensate such Bank for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment or
Conversion, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund or
maintain such Advance.
SECTION 8.05. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of section 6.01,
each Bank is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement or the Notes, whether or not such Bank
shall have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Bank agrees promptly to notify the Borrower
after any such set-off and application made by such Bank, PROVIDED that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which such Bank may have.
SECTION 8.06. BINDING EFFECT. This Agreement shall become effective
when (i) it shall have been executed by the Borrower and the Agent, (ii) the
conditions specified in section 3.01 shall have been satisfied, and (iii) the
Agent shall have been notified by each Bank that such Bank has executed this
Agreement, and thereafter this Agreement shall be binding upon and inure to the
benefit of the Borrower, the Agent and each Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Banks.
SECTION 8.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Bank may assign
to one or more Banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the Advances owing to it); PROVIDED, HOWEVER, that
(A) each such assignment shall be of a uniform, and not a varying, percentage of
all rights and obligations under and in respect of all of such Bank's
Commitment, (B) except in the case of an assignment to a Bank, the amount of the
Commitment of the assigning Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000 and shall (unless such
amount constitutes the entire remaining amount of the assigning Bank's
Commitment) be an integral multiple of $1,000,000, (C) each such assignment
shall be to an Eligible Assignee, and (D) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording, an
Assignment and Acceptance (the "ASSIGNMENT AND ACCEPTANCE") in substantially the
form attached hereto as Exhibit D, together with a processing and recordation
fee of $2,000. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank hereunder and (y) the Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under
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this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower or the
performance by the Borrower of any of its obligations under this Agreement or
any other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in section 4.01(d) and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Bank or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under this Agreement as are delegated to the Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all of
the obligations that by the terms of this Agreement are required to be performed
by it as a Bank.
(c) The Agent shall maintain at its address referred to in section 8.02
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Banks and the
Commitment of, and principal amount of the Advances owing to, each Bank from
time to time (the "REGISTER"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Banks may treat each person whose name is recorded in the Register as a
Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee representing that it is an Eligible Assignee, the
Agent shall, if such Assignment and Acceptance has been completed and is in form
acceptable to the Agent, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower.
(e) Each Bank may sell participations to one or more Banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Advances owing to it); PROVIDED, HOWEVER, that (i) such Bank's obligations
under this Agreement (including, without limitation, its Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrower, the Agent and the other Banks shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement, and (iv) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of this Agreement, or any consent to any departure by Borrower
therefrom, except to the extent that such amendment, waiver or consent would
reduce the principal of, or interest on, the Advances or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Advances or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation.
(f) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this section, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Bank by or on behalf of the Borrower;
PROVIDED,
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HOWEVER, that, prior to any such disclosure, the assignee or participant or
proposed assignee or participant shall agree to preserve the confidentiality of
any confidential information received by it from such Bank.
SECTION 8.08. GOVERNING LAW. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of Ohio.
SECTION 8.09. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 8.10. INDEMNIFICATION. The Borrower hereby indemnifies and
holds the Agent and each Bank harmless from and against any and all claims,
damages, losses, liabilities, costs or expenses which the Agent or such Bank may
incur or which may be claimed against the Agent or such Bank by any person or
entity:
(a) by reason of any proposed or actual use of the proceeds of
any Borrowing;
(b) by reason of or in connection with the execution, delivery
or performance of this Agreement or any transaction contemplated
hereby; PROVIDED, HOWEVER, that the Borrower shall not be required to
indemnify the Agent or such Bank pursuant to this section 8.10(b) for
any claims, damages, losses, liabilities, costs or expenses to the
extent caused by the Agent's or such Bank's wilful misconduct or gross
negligence; or
(c) by reason of or in connection with any liability or
alleged liability which arises under any Environmental Law and which
occurs upon or from any real property owned, operated, or leased by the
Borrower or any Subsidiary either as of the date of this Agreement or
at any time thereafter, or any fixture or personal property used in
connection therewith, and the Borrower's rights to leases, rents and
profits with respect thereto, or by the reason of any governmental
response costs pursuant to any Environmental Law.
Nothing in this section is intended to limit the Borrower's obligations
contained in Article II. Without prejudice to the survival of any other
obligation of the Borrower hereunder, the indemnities and obligations of the
Borrower contained in this section shall survive the payment in full of amounts
payable pursuant to Article II.
SECTION 8.11. NO MARGIN STOCK COLLATERAL. Each of the Banks represents
to the Agent and each of the other Banks that it in good faith is not, directly
or indirectly (by negative pledge or otherwise) relying upon any margin stock
(as defined in Regulation U of the Board of Governors of the Federal Reserve
System) as collateral in the extension or maintenance of the credit provided for
in this Agreement.
SECTION 8.12. JURY TRIAL WAIVER. THE BORROWER AND THE AGENT AND EACH
LENDER EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN THE AGENT OR ANY LENDER
AND THE BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT
OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
[The balance of this page is intentionally blank.]
36
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
MEDUSA CORPORATION
BY: /s/ R. Breck Denny
------------------------------
TITLE: VICE PRESIDENT-FINANCE
SOCIETY NATIONAL BANK, AS AGENT
BY: /s/ Thomas J. Purcell
-------------------------------
TITLE: ASST. VICE PRESIDENT
[Signatures continued on following page.]
37
<PAGE> 42
BANKS
COMMITMENT
$17,500,000 SOCIETY NATIONAL BANK
(39%)
By: /s/ Thomas J. Purcell
----------------------------------
Title: Asst. Vice President
$10,000,000 NBD BANK
(22%)
By: /s/ Illegible
----------------------------------
Title: Vice President
$10,000,000 NATIONAL CITY BANK
(22%)
By: /s/ Illegible
----------------------------------
Title: Vice President
$7,500,000 PNC BANK, NATIONAL ASSOCIATION
(17%)
By: /s/ Illegible
----------------------------------
Title: Asst. Vice President
Total of Commitments:
$45,000,000
(100%)
38
<PAGE> 43
<TABLE>
<CAPTION>
SCHEDULE I
MEDUSA CORPORATION
REVOLVING CREDIT AGREEMENT
- -------------------------------------------------------------------------------------------------------------------------------
DOMESTIC LENDING EURODOLLAR LENDING
NAME OF BANK OFFICE OFFICE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Society National Bank Society Center Same as Domestic Lending Office
Mailcode OH-01-27-0606
127 Public Square
Cleveland, Ohio 44114-1306
Attention: Large Corporate Group
Thomas J. Purcell
Assistant Vice President
Telephone: (216) 689-4439
Facsimile: (216) 689-4981
CONTACT FOR BORROWINGS, PAYMENTS, ETC.:
Cathy Sledge
Telephone: (216) 689-4450
Facsimile: (216) 689-4981
ABA # 041001039
- --------------------------------------------------------------------------------------------------------------------------------
NBD Bank NBD Bank Same as Domestic Lending Office
611 Woodward Avenue
Detroit, Michigan 48226
CONTACTS/NOTIFICATION METHODS:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Andrew W. Strait
Vice President
Midwest Banking Division
Telephone: (313) 225-3300
Telecopy: (313) 225-1671
CONTACT FOR BORROWINGS, PAYMENTS, ETC.:
Patti Deuweke
Telephone: (313) 225-1274
Telecopy: (313) 225-1671
ABA # 0720 003 26
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 44
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
DOMESTIC LENDING EURODOLLAR LENDING
NAME OF BANK OFFICE OFFICE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
National City Bank National City Bank Same as Domestic Lending Office
1900 East Ninth Street
Cleveland, Ohio 44114
PRIMARY CONTACT:
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
Attention:
Christopher M. Karr
Vice President
Metro Ohio Division
Telephone: (216) 575-2000
Telecopy: (216) 575-9396
Telex: 980394
FOR WIRING:
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: Revette Flanigan
Commercial Loan Operations
Telephone: (216) 575-3276
Telecopy: (216) 575-3207
ABA # 041000124
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 45
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
DOMESTIC LENDING EURODOLLAR LENDING
NAME OF BANK OFFICE OFFICE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PNC Bank, National Association PNC Bank, National Association Same as Domestic Lending Office
One PNC Plaza
Fifth and Wood Streets
Pittsburgh, Pennsylvania 15265
CONTACTS/NOTIFICATION METHODS:
PNC Bank, National Association
Suite 1250
1375 East Ninth Street
Cleveland, Ohio 44114-3103
Joseph G. Moran
Vice President
Telephone: (216) 348-8560
Facsimile: (216) 348-8594
Chris Helmeci
Relationship Manager
Telephone: (216) 348-8580
Facsimile: (216) 348-8594
CONTACT FOR BORROWINGS, PAYMENTS, ETC.:
PNC Bank, National Association
Suite 1250
1375 East Ninth Street
Cleveland, Ohio 44114-3103
Attention: Denise T. Gottlieb
Telephone: (216) 348-8552
Facsimile: (216) 348-8594
ABA # 043000096
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 46
SCHEDULE II
CERTAIN ERISA DISCLOSURES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PLAN Incurrence Date Explanation Liability Source of Funds Status
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Central States, December 10, Multiemployer $355,000 $200,000 paid by Paid in
Southeast and 1982 withdrawal liability Travelers Full
Southwest Areas incurred by reason of the Insurance;
Pension Fund, sale of substantially all of balance from the
Chicago, Illinois the assets of New Hudson Company
and Walker Sand and
Gravel operations by
Medusa Aggregates
Company to Milford Sand
and Gravel Company
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 47
SCHEDULE III
OUTSTANDING DEBT
1. Short term Debt outstanding under lines of credit.
2. $3,800,000 Capitalized Lease Obligation, covering the Toledo
Silo, with a final maturity of 12/06, issued to the
Toledo-Lucas County, port Authority, supported by a Letter of
Credit issued by PNC Bank, National Association.*
3. $57,500,000 Convertible Subordinated Notes.
4. $365,000 Mortgage Notes payable at 6.16%, maturing October 31,
2004, payable in 9 equal annual payments.*
- ----------------
* Secured Debt
<PAGE> 48
EXHIBIT A
PROMISSORY NOTE
U.S. $ Dated: , 19
-------------------- -----------
FOR VALUE RECEIVED, the undersigned, MEDUSA CORPORATION, an Ohio
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of (the
"BANK") for the account of its Applicable Lending Office (as defined in the
Credit Agreement referred to below) the principal sum of U.S.
___________________________ DOLLARS AND NO CENTS ($____________), on the
Termination Date (as defined in the Credit Agreement), or, if less, the
aggregate principal amount of the Advances (as defined below) made by the Bank
to the Borrower pursuant to the Credit Agreement outstanding on the Termination
Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Society National Bank, as Agent, for the benefit of the
Bank, at 127 Public Square, Cleveland, Ohio 44114-1306, in same day funds. Each
Advance made by the Bank to the Borrower pursuant to the Credit Agreement, and
all payments made on account of the principal amount thereof, shall be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Amended and Restated Revolving Credit Agreement
dated as of January 27, 1993 and amended and restated as of December 15, 1995
(as so amended and restated and as hereinafter amended or otherwise modified,
the "CREDIT AGREEMENT") among the Borrower, the Bank and certain other banks
parties thereto, and Society National Bank, as Agent for the Bank and such other
banks. The Credit Agreement, among other things, (i) provides for the making of
advances (the "ADVANCES") by the Bank to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from each such
Advance being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
MEDUSA CORPORATION
BY:
------------------------------
TITLE: VICE PRESIDENT-FINANCE
<PAGE> 49
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Principal Paid or Unpaid Principal Notation
NOTATION DATE Advance Prepaid Balance Made By
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE> 50
EXHIBIT B
NOTICE OF BORROWING
[Date]
Society National Bank,
as Agent
127 Public Square
Cleveland, Ohio 44114-1306
Attention: Thomas J. Purcell
Assistant Vice President
Large Corporate Group
Gentlemen:
The undersigned, Medusa Corporation, refers to the Amended and Restated
Revolving Credit Agreement, dated as of January 27, 1993 and amended and
restated as of December 15, 1995 (the "CREDIT AGREEMENT", the terms defined
therein being used herein as therein defined), among the undersigned, certain
Banks parties thereto and Society National Bank, as Agent for said Banks, and
hereby gives you notice, irrevocably, pursuant to section 2.02 of the Credit
Agreement that the undersigned hereby requests a Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Borrowing (the "PROPOSED BORROWING") as required by section 2.02(a) of the
Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _______, 19__.
(ii) The Type of Advances comprising the Proposed Borrowing is
[Adjusted Base Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Borrowing is
$________________.
*[(iv) The initial Interest Period for each Advance made as part
of the Proposed Borrowing is [ months]. --
* To be included for a Proposed Borrowing comprised of
Eurodollar Rate Advances.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Borrowing: (A)
the representations and warranties contained in section 4.01 of the Credit
Agreement are correct, before and after giving effect to the Proposed Borrowing
and to the application of the proceeds therefrom, as though made on and as of
such date; and (B) no event has occurred and is continuing, or would result from
such Proposed Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both.
Very truly yours,
MEDUSA CORPORATION
By:
-------------------
Title:
---------------
<PAGE> 51
EXHIBIT C
[Restatement Effective Date]
To each of the Banks parties to the Amended and Restated Revolving Credit
Agreement dated as of January 27, 1993 and amended and restated as of December
15, 1995, among Medusa Corporation, said Banks and Society National Bank as
Agent for said Banks, and to Society National Bank, as Agent
Re: AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Ladies and Gentlemen:
This opinion is furnished to you pursuant to section 3.01(d) of the
Amended and Restated Revolving Credit Agreement, dated as of January 27, 1993
and amended and restated as of December 15, 1995 (the "CREDIT AGREEMENT"), among
Medusa Corporation (the "BORROWER"), the Banks parties thereto and Society
National Bank, as Agent for said Banks. Terms defined in the Credit Agreement
are used herein as therein defined.
I am the General Counsel and Secretary of the Borrower and have acted
as counsel for the Borrower in connection with the preparation, execution and
delivery of the Credit Agreement.
In that connection, I have examined:
(1) The Credit Agreement.
(2) The Articles of Incorporation of the Borrower and all
amendments thereto (the "CHARTER").
(3) The Code of Regulations of the Borrower and all amendments
thereto (the "CODE OF REGULATIONS").
(4) A certificate of the Secretary of State of the State of
Ohio, dated January 19 , 1993, attesting to the continued corporate
existence and good standing of the Borrower in that State.
I have also examined the originals, or copies certified to my satisfaction, of
the documents referred to in the last sentence of section 4.01(g) of the Credit
Agreement (the "RESTRICTIVE AGREEMENTS"). In addition, I have examined the
originals, or copies certified to my satisfaction, of such other corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower, and agreements, instruments and other documents, as I have deemed
necessary as a basis for the opinions expressed below. As to questions of fact
material to such opinions, I have, when relevant facts were not independently
established by me, relied upon certificates of the Borrower or its officers or
of public officials. I have assumed the due execution and delivery, pursuant to
due authorization, of the Credit Agreement by the Banks and the Agent.
I am qualified to practice law in the State of Ohio and do not purport
to be an expert on any laws other than the laws of the State of Ohio and the
Federal laws of the United States.
<PAGE> 52
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio.
2. The execution, delivery and performance by the Borrower of
the Credit Agreement and the Notes are within the Borrower's corporate
powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Charter or the Code of Regulations, (ii)
any law, rule or regulation applicable to the Borrower (including,
without limitation, Regulation X of the Board of Governors of the
Federal Reserve System), or (iii) any contractual or legal restriction
contained in any Restrictive Agreement or, to the best of my knowledge,
contained in any other similar document.
3. The Credit Agreement and the Notes have been duly executed
and delivered on behalf of the Borrower. The Credit Agreement and the
Notes each constitute a valid and binding agreement or obligation of
the Borrower enforceable against the Borrower in accordance with their
terms.
4. No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Body is required on the
part of the Borrower for the valid execution and delivery of the Credit
Agreement or the consummation of the transactions contemplated thereby,
including the issuance and delivery of the Notes, or for the
fulfillment of, or compliance by the Borrower with, the terms and
provisions of the Credit Agreement and the Notes.
5. There are no pending or overtly threatened actions or
proceedings against the Borrower or any of its Subsidiaries before any
court, governmental agency or arbitrator which purport to affect the
legality, validity, binding effect or enforceability of the Credit
Agreement or any of the Notes or which might result in a Material
Adverse Change in the Business or Condition of the Borrower or of the
Borrower and its Subsidiaries taken as a whole.
6. The transactions contemplated by the Credit Agreement will
not result in a violation of Regulation U or Regulation X of the Board
of Governors of the Federal Reserve System.
7. The Borrower is not an "investment company" or a Person
directly or indirectly "controlled" by or "acting on behalf of" an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended. The Borrower is not a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company",
as such terms are defined in the Public Utility Holding Company Act of
1935, as amended.
The opinions set forth above are subject to the following
qualifications:
(a) My opinion in the last sentence of paragraph 3 above is
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally.
(b) My opinion in the last sentence of paragraph 3 above is
subject to the effect of general principles of equity, including
(without limitation) concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in a
proceeding in equity or at law).
The opinions expressed herein are expressed solely to you and may not
be relied upon by any other persons for any reason, without the express written
consent of the undersigned.
Very truly yours,
2
<PAGE> 53
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Dated________, 19__
Reference is made to the Amended and Restated Revolving Credit
Agreement, dated as of January 27, 1993 as amended and restated as of December
15, 1995 (the "CREDIT AGREEMENT"), among Medusa Corporation, an Ohio corporation
(the "BORROWER"), the Banks (as defined in the Credit Agreement) and Society
National Bank, as Agent for the Banks (the "AGENT"). Terms defined in the Credit
Agreement are used herein with the same meaning.
(the "ASSIGNOR") and _____________ (the "ASSIGNEE") agree as follows:
1.________________ The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obligations under the Credit
Agreement as of the date hereof which represents the percentage interest
specified on Schedule 1 of all outstanding rights and obligations under the
Credit Agreement which are specified on Schedule 1, including, without
limitation, such interest in the Assignor's Commitment, the Advances owing to
the Assignor, the Note held by the Assignor, as set forth in section 1 of
Schedule 1. After giving effect to such sale and assignment, the Assignee's
Commitment and the amount of the Advances owing to the Assignee will be as set
forth in section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Note referred to in paragraph 1 above and requests that
the Agent exchange such Note for a new Note payable to the order of the Assignee
in an amount equal to the Commitment assumed by the Assignee pursuant hereto,
and a new Note payable to the order of the Assignor in an amount equal to the
Commitment retained by the Assignor under the Credit Agreement, respectively, as
specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
section 4.01(d) thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Credit Agreement as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto; (v) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank; [and] (vi) specifies as its Domestic Lending Office
(and address for notices) and Eurodollar Lending Office the offices set forth
beneath its name on the signature pages hereof [and (vii) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as to
the Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be
<PAGE> 54
made to the Assignee under the Credit Agreement and the Note or such other
documents as are necessary to indicate that all such payments are subject to
such rates at a rate reduced by an applicable tax treaty].1
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Agent for acceptance and
recording by the Agent. The effective date of this Assignment and Acceptance
shall be the date of acceptance thereof by the Agent, unless otherwise specified
on Schedule 1 hereto (the "EFFECTIVE DATE").
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations thereafter arising under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment and facility fees
with respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Notes for
periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
- --------
1 If the Assignee is organized under the laws of the jurisdiction outside
the United States.
2
<PAGE> 55
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 19____
SECTION 1.
Percentage Interest: ______________%
SECTION 2.
Assignee's Commitment: $________________
Aggregate Outstanding Principal
Amount of Advances owing to the Assignee: $____________
A Note payable to the Assignee
Dated:__________________ , 19_______
Principal amount:___________________
A Note payable to the order of the Assignor
Dated: __________________, 19_______
Principal amount:___________________
SECTION 3.
Effective Date(1): ______________________, 19______
[NAME OF ASSIGNOR]
By:
----------------------------------
Title:
[NAME OF ASSIGNEE]
By:
-----------------------------------
Title:
Domestic Lending Office (and address for notices):
Eurodollar Lending Office:
[Address]
- --------
1 This date should be no earlier than the date of acceptance by the Agent.
<PAGE> 56
Accepted this ______day
of ___________, 19__
SOCIETY NATIONAL BANK, AS AGENT
By:
--------------------------------------
Title:
4
<PAGE> 57
EXHIBIT E
GUARANTY
GUARANTY, dated ________, 19___, made by ___________, a [corporation]
organized and existing under the laws of (herein, together with its successors
and assigns, the "GUARANTOR"), in favor of the Banks (the "BANKS", such term to
include their respective successors and assigns) parties to the Credit Agreement
(as defined below) and SOCIETY NATIONAL BANK, a national banking association, as
agent (the "AGENT") for the Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and amended
and restated as of December 15, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
the terms defined therein and not otherwise defined herein being used herein as
therein defined) with Medusa Corporation, a corporation organized and existing
under the laws of Ohio (herein, together with its successors and assigns, the
"BORROWER"). The Guarantor may receive a portion of the proceeds of the Advances
under the Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent or the Banks under the Credit Agreement and the Notes but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
<PAGE> 58
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the Credit
Agreement or the Notes, including, without limitation, any increase in
the Obligations resulting from the extension of additional credit to
the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the
corporate structure or existence of the Borrower or any of its
Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments, such amount
shall be held in trust for the benefit of the Agent and the Banks and shall
forthwith be paid to the Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement or to be held by the Agent as collateral security for any Obligations
thereafter existing. If (i) the Guarantor shall make payment to the Agent or the
Banks of all or any part of the Obligations, (ii) all the Obligations and all
other amounts payable under this Guaranty shall be paid in full and (iii) the
Commitments shall have expired or terminated, the Agent and the Banks will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a [corporation] duly organized, validly existing and in good
standing under the laws of the State of _____ and has all requisite
power and authority to own or hold under lease, to carry on its
business as now conducted and proposed to be conducted, to enter into
this Guaranty and to perform its obligations hereunder. The Guarantor
has, by all necessary [corporate] [partnership] [limited liability
company] action (all action of [shareholders] [partners] [members], if
any, required therefor having been duly taken), duly authorized the
execution and delivery of this Guaranty and the performance of its
obligations under this Guaranty.
2
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(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Guaranty nor the consummation of the
transactions contemplated hereby nor the performance of the terms and
provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in
respect of any property of the Guarantor under, any agreement,
indenture, mortgage, instrument, corporate charter (or corresponding
document) or by-law to which the Guarantor is a party or by which the
Guarantor or any of its properties may be bound or affected, or
violate any existing law, governmental rule or regulation or any Order
of any court, arbitrator or Governmental Body applicable to the
Guarantor which could have a Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Body is required on the part of the Guarantor for the
valid execution and delivery of this Guaranty or for compliance by the
Guarantor with the terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor in any court or before any arbitrator of any
kind or before or by any Governmental Body, which question the validity
of this Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty is a legal,
valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is familiar with the
finances and affairs of the Borrower and has, independently and without
reliance upon the Agent or any Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address at
______________, Attention: __________________, and if to the Agent or any Bank,
at its address specified in the Credit Agreement, or, as to any party, at such
other address as shall be designated by such party in a written notice to each
other party. All such notices and other communications shall, when mailed,
telecopied, telegraphed, telexed or cabled, be effective when deposited in the
mails, telecopied, delivered to the telegraph company, confirmed by telex
answerback or delivered to the cable company, respectively.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said
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section 6.01, each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, whether or not such
Bank shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured. Each Bank agrees promptly to notify
the Guarantor after any such set-off and application made by such Bank,
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[NAME OF GUARANTOR]
By:
----------------------------
Title:
4
<PAGE> 61
PROMISSORY NOTE
U.S. $17,500,000 Dated: December 15, 1995
FOR VALUE RECEIVED, the undersigned, MEDUSA CORPORATION, an Ohio
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of SOCIETY
NATIONAL BANK (the "BANK") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the principal sum of U.S.
SEVENTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS ($17,500,000.00),
on the Termination Date (as defined in the Credit Agreement), or, if less, the
aggregate principal amount of the Advances (as defined below) made by the Bank
to the Borrower pursuant to the Credit Agreement outstanding on the Termination
Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Society National Bank, as Agent, for the benefit of the
Bank, at 127 Public Square, Cleveland, Ohio 44114-1306, in same day funds. Each
Advance made by the Bank to the Borrower pursuant to the Credit Agreement, and
all payments made on account of the principal amount thereof, shall be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled
to the benefits of, the Amended and Restated Revolving Credit Agreement dated as
of January 27, 1993 and amended and restated as of December 15, 1995 (as so
amended and restated and as hereinafter amended or otherwise modified, the
"CREDIT AGREEMENT") among the Borrower, the Bank and certain other banks parties
thereto, and Society National Bank, as Agent for the Bank and such other banks.
The Credit Agreement, among other things, (i) provides for the making of
advances (the "ADVANCES") by the Bank to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from each such
Advance being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
MEDUSA CORPORATION
By: /s/ R. Breck Denny
------------------------------------
Title: Vice President-Finance
<PAGE> 62
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Principal Paid or Unpaid Principal Notation
Notation Date Advance Prepaid Balance Made By
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PROMISSORY NOTE
U.S. $10,000,000 Dated: December 15, 1995
FOR VALUE RECEIVED, the undersigned, MEDUSA CORPORATION, an Ohio
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of NBD BANK
(the "BANK") for the account of its Applicable Lending Office (as defined in the
Credit Agreement referred to below) the principal sum of U.S. TEN MILLION
DOLLARS AND NO CENTS DOLLARS AND NO CENTS ($10,000,000.00), on the Termination
Date (as defined in the Credit Agreement), or, if less, the aggregate principal
amount of the Advances (as defined below) made by the Bank to the Borrower
pursuant to the Credit Agreement outstanding on the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Society National Bank, as Agent, for the benefit of the
Bank, at 127 Public Square, Cleveland, Ohio 44114-1306, in same day funds. Each
Advance made by the Bank to the Borrower pursuant to the Credit Agreement, and
all payments made on account of the principal amount thereof, shall be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled
to the benefits of, the Amended and Restated Revolving Credit Agreement dated as
of January 27, 1993 and amended and restated as of December 15, 1995 (as so
amended and restated and as hereinafter amended or otherwise modified, the
"CREDIT AGREEMENT") among the Borrower, the Bank and certain other banks parties
thereto, and Society National Bank, as Agent for the Bank and such other banks.
The Credit Agreement, among other things, (i) provides for the making of
advances (the "ADVANCES") by the Bank to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from each such
Advance being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
MEDUSA CORPORATION
By: /s/ R. Breck Denny
------------------------------------
Title: Vice President-Finance
<PAGE> 64
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Principal Paid or Unpaid Principal Notation
Notation Date Advance Prepaid Balance Made By
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PROMISSORY NOTE
U.S. $10,000,000 Dated: December 15, 1995
FOR VALUE RECEIVED, the undersigned, MEDUSA CORPORATION, an Ohio
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of NATIONAL
CITY BANK (the "BANK") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the principal sum of U.S. TEN
MILLION DOLLARS AND NO CENTS ($10,000,000.00), on the Termination Date (as
defined in the Credit Agreement), or, if less, the aggregate principal amount of
the Advances (as defined below) made by the Bank to the Borrower pursuant to the
Credit Agreement outstanding on the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Society National Bank, as Agent, for the benefit of the
Bank, at 127 Public Square, Cleveland, Ohio 44114-1306, in same day funds. Each
Advance made by the Bank to the Borrower pursuant to the Credit Agreement, and
all payments made on account of the principal amount thereof, shall be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled
to the benefits of, the Amended and Restated Revolving Credit Agreement dated as
of January 27, 1993 and amended and restated as of December 15, 1995 (as so
amended and restated and as hereinafter amended or otherwise modified, the
"CREDIT AGREEMENT") among the Borrower, the Bank and certain other banks parties
thereto, and Society National Bank, as Agent for the Bank and such other banks.
The Credit Agreement, among other things, (i) provides for the making of
advances (the "ADVANCES") by the Bank to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from each such
Advance being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
MEDUSA CORPORATION
By: /s/ R. Breck Denny
------------------------------------
Title: Vice President-Finance
<PAGE> 66
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Principal Paid or Unpaid Principal Notation
Notation Date Advance Prepaid Balance Made By
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PROMISSORY NOTE
U.S. $7,500,000 Dated: December 15, 1995
FOR VALUE RECEIVED, the undersigned, MEDUSA CORPORATION, an Ohio
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of PNC BANK,
NATIONAL ASSOCIATION (the "BANK") for the account of its Applicable Lending
Office (as defined in the Credit Agreement referred to below) the principal sum
of U.S. SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS
($7,500,000.00), on the Termination Date (as defined in the Credit Agreement),
or, if less, the aggregate principal amount of the Advances (as defined below)
made by the Bank to the Borrower pursuant to the Credit Agreement outstanding on
the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Society National Bank, as Agent, for the benefit of the
Bank, at 127 Public Square, Cleveland, Ohio 44114-1306, in same day funds. Each
Advance made by the Bank to the Borrower pursuant to the Credit Agreement, and
all payments made on account of the principal amount thereof, shall be recorded
by the Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled
to the benefits of, the Amended and Restated Revolving Credit Agreement dated as
of January 27, 1993 and amended and restated as of December 15, 1995 (as so
amended and restated and as hereinafter amended or otherwise modified, the
"CREDIT AGREEMENT") among the Borrower, the Bank and certain other banks parties
thereto, and Society National Bank, as Agent for the Bank and such other banks.
The Credit Agreement, among other things, (i) provides for the making of
advances (the "ADVANCES") by the Bank to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from each such
Advance being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
MEDUSA CORPORATION
By: /s/ R. Breck Denny
------------------------------------
Title: Vice President-Finance
1
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ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Principal Paid or Unpaid Principal Notation
Notation Date Advance Prepaid Balance Made By
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[LOGO]
M E D U S A C 0 R P 0 R A T I 0 N
LEE AND MONTICELLO CLEVELAND HEIGHTS, OHIO 44118 216/371-4000
FAX 216/371-2912
JOHN P. SIEGFRIED
VICE PRESIDENT, SECRETARY MAIL ADDRESS
AND GENERAL COUNSEL P.O. BOX 5668
CLEVELAND 44101
EXHIBIT C
December 15, 1995
To each of the Banks parties to the
Amended and Restated Revolving Credit
Agreement dated as of January 27, 1993
and amended and restated as of
December 15, 1995, among
Medusa Corporation, said Banks
and Society National Bank as Agent
for said Banks, and to Society National
Bank, as Agent
Re: AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Ladies and Gentlemen:
This opinion is furnished to you pursuant to section 3.01(d) of the
Amended and Restated Revolving Credit Agreement, dated as of January 27, 1993
and amended and restated as of December 15, 1995 (the "CREDIT AGREEMENT"), among
Medusa Corporation (the "BORROWER"), the Banks parties thereto and Society
National Bank, as Agent for said Banks. Terms defined in the Credit Agreement
are used herein as therein defined.
I am the General Counsel and Secretary of the Borrower and have acted
as counsel for the Borrower in connection with the preparation, execution and
delivery of the Credit Agreement.
In that connection, I have examined:
(1) The Credit Agreement.
(2) The Articles of Incorporation of the Borrower and all
amendments thereto (the "CHARTER").
(3) The Code of Regulations of the Borrower and all
amendments thereto (the "CODE OF REGULATIONS").
<PAGE> 70
(4) A certificate of the Secretary of State of the State of
Ohio, dated January 19, 1993, attesting to the continued corporate
existence and good standing of the Borrower in that State.
I have also examined the originals, or copies certified to my
satisfaction, of the documents referred to in the last sentence of section
4.01(g) of the Credit Agreement (the "RESTRICTIVE AGREEMENTS"). In addition, I
have examined the originals, or copies certified to my satisfaction, of such
other corporate records of the Borrower, certificates of public officials and of
officers of the Borrower, and agreements, instruments and other documents, as I
have deemed necessary as a basis for the opinions expressed below. As to
questions of fact material to such opinions, I have, when relevant facts were
not independently established by me, relied upon certificates of the Borrower or
its officers or of public officials. I have assumed the due execution and
delivery, pursuant to due authorization, of the Credit Agreement by the Banks
and the Agent.
I am qualified to practice law in the State of Ohio and do not purport
to be an expert on any laws other than the laws of the State of Ohio and the
Federal laws of the United States.
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio.
2. The execution, delivery and performance by the Borrower
of the Credit Agreement and the Notes are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene (i) the Charter or the Code of
Regulations, (ii) any law, rule or regulation applicable to the
Borrower (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System), or (iii) any contractual or
legal restriction contained in any Restrictive Agreement or, to the
best of my knowledge, contained in any other similar document.
3. The Credit Agreement and the Notes have been duly
executed and delivered on behalf of the Borrower. The Credit Agreement
and the Notes each constitute a valid and binding agreement or
obligation of the Borrower enforceable against the Borrower in
accordance with their terms.
4. No consent, approval or authorization of, or
registration, filing or declaration with, any Governmental Body is
required on the part of the Borrower for the valid execution and
delivery of the Credit Agreement or the consummation of the
transactions contemplated thereby, including the issuance and delivery
of the Notes, or for the fulfillment of, or compliance by the Borrower
with, the terms and provisions of the Credit Agreement and the Notes.
5. There are no pending or overtly threatened actions or
proceedings against the Borrower or any of its Subsidiaries before any
court, governmental agency or arbitrator which purport to affect the
legality, validity, binding effect or enforceability of
2
<PAGE> 71
the Credit Agreement or any of the Notes or which might result in a
Material Adverse Change in the Business or Condition of the Borrower
or of the Borrower and its Subsidiaries taken as a whole.
6. The transactions contemplated by the Credit Agreement
will not result in a violation of Regulation U or Regulation X of the
Board of Governors of the Federal Reserve System.
7. The Borrower is not an "investment company" or a Person
directly or indirectly "controlled" by or "acting on behalf of' an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended. The Borrower is not a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company",
as such terms are defined in the Public Utility Holding Company Act of
1935, as amended.
The opinions set forth above are subject to the following
qualifications:
(a) My opinion in the last sentence of paragraph 3 above is
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally.
(b) My opinion in the last sentence of paragraph 3 above is
subject to the effect of general principles of equity, including
(without limitation) concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in a
proceeding in equity or at law).
The opinions expressed herein are expressed solely to you and may not
be relied upon by any other persons for any reason, without the express written
consent of the undersigned.
Very truly yours,
/s/ John P. Siegfried
John P. Siegfried
JPS: jvc
3
<PAGE> 72
CERTIFIED RESOLUTIONS OF THE BOARD OF DIRECTORS
I DO HEREBY CERTIFY, That I am the duly elected and qualified
Secretary of Medusa Corporation, a corporation organized and existing under the
laws of the State of Ohio, and the keeper of the records and corporate seal of
such corporation; that the following is a true and correct copy of a certain
resolution duly adopted by the Board of Directors by unanimous vote at a
regularly scheduled meeting held on September 25, 1995, at which time a quorum
was always present, and that the resolution below has not been amended, revised,
modified or rescinded:
"RESOLVED, that the Board hereby approves the terms and
conditions of the revised Revolving Credit Agreement negotiated by the
Company with four financial institutions in the face amount of $45.0
million, expiring December 21, 2000, with interest rates, commitment
fees and financial covenants substantially similar to the current
Revolving Credit Agreement, alone with a off, delegation of sufficient
authority to the officers of the Company in order to GIVE effect to
this resolution, to enter into such agreements, and make such
representations and covenants as are required in order to implement
this resolution."
IN WITNESS WHEREOF, I have hereunto affixed my name as Secretary and
have caused the corporate seal of such corporation to be hereto affixed this
Fourteenth day of December, 1995.
Respectfully submitted,
MEDUSA CORPORATION
(CORPORATE SEAL)
By /s/ John P. Siegfried
-------------------------------------
John P. Siegfried
Secretary
<PAGE> 73
Medusa Corporation
U.S. $45,000,000 Amended and
Restated Revolving Credit Agreement
INCUMBENCY CERTIFICATE
The undersigned, R. Breck Denny, of Medusa Corporation, an Ohio
corporation, hereby certifies that the following named persons, from January 1,
1995, to this day, have been and are the officers of the corporation holding the
offices set forth opposite their names, and that set opposite each name is the
true and genuine signature of that person.
NAME TITLE SIGNATURE
R. B. Denny Vice President-Finance and Treasurer /s/ R. Breck Denny
-------------------
John P. Siegfried Vice President, Secretary and General Counsel
/s/ John P. Siegfried
----------------------
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day
of De er, 1995.
/s/ R. Breck Denny
----------------------------
The undersigned, John P. Siegfried, hereby certifies that R. Breck
Denny is, on the date set forth above, the Vice President-Finance and Treasurer
of Medusa Corporation and that the foregoing signature of his is true and
genuine.
/s/ John P. Siegfried
-------------------------
Dated: December 14, 1995
<PAGE> 74
GUARANTY
GUARANTY, dated December 15, 1995 made by CANADIAN MEDUSA CEMENT
LIMITED, a corporation organized and existing under the laws of the Province of
Ontario, Canada (herein, together with its successors and assigns, the
"GUARANTOR"), in favor of the Banks (the "BANKS", such term to include their
respective successors and assigns) parties to the Credit Agreement (as defined
below) and SOCIETY NATIONAL BANK, a national banking association, as agent (the
"AGENT") for the Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and amended
and restated as of December 15, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
the terms defined therein and not otherwise defined herein being used herein as
therein defined) with Medusa Corporation, a corporation organized and existing
under the laws of Ohio (herein, together with its successors and assigns, the
"BORROWER"). The Guarantor may receive a portion of the proceeds of the Advances
under the Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent or the Banks under the Credit Agreement and the Notes but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the
<PAGE> 75
Credit Agreement or the Notes, including, without limitation, any
increase in the Obligations resulting from the extension of additional
credit to the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments, such amount
shall be held in trust for the benefit of the Agent and the Banks and shall
forthwith be paid to the Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement or to be held by the Agent as collateral security for any Obligations
thereafter existing. If (i) the Guarantor shall make payment to the Agent or the
Banks of all or any part of the Obligations, (ii) all the Obligations and all
other amounts payable under this Guaranty shall be paid in full and (iii) the
Commitments shall have expired or terminated, the Agent and the Banks will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a corporation duly organized, validly existing and in good standing
under the laws of the Province of Ontario, Canada, and has all
requisite power and authority to own or hold under lease, to carry on
its business as now conducted and proposed to be conducted, to enter
into this Guaranty and to perform its obligations hereunder. The
Guarantor has, by all necessary corporate action (all action of
shareholders, if any, required therefor having been duly taken), duly
authorized the execution and delivery of this Guaranty and the
performance of its obligations under this Guaranty.
2
<PAGE> 76
(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Guaranty nor the consummation of the
transactions contemplated hereby nor the performance of the terms and
provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in
respect of any property of the Guarantor under, any agreement,
indenture, mortgage, instrument, corporate charter (or corresponding
document) or by-law to which the Guarantor is a party or by which the
Guarantor or any of its properties may be bound or affected, or
violate any existing law, governmental rule or regulation or any
Order of any court, arbitrator or Governmental Body applicable to the
Guarantor which could have a Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Body is required on the part of the Guarantor for the
valid execution and delivery of this Guaranty or for compliance by the
Guarantor with the terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor in any court or before any arbitrator of any
kind or before or by any Governmental Body, which question the validity
of this Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty is a legal,
valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is familiar with the
finances and affairs of the Borrower and has, independently and without
reliance upon the Agent or any Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address at c/o Medusa
Corporation, 3008 Monticello Boulevard, Cleveland Heights, Ohio 44119,
attention: Chief Financial Officer, and if to the Agent or any Bank, at its
address specified in the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed,
telecopied, telegraphed, telexed or cabled, be effective when deposited in the
mails, telecopied, delivered to the telegraph company, confirmed by telex
answerback or delivered to the cable company, respectively.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said
3
<PAGE> 77
section 6.01, each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, whether or not such
Bank shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured. Each Bank agrees promptly to notify
the Guarantor after any such set-off and application made by such Bank,
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
CANADIAN MEDUSA CEMENT LIMITED
By: /s/ R. Breck Denny
---------------------------
Title: Vice President and
Treasurer
4
<PAGE> 78
GUARANTY
GUARANTY, dated December 16, 1995, made by MEDUSA PORTLAND CEMENT
COMPANY, a corporation organized and existing under the laws of the State of
Michigan (herein, together with its successors and assigns, the GUARANTOR), in
favor of the Banks (the "BANKS", such term to include their respective
successors and assigns) parties to the Credit Agreement (as defined below) and
KEYBANK NATIONAL ASSOCIATION, a national banking association (successor by
merger to Society National Bank), as agent (the "AGENT") for the Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and
amended and restated as of December 15, 1995, and as further amended by
Amendment No. 1, dated as of December 16, 1996, to Amended and Restated
Revolving Credit Agreement (said Agreement, as so amended, restated and amended
and as it may hereafter be amended or otherwise modified from time to time,
being the "CREDIT AGREEMENT," the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Medusa Corporation, a
corporation organized and existing under the laws of Ohio (herein,
together with its successors and assigns, the "BORROWER"). The Guarantor may
receive a portion of the proceeds of the Advances under the Credit Agreement
and will derive substantial direct and indirect benefit from the transactions
contemplated by the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without
limiting the generality of the foregoing, the Guarantor's liability shall
extend to all amounts which constitute part of the Obligations and would be
owed by the Borrower to the Agent or the Banks under the Credit Agreement and
the Notes but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
<PAGE> 79
GUARANTY
GUARANTY, dated December 16, 1995, made by MEDUSA AGGREGATES LLC, a
limited liability company organized and existing under the laws of the
Commonwealth of Pennsylvania (herein, together with its successors and assigns,
the "GUARANTOR"), in favor of the Banks (the "BANKS", such term to include their
respective successors and assigns) parties to the Credit Agreement (as defined
below) and KEYBANK NATIONAL ASSOCIATION, a national banking association
(successor by merger to Society National Bank), as agent (the "AGENT") for the
Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and amended
and restated as of December 15, 1995, and as further amended by Amendment No. 1,
dated as of December 16, 1996, to Amended and Restated Revolving Credit
Agreement (said Agreement, as so amended, restated and amended and as it may
hereafter be amended or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with Medusa Corporation, a corporation
organized and existing under the laws of Ohio (herein, together with its
successors and assigns, the "BORROWER"). The Guarantor may receive a portion of
the proceeds of the Advances under the Credit Agreement and will derive
substantial direct and indirect benefit from the transactions contemplated by
the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent or the Banks under the Credit Agreement and the Notes but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
<PAGE> 80
GUARANTY
GUARANTY, dated December 15, 1995 made by CEMENT TRANSIT COMPANY, a
corporation organized and existing under the laws of the State of Delaware
(herein, together with its successors and assigns, the "GUARANTOR"), in favor of
the Banks (the "BANKS", such term to include their respective successors and
assigns) parties to the Credit Agreement (as defined below) and SOCIETY NATIONAL
BANK, a national banking association, as agent (the "AGENT") for the Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and amended
and restated as of December 15, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
the terms defined therein and not otherwise defined herein being used herein as
therein defined) with Medusa Corporation, a corporation organized and existing
under the laws of Ohio (herein, together with its successors and assigns, the
"BORROWER"). The Guarantor may receive a portion of the proceeds of the Advances
under the Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent or the Banks under the Credit Agreement and the Notes but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the
<PAGE> 81
Credit Agreement or the Notes, including, without limitation, any
increase in the Obligations resulting from the extension of additional
credit to the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments, such amount
shall be held in trust for the benefit of the Agent and the Banks and shall
forthwith be paid to the Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement or to be held by the Agent as collateral security for any Obligations
thereafter existing. If (i) the Guarantor shall make payment to the Agent or the
Banks of all or any part of the Obligations, (ii) all the Obligations and all
other amounts payable under this Guaranty shall be paid in full and (iii) the
Commitments shall have expired or terminated, the Agent and the Banks will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite power and
authority to own or hold under lease, to carry on its business as now
conducted and proposed to be conducted, to enter into this Guaranty and
to perform its obligations hereunder. The Guarantor has, by all
necessary corporate action (all action of shareholders, if any,
required therefor having been duly taken), duly authorized the
execution and delivery of this Guaranty and the performance of its
obligations under this Guaranty.
2
<PAGE> 82
(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Guaranty nor the consummation of the
transactions contemplated hereby nor the performance of the terms and
provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in
respect of any property of the Guarantor under, any agreement,
indenture, mortgage, instrument, corporate charter (or corresponding
document) or by-law to which the Guarantor is a party or by which the
Guarantor or any of its properties may be bound or affected, or violate
any existing law, governmental rule or regulation or any Order of any
court, arbitrator or Governmental Body applicable to the Guarantor
which could have a Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Body is required on the part of the Guarantor for the
valid execution and delivery of this Guaranty or for compliance by the
Guarantor with the terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor in any court or before any arbitrator of any
kind or before or by any Governmental Body, which question the validity
of this Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty is a legal,
valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is familiar with the
finances and affairs of the Borrower and has, independently and without
reliance upon the Agent or any Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address at c/o Medusa
Corporation, 3008 Monticello Boulevard, Cleveland Heights, Ohio 44119,
attention: Chief Financial Officer, and if to the Agent or any Bank, at its
address specified in the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said
3
<PAGE> 83
section 6.01, each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, whether or not such
Bank shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured. Each Bank agrees promptly to notify
the Guarantor after any such set-off and application made by such Bank,
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
CEMENT TRANSIT COMPANY
By: /s/ R. Breck Denny
---------------------------
Title: Vice President and
Treasurer
4
<PAGE> 84
GUARANTY
GUARANTY, dated December 15, 1995 made by MEDUSA AGGREGATES COMPANY, a
corporation organized and existing under the laws of the State of Iowa (herein,
together with its successors and assigns, the "GUARANTOR"), in favor of the
Banks (the "BANKS", such term to include their respective successors and
assigns) parties to the Credit Agreement (as defined below) and SOCIETY NATIONAL
BANK, a national banking association, as agent (the "AGENT") for the Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and amended
and restated as of December 15, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
the terms defined therein and not otherwise defined herein being used herein as
therein defined) with Medusa Corporation, a corporation organized and existing
under the laws of Ohio (herein, together with its successors and assigns, the
"BORROWER"). The Guarantor may receive a portion of the proceeds of the Advances
under the Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent or the Banks under the Credit Agreement and the Notes but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the
<PAGE> 85
Credit Agreement or the Notes, including, without limitation, any
increase in the Obligations resulting from the extension of additional
credit to the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments, such amount
shall be held in trust for the benefit of the Agent and the Banks and shall
forthwith be paid to the Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement or to be held by the Agent as collateral security for any Obligations
thereafter existing. If (i) the Guarantor shall make payment to the Agent or the
Banks of all or any part of the Obligations, (ii) all the Obligations and all
other amounts payable under this Guaranty shall be paid in full and (iii) the
Commitments shall have expired or terminated, the Agent and the Banks will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Iowa and has all requisite power and
authority to own or hold under lease, to carry on its business as now
conducted and proposed to be conducted, to enter into this Guaranty and
to perform its obligations hereunder. The Guarantor has, by all
necessary corporate action (all action of shareholders, if any,
required therefor having been duly taken), duly authorized the
execution and delivery of this Guaranty and the performance of its
obligations under this Guaranty.
2
<PAGE> 86
(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Guaranty nor the consummation of the
transactions contemplated hereby nor the performance of the terms and
provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in
respect of any property of the Guarantor under, any agreement,
indenture, mortgage, instrument, corporate charter (or corresponding
document) or by-law to which the Guarantor is a party or by which the
Guarantor or any of its properties may be bound or affected, or violate
any existing law, governmental rule or regulation or any Order of any
court, arbitrator or Governmental Body applicable to the Guarantor
which could have a Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Body is required on the part of the Guarantor for the
valid execution and delivery of this Guaranty or for compliance by the
Guarantor with the terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor in any court or before any arbitrator of any
kind or before or by any Governmental Body, which question the validity
of this Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty is a legal,
valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is familiar with the
finances and affairs of the Borrower and has, independently and without
reliance upon the Agent or any Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address at c/o Medusa
Corporation, 3008 Monticello Boulevard, Cleveland Heights, Ohio 44119,
attention: Chief Financial Officer, and if to the Agent or any Bank, at its
address specified in the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said
3
<PAGE> 87
section 6.01, each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, whether or not such
Bank shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured. Each Bank agrees promptly to notify
the Guarantor after any such set-off and application made by such Bank,
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MEDUSA AGGREGATES COMPANY
By: /s/ R. Breck Denny
---------------------------
Title: Vice President and
Treasurer
4
<PAGE> 88
GUARANTY
GUARANTY, dated December 15, 1995 made by JAMES H. DREW CORPORATION, a
corporation organized and existing under the laws of the State of Indiana
(herein, together with its successors and assigns, the "GUARANTOR"), in favor of
the Banks (the "BANKS", such term to include their respective successors and
assigns) parties to the Credit Agreement (as defined below) and SOCIETY NATIONAL
BANK, a national banking association, as agent (the "AGENT") for the Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and amended
and restated as of December 15, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
the terms defined therein and not otherwise defined herein being used herein as
therein defined) with Medusa Corporation, a corporation organized and existing
under the laws of Ohio (herein, together with its successors and assigns, the
"BORROWER"). The Guarantor may receive a portion of the proceeds of the Advances
under the Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent or the Banks under the Credit Agreement and the Notes but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the
<PAGE> 89
Credit Agreement or the Notes, including, without limitation, any
increase in the Obligations resulting from the extension of additional
credit to the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments, such amount
shall be held in trust for the benefit of the Agent and the Banks and shall
forthwith be paid to the Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement or to be held by the Agent as collateral security for any Obligations
thereafter existing. If (i) the Guarantor shall make payment to the Agent or the
Banks of all or any part of the Obligations, (ii) all the Obligations and all
other amounts payable under this Guaranty shall be paid in full and (iii) the
Commitments shall have expired or terminated, the Agent and the Banks will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Indiana and has all requisite power and
authority to own or hold under lease, to carry on its business as now
conducted and proposed to be conducted, to enter into this Guaranty and
to perform its obligations hereunder. The Guarantor has, by all
necessary corporate action (all action of shareholders, if any,
required therefor having been duly taken), duly authorized the
execution and delivery of this Guaranty and the performance of its
obligations under this Guaranty.
2
<PAGE> 90
(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Guaranty nor the consummation of the
transactions contemplated hereby nor the performance of the terms and
provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in
respect of any property of the Guarantor under, any agreement,
indenture, mortgage, instrument, corporate charter (or corresponding
document) or by-law to which the Guarantor is a party or by which the
Guarantor or any of its properties may be bound or affected, or violate
any existing law, governmental rule or regulation or any Order of any
court, arbitrator or Governmental Body applicable to the Guarantor
which could have a Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Body is required on the part of the Guarantor for the
valid execution and delivery of this Guaranty or for compliance by the
Guarantor with the terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor in any court or before any arbitrator of any
kind or before or by any Governmental Body, which question the validity
of this Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty is a legal,
valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is familiar with the
finances and affairs of the Borrower and has, independently and without
reliance upon the Agent or any Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address at c/o Medusa
Corporation, 3008 Monticello Boulevard, Cleveland Heights, Ohio 44119,
attention: Chief Financial Officer, and if to the Agent or any Bank, at its
address specified in the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said
3
<PAGE> 91
section 6.01, each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, whether or not such
Bank shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured. Each Bank agrees promptly to notify
the Guarantor after any such set-off and application made by such Bank,
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
JAMES H. DREW CORPORATION
By: /s/ R. Breck Denny
---------------------------
Title: Vice President and
Treasurer
4
<PAGE> 92
GUARANTY
GUARANTY, dated December 15, 1995 made by MEDUSA-CITADEL, INC., a
corporation organized and existing under the laws of the State of Alabama
(herein, together with its successors and assigns, the "GUARANTOR"), in favor of
the Banks (the "BANKS", such term to include their respective successors and
assigns) parties to the Credit Agreement (as defined below) and SOCIETY NATIONAL
BANK, a national banking association, as agent (the "AGENT") for the Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and amended
and restated as of December 15, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
the terms defined therein and not otherwise defined herein being used herein as
therein defined) with Medusa Corporation, a corporation organized and existing
under the laws of Ohio (herein, together with its successors and assigns, the
"BORROWER"). The Guarantor may receive a portion of the proceeds of the Advances
under the Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent or the Banks under the Credit Agreement and the Notes but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the
<PAGE> 93
Credit Agreement or the Notes, including, without limitation, any
increase in the Obligations resulting from the extension of additional
credit to the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments, such amount
shall be held in trust for the benefit of the Agent and the Banks and shall
forthwith be paid to the Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement or to be held by the Agent as collateral security for any Obligations
thereafter existing. If (i) the Guarantor shall make payment to the Agent or the
Banks of all or any part of the Obligations, (ii) all the Obligations and all
other amounts payable under this Guaranty shall be paid in full and (iii) the
Commitments shall have expired or terminated, the Agent and the Banks will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Alabama and has all requisite power and
authority to own or hold under lease, to carry on its business as now
conducted and proposed to be conducted, to enter into this Guaranty and
to perform its obligations hereunder. The Guarantor has, by all
necessary corporate action (all action of shareholders, if any,
required therefor having been duly taken), duly authorized the
execution and delivery of this Guaranty and the performance of its
obligations under this Guaranty.
2
<PAGE> 94
(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Guaranty nor the consummation of the
transactions contemplated hereby nor the performance of the terms and
provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in
respect of any property of the Guarantor under, any agreement,
indenture, mortgage, instrument, corporate charter (or corresponding
document) or by-law to which the Guarantor is a party or by which the
Guarantor or any of its properties may be bound or affected, or violate
any existing law, governmental rule or regulation or any Order of any
court, arbitrator or Governmental Body applicable to the Guarantor
which could have a Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Body is required on the part of the Guarantor for the
valid execution and delivery of this Guaranty or for compliance by the
Guarantor with the terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor in any court or before any arbitrator of any
kind or before or by any Governmental Body, which question the validity
of this Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty is a legal,
valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is familiar with the
finances and affairs of the Borrower and has, independently and without
reliance upon the Agent or any Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address at c/o Medusa
Corporation, 3008 Monticello Boulevard, Cleveland Heights, Ohio 44119,
attention: Chief Financial Officer, and if to the Agent or any Bank, at its
address specified in the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said
3
<PAGE> 95
section 6.01, each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, whether or not such
Bank shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured. Each Bank agrees promptly to notify
the Guarantor after any such set-off and application made by such Bank,
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
JAMES H. DREW CORPORATION
By: /s/ R. Breck Denny
---------------------------
Title: Vice President and
Treasurer
4
<PAGE> 96
GUARANTY
GUARANTY, dated December 15, 1995 made by MEDUSA-CRESCENT, INC., a
corporation organized and existing under the laws of State of Ohio (herein,
together with its successors and assigns, the "GUARANTOR"), in favor of the
Banks (the "BANKS", such term to include their respective successors and
assigns) parties to the Credit Agreement (as defined below) and SOCIETY NATIONAL
BANK, a national banking association, as agent (the "AGENT") for the Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and amended
and restated as of December 15, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
the terms defined therein and not otherwise defined herein being used herein as
therein defined) with Medusa Corporation, a corporation organized and existing
under the laws of Ohio (herein, together with its successors and assigns, the
"BORROWER"). The Guarantor may receive a portion of the proceeds of the Advances
under the Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent or the Banks under the Credit Agreement and the Notes but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the
<PAGE> 97
Credit Agreement or the Notes, including, without limitation, any
increase in the Obligations resulting from the extension of additional
credit to the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments, such amount
shall be held in trust for the benefit of the Agent and the Banks and shall
forthwith be paid to the Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement or to be held by the Agent as collateral security for any Obligations
thereafter existing. If (i) the Guarantor shall make payment to the Agent or the
Banks of all or any part of the Obligations, (ii) all the Obligations and all
other amounts payable under this Guaranty shall be paid in full and (iii) the
Commitments shall have expired or terminated, the Agent and the Banks will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio and has all requisite
power and authority to own or hold under lease, to carry on its
business as now conducted and proposed to be conducted, to enter into
this Guaranty and to perform its obligations hereunder. The Guarantor
has, by all necessary corporate action (all action of shareholders, if
any, required therefor having been duly taken), duly authorized the
execution and delivery of this Guaranty and the performance of its
obligations under this Guaranty.
2
<PAGE> 98
(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Guaranty nor the consummation of the
transactions contemplated hereby nor the performance of the terms and
provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in
respect of any property of the Guarantor under, any agreement,
indenture, mortgage,
instrument, corporate charter (or corresponding document) or by-law to
which the Guarantor is a party or by which the Guarantor or any of its
properties may be bound or affected, or violate any existing law,
governmental rule or regulation or any Order of any court, arbitrator
or Governmental Body applicable to the Guarantor which could have a
Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Body is required on the part of the Guarantor for the
valid execution and delivery of this Guaranty or for compliance by the
Guarantor with the terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor in any court or before any arbitrator of any
kind or before or by any Governmental Body, which question the validity
of this Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty is a legal,
valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is familiar with the
finances and affairs of the Borrower and has, independently and without
reliance upon the Agent or any Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address at c/o Medusa
Corporation, 3008 Monticello Boulevard, Cleveland Heights, Ohio 44119,
attention: Chief Financial Officer, and if to the Agent or any Bank, at its
address specified in the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said
3
<PAGE> 99
section 6.01, each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, whether or not such
Bank shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured. Each Bank agrees promptly to notify
the Guarantor after any such set-off and application made by such Bank,
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MEDUSA-CITADEL, INC.
By: /s/ R. Breck Denny
---------------------------
Title: Vice President and
Treasurer
4
<PAGE> 100
GUARANTY
GUARANTY, dated December 15, 1995 made by THE THOMASVILLE STONE AND
LIME COMPANY, a corporation organized and existing under the laws of State of
Maryland (herein, together with its successors and assigns, the "GUARANTOR"), in
favor of the Banks (the "BANKS", such term to include their respective
successors and assigns) parties to the Credit Agreement (as defined below) and
SOCIETY NATIONAL BANK, a national banking association, as agent (the "AGENT")
for the Banks:
PRELIMINARY STATEMENTS:
(1) The Banks and the Agent have entered into an Amended and Restated
Revolving Credit Agreement, originally dated as of January 27, 1993, and amended
and restated as of December 15, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
the terms defined therein and not otherwise defined herein being used herein as
therein defined) with Medusa Corporation, a corporation organized and existing
under the laws of Ohio (herein, together with its successors and assigns, the
"BORROWER"). The Guarantor may receive a portion of the proceeds of the Advances
under the Credit Agreement and will derive substantial direct and indirect
benefit from the transactions contemplated by the Credit Agreement.
(2) It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter existing under
the Credit Agreement and the Notes, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent or the Banks in enforcing any rights under this Guaranty. Without limiting
the generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Agent or the Banks under the Credit Agreement and the Notes but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The obligations of the
Guarantor under this Guaranty are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Guaranty, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the
<PAGE> 101
Credit Agreement or the Notes, including, without limitation, any
increase in the Obligations resulting from the extension of additional
credit to the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments, such amount
shall be held in trust for the benefit of the Agent and the Banks and shall
forthwith be paid to the Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement or to be held by the Agent as collateral security for any Obligations
thereafter existing. If (i) the Guarantor shall make payment to the Agent or the
Banks of all or any part of the Obligations, (ii) all the Obligations and all
other amounts payable under this Guaranty shall be paid in full and (iii) the
Commitments shall have expired or terminated, the Agent and the Banks will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland and has all requisite
power and authority to own or hold under lease, to carry on its
business as now conducted and proposed to be conducted, to enter into
this Guaranty and to perform its obligations hereunder. The Guarantor
has, by all necessary corporate action (all action of shareholders, if
any, required therefor having been duly taken), duly authorized the
execution and delivery of this Guaranty and the performance of its
obligations under this Guaranty.
2
<PAGE> 102
(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Guaranty nor the consummation of the
transactions contemplated hereby nor the performance of the terms and
provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in
respect of any property of the Guarantor under, any agreement,
indenture, mortgage, instrument, corporate charter (or corresponding
document) or by-law to which the Guarantor is a party or by which the
Guarantor or any of its properties may be bound or affected, or violate
any existing law, governmental rule or regulation or any Order of any
court, arbitrator or Governmental Body applicable to the Guarantor
which could have a Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Body is required on the part of the Guarantor for the
valid execution and delivery of this Guaranty or for compliance by the
Guarantor with the terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor in any court or before any arbitrator of any
kind or before or by any Governmental Body, which question the validity
of this Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty is a legal,
valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is familiar with the
finances and affairs of the Borrower and has, independently and without
reliance upon the Agent or any Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address at c/o Medusa
Corporation, 3008 Monticello Boulevard, Cleveland Heights, Ohio 44119,
attention: Chief Financial Officer, and if to the Agent or any Bank, at its
address specified in the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said
3
<PAGE> 103
section 6.01, each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, whether or not such
Bank shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured. Each Bank agrees promptly to notify
the Guarantor after any such set-off and application made by such Bank,
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
THE THOMASVILLE STONE AND LIME COMPANY
By: /s/ R. Breck Denny
---------------------------
Title: Vice President and
Treasurer
4
<PAGE> 104
===============================================================================
MEDUSA CORPORATION
as the Borrower
And
THE BANKS NAMED HEREIN
as Banks
And
KEYBANK NATIONAL ASSOCIATION
as Agent
---------------------
AMENDMENT NO. 1
dated as of
December 16, 1996
to
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated as of
January 27, 1993
and amended and restated as of
December 15, 1995
---------------------
==============================================================================
<PAGE> 105
AMENDMENT NO. 1
TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT, dated as of December 16, 1996, among MEDUSA CORPORATION, an Ohio
corporation (herein, together with its successors and assigns, the "BORROWER");
the Banks party to the Credit Agreement referred to below (the "BANKS"); and
KEYBANK NATIONAL ASSOCIATION, a national banking association which is successor
by merger to Society National Bank, as Agent for the Banks under such Credit
Agreement:
PRELIMINARY STATEMENTS:
(1) The Borrower, the Banks named therein, and the the Agent entered
into the Amended and Restated Revolving Credit Agreement, dated as of January
27, 1993 and amended and restated as of December 15, 1995 (the "CREDIT
AGREEMENT"; with the terms defined therein, or the definitions of which are
incorporated therein, being used herein as so defined).
(2) The Borrower, the Banks, and the Agent desire to amend certain of
the terms and provisions of the Credit Agreement in order, among other things,
to increase the aggregate amount of the Commitments of the Banks from
$45,000,000 to $65,000,000, to extend the existing Termination Date from
December 31, 2000 to December 31, 2001, and to delete the covenant restricting
the incurrance of Current Debt, and to make certain other modifications to the
terms and provisions thereof, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1. REVISED COMMITMENT AMOUNTS. Effective on the Effective Date (as
hereinafter defined), (i) the respective Commitments of the Banks appearing
opposite their signatures to the Credit Agreement are changed to the amounts and
percentages indicated below:
<TABLE>
<CAPTION>
Name of Bank Commitment Amount Percentage
------------ ---------------- -----------
<S> <C> <C>
KeyBank National Association $25,000,000 38.4615%
National City Bank $14,000,000 21.5385%
NBD Bank $14,000,000 21.5385%
PNC Bank, National Association $12,000,000 18.4615%
</TABLE>
; and (ii) the amount "$45,000,000" which appears on the cover page of the
Credit Agreement and as the Total of the Commitments on the page of the Credit
Agreement containing the signatures of the Banks is changed in each such
instance to "$65,000,000".
1.2. EXTENSION OF MATURITY. Effective on the Effective Date, the date
"December 31, 2000" which appears in the definition of the term "TERMINATION
DATE" in section 1.01 of the Credit Agreement is changed to "December 31, 2001".
1.3. CURRENT DEBT COVENANT. Effective on the Effective Date, the
covenant contained in section 5.11 of the Credit Agreement shall be of no
further force or effect.
1.4. REPRESENTATIONS AS TO CHANGES, ETC. Effective on the Effective
Date, the phrase "Since the date of the most recent audited balance sheet
referred to in section 4.01(d)" which appears at the beginning of section
4.01(e) of the Credit Agreement, is changed to "Since December 31, 1995".
<PAGE> 106
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants that: (a) the Borrower has
delivered to the Agent and each Bank prior to the execution of this Amendment
true, correct and complete copies of the consolidated financial statements of
the Borrower and its consolidated subsidiaries for the fiscal year ended
December 31, 1995 and for the nine months ended September 30, 1996, such
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied (except as noted
therein), and fairly present the consolidated financial condition of the
Borrower and its consolidated subsidiaries at such dates and the consolidated
results of their operations and cash flows for the periods then ended; (b) this
Amendment has been duly authorized by all necessary corporate action on the part
of the Borrower, has been duly executed and delivered by a duly authorized
officer or officers of the Borrower, and constitutes the valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms; (c) the representations and warranties of the Borrower contained in
the Credit Agreement, as amended hereby, are true and correct on and as of the
date hereof as though made on and as of the date hereof; (d) no condition or
event has occurred or exists which constitutes or which, after notice or lapse
of time or both, would constitute an Event of Default; and (e) the Borrower is
in full compliance with all covenants and agreements contained in the Credit
Agreement, as amended hereby.
SECTION 3. RATIFICATIONS.
The terms and provisions set forth in this Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Credit
Agreement, and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Credit Agreement are ratified and confirmed and
shall continue in full force and effect.
SECTION 4. BINDING EFFECT.
This Amendment shall become effective on December 16, 1996 (the
"EFFECTIVE DATE") if and when, on or prior to such date,
(i) this Amendment shall have been executed by the Borrower
and the Agent, and counterparts hereof as so executed shall have been
delivered to the Agent,
(ii) the Acknowledgment and Consent appended hereto shall have
been executed by the Subsidiaries of the Borrower named therein, and
counterparts thereof as so executed shall have been delivered to the
Agent,
(iii) the Agent shall have been notified by all of the Banks
that such Banks have executed this Amendment (which notification may be
by facsimile or other written confirmation of such execution),
(iv) certified copies of the resolutions of the Board of
Directors of the Borrower approving this Amendment, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the execution, delivery and
performance by the Borrower of this Amendment, shall have been
delivered to the Agent on or within five days prior to the Effective
Date, in sufficient original copies for the Agent and the Banks,
(v) a certificate of the Secretary or an Assistant Secretary
of the Borrower, certifying the names and true signatures of the
officers of the Borrower authorized to sign this Amendment and the
other documents to which the Borrower is to be a party which are
referred to herein, shall have been delivered to the Agent on or within
five days prior to the Effective Date, in sufficient original copies
for the Agent and the Banks,
2
<PAGE> 107
(vi) a favorable opinion of John P. Siegfried, General Counsel
and Secretary of the Borrower, satisfactory in form and substance to
the Agent and the Banks and substantially in the form of Exhibit A
hereto and as to such other matters as any Bank through the Agent may
reasonably request, shall have been delivered to the Agent on or within
five days prior to the Effective Date, in sufficient original copies
for the Agent and the Banks,
(vii) Notes of the Borrower to the order of the Banks shall
have been duly executed and delivered to the Agent for delivery to the
Banks in replacement of Notes previously issued to the Banks, and
(viii) the Agent shall have notified the Borrower and each
Bank in writing that the conditions specified in the foregoing clauses
have been satisfied;
and thereafter this Amendment shall be binding upon and inure to the benefit of
the Borrower, the Agent and each Bank and their respective permitted successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Majority Banks.
SECTION 5. MISCELLANEOUS.
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Amendment shall survive the execution and delivery
of this Amendment, and no investigation by any Agent or any Bank or any
subsequent Advance shall affect the representations and warranties or the right
of the Agent or any Bank to rely upon them.
5.2. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and
all other agreements, instruments or documentation now or hereafter executed and
delivered pursuant to the terms of the Credit Agreement as amended hereby, are
hereby amended so that any reference therein to the Credit Agreement shall mean
a reference to the Credit Agreement as amended hereby.
5.3. EXPENSES. As provided in the Credit Agreement, but without
limiting any terms or provisions thereof, the Borrower agrees to pay on demand
all costs and expenses incurred by the Agent in connection with the preparation,
negotiation, and execution of this Amendment, including without limitation the
costs and fees of the Agent's special legal counsel, regardless of whether this
Amendment becomes effective in accordance with the terms hereof, and all costs
and expenses incurred by the Agent or any Bank in connection with the
enforcement or preservation of any rights under the Credit Agreement, as amended
hereby.
5.4. SEVERABILITY. Any term or provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.
5.5. APPLICABLE LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Ohio.
5.6. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.7. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of
3
<PAGE> 108
the parties hereto. There are no oral agreements among the parties hereto
relating to the subject matter hereof or any other subject matter relating to
the Credit Agreement.
5.8. COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
as of the date first above written.
MEDUSA CORPORATION
BY:/s/ R. Breck Denny
--------------------------------------
VICE PRESIDENT-FINANCE
KEYBANK NATIONAL ASSOCIATION,
AS A BANK AND AS AGENT
BY:/s/ Thomas J. Purcell
--------------------------------------
VICE PRESIDENT
NATIONAL CITY BANK
BY: /s/illegible
--------------------------------------
VICE PRESIDENT
NBD BANK
BY: /s/ illegible
--------------------------------------
VICE PRESIDENT
PNC BANK, NATIONAL ASSOCIATION
BY: /s/ illegible
--------------------------------------
VICE PRESIDENT
4
<PAGE> 109
EXHIBIT A
[Effective Date]
To each of the Banks and the Agent
party to the Credit Agreement
referred to below
c/o KeyBank National Association
Key Center
127 Public Square
Cleveland, Ohio 44114
Re: U.S.$65,000,000 Credit Agreement
with Medusa Corporation
---------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to section 4(vi) of Amendment
No. 1 to Amended and Restated Revolving Credit Agreement, dated as of December
16, 1996 (the "AMENDMENT"), among Medusa Corporation (the "BORROWER"), the Banks
parties thereto and KeyBank National Association (as successor to Society
National Bank), as Agent for said Banks. Terms defined in the Amendment or in
the Credit Agreement referred to in the Amendment are, unless otherwise defined
herein, used herein as therein defined.
I am a Vice President and the General Counsel and Secretary of the
Borrower and have acted as counsel for the Borrower in connection with the
preparation, execution and delivery of the Credit Agreement and the Amendment.
In that connection, I have examined:
(1) The Credit Agreement and the Amendment.
(2) The Promissory Notes (the "NOTES") delivered by the
Borrower to the Banks pursuant to the Amendment.
(3) The Articles of Incorporation of the Borrower and all
amendments thereto (the "CHARTER").
(4) The Code of Regulations of the Borrower and all amendments
thereto (the "CODE OF REGULATIONS").
(5) A certificate of the Secretary of State of the State of
Ohio, dated January 19 , 1993, attesting to the continued corporate
existence and good standing of the Borrower in that State.
I have also examined the originals, or copies certified to my satisfaction, of
the documents referred to in the last sentence of section 4.01(g) of the Credit
Agreement (the "RESTRICTIVE AGREEMENTS"). In addition, I have examined the
originals, or copies certified to my satisfaction, of such other corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower, and agreements, instruments and other documents, as I have deemed
necessary as a basis for the opinions expressed below. As to questions of fact
material to such opinions, I have, when relevant facts were not independently
established by me, relied upon certificates of the Borrower or its officers or
of public officials. I have assumed the due execution and delivery, pursuant to
due authorization, of the Credit Agreement and the Amendment by the Banks and
the Agent.
I am qualified to practice law in the State of Ohio and do not purport
to be an expert on any laws other than the laws of the State of Ohio and the
Federal laws of the United States.
<PAGE> 110
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Ohio.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement, the Amendment and the Notes are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Charter or the Code of Regulations, (ii) any law,
rule or regulation applicable to the Borrower (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System), or (iii)
any contractual or legal restriction contained in any Restrictive Agreement or,
to the best of my knowledge, contained in any other similar document.
3. The Credit Agreement, the Amendment and the Notes have been duly
executed and delivered on behalf of the Borrower. The Credit Agreement (as
amended by the Amendment) and the Notes each constitute a valid and binding
agreement or obligation of the Borrower enforceable against the Borrower in
accordance with their terms.
4. No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Body is required on the part of the Borrower
for the valid execution and delivery of the Credit Agreement or the Amendment or
the consummation of the transactions contemplated thereby, including the
issuance and delivery of the Notes, or for the fulfillment of, or compliance by
the Borrower with, the terms and provisions of the Credit Agreement (as amended
by the Amendment) and the Notes.
5. There are no pending or overtly threatened actions or proceedings
against the Borrower or any of its Subsidiaries before any court, governmental
agency or arbitrator which purport to affect the legality, validity, binding
effect or enforceability of the Credit Agreement or the Amendment or any of the
Notes or which might result in a Material Adverse Change in the Business or
Condition of the Borrower or of the Borrower and its Subsidiaries taken as a
whole.
6. The transactions contemplated by the Credit Agreement (as amended by
the Amendment) will not result in a violation of Regulation U or Regulation X of
the Board of Governors of the Federal Reserve System.
7. The Borrower is not an "investment company" or a Person directly or
indirectly "controlled" by or "acting on behalf of" an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
The opinions set forth above are subject to the following
qualifications:
(a) My opinion in the last sentence of paragraph 3 above is subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar law affecting creditors' rights generally.
(b) My opinion in the last sentence of paragraph 3 above is subject to
the effect of general principles of equity, including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing (regardless
of whether considered in a proceeding in equity or at law).
The opinions expressed herein are expressed solely to you and may not
be relied upon by any other persons for any reason, without the express written
consent of the undersigned.
Very truly yours,
2
<PAGE> 111
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned is a party to a Guaranty (as such term is
defined in the Credit Agreement referred to in the Amendment No. 1 to Amended
and Restated Revolving Credit Agreement (the "AMENDMENT"), to which this
Acknowledgment and Consent is appended).
For the avoidance of doubt, and without limitation of the intent and
effect of sections 2 and 3 of any Guaranty to which any of the undersigned is a
party, each of the undersigned hereby unconditionally and irrevocably (i)
acknowledges receipt of a copy of the Credit Agreement and the Amendment, and
(ii) consents to all of the terms and provisions of the Credit Agreement as
amended by the Amendment.
Capitalized terms which are used herein without definition shall have
the respective meanings ascribed thereto in the Credit Agreement referred to
herein. This Acknowledgment and Consent is for the benefit of the Banks and the
Agent, any other person who is a third party beneficiary of a Guaranty, and
their respective successors and assigns. No term or provision of this
Acknowledgment and Consent may be modified or otherwise changed without the
prior written consent of the Agent, given as provided in the Credit Agreement.
This Acknowledgment and Consent shall be binding upon the successors and assigns
of each of the undersigned. This Acknowledgment and Consent may be executed by
any of the undersigned in separate counterparts, each of which shall be an
original and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has duly executed and
delivered this Acknowledgment and Consent as of the date of the Amendment
referred to herein.
CANADIAN MEDUSA CEMENT LIMITED MEDUSA-CITADEL, INC.
BY: /s/ R. Breck Denny BY: /s/ R. Breck Denny
----------------------------- --------------------------------
VICE PRESIDENT VICE PRESIDENT
CEMENT TRANSIT COMPANY MEDUSA-CRESCENT, INC.
BY: /s/ R. Breck Denny BY: /s/ R. Breck Denny
----------------------------- --------------------------------
VICE PRESIDENT VICE PRESIDENT
JAMES H. DREW CORPORATION MEDUSA MINERALS COMPANY
(FORMERLY THE THOMASVILLE STONE
AND LIME COMPANY)
BY: /s/ R. Breck Denny BY: /s/ R. Breck Denny
----------------------------- --------------------------------
VICE PRESIDENT VICE PRESIDENT
MEDUSA AGGREGATES COMPANY MEDUSA PORTLAND CEMENT COMPANY
BY: /s/ R. Breck Denny BY: /s/ R. Breck Denny
----------------------------- --------------------------------
VICE PRESIDENT VICE PRESIDENT
MEDUSA AGGREGATES LLC
BY: /s/ R. Breck Denny
-----------------------------
VICE PRESIDENT
<PAGE> 112
[LETTERHEAD] MEDUSA CORPORATION
LEE AND MONTICELLO CLEVELAND HEIGHTS, OHIO 44118 216/371-4000
JOHN P. SIEGFRIED FAX 216/371-2912
VICE PRESIDENT, SECRETARY
AND GENERAL COUNSEL MAIL ADDRESS
P.O. BOX 5668
CLEVELAND, 44101
EXHIBIT A
December 16, 1996
To each of the Banks and the Agent
party to the Credit Agreement
referred to below
c/o KeyBank National Association
Key Center
127 Public Square
Cleveland, Ohio 44114
Re: U.S. $65,000,000 Credit Agreement
with Medusa Corporation
-----------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to section 4(vi) of
Amendment No. 1 to Amended and Restated Revolving Credit Agreement,
dated as of December 16, 1996 (the "AMENDMENT"), among Medusa
Corporation (the "BORROWER"), the Banks parties thereto and KeyBank
National Association (as successor to Society National Bank), as Agent
for said Banks. Terms defined in the Amendment or in the Credit
Agreement referred to in the Amendment are, unless otherwise defined
herein, used herein as therein defined.
I am a Vice President and the General Counsel and Secretary of
the Borrower and have acted as counsel for the Borrower in connection
with the preparation, execution and delivery of the Credit Agreement and
the Amendment.
In that connection, I have examined:
(1) The Credit Agreement and the Amendment.
(2) The Promissory Notes (the "NOTES") delivered by the
Borrower to the Banks pursuant to the Amendment.
(3) The Articles of Incorporation of the Borrower and all
amendments thereto (the "CHARTER").
(4) The Code of Regulations of the Borrower and all amendments
thereto (the "CODE OF REGULATIONS").
<PAGE> 113
(5) A certificate of the Secretary of State of the State of
Ohio, dated January 19 , 1993, attesting to the continued corporate
existence and good standing of the Borrower in that State.
I have also examined the originals, or copies certified to my satisfaction, of
the documents referred to in the last sentence of section 4.01(g) of the Credit
Agreement (the "RESTRICTIVE AGREEMENTS"). In addition, I have examined the
originals, or copies certified to my satisfaction, of such other corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower, and agreements, instruments and other documents, as I have deemed
necessary as a basis for the opinions expressed below. As to questions of fact
material to such opinions, I have, when relevant facts were not independently
established by me, relied upon certificates of the Borrower or its officers or
of public officials. I have assumed the due execution and delivery, pursuant to
due authorization, of the Credit Agreement and the Amendment by the Banks and
the Agent.
I am qualified to practice law in the State of Ohio and do not purport
to be an expert on any laws other than the laws of the State of Ohio and the
Federal laws of the United States.
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Ohio.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement, the Amendment and the Notes are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Charter or the Code of Regulations, (ii) any
law, rule or regulation applicable to the Borrower (including, without
limitation, Regulation X of the Board of Governors of the Federal Reserve
System), or (iii) any contractual or legal restriction contained in any
Restrictive Agreement or, to the best of my knowledge, contained in any other
similar document.
3 . The Credit Agreement, the Amendment and the Notes have been duly
executed and delivered on behalf of the Borrower. The Credit Agreement (as
amended by the Amendment) and the Notes each constitute a valid and binding
agreement or obligation of the Borrower enforceable against the Borrower in
accordance with their terms.
4. No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Body is required on the part of the Borrower
for the valid execution and delivery of the Credit Agreement or the Amendment or
the consummation of the transactions contemplated thereby, including the
issuance and delivery of the Notes, or for the fulfillment of, or compliance by
the Borrower with, the terms and provisions of the Credit Agreement (as amended
by the Amendment) and the Notes.
5. There are no pending or overtly threatened actions or proceedings
against the Borrower or any of its Subsidiaries before any court, governmental
agency or arbitrator which purport to affect the legality, validity, binding
effect or enforceability of the Credit Agreement or the Amendment or any of the
Notes or which might result in a Material Adverse Change in the Business or
Condition of the Borrower or of the Borrower and its Subsidiaries taken as a
whole.
2
<PAGE> 114
6. The transactions contemplated by the Credit Agreement (as amended by
the Amendment) will not result in a violation of Regulation U or Regulation X of
the Board of Governors of the Federal Reserve System.
7. The Borrower is not an "investment company" or a Person directly or
indirectly "controlled" by or "acting on behalf of" an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
The opinions set forth above are subject to the following
qualifications:
(a) My opinion in the last sentence of paragraph 3 above is subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar law affecting creditors' rights generally.
(b) My opinion in the last sentence of paragraph 3 above is subject to
the effect of general principles of equity, including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing (regardless
of whether considered in a proceeding in equity or at law).
The opinions expressed herein are expressed solely to you and may not
be relied upon by any other persons for any reason, without the express written
consent of the undersigned.
Very truly yours,
/s/ John P. Siegfried
John P. Siegfried
3
<PAGE> 115
Medusa Corporation
U.S. $65,000,000 Amended and
Restated Revolving Credit Agreement
INCUMBENCY CERTIFICATE
The undersigned, R. Breck Denny, of Medusa Corporation, an Ohio
corporation, hereby certifies that the following named persons, from January 1,
1996, to this day, have been and ARE the officers of the corporation holding the
offices set forth opposite their names, and that set opposite each name is the
true and genuine signature of that person.
<TABLE>
<CAPTION>
Name Title Signature
---- ----- ---------
<S> <C> <C>
/s/ R. Breck Denny
R. B. Denny Vice President-Finance and Treasurer -----------------------------------
/s/ John P. Siegfried
John P. Siegfried Vice President, Secretary and General Counsel -----------------------------------
<CAPTION>
<S> <C>
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of December,
1996.
/s/ John P. Siegfried
------------------------------------
<CAPTION>
The undersigned, John P. Siegfried, hereby certifies that R. Breck
Denny is, on the date set forth above, the Vice President-Finance and Treasurer of
Medusa Corporation and that the foregoing signature of his is true and genuine.
/s/ R. Breck Denny
-----------------------------------
Dated: December 16, 1996
</TABLE>
<PAGE> 116
CERTIFIED RESOLUTIONS OF THE BOARD OF DIRECTORS
I DO HEREBY CERTIFY, That I am the duly elected and qualified Secretary
of Medusa Corporation, a corporation organized and existing under the laws of
the State of Ohio, and the keeper of the records and corporate seal of such
corporation; that the following is a true and correct copy of a certain
resolution duly adopted by the Board of Directors by unanimous vote at a
regularly scheduled meeting held on December 2, 1996, at which time a quorum was
always present, and that the resolution below has not been amended, revised,
modified or rescinded:
"RESOLVED, that the Board hereby approves the terms and conditions of
the revised Revolving Credit Agreement negotiated by the Company with
four financial institutions in the face amount of $65.0 million,
expiring December 21, 2001 , with interest rates, commitment fees and
financial covenants substantially similar to the current Revolving
Credit Agreement, along with a delegation of sufficient authority to
the officers of the Company in order to give effect to this resolution,
to enter into such agreements, and make such representations and
covenants as are required in order to implement this resolution."
IN WITNESS WHEREOF, I have hereunto affixed my name as Secretary and
have caused the corporate seal of such corporation to be hereto affixed this
Sixteenth day of December, 1996.
Respectfully submitted,
MEDUSA CORPORATION
(Corporate Seal)
By /s/ John P. Siegfried
----------------------
. John P. Siegfried
Secretary
<PAGE> 117
(b) any change in the time, manner or place of payment of, or
in any other term of all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the Credit
Agreement or the Notes, including, without limitation, any increase in
the Obligations resulting from the extension of additional credit to
the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. Waiver. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. Subrogation. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later of (x) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments, such amount
shall be held in trust for the benefit of the Agent and the Banks and shall
forthwith be paid to the Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement or to be held by the Agent as collateral security for any Obligations
thereafter exiting. If (i) the Guarantor shall make payment to the Agent or the
Banks of all or any part of the Obligations, (ii) all the Obligations and all
other amounts payable under this Guaranty shall be paid in full and (iii) the
Commitments shall have expired or terminated, the Agent and the Banks will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. THE GUARANTOR HEREBY
REPRESENTS AND WARRANTS AS FOLLOWS:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan and has all requisite power and
authority to own or hold under lease, to carry on its business as now
conducted and proposed to be conducted, to enter into this Guaranty and
to perform its obligations hereunder. The Guarantor has, by all
necessary corporate action (all action of shareholders, if any,
required therefor having been duly taken), duly authorized the
execution and delivery of this Guaranty and the performance of its
obligations under this Guaranty.
2
<PAGE> 118
(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Guaranty nor the consummation of the
transaction contemplated hereby nor the performance of the terms and
provisions thereof will result in any breach of, or constitute a
default under, or result in (or require) the creation of any Lien in
respect of any property of the Guarantor under, any agreement,
indenture, mortgage, instrument, corporate charter (or corresponding
document) or by-law to which the Guarantor is a party or by which the
Guarantor or any of its properties may be bound or affected, or violate
any existing law, governmental rule or regulation or any Order of any
court, arbitrator or Governmental Body applicable to the Guarantor
which could have a Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Body is required on the part of the Guarantor for the
valid execution and delivery of this Guaranty or for compliance by the
Guarantor with the terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor in any court or before any arbitrator of any
kind or before or by any Governmental Body, which question the validity
of this Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty is a legal
valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is familiar with the
finances and affairs of the Borrower and has, independently and
without reliance upon the Agent or any Bank and based on such
documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address c/o Medusa
Corporation, 3008 Monticello Boulevard, Cleveland Heights, Ohio 44119,
attention: Chief Financial Officer, and if to the Agent or any Bank, at its
address specified in the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mail,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION 8. NO WAIVER, REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit
<PAGE> 119
Agreement to authorize the Agent to declare the Notes due and payable pursuant
to the provisions of said section 6.01, each Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such Bank
to or for the credit or the account of the Guarantor against any and all of the
obligations of the Guarantor now or hereafter existing under this Guaranty,
whether or not such Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Guarantor after any such set-off and application made by
such Bank, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank under this
section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MEDUSA PORTLAND CEMENT COMPANY
By:
----------------------------------
Vice President
<PAGE> 120
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the Credit
Agreement or the Notes, including, without limitation, any increase in
the Obligations resulting from the extension of additional credit to
the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the
Obligations;
(d) any manner of application of collateral or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other person or entity or any collateral.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any
payment made hereunder or otherwise, until all the Obligations and all other
amounts payable under this Guaranty shall have been paid in full and the
Commitments shall have expired or terminated. If any amount shall be paid to
the Guarantor on account of such subrogation rights at any time prior to the
later of (x) the payment in full of the Obligations and all other amounts
payable under this Guaranty and (y) the expiration or termination of the
Commitments, such amount shall be held in trust for the benefit of the Agent
and the Banks and shall forthwith be paid to the Agent to be credited and
applied upon the Obligations, whether matured or unmatured, in accordance
with the terms of the Credit Agreement or to be held by the Agent as collateral
security for any Obligations thereafter existing. If (i) the Guarantor shall
make payment to the Agent or the Banks of all or any part of the Obligations,
(ii) all the Obligations and all other amounts payable under this Guaranty shall
be paid in full and (iii) the Commitments shall have expired or terminated, the
Agent and the Banks will, at the Guarantor's request, execute and deliver to the
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to the Guarantor of
an interest in the Obligations resulting from such payment by the Guarantor.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) ORGANIZATION AND AUTHORITY OF THE GUARANTOR. The Guarantor
is a limited liability company duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania and
has all requisite power and authority to own or hold under lease, to
carry on its business as now conducted and proposed to be conducted, to
enter into this Guaranty and to perform its obligations hereunder. The
Guarantor has, by all necessary corporate action (all action of
shareholders, if any, required therefor having been duly taken), duly
authorized the execution and delivery of this Guaranty and the
performance of its obligations under this Guaranty.
2
<PAGE> 121
(b) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither
the execution and delivery of this Guaranty nor the
consummation of the transactions contemplated hereby nor
the performance of the terms and provisions thereof will
result in any breach of, or constitute a default under, or
result in (or require) the creation of any Lien in respect
of any property of the Guarantor under, any agreement,
indenture, mortgage, instrument, corporate charter (or
corresponding document) or by-law to which the Guarantor is
a party or by which the Guarantor or any of its properties
may be bound or affected, or violate any existing law,
governmental rule or regulation or any Order of any court,
arbitrator or Governmental Body applicable to the Guarantor
which could have a Material Adverse Effect on the Guarantor.
(c) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent,
approval or authorization of, or registration, filing or
declaration with, any Governmental Body is required on the
part of the Guarantor for the valid execution and delivery
of this Guaranty or for compliance by the Guarantor with the
terms and provisions of this Guaranty.
(d) LITIGATION. There are no actions, suits or
proceedings pending or, to the knowledge of the Guarantor,
threatened against or affecting the Guarantor in any court
or before any arbitrator of any kind or before or by any
Governmental Body, which question the validity of this
Guaranty or any action taken or to be taken pursuant hereto.
(e) VALIDITY OF THIS GUARANTY, ETC. This Guaranty
is a legal, valid and binding obligation of the Guarantor
enforceable against the Guarantor in accordance with its
terms.
(f) FAMILIAR WITH BORROWER. The Guarantor is
familiar with the finances and affairs of the Borrower
and has, independently and without reliance upon the Agent
or any Bank and based on such documents and information as
it has deemed appropriate, made its own credit analysis and
decision to enter into this Guaranty.
SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change the number of
Banks required to take any action hereunder.
SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address c/o Medusa
Corporation, 3008 Monticello Boulevard, Cleveland Heights, Ohio 44119,
attention: Chief Financial Officer, and if to the Agent or any Bank, at its
address specified in the Credit Agreement, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION 8. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by section 6.01 of the Credit
3
<PAGE> 122
Agreement to authorize the Agent to declare the Notes due and payable pursuant
to the provisions of said section 6.01, each Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such Bank
to or for the credit or the account of the Guarantor against any and all of the
obligations of the Guarantor now or hereafter existing under this Guaranty,
whether or not such Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Guarantor after any such set-off and application made by
such Bank, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank under this
section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Bank may have.
SECTION 10. CONTINUING GUARANTY, ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Bank may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Bank herein or
otherwise, subject, however, to the provisions of Article VII (concerning the
Agent) of the Credit Agreement.
SECTION 11. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
SECTION 12. JURY TRIAL WAIVER. THE GUARANTOR, AND THE AGENT AND EACH
LENDER (BY THEIR ACCEPTANCE HEREOF), EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN THE AGENT OR ANY LENDER AND THE GUARANTOR ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS GUARANTY OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MEDUSA AGGREGATES LLC
By
----------------------------------
Vice President
4
<PAGE> 123
PROMISSORY NOTE
U.S. $12,000,000 Dated: December 16, 1996
FOR VALUE RECEIVED, the undersigned, MEDUSA CORPORATION, an Ohio
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of PNC BANK,
NATIONAL ASSOCIATION (the "BANK") for the account of its Applicable Lending
Office (as defined in the Credit Agreement referred to below) the principal sum
of U.S. TWELVE MILLION DOLLARS AND NO CENTS (Sl2,000,000.00), on the Termination
Date (as defined in the Credit Agreement), or, if less the aggregate principal
amount of the Advances (as defined below) made by the Bank to the Borrower
pursuant to the Credit Agreement outstanding on the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is paid
in full at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to KeyBank National Association, as Agent, for the benefit of
the Bank, at 127 Public Square, Cleveland, Ohio 44114-1306, in same day funds.
Each Advance made by the Bank to the Borrower pursuant to the Credit Agreement,
and all payments made on account of the principal amount thereof, shall be
recorded by the Bank and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Amended and Restated Revolving Credit Agreement
dated as of January 27, 1993 and amended and restated as of December 15, 1995,
and as further amended by Amendment No. 1 thereto, dated as of December 16, 1996
(as so amended and restated and further amended and as hereinafter amended or
otherwise modified, the "CREDIT AGREEMENT"), among the Borrower, the Bank and
certain other banks parties thereto, and KeyBank National Association (as
successor by merger to Society National Bank), as Agent for the Bank and such
other banks. The Credit Agreement, among other things, (i) provides for the
making of advances (the "ADVANCES") by the Bank to the Borrower from time to
time in an aggregate amount not to exceed at any time outstanding the U.S.
dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such Advance being evidenced by this Promissory Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
This Promissory Note is issued in replacement of a Promissory Note
previously issued to the Bank under the Credit Agreement. Any Advances
outstanding under such prior Promissory Note on the date hereof shall continue
outstanding and be evidenced by this Promissory Note.
MEDUSA CORPORATION
By:/s/ R. Breck Denny
----------------------------
Vice President-Finance
<PAGE> 124
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
=======================================================================================================
Amount of
Amount of Principal Paid or Unpaid Principal Notation
Notation Date Advance Prepaid Balance Made By
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 125
PROMISSORY NOTE
U.S. $14,000,000 Dated: December 16, 1996
FOR VALUE RECEIVED, the undersigned, MEDUSA CORPORATION, an Ohio
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of NBD BANK
(the "Bank") for the account of its Applicable Lending Office (as defined in the
Credit Agreement referred to below) the principal sum of U.S. FOURTEEN MILLION
DOLLARS AND NO CENTS ($14,000,000.00), on the Termination Date (as defined in
the Credit Agreement), or, if less, the aggregate principal amount of the
Advances (as defined below) made by the Bank to the Borrower pursuant to the
Credit Agreement outstanding on the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified
in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to KeyBank National Association, as Agent, for the benefit of
the Bank, at 127 Public Square, Cleveland, Ohio 44114-1306, in same day funds.
Each Advance made by the Bank to the Borrower pursuant to the Credit Agreement,
and all payments made on account of the principal amount thereof, shall be
recorded by the Bank and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Amended and Restated Revolving Credit Agreement
dated as of January 27, 1993 and amended and restated as of December 15, 1995,
and as further amended by Amendment No. 1 thereto, dated as of December 16, 1996
(as so amended and restated and further amended and as hereinafter amended or
otherwise modified, the "Credit Agreement"), among the Borrower, the Bank and
certain other banks parties thereto, and KeyBank National Association (as
successor by merger to Society National Bank), as Agent for the Bank and such
other banks. The Credit Agreement, among other things, (i) provides for the
making of advances (the "Advances") by the Bank to the Borrower from time to
time in an aggregate amount not to exceed at any time outstanding the U.S.
dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such Advance being evidenced by this Promissory Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified.
This Promissory Note is issued in replacement of a Promissory Note
previously issued to the Bank under the Credit Agreement. Any Advances
outstanding under such prior Promissory Note on the date hereof shall continue
outstanding and be evidenced by this Promissory Note.
MEDUSA CORPORATION
By: /s/ R. Breck Denny
------------------------------
Vice President-Finance
<PAGE> 126
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
=======================================================================================================
Amount of
Amount of Principal Paid or Unpaid Principal Notation
Notation Date Advance Prepaid Balance Made By
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 127
PROMISSORY NOTE
U.S. $14,000,000 Dated:- December 16, 1996
FOR VALUE RECEIVED, the undersigned, MEDUSA CORPORATION, an Ohio
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of NATIONAL
CITY BANK (the "Bank") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the principal sum of U.S.
FOURTEEN MILLION DOLLARS AND NO CENTS ($14,000,000.00), on the Termination Date
(as defined in the Credit Agreement), or, if less, the aggregate principal
amount of the Advances (as below) made by the Bank to the Borrower pursuant to
the Credit Agreement outstanding on the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is paid
in full, at such interest rates and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to KeyBank National Association, as Agent, for the benefit of
the Bank, at 127 Public Square, Cleveland, Ohio 44114-1306, in same day funds.
Each Advance made by the Bank to the Borrower pursuant to the Credit Agreement,
and all payments made on account of the principal amount thereof, shall be
recorded by the Bank and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Amended and Restated Revolving Credit Agreement
dated as of January 27, 1993 and amended and restated as of December 15, 1995,
and as further amended by Amendment No. 1 thereto, dated as of December 16, 1996
(as so amended and restated and further amended and as hereinafter amended or
otherwise modified, the "Credit Agreement"), among the Borrower, the Bank and
certain other banks parties thereto, and KeyBank National Association (as
successor by merger to Society National Bank), as Agent for the Bank and such
other banks. The Credit Agreement, among other things, (i) provides for the
making of advances (the "Advances") by the Bank to the Borrower from time to
time in an aggregate amount not to exceed at any time outstanding the U.S.
dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such Advance being evidenced by this Promissory Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified.
This Promissory Note is issued in replacement of a Promissory Note
previously issued to the Bank under the Credit Agreement. Any Advances
outstanding under such prior Promissory Note on the date hereof shall continue
outstanding and be evidenced by this Promissory Note.
MEDUSA CORPORATION
By: /s/ R. Breck Denny
--------------------------------
Vice President-Finance
<PAGE> 128
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
=======================================================================================================
Amount of
Amount of Principal Paid or Unpaid Principal Notation
Notation Date Advance Prepaid Balance Made By
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<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 129
PROMISSORY NOTE
U.S. $25,000,000 Dated: December 16,1996
FOR VALUE RECEIVED, the undersigned, MEDUSA CORPORATION, an Ohio
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of KEYBANK
NATIONAL ASSOCIATION (the "BANK") for the account of its Applicable Lending
Office (as defined in the Credit Agreement referred to below) the principal sum
of U.S. TWENTY-FIVE MILLION DOLLARS AND NO CENTS ($25,000,000.00), on the
Termination Date (as defined in the Credit Agreement), or, if less, the
aggregate principal amount of the Advances (as defined below) made by the Bank
to the Borrower pursuant to the Credit Agreement outstanding on the Termination
Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is paid
in full at such interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to KeyBank National Association, as Agent, for the benefit
of the Bank, at 127 Public Square, Cleveland, Ohio 44114-1306, in same day
funds. Each Advance made by the Bank to the Borrower pursuant to the Credit
Agreement, and all payments made on account of the principal amount thereof,
shall be recorded by the Bank and, prior to any transfer hereof, endorsed on
the grid attached hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Amended and Restated Revolving Credit
Agreement dated as of January 27, 1993 and amended and restated as of December
15, 1995, and as further amended by Amendment No. 1 thereto, dated as of
December 16, 1996 (as so amended and restated and further amended and as
hereinafter amended or otherwise modified, the "CREDIT AGREEMENT"), among the
Borrower, the Bank and certain other banks parties thereto, and KeyBank
National Association (as successor by merger to Society National Bank), as
Agent for the Bank and such other banks. The Credit Agreement, among other
things, (i) provides for the making of advances (the "ADVANCES") by the Bank to
the Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned, the indebtedness of
the Borrower resulting Erom each such Advance being evidenced by this
Promissory Note, and (ii) contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
This Promissory Note is issued in replacement of a Promissory Note
previously issued to the Bank under the Credit Agreement. Any Advances
outstanding under such prior Promissory Note on the date hereof shall continue
outstanding and be evidenced by this Promissory Note.
MEDUSA CORPORATION
By: /s/ R. Breck Denny
-----------------------------------
Vice President-Finance
<PAGE> 130
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
=======================================================================================================
Amount of
Amount of Principal Paid or Unpaid Principal Notation
Notation Date Advance Prepaid Balance Made By
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<S> <C> <C> <C> <C>
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</TABLE>
<PAGE> 131
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MEDUSA CORPORATION
AS THE BORROWER
AND
THE BANKS NAMED HEREIN
AS BANKS
AND
KEYBANK NATIONAL ASSOCIATION
AS AGENT
-----------------------------
AMENDMENT NO. 2
DATED AS OF
DECEMBER 17, 1997
TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
DATED AS OF
JANUARY 27, 1993
AND AMENDED AND RESTATED AS OF
DECEMBER 15, 1995
-----------------------------
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<PAGE> 132
AMENDMENT NO. 2
TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
THIS AMENDMENT, dated as of December 17, 1997 ("THIS AMENDMENT"), among
MEDUSA CORPORATION, an Ohio corporation (herein, together with its successors
and assigns, the "BORROWER"); the Banks party to the Credit Agreement referred
to below (the "BANKS"); and KEYBANK NATIONAL ASSOCIATION, a national banking
association which is successor by merger to Society National Bank, as Agent for
the Banks under such Credit Agreement:
PRELIMINARY STATEMENTS:
(1) The Borrower, the Banks named therein, and the the Agent entered
into the Amended and Restated Revolving Credit Agreement, dated as of January
27, 1993, and amended and restated as of December 15, 1995, and as further
amended by Amendment No. 1, dated as of December 16, 1996, to Amended and
Restated Credit Agreement (the "CREDIT AGREEMENT"; with the terms defined
therein, or the definitions of which are incorporated therein, being used herein
as so defined).
(2) The Borrower, the Banks, and the Agent desire to amend certain of
the terms and provisions of the Credit Agreement in order, among other things,
to increase the aggregate amount of the Commitments of the Banks from
$65,000,000 to $180,000,000, to extend the existing Termination Date from
December 31, 2001 to December 31, 2002, and to make certain other modifications
to the terms and provisions thereof, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1. REVISED COMMITMENT AMOUNTS. Effective on the Effective Date (as
hereinafter defined), (i) the respective Commitments of the Banks appearing
opposite their signatures to the Credit Agreement are changed to the amounts and
percentages indicated below:
<TABLE>
<CAPTION>
Name of Bank Commitment Amount Percentage
---------------------------- ----------------- ------------
<S> <C> <C>
KeyBank National Association $70,000,000 38.8889%
National City Bank $38,000,000 21.1111%
NBD Bank $38,000,000 21.1111%
PNC Bank, National Association $34,000,000 18.8889%
</TABLE>
; and (ii) the amount "$65,000,000" which appears on the cover page of the
Credit Agreement and as the Total of the Commitments on the page of the Credit
Agreement containing the signatures of the Banks is changed in each such
instance to "$180,000,000".
1.2. EXTENSION OF MATURITY. Effective on the Effective Date, the date
"December 31, 2000" which appears in the definition of the term "TERMINATION
DATE" in section 1.01 of the Credit Agreement is changed to "December 31, 2002".
1
<PAGE> 133
1.3. PRICING CHANGES. Effective on the Effective Date, the term
"Applicable Increment" which appears in section 2.06 of the Credit Agreement is
amended to read in its entirety as follows:
The "APPLICABLE INCREMENT" for any Interest Period shall be equal to
the percentage rate per annum shown in the Pricing Grid below in the
column entitled Applicable Increment corresponding to the ratio of the
Borrower's Consolidated Total Debt to the sum of the Borrower's
Consolidated Total Debt plus Consolidated Net Worth as of the end of
the Borrower's fiscal quarter ended most recently prior to such
Interest Period as to which the Borrower shall have delivered to the
Agent the financial statements for such quarter (or the fiscal year
ended with such fiscal quarter) referred to in clause (a) or (b) of
section 5.01, together with an Officer's Certificate setting forth in
reasonable detail the amounts of Consolidated Total Debt and
Consolidated Net Worth and the computation of such ratio.
<TABLE>
<CAPTION>
PRICING GRID
- -------------------------------------------------------------------------------------------------------------
Ratio, expressed as a
percentage, of (i) Consolidated
Total Debt, to (ii) the sum of
Consolidated Total Debt and Applicable Increment Commitment Fee Rate
Consolidated Net Worth (expressed in basis points) (expressed in basis points)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than or equal to 30.00% 30.00 12.50
- -------------------------------------------------------------------------------------------------------------
Greater than 30.00%, but less 35.00 17.50
than or equal to 45.00%
- -------------------------------------------------------------------------------------------------------------
Greater than 45.00%, but less 45.00 25.00
than or equal to 55.00%
- -------------------------------------------------------------------------------------------------------------
Greater than 55.00% 55.00 35.00
- -------------------------------------------------------------------------------------------------------------
</TABLE>
1.4. DEFINITION OF CONSOLIDATED NET WORTH. Effective on the Effective
Date, the entire definition of the term "Consolidated Tangible Net Worth" in
section 1.01 of the Credit Agreement is deleted and the following is substituted
therefor:
"CONSOLIDATED NET WORTH" means as at any date of
determination, the amount under the caption "Total Shareholders'
Equity" (or any similar caption) of the Borrower as shown on the most
recent balance sheet of the Borrower prepared and delivered to the
Banks pursuant to section 5.01.
1.5. CONSOLIDATED TANGIBLE NET WORTH COVENANT. Effective on the
Effective Date, the covenant contained in section 5.10 of the Credit Agreement
shall be of no further force or effect.
2
<PAGE> 134
1.6. TOTAL DEBT TO CAPITAL COVENANT. Effective on the Effective Date,
section 5.14 of the Credit Agreement is amended to read in its entirety as
follows:
SECTION 5.14. CONSOLIDATED TOTAL DEBT TO CAPITAL. The Borrower
will not permit the ratio of (i) Consolidated Total Debt, to (ii) the
sum of Consolidated Total Debt and Consolidated Net Worth, expressed as
a percentage, to exceed 65.00% at any time.
1.7. REPRESENTATIONS AS TO CHANGES, ETC. (a) Effective on the Effective
Date, the phrase "Since December 31, 1995" which appears at the beginning of
section 4.01(e) of the Credit Agreement, is changed to "With the possible
exception of the effect of publicly announced charges taken in the fourth
quarter of 1997 related to environmental investigation, remediation and related
matters involving plants in Charlevoix, Michigan, and Wampum, Pennsylvania,
since December 31, 1996,".
(b) Effective on the Effective Date, all references in section 4.01 (g)
[Compliance with Other Instruments, etc.] and in section 4.01(i) [Litigation] of
the Credit Agreement to "Material Adverse Change" or "Material Adverse Effect"
are changed to add thereafter the following parenthetical phrase: "(except for
the possible effect of the matters noted in section 4.01(a))".
1.8. REPRESENTATIONS AS TO USE OF PROCEEDS; MARGIN REGULATIONS.
Effective on the Effective Date, section 4.01(n) of the Credit Agreement is
amended to read in its entirety as follows:
(n) USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the
Advances made hereunder will be used by the Borrower for general
corporate purposes, including (without limitation) repurchases by the
Borrower of shares of its outstanding Common Stock. Notwithstanding the
foregoing, no proceeds of any Advance will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock
in violation of the provisions of Regulation U of the Board of
Governors of the Federal Reserve System. Neither the Borrower nor any
of its Subsidiaries is engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (as such term is
defined in such Regulation U), and no proceeds of any Advance will be
used to extend credit to others for the purpose of purchasing or
carrying any margin stock. Following the application of the proceeds of
any Advance, not more than 25% of the value of the assets (either of
the Borrower only or of the Borrower and its Subsidiaries on a
consolidated basis) will be margin stock. As used herein "margin stock"
shall have the meaning ascribed to such term in such Regulation U.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants that: (a) the Borrower has
delivered to the Agent and each Bank prior to the execution of this Amendment
true, correct and complete copies of the consolidated financial statements of
the Borrower and its consolidated subsidiaries for the fiscal year ended
December 31, 1996 and for the nine months ended September 30, 1997, such
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied (except as noted
therein), and fairly present the consolidated financial condition of the
Borrower and its consolidated subsidiaries at such dates and the consolidated
results of their operations and cash flows for the periods then ended; (b) this
Amendment has been duly authorized by all necessary corporate action on the part
of the Borrower, has been duly executed and delivered by a duly authorized
officer or officers of the Borrower, and constitutes the valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms; (c) the representations and warranties of the Borrower contained
3
<PAGE> 135
in the Credit Agreement, as amended hereby, are true and correct on and as of
the date hereof as though made on and as of the date hereof; (d) no condition or
event has occurred or exists which constitutes or which, after notice or lapse
of time or both, would constitute an Event of Default; and (e) the Borrower is
in full compliance with all covenants and agreements contained in the Credit
Agreement, as amended hereby.
SECTION 3. RATIFICATIONS.
The terms and provisions set forth in this Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Credit
Agreement, and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Credit Agreement are ratified and confirmed and
shall continue in full force and effect.
SECTION 4. BINDING EFFECT.
This Amendment shall become effective on a date (the "EFFECTIVE DATE"),
on or before December 30, 1997, if and when the following conditions shall be
satisfied:
(a) AMENDMENT, ETC.: this Amendment shall have been executed
by the Borrower and the Agent, and counterparts hereof as so executed
shall have been delivered to the Agent; the Acknowledgment and Consent
appended hereto shall have been executed by the Subsidiaries of the
Borrower named therein, and counterparts thereof as so executed shall
have been delivered to the Agent; the Agent shall have been notified by
all of the Banks that such Banks have executed this Amendment (which
notification may be by facsimile or other written confirmation of such
execution);
(b) ROLLOVER OF ANY OUTSTANDING ADVANCES: if immediately prior
to the Effective Date there are any Advances outstanding under the
Credit Agreement, the Borrower shall have repaid such Advances on the
Effective Date out of the proceeds of additional Advances obtained from
the Banks on the Effective Date in accordance with the Commitments of
the Banks as revised in this Amendment;
(c) CERTIFIED RESOLUTIONS OF THE BORROWER AND CERTAIN
SUBSIDIARIES: certified copies of the resolutions of the Board of
Directors of the Borrower and of each Subsidiary of the Borrower which
has executed and delivered a Guaranty, approving the transactions
contemplated by this Amendment, shall have been delivered to the Agent
on or within five days prior to the Effective Date;
(d) INCUMBENCY CERTIFICATES OF THE BORROWER AND CERTAIN
SUBSIDIARIES: a certificate of the Secretary or an Assistant Secretary
of the Borrower and of each Subsidiary of the Borrower which has
executed and delivered a Guaranty, certifying the names and true
signatures of the officers of such person authorized to sign this
Amendment and the other documents to which any such person is to be a
party which are referred to herein, as applicable, shall have been
delivered to the Agent on or within five days prior to the Effective
Date;
(e) OPINION OF THE BORROWER'S COUNSEL: a favorable opinion of
the General Counsel of the Borrower, satisfactory in form and substance
to the Agent and the Banks and substantially
4
<PAGE> 136
in the form of Exhibit A hereto and as to such other matters as any
Bank through the Agent may reasonably request, shall have been
delivered to the Agent on or within five days prior to the Effective
Date, in sufficient original copies for the Agent and the Banks;
(f) NEW NOTES: Notes of the Borrower to the order of the Banks
shall have been duly executed and delivered to the Agent for delivery
to the Banks in replacement of Notes previously issued to the Banks;
and
(g) NOTICE FROM THE AGENT: the Agent shall have notified the
Borrower and each Bank in writing that the conditions specified in the
foregoing clauses have been satisfied;
and thereafter this Amendment shall be binding upon and inure to the benefit of
the Borrower, the Agent and each Bank and their respective permitted successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Banks.
SECTION 5. MISCELLANEOUS.
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Amendment shall survive the execution and delivery
of this Amendment, and no investigation by any Agent or any Bank or any
subsequent Advance shall affect the representations and warranties or the right
of the Agent or any Bank to rely upon them.
5.2. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and
all other agreements, instruments or documentation now or hereafter executed and
delivered pursuant to the terms of the Credit Agreement as amended hereby, are
hereby amended so that any reference therein to the Credit Agreement shall mean
a reference to the Credit Agreement as amended hereby.
5.3. EXPENSES. As provided in the Credit Agreement, but without
limiting any terms or provisions thereof, the Borrower agrees to pay on demand
all costs and expenses incurred by the Agent in connection with the preparation,
negotiation, and execution of this Amendment, including without limitation the
costs and fees of the Agent's special legal counsel, regardless of whether this
Amendment becomes effective in accordance with the terms hereof, and all costs
and expenses incurred by the Agent or any Bank in connection with the
enforcement or preservation of any rights under the Credit Agreement, as amended
hereby.
5.4. SEVERABILITY. Any term or provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.
5.5. APPLICABLE LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Ohio.
5.6. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.7. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and
5
<PAGE> 137
delivered in connection with this Amendment embody the final, entire agreement
among the parties hereto with respect to the subject matter hereof and supersede
any and all prior commitments, agreements, representations and understandings,
whether written or oral, relating to the matters covered by this Amendment, and
may not be contradicted or varied by evidence of prior, contemporaneous or
subsequent oral agreements or discussions of the parties hereto. There are no
oral agreements among the parties hereto relating to the subject matter hereof
or any other subject matter relating to the Credit Agreement.
5.8. COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same agreement.
[The balance of this page is intentionally blank;
the next page is the signature page.]
6
<PAGE> 138
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
as of the date first above written.
MEDUSA CORPORATION
BY: _________________________________
VICE PRESIDENT-FINANCE
KEYBANK NATIONAL ASSOCIATION,
AS A BANK AND AS AGENT
BY: __________________________________
VICE PRESIDENT
NATIONAL CITY BANK
BY: __________________________________
VICE PRESIDENT
NBD BANK
BY: __________________________________
VICE PRESIDENT
PNC BANK, NATIONAL ASSOCIATION
BY: __________________________________
VICE PRESIDENT
7
<PAGE> 139
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned is a party to a Guaranty (as such term is
defined in the Credit Agreement referred to in the Amendment No. 2 to Amended
and Restated Revolving Credit Agreement (the "AMENDMENT"), to which this
Acknowledgment and Consent is appended).
For the avoidance of doubt, and without limitation of the intent and
effect of sections 2 and 3 of any Guaranty to which any of the undersigned is a
party, each of the undersigned hereby unconditionally and irrevocably (i)
acknowledges receipt of a copy of the Credit Agreement and the Amendment, and
(ii) consents to all of the terms and provisions of the Credit Agreement as
amended by the Amendment.
Capitalized terms which are used herein without definition shall have
the respective meanings ascribed thereto in the Credit Agreement referred to
herein. This Acknowledgment and Consent is for the benefit of the Banks and the
Agent, any other person who is a third party beneficiary of a Guaranty, and
their respective successors and assigns. No term or provision of this
Acknowledgment and Consent may be modified or otherwise changed without the
prior written consent of the Agent, given as provided in the Credit Agreement.
This Acknowledgment and Consent shall be binding upon the successors and assigns
of each of the undersigned. This Acknowledgment and Consent may be executed by
any of the undersigned in separate counterparts, each of which shall be an
original and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has duly executed and
delivered this Acknowledgment and Consent as of the date of the Amendment
referred to herein.
CANADIAN MEDUSA CEMENT LIMITED MEDUSA-CITADEL, INC.
BY: BY:
----------------------------- --------------------------------
VICE PRESIDENT VICE PRESIDENT
CEMENT TRANSIT COMPANY MEDUSA-CRESCENT, INC.
BY: BY:
----------------------------- --------------------------------
VICE PRESIDENT VICE PRESIDENT
JAMES H. DREW CORPORATION MEDUSA MINERALS COMPANY
(FORMERLY THE THOMASVILLE STONE
AND LIME COMPANY)
BY: BY:
----------------------------- --------------------------------
VICE PRESIDENT VICE PRESIDENT
MEDUSA AGGREGATES COMPANY MEDUSA PORTLAND CEMENT COMPANY
BY: BY:
----------------------------- --------------------------------
VICE PRESIDENT VICE PRESIDENT
MEDUSA AGGREGATES LLC
BY:
-----------------------------
VICE PRESIDENT
1
<PAGE> 140
EXHIBIT A
[Effective Date]
To each of the Banks and the Agent
party to the Credit Agreement
referred to below
c/o KeyBank National Association
Key Center
127 Public Square
Cleveland, Ohio 44114
Re: U.S.$180,000,000 Amended and Restated Credit
Agreement, as amended, with Medusa Corporation
Ladies and Gentlemen:
This opinion is furnished to you pursuant to section 4(vi) of Amendment
No. 2 to Amended and Restated Revolving Credit Agreement, dated as of December
17, 1997 (the "Amendment"), among Medusa Corporation (the "Borrower"), the Banks
parties thereto, and KeyBank National Association (as successor to Society
National Bank), as Agent for said Banks. Terms defined in the Amendment or in
the Credit Agreement referred to in the Amendment are, unless otherwise defined
herein, used herein as therein defined.
I am the General Counsel and Secretary of the Borrower and have acted
as counsel for the Borrower in connection with the preparation, execution and
delivery of the Credit Agreement and the Amendment.
In that connection, I have examined:
(1) The Credit Agreement and the Amendment.
(2) The Promissory Notes (the "Notes") delivered by the
Borrower to the Banks pursuant to the Amendment.
(3) The Articles of Incorporation of the Borrower and all
amendments thereto (the "Charter").
(4) The Code of Regulations of the Borrower and all amendments
thereto (the "CODE OF REGULATIONS").
(5) A certificate of the Secretary of State of the State of
Ohio, dated a recent date, attesting to the continued corporate
existence and good standing of the Borrower in that State.
I have also examined the originals, or copies certified to my satisfaction, of
the documents referred to in the last sentence of section 4.01(g) of the Credit
Agreement, as amended by the Amendment (the "RESTRICTIVE AGREEMENTS"). In
addition, I have examined the originals, or copies certified to my satisfaction,
of such other corporate records of the Borrower, certificates of public
officials and of officers of the Borrower, and agreements, instruments and other
documents, as I have deemed necessary as a basis
<PAGE> 141
for the opinions expressed below. As to questions of fact material to such
opinions, I have, when relevant facts were not independently established by me,
relied upon certificates of the Borrower or its officers or of public officials.
I have assumed the due execution and delivery, pursuant to due authorization, of
the Credit Agreement and the Amendment by the Banks and the Agent.
I am qualified to practice law in the State of Ohio and do not purport
to be an expert on any laws other than the laws of the State of Ohio and the
Federal laws of the United States.
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Ohio.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement, the Amendment and the Notes are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Charter or the Code of Regulations, (ii) any law,
rule or regulation applicable to the Borrower (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System), or (iii)
any contractual or legal restriction contained in any Restrictive Agreement or,
to the best of my knowledge, contained in any other similar document.
3. The Credit Agreement, the Amendment and the Notes have been duly
executed and delivered on behalf of the Borrower. The Credit Agreement (as
amended by the Amendment) and the Notes each constitute a valid and binding
agreement or obligation of the Borrower enforceable against the Borrower in
accordance with their terms.
4. No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Body is required on the part of the Borrower
for the valid execution and delivery of the Credit Agreement or the Amendment or
the consummation of the transactions contemplated thereby, including the
issuance and delivery of the Notes, or for the fulfillment of, or compliance by
the Borrower with, the terms and provisions of the Credit Agreement (as amended
by the Amendment) and the Notes.
5. There are no pending or overtly threatened actions or proceedings
against the Borrower or any of its Subsidiaries before any court, governmental
agency or arbitrator which purport to affect the legality, validity, binding
effect or enforceability of the Credit Agreement or the Amendment or any of the
Notes or which might result in a Material Adverse Change (except for the
possible effect of the matters noted in section 4.01(a) of the Credit Agreement,
as amended) in the Business or Condition of the Borrower or of the Borrower and
its Subsidiaries taken as a whole.
6. The transactions contemplated by the Credit Agreement (as amended by
the Amendment) will not result in a violation of Regulation U or Regulation X of
the Board of Governors of the Federal Reserve System.
7. The Borrower is not an "investment company" or a Person directly or
indirectly "controlled" by or "acting on behalf of" an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
2
<PAGE> 142
The opinions set forth above are subject to the following
qualifications:
(a) My opinion in the last sentence of paragraph 3 above is subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar law affecting creditors' rights generally.
(b) My opinion in the last sentence of paragraph 3 above is subject to
the effect of general principles of equity, including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing (regardless
of whether considered in a proceeding in equity or at law).
The opinions expressed herein are expressed solely to you and may not
be relied upon by any other persons for any reason, without the express written
consent of the undersigned.
Very truly yours,
3
<PAGE> 1
Exhibit 21
MEDUSA CORPORATION AND SUBSIDIARIES
Exhibit 21 to Form 10-K
Subsidiaries of the Registrant
December 31, 1997
The following is a list of active subsidiaries of the Registrant and their
jurisdiction of incorporation. All of these subsidiaries are wholly-owned,
directly or indirectly, and are included in the consolidated financial
statements.
Cement Transit Company Delaware
James H. Drew Corporation Indiana
Medusa Aggregates Company Iowa
Medusa Minerals Company Maryland
Canadian Medusa Cement Limited Ontario, Canada
Medusa-Citadel, Inc. Alabama
Medusa-Crescent, Inc. Pennsylvania
Medusa Aggregates LLC Pennsylvania
Medusa Portland Cement Company Michigan
Medusa Minerals Co. - Lee Delaware
Medusa Minerals Co. - Sparta New Jersey
White Stone Company of Southwest
Virginia Virginia
Clinch River Quarries, Inc. Virginia
<PAGE> 1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 333-29173 of Medusa Corporation on Form S-8 of our report dated January 26,
1998 (March 18, 1998 as to Notes Q and R), appearing in this annual report on
Form 10-K of Medusa Corporation for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
March 25, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDUSA
CORPORATION AND SUBSIDIARIES' STATEMENT OF INCOME AND BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000064674
<NAME> MEDUSA CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 13,813
<SECURITIES> 0
<RECEIVABLES> 35,479
<ALLOWANCES> 2,693
<INVENTORY> 33,013
<CURRENT-ASSETS> 85,520
<PP&E> 419,942
<DEPRECIATION> 258,469
<TOTAL-ASSETS> 306,513
<CURRENT-LIABILITIES> 51,397
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 190,675
<TOTAL-LIABILITY-AND-EQUITY> 306,513
<SALES> 375,958
<TOTAL-REVENUES> 375,958
<CGS> 237,720
<TOTAL-COSTS> 290,951
<OTHER-EXPENSES> (311)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,482
<INCOME-PRETAX> 83,836
<INCOME-TAX> 26,807
<INCOME-CONTINUING> 57,029
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,029
<EPS-PRIMARY> 3.44
<EPS-DILUTED> 3.41
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDUSA
CORPORATION AND SUBSIDIARIES' STATEMENT OF INCOME AND BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<RESTATED>
<CIK> 0000064674
<NAME> MEDUSA CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 33,166
<SECURITIES> 0
<RECEIVABLES> 22,109
<ALLOWANCES> 609
<INVENTORY> 29,266
<CURRENT-ASSETS> 88,237
<PP&E> 358,819
<DEPRECIATION> 239,955
<TOTAL-ASSETS> 219,578
<CURRENT-LIABILITIES> 31,690
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 95,547
<TOTAL-LIABILITY-AND-EQUITY> 219,578
<SALES> 293,327
<TOTAL-REVENUES> 293,327
<CGS> 184,997
<TOTAL-COSTS> 223,937
<OTHER-EXPENSES> (2,032)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,575
<INCOME-PRETAX> 63,847
<INCOME-TAX> 20,635
<INCOME-CONTINUING> 43,212
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,212
<EPS-PRIMARY> 2.70
<EPS-DILUTED> 2.54
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDUSA
CORPORATION AND SUBSIDIARIES' STATEMENT OF INCOME AND BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT
</LEGEND>
<RESTATED>
<CIK> 0000064674
<NAME> MEDUSA CORPORATION
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-END> DEC-31-1996 MAR-31-1996 JUN-30-1996 SEP-30-1996
<CASH> 25,045 17,631 7,649 28,282
<SECURITIES> 0 0 0 0
<RECEIVABLES> 29,881 21,316 41,024 50,820
<ALLOWANCES> 1,173 720 1,248 1,868
<INVENTORY> 31,177 32,028 35,075 27,375
<CURRENT-ASSETS> 89,420 81,070 91,753 110,848
<PP&E> 376,186 365,019 369,900 374,264
<DEPRECIATION> 250,457 242,373 246,355 250,222
<TOTAL-ASSETS> 223,446 215,577 226,251 245,420
<CURRENT-LIABILITIES> 34,605 28,350 30,694 36,071
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 1 1 1 1
<OTHER-SE> 153,969 94,946 102,678 116,174
<TOTAL-LIABILITY-AND-EQUITY> 223,446 215,577 226,251 245,420
<SALES> 323,377 45,073 85,995 109,295
<TOTAL-REVENUES> 323,377 45,073 85,995 109,295
<CGS> 200,999 33,772 51,855 65,657
<TOTAL-COSTS> 241,798 42,606 63,474 76,513
<OTHER-EXPENSES> (1,300) (339) (156) (358)
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 3,674 1,041 952 1,022
<INCOME-PRETAX> 79,205 1,765 21,725 32,118
<INCOME-TAX> 24,945 573 6,756 10,024
<INCOME-CONTINUING> 54,260 1,192 14,969 22,094
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> (1,770) 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 52,490 1,192 14,969 22,094
<EPS-PRIMARY> 3.38 0.07 0.93 1.39
<EPS-DILUTED> 3.15 0<F1> 0.86 1.27
<FN>
<F1>antidilutive
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDUSA
CORPORATION AND SUBSIDIARIES' STATEMENT OF INCOME AND BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<RESTATED>
<CIK> 0000064674
<NAME> MEDUSA CORPORATION
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 0 7,198 4,698
<SECURITIES> 0 0 0
<RECEIVABLES> 33,382 45,902 56,610
<ALLOWANCES> 1,434 1,845 2,348
<INVENTORY> 33,135 35,272 30,631
<CURRENT-ASSETS> 77,172 96,365 97,595
<PP&E> 399,086 406,145 424,938
<DEPRECIATION> 254,000 257,411 261,567
<TOTAL-ASSETS> 235,486 257,682 298,224
<CURRENT-LIABILITIES> 45,785 57,934 42,708
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 1 1 1
<OTHER-SE> 154,179 164,094 182,174
<TOTAL-LIABILITY-AND-EQUITY> 235,486 257,682 298,224
<SALES> 56,839 103,185 117,068
<TOTAL-REVENUES> 56,839 103,185 117,068
<CGS> 43,962 60,098 69,759
<TOTAL-COSTS> 54,402 75,904 81,767
<OTHER-EXPENSES> (352) 44 (18)
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 108 301 399
<INCOME-PRETAX> 2,681 26,936 34,920
<INCOME-TAX> 850 8,628 11,174
<INCOME-CONTINUING> 1,831 18,308 23,746
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 1,831 18,308 23,746
<EPS-PRIMARY> 0.11 1.10 1.44
<EPS-DILUTED> 0.11 1.09 1.42
</TABLE>
<PAGE> 1
[LETTERHEAD - LOGO]
MEDUSA CORPORATION
LEE AND MONTICELLO - CLEVELAND HEIGHTS, OHIO 44118 - 216/371-4000
Fax 216/371-2912
MAIL ADDRESS
P.O. BOX 5668
CLEVELAND 44101
TO OUR SHAREHOLDERS:
For the fifth consecutive year, Medusa achieved record revenues and earnings.
Revenues increased 16% to $376.0 million, resulting from continued strong market
conditions for both cement and aggregates and additional sales from our three
minerals acquisitions made during the year. Net income increased 5% to $57.0
million, or $3.41 per diluted share. This compares with net income in 1996 of
$54.3 million or $3.15 per share, before an extraordinary charge of $1.8 million
or $0.10 per share related to the early retirement of debt. Our results for this
year reflect a pretax charge of approximately $4 million principally related to
certain environmental matters at our Charlevoix, Michigan plant.
Our cement operations had another excellent year, with record production and
sales. The record production is the result of our incremental capacity expansion
program which we continued this year. This program has increased our production
levels by 8% over 1993 levels, the year we began the program.
We continue to use our strong cash flow for the benefit of shareholders. Cash
flow from operations was $76.9 million, up 20% from last year. Capital spending
this year totaled $24.5 million, 24% higher than last year. We have begun a
major modernization and expansion of our Clinchfield, Georgia cement plant and
related distribution facilities. This $56 million project will significantly
reduce the cash costs of the Clinchfield complex and increase clinker capacity
by 175,000 tons annually to about 760,000 tons. We expect this project will
reach full production in the second half of 1999.
We have made significant progress in making Medusa Minerals the premier supplier
of limestone-related lawn and garden products in the eastern United States. In
January, 1997, we acquired the Sparta, New Jersey-based Lime Crest Corporation.
In late August, we acquired the stock of White Stone Company, with operations in
Castlewood, Virginia and Paradise, Pennsylvania. In October, we acquired Lee
Lime Corporation, based in western Massachusetts. In early January, 1998, we
acquired Commonwealth Stone, an aggregates producer located in Bowling Green,
Kentucky. In total, we have invested nearly $73 million in these operations.
<PAGE> 2
With these acquisitions, we have increased our capacity of high quality chemical
and white stone reserves to better serve the industrial minerals and lawn and
garden markets. In addition, these new operations have allowed us to expand our
core construction aggregates business into new markets. We have also gained
pelletized lime technology and capabilities along with significant bagging,
materials handling and warehousing expertise. We feel that with the combination
of these businesses we will provide an excellent return to shareholders.
The turnaround at James H. Drew Corporation continues. In 1997, Drew continued
to strive to be the low-cost supplier of quality construction services for
highway safety. Costs have been reduced by consolidating operations into a
single location in Indiana and divesting low-margin product lines. Drew's
strategic plan includes making the company less seasonal by increasing its
activities in warmer-climate states.
Enclosed is a press release announcing the proposed merger between Medusa and
Southdown, Inc. Your Board of Directors believes that the merger represents a
unique strategic opportunity for Medusa, creating the largest publicly-owned
cement company in the United States. The larger, financially strong combined
company should benefit from significant synergies while affording investors
enhanced investment liquidity and diversification of risk.
A special shareholders meeting to request approval of the proposed transaction
is anticipated within 60 to 90 days. You will be sent a proxy statement that
will provide detailed information on the transaction. We urge you to read it
carefully.
In closing, we thank our dedicated employees for their hard work and commitment,
and our shareholders for their continuing support.
Robert S. Evans, Chairman of the Board
George E. Uding, Jr., President
Cleveland, Ohio
March 25, 1998
