UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1999
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 1-6179
CORDANT TECHNOLOGIES INC.
Incorporated in the State of Delaware IRS Employer Identification
No. 36-2678716
15 West S. Temple, Suite 1600, Salt Lake City, Utah 84101-1532
Telephone Number: (801) 933-4000
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 ____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $1.00 par value, outstanding at March 31, 1999: 36,578,820
1
<PAGE>
CORDANT TECHNOLOGIES INC.
QUARTERLY REPORT ON FORM 10-Q
March 31, 1999
INDEX
<TABLE>
Page
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. Financial Statements
Consolidated Statements of Income - Three months
ended March 31, 1999 and 1998 3
Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998 4-5
Consolidated Statements of Cash Flows - Three
months ended March 31, 1999 and 1998 6
Consolidated Statements of Stockholders' Equity-
Three months ended March 31, 1999 and 1998 7
Notes to Consolidated Financial Statements 8-13
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-26
ITEM 3. Quantitative and Qualitative Disclosure about Market Risk 27
PART II. OTHER INFORMATION
ITEM 5. Other Information 28
ITEM 6. Exhibits and Reports on Form 8-K 28-29
SIGNATURES 29
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<CAPTION>
Three Months Ended
March 31
------------------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $634.1 $562.7
Operating expenses:
Cost of sales 490.7 436.7
Selling, general and administrative 51.4 46.0
Research and development 8.2 8.4
- -----------------------------------------------------------------------------------------------------------------
Total operating expenses 550.3 491.1
- -----------------------------------------------------------------------------------------------------------------
Income from operations 83.8 71.6
Interest income 2.7 2.7
Interest expense (9.5) (5.8)
Other, net (.2) (.9)
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes and minority interest 76.8 67.6
Income taxes (22.5) (26.0)
- -----------------------------------------------------------------------------------------------------------------
Income before minority interest 54.3 41.6
Minority interest (7.1) (8.8)
- -----------------------------------------------------------------------------------------------------------------
Net income $ 47.2 $ 32.8
=================================================================================================================
Net Income per share:
Basic $ 1.29 $ .90
Diluted $ 1.26 $ .87
=================================================================================================================
Dividends per share $ .10 $ .10
=================================================================================================================
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<CAPTION>
March 31
1999 December 31
(Unaudited) 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 18.8 $ 45.3
Receivables 280.9 240.0
Inventories 261.4 252.3
Deferred income taxes and prepaid expenses 56.3 60.8
Restricted Trust (a) 716.4
- ------------------------------------------------------------------------------------------------------------------------
Total current assets 617.4 1,314.8
Property, plant and equipment, at cost
less allowances for depreciation 679.2 672.3
Other assets
Costs in excess of net assets of businesses
acquired, net 856.0 561.7
Patents and other intangible assets, net 124.8 128.3
Other noncurrent assets 132.0 132.8
- ------------------------------------------------------------------------------------------------------------------------
Total other assets 1,112.8 822.8
- ------------------------------------------------------------------------------------------------------------------------
Total assets $2,409.4 $2,809.9
========================================================================================================================
<FN>
(a) The Restricted Trust held a note receivable from Pechiney S.A. and related letters of credit that secured Pechiney
S.A.'s agreement to repay the Pechiney Notes. Pechiney S.A. (Howmet's previous owner) paid the notes on January 4, 1999,
and the Restricted Trust was terminated. No Howmet or Cordant funds were used in the payment of the Notes.
See notes to consolidated financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<CAPTION>
March 31
1999 December 31
(Unaudited) 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities
Short-term debt $ 130.3 $ 80.1
Accounts payable 122.0 139.8
Accrued compensation 85.9 81.6
Other accrued expenses 205.4 202.1
Pechiney Notes (a) 716.4
- ------------------------------------------------------------------------------------------------------------------------
Total current liabilities 543.6 1,220.0
Noncurrent liabilities
Accrued retiree benefits 170.8 169.0
Deferred income taxes 52.6 52.3
Accrued interest and other noncurrent liabilities 230.5 234.2
Long-term debt 644.3 324.5
- ------------------------------------------------------------------------------------------------------------------------
Total noncurrent liabilities 1,098.2 780.0
Minority interest 61.1 142.0
Stockholders' equity
Common stock (par value $1.00 per share)
Authorized - 200 shares
Issued - 41.1 shares at March 31, 1999 and 41.1 41.1
December 31, 1998 (includes treasury shares)
Additional paid-in capital 46.9 47.4
Retained earnings 702.3 658.8
Accumulated other comprehensive income (loss) (10.1) (3.9)
- ------------------------------------------------------------------------------------------------------------------------
780.2 743.4
Less common stock in treasury, at cost
4.5 shares, March 31, 1999 and
4.6 shares, December 31, 1998 (73.7) (75.5)
- ------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 706.5 667.9
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,409.4 $2,809.9
========================================================================================================================
<FN>
a) The Restricted Trust held a note receivable from Pechiney S.A. and related letters of credit that secured Pechiney
S.A.'s agreement to repay the Pechiney Notes. Pechiney S.A. (Howmet's previous owner) paid the notes on January 4, 1999,
and the Restricted Trust was terminated. No Howmet or Cordant funds were used in the payment of the Notes.
See notes to consolidated financial statements.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
<CAPTION>
Three Months Ended
March 31
-------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net income $ 47.2 $ 32.8
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest 7.1 8.8
Depreciation 19.5 17.8
Amortization 8.6 7.7
Changes in operating assets and liabilities:
Receivables (45.8) (36.2)
Inventories (11.2) 4.8
Accounts payable and accrued expenses (27.2) (24.4)
Income taxes 21.0 18.4
Other 4.8 (3.4)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 24.0 26.3
Investing Activities
Acquisitions (385.0)
Purchases of property, plant and equipment (31.1) (23.3)
- ----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (416.1) (23.3)
Financing Activities
Net change in short-term debt 50.7 (1.1)
Long-term borrowings 450.0 156.4
Repayment of long-term debt (130.1) (116.1)
Dividends paid (3.7) (3.6)
Purchase of common stock for treasury (10.8)
Stock option transactions 1.3 2.7
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 368.2 27.5
Foreign currency rate changes (2.6) .1
- ----------------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents (26.5) 30.6
Cash and cash equivalents at beginning of year 45.3 45.6
- ----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 18.8 $ 76.2
======================================================================================================================
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
CORDANT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
(IN MILLIONS)
<CAPTION>
Accumulated
Additional Other Total
Common Paid-In Retained Treasury Comprehensive Stockholders'
Stock Capital Earnings Stock Income Equity
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Three months ended March 31, 1998
Balance, December 31, 1997 $20.5 $46.0 $ 552.0 $(64.5) $ (3.5) $ 550.5
Comprehensive income
Net income 32.8 32.8
Other comprehensive income
Cumulative translation adjustment .1 .1
-----------
Total comprehensive income 32.9
===========
Dividends paid (3.6) (3.6)
Stock dividend (2.2 treasury shares
and 20.6 common shares) 20.6 (20.6)
Treasury stock purchases (.3 shares) (10.8) (10.8)
Stock options exercised and related
income tax benefits (.1 shares) .9 1.8 2.7
- --------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1998 $41.1 $46.9 $ 560.6 $(73.5) $ (3.4) $ 571.7
====================================================================================================================
- --------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 1999
Balance, December 31, 1998 $41.1 $47.4 $ 658.8 $(75.5) $ (3.9) $ 667.9
Comprehensive income
Net income 47.2 47.2
Other comprehensive income
Minimum pension liability .9 .9
Cumulative translation adjustment (7.1) (7.1)
-----------
Total comprehensive income 41.0
===========
Dividends paid (3.7) (3.7)
Stock options exercised and related
income tax benefits (.1 shares) (.5) 1.8 1.3
- --------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1999 $41.1 $46.9 $ 702.3 $(73.7) $(10.1) $ 706.5
====================================================================================================================
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Basis of Presentation
The accompanying interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. The balance sheet at December 31, 1998
reflects the Company's audited consolidated balance sheet at that date. In
management's opinion, all adjustments considered necessary for a fair
presentation have been included. Operating results for the three-months
ended March 31, 1999 are not necessarily indicative of the results to be
expected for the year ending December 31, 1999. The financial statements
should be read in conjunction with the consolidated financial statements
and notes thereto included in the Company's 1999 Notice of Annual Meeting
and Proxy Statement, Financial Information, incorporated by reference in
the Company's Annual Report on Form 10-K for the year ended December 31,
1998.
Certain reclassifications were made to the 1998 financial statements to
conform to the 1999 presentation.
Receivables
The components of receivables are as follows:
<TABLE>
<CAPTION>
March 31
1999 December 31
(in millions) (Unaudited) 1998
---------------------------------------------------------------------------------------
<S> <C> <C>
Trade Receivables:
Trade accounts receivable $164.5 $159.0
Retained receivables 54.6 32.0
Allowance for doubtful accounts (8.7) (7.8)
---------------------------------------------------------------------------------------
Total Trade Receivables 210.4 183.2
Receivables under U.S. Government contracts
and subcontracts 70.5 56.8
---------------------------------------------------------------------------------------
$280.9 $240.0
=======================================================================================
</TABLE>
Receivables under government contracts and subcontracts include unbilled
costs and accrued profits. Such amounts are billed based on contract terms
and delivery schedules.
Cost and incentive-type contracts and subcontracts are subject to
government audit and review. It is anticipated that adjustments, if any,
will not have a material effect on the Company's results of operations or
financial condition.
8
<PAGE>
Cost management award fees totaling $128.1 million, at March 31, 1999, have
been recognized on the current Buy 3 Space Shuttle Reusable Solid Rocket
Motor (RSRM) contract. Realization of such fees is reasonably assured based
on actual and anticipated contract cost performance. However, all cost
management award fees remain at risk until contract completion and final
NASA review. The Buy 3 RSRM contract is expected to be completed during
2001. Unanticipated program problems which erode cost management
performance could cause some or all of the recognized cost management award
fees to be reversed and would be offset against receivable amounts from the
government or may be directly reimbursed. Circumstances which could erode
cost management performance, and materially impact Company profitability
and cash flow, include failure of a Company-supplied component, performance
problems with the RSRM leading to a major redesign and/or requalification
effort, manufacturing problems, including supplier problems which result in
RSRM production interruptions or delays, and major safety incidents.
Trade accounts receivable primarily relate to sales to well established
corporations and historically, bad debt expense has been minor.
Howmet has an agreement to sell, on a revolving basis, an undivided
interest in a defined pool of accounts receivable. Howmet has received $55
million from the sale of such receivables and has deducted this amount from
accounts receivable at March 31, 1999. The $54.6 million retained
receivables, shown in the March 31, 1999 balance sheet, represents the
receivables set aside to replace sold receivables in the event they are not
fully collected.
Inventories
Inventories are stated at the lower of cost or market. Inventories for the
fastening systems segment are determined by the first-in, first-out (FIFO)
method. Inventories for the investment castings segment are determined by
both the FIFO and last-in, first-out (LIFO) method.
Propulsion Systems inventories include estimated recoverable costs related
to long-term fixed price contracts including direct production costs and
allocable indirect costs, less related progress payments received. In
accordance with industry practice, such costs include amounts that are not
expected to be realized within one year. The government may acquire title
to, or a security interest in, certain inventories as a result of progress
payments made on contracts and programs.
9
<PAGE>
The components of inventories are as follows:
<TABLE>
<CAPTION>
March 31
1999 December 31
(in millions) (Unaudited) 1998
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials and work-in-process $189.7 $161.8
Finished Goods 66.1 87.6
Inventoried costs related to U.S. Government
and other long-term contracts 35.1 28.8
Progress payments received on long-term
contracts (26.7) (22.6)
LIFO valuation adjustment (2.8) (3.3)
----------------------------------------------------------------------------------------------------
$261.4 $252.3
====================================================================================================
</TABLE>
At March 31, 1999 and December 31, 1998, inventories include $114.9 and
$111.8 million, respectively, that are valued using LIFO. The LIFO
valuation adjustment approximates the difference between the LIFO carrying
value and current replacement cost.
Purchase of Additional Howmet International Inc. Common Stock
On February 8, 1999, the Company acquired for $385 million the remaining
22.65 million shares of Howmet International Inc. common stock owned by
Carlyle Blade Acquisition Partners, L.P. (Carlyle) and entered into a new
Standstill Agreement and extended an existing covenant not to compete. With
this purchase of the Carlyle shares, the Company's ownership of Howmet
International Inc. common stock increases to approximately 84.6 million
shares representing 84.6 percent of Howmet's outstanding voting common
stock. The remaining 15.4 percent of Howmet common stock is publicly owned.
The acquisition was financed with borrowings under an unsecured bank line
of credit established in conjunction with the stock purchase. The interest
rate on this facility is based on LIBOR plus a spread, and was 5.75 percent
at the time of the transaction. As a result of this acquisition, a one-time
tax adjustment was recorded in the first quarter of 1999 reversing $7.1
million or $.19 per share of a previously accrued accumulated dividend tax.
Additional detailed financial information on Howmet is available in it's
current form 10-Q and in Howmet's Notice of 1999 Annual Meeting and Proxy
Statement, Exhibit B, incorporated by reference in Howmet's Annual Report
on Form 10-K for the year ended December 31, 1998.
10
<PAGE>
FINANCING ARRANGEMENTS
Long term debt is summarized as follows:
<TABLE>
<CAPTION>
March 31
1999 December 31
(in millions) (Unaudited) 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Cordant Technologies 6.625% senior notes $150.0 $150.0
Cordant Technologies senior revolving credit facilities 400.0 110.0
Howmet senior revolving credit facility 90.0 60.0
Other 12.4 13.1
- ---------------------------------------------------------------------------------------------------
652.4 333.1
Less current portion 8.1 8.6
- ---------------------------------------------------------------------------------------------------
$644.3 $324.5
===================================================================================================
</TABLE>
The Company, excluding Howmet, has credit commitments from a group of banks
aggregating $500 million under revolving credit facilities, of which $100
million was available at March 31, 1999. The funds available under the
credit facilities may be used for any corporate purpose and are available
through May 1999 ($50 million), November 1999 ($300 million) and May 2001
($150 million). The Company has the option to extend up to $400 million for
an additional nine months. The interest rate on the revolving credit
facilities is based on LIBOR plus a spread, and was 5.6 and 5.9 percent at
March 31, 1999 and December 31, 1998, respectively. The credit agreements
and senior notes contain covenants restricting, among other things, the
Company's ability to incur funded debt, limitations on liens, sale and
leaseback transactions, and the sale of assets.
Howmet has credit commitments from a group of banks aggregating $300
million under a revolving credit agreement, of which $202.4 million was
available at March 31, 1999. Howmet had $7.6 million in Letters of Credit
outstanding at March 31, 1999 under the revolving credit facility. The
funds available under the credit facility may be used for any corporate
purpose and are available through December 2002. The interest rate on the
facility is based on LIBOR plus a spread, and was 5.2 and 5.8 percent at
March 31, 1999 and December 31, 1998, respectively. Terms of the revolving
credit facility require Howmet to meet certain interest coverage and
leverage ratios and maintain certain minimum net worth amounts. In
addition, there are restrictions that limit indebtedness, the sale of
assets, and payments for acquisitions or investments.
Cordant does not have access to Howmet cash balances except through
Howmet's declaring a cash dividend to its shareholders, which availability
may be restricted under the terms of its revolving credit facility. Howmet
does not currently intend to pay dividends.
On February 17, 1999, Howmet paid $66.4 million to redeem all of its 9
percent preferred stock. The payment was made to Cordant Technologies, the
sole preferred stockholder. Howmet borrowed under its existing revolving
credit facility to make this payment and Cordant Technologies used the
proceeds to reduce debt under its revolving credit facilities.
11
<PAGE>
The current portion of long-term debt is classified in "short-term debt" on
the balance sheets.
Earnings per share
<TABLE>
The following table sets forth the computation of basic and diluted
earnings per share:
<CAPTION>
Three-Months Ended
March 31
----------------------------------
1999
(In millions, except per share data) (Unaudited) 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Numerator for basic and diluted earnings per share:
Net Income $47.2 $32.8
======================================================================================================
Denominator:
Denominator for basic earnings per
share -- weighted-average shares 36.5 36.4
Effect of dilutive securities
Employee stock options .9 1.2
- -----------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share --
weighted-average shares and assumed exercises 37.4 37.6
- -----------------------------------------------------------------------------------------------------
Net income per share:
Basic $ 1.29 $ .90
Diluted $ 1.26 $ .87
=====================================================================================================
</TABLE>
Segment Information
The Company has three reportable segments: Investment Castings, Fastening
Systems, and Propulsion Systems. The Company's reportable segments
manufacture and distribute distinct products with different production
processes.
The Company evaluates performance and allocates resources based on
operating income, which is pre-tax income before interest income and
expense, and excludes any equity income and other non-operating expenses.
In accordance with industry practice, a proportionate share of Corporate
general and administrative expense is allocated and reimbursed through
Propulsion Systems contracts. Intersegment sales and transfers are not
significant.
12
<PAGE>
<TABLE>
Summary unaudited segment information for the three-months ended March 31 follows:
<CAPTION>
(in millions) 1999 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Investment Castings $ 372.7 $ 328.4
Fastening Systems 121.2 90.1
Propulsion Systems 140.2 144.2
- ---------------------------------------------------------------------------------------------------
Total sales $ 634.1 $562.7
===================================================================================================
Operating income:
Investment Castings $ 55.0 $ 43.8
Fastening Systems 18.3 13.2
Propulsion Systems 17.8 18.4
Unallocated corporate expense (7.3) (3.8)
- ---------------------------------------------------------------------------------------------------
Total operating income 83.8 71.6
Interest income 2.7 2.7
Interest expense (9.5) (5.8)
Other, net (.2) (.9)
- ---------------------------------------------------------------------------------------------------
Consolidated income before income taxes
and minority interest $ 76.8 $ 67.6
===================================================================================================
</TABLE>
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (UNAUDITED)
Results of Operations
All of the following discussion reflects diluted earnings per share.
Income for the First Quarter
Net income for the first quarter ended March 31, 1999, was $47.2 million,
or $1.26 per share, an increase of 44 percent, compared to the prior year's
quarter net income of $32.8 million or $.87 per share. The current
quarter's net income included a Stock Appreciation Rights (SAR) benefit at
Howmet of $1.3 million or $.03 per share, resulting from Howmet's stock
price decline below the $15 per share ceiling at the end of the quarter.
Net income for the current quarter also included a $7.1 million or $.19 per
share tax benefit from reversing a dividend tax previously recorded on the
Company's share of Howmet's income. Excluding the unusual items listed
above, net income of $38.8 million or $1.04 increased 18 percent over the
prior year's quarter.
The SAR benefit was caused by a decline in Howmet's common stock price.
Compensation expense increases or decreases (benefit) as the market value
of the stock fluctuates below a $15 per share ceiling, and also is
determined based on employee SAR vesting to date. At March 31, 1999,
Howmet's common stock price was $14.31, which resulted in the $1.3 million,
or $.03 per share benefit to the Company. SAR benefit or expense is
recognized each quarter based on the market value at the end of the quarter
compared to the market price at the previous quarter end subject to the $15
per share ceiling limit.
14
<PAGE>
<TABLE>
Summary unaudited financial information for the three-months ended March 31 follows:
<CAPTION>
Better Percent
(in millions, except per share data) 1999 1998 (Worse) Change
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Investment Castings $372.7 $328.4 $ 44.3 13
Fastening Systems 121.2 90.1 31.1 35
Propulsion Systems 140.2 144.2 (4.0) (3)
- ------------------------------------------------------------------------------------------------------------------
Total sales $634.1 $562.7 $ 71.4 13
==================================================================================================================
Operating income:
Investment Castings $ 55.0 $ 43.8 $ 11.2 26
Fastening Systems 18.3 13.2 5.1 39
Propulsion Systems 17.8 18.4 (.6) (3)
Unallocated corporate expense (7.3) (3.8) (3.5) (92)
- ------------------------------------------------------------------------------------------------------------------
Total operating income 83.8 71.6 12.2 17
Interest income 2.7 2.7
Interest expense (9.5) (5.8) (3.7) (64)
Other, net (.2) (.9) .7 78
Income taxes (22.5) (26.0) 3.5 13
- ------------------------------------------------------------------------------------------------------------------
Income before minority interest 54.3 41.6 12.7 31
Minority interest (7.1) (8.8) 1.7 19
- ------------------------------------------------------------------------------------------------------------------
Net income $ 47.2 $ 32.8 $ 14.4 44
==================================================================================================================
Net income per share:
Basic $ 1.29 $ .90 $ .39 43
Diluted $ 1.26 $ .87 $ .39 45
</TABLE>
Selected Unaudited Financial Data
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------------------------------------------------------------------
1999 1998
------------------------------------------- ----------------------------------------------
(in millions) Cordant Howmet Consolidated Cordant Howmet Consolidated
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by
operating activities $14.2 $ 9.8 $ 24.0 $ 31.7 $ (5.4) $26.3
Capital expenditures (7.8) (23.3) (31.1) (6.7) (16.6) (23.3)
Dividends (3.7) (3.7) (3.6) (3.6)
- ---------------------------------------------------------------------------------------------------------------------------
$ 2.7 $(13.5) $(10.8) $ 21.4 $(22.0) $ (.6)
===========================================================================================================================
</TABLE>
15
<PAGE>
BUSINESS SEGMENT SALES AND INCOME FOR THE QUARTER
Investment Castings
The following unaudited information summarizes Howmet's results, as
separately reported to its shareholders, for the three-months ended March
31:
<TABLE>
<CAPTION>
(in millions) 1999 1998
--------------------------------------------------------------------
<S> <C> <C>
Net sales $372.7 $328.4
Cost of goods sold 284.6 252.7
Gross profit 88.1 75.7
Operating income 57.2 44.8
Net income $ 34.8 $ 24.5
--------------------------------------------------------------------
</TABLE>
Following is a reconciliation of Howmet's contribution to the Company's
income for the three-months ended March 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Howmet net income $34.8 $24.5
Less preferred paid-in-kind dividend (1) (.8) (1.4)
- ----------------------------------------------------------------------------------------------
Income available to common shareholders 34.0 23.1
- ----------------------------------------------------------------------------------------------
Company's interest in Howmet income (2) 26.8 14.3
Add preferred paid-in-kind dividend .8 1.4
- ----------------------------------------------------------------------------------------------
Howmet's contribution to the Company's income 27.6 15.7
Less the Company's 7 percent tax on Howmet income (1.1)
Add the Company's cumulative 7 percent tax reversal on
Howmet income 7.1
- ----------------------------------------------------------------------------------------------
Howmet's total after-tax contribution to the Company's
income $34.7 $14.6
==============================================================================================
<FN>
(1) Howmet's 9 percent paid-in-kind preferred stock owned by the Company was redeemed on
February 17, 1999 for $66.4 million.
(2) On February 8, 1999, the Company increased its ownership in Howmet from 62 percent to 84.6
percent.
</FN>
</TABLE>
Howmet's sales increased $44.3 million or 13 percent over the prior year's
quarter. The sales increase came from the industrial gas turbine (IGT)
market.
16
<PAGE>
Howmet's net income was $34.8 million for the quarter, a 42 percent
increase from $24.5 million in the prior year's quarter. The principle
reason for the higher income was the increased revenue in the IGT market
and improved operating margins. The current quarter also includes the
aforementioned $1.3 million after-tax SAR benefit which will reverse in
future periods if Howmet's stock price increases above $15 per share.
Interest expense was $1.9 million lower than the prior year's quarter due
to lower debt levels and lower interest rates in the current quarter.
Starting in late 1998, Howmet discovered certain product testing and
specification non-compliance issues at two of Cercast's facilities. Howmet
notified customers, is actively cooperating with them and government
agencies in the investigation of these matters, and is implementing
remedial action. In addition, Cercast has been, and expects to continue for
some time to be, late in delivery of products to certain customers. Data
collection and analysis must be completed before a definitive estimate of
Howmet's cost to resolve these matters can be completed. Howmet knows of no
in-service problems associated with these issues. Based on preliminary
evaluation, however, Howmet recorded an estimated loss of $4 million in its
consolidated statement of income for the year ended December 31, 1998.
Based on currently known facts, the Company believes that additional cost
to Howmet beyond $4 million, if any, would not have a material adverse
effect on the Company's financial position, cash flow, or annual operating
results. However, additional cost when and if accrued may have a material
adverse impact on the quarter in which it may be accrued.
On March 3, 1999, Howmet received from the U.S. Air Force a Notice of
Proposed Debarment from future government contracts and subcontracts
directed at Howmet Corporation and its Cercast Canadian subsidiary. The Air
Force terminated the proposed debarment with respect to Howmet Corporation
by letter to it on March 10, 1999, thus permitting Howmet Corporation to
resume accepting U.S. government contracts and subcontracts. The continuing
proposed debarment with respect to Howmet's Cercast Canadian subsidiary is
based on the product testing and specification non-compliance issues
discussed above, and improper vendor payments previously disclosed.
Debarment does not affect existing Cercast contracts, other than
extensions. Howmet is negotiating an Administrative Agreement with the Air
Force under which the Notice of Proposed Debarment would be terminated. In
the unlikely event a debarment were imposed for an extended period of time,
such action would negatively impact sales and profits in future periods.
However, the Company believes that such impact would be immaterial to
Howmet's results of operations.
17
<PAGE>
Fastening Systems
Fastening Systems sales and operating income for the quarter were $31.1 and
$5.1 million higher, respectively, than in the prior year's quarter,
reflecting both the addition of Jacobson Manufacturing's results and
continued strength in the industrial markets. Operating income increased 39
percent over last year's quarter. Operating margins for the quarter were
15.1 percent, compared to 14.7 percent last year. Margins continue to
benefit from continuing cost control initiatives and increased revenues.
Aerospace sales were lower than the prior year's quarter primarily as a
result of lower domestic demand. Excluding Jacobson's results, Huck's total
sales and operating income both decreased 7 percent over the prior year due
to declining aerospace sales.
Fastening systems book-to-bill ratios, defined as period orders divided by
period shipments, for the three months ended March 31, were as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------------------------------------------------
<S> <C> <C>
Aerospace .59 1.04
Industrial 1.06 1.05
---------------------------------------------------------------------
Fastening Systems Total .90 1.05
=====================================================================
</TABLE>
Book to bill ratios are used as an indicator of future sales, but as with
all indicators, such ratios have inherent limitations and actual results
may be different. Since the book to bill ratio is not a generally accepted
accounting principle disclosure, other companies may calculate this ratio
differently and utilize the ratio for different purposes.
Propulsion systems
Propulsion systems sales and operating income for the quarter decreased 3
percent compared to the prior year due primarily to lower activity in the
commercial launch motor and flare programs. Space Shuttle Reusable Solid
Rocket Motor (RSRM) and Missile Defense sales increased slightly. RSRM
operating margins experienced a small increase over the prior year.
Propulsion systems operating margins were 12.7 percent in the current
quarter compared to 12.8 percent in 1998.
During the quarter, the RSRM contract accounted for approximately 15
percent of the Company's consolidated net sales and 16 percent of
consolidated operating income. Current year RSRM sales are expected to
approximate the prior year's sales. The current NASA Buy 3
cost-plus-award-fee contract provides for Company production of the Space
Shuttle solid rocket motors through 2001. Buy 3 profit margins are expected
to improve through 2001 as the contract approaches completion. The Company
has negotiated a Buy 4 agreement that extends the program into 2005.
18
<PAGE>
RSRM Buy 4
In December 1998, an agreement was reached with NASA outlining all
significant contractual issues for the RSRM Buy 4 contract. The final
contract signing is expected in the second quarter of 1999. The Buy 4
contract type is a cost-plus-incentive/performance/award-fee. The Buy 4
contract includes 35 flight sets, or 70 motors, and three flight support
motors. Contract completion is expected during 2005. Currently, the Company
anticipates follow-on contracts for RSRM motors through the life of the
Space Shuttle program. The Space Shuttle program is expected to continue in
service through approximately 2010. Long lead material procurement and
production has begun under the Buy 4 agreement. The contract is subject to
annual Congressional funding. While the Buy 4 agreement is similar in
structure and profit potential to the Buy 3 contract, until performance
incentives are met, Buy 4 profit margins will be lower than margins
currently being recognized on Buy 3.
On February 9, 1999 the Company was notified that NASA intends to
consolidate the Company's RSRM contract into the Space Flight Operations
Contract with United Space Alliance (U.S.A.). This change will mean the
Company will perform RSRM activities under a subcontract to U.S.A. instead
of as a prime contractor to NASA. The target date established by NASA for
the transition is October 1, 2000. The Company does not anticipate any
significant change to its RSRM contract terms or profit potential as a
result of the change.
OTHER MATTERS
Selling, general and administrative
For the quarter ended March 31, 1998, selling, general and administrative
expenses increased $5.4 million or 12 percent compared to the prior year.
Goodwill amortization increased $2.3 million for the quarter, due to the
purchase of an additional 22.6 percent of Howmet common stock in February,
and the purchase of Jacobson in June 1998. Selling, general and
administrative expenses for the three-month period increased $2.4 million
due to the addition of Jacobson's selling, general and administrative
expenses and to increased corporate costs and marketing efforts. Corporate
unallocated costs increased due to increased costs noted above and fewer
costs being allocated to Propulsion systems contracts. Increased sales in
the commercial segments reduced the amount of corporate costs allocable to
that business.
Interest Expense
Interest expense increased $3.7 million over the prior year's quarter due
to Cordant's increased borrowings related to the 22.6 percent purchase of
Howmet and the Jacobson acquisition.
19
<PAGE>
Income Taxes
The Company had an effective income tax rate of 29 percent, compared with
38 percent for the same three-month period in the prior year. The effective
income tax rate for the quarter was 38.5 percent before reversal of the
$7.1 million or $.19 per share dividend tax previously recorded on the
Company's share of Howmet income. Beginning in February 1999, Howmet's
taxable income will be included in the Company's consolidated Federal
income tax return, and a dividend tax will no longer be accrued on the
Company's share of Howmet results.
YEAR 2000 REMEDIATION
The Company has a decentralized Information Systems (I.S.) function,
wherein each of its three business segments operates autonomously with its
own I.S. organization. Accordingly, each segment is conducting its own Year
2000 project that is unique to its particular operating environment. Each
of the business segment projects is similarly organized into four distinct
categories of effort. These four categories include the following: Business
Information Systems Remediation; Embedded Processor Systems Remediation;
Customer and Supplier Readiness; and Risk Assessment, Worst Case Scenarios
and Contingency Planning.
Investment Castings
Business Information Systems Remediation: Investment Castings I.S.
organization has identified virtually all date logic problems on its
central mainframe and distributed server production systems and remediation
is currently in process. This portion of the Year 2000 remediation project,
which began in 1996, is scheduled, with minor exceptions, to be completed
by June of 1999. All central systems will be placed under restrictive
change control procedures to ensure that corrected systems are not
inadvertently impacted by further changes. System-wide testing activity
will be conducted periodically throughout 1999. The central I.S. Year 2000
project team also provides oversight for the sixteen small, local I.S.
groups located at Howmet plant facilities. These plant teams have each
completed a Year 2000 readiness assessment that identified all local
business systems or equipment requiring corrective action or replacement.
This remediation work is currently underway at all plants and is scheduled
for completion by June of 1999.
Embedded Processor Systems Remediation: The central I.S. organization has
provided each plant facility with guidance and support for embedded
processor identification, evaluation, testing and remediation, where
required. All plant teams are scheduled to complete this project category
by June of 1999.
20
<PAGE>
Customer and Supplier Readiness: Howmet I.S. and procurement personnel have
communicated with several hundred of their key customers, suppliers and
third parties regarding their respective Year 2000 readiness status and
plans. These communications have included written inquiries or
questionnaires and, in some instances, on-site meetings. Any electronic
interfaces with individual business associates will be addressed on a
case-by-case basis. Management has also responded appropriately to Year
2000 readiness inquiries from Howmet customers, suppliers and third
parties. Howmet is not aware of any significant readiness issues at this
time.
Risk Assessment, Worst Case Scenarios and Contingency Planning: Howmet
Castings management believes the most likely worst case scenario would be a
one or two week shutdown of individual pieces of critical equipment or
computer systems at one or two manufacturing facilities, disrupting but not
totally eliminating production at those plants. Workaround procedures would
be established by the end of that period. Total remediation of the
underlying problem could stretch over a six-month period. Management
further believes that this is more likely to occur at its foreign
facilities than its U.S. plants. Even in this eventuality, management
believes that any loss of revenue during the period involved would be
substantially recovered in later periods due to deferral rather than
cancellation of orders or deliveries.
Howmet is currently developing Year 2000 Contingency Plans in three areas:
1) business systems processing at Howmet's primary data center; 2)
procurement activities for critical raw materials and services, including
transportation; and 3) local manufacturing processes and systems at each
facility. These plans are expected to be completed during the third quarter
of 1999. Howmet expects to employ various methods of risk mitigation such
as: devising alternate manual processes for critical applications;
installing a generator at Howmet's central computing facility; establishing
a corporate command post and providing full staffing of I.S. and plant
maintenance personnel during the year-end weekend; conducting extensive
future date testing; developing an inventory build-up strategy; imposing
extra product quality testing during the new year; validating customer and
supplier electronic interfaces; scheduling shutdowns of critical equipment
on December 31, 1999; and active monitoring, measuring, and auditing of
plant compliance. While every effort has been made to anticipate and
mitigate risks, it is possible that the inability of the Company or certain
of its suppliers, customers or third parties to implement solutions to
their respective Year 2000 issues on a timely and cost effective basis
could have a material adverse effect on the Company.
21
<PAGE>
Cost Information: The estimated cost at completion for all phases of the
Howmet Castings project is $16.6 million. An estimated $6.1 million (37
percent) of this amount is for I.S. labor and miscellaneous project costs;
these costs are being expensed as routine I.S. systems maintenance as
incurred over the three-year duration of the project. Another $7.6 million
(46 percent) is for software package purchase and implementation costs for
applications that were installed or expedited for Year 2000 purposes. An
additional $2.9 million (17 percent) has been spent for infrastructure
upgrades or replacement. Approximately $11.9 million (72 percent) had been
expended as of March 31, 1999; the estimated $4.7 million (28 percent) in
remaining costs will be expended during the remainder of 1999. No major
information systems initiatives have been adversely affected due to
staffing constraints or expenditures needed to remedy Year 2000 issues.
Management has concluded that it will substantially benefit from these
efforts because of the elimination of numerous old systems, implementation
of several new state-of-the-art applications, new and thorough
documentation of many older systems, and the creation of updated and
improved business continuity plans.
Propulsion Systems
Business Information Systems Remediation: Thiokol Propulsion has completed
its renovation on all major production applications. The objective of the
project, which began in early 1996, was to identify all date-related
program logic, to renovate, replace or eliminate all date processing
problems, to validate the results via integrated system testing, and to
implement into production the corrected application software. All systems
that were replaced or renovated have been moved into production. The
production environment will then be maintained under restrictive change
control procedures to ensure that corrected systems are not inadvertently
impacted by further changes. System-wide testing activity will be conducted
periodically throughout 1999. In addition, all computer and internal
telecommunications hardware systems have been evaluated, upgraded and
tested, as required, and are presently being moved into production. This
activity will be completed in June of 1999 with the replacement of a
telephone PBX system at an offsite location.
Embedded Processor Systems Remediation: Cross-functional teams at each
Thiokol Propulsion facility have inventoried, evaluated, replaced or
renovated, and tested all embedded processor systems with potential Year
2000 readiness risks. Systems evaluated include programmable process
controllers, recording devices, data collection devices, security and alarm
systems, pumps and pumping stations, power metering systems, elevators,
HVAC timers, protective relays and card readers. To date 99 percent have
been corrected or replaced with only minor issues remaining to be resolved.
The scheduled completion for this category of effort is June of 1999.
22
<PAGE>
Customer and Supplier Readiness: Thiokol Propulsion is actively
communicating with its key customers, suppliers and third parties to help
ensure that its supply chain dependencies and interfaces are or will be
Year 2000 ready. This initiative, which will continue throughout 1999,
involves written inquiries or questionnaires to these business associates
regarding the status of their respective Year 2000 readiness efforts. For
certain key customers, critical suppliers (i.e. railways, sole sources,
critical materials and utilities) and third parties, on-premise meetings
have been conducted to review detailed project plans and timetables.
Thiokol has also responded appropriately upon receipt of such inquiries
from its customers, suppliers and third parties. Management is not aware of
any significant readiness issues at this time.
Risk Assessment, Worst Case Scenarios and Contingency Planning: Risk
assessment and contingency planning for the Company's business information
systems and embedded processor systems are expected to be completed by June
of 1999. Additional categories of risk assessment and contingency planning
focus on the external influences that the Company does not directly
control. The outcomes of ongoing external renovation activities will be
rigorously monitored with risks assessed and contingency plans put in place
as required. The critical supplier chain has been addressed and contingency
plans put into place, mitigating the risk of disruption to manufacturing
operations for lack of materials or finished components. The NASA-critical
solid rocket motor program risk has been assessed as minimal. With five
flights planned for 1999 and ongoing production, five flight sets of
hardware will be in inventory at Kennedy Space Flight Center by December
1999. This inventory will support the shuttle launch schedule through
August 2000. Additionally, in December 1999, 3.6 flight sets of hardware
will be in inventory at Thiokol Propulsion facilities. Risk assessment and
contingency planning will be a dynamic activity and as such will be
monitored and acted upon on a continual basis as risks are identified.
Cost Information: The estimated cost at completion for all phases of the
Thiokol Propulsion project is $9.0 million. These costs are recorded as
incurred over the three-year duration of the project. Approximately $8.3
million (92 percent) had been expended through March 31, 1999, and the $ .7
million (8 percent) in estimated remaining costs will be expended during
the remainder of 1999. Of the total estimated project cost, 58 percent is
labor and miscellaneous project-related expense, 12 percent is for I.S.
infrastructure upgrades and replacement, and 30 percent is for software
package implementations that were performed or expedited to address Year
2000 issues. No major information systems initiatives have been adversely
affected due to staffing constraints or expenditures needed to remedy Year
2000 issues. On average, Year 2000 project spending has consumed only 7.5
percent of the annual I.S. budget and 10-12 percent of I.S. staffing.
Thiokol Propulsion management has concluded that it will substantially
benefit from these efforts because of the elimination of several old
systems, the implementation of new state-of-the-art applications, new and
thorough documentation of many older systems, and the creation of updated
and improved business continuity plans.
23
<PAGE>
Fastening Systems
Business Information Systems Remediation: Huck Fasteners is employing a
dual approach to Year 2000 readiness for its business application systems.
For many years most Huck locations have used a standard commercial,
vendor-supported application software product. As of March 31, 1999,
approximately one-half of those locations had been upgraded to a version of
the software product that addresses virtually all Year 2000 readiness
issues. All remaining Huck locations, including its international sites and
headquarters offices, are implementing a recently purchased Enterprise
Resource Planning (ERP) software product that is both Year 2000 and Euro
ready. The ERP implementation is presently underway at eight sites, with 50
percent of the sites and 65 percent of the user base already operational.
The new system will be operational at the remainder of the sites by June
1999. Additional local and system-wide testing activity is being conducted
during the remainder of 1999.
Embedded Processor Systems Remediation: Huck Fasteners has a dedicated Year
2000 program office that supports each site in establishing a
cross-functional team to identify, evaluate, test and, where needed, to
modify or replace embedded processor systems. To date, formal inventories
have been completed, criticality assessments have been made and evaluation
of the individual devices is underway. Project work on this category is
scheduled for completion during September 1999.
Customer and Supplier Readiness: Huck Fasteners has submitted written
inquiries or questionnaires to all major customers, critical suppliers and
certain third parties to determine their respective Year 2000 readiness
status and plans. Any electronic interfaces will be coordinated with these
business associates on a case-by-case basis. Management has also responded
appropriately to Year 2000 inquiries made by any of its customers,
suppliers and third parties. Huck is not aware of any significant Year 2000
readiness issues at this time.
Risk Assessment, Worst Case Scenarios and Contingency Planning: Using the
approach of certain major Huck customers, management has contracted with
independent assessors to audit its progress against plan and with respect
to industry benchmarks. Additionally, several customers have provided
assessment teams to evaluate individual sites and Huck's overall Year 2000
readiness and plans. These independent assessments have addressed both the
Industrial and Aerospace businesses and the feedback is being used to
refine Huck's approach to risk assessment and contingency planning. Work on
worst case scenarios and formal contingency planning is underway, and is
expected to be completed during June of 1999.
24
<PAGE>
Cost Information: The estimated total cost at completion for all phases of
the Huck Year 2000 project is $11.9 million. Approximately $6.4 million (54
percent) of that total amount will be capitalized. The estimated $5.5
million (46 percent) in remaining cost is classified as routine I.S.
maintenance and is being expensed as incurred over the three-year life of
the project. Approximately $7.9 million (67 percent) had been expended as
of March 31, 1999, and the estimated $4.0 million (33 percent) in remaining
costs will be expended in 1999. No major I.S. initiatives have been
adversely affected due to staffing constraints or expenditures needed to
remedy Year 2000 issues. Huck management has concluded that it will
substantially benefit from these efforts because of the elimination of
several old systems, the implementation of new state-of-the-art
applications, and the creation of updated and improved business continuity
plans.
Euro Conversion
The Company is assessing the impact of the Euro conversion on its business
operations and is currently implementing a strategy which will allow it to
operate in a Euro environment during the transition period, January 1, 1999
- - December 31, 2001, and after full Euro conversion post July 1, 2002. The
Company does not anticipate any material impact from the Euro conversion on
its computer software plans. Computer software changes necessary to comply
with the Year 2000 issue are generally compliant with the Euro conversion
issue. Enterprise Resource Planning (ERP) software being implemented at
Huck as a part of Year 2000 readiness will be Euro compliant. No additional
costs related to Euro compliance are expected for the ERP software. Some
expense is anticipated for minor system modifications, but is not expected
to be significant. The Company's payroll system has not yet been examined
and will require modifications to be Euro compliant. The cost of payroll
systems modifications is also undetermined. The Company expects no Euro
conversion impact to its Thiokol Propulsion business segment. The Company
expects no significant impact to its contracting policies or competitive
position related to its three business segments as a result of the Euro
conversion. The Company is reviewing the impact of the Euro conversion on
its foreign exchange exposure and has determined a modest increase in this
exposure due to the Company's United Kingdom operation's acceptance of Euro
denominated contracts. The Company does not expect any significant changes
to its current hedging policy and does not expect any significant increases
in its foreign exchange exposure.
Liquidity and Capital Resources
For the current three-month period, consolidated net cash flows from
operating activities were $24 million compared to $26.3 million last year.
Compared to the prior year, the higher net income in the current period was
offset by higher cash used for an increase in receivables and inventories.
The increase in receivables resulted from collection timing issues related
to both Howmet's retained receivables and Propulsion systems balances. The
increase in inventories was primarily from the Investment Castings segment.
25
<PAGE>
Acquisition activity included $385 million for the purchase of 22.6 percent
of Howmet common stock. Consolidated capital spending on property, plant
and equipment used $31.1 million in the current period compared to $23.3
million in the prior year. Howmet used $23.3 million in capital
expenditures, mainly for capacity expansions to serve the core business as
well as additional expenditures to support new products and process
enhancement activities.
Financing activities for the three-month period provided $368.2 million of
cash compared to $27.5 million of cash provided in the prior year period.
In February, the Company borrowed $385 million to finance the Howmet common
stock purchase. During the period the Company repaid a total of $130.1
million of debt, $35 million being repaid by Howmet.
On February 17, 1999, Howmet paid $66.4 million to redeem all of its 9
percent paid-in-kind preferred stock. The payment was made to Cordant
Technologies, the sole preferred stockholder. Howmet borrowed under its
existing senior revolving credit facility to make this payment and Cordant
Technologies used the proceeds to reduce debt under its senior revolving
credit facilities.
During the three-month period, Cordant did not repurchase any shares of
common stock. In the prior year period, Cordant repurchased 265,200 shares
of it's common stock for $10.8 million. There are approximately 2.4 million
shares available for repurchase under the current share repurchase
authorization. Cordant will repurchase shares when, and in amounts as it
deems appropriate.
Cordant does not have access to Howmet cash balances except through Howmet
declaring a cash dividend to its shareholders. Howmet is limited as to the
amount of dividends it can declare under the terms of Howmet's financing
agreements. Howmet does not currently intend to pay dividends.
At December 31, 1998, the Company's balance sheet includes $716.4 million
of Pechiney Notes and a related $716.4 million Restricted Trust asset. On
January 4, 1999, Pechiney, S.A. (Howmet's previous owner) repaid the
Pechiney Notes in full. As a result, the Restricted Trust, which secured
Pechiney, S.A's agreement to repay the notes was terminated. No Howmet or
Cordant funds were used in the payment of the Notes.
At March 31, 1999, Cordant had $500 million in revolving credit facilities
with $100 million available for additional use. In addition, on March 31,
1999, Howmet had a $300 million revolving credit facility with $202.4
million available for additional borrowing and/or letters of credit.
Howmet has an agreement to sell, on a revolving basis, an undivided
interest in a defined pool of accounts receivable. Howmet has received $55
million from the sale of such receivables and has deducted this amount from
accounts receivable at March 31, 1999. The $54.6 million retained
receivables, shown in the March 31, 1998 balance sheet, represents the
receivables set aside to replace sold receivables in the event they are not
fully collected.
26
<PAGE>
<TABLE>
The Company's liquidity ratio's were as follows:
<CAPTION>
March 31 December 31
1999 1998
- ---------------------------------------------------------------------------
<S> <C> <C>
Working Capital (in millions) $73.8 $94.8
Current Ratio 1.1 1.2
Debt-to-equity 109.6% 60.6%
Debt-to-total capital 54.0% 40.8%
- ---------------------------------------------------------------------------
</TABLE>
All of the above ratios for 1998 exclude the Pechiney Notes and the
Restricted Trust terminated with Pechiney S.A.'s payment of its Notes on
January 4, 1999. The debt-to-total-capital ratio includes the $55 million
receivable facility at Howmet. The current ratio and working capital
decreases resulted primarily from increased short-term debt levels.
Estimated future cash flows from operations, current financial resources,
and available credit facilities are expected to be adequate to fund the
Company's anticipated working capital requirements, capital expenditures,
dividend payments, and stock repurchase program on both a short and
long-term basis. The Company expects that its senior revolving credit
facilities will be renegotiated, restructured, or replaced and continually
reviews its options for other types of long-term financing.
Since December 31, 1998, the cumulative translation adjustment, which is
included in stockholder's equity, changed by $7.1 million. The change is
primarily due to the strengthening of the U.S. dollar relative to the
French franc.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no significant changes in market risks since the end of the
Company's December 31, 1998 year. For more information, please read the
consolidated financial statements and notes thereto included in the
Company's 1999 Notice of Annual Meeting and Proxy Statement, Financial
Information, incorporated by reference in the Annual Report on Form 10-K
for the year ended December 31, 1998.
27
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company's "Cautionary Statements" with respect to certain statements
herein that the Company believes are "forward looking statements" under the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995 are set forth in Item 7, Management's Discussion and Analysis of
Financial Conditions and Operations of the Company's Annual Report on Form
10-K for the year ended December 31, 1999. Many of the factors described
herein are discussed in both current and prior Company Securities and
Exchange Commission filings and to the extent not otherwise discussed in
forward-looking statements should be considered in assessing the various
risks associated with the Company's conduct of its business and financial
condition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
Exhibits
<CAPTION>
<S> <C> <C>
Exhibit 10 Material Contracts
10.1 Credit Agreement dated as of February 5, 1999 among Cordant Technologies Inc. and
The First National Bank of Chicago, individually and as Administrative Agent,
First Chicago Capital Markets, Inc., as arranger, and the lending institutions
party hereto.
10.2 Form of Amended and Restated Employment Agreement dated March 1, 1999 by and
among Cordant Technologies Inc. and Messrs. James R. Wilson, Richard L. Corbin,
James E. McNulty, Bruce M. Zorich and certain other executive officers of the
Company.
10.3 Form Cordant Technologies Inc. 1999 Stock Option Grant Agreement Incentive Stock
Option.
10.4 Form Cordant Technologies Inc. 1999 Stock Option Grant Agreement Non Qualified
Stock Option.
Exhibit 27.1 Financial Data Schedule.
</TABLE>
28
<PAGE>
Reports on Form 8-K
On February 9, 1999, a Form 8-K was filed. Included therein was Item 2,
"Acquisition or Disposition of Assets" disclosing the Company's acquisition
of 22,650,000 shares of Howmet International Inc. common stock owned by the
Carlyle Group. Included in Item 5, "Other Events" was the text of the
announcement of earnings for the quarter and year-ended December 31, 1998,
summary financial information was included.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CORDANT TECHNOLOGIES INC.
(Registrant)
Date: April 27, 1999. /s/ Richard L. Corbin____________
Richard L. Corbin, Senior Vice
President and Chief Financial Officer
(Principal Financial Officer)
/s/ Michael R. Ayers_____________
Michael R. Ayers,
Vice President and Controller
(Principal Accounting Officer)
29
<PAGE>
CORDANT TECHNOLOGIES INC.
1999 G R A N T A G R E E M E N T
INCENTIVE STOCK OPTION
AGREEMENT, made this ____ day of ______ 199_ between Cordant
Technologies Inc., a Delaware corporation ("Company") and the Employee
("Employee") whose name appears on the Notice of Grant of Stock of Stock
Option ("Notice of Grant") attached hereto and incorporated by reference
herein.
WHEREAS, the Committee (as defined in Section 1.5), has determined
that it would be to the advantage and best interest of the Company and its
stockholders to grant the stock option provided for herein to the Employee
in consideration of Employee's services to the Company or Affiliate and as
an incentive for increased efforts during the Employee's service to the
Company or Affiliate, and has advised the Company thereof and instructed
the undersigned officers to issue said Option;
WHEREAS, the stock option subject to this agreement is granted
pursuant to the terms of the Cordant Technologies Inc. Amended and Restated
1996 Stock Awards Plan or the 1989 Stock Awards Plan, as the case may be.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to
the contrary. Capitalized terms which are not defined below shall have the
meaning specified in the Plan.
SECTION 1.1 - AFFILIATE
"Affiliate" shall mean any entity in which the Company has a
direct or indirect equity interest which is so designated by the Committee.
- ------------------------
Note: An Incentive Stock option must be exercised within three months of
the date of termination of employment or retirement, the tax status of the
option changes to that of a Nonqualified option. Special ISO rules apply to
death and disability. Consult your tax advisor concerning tax consequences
of this Stock Option Grant.
<PAGE>
SECTION 1.2 - BENEFICIARY
"Beneficiary" shall mean the person or persons properly designated by
the Employee, including his spouse or heirs at law, to exercise such
Employee's rights under the Plan in the event of the Employee's death, or
if the Employee has not designated such person or persons, or such person
or persons shall all have pre-deceased the Employee, the executor or
administrator of the Employee's estate. Designation, revocation and
redesignation of Beneficiaries must be made in writing in accordance with
rules established by the Committee and shall be effective upon delivery to
the Committee.
SECTION 1.3 - BOARD
"Board" shall mean the Board of Directors of the Company.
SECTION 1.4 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.5 - COMMITTEE
"Committee" shall mean the Committee of the Board appointed as
provided in the Plan.
SECTION 1.6 - COMPANY
"Company" shall mean Cordant Technologies Inc., a Delaware
corporation.
SECTION 1.7 - DATE OF GRANT
"Date of Grant" shall mean the date set forth on the Notice of Grant
on which the Board grants the option hereunder and from which the
Anniversary Date set forth in the Vesting Schedule shall be determined.
SECTION 1.8 - EXCHANGE ACT
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
SECTION 1.9 - OPTION
"Option" shall mean the incentive stock option to purchase Common
Stock of the Company granted under this Agreement.
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SECTION 1.10 - PLAN
"Plan" shall mean either the Cordant Technologies Inc. Amended and
Restated 1996 Stock Awards Plan or the 1989 Stock Awards Plan as set forth
on the face of the Notice of Grant.
SECTION 1.11 - RULE 16B-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended in the future.
SECTION 1.12 - SECURITIES ACT
"Securities Act" shall mean the Securities Act of 1933, as amended.
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION. In consideration of Employee's services to
the Company or Affiliate, as the case may be, Cordant Technologies Inc.
grants to Employee the option to purchase shares of its Common Stock (par
value $1 per share) at a purchase price set forth on the Notice of Stock
attached hereto (the fair market value of such shares on the Date of
Grant), subject to the conditions of this Agreement.
SECTION 2.2 - ADJUSTMENTS IN OPTION. Subject to Section 5.3, in the event
that the Committee determines that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities or property)
of a reorganization, recapitalization, spin-off, stock dividend, stock
split, combination, reclassification, reverse stock split, merger,
consolidation, split-up, spin-off, repurchase, liquidation, dissolution, or
sale, transfer, exchange or other disposition of all or substantially all
of the assets of the Company, or exchange of Common Stock or other
securities of the Company, or other similar corporate transaction or event
or other increase or reduction in the number of issued shares of Common
Stock, affects the Common Stock such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available with
respect to the Option the Committee may, in order to prevent the dilution
or enlargement of rights under awards, make such adjustments in any and all
of the number and type of shares covered by the option, or with respect to
which payments are measured under, outstanding awards and the exercise
price specified herein as may be determined to be appropriate and
equitable, to the end that after such event the optionees' proportionate
interest shall be maintained as before the occurrence of such event.. Such
adjustment in the Option shall be made without change in the total price
applicable to the unexercised portion of the Option (except for any change
in the aggregate price resulting from rounding-off of share quantities or
prices) and with any necessary corresponding adjustment in the Option price
per share; PROVIDED, HOWEVER,
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that each such adjustment shall be made in such manner as not to constitute
a "modification" within the meaning of Section 424(h)(3) of the Code. Any
such adjustment made by the Committee shall be final and binding upon the
Employee, the Company, and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) This Option shall become exercisable (vested) as follows:
OPTION VESTING
SCHEDULE
FIRST BUSINESS DAY FOLLOWING PORTION OF THE OPTION BECOME
THE ANNIVERSARY DATE FROM THE EXERCISABLE
DATE OF GRANT (VESTED) ON SUCH ANNIVERSARY DATE
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One year from date of grant 25 percent
Two years from date of grant 50 percent
Three years from date of grant 75 percent
Four years from date of grant 100 percent
No fractional share of a vested option is exercisable until such
anniversary date from the date of grant as the remainder of such fractional
share becomes exercisable.
No part of the Option will be exercisable prior to the first business
day following the expiration of one year from the Date of Grant set forth
on the Notice of Grant of Stock attached hereto.
(b) No portion of the Option (including any portion of the Option not
yet vested under Section 3.1(a) which is unexercisable at termination of
employment) shall thereafter become exercisable except with respect to
retirement under Section 3.3(b); death Section 3.3(c); or disability
Section 3.3(d).
SECTION 3.2 - DURATION OF EXERCISABILITY. After any portion of the Option
becomes exercisable pursuant to Section 3.1(a), the Option shall remain
exercisable until it has been exercised or until it becomes unexercisable
under Section 3.3.
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SECTION 3.3 - EXPIRATION OF OPTION.
(a) The Option (or any portion of the Option not yet vested under
Section 3.1(a) as the case may be) may not be exercised to any extent by
anyone after the first to occur of the following events ("Expiration
Date"):
(i) The expiration of ten (10) years from the date the Option
was granted; or
(ii) Except in the event of a Change in Control of the Company as
defined in Section 3.4 below or as otherwise provided
herein, the expiration of three (3) months from the date of
the employee's termination of employment unless such
termination of employment results from Employee's retirement
pursuant to the terms of a pension plan of the Company;
death or permanent and total disability; PROVIDED, HOWEVER,
if during the first two years following a Change in Control
of the Company Employee's, employment terminates other than
pursuant to the terms of a pension plan of a Company and
Employee's Option was exercisable on the date of termination
of Employee's employment, it will remain exercisable for a
period of six months and one day after termination of
Employee's employment, or until the Expiration Date,
whichever occurs first; or
(iii)The effective date of the Committee's action under Section
5.3(ii), (iii) or (iv) (except in the case of an action
providing for assumption of the Option).
(b) If Employee's employment with the Company terminates prior to the
Expiration Date because of Employee's retirement pursuant to the terms of a
pension plan of the Company, the Employee's Option will remain exercisable
until the Expiration Date. Any portion of the Option not yet vested at the
Employee's date of retirement will automatically vest with the passage of
time (as if the retired Employee had remained actively employed) pursuant
to the Option vesting schedule set forth in Section 3.1(a). In the event of
a retired employees' death prior to the Expiration Date of this option,
this option shall become 100% vested and such retired Employee's
beneficiary shall have two years from the date of death or the Expiration
Date, whichever date is the earliest, to exercise this option.
(c) If an Employee's employment with the Company terminates prior to
the Expiration Date due to death, the option to the extent not yet vested
shall become 100% vested on the date of death and shall remain exercisable
by such Employee's beneficiary until the Expiration Date.
(d) If the Employee's employment with the Company terminates prior to
the Expiration Date due to the Employee's permanent and total disability
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("Disability"), such option shall remain exercisable until the Expiration
Date so long as such Disability is continuing. To the extent such option is
not vested on the date of Disability, the option shall automatically vest
with the passage of time (as if the Disabled Employee has remained actively
employed) pursuant to the vesting schedule in Section 3.1(a). The Committee
shall have the sole discretion to determine if an Employee is disabled for
the purposes of this option and such determination shall be binding and
conclusive on the Employee. In the event such Employee ceases to be
disabled, this option shall terminate within three months of the date of
determination by the Committee that such disability no longer exists or the
Expiration Date, whichever date is the earliest to occur.
SECTION 3.4 - ACCELERATION OF EXERCISABILITY UPON CHANGE IN CONTROL OF THE
COMPANY. Notwithstanding any provision herein to the contrary, to the
extent the Employee's Option has not been exercised previously or any
portion of such Option has not yet vested under Section 3.(a), Employee's
Option shall be exercisable from and after the occurrence of a Change in
Control of the Company; PROVIDED, HOWEVER, that this acceleration of
exercisability shall not take place if this Option becomes unexercisable
under Section 3.3 prior to the occurrence of a Change of Control of the
Company; and PROVIDED, FURTHER, that no Option shall be exercisable by any
Employee who is then subject to Section 16 of the Exchange Act until the
expiration of the period ending six months and one day after the later of
date the Option is granted or deemed regranted. A Change of Control of the
Company shall mean:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iv) any acquisition
by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 3.4; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual
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were a member of he Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE. During Employee's lifetime,
Employee's option is exercisable only by Employee unless it has been
disposed of pursuant to a Qualified Domestic Relations Order (?QDRO?).
After the death of the Employee, any exercisable portion of the Option may,
prior to the time when the Option becomes unexercisable under Section 3.3,
be exercised by his Beneficiary.
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SECTION 4.2 - PARTIAL EXERCISE. Any exercisable portion of the Option or
the entire Option, if then wholly exercisable, may be exercised in whole or
in part prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.3.
SECTION 4.3 - PROCEDURE FOR EXERCISE. The Option may be exercised with
respect to shares of the Company's Common Stock granted to Employee in the
amount specified ("Option Shares") at any time from the date that any
portion of the Option described in the Vesting Schedule set forth in
Section 3.1(a) becomes exercisable pursuant to Section 3.1(a) or 3.4 until
the Option expires pursuant to Section 3.3 by: (i) delivery of written
notification of exercise and payment in full either in cash or in Common
Stock of the Company delivered to the Corporate Secretary of the Company
for all Option Shares being purchased plus the amount of any federal and
state income taxes required to be withheld by reason of the exercise of
Employee's option; and (ii) if requested, within the specified time set
forth in any such request, delivery to the Company of such written
representations and undertakings as may, in the opinion of the Company's
legal counsel, be necessary or desirable to comply with federal and state
tax and securities laws and (iii) if requested, a bona fide written
representation and agreement, in a form satisfactory to the Committee,
signed by the Employee or other person then entitled to exercise such
Option or portion, stating that the shares of stock are being acquired for
his own account, for investment and without any present intention of
distributing or reselling said shares or any of them except as may be
permitted under the Securities Act and then applicable rules and
regulations thereunder, and that the Employee or other person then entitled
to exercise such Option or portion will indemnify the Company against and
hold it free and harmless from any loss, damage, expense or liability
resulting to the Company if any sale or distribution of the shares by such
person is contrary to the representation and agreement referred to above.
In the event the Option or portion shall be exercised pursuant to Section
4.1 by any person or persons other than the Employee, appropriate proof of
the right of such person or persons to exercise the Option.
The Committee may, in its absolute discretion, take whatever
additional actions it deems appropriate to insure the observance and
performance of such representations, undertakings and agreements and to
effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it
to the effect that any subsequent transfer of shares acquired on an Option
exercise does not violate the Securities Act, and may issue stop-transfer
orders covering such shares. Share certificates evidencing stock issued on
exercise of this Option shall bear an appropriate legend referring to the
provisions of this subsection and the representations, undertakings and
agreements referenced herein.
SECTION 4.4 - SECURITIES LAW RESTRICTIONS. Employee understands and
acknowledges that applicable securities laws govern and may restrict
Employee's right to offer, sell, or otherwise dispose of any Option Shares.
Employee may not offer, sell or otherwise dispose of any Option Shares
unless Employee's offer, sale or other disposition thereof is registered
under the Securities Act of 1933 (the "1933 Act") or an exemption from the
registration requirements of the 1933 Act, such as the exemption afforded
by Rule 144
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of the Securities and Exchange Commission ("SEC"), is available. Employee
further understands and acknowledges that one of the requirements of Rule
144 is that there shall be available adequate current public information
with respect to the Company at the time of the proposed disposition of the
Option Shares, and that the Company is not obligated hereunder to file
reports with the SEC or otherwise make current public information available
for such purpose or to take any other action to make available an exemption
from the registration requirements of the 1933 Act. Employee agrees that
Employee will not offer, sell or otherwise dispose of any Option Shares in
any manner which would (i) require the Company to file any registration
statement with the SEC; (ii) require the Company to amend or supplement any
registration statement which the Company at any time may have on file with
the SEC; or (iii) violate the 1933 Act, the rules and regulations
promulgated thereunder or any other state or federal law.
SECTION 4.5 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The shares of
stock deliverable upon the exercise of the Option, or any portion thereof,
may be either previously authorized but unissued shares or issued shares
which have then been reacquired by the Company. Such shares shall be fully
paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon
the exercise of the Option or portion thereof prior to fulfillment of all
of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental
regulatory body, which the Committee shall, in its sole and absolute
discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its sole and
absolute discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to
withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may from time to time establish for reasons
of administrative convenience.
SECTION 4.6 - RIGHTS AS STOCKHOLDER. The holder of the Option shall not be,
nor have any of the rights or privileges of, a stockholder of the Company
in respect of any shares purchasable upon the exercise of any part of the
Option unless and until certificates representing such shares shall have
been issued by the transfer agent on behalf of the Company.
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ARTICLE V
OTHER PROVISIONS
SECTION 5.1 - ADMINISTRATION. The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee in
good faith shall be final and binding upon the Employee, the Company and
all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or the Option. In its sole and absolute
discretion, the Board may at any time and from time to time exercise any
and all rights and duties of the Committee under the Plan and this
Agreement except with respect to matters which under Rule 16b-3 or Section
162(m) of the Code are required to be determined in the sole discretion of
the Committee.
SECTION 5.2 - NON-TRANSFERABILITY. Employee's option is personal to
Employee and shall not be transferable by Employee otherwise than by will
or the laws of descent and distribution or pursuant to a QDRO. Neither the
Option nor any interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Employee or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether
such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof
shall be null and void and of no effect; PROVIDED, HOWEVER, that this
Section 5.2 shall not prevent transfers by will or by the applicable laws
of descent and distribution or pursuant to QDRO.
SECTION 5.3 - CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY, ACQUISITION
OR LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS. Subject to the
provisions of this Section 5.3, in the event of any transaction or event
described in Section 2.2, a change in control, or similar transaction by
the Company or any unusual or nonrecurring transactions or events affecting
the Company, any Affiliate of the Company, or the financial statements of
the Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, if the Committee determines that
such action is appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the
Plan or with respect to the Option to facilitate such transactions or
events or to give effect to such changes in laws, regulations or
principles, the Committee in its discretion is hereby authorized to provide
for such terms as it deems appropriate by action taken prior to the
occurrence of such transaction or event: (i) for adjustments to the Option
in order to prevent the dilution or enlargement of rights thereunder or to
provide for acceleration of benefits thereunder; (ii) for either the
purchase of the Option for an amount of cash equal to the amount that could
have been attained upon the exercise of such option or realization of the
Participant's rights had the Option been currently exercisable or payable
or fully vested or the replacement of such Option with other rights or
property selected by the Committee in its sole discretion; (iii) that it
cannot be exercised after such event; (iv)
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that upon such event, the Option be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for
by similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices. No adjustment
or action described in this Section 5.3 or in any other provision of this
Agreement shall be authorized to the extent that such adjustment or action
would cause the Agreement or the Plan or the Option to violate Section
422(b)(1) of the Code or would cause the Option to fail to so qualify under
Section 162(m), as the case may be, or any successor provisions thereto.
Furthermore, no such adjustment or action shall be authorized to the extent
such adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions or Rule 16b-3 unless
the Committee determines that the option or other award is not to comply
with such exemptive conditions.
SECTION 5.4 - SHARES TO BE RESERVED. The Company shall at all times during
the term of the Option reserve and keep available such number of shares of
stock as will be sufficient to satisfy the requirements of this Agreement.
SECTION 5.5 - NOTICES. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
Corporate Secretary, and any notice to be given to the Employee shall be
addressed to him at the address maintained by the Corporation in its
business records. By a notice given pursuant to this Section 5.5, either
party may hereafter designate a different address for notices to be given
to him. Any notice which is required to be given to the Employee shall, if
the Employee is then deceased, be given to the Employee's personal
representative if such representative has previously informed the Company
of his status and address by written notice under this Section 5.5. Any
notice shall be deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the
United States Postal Service.
SECTION 5.6 - TITLES. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this
Agreement.
SECTION 5.7 - NOTIFICATION OF DISPOSITION. The Employee shall give prompt
notice to the Company of any disposition or other transfer of any shares of
stock acquired under this Agreement if such disposition or transfer is made
(a) within two (2) years from the date of granting the Option with respect
to such shares or (b) within one (1) year after the transfer of such shares
to him. Such notice shall specify the date of such disposition or other
transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by the Employee in such disposition or
other transfer.
SECTION 5.8 - GOVERNING LAW. This Grant Agreement and the Plan shall be
construed in accordance with and governed by the laws of the State of Utah.
SECTION 5.9 - CONFORMITY TO SECURITIES LAWS. The Employee acknowledges that
the
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Plan is intended to conform to the extent necessary with all provisions of
the Securities Act and the Exchange Act and any and all regulations and
rules promulgated by the Securities and Exchange Commission thereunder,
including without limitation Rule 16b-3. Notwithstanding anything herein to
the contrary, the Plan shall be administered, and the Option is granted and
may be exercised, only in such a manner as to conform to such laws, rules
and regulations. To the extent permitted by applicable law, the Plan and
this Agreement shall be deemed amended to the extent necessary to conform
to such laws, rules and regulations.
SECTION 5.10 - AMENDMENTS. This Agreement and the Plan may be amended
without the consent of the Optionee provided that such amendment would not
impair any rights of the Optionee under this Agreement. No amendment of
this Agreement shall, without the consent of the Optionee, impair any
rights of the Optionee under this Agreement.
SECTION 5.11 - CONFORMITY WITH PLAN. Employee's option is intended to
conform in all respects with the Plan, a copy of which is attached hereto.
Inconsistencies between this Grant Agreement and the Plan shall be resolved
in accordance with the terms of the Plan. All definitions stated in the
Plan shall be fully applicable to this Grant Agreement.
SECTION 5.12 - EMPLOYMENT AND SUCCESSORS. Nothing herein or in the Plan
confers any right or obligation on Employee to continue in the employ of
the Company or Company Subsidiary or shall affect in any way Employee's
right or the right of the Company or Company Subsidiary, as the case may
be, which are hereby expressly reserved, to terminate Employee's employment
at any time. Employee agrees that Employee is an Employee at will and can
be terminated by the Company or Company Subsidiary, as the case may be, at
any time. Nothing herein or in the Plan is to be interpreted as an express
or implied contract of employment. This Grant Agreement and the Plan shall
be binding upon any successor or successors of the Company.
IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of this ___ day of _______ 199__.
CORDANT TECHNOLOGIES INC. EMPLOYEE
By: ___________________________ By: _____________________
Vice President and
Corporate Secretary
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CORDANT TECHNOLOGIES INC.
1999 G R A N T A G R E E M E N T
NONQUALIFIED STOCK OPTION
AGREEMENT, made this ____ day of _______ 199_ between Cordant
Technologies Inc., a Delaware corporation ("Company") and the Employee
("Employee") whose name appears on the Notice of Grant of Stock Option
("Notice of Grant") attached hereto and incorporated by reference herein.
WHEREAS, the Committee (as defined in Section 1.5), has determined
that it would be to the advantage and best interest of the Company and its
stockholders to grant the stock option provided for herein to the Employee
in consideration of Employee's services to the Company or Affiliate and as
an incentive for increased efforts during the Employee's service to the
Company or Affiliate, and has advised the Company thereof and instructed
the undersigned officers to issue said Option;
WHEREAS, the stock option subject to this agreement is granted
pursuant to the terms of the Cordant Technologies Inc. Amended and Restated
1996 Stock Awards Plan or the 1989 Stock Awards Plan as the case may be.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to
the contrary. Capitalized terms which are not defined below shall have the
meaning specified in the Plan.
SECTION 1.1 - AFFILIATE
"Affiliate" shall mean any entity in which the Company has a direct or
indirect equity interest which is so designated by the Committee.
SECTION 1.2 - BENEFICIARY
"Beneficiary" shall mean the person or persons properly designated by
the Employee, including his spouse or heirs at law, to exercise such
Employee's rights under the Plan in the event of the Employee's death, or
if the Employee has not designated such person or persons, or such person
or persons shall all have pre-
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deceased the Employee, the executor or administrator of the Employee's
estate. Designation, revocation and redesignation of Beneficiaries must be
made in writing in accordance with rules established by the Committee and
shall be effective upon delivery to the Committee.
SECTION 1.3 - BOARD
"Board" shall mean the Board of Directors of the Company.
SECTION 1.4 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.5 - COMMITTEE
"Committee" shall mean the Committee of the Board appointed as
provided in the Plan.
SECTION 1.6 - COMPANY
"Company" shall mean Cordant Technologies Inc., a Delaware
corporation.
SECTION 1.7 - DATE OF GRANT
"Date of Grant" shall mean the date set forth on the Notice of Grant
on which the Board grants the option hereunder and from which the
Anniversary Date set forth in the Vesting Schedule shall be determined.
SECTION 1.8 - EXCHANGE ACT
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
SECTION 1.9 - OPTION
"Option" shall mean the nonqualified stock option to purchase Common
Stock of the Company granted under this Agreement.
SECTION 1.10- PLAN
"Plan" shall mean either the Cordant Technologies Inc. Amended and
Restated 1996 Stock Awards Plan or the 1989 Stock Awards Plan as set forth
on the face of the Notice of Grant.
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SECTION 1.11 - RULE 16B-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended in the future.
SECTION 1.12 - SECURITIES ACT
"Securities Act" shall mean the Securities Act of 1933, as amended.
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION. In consideration of Employee's services to
the Company, or affiliate, as the case may be, Cordant Technologies Inc.
grants to Employee the option to purchase shares of its Common Stock (par
value $1 per share) at a purchase price set forth on the Notice of Grant
attached hereto (the fair market value of such shares on the Date of
Grant), subject to the conditions of this Agreement.
SECTION 2.2 - ADJUSTMENTS IN OPTION. Subject to Section 5.3, in the event
that the Committee determines that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), a reorganization, recapitalization, spin-off, stock dividend,
stock split, combination, reclassification, reverse stock split, merger,
consolidation, split-up, spin-off, repurchase, liquidation, dissolution, or
sale, transfer, exchange or other disposition of all or substantially all
of the assets of the Company, or exchange of Common Stock or other
securities of the Company, or other similar corporate transaction or event
or other increase or reduction in the number of issued shares of Common
Stock affects the Commons Stock such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available with
respect to the Option, the Committee may, in order to prevent the dilution
or enlargement of rights under awards, make such adjustments in any and all
of the number and type of shares covered by the Option and the exercise
price specified herein as may be determined to be appropriate and
equitable, to the end that after such event the Optionee's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in the Option shall be made without change in the total price
applicable to the unexercised portion of the Option (except for any change
in the aggregate price resulting from rounding-off of share quantities or
prices) and with any necessary corresponding adjustment in the Option price
per share. Any such adjustment made by the Committee shall be final and
binding upon the Employee, the Company and all other interested persons.
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ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) This Option shall become exercisable (vested) as follows:
OPTION VESTING
SCHEDULE
FIRST BUSINESS DAY FOLLOWING PORTION OF THE OPTION BECOME
THE ANNIVERSARY DATE FROM THE EXERCISABLE
DATE OF GRANT (VESTED) ON SUCH ANNIVERSARY DATE
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One year from date of grant 25 percent
Two years from date of grant 50 percent
Three years from date of grant 75 percent
Four Years from date of grant 100 percent
No fractional share of a vested option is exercisable until such
anniversary date from the date of grant as the remainder of such fractional
share becomes exercisable.
No part of the Option will be exercisable prior to the first
business day following the expiration of one year from the Date of Grant
set forth on the Notice of Grant of Stock attached hereto.
(b) No portion of the Option (including any portion of the Option
not yet vested under Section 3.1(a) which is unexercisable at termination
of employment) shall thereafter become exercisable except with respect to
retirement under Section 3.3(b); death Section 3.3(c); or disability
Section 3.3(d).
SECTION 3.2 - DURATION OF EXERCISABILITY. After any portion of the Option
becomes exercisable pursuant to Section 3.1(a), the Option shall remain
exercisable until it has been exercised or until it becomes unexercisable
under Section 3.3.
SECTION 3.3 - EXPIRATION OF OPTION.
(a) The Option (or any portion of the Option not yet vested under
Section 3.1(a) as the case may be) may not be exercised to any extent by
anyone after the first to occur of the following events ("Expiration
Date"):
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(i) The expiration of ten (10) years from the date the Option
was granted; or
(ii) Except in the event of a Change in Control of the Company as
defined in Section 3.4 below or as otherwise provided
herein, the expiration of three (3) months from the date of
the employee's termination of employment unless such
termination of employment results from Employee's retirement
pursuant to the terms of a pension plan of the Company;
death or permanent and total disability; PROVIDED, HOWEVER,
if during the -------- ------- first two years following a
Change in Control of the Company Employee's, employment
terminates other than pursuant to the terms of a pension
plan of a Company and Employee's Option was exercisable on
the date of termination of Employee's employment, it will
remain exercisable for a period of six months and one day
after termination of Employee's employment, or until the
Expiration Date, whichever occurs first; or
(iii)The effective date of the Committee's action under Section
5.3(ii), (iii) or (iv) (except in the case of an action
providing for assumption of the Option).
(b) If Employee's employment with the Company terminates prior to the
Expiration Date because of Employee's retirement pursuant to the
terms of a pension plan of the Company, the Employee's Option
will remain exercisable until the Expiration Date. Any portion of
the Option not yet vested at the Employee's date of retirement
will automatically vest with the passage of time (as if the
retired Employee had remained actively employed) pursuant to the
Option vesting schedule set forth in Section 3.1(a). In the event
of a retired employees' death prior to the Expiration Date of
this option, this option shall become 100% vested and such
retired Employee's beneficiary shall have two years from the date
of death or the Expiration Date, whichever date is the earliest,
to exercise this option.
(c) If an Employee's employment with the Company terminates prior to
the Expiration Date due to death, the option to the extent not
yet vested shall become 100% vested on the date of death and
shall remain exercisable by such Employee's beneficiary until the
Expiration Date.
(d) If the Employee's employment with the Company terminates prior to
the Expiration Date due to the Employee's permanent and total
disability ("Disability"), such option shall remain exercisable
until the Expiration Date so long as such Disability is
continuing. To the extent such option is not vested on the date
of Disability, the option shall automatically vest with the
passage of time (as if the Disabled Employee has remained
actively employed) pursuant to the vesting schedule in Section
3.1(a). The Committee shall have the sole discretion to determine
if an Employee is
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disabled for the purposes of this option and
such determination shall be binding and conclusive on the
Employee. In the event such Employee ceases to be disabled, this
option shall terminate within three months of the date of
determination by the Committee that such disability no longer
exists or the Expiration Date, whichever date is the earliest to
occur.
SECTION 3.4 - ACCELERATION OF EXERCISABILITY UPON CHANGE IN CONTROL OF THE
COMPANY. Notwithstanding any provision herein to the contrary, to the
extent the Employee's Option has not been exercised previously or any
portion of such Option has not yet vested under Section 3.(a), Employee's
Option shall be exercisable from and after the occurrence of a Change in
Control of the Company; PROVIDED, HOWEVER, that this acceleration of
exercisability shall not take place if this Option becomes unexercisable
under Section 3.3 prior to the occurrence of a Change of Control of the
Company; and PROVIDED, FURTHER, that no Option shall be exercisable by any
Employee who is then subject to Section 16 of the Exchange Act until the
expiration of the period ending six months and one day after the later of
date the Option is granted or deemed regranted. A Change of Control of the
Company shall mean:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iv) any acquisition
by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 3.4; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
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(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE. During Employee's lifetime,
Employee's option is exercisable only by Employee unless it has been
disposed of pursuant to a Qualified Domestic Relations Order ("QDRO").
After the death of the Employee, any exercisable portion of the Option may,
prior to the time when the Option becomes unexercisable under Section 3.3,
be exercised by his Beneficiary.
SECTION 4.2 - PARTIAL EXERCISE. Any exercisable portion of the Option or
the entire Option, if then wholly exercisable, may be exercised in whole or
in part prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.3.
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SECTION 4.3 - PROCEDURE FOR EXERCISE. The Option may be exercised with
respect to shares of the Company's Common Stock granted to Employee in the
amount specified ("Option Shares") at any time from the date that any
portion of the Option described in 3.1(a) becomes exercisable pursuant to
Section 3.1(a) or 3.4 until the Option expires pursuant to Section 3.3 by:
(i) delivery of written notification of exercise and payment in full either
in cash or in Common Stock of the Company delivered to the Corporate
Secretary of the Company for all Option Shares being purchased plus the
amount of any federal and state income taxes required to be withheld by
reason of the exercise of Employee's option; and (ii) if requested, within
the specified time set forth in any such request, delivery to the Company
of such written representations and undertakings as may, in the opinion of
the Company's legal counsel, be necessary or desirable to comply with
federal and state tax and securities laws and (iii) a bona fide written
representation and agreement, in a form satisfactory to the Committee,
signed by the Employee or other person then entitled to exercise such
Option or portion, stating that the shares of stock are being acquired for
his own account, for investment and without any present intention of
distributing or reselling said shares or any of them except as may be
permitted under the Securities Act and then applicable rules and
regulations thereunder, and that the Employee or other person then entitled
to exercise such Option or portion will indemnify the Company against and
hold it free and harmless from any loss, damage, expense or liability
resulting to the Company if any sale or distribution of the shares by such
person is contrary to the representation and agreement referred to above.
In the event the Option or portion shall be exercised pursuant to Section
4.1 by any person or persons other than the Employee, appropriate proof of
the right of such person or persons to exercise the Option.
The Committee may, in its absolute discretion, take whatever
additional actions it deems appropriate to insure the observance and
performance of such representations, undertakings and agreements and to
effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it
to the effect that any subsequent transfer of shares acquired on an Option
exercise does not violate the Securities Act, and may issue stop-transfer
orders covering such shares. Share certificates evidencing stock issued on
exercise of this Option shall bear an appropriate legend referring to the
provisions of this subsection and the representations, undertakings and
agreements referenced herein.
SECTION 4.4 - SECURITIES LAW RESTRICTIONS. Employee understands and
acknowledges that applicable securities laws govern and may restrict
Employee's right to offer, sell, or otherwise dispose of any Option Shares.
Employee may not offer, sell or otherwise dispose of any Option Shares
unless Employee's offer, sale or other disposition thereof is registered
under the Securities Act of 1933 (the "1933 Act") or an exemption from the
registration requirements of the 1933 Act, such as the exemption afforded
by Rule 144 of the Securities and Exchange Commission ("SEC"), is
available. Employee further understands and acknowledges that one of the
requirements of Rule 144 is that there shall be available adequate current
public information with respect to the Company at the time of the proposed
disposition of the Option Shares, and that the Company is not obligated
hereunder to file reports with the SEC or otherwise make current public
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information available for such purpose or to take any other action to make
available an exemption from the registration requirements of the 1933 Act.
Employee agrees that Employee will not offer, sell or otherwise dispose of
any Option Shares in any manner which would (i) require the Company to file
any registration statement with the SEC; (ii) require the Company to amend
or supplement any registration statement which the Company at any time may
have on file with the SEC; or (iii) violate the 1933 Act, the rules and
regulations promulgated thereunder or any other state or federal law.
SECTION 4.5 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The shares of
stock deliverable upon the exercise of the Option, or any portion thereof,
may be either previously authorized but unissued shares or issued shares
which have then been reacquired by the Company. Such shares shall be fully
paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon
the exercise of the Option or portion thereof prior to fulfillment of all
of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations
of the Securities and Exchange Commission or of any other governmental
regulatory body, which the Committee shall, in its sole and absolute
discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its sole
and absolute discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of
all amounts which, under federal, state or local tax law, it is required to
withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.
SECTION 4.6 - RIGHTS AS STOCKHOLDER. The holder of the Option shall not be,
nor have any of the rights or privileges of, a stockholder of the Company
in respect of any shares purchasable upon the exercise of any part of the
Option unless and until certificates representing such shares shall have
been issued by the transfer agent on behalf of the Company.
ARTICLE V
OTHER PROVISIONS
SECTION 5.1 - ADMINISTRATION. The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and
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application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and
binding upon the Employee, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan
or the Option. In its sole and absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under the Plan and this Agreement except with respect to matters
which under Rule 16b-3 or Section 162(m) of the Code are required to be
determined in the sole discretion of the Committee.
SECTION 5.2 - NON-TRANSFERABILITY. Employee's option is personal to
Employee and shall not be transferable by Employee otherwise than by will
or the laws of descent and distribution or pursuant to a QDRO. Neither the
Option nor any interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Employee or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether
such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof
shall be null and void and of no effect; PROVIDED, HOWEVER, that this
Section 5.2 shall not prevent transfers by will or by the applicable laws
of descent and distribution or pursuant to QDRO.
SECTION 5.3 - CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY, ACQUISITION
OR LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS. Subject to the
provisions of this Section 5.3, in the event of any transaction or event
described in Section 2.2, a change in control, or similar transaction by
the Company or any unusual or nonrecurring transactions or events affecting
the Company, any affiliate of the Company, or the financial statements of
the Company or any affiliate, or of changes in applicable laws,
regulations, or accounting principles, if the Committee determines that
such action is appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the
Plan or with respect to the Option to facilitate such transactions or
events or to give effect to such changes in laws, regulations or
principles, the Committee in its discretion is hereby authorized to provide
for such terms and conditions as it deems appropriate, by action taken
prior to the occurrence of such transaction or event: (i) for adjustments
to such award in order to prevent the dilution or enlargement of rights
thereunder or to provide for acceleration of benefits thereunder; (ii) for
either the purchase of the Option for an amount of cash equal to the amount
that could have been attained upon the exercise of the Option or
realization of the Participant's rights had such option been currently
exercisable or the replacement of such option, right or award with other
rights or property selected by the Committee in its sole discretion; (iii)
that it cannot be exercised after such event; (iv) that upon such event,
such option, right or award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for
by similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares
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and prices. No adjustment or action described in this Section 5.3 or in any
other provision of the Agreement shall be authorized to the extent that
such adjustment or action would cause the Option to fail to qualify under
Section 162(m), as the case may be, or any successor provisions thereto.
Furthermore, no such adjustment or action shall be authorized to the extent
such adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions or Rule 16b-3 unless
the Committee determines that the option or other award is not to comply
with such exemptive conditions.
SECTION 5.4 - SHARES TO BE RESERVED. The Company shall at all times during
the term of the Option reserve and keep available such number of shares of
stock as will be sufficient to satisfy the requirements of this Agreement.
SECTION 5.5 - NOTICES. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
Corporate Secretary, and any notice to be given to the Employee shall be
addressed to him at the address maintained by the Corporation in its
business records. By a notice given pursuant to this Section 5.5, either
party may hereafter designate a different address for notices to be given
to him. Any notice which is required to be given to the Employee shall, if
the Employee is then deceased, be given to the Employee's personal
representative if such representative has previously informed the Company
of his status and address by written notice under this Section 5.5. Any
notice shall be deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the
United States Postal Service.
SECTION 5.6 - TITLES. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this
Agreement.
SECTION 5.7 - NOTIFICATION OF DISPOSITION. The Employee shall give prompt
notice to the Company of any disposition or other transfer of any shares of
stock acquired under this Agreement if such disposition or transfer is made
(a) within two (2) years from the date of granting the Option with respect
to such shares or (b) within one (1) year after the transfer of such shares
to him. Such notice shall specify the date of such disposition or other
transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by the Employee in such disposition or
other transfer.
SECTION 5.8 - GOVERNING LAW. This Grant Agreement and the Plan shall be
construed in accordance with and governed by the laws of the State of Utah.
SECTION 5.9 - CONFORMITY TO SECURITIES LAWS. The Employee acknowledges that
the Plan is intended to conform to the extent necessary with all provisions
of the Securities Act and the Exchange Act and any and all regulations and
rules promulgated by the Securities and Exchange Commission thereunder,
including without limitation Rule 16b-3. Notwithstanding anything herein to
the contrary, the Plan shall be administered, and the Option is granted and
may be exercised, only in such a manner as to conform to
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such laws, rules and regulations. To the extent permitted by applicable
law, the Plan and this Agreement shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.
SECTION 5.10 - AMENDMENTS. This Agreement and the Plan may be amended
without the consent of the Optionee provided that such amendment would not
impair any rights of the Optionee under this Agreement. No amendment of
this Agreement shall, without the consent of the Optionee, impair any
rights of the Optionee under this Agreement.
SECTION 5.11 - CONFORMITY WITH PLAN. Employee's option is intended to
conform in all respects with the Plan, a copy of which is attached hereto.
Inconsistencies between this Grant Agreement and the Plan shall be resolved
in accordance with the terms of the Plan. All definitions stated in the
Plan shall be fully applicable to this Grant Agreement.
SECTION 5.12 - EMPLOYMENT AND SUCCESSORS. Nothing herein or in the Plan
confers any right or obligation on Employee to continue in the employ of
the Company or any Affiliate or shall affect in any way Employee's right or
the right of the Company or any Affiliate, as the case may be, which are
hereby expressly reserved, to terminate Employee's employment at any time.
Employee agrees that Employee is an Employee at will and can be terminated
by the Company or any Affiliate at any time. Nothing herein or in the Plan
is to be interpreted as an express or implied contract of employment. This
Grant Agreement and the Plan shall be binding upon any successor or
successors of the Company.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of this ___day of ______ 199__.
CORDANT TECHNOLOGIES INC. EMPLOYEE
By: __________________________ By:________________________
Vice President and
Corporate Secretary
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement is made by and between
CORDANT TECHNOLOGIES INC. (the "Company") and ____________________ (the
"Executive"), and is dated as of the 1st day of March 1999.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its stockholders to
assure that the Company will have the continued dedication of the
Executive, notwithstanding the possibility, threat, or occurrence of a
Change of Control (as defined below) of the Company. The Board believes it
is imperative to diminish the inevitable distraction of the Executive by
virtue of the personal uncertainties and risks created by a pending or
threatened Change of Control and to encourage the Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Amended and Restated Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1 . CHANGE OF CONTROL DATE. The "Change of Control Date" shall be the
first date on which a Change of Control (as defined in Section 2) occurs.
Anything in this Agreement to the contrary notwithstanding, if a Change of
Control occurs and the Company has terminated the Executive's employment
(other than under circumstances which would constitute Cause or Disability
(as defined below)) or the Executive has
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terminated his employment under circumstances which would constitute Good
Reason hereunder if such termination occurred the day after the Change of
Control Date, and if (A) it is reasonably demonstrated by the Executive (i)
that such termination of employment was at the request of a third party who
has taken steps reasonably calculated to effect the Change of Control or
(ii) that the Company's actions otherwise arose in connection with or
anticipation of the Change of Control or (B) such termination is within six
months of the Change of Control Date, then for all purposes of this
Agreement the "Change of Control Date" shall mean the date immediately
prior to the date of such termination of employment.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" shall mean:
(a) the acquisition by any individual, entity or group (within
the meaning of sections 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "exchange act")) (a "person") of
beneficial ownership (within the meaning of rule 13d-3 promulgated
under the exchange act) of 20% or more of either (i) the then
outstanding shares of common stock of the company (the "outstanding
company common stock") or (ii) the combined voting power of the then
outstanding voting securities of the company entitled to vote
generally in the election of directors (the "outstanding company
voting securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
change of control: (i) any acquisition directly from the company, (ii)
any acquisition by the company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the company
or any corporation controlled by the company or (iv) any acquisition
by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this section 2; or
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(b) individuals who, as of the date hereof, constitute the board
(the "incumbent board") cease for any reason to constitute at least a
majority of the board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the incumbent
board shall be considered as though such individual were a member of
the incumbent board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the board;
or
(c) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the company (a "business combination"), in each case, unless,
following such business combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the outstanding company common stock and outstanding
company voting securities immediately prior to such business
combination beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such business combination
(including, without limitation, a corporation which as a result of
such transaction owns the company or all or substantially all of the
company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such business combination of the outstanding company common
stock and outstanding company voting securities, as the case may be,
(ii) no
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person (excluding any corporation resulting from such business
combination or any employee benefit plan (or related trust) of the
company or such corporation resulting from such business combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such business combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the business combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
business combination were members of the incumbent board at the time
of the execution of the initial agreement, or of the action of the
board, providing for such business combination; or
(d) approval by the shareholders of the company of a complete
liquidation or dissolution of the company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, for the period commencing on the Change of Control
Date and ending on the third anniversary of such date (the "Employment
Period").
4. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting relationships), authority, duties and responsibilities
shall be at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during the
90-day period immediately preceding the Change of Control Date and (B) the
Executive's services shall be performed at the location (the "Principal
Business Location") where the Executive was employed immediately preceding
the Change of Control Date or at any office or location which does not
result in a material increase in the distance or time of commutation
between the Executive's
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place of primary residence at the Change of Control Date and the
Executive's Principal Business Location, or materially adversely affect the
mode of such commutation.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
Discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it shall
not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the
Change of Control Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to
the Change of Control Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the Company.
(b) COMPENSATION, BENEFITS AND SUPPORT STAFF. (i) BASE SALARY.
During the Employment Period, the Executive shall receive in accordance
with the Company's payroll practices at the Change of Control Date an
annual base salary ("Annual Base Salary"), at least equal to twelve times
the highest monthly base salary paid or payable to the Executive by the
Company and its affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Change of Control Date occurs.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
shall be substantially consistent with increases in base salary awarded in
the ordinary course of business to other peer executives of the Company and
its affiliated
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companies but in no event shall the annual increase in Base Salary be less
than a percentage at least equal to the increase, if any, in the
cost-of-living shown on the Consumer Price Index for the area in which the
Principal Business Location is located, published by the Bureau of Labor
Statistics of the United States Department of Labor for the immediately
preceding twelve-month period (or, if no such Consumer Price Index is then
published, any successor index thereto). Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" includes any company controlled
by, controlling or under common control with the Company.
(ii) BONUS. (A) In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year beginning or ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the highest annualized (for any fiscal year consisting of less
than twelve full months or with respect to which the Executive has been
employed by the Company for less than twelve full months) bonus paid or
payable (including any amount subject to a deferral election) to the
Executive by the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in which the
Change of Control Date occurs (the "Recent Annual Bonus"). Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal
year next following the fiscal year for which the Annual Bonus is awarded,
unless the Executive shall elect to defer the receipt of such Annual Bonus.
(B) In addition to Annual Base Salary and the Annual Bonus, the
Executive shall be paid, for each fiscal year beginning or ending during
the Employment Period, a long-term bonus (the "long-term Bonus") in cash at
least equal to the average long-term incentive bonus (the "Recent Long-Term
Bonus") paid or payable to the Executive by the Company under the Company's
Long-Term Incentive Compensation
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Plan (or any predecessor or successor plan thereto (the "LTIP") in respect
of the last three completed performance cycles ending with the performance
cycle ending in the fiscal year preceding the fiscal year in which the
Change of Control Date occurs (or, if less, in respect of the number of
completed performance cycles for which the Executive has received a
long-term bonus). If the Executive was not a participant in the LTIP in one
of such cycles, but is, at the Change of Control Date, a participant in the
LTIP, the Recent long-term Bonus shall be equal to the amount payable to
such Executive under the LTIP upon a Change of Control, divided by the
number of performance cycles in which the Executive was participating at
such time. For the fiscal year in which the Change of Control Date occurs
and for the next two fiscal years, any such payment may be reduced (but not
below zero) by the amount payable to the Executive under the terms of the
LTIP with respect to the performance cycle that otherwise would have ended
in such fiscal year upon the Change of Control. Each such long-term Bonus
shall be paid pursuant to a plan which has three-year performance cycles
and is otherwise substantially similar to the LTIP and shall be paid no
later than the end of the third month of the fiscal year next following the
fiscal year for which the long-term Bonus is awarded, unless the Executive
shall elect to defer the receipt of such long-term Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to
Annual Base Salary, Annual Bonus and Long-term Bonus payable as hereinabove
provided, the Executive shall be entitled to participate during the
Employment Period in all other incentive, savings and retirement plans,
practices, policies and programs applicable to other peer executives of the
Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with incentive,
savings and retirement benefits opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by
the Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Change of Control Date.
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(iv) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group
life, accidental death and travel accident insurance plans and programs)
and applicable to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide benefits which are less favorable, in the aggregate, than
the most favorable of such plans, practices, policies and programs in
effect at any time during the 90-day period immediately preceding the
Change of Control Date.
(v) EXPENSES. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in
effect at any time during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive, as in effect
at ANY time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(vi) OTHER EXECUTIVE BENEFITS. During the Employment Period, the
Executive shall be entitled to other executive benefits including, without
limitation, club memberships and annual physicals, in accordance with the
most favorable plans, practices, programs and policies of the Company and
its affiliated companies in effect at any time during the 90-day period
immediately preceding the Change of Control Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
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(vii) OFFICE, COMPANY CAR AND SUPPORT STAFF. During the
Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, to exclusive personal secretarial and
other assistance, and to a Company-provided car, at least equal to the most
favorable of the foregoing provided to the Executive by the Company and its
affiliated companies at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, as provided at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its affiliated
companies as in effect at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, as in effect at any time thereafter with respect to other peer
executives of the Company and its affiliated companies with similar lengths
of service.
5. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of "Disability" set forth below), it may
give to the Executive written notice in accordance with Section 12(b) of
this Agreement of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive
(the "Disability Change of Control Date"), provided that, within the 30
days after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" means the absence of the Executive from the Executive's duties
with the Company on a Full-time basis for 180 consecutive business days as
a result of incapacity due to mental or physical illness
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which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement as to acceptability not to
be withheld unreasonably).
(b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for "Cause." For purposes of this Agreement,
"Cause" means (i) an act or acts of personal dishonesty taken by the
Executive and intended to result in substantial personal enrichment of the
Executive at the expense of the Company, (ii) repeated violations by the
Executive of the Executive's obligations under Section 4(a) of this
Agreement which are demonstrably willful and deliberate on the Executive's
part and which are not remedied in a reasonable period of time after
receipt of written notice from the Company or (iii) the conviction of the
Executive of a felony involving moral turpitude. For purposes of this
Section 5(b), no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution,
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to the Executive and an
opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the Executive
was guilty of conduct set forth above in clause (i), (ii), or (iii) of the
second sentence of this Section 5(b) and specifying the particulars thereof
in detail.
(c) GOOD REASON. The Executive's employment may be terminated
during the Employment Period by the Executive for Good Reason. For purposes
of this Agreement, "Good Reason" means:
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(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices,
titles and reporting relationships), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or
any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination
of "Good Reason" made by the Executive shall be conclusive. Anything in
this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period immediately following the
first anniversary of the Change of Control Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
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(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause or by the Executive for Good Reason shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section
12(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing the
Executive's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein,
as the case may be; provided, however, that (i) if the Executive's
employment is terminated by the Company other than for Cause or Disability,
the Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (ii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall
be the date of death of the Executive or the Disability Change of Control
Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment terminates by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following obligations:
(i) the Executive's Annual Base Salary
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through the Date of Termination, to the extent not theretofore paid, (ii)
any amount payable to the Executive pursuant to Section 4(b)(ii) hereof in
respect of the most recently completed fiscal year, to the extent not
theretofore paid, (iii) if the Change of Control Date occurred after the
end of the most recently completed fiscal year and no Annual Bonus was paid
to the Executive in respect of such period, an amount equal to the Recent
Annual Bonus, (iv) the product of the greater of the Annual Bonus paid or
payable (and annualized for any fiscal year consisting of less than twelve
full months or for which the Executive has been employed for less than
twelve full months) to the Executive for the most recently completed fiscal
year during the Employment Period, if any, or the Recent Annual Bonus (such
greater amount hereafter referred to as the "Highest Annual Bonus") and a
fraction, the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the denominator of which
is 365, (v) for each performance cycle under the LTIP or any successor
thereto which has commenced on or after the Change of Control Date, the
product of the greater of the Long-term Bonus paid or payable to the
Executive for the most recently completed performance cycle during the
Employment Period, if any, or the Recent Long-Term Bonus (such greater
amount hereafter referred to as the "Greater Long-Term Bonus") and a
fraction, the numerator of which is the number of days which have elapsed
in the performance cycle through the Date of Termination, and the
denominator of which is 1095, and (vi) any compensation previously deferred
by the Executive (together with any accrued interest thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (the amounts described in paragraphs (i) through (vi) hereof are
hereinafter referred to as "Accrued Obligations"). All Accrued Obligations
shall be paid to the Executive's estate or beneficiary, as applicable, in a
lump sum in cash within 30 days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the Executive's family
shall be entitled to receive benefits at least equal to the most favorable
benefits provided by the Company and any of its affiliated companies to
surviving families of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies relating to
family death benefits, if any, as in effect with respect to other peer
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executives and their families at any time during the 90-day period
immediately preceding the Change of Control Date or, if more favorable to
the Executive and/or the Executive's family, as in effect on the date of
the Executive's death with respect to other peer executives of the Company
and its affiliated companies and their families.
(b) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations. All Accrued Obligations shall be paid
to the Executive in a lump sum in cash within 30 days of the Date of
Termination. Anything in this Agreement to the contrary notwithstanding,
the Executive shall be entitled after the Disability Change of Control Date
to receive disability and other benefits at least equal to the most
favorable of those provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in
effect with respect to other peer executives and their families at any time
during the 90-day period immediately receding the Change of Control Date
or, if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other peer executives of the
Company and its affiliated companies and their families.
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period or if
the Executive terminates employment during the Employment Period other than
for Good Reason, this Agreement shall terminate without further obligations
to the Executive other than the obligation to pay to the Executive Annual
Base Salary through the Date of Termination plus the amount of any
compensation previously deferred by the Executive and accrued vacation pay,
in each case to the extent theretofore unpaid.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If, during
the Employment Period, the Company shall terminate the Executive's
employment other
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than for Cause or Disability, or if the Executive shall terminate
employment under this Agreement for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the product of (x) three and (y) the sum of (i) Annual
Base Salary, (ii) the Highest Annual Bonus and (iii) the Greater
Long-Term Bonus; and B. all Accrued Obligations; and C. the
Executive shall be entitled to receive a lump-sum retirement
benefit equal to the difference between (a) the actuarial
equivalent of the benefit under the Cordant Technologies Inc.
Pension Plan and the Cordant Technologies Inc. Excess Pension
Plan as in effect on the Change of Control Date or any successor
plan which provides more favorable benefits to the Executive (the
"Retirement Plans") which the Executive would receive if the
Executive's employment continued at the compensation level
provided for in Sections 4(b)(i) and 4(b)(ii) of this Agreement
for three years, assuming for this purpose that all accrued
benefits are fully vested, and (b) the actuarial equivalent of
the Executive's actual benefit (paid or payable), if any, under
the Retirement Plans; and
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) and (vi) of this Agreement if
the Executive's employment had not been terminated in accordance with
the most favorable plans,
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practices, programs or policies of the Company and its affiliated
companies applicable to other peer executives and their families
during the 90-day period immediately preceding the Change of Control
Date or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies and their families. For purposes of
determining the Executive's age and length of service at the time of
his termination of employment in order to determine eligibility of the
Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have
remained employed until the end of the Employment Period and to have
terminated employment on the last day of such period; provided,
however, that the Executive shall be entitled to the more favorable of
the retiree benefits in effect on the Date of Termination or the
retiree benefits in effect on the date that would have been the last
date of the Employment Period if the Executive had remained employed.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plans, programs, policies or practices, provided
by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any other agreements with the
Company or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program except as explicitly
modified by this Agreement.
8. FULL PAYMENTS. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no
event shall the Executive be
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obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The Company agrees to
pay, from time to time promptly upon invoice, to the full extent
permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest, question or
controversy (regardless of the outcome thereof and whether or not
litigation is involved) by the Company, the Executive or others
over the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to Section 9 of this
Agreement).
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or any
other compensation plan, program or arrangement including but not limited
to the proceeds from the exercise of stock option grants the Executive is
entitled to receive on the date of a Change of Control or otherwise, but
determined without regard to any additional payments required under this
Section 9) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code")
or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive
of all taxes (including any interest or penalties imposed with respect to
such taxes), including without limitation, any income taxes (and any
interest and penalties imposed with
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respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 9(c) below, all
determinations required to be made under this Section 9, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Ernst & Young (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving
(or has, during the three years preceding the Effective Date, served) as
accountant or auditor for the individual, entity or group effecting the
Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 9, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall
furnish the Executive with a written opinion that failure to report the
Excise Tax on the Executive's applicable federal income tax return would
not result in the imposition of a negligence or similar penalty. Any
determination by the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting
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Firm shall determine the amount of Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after
the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any Proceedings
relating to such claim;
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provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or Penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 9(c)) promptly
pay to the Company the
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amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of
an amount advanced by the Company pursuant to Section 9(c), a determination
is made that the Executive shall not be entitled to any refund with respect
to such claim and the Company does not notify the Executive in writing of
its intent to contest such denial of refund prior to the expiration of 30
days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
10. CONFIDENTIAL INFORMATION. (a) During the period of his employment
hereunder, the Executive shall not, without the written consent of the
Chief Executive Officer, disclose to any person, other than an employee of
the Company or another person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of his
duties as an executive of the Company, any material confidential
information obtained by him while in the employ of the Company with respect
to any of the Company's products, improvements, formulas, designs or
styles, processes, customers, methods of distribution or methods of
manufacture, the disclosure of which he knows will be materially damaging
to the Company; PROVIDED, HOWEVER, that confidential information shall not
include any information known generally to the public (other than as a
result of unauthorized disclosure by the Executive) or any information of a
type not otherwise considered confidential by persons engaged in the same
business or a business similar to that conducted by the Company. For the
period ending two years following the Date of Termination, the Executive
shall not disclose any confidential information of the type described above
except as determined by him to be reasonably necessary in connection with
any business or activity in which he is then engaged.
(b) Any and all inventions made, developed or created by the Executive
(whether at the request or suggestion of the Company or otherwise, whether
alone or in conjunction with others, and whether during regular hours of
work or
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otherwise) during the period of his employment by the Company, which may be
directly or indirectly useful in, or relate to, the business of or research
and development being carried out by the Company or any of its subsidiaries
or affiliates, will be promptly and fully disclosed by the Executive to an
appropriate executive officer of the Company and shall be the Company's
exclusive property as against the Executive, and the Executive will
promptly deliver to an appropriate executive officer of the Company all
papers, drawings, models, data and other material relating to any invention
made, developed or created by him as aforesaid.
(c) The Executive will, upon the Company's request and without any
payment therefor, execute any documents necessary or advisable in the
opinion of the Company's counsel to direct issuance of patents to the
Company with respect to such inventions as are to be the Company's
exclusive property as against the Executive under Section 10(b) above or to
vest in the Company title to such inventions as against the Executive,
PROVIDED, HOWEVER, that the expense of securing any such patent will be
borne by the Company.
(d) The foregoing provisions of this Section 10 shall be binding upon
the Executive's heirs, successors and legal representatives.
(e) In no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
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(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
IF TO THE EXECUTIVE:
Home address as currently shown on Human Resource
Department records of Executive's business unit.
IF TO THE COMPANY:
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Cordant Technologies Inc.
15 W. South Temple, Suite 1600
Salt Lake City, UT 84101-1532
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or
any other provision thereof.
(f) This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof.
(g) Anything in this Agreement to the contrary notwithstanding, the
Executive and the Company acknowledge that the employment of the Executive
by the Company is "at will", and, except as provided in Section 1 hereof,
prior to the Change of Control Date, the employment of the Executive may be
terminated by either the Executive or the Chief Executive Officer of the
Company at any time. Upon a termination of the Executive's employment prior
to the Change of Control Date, except as provided in Section 1 hereof,
there shall be no further rights under this Agreement.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of
the day and year first above written. CORDANT TECHNOLOGIES INC.
by __________________________________
James R. Wilson
Chairman of the Board, President, and
Chief Executive Officer
by:__________________________________
(name)
EXECUTION COPY
CREDIT AGREEMENT
Dated as of February 5, 1999
among
CORDANT TECHNOLOGIES INC.
and
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and As Administrative Agent,
FIRST CHICAGO CAPITAL MARKETS, INC.,
As Arranger,
and
THE LENDING INSTITUTIONS PARTY HERETO
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PAGE
ARTICLE I: DEFINITIONS 1
ARTICLE II: THE CREDITS 10
2.1. Advances 10
2.1.1. Commitments to Make Revolving Loans 10
2.1.2. Ratable Loans 10
2.1.3. Rate Options 11
2.1.4. Method of Selecting Rate Options and Interest Periods for Advances 11
2.1.5. Conversion and Continuation of Outstanding Advances 11
2.2. Term Loan Extension Option. 12
2.2.1. Option 12
2.2.2. Extension Request. 12
2.2.3. Conditions Precedent to Extension 12
2.2.4. Repayment of Term Loans 13
2.2.5. Rate Options 13
2.2.6. Conversion and Continuation of Outstanding Advances
consisting of Term Loans 13
2.3. General Facility Terms 14
2.3.1. Method of Borrowing 14
2.3.2. Minimum Amount of Each Advance 14
2.3.3. Termination; Required Payments 14
2.3.4. Optional Principal Payments 14
2.3.5. Commitment Fees and Voluntary Reduction of Commitments 14
2.3.6. Changes in Interest Rate, etc. 15
2.3.7. Ratings Change Rate Increase; Rate after Maturity 15
2.3.8. Interest Payment Dates; Interest and Fee Basis. 15
2.3.9. Method of Payment 16
2.3.10. Notes; Telephonic Notices 16
2.3.11. Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions 17
2.3.12. Lending Installations 17
2.3.13. Non-Receipt of Funds by the Administrative Agent. 17
2.3.14. Withholding Tax Exemption 18
ARTICLE III: CHANGE IN CIRCUMSTANCES; INDEMNIFICATION 18
3.1. Yield Protection. 18
3.2. Changes in Capital Adequacy Regulations 19
3.3. Availability of Interest Rate. 20
3.4. Failure to Pay or Borrow on Certain Dates 20
3.5. Bank Certificates; Survival of Indemnity 20
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ARTICLE IV: CONDITIONS PRECEDENT 21
4.1. Initial Advance 21
4.2. Each Advance 22
ARTICLE V: REPRESENTATIONS AND WARRANTIES. 22
5.1. Corporate Existence and Standing 22
5.2. Authorization and Validity 22
5.3. Compliance with Laws and Contracts 23
5.4. Financial Statements 23
5.5. Material Adverse Change 23
5.6. Taxes 23
5.7. Litigation 24
5.8. ERISA 24
5.9. Defaults and Prepayment Event 24
5.10. Accuracy of Information 24
5.11. Regulation U. 24
5.12. Pari Passu. 24
5.13. Investment Company 24
5.14. Material Laws. 25
5.15. Material Agreements 25
5.16. Subsidiaries 25
5.17. Ownership of Properties 25
ARTICLE VI: COVENANTS 25
6.1. Affirmative Covenants 25
6.1.1. Financial Reporting 26
6.1.2. Use of Proceeds 27
6.1.3. Notice of Default and Prepayment Event 28
6.1.4. Conduct of Business 28
6.1.5. Payment of Taxes 28
6.1.6. Insurance 28
6.1.7. Compliance with Laws 28
6.1.8. Maintenance of Properties 29
6.1.9. Inspection 29
6.2. Negative Covenants 29
6.2.1. Dividends 29
6.2.2. Indebtedness of Subsidiaries 29
6.2.3. Merger 29
6.2.4. Sale of Assets 30
6.2.5. Sale and Leaseback 30
6.2.6. Liens 30
6.2.7. Funded Debt/EBITDA Ratio 31
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6.2.8. Affiliates; Howmet 31
ARTICLE VII: DEFAULTS 32
ARTICLE VIII: ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 34
8.1. Acceleration; Allocation of Payments after Default or Prepayment Event 34
8.2. Amendments 34
8.3. Preservation of Rights 35
ARTICLE IX: GENERAL PROVISIONS 35
9.1. Survival of Representations 35
9.2. Governmental Regulation 35
9.3. Taxes 35
9.4. CHOICE OF LAW 36
9.5. CONSENT TO JURISDICTION 36
9.6. WAIVER OF JURY TRIAL 36
9.7. Headings 36
9.8. Entire Agreement 36
9.9. Several Obligations 36
9.10. Expenses. 37
9.12. Numbers of Documents 37
9.13. Confidentiality 37
ARTICLE X: THE ADMINISTRATIVE AGENT 38
10.1. Appointment 38
10.2. Powers 38
10.3. General Immunity 38
10.4. No Responsibility for Loans, Recitals, etc 38
10.5. Right to Indemnity 38
10.6. Action on Instructions of Banks 38
10.7. Employment of Agents and Counsel. 38
10.8. Reliance on Documents; Counsel. 39
10.9. Administrative Agent's Reimbursement 39
10.10. Rights as a Bank 39
10.11. Bank Credit Decision. 39
10.12. Successor Administrative Agent 39
10.13. Distribution of Information 40
10.14. Disclosure 40
ARTICLE XI: SETOFF; RATABLE PAYMENTS 41
11.1. Setoff 41
11.2. Ratable Payments 41
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ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 41
12.1. Successors and Assigns 41
12.2. Participations 42
12.2.1. Permitted Participants; Effect 42
12.2.2. Voting Rights 42
12.3. Assignments. 42
12.3.1. Permitted Assignments 42
12.3.2. Substitution of Bank 43
12.3.3. Effect; Effective Date 43
12.4. Dissemination of Information 44
12.5. Tax Treatment 44
ARTICLE XIII: NOTICES 44
13.1. Giving Notice 44
13.2. Change of Address 44
ARTICLE XIV: COUNTERPARTS 45
EXHIBIT "A":EXTENSION REQUEST 48
EXHIBIT "B": FORM OF PROMISSORY NOTE 49
EXHIBIT "C": OPINION OF COUNSEL 51
EXHIBIT "D": LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION 54
EXHIBIT "E": ASSIGNMENT AGREEMENT 55
SCHEDULE "1": SUBSIDIARIES 65
SCHEDULE "2": INDEBTEDNESS OF SUBSIDIARIES 66
SCHEDULE "3": LIENS 67
</TABLE>
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<PAGE>
CORDANT TECHNOLOGIES INC.
CREDIT AGREEMENT
This Credit Agreement dated as of February 5, 1999 is among Cordant
Technologies Inc., a Delaware corporation, each of the undersigned banks
and The First National Bank of Chicago, individually and as agent for such
banks. The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by the Banks to the Company at the same
time, at the same Rate Option and for the same Interest Period. Unless the
context otherwise expressly states otherwise, from and after the Revolving
Credit Termination Date if the Revolving Loans shall have been converted to
Term Loans, "Advance" shall mean the borrowings consisting of the aggregate
amount of the several Term Loans.
"Administrative Agent" means The First National Bank of Chicago in its
capacity as agent for the Banks pursuant to Article X, and not in its
individual capacity as a Bank, and any successor Administrative Agent
appointed pursuant to Article X.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. A Person shall be deemed to control another Person if the
controlling Person owns 10% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses, directly
or indirectly, the power to direct or cause the direction of the management
or policies of the controlled Person, whether through ownership of stock,
by contract or otherwise.
"Aggregate Available Commitment" means, at any time prior to the
Revolving Credit Termination Date, the Aggregate Commitment at such time
less the Outstandings at such time.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Banks hereunder.
"Aggregate Outstanding Credit Exposure" means, as of any day, the
aggregate of the Outstanding Credit Exposure of all the Banks.
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<PAGE>
"Agreement" means this credit agreement, as it may be amended from
time to time.
"Arranger" means First Chicago Capital Markets, Inc.
"Article" means an article of this Agreement unless another document
is specifically referenced.
"Authorized Representative" means the Chief Financial Officer or
the Treasurer of the Company or any other officer or employee of the
Company designated in writing as an "Authorized Representative" under this
Agreement by the Chief Financial Officer or the Treasurer of the Company.
"Bankruptcy Code" means Title 11, United States Code Sections 1 ET
SEQ., as the same may be amended from time to time, and any successor
thereto or replacement therefor which may be hereafter enacted.
"Banks" means the banks listed on the signature pages of this
Agreement and their respective successors and assigns.
"Base Eurodollar Rate" means, with respect to a Eurodollar Rate
Advance for the relevant Interest Period, the rate determined by the
Administrative Agent to be the rate at which deposits in U.S. Dollars are
offered by First Chicago to first-class banks in the London interbank
market at approximately 11 a.m. (London time) two Business Days prior to
the first day of such Interest Period, in the approximate amount of First
Chicago's relevant Eurodollar Rate Loan and having a maturity approximately
equal to such Interest Period.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.1.4.
"Business Day" means (a) with respect to borrowing, payment or rate
selection of Eurodollar Rate Advances, a day (other than a Saturday or
Sunday) on which banks generally are open for business in Chicago and New
York for the conduct of substantially all of their commercial lending
activities and on which dealings in U.S. Dollars are carried on in the
London interbank market and (b) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open for business in
Chicago and New York for the conduct of substantially all of their
commercial lending activities.
"Capitalized Lease" of any Person means any lease or lease agreement
which creates a Capitalized Lease Obligation of such Person.
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"Capitalized Lease Obligation" of any Person means the obligation of
such Person, as lessee, to pay rent for the letting, use or hire of real or
personal property which in accordance with GAAP is required to be presented
on the balance sheet of such Person as a liability.
"Commitment" means, for each Bank, the obligation of the Bank to make
Loans not exceeding the amount set forth opposite its signature below, as
such amount may be modified from time to time.
"Company" means Cordant Technologies Inc., a Delaware corporation.
"Consolidated EBITDA" means, for any period, Consolidated Net Income
PLUS interest expense and provision for taxes based on income (in each case
to the extent deducted in determining Consolidated Net Income), adjusted by
adding thereto the amount of (i) all amortization of intangibles and
depreciation and (ii) Receivables Facility Financing Costs (to the extent
not otherwise included).
"Consolidated Funded Debt" means all Indebtedness of the Company and
its Consolidated Subsidiaries which, on the date of determination, would be
required to be shown on the Company's consolidated balance sheet prepared
in accordance with GAAP, PLUS all Receivables Facility Attributed
Indebtedness of the Company and its Consolidated Subsidiaries on the date
of determination regardless of its treatment under GAAP.
"Consolidated Net Income" means, for any period, the consolidated net
after-tax income of the Company and its Consolidated Subsidiaries
determined in accordance with GAAP.
"Consolidated Subsidiary" means any Subsidiary that is consolidated on
a balance sheet of the Company in accordance with GAAP; PROVIDED, THAT,
notwithstanding anything in this Agreement to the contrary, for purposes of
the definitions of Consolidated EBITDA, Consolidated Funded Debt,
Consolidated Net Income and all components of each of the foregoing, Howmet
and its Subsidiaries shall be included as Consolidated Subsidiaries of the
Company.
"Consolidated Total Assets" means, as at any date of determination,
the aggregate value of assets of the Company and its Consolidated
Subsidiaries determined in accordance with GAAP.
"Conversion/Continuation Notice" is defined in Section 2.1.5.
"Corporate Base Rate" means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time,
changing when and as said corporate base rate changes.
"Default" means an event described in Article VII.
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"Dollars" and "$" mean lawful money of the United States of America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Effective Date" means any Business Day on which the Company has
complied with all of the terms and conditions of Section 4.1, the Company
has paid all requisite fees to the Administrative Agent, the Company, the
Administrative Agent and the Banks have executed this Agreement, and the
Administrative Agent has notified the Company and the Banks that all such
events have occurred.
"Eurodollar Margin" means (a) for the period from the Effective Date
until the date that is 180 days thereafter, 0.875% per annum; (b) for the
period beginning 181 days after the Effective Date until the Revolving
Credit Termination Date, 1.0% per annum; and (c) from and after the
Revolving Credit Termination Date, 1.25% per annum.
"Eurodollar Rate" means, with respect to a Eurodollar Rate Advance for
the relevant Interest Period, a per annum rate equal to the sum of (a) the
quotient of (i) the Base Eurodollar Rate applicable to that Interest
Period, divided by (ii) one minus the Reserve Requirement (expressed as a
decimal) applicable to that Interest Period, if any, plus (b) the
Eurodollar Margin, changing when and as said Eurodollar Margin changes. The
Eurodollar Rate shall be rounded, if necessary, to the next higher 1/100th
of 1%.
"Eurodollar Rate Advance" means an Advance which bears interest at a
Eurodollar Rate.
"Eurodollar Rate Loan" means a Loan which bears interest at a
Eurodollar Rate.
"Extension Request" means a notice in substantially the form of
Exhibit "A" hereto, with appropriate insertions, duly executed and
delivered to the Administrative Agent by the Company.
"Federal Funds Rate" means, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is
not a Business Day, for the immediately preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations at
approximately 10 a.m. (Chicago time) on such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent in its sole
discretion.
"First Chicago" means The First National Bank of Chicago in its
individual capacity and not as agent hereunder.
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"Floating Rate" means, for any day, a rate per annum equal to the
higher of (a) the Corporate Base Rate for such day and (b) the Federal
Funds Rate for such day plus .5% per annum.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Funded Debt/EBITDA Ratio" means, as at the last day of any fiscal
quarter of the Company, the ratio of (i) Consolidated Funded Debt as of
such day to (ii) Consolidated EBITDA for the four consecutive fiscal
quarters ending on such day.
"GAAP" means generally accepted principles of accounting as in effect
at the time of application to the provisions hereof, except as provided
with regard to Howmet pursuant to the definition of "Subsidiary" set forth
herein.
"Guaranty" of any Person means any agreement by which such Person
assumes, guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes liable upon, the obligation
of any other Person, or agrees to maintain the net worth or working capital
or other financial condition of any other Person or otherwise assure any
creditor of such other Person against loss, and shall include, without
limitation, the contingent liability of such Person under or with respect
to any Letter of Credit.
"Howmet" means Howmet International, Inc., a Delaware corporation.
"Indebtedness" of any Person means, without duplication, (a) the
obligations of such Person (i) for borrowed money, (ii) under or with
respect to notes payable and drafts accepted which represent extensions of
credit (whether or not representing obligations for borrowed money) to such
Person or (iii) reimbursement obligations with respect to letters of credit
issued for the account of such Person or (iv) for the deferred purchase
price of property or services other than current accounts payable arising
in the ordinary course of business on terms customary in the trade, (b) the
obligations of others, whether or not assumed, secured by Liens on property
of such Person or payable out of the proceeds of or production from
property now or hereafter owned or acquired by such Person, (c) the
Capitalized Lease Obligations of such Person, (d) the obligations of such
Person under Guaranties by such Person of any Indebtedness (other than
obligations for borrowed money incurred to finance the purchase of property
leased to such Person pursuant to a Capitalized Lease of such Person) of
any other Person, (e) all Receivables Facility Attributed Indebtedness of
such Person on the date of determination and (f) Off Balance Sheet
Liabilities of such Person.
"Interest Period" means, with respect to a Eurodollar Rate Advance, a
period of one, two, three or six months commencing on a Business Day
selected by the Company pursuant to this Agreement. Such Interest Period
shall end on the day in the succeeding calendar month which
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corresponds numerically to the beginning day of such Interest Period;
PROVIDED, HOWEVER, that if there is no such numerically corresponding day
in such succeeding month, such Interest Period shall end on the last
Business Day of such succeeding month. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day; PROVIDED, HOWEVER, that if
said next succeeding Business Day falls in a new month, such Interest
Period shall end on the immediately preceding Business Day.
"Lending Installation" means, for each type of Loan, any office,
branch, subsidiary or affiliate of any Bank.
"Letter of Credit" of any Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon
which such Person is account party or for which such Person is in any way
liable.
"Lien" means, with respect to the property of any Person, any security
interest, mortgage, pledge, lien, claim, charge, encumbrance, conditional
sale agreement, title retention agreement, lessor's interest under a
Capitalized Lease or analogous instrument, in, of or on any of the property
of such Person.
"Loan" means, with respect to a Bank, such Bank's portion of any
Advance or, during the Term Loan Period, such Bank's Term Loan.
"Loan Documents" means this Agreement and the Notes.
"Note" means a promissory note in substantially the form of Exhibit
"B" hereto, with appropriate insertions, duly executed and delivered to the
Administrative Agent by the Company and payable to the order of a Bank in
the amount of its Commitment, including any amendment, modification,
renewal or replacement of such promissory note.
"Obligations" means all unpaid principal and accrued and unpaid
interest under the Notes, all accrued and unpaid commitment and extension
fees and all other obligations of the Company or any Subsidiary to the
Banks or to any Bank or the Administrative Agent arising under the Loan
Documents.
"Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any sale and
leaseback transaction which does not create a liability on the balance
sheet of such Person, (iii) any liability under any financing lease or
so-called "synthetic lease" transaction entered into by such Person, or
(iv) any obligation arising with respect to any other transaction which is
the functional equivalent of or takes the place of borrowing but which does
not constitute a liability on the balance sheets of such Person, but
excluding Operating Leases.
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"Operating Lease" of a Person means any lease of Property (other than
a Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option
of the lessor) of one year or more.
"Outstanding Credit Exposure" means, as to any Bank at any time, the
aggregate principal amount of its Loans outstanding at such time .
"Outstandings" means at any time the aggregate of the principal amounts of
all outstanding Advances.
"Participants" is defined in Section 12.2.1.
"Payment Date" shall mean the last Business Day of each quarter,
commencing March 31, 1999.
"Permitted Lien" means any lien described in clauses (a) through (i)
of Section 6.2.6.
"Person" means any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, government or any
department or agency of any government.
"Plan" means a defined benefit pension plan as such term is defined in
Section 3(35) of ERISA for the unfunded liabilities of which upon
termination the Company or any Subsidiary could be held liable by the
Pension Benefit Guaranty Corporation.
"Plan Year" means a plan year as defined in Section 3(39) of ERISA.
"Prepayment Event" means the earliest to occur of (a) the date of a
public announcement that a Person or group of affiliated or associated
Persons (an "Acquiring Person") has acquired, or has obtained the right to
acquire, legal or beneficial ownership of more than 50% of the outstanding
shares of the Voting Stock of the Company, (b) the date of the commencement
of a tender offer or exchange offer that would result in an Acquiring
Person legally or beneficially owning more than 50% of the outstanding
shares of the Voting Stock of the Company, and (c) the date an Acquiring
Person acquires all or substantially all of the assets of the Company.
"Rate Option" means the Eurodollar Rate or the Floating Rate.
"Receivables Facility Attributed Indebtedness" means the amount of
obligations outstanding under a receivables purchase facility on any date
of determination that would be characterized as principal if such facility
were structured as a secured lending transaction rather than as a purchase.
"Receivables Facility Financing Costs" means all cash fees, service
charges, and other costs, as well as all collections or other amounts
retained by purchasers of receivables pursuant to
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a receivables purchase facility, which are in excess of amounts paid to the
Company and its Consolidated Subsidiaries under any receivables purchase
facility for the purchase of receivables pursuant to such facility.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of
the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of
purchasing or carrying margin stocks applicable to member banks of the
Federal Reserve System.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA.
"Required Banks" means Banks in the aggregate having at least 51% of
the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Banks in the aggregate holding at least 51% of the Aggregate
Outstanding Credit Exposure.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
Eurocurrency liabilities.
"Revolving Credit Termination Balance" means the aggregate principal
amount of Advances outstanding on the Revolving Credit Termination Date
after giving effect to any Advances made or repaid on such date.
"Revolving Credit Termination Date" means November 5, 1999 or any
earlier date on which the Aggregate Commitment is reduced to zero or
otherwise terminated pursuant to the terms hereof.
"Revolving Loan" is defined in Section 2.1.1.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Stock Acquisition" means the acquisition by the Company of all
outstanding shares of capital stock of Howmet owned by The Carlyle Group
for an aggregate purchase price not to
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exceed the amount set forth in the disclosure letter dated of even date
herewith from the Company to the Agent and the Banks.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or
by one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, joint venture, limited
liability company or similar business organization more than 50% of the
ownership interests having ordinary voting power of which shall at the time
be so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of the Company,
PROVIDED THAT, except for the limited purposes as set forth in the
definition of Consolidated Subsidiary, Howmet shall not be deemed a
Subsidiary of the Company for any purposes under this Agreement.
"Term Loan" is defined in Section 2.2.1.
"Term Loan Period" means the period from the Revolving Credit
Termination Date to the date that is nine-months after the Revolving Credit
Termination Date.
"Termination Date" means (1) (a) if the conversion of the Revolving
Credit Termination Balance to Term Loans does not occur, the Revolving
Credit Termination Date or (b) if the conversion of the Revolving Credit
Termination Balance to Term Loans occurs, the date that is nine months
after the Revolving Credit Termination Date, or (2) any earlier date on
which the Commitments are canceled by the Company or otherwise terminated
pursuant to this Agreement.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating
Rate Advance or Eurodollar Rate Advance.
"Unfunded Liabilities" means the amount (if any) by which the excesses
of the accumulated benefit obligations as determined under Financial
Accounting Standard Board Statement 87 exceeds the fair value of all such
Plan assets allocable to such benefits, as reported each year in the
Company's Annual Report to Stockholders.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Voting Stock" means Securities of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect
the corporate directors (or Persons performing similar functions).
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"Wholly-Owned Subsidiary" means any Subsidiary of which all of the
outstanding voting securities or ownership interests having ordinary voting
power are owned or controlled, directly or indirectly, by the Company or
one or more Wholly-Owned Subsidiaries, or by the Company and one or more
Wholly-Owned Subsidiaries, or any similar business organization which is so
owned or controlled.
"Year 2000 Issues" means anticipated costs, problems and uncertainties
associated with the inability of certain computer applications to
effectively handle data including dates on and after January 1, 2000, as
such inability affects the business, operations and financial condition of
the Company and its Subsidiaries and of the Company's and its Subsidiaries'
material customers, suppliers and vendors.
"Year 2000 Program" is defined in Section 5.19.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. ADVANCES.
2.1.1. COMMITMENTS TO MAKE REVOLVING LOANS. From and including the
Effective Date and prior to the Revolving Credit Termination Date, each
Bank severally agrees, on the terms and conditions set forth in this
Agreement, to make loans (individually a "Revolving Loan" and collectively
the "Revolving Loans") to the Company from time to time in amounts not to
exceed in the aggregate at any one time outstanding the amount of its
Commitment, PROVIDED that in no event may the Outstandings at any one time
exceed the Aggregate Commitment as in effect at such time. Subject to the
terms of this Agreement, the Company may borrow, repay and reborrow at any
time prior to the Revolving Credit Termination Date. Subject to the terms
and conditions set forth in Section 2.2 and at the option of the Borrower,
the Revolving Loans outstanding as of the Revolving Credit Termination Date
shall be converted to Term Loans and shall be repaid in accordance with the
terms of Section 2.2.
2.1.2. RATABLE LOANS. Each Advance hereunder shall consist of
Revolving Loans made from the several Banks ratably in proportion to the
ratios that their respective Commitments bear to the Aggregate Commitment.
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2.1.3. RATE OPTIONS. The Advances may be Floating Rate Advances or
Eurodollar Rate Advances, or a combination thereof, selected by the Company
in accordance with Sections 2.1.4 and 2.1.5; PROVIDED that there shall be
no more than ten (10) Interest Periods in effect with respect to all of the
Loans at any time.
2.1.4. METHOD OF SELECTING RATE OPTIONS AND INTEREST PERIODS FOR
ADVANCES. The Company shall select the Rate Options and Interest Periods
applicable to each Advance from time to time. The Company shall give the
Administrative Agent irrevocable notice (a "Borrowing Notice") not later
than 10:00 a.m. Chicago time on the Borrowing Date of each Floating Rate
Advance and at least three Business Days before the Borrowing Date for each
Eurodollar Rate Advance, specifying:
(a) the Borrowing Date, which shall be a Business Day, of such
Advance,
(b) the aggregate amount of such Advance, which shall be less than or
equal to the Aggregate Available Commitment,
(c) the Rate Option selected for such Advance, and
(d) in the case of each Eurodollar Rate Advance, the Interest Period
applicable thereto.
2.1.5. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES. Floating
Rate Advances shall continue as Floating Rate Advances unless and until
such Floating Rate Advances are converted into Eurodollar Rate Advances.
Each Eurodollar Rate Advance shall continue as a Eurodollar Rate Advance
until the end of the then applicable Interest Period therefor, at which
time such Eurodollar Rate Advance shall be automatically converted into a
Floating Rate Advance unless the Company shall have given the
Administrative Agent a Conversion/Continuation Notice requesting that, at
the end of such Interest Period, such Eurodollar Rate Advance continue as a
Eurodollar Rate Advance for the same or another Interest Period. Subject to
the terms of Section 2.3.2, the Company may elect from time to time to
convert all or any part of an Advance of any Type into any other Type or
Types of Advances; provided that (i) any conversion of any Eurodollar Rate
Advance shall be made on, and only on, the last day of the Interest Period
applicable thereto, and (ii) no Advance may be continued as or converted
into a Eurodollar Rate Advance at such times as a Default or Unmatured
Default has occurred and is continuing. The Company shall give the
Administrative Agent irrevocable notice (a "Conversion/Continuation
Notice") of each conversion of an Advance or continuation of a Eurodollar
Rate Advance not later than 10:00 a.m. Chicago time on the date of the
requested conversion into a Floating Rate Advance and at least three
Business Days, in the case of a conversion into or continuation of a
Eurodollar Advance, prior to the date of the requested conversion or
continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation;
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(ii) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(iii)the amount and Type(s) of Advance(s) into which such Advance is
to be converted or continued and, in the case of a conversion
into or continuation of a Eurodollar Rate Advance, the duration
of the Interest Period applicable thereto.
2.2. TERM LOAN EXTENSION OPTION.
2.2.1. OPTION. During the period that is not less than 5 Business Days
prior to the Revolving Credit Termination Date and that is not greater than
30 days prior to the Revolving Credit Termination Date, the Company may
request the Banks to convert the Revolving Loans outstanding on the
Revolving Credit Termination Date into term loans (individually, a "Term
Loan" and, collectively, the "Term Loans") and, subject to the terms and
conditions contained in this Section 2.2, the Revolving Credit Termination
Balance will be converted on the Revolving Credit Termination Date into
Term Loans.
2.2.2. EXTENSION REQUEST. When the Company wishes to request
conversion of the Revolving Loans into Term Loans, it shall transmit to the
Administrative Agent by telecopy or telefacsimile an Extension Request so
as to be received no later than noon Chicago time at least five (5)
Business Days prior to the Revolving Credit Termination Date. Promptly upon
receipt of an Extension Request, the Administrative Agent shall send to the
Banks by telecopy or telefacsimile a copy of such Extension Request.
2.2.3. CONDITIONS PRECEDENT TO EXTENSION. No Bank shall be required to
convert its Revolving Loans to Term Loans on the Revolving Credit
Termination Date unless:
(a) An Extension Request shall have been delivered to the
Administrative Agent in accordance with the terms of Section 2.2;
(b) No Default or Unmatured Default shall have occurred and be
continuing under Section 7.2, 7.3, 7.6, 7.7, 7.8 or 7.11;
(c) No Prepayment Event has occurred;
(d) On or prior to the Revolving Credit Termination Date, the Company
has paid to the Administrative Agent an extension fee in the
amount of .10% of the Revolving Credit Termination Balance for
the ratable benefit of the Banks and any other fees due and owing
to the Administrative Agent and the Banks as at the Revolving
Credit Termination Date.
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Submission by the Company of an Extension Request shall constitute a
representation and warranty by the Company that the conditions contained in
Section 2.2.3 have been satisfied. If the conditions precedent to
conversion contained in this Section 2.2.3 have not been satisfied or
waived, the Revolving Loans shall be due payable on the Revolving Credit
Termination Date.
2.2.4. REPAYMENT OF TERM LOANS. The outstanding principal balance of
each Term Loan shall be paid in full by the Company on the Termination
Date. Amounts repaid with respect to the Term Loans may not be reborrowed.
2.2.5. RATE OPTIONS. The Revolving Loans converted to Term Loans on
the Revolving Credit Termination Date shall initially continue as the Type
or Types of Advances, with the Interest Periods then applicable as are
outstanding on the Revolving Credit Termination Date and shall be continued
as or converted into Floating Rate Advances or Eurodollar Rate Advances, or
a combination thereof, selected by the Company in accordance with Sections
2.2.6.
2.2.6. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES CONSISTING
OF TERM LOANS. Floating Rate Advances shall continue as Floating Rate
Advances unless and until such Floating Rate Advances are converted into
Eurodollar Rate Advances. Each Eurodollar Rate Advance shall continue as a
Eurodollar Rate Advance until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Rate Advance shall be
automatically converted into a Floating Rate Advance unless the Company
shall have given the Administrative Agent a Conversion/Continuation Notice
requesting that, at the end of such Interest Period, such Eurodollar Rate
Advance continue as a Eurodollar Rate Advance for the same or another
Interest Period. Subject to the terms of Section 2.3.2, the Company may
elect from time to time to convert all or any part of an Advance of any
Type into any other Type or Types of Advances; provided that (i) any
conversion of any Eurodollar Rate Advance shall be made on, and only on,
the last day of the Interest Period applicable thereto, and (ii) no Advance
may be continued as or converted into a Eurodollar Rate Advance at such
times as a Default or Unmatured Default has occurred and is continuing. The
Company shall give the Administrative Agent a Conversion/Continuation
Notice of each conversion of an Advance or continuation of a Eurodollar
Rate Advance not later than 10:00 a.m. Chicago time on the date of the
requested conversion into a Floating Rate Advance and at least three
Business Days, in the case of a conversion into or continuation of a
Eurodollar Advance, prior to the date of the requested conversion or
continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(iii)the amount and Type(s) of Advance(s) into which such Advance is
to be converted or continued and, in the case of a conversion
into or continuation of a Eurodollar Rate Advance, the duration
of the Interest Period applicable thereto.
2.3. GENERAL FACILITY TERMS.
2.3.1. METHOD OF BORROWING. Not later than 1:00 p.m. Chicago time on
each Borrowing Date, each Bank shall make available its Loan or Loans in
funds immediately available in Chicago, to the Administrative Agent at its
address specified pursuant to Article XII. The Administrative Agent will
make the funds so received from the Banks available to the Company at the
Administrative Agent's aforesaid address. Notwithstanding the foregoing
provisions of this Section 2.3.1 but subject to Section 2.1.5, to the
extent that a Loan made by a Bank matures on the Borrowing Date of a
requested Loan, such Bank shall first apply the proceeds of the Loan it is
then making to the repayment of the maturing Loan.
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2.3.2. MINIMUM AMOUNT OF EACH ADVANCE. Each Advance shall be in the
minimum amount of $5,000,000 (and in integral multiples of $1,000,000 if in
excess thereof), PROVIDED, HOWEVER, that any Floating Rate Advance may be
in the aggregate amount of the Aggregate Available Commitment.
2.3.3. TERMINATION; REQUIRED PAYMENTS. The Commitments to lend
hereunder shall expire on the Revolving Credit Termination Date. Unless
converted to Term Loans in accordance with the provisions of Section 2.2,
any outstanding Revolving Loans and all other unpaid Obligations (other
than the Term Loans) shall be paid in full by the Company on the Revolving
Credit Termination Date or, at the election of the Required Banks in
accordance with Section 8.1, upon the occurrence of a Prepayment Event. Any
outstanding Term Loans and all other unpaid Obligations shall be paid in
full by the Company on the Termination Date or, at the election of the
Required Banks in accordance with Section 8.1, upon the occurrence of a
Prepayment Event.
2.3.4. OPTIONAL PRINCIPAL PAYMENTS. The Company may from time to time
pay all outstanding Floating Rate Advances, or, in a minimum aggregate
amount of $5,000,000, or any integral multiple of $1,000,000 in excess
thereof, any portion of the outstanding Floating Rate Advances upon one
Business Day's prior notice to the Administrative Agent without penalty or
premium. A Eurodollar Rate Advance may be paid prior to the last day of the
applicable Interest Period upon three Business Days' prior notice to the
Administrative Agent; PROVIDED, HOWEVER, that the Company shall indemnify
each Bank for any loss or cost incurred by it resulting therefrom in
accordance with Section 3.4.
2.3.5. COMMITMENT FEES AND VOLUNTARY REDUCTION OF COMMITMENTS.
(a) The Company agrees to pay to the Administrative Agent
for the account of each Bank a commitment fee payable on the
average daily unborrowed portion of such Bank's Commitment from
the Effective Date to but not including the Revolving Credit
Termination Date, equal to .15% per annum, such fee payable in
arrears on each Payment Date hereafter and on the Revolving
Credit Termination Date.
(b) The Company may permanently reduce the Aggregate
Commitment in whole, or in part ratably among the Banks in
integral multiples of $5,000,000, upon at least three Business
Days' written notice to the Administrative Agent, which shall be
irrevocable and shall specify the amount of any such reduction;
PROVIDED, HOWEVER, that the amount of the Aggregate Commitment
may not be reduced below the Outstandings at the time such
reduction is to take effect. All accrued commitment fees shall be
payable on the effective date of any termination of the
obligations of the Banks to make Revolving Loans hereunder.
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2.3.6. CHANGES IN INTEREST RATE, ETC. Each Floating Rate Advance shall
bear interest on the outstanding principal amount thereof, for each day
from and including the date such Advance is made or is converted from a
Eurodollar Rate Advance into a Floating Rate Advance pursuant to Section
2.1.5 or Section 2.2.6 to but excluding the date it becomes due or is
converted into a Eurodollar Rate Advance pursuant to Section 2.1.5 or
Section 2.2.6 hereof, at a rate per annum equal to the Floating Rate for
such day. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect simultaneously with
each change in the Floating Rate. Each Eurodollar Rate Advance shall bear
interest from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest Period at the
interest rate determined as applicable to such Eurodollar Rate Advance.
Prior to the Revolving Credit Termination Date, no Interest Period may end
after the Revolving Credit Termination Date. In the event the Revolving
Loans are converted to Term Loans in accordance with the terms of Section
2.2, thereafter no Interest Period may end after the Termination Date.
2.3.7. RATINGS CHANGE RATE INCREASE; RATE AFTER MATURITY.
2.3.7.1. RATE INCREASE WITH RATINGS CHANGE. If at any time the
Company's senior unsecured debt rating is below BBB- as determined by
Standard and Poor's Ratings Group (or its successors or assigns) or
below Baa3 as determined by Moody's Investors Service (or its
successors and assigns), the interest rates applicable to the Loans
shall automatically be increased by 0.25% per annum.
2.3.7.2. RATE AFTER MATURITY. Except as provided in the next
sentence, any Advance not paid at maturity, whether by acceleration or
otherwise, shall bear interest until paid in full at a rate per annum
equal to the Floating Rate plus 2% per annum. In the case of a
Eurodollar Rate Advance the maturity of which is accelerated pursuant
to Section 8.1, such Eurodollar Rate Advance shall bear interest until
paid in full for the remainder of the applicable Interest Period at
the rate otherwise applicable to such Interest Period plus 2% per
annum and thereafter at the Floating Rate plus 2% per annum.
2.3.8. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest
accrued on each Floating Rate Advance shall be payable on each Payment
Date, on any date on which the Floating Rate Advance is prepaid, whether
due to acceleration or otherwise, and at maturity. Interest accrued on each
Eurodollar Rate Advance shall be payable on the last day of its applicable
Interest Period and on any date on which such Advance is prepaid, whether
due to acceleration or otherwise. Interest accrued on each Eurodollar Rate
Advance having an Interest Period longer than three months shall also be
payable on the last day of each three-month interval during such Interest
Period. Interest on Eurodollar Rate Advances and commitment fees shall be
calculated for the actual number of days elapsed on the basis of a year
consisting of 360 days. Interest on Floating Rate Advances shall be
calculated for the actual number of days elapsed on the basis of a year
consisting of 365, or when appropriate 366, days. Interest shall be payable
for the day an Advance is made but not for the day of any payment on the
amount paid if payment is received prior to 1:00 p.m. (Chicago time) at the
place of payment. In the event any such payment is made with the proceeds
of an Advance, such payment shall be deemed to have been
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made prior to 1:00 p.m. (Chicago time) on the day such Advance is made. If
any payment of principal of or interest on an Advance or any payment of
fees shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment or a payment of fees, such extension of time shall be
included in computing interest in connection with such principal payment or
in computing the amount of such payment of fees, as the case may be.
2.3.9. METHOD OF PAYMENT. All payments of principal, interest, and
fees hereunder shall be made in immediately available funds to the
Administrative Agent at the Administrative Agent's address specified
pursuant to Article XIII or at any other Lending Installation of the
Administrative Agent specified in writing by the Administrative Agent to
the Company by noon (local time) on the date when due. Subject to Section
8.1(b), each such payment shall be applied to any Advances and other
amounts then due in accordance with the written instructions from the
Company to the Administrative Agent before or accompanying such payment and
shall be applied ratably among those Banks for whom any payment is then due
in proportion to the type of Advance or other payment then due. Each
payment delivered to the Administrative Agent for the account of any Bank
shall be delivered promptly by the Administrative Agent to such Bank in the
same type of funds which the Administrative Agent received at its address
specified pursuant to Article XIII or at any Lending Installation specified
in a notice received by the Administrative Agent from such Bank. The
Administrative Agent is hereby authorized to charge the account of the
Company at the office of the Administrative Agent for each payment of
principal, interest and fees as it becomes due hereunder.
2.3.10. NOTES; TELEPHONIC NOTICES. The Loans shall be evidenced by the
Notes. Each Bank is hereby authorized to record on the schedule attached to
its Notes, or otherwise record in accordance with its usual practice, the
date and amount of each of its Loans of the type evidenced by such Note;
PROVIDED, HOWEVER, that any failure to so record shall not affect the
Company's obligations under any Note. The Company hereby authorizes the
Banks and the Administrative Agent to extend Advances and effect Rate
Option selections based on telephonic notices made by any person or persons
the Administrative Agent or any Bank in good faith believes to be an
Authorized Representative acting on behalf of the Company. The Company
agrees to deliver promptly to the Administrative Agent a written
confirmation of each telephonic notice signed by
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an Authorized Representative. If the written confirmation differs in any
material respect from the action taken by the Administrative Agent and the
Banks, the records of the Administrative Agent and the Banks shall govern
absent demonstrable error.
2.3.11. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Administrative
Agent will notify each Bank of the contents of each commitment reduction
notice, Borrowing Notice, Conversion/Continuation Notice, Extension Request
and repayment notice received by it hereunder. The Administrative Agent
will notify each Bank of the interest rate applicable to each Eurodollar
Rate Advance promptly upon determination of such interest rate and will
give each Bank prompt notice of each change in the Corporate Base Rate.
2.3.12. LENDING INSTALLATIONS. Each Bank may book the Loans at any
Lending Installation selected by the Bank and may change the Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Notes shall be deemed held by each
Bank for the benefit of such Lending Installation. Each Bank may, by
written notice to the Administrative Agent and the Company, designate a
Lending Installation through which Loans are made by it and for whose
account Loan payments are to be made. Each Bank shall use its best efforts
to minimize any additional cost (if any) to the Company, under Section 3.3
or otherwise, as a result of a change of Lending Installation (including,
if appropriate, a return to a prior Lending Installation at such time as
the circumstances giving rise to a change of Lending Installation are no
longer in effect), but no Bank shall be required to take or omit to take
any action which action or omission would be economically or legally
disadvantageous to such Bank. In the event that any Bank has booked its
outstanding Eurodollar Rate Loans at such a designated Lending
Installation, the Company hereby agrees, upon the written request of such
Bank and receipt of such Bank's applicable Note, to execute and deliver to
such Bank for the account of such Bank's existing Lending Installation and
the account of such designated Lending Installation, respectively, both:
(i) as the case may be, a new Note which shall exclusively evidence all of
such Bank's Floating Rate Loans then and thereafter outstanding and (ii) as
the case may be, a new Note which shall exclusively evidence all of such
Bank's Eurodollar Rate Loans then and thereafter outstanding, each of said
new Notes to be in substantially the form of Exhibit "B" hereto with such
appropriate changes in either case as may be agreed to by such Bank, the
Company and the Administrative Agent and each of their respective legal
counsel. Upon such Bank's receipt of its new Notes, it is hereby authorized
and instructed by the Company to record on the respective schedules
attached thereto all of such Bank's Loans then outstanding of the type
evidenced by each such Note.
2.3.13. NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the
Company or a Bank, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the
Administrative Agent of (a) in the case of a Bank, the proceeds of a Loan
or (b) in the case of the Company, a payment of principal, interest or fees
to the Administrative Agent for the account of the Banks, that it does not
intend to make such payment, the Administrative Agent may assume that such
payment has been made. The Administrative
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Agent may, but shall not be obligated to, make the amount of such payment
available to the intended recipient in reliance upon such assumption. If
such Bank or the Company, as the case may be, has not in fact made such
payment to the Administrative Agent, the recipient of such payment shall,
on demand by the Administrative Agent, repay to the Administrative Agent
the amount so made available together with interest thereon in respect of
each day during the period commencing on the date such amount was so made
available by the Administrative Agent until the date the Administrative
Agent recovers such amount at a rate per annum equal to (a) in the case of
payment by a Bank, the Federal Funds Rate for such day or (b) in the case
of payment by the Company, the interest rate applicable to the relevant
Loan.
2.3.14. WITHHOLDING TAX EXEMPTION. At least five Business Days prior
to the first date on which interest or fees are payable hereunder for the
account of any Bank, each Bank that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will
deliver to each of the Company and the Administrative Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Bank is entitled to receive
payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver to each of the
Company and the Administrative Agent two additional copies of such form (or
a successor form) on or before the date that such form expires (currently,
three successive calendar years for Form 1001 and one calendar year for
Form 4224) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Company or the Administrative Agent, in each case
certifying that such Bank is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation
any change in treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Bank from duly completing
and delivering any such form with respect to it and such Bank advises the
Company and the Administrative Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal
income tax.
ARTICLE III
CHANGE IN CIRCUMSTANCES; INDEMNIFICATION
3.1. YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law) which becomes effective after the
date hereof, or any interpretation thereof, or compliance of any Bank with
such,
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(i) subjects any Bank or any applicable Lending Installation
to any tax, duty, charge or withholding on or from
payments due from the Company (excluding taxation of the
overall net income of any Bank or applicable Lending
Installation), or changes the basis of taxation of
payments to any Bank in respect of its Loans or other
amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Bank or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the
interest rate applicable to Eurodollar Rate Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Bank or any applicable Lending
Installation of making, funding or maintaining loans or
reduces any amount receivable by any Bank or any
applicable Lending Installation in connection with loans,
or requires any Bank or any applicable Lending
Installation to make any payment calculated by reference
to the amount of loans held or interest received by it,
by an amount deemed material by such Bank,
then, within 15 days of demand by such Bank, the Company shall pay such
Bank that portion of such increased expense incurred or reduction in an
amount received which such Bank determines is attributable to making,
funding and maintaining its Loans and its Commitment.
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Bank determines the
amount of capital required or expected to be maintained by such Bank, any
Lending Installation of such Bank or any corporation controlling such Bank
is increased as a result of a Change, then, within 15 days of demand by
such Bank, the Company shall pay such Bank the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Bank determines is attributable to this
Agreement, its Loans or its obligation to make Loans hereunder (after
taking into account such Bank's policies as to capital adequacy). No Bank
shall be entitled to demand payment under this Section 3.2 to the extent
that such payment relates to a period of time more than 90 days prior to
the date upon which such Bank first notified the Company of the occurrence
of the event entitling such Bank to such payment. "Change" means (i) any
change after the date of this Agreement in the Risk-Based Capital
Guidelines or (ii) any adoption of or change in any other law, governmental
or quasi-governmental rule, regulation, policy, guideline, interpretation,
or directive (whether or not having the force of law) after the date of
this Agreement which affects the amount of capital required or expected to
be maintained by any Bank or any Lending Installation or any corporation
controlling any Bank. "Risk-Based Capital Guidelines" means (i) the
risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (ii) the corresponding
capital regulations promulgated by regulatory authorities outside the
United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled
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"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted
prior to the date of this Agreement.
3.3. AVAILABILITY OF INTEREST RATE. If any Bank determines that
maintenance of its Eurodollar Rate Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether
or not having the force of law, or if the Required Banks determine that (i)
deposits of a type and maturity appropriate to match fund Eurodollar Rate
Advances are not available or (ii) a Eurodollar Rate does not accurately
reflect the cost of making or maintaining a Eurodollar Rate Advance, then
the Administrative Agent shall suspend the availability of the affected
Rate Option and (subject to the next sentence) require any Eurodollar Rate
Advances outstanding under an affected Rate Option to be converted to an
unaffected Rate Option. Notwithstanding anything in the preceding sentence
to the contrary, the Company shall not be required to pay or convert any
outstanding Eurodollar Rate Loan or Eurodollar Rate Advance unless such
payment or conversion is legally required in accordance with the
circumstances causing such unavailability. Subject to the provisions of
Article II hereof, the Company may select any unaffected Rate Option to
apply to such affected Advances. If the Company fails to select a new Rate
Option, the affected Advances shall be Floating Rate Advances.
3.4. FAILURE TO PAY OR BORROW ON CERTAIN DATES. If any payment of a
Eurodollar Rate Advance occurs on a date which is not the last day of the
applicable Interest Period, whether because of acceleration, prepayment or
otherwise, or a Eurodollar Rate Advance is not made on the date specified
by the Company for any reason other than default by the Banks, the Company
will indemnify each Bank for any loss or cost incurred by it resulting
therefrom, including, without limitation, any loss or cost in liquidating
or employing deposits acquired to fund or maintain the Eurodollar Rate
Advance.
3.5. BANK CERTIFICATES; SURVIVAL OF INDEMNITY. To the extent
reasonably possible, each Bank shall designate an alternate Lending
Installation with respect to its Eurodollar Rate Loans to reduce any
liability of the Company to such Bank under Sections 3.1 and 3.2 or to
avoid the unavailability of a Rate Option under Section 3.3, so long as
such designation is not disadvantageous to such Bank as determined by such
Bank in its sole discretion. A certificate of a Bank as to the amount due,
if any, under Sections 3.1, 3.2, or 3.4 shall be final, conclusive and
binding on the Company in the absence of manifest error. Such certificate
shall set forth in reasonable detail the basis of the determination of
amounts due under such Sections. Determination of amounts payable under
such Sections in connection with a Eurodollar Rate Loan shall be calculated
as though each Bank funded its Eurodollar Rate Loan through the purchase of
a deposit of the type and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein,
the amount specified in the certificate shall be payable on demand after
receipt by the Company of the certificate. The obligations of the Company
under Sections 3.1, 3.2, and 3.4 shall survive payment of the Obligations
and termination of this Agreement.
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ARTICLE IV
CONDITIONS PRECEDENT
4.1. INITIAL ADVANCE. No Bank shall be required to make its initial
Revolving Loan hereunder unless the Company has furnished to the
Administrative Agent with sufficient copies for the Banks:
(a) Copies of the Articles of Incorporation of the Company,
together with all amendments, and a certificate of good
standing, both certified on or within 15 days prior to the
Effective Date by the Secretary of State of Delaware.
(b) Copies, certified on the Effective Date by the Secretary or
Assistant Secretary of the Company, of its By-Laws and of
its Board of Directors' resolutions (and resolutions of
other bodies, if any are deemed necessary by counsel for any
Bank) authorizing the execution of the Loan Documents.
(c) An incumbency certificate, certified on the Effective Date
by the Secretary or Assistant Secretary of the Company,
which shall identify by name and title and bear the
signature of the officers of the Company authorized to sign
the Loan Documents and to make borrowings hereunder, upon
which certificates the Banks shall be entitled to rely until
informed of any change in writing by the Company.
(d) A written opinion of the counsel to the Company, addressed
to the Banks, in substantially the form of Exhibit "C"
hereto.
(e) A certificate, dated the Effective Date, signed by the Chief
Financial Officer of the Company, stating that on the
Effective Date (i) no Default or Unmatured Default has
occurred and is continuing; (ii) the Company will be
utilizing the proceeds to consummate the Stock Acquisition
on the date of such Advance and (iii) no Prepayment Event
has occurred and setting forth the determination of the
Company's Funded Debt/EBITDA Ratio for the last day of the
most recently ended fiscal quarter.
(f) A Note payable to the order of each of the Banks.
(g) Payment to the Agent of all fees due and owing to the
Administrative Agent and the Banks as at the Effective Date.
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(h) Written money transfer instructions, in substantially the
form of Exhibit "D" hereto, addressed to the Administrative
Agent and signed by an Authorized Officer, together with
such other related money transfer authorizations as the
Administrative Agent may have reasonably requested.
(i) Such other documents as any Bank or its counsel may have
reasonably requested.
4.2. EACH ADVANCE. No Bank shall be required to make any Advance
unless on the applicable Borrowing Date:
(a) There exists no Default or Unmatured Default or Prepayment
Event.
(b) The representations and warranties contained in Article V,
except the representation and warranty contained in Section
5.5, are true and correct in all material respects as of
such Borrowing Date as if made on such Borrowing Date except
for changes in the Schedules hereto reflecting transactions
permitted by this Agreement.
(c) All legal matters incident to the making of such Advance
shall be satisfactory to the Banks and their counsel.
Each Borrowing Notice with respect to each such Advance shall constitute a
representation and warranty by the Company that the conditions contained in
Sections 4.2(a) and (b) have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Banks that:
5.1. CORPORATE EXISTENCE AND STANDING. Each of the Company and the
Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and each
is duly qualified and in good standing in each jurisdiction where, because
of the nature of its activities or properties, such qualification is
required and the failure so to qualify would materially and adversely
affect its business, assets, financial condition, operations or prospects
of the Company and its Subsidiaries taken as a whole.
5.2. AUTHORIZATION AND VALIDITY. The Company has the corporate power
and authority and legal right to execute and deliver the Loan Documents and
perform its obligations thereunder.
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The execution and delivery by the Company of the Loan Documents and the
performance of its obligations thereunder have been duly authorized by
proper corporate proceedings and the Loan Documents constitute legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
5.3. COMPLIANCE WITH LAWS AND CONTRACTS. Neither the execution and
delivery by the Company of the Loan Documents, the consummation of the
transactions therein contemplated, nor compliance with the provisions
thereof will violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Company or any Subsidiary or the
Company's or any Subsidiary's charter, articles or certificate of
incorporation or by-laws or the provisions of any material indenture,
instrument or agreement to which the Company or any Subsidiary is a party
or is subject, or by which it, or its property, is bound, or conflict with
or constitute a default thereunder, or result in the creation or imposition
of any Lien pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by,
any governmental or public body or authority, or any subdivision thereof,
is required to authorize, or is required as of the date hereof in
connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents.
5.4. FINANCIAL STATEMENTS. The June 30, 1998 audited consolidated
financial statements of the Company and its Subsidiaries heretofore
delivered to the Banks were prepared in accordance with GAAP in effect on
the date such statements were prepared and fairly present the consolidated
financial condition and operations of the Company and its Subsidiaries at
such date and the consolidated results of their operations for the period
then ended.
5.5. MATERIAL ADVERSE CHANGE. No material adverse change in the
business, condition (financial or otherwise), operations, performance, or
properties of the Company and its Subsidiaries taken as a whole has
occurred since the date of the audited financial statements referred to in
Section 5.4. The Borrower has made a full and complete assessment of the
Year 2000 Issues and has a realistic and achievable program for remediating
the Year 2000 Issues on a timely basis (the "Year 2000 Program"). Based on
such assessment and on the Year 2000 Program the Borrower does not
reasonably anticipate that Year 2000 Issues will have a Material Adverse
Effect.
5.6. TAXES. The Company and the Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to
be filed and have paid all taxes due pursuant to said returns or pursuant
to any assessment received by the Company or any Subsidiary, except such
taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. Except as provided in Section
6.2.6(a), no material tax liens have been filed and no claims are being
asserted with respect to any such taxes. The charges, accruals and reserves
on the books of the Company and the Subsidiaries in respect of any taxes or
other governmental charges are adequate.
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5.7. LITIGATION. Except as disclosed in the Company's Form 10-K for
the year ended June 30, 1998, there is no litigation or proceeding pending
or, to the knowledge of any of their officers, threatened against the
Company or any Subsidiary which would reasonably be expected to have a
material adverse affect on the condition of the Company or the ability of
the Company to perform its obligations under the Loan Documents.
5.8. ERISA. The Unfunded Liabilities of all Plans do not in the
aggregate exceed an amount equal to 5 percent of the value (as of any date
of determination) of all Plan assets allocable to Plan benefits guaranteed
under ERISA. Each Plan complies in all material respects with all
applicable requirements of law and regulations, neither the Company nor any
of its Subsidiaries has withdrawn from any Plan or initiated steps to do
so, no steps have been taken to terminate any Plan, and no Reportable Event
has occurred with respect to any Plan, the cumulative effect of which could
have a material adverse effect on the business, operations, properties,
assets or conditions (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole.
5.9. DEFAULTS AND PREPAYMENT EVENT. No Default or Unmatured Default
has occurred and is continuing. No Prepayment Event has occurred.
5.10. ACCURACY OF INFORMATION. No information, exhibit or report
furnished by the Company or any Subsidiary in writing to the Administrative
Agent or to any Bank in connection with the negotiation of the Loan
Documents contained any material misstatement of fact or omitted to state
any fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
5.11. REGULATION U. Neither the Company nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying "margin stock"
(as defined in Regulation U). No part of the proceeds of any Loan will be
used in a manner which would violate, or result in a violation of,
Regulation U. No part of the proceeds of any Loan will be used for
"purchasing" or "carrying" "margin stock" (each as defined in Regulation
U).
5.12. PARI PASSU. All the payment obligations of the Company arising
under or pursuant to the Loan Documents will at all times rank pari passu
with all other unsecured and unsubordinated payment obligations and
liabilities (including contingent obligations and liabilities) of the
Company (other than those which are mandatorily preferred by laws or
regulations of general application).
5.13. INVESTMENT COMPANY. The Company is not, and after giving effect
to any Advance will not be, an "investment company" within the meaning of
the United States Investment Company Act of 1940, as amended.
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5.14. MATERIAL LAWS. Neither the Company nor any Subsidiary has
received any notice to the effect that its operations are not in material
compliance with any of the requirements of applicable federal, state and
local environmental, health and safety statutes and regulations with
respect to, or the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release into the
environment of, any toxic or hazardous waste or physical substance, which
non-compliance or remedial action could have a material adverse effect on
the business, operations, properties, assets or conditions (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole.
5.15. MATERIAL AGREEMENTS. Neither the Company nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction materially and adversely affecting its business,
properties or assets, operations or condition (financial or otherwise).
Neither the Company nor any Subsidiary is in default in the performance,
observance of fulfillment or any of the obligations, covenants or
conditions contained in any agreement to which it is a party or any
agreement or instrument evidencing or governing Indebtedness, which default
might have a material adverse effect on the business, properties, financial
condition, or results of operations, of the Company and its Subsidiaries,
taken as a whole.
5.16. SUBSIDIARIES. Schedule "1" hereto contains an accurate list of
all of the presently existing Subsidiaries of the Company, setting forth
their respective jurisdictions of incorporation and the percentage of their
respective capital stock owned by the Company or other Subsidiaries (which
in the case of Howmet shall be calculated after taking into account the
Stock Acquisition). All of the issued and outstanding shares of capital
stock of such Subsidiaries have been duly authorized and issued and are
fully paid and non-assessable. Schedule "2" hereto accurately describes all
Indebtedness of the Subsidiaries existing on the date of this Agreement.
5.17. OWNERSHIP OF PROPERTIES. Except as permitted by Section 6.2.6.,
on the date of this Agreement, the Company and its Subsidiaries will have
good title, free of all Liens, to all of the properties and assets
reflected in the financial statements referred to in Section 5.4 as owned
by the Company and its Subsidiaries.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Banks shall
otherwise consent in writing:
6.1. AFFIRMATIVE COVENANTS.
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6.1.1. FINANCIAL REPORTING. The Company will maintain, for itself and
the Consolidated Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to the Banks:
(a) Within 90 days after the close of each of its fiscal years,
an unqualified audit report certified by independent
certified public accountants of recognized national
standing, acceptable to the Banks, prepared in accordance
with generally accepted accounting principles on a
consolidated basis for itself and the Consolidated
Subsidiaries, including balance sheets as of the end of such
period, related profit and loss statements, a statement of
shareholders' equity, and a statement of cash flow,
accompanied by any management letter prepared by said
accountants.
(b) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, for itself and the
Consolidated Subsidiaries, consolidated unaudited balance
sheets as at the close of each such period and consolidated
profit and loss statements, a statement of shareholders'
equity, and a statement of cash flow for the period from the
beginning of such fiscal year to the end of such quarter
(subject to normal year-end audit adjustments), all
certified by its Chief Financial Officer or Treasurer.
(c) Together with the financial statements required hereunder, a
certificate signed by its Chief Financial Officer or
Treasurer (i) stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists,
stating the nature and status thereof, and stating the steps
the Company is taking to cure such Default or Unmatured
Default and (ii) stating that no Prepayment Event has
occurred.
(d) As soon as available, and in any event within 45 calendar
days after the end of each quarter of each fiscal year of
the Company, a schedule, certified as being accurate by the
Company's Chief Financial Officer, Treasurer or Controller,
showing, as of the end of each such quarter, the Company's
calculation, in form and detail satisfactory to the
Administrative Agent, of the calculations required to be
made to determine compliance with Section 6.2.7. The
schedule delivered within 45 calendar days after the end of
the fourth quarter of each fiscal year shall set forth a
preliminary determination subject to adjustment upon receipt
of audited annual financial statements and shall not be
deemed to constitute a misrepresentation or breach if
prepared in good faith and the audited numbers differ from
the unaudited fourth quarter results.
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(e) Promptly upon becoming available, copies of:
(i) All financial statements, reports, notices and proxy
statements sent by the Company or any Consolidated
Subsidiary to the stockholders of the Company.
(ii) All prospectuses of the Company or any Consolidated
Subsidiary filed with the Securities and Exchange
Commission or any other governmental agency succeeding
to the jurisdiction thereof.
(iii)All regular and periodic reports filed by the Company
or any Consolidated Subsidiary with any securities
exchange or with the Securities and Exchange Commission
or any other governmental agency succeeding to the
jurisdiction thereof.
(f) As soon as possible and in any event within 10 days after
receipt by the Company, a copy of (i) any notice or claim to
the effect that the Company or any Subsidiary is or may be
liable to any Person as a result of the release by the
Company, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or physical substance into the
environment, and (ii) any notice alleging any violation of
any federal, state or local environmental, health or safety
law or regulation with respect to any toxic or hazardous
waste or physical substance by the Company or any
Subsidiary, which would, in either case, have a material
adverse effect upon the operations of the Company and the
Subsidiaries, taken as a whole.
(g) As to each Plan, within 270 days after the close of each
Plan Year of such Plan, a statement of the Unfunded
Liabilities of such Plan, certified as correct by an actuary
enrolled under ERISA.
(h) As soon as possible and in any event within 10 days after
the Company knows that any Reportable Event has occurred
with respect to any Plan, a statement, signed by the chief
financial officer of the Company, describing said Reportable
Event and the action which the Company proposes to take with
respect thereto.
(i) Together with the financial statements required under
Section 6.1.1(a) hereinabove, a copy of the Company's annual
operating plan.
(j) Such other information (including non-financial information)
as the Administrative Agent or any Bank may from time to
time reasonably request.
6.1.2. USE OF PROCEEDS. The Company will, and will cause each
Subsidiary to, use the proceeds of the Advances to consummate the Stock
Acquisition and for payment of fees and expenses in connection therewith.
The Company shall use the proceeds of Advances in
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compliance with all applicable legal and regulatory requirements and any
use shall not result in a violation of any such applicable regulatory
requirements, including, without limitation, Regulation U, and the
Securities Act of 1933 and the Securities Exchange Act of 1934 and the
regulations thereunder.
6.1.3. NOTICE OF DEFAULT AND PREPAYMENT EVENT. The Company will, and
will cause each Subsidiary to, give prompt notice in writing to the Banks
of the occurrence of any Default or Unmatured Default and of any other
development related specifically to the business, properties or affairs of
the Company, financial or otherwise (including, without limitation,
developments with respect to Year 2000 Issues), which would be reasonably
likely to materially adversely affect the Company's business, properties or
affairs or the ability of the Company to repay the Obligations. The Company
will give written notice to the Banks of any Prepayment Event no later than
five Business Days following the occurrence of such Prepayment Event.
6.1.4. CONDUCT OF BUSINESS. The Company will carry on and conduct its
business in the manner of a diversified industrial company with a
commitment to the aerospace industry and will cause each Subsidiary to
conduct its business in a manner consistent with the Company's objectives
as such. The Company will, and will cause each Subsidiary to, do all things
necessary to remain duly incorporated, validly existing and in good
standing as a domestic corporation in its jurisdiction of incorporation,
and maintain all requisite authority to conduct its business in each
jurisdiction where, because of the nature of its activities or properties,
such authority is required and the failure to maintain such authority would
materially and adversely affect it business, assets, financial condition,
operations or prospects.
6.1.5. PAYMENT OF TAXES. The Company will, and will cause each
Subsidiary to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon
any property belonging to it, and all lawful claims which, if unpaid, would
become a Lien, provided that neither the Company nor a Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim the payment
of which is being contested in good faith and by appropriate proceedings;
the Company will, and will cause each Subsidiary to, make monthly accruals
of all of the estimated liability of the Company and the Subsidiaries for
such taxes, assessments, charges and levies, determined in accordance with
GAAP, and establish adequate reserves determined in accordance with GAAP,
for such thereof as may be contested, and reflect such accruals and
reserves in all financial statements furnished hereunder.
6.1.6. INSURANCE. The Company will, and will cause each Subsidiary to,
maintain insurance in such amounts and covering such risks as is consistent
with sound business practice.
6.1.7. COMPLIANCE WITH LAWS. The Company will, and will cause each
Subsidiary to, comply in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject.
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6.1.8. MAINTENANCE OF PROPERTIES. The Company will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve, protect
and keep its properties in good repair, working order and condition, and
make all necessary and proper repairs, renewals and replacements, except
for properties no longer used or useful in the respective businesses of the
Company or such Subsidiary.
6.1.9. INSPECTION. Except with respect to any information or
activities which are classified by the United States Government or
disclosure of which the Company reasonably believes would compromise
matters of national security, the Company will, and will cause each
Subsidiary to, permit the Banks, by their respective representatives and
agents and without cost to the Company, to inspect any of the properties,
corporate books and financial records of the Company and each Subsidiary,
to examine and make copies of the books of accounts and other financial
records of the Company and each Subsidiary, and to discuss the affairs,
finances and accounts of the Company and each Subsidiary with, and to be
advised as to the same by, their respective officers at such reasonable
times and intervals as the Banks may designate.
6.2. NEGATIVE COVENANTS.
6.2.1. DIVIDENDS. The Company will not, nor will it permit any
Subsidiary to, declare or pay any dividends on its capital stock or redeem,
repurchase or otherwise acquire or retire any of its capital stock at any
time outstanding, if a Default or Unmatured Default (except any Default or
Unmatured Default described in Section 7.5 hereof) or Prepayment Event
exists or would exist as a result of such declaration, payment or
redemption.
6.2.2. INDEBTEDNESS OF SUBSIDIARIES. The Company will not permit any
Subsidiary to create, incur or suffer to exist any Indebtedness, except:
(a) Indebtedness existing on the date of this Agreement and
refinancings of such Indebtedness;
(b) Indebtedness to the Company; and
(c) other Indebtedness which at any time does not exceed in the
aggregate $75,000,000.
6.2.3. MERGER. The Company will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except:
(a) any Subsidiary may merge or consolidate with or into the
Company or any Wholly-Owned Subsidiary so long as in any
merger or consolidation involving the Company, the Company
shall be the surviving or continuing corporation; and
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(b) the Company may consolidate or merge with any other
corporation if (i) the corporation which results from such
merger or consolidation (the "surviving corporation") is
organized under the laws of the United States or a
jurisdiction thereof, (ii) the due and punctual payment of
the principal of and interest on all of the Notes and the
due and punctual performance and observance of all of the
covenants in the Notes and this Agreement to be performed or
observed by the Company are expressly assumed in writing by
the surviving corporation and the surviving corporation
shall furnish to the Banks an opinion of counsel
satisfactory to the Banks to the effect that the instrument
of assumption has been duly authorized, executed and
delivered and constitutes the legal, valid and binding
contract and agreement of the surviving corporation
enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and
by general equitable principles, and (iii) at the time of
such consolidation or merger and immediately after giving
effect thereto, no Default or Unmatured Default or
Prepayment Event would exist.
6.2.4. SALE OF ASSETS. The Company will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of all, or a substantial
portion of, its property, assets or business to any other Person except for
sales of inventory in the ordinary course of business. For purposes of this
Section, "substantial portion" means assets (valued at the higher of book
or fair market value) having a value in excess of 10% of the Company's
Consolidated Total Assets.
6.2.5. SALE AND LEASEBACK. The Company will not, nor will it permit
any Subsidiary to, sell or transfer any property, the aggregate fair market
value of which at any time exceeds 10% of the Company's Consolidated Total
Assets, in order to concurrently or subsequently lease as lessee such or
similar property. The fair market value of any property sold or transferred
pursuant to this Section 6.2.5 shall be determined as of the date of such
sale or transfer.
6.2.6. LIENS. The Company will not, nor will it permit any Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the property of
the Company or any Subsidiary, except:
(a) Liens for taxes, assessments or governmental charges or
levies on its property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate
proceedings.
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens, interests of bailors, bailees, consignors
and consignees, and other similar liens arising in the
ordinary course of business which secure payment of
obligations not more than 60 days past due.
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(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits, or similar
legislation.
(d) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a
similar character and which do not in any material way
affect the marketability of the same or interfere with the
use thereof in the business of the Company or the
Subsidiaries.
(e) Liens created in favor of the United States government or
any other Person who has purchased or contracted to purchase
goods or services from the Company or any Subsidiary with
advance or progress payments.
(f) Liens existing on the date hereof and described in Schedule
"3" hereto.
(g) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not
have expired, or in respect of which the Company or a
Subsidiary shall at any time in good faith be prosecuting an
appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for
review shall have been secured.
(h) Liens to secure statutory obligations, surety or appeal
bonds or other liens of like general nature incurred in the
ordinary course of business and not in connection with the
borrowing of money, PROVIDED, in each case, the obligation
secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings.
(i) Liens of lessors under Capitalized Leases.
(j) Liens, in addition to those described in subsections (a)
through (i) hereof, to secure Indebtedness of the Company or
any Subsidiary in an aggregate amount not to exceed at any
time 10% of the Company's Consolidated Total Assets.
6.2.7. FUNDED DEBT/EBITDA RATIO. The Company will not permit its
Funded Debt/EBITDA Ratio as at the end of any fiscal quarter to exceed 3.00
to 1.0.
6.2.8. AFFILIATES; HOWMET. The Company will not, and will not permit
any Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any property or service) with, or make
any payment or transfer to, any Affiliate except in the ordinary course of
business and pursuant to the reasonable requirements of the Company's or
such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than the Company or such
Subsidiary would obtain in a comparable arms-length transaction. The
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Company will not, and will not permit any Subsidiary to, make any advance,
distribution, or payment to or investment in Howmet or any Subsidiary of
Howmet except for purposes of acquiring equity interests in Howmet.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made by or on behalf of the
Company or any Subsidiary to the Banks under or in connection with any Loan
Document shall be materially false as of the date on which made.
7.2. Nonpayment of principal of the Notes when due.
7.3. Nonpayment of interest upon the Notes or of any commitment fee,
extension fee or other obligations under any of the Loan Documents within
five days after the same becomes due.
7.4. The breach by the Company of any of the terms or provisions of
Sections 6.1.3 or 6.2.
7.5. The breach by the Company (other than a breach which constitutes
a Default under Section 7.1, 7.2, 7.3 or 7.4) of any of the terms or
provisions of this Agreement which is not remedied or waived within fifteen
days after written notice from the Administrative Agent or any Bank.
7.6. Failure of the Company, any Consolidated Subsidiary or Howmet to
pay any Indebtedness in an aggregate principal amount in excess of
$10,000,000 (or the equivalent thereof in any other currency), when due, or
the default by the Company, any Consolidated Subsidiary or Howmet in the
performance of any other term, provision or condition contained in any
agreement or agreements under which Indebtedness in an aggregate principal
amount in excess of $10,000,000 (or the equivalent thereof in any other
currency) was created or is governed, the effect of which, in either case,
is to cause, or to permit the holder or holders of such Indebtedness to
cause, such Indebtedness to become due prior to its stated maturity; or
Indebtedness in an aggregate principal amount in excess of $10,000,000 (or
the equivalent thereof in any other currency) shall be declared to be due
and payable or required to be prepaid (other than by a regularly scheduled
payment), prior to the stated maturity thereof; or the Company, any
Consolidated Subsidiary or Howmet shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.
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7.7. The Company or any Consolidated Subsidiary shall (a) have an
order for relief entered with respect to it under the Bankruptcy Code, (b)
make an assignment for the benefit of creditors, (c) apply for, seek,
consent to, or acquiesce in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any substantial
part of its property, (d) institute any proceeding seeking an order for
relief under the Bankruptcy Code or seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors
or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (e) take any corporate
action to authorize or effect any of the foregoing actions set forth in
this Section 7.7 or (f) fail to contest in good faith any appointment or
proceeding described in Section 7.8.
7.8. Without the application, approval or consent of the Company or
any Consolidated Subsidiary, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Company or any Consolidated
Subsidiary or any substantial part of its property, or a proceeding
described in Section 7.7(d) shall be instituted against the Company or any
Consolidated Subsidiary and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 60 consecutive
days.
7.9. The Company or any Consolidated Subsidiary shall fail within 30
days to pay, bond or otherwise discharge any judgment or order for the
payment of money in excess of $10,000,000, which is not stayed on appeal or
otherwise being appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Plans shall exceed in the
aggregate an amount equal to 5 percent of the value (as of any date of
determination) of all Plan assets allocable to Plan benefits guaranteed
under ERISA.
7.11. An administrator, custodian or other representative, by or
pursuant to any legislative act, resolution or rule (other than the
Bankruptcy Code or any similar law, state or federal, whether now or
hereafter existing) or any order or decree of any court or any governmental
board or agency (other than any order or decree issued pursuant to the
Bankruptcy Code or any similar law, state or federal, whether now or
hereafter existing) shall take possession or control of all or such
portions of the property of any one or more of the Company and the
Consolidated Subsidiaries as would, in the sole opinion of the Required
Banks, materially interfere with the operation of the business of the
Company and the Consolidated Subsidiaries, on a consolidated basis, and
such possession or control shall continue for 30 calendar days.
7.12. The Company or any Subsidiary shall be the subject of any
proceeding or investigation pertaining to the release by the Company or any
of its Subsidiaries, or any other Person of any toxic or hazardous waste or
physical substance into the environment, or any violation of any federal,
state or local environmental, health or safety law or regulation with
respect to any toxic or hazardous waste or physical substance, which would,
in either case, have a
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material adverse effect upon the operations of the Company and the
Subsidiaries, taken as a whole.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. ACCELERATION; ALLOCATION OF PAYMENTS AFTER DEFAULT OR PREPAYMENT
EVENT. (a) If any Default described in Section 7.7 or 7.8 occurs, the
commitments of the Banks to make Advances hereunder shall automatically
terminate and the Obligations shall immediately become due and payable
without any election or action on the part of the Administrative Agent or
any Bank. If any other Default or Prepayment Event occurs, the Required
Banks may terminate the commitments of the Banks to make Advances
hereunder, or declare the Obligations to be due and payable, whereupon the
Obligations shall become immediately due and payable, or both, without
presentment, demand, protest or notice of any kind, all of which the
Company hereby expressly waives.
If, within 14 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Banks to make Loans
hereunder as a result of any Default (other than any Default as described
in Section 7.7 or 7.8 with respect to the Company) and before any judgment
or decree for the payment of the Obligations due shall have been obtained
or entered, the Required Banks (in their sole discretion) shall so direct,
the Administrative Agent shall, by notice to the Company, rescind and annul
such acceleration and/or termination.
(b) Upon the occurrence of (i) any Unmatured Default as to which the
Required Banks shall have notified the Administrative Agent that the
provisions of this Section 8.1(b) shall apply, (ii) any Default or (iii)
any Prepayment Event, the Banks shall share all collections and recoveries
of the Obligations on a pro rata basis, based on the respective amounts of
Obligations (whether or not mature and currently payable) owing to each
Bank in respect of principal and unpaid accrued interest, fees and
indemnities hereunder as of the date of occurrence of such Default,
Unmatured Default or Prepayment Event, as the case may be.
8.2. AMENDMENTS. Subject to the provisions of this Section, the
Required Banks (or the Administrative Agent with the consent in writing of
the Required Banks) and the Company may enter into agreements supplemental
hereto for the purpose of adding any provisions to the Loan Documents or
changing in any manner the rights of the Banks or the Company hereunder or
waiving any Default hereunder; PROVIDED, HOWEVER, that no such supplemental
agreement shall, without the consent of all of the Banks:
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(a) Modify any of the provisions of this Agreement with respect to
the amount of or the time for the payment of the principal of or
any interest on any of the Obligations or any of the fees due
hereunder,
(b) Reduce the percentage specified in the definition of Required
Banks.
(c) Change the amount of the Commitment of any Bank hereunder or the
Revolving Credit Termination Date or Termination Date.
(d) Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written consent of the
Administrative Agent.
8.3. PRESERVATION OF RIGHTS. No delay or omission of the Banks or the
Administrative Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and any single or partial exercise of any such right
shall not preclude other or further exercise thereof or the exercise of any
other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Banks required pursuant to Section 8.2, and
then only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Administrative Agent and the
Banks until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties
of the Company contained in this Agreement shall survive delivery of the
Notes and the making of the Loans herein contemplated.
9.2. GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Bank shall be obligated to extend credit
to the Company in violation of any limitation or prohibition provided by
any applicable statute or regulation.
9.3. TAXES. Any taxes (excluding income taxes whether or not such
taxes are actually called "income taxes") payable or ruled payable by
Federal or State authority in respect of the Loan Documents shall be paid
by the Company, together with interest and penalties, if any.
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9.4. CHOICE OF LAW. THE LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT
OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO APPLICABLE FEDERAL LAWS.
9.5. CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS
STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO ANY LOAN DOCUMENTS AND THE COMPANY HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY
NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR
ANY BANK TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY
OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE COMPANY AGAINST THE
ADMINISTRATIVE AGENT OR ANY BANK OR ANY AFFILIATE OF THE ADMINISTRATIVE
AGENT OR ANY BANK INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
9.6. WAIVER OF JURY TRIAL. THE COMPANY, THE ADMINISTRATIVE AGENT AND
EACH BANK HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY
LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.7. HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of
any of the provisions of the Loan Documents.
9.8. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Company, the Administrative Agent and the Banks
and supersede all prior agreements and understandings among the Company,
the Administrative Agent and the Banks relating to the subject matter
thereof.
9.9. SEVERAL OBLIGATIONS. The respective obligations of the Banks
hereunder are several and not joint and no Bank shall be the partner or
agent of any other (except to the extent to which the Administrative Agent
is authorized to act as such). The failure of any Bank to perform any of
its obligations hereunder shall not relieve any other Bank from any of its
obligations hereunder.
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9.10. EXPENSES. The Company shall reimburse the Administrative Agent
for any and all costs and out-of-pocket expenses (including attorneys' fees
and time charges of attorneys for the Administrative Agent, which attorneys
may be employees of the Administrative Agent,) paid or incurred by the
Administrative Agent and the Arranger in connection with the preparation,
review, execution, delivery, amendment and modification of the Loan
Documents. The Company shall reimburse the Administrative Agent and the
Banks for any and all costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the
Administrative Agent and the Banks, which attorneys may be employees of the
Administrative Agent or the Banks) paid or incurred by the Administrative
Agent or any Bank in connection with the collection and enforcement of the
Loan Documents. The Company further agrees to indemnify the Administrative
Agent, the Arranger and each Bank, its directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Administrative Agent, the Arranger,
or any Bank is a party thereto) which any of them may pay or incur in
connection with or arising out of or relating to this Agreement, the other
Loan Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of any Loan
hereunder; PROVIDED, HOWEVER, that the Company shall not be liable for any
of the foregoing to the extent that they arise from a violation of law by,
or the gross negligence or willful misconduct of, the Administrative Agent,
the Arranger or such Bank, as the case may be. The obligations of the
Company under this Section shall survive the termination of this Agreement.
9.12. NUMBERS OF DOCUMENTS. All closing documents, notices and
requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to
each of the Banks.
9.13. CONFIDENTIALITY. Each Bank agrees to hold any confidential
information which it may receive from the Company pursuant to this
Agreement in confidence, except for disclosure (i) to its Affiliates and to
other Banks and their respective Affiliates, (ii) to legal counsel,
accountants, and other professional advisors to that Bank or to a
Transferee, (iii) to regulatory officials, (iv) to any Person as required
by law, regulation, or legal process, (v) to any Person in connection with
any legal proceeding to which that Bank is a party, and (vi) permitted by
Section 12.4. Each Bank will notify the Company of any disclosure under
clauses (iii) (other than disclosure pursuant to a request arising in the
course of a bank audit, notice of which such Bank shall deliver to the
Company as soon as is practicable), (iv), and (v) hereinabove before
divulging such information unless such disclosure is legally prohibited by
the terms of the request or demand for such information.
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ARTICLE X
THE ADMINISTRATIVE AGENT
10.1. APPOINTMENT. The First National Bank of Chicago is hereby
appointed Administrative Agent hereunder, and each of the Banks irrevocably
authorizes the Administrative Agent to act as the agent of such Bank. The
Administrative Agent agrees to act as such upon the express conditions
contained in this Article X. The duties of the Administrative Agent shall
be administrative in nature and the Administrative Agent shall not have a
fiduciary relationship in respect of any Bank by reason of this Agreement.
10.2. POWERS. The Administrative Agent shall have and may exercise
such powers hereunder as are specifically delegated to the Administrative
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. The Administrative Agent shall have no implied duties
to the Banks, or any obligation to the Banks to take any action hereunder
except any action specifically provided by this Agreement to be taken by
the Administrative Agent.
10.3. GENERAL IMMUNITY. Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be liable to the Banks
or any Bank for any action taken or omitted to be taken by it or them
hereunder or in connection herewith except for its or their own gross
negligence or wilful misconduct.
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. The Administrative
Agent shall not be responsible to the Banks for any recitals, reports,
statements, warranties or representations herein or any Loans hereunder or
be bound to ascertain or inquire as to the performance or observance of any
of the terms of this Agreement.
10.5. RIGHT TO INDEMNITY. The Administrative Agent shall be fully
justified in failing or refusing to take any action hereunder unless it
shall first be indemnified to its satisfaction by the Banks pro rata
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.
10.6. ACTION ON INSTRUCTIONS OF BANKS. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with written instructions signed by the Required
Banks, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks and on all holders of
Notes.
10.7. EMPLOYMENT OF AGENTS AND COUNSEL. The Administrative Agent may
execute any of its duties as Administrative Agent hereunder by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Banks, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative
Agent
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shall be entitled to advice of counsel concerning all matters pertaining to
the agency hereby created and its duties hereunder.
10.8. RELIANCE ON DOCUMENTS; COUNSEL. The Administrative Agent shall
be entitled to rely upon any Note, notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to be genuine
and correct and to have been signed or sent by the proper person or
persons, and, in respect to legal matters, upon the opinion of counsel
selected by the Administrative Agent.
10.9. ADMINISTRATIVE AGENT'S REIMBURSEMENT. Each Bank agrees to
reimburse the Administrative Agent in the amount of such Bank's ratable
share of the Commitments for any expenses not reimbursed by the Company (i)
for which the Administrative Agent is entitled to reimbursement by the
Company under the Loan Documents and (ii) for any other expenses,
liabilities, obligations, losses, damages, penalties, costs, or
disbursements of any kind incurred by the Administrative Agent on behalf of
the Banks, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents; PROVIDED, HOWEVER,
that no Bank shall be required to reimburse the Administrative Agent for
any such expenses to the extent that they arise from a violation of law by,
or the gross negligence or willful misconduct of, the Administrative Agent.
The obligations of the Banks under this Section 10.9 shall survive payment
of the Obligations and termination of this Agreement.
10.10. RIGHTS AS A BANK. With respect to its Commitment, Loans made by
it and the Note issued to it, the Administrative Agent shall have the same
rights and powers hereunder as any Bank and may exercise the same as though
it were not the Administrative Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include the Administrative Agent in
its individual capacity. The Administrative Agent may accept deposits from,
lend money to, and generally engage in any kind of banking or trust
business with the Company as if it were not the Administrative Agent.
10.11. BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any
other Bank and based on the financial statements referred to in Section 5.4
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 Administrative 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.
10.12. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving thirty days' written notice thereof to the
Banks and the Company and may be removed at any time with or without cause
by the Required Banks. Upon any such resignation or removal, the Required
Banks shall have the right to appoint, on behalf of the Banks but with the
consent of the Company (which consent shall not be unreasonably withheld),
a successor
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Administrative Agent. If no successor Administrative Agent shall have been
so appointed by the Required Banks and shall have accepted such appointment
within thirty days after the retiring Administrative Agent's giving notice
of resignation, then the retiring Administrative Agent may appoint, on
behalf of the Banks but with the consent of the Company (which consent
shall not be unreasonably withheld), a successor Administrative Agent. Such
successor Administrative Agent shall be a commercial bank having capital
and retained earnings of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article X shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was
acting as the Administrative Agent hereunder.
10.13. DISTRIBUTION OF INFORMATION. The Company authorizes the
Administrative Agent, as the Administrative Agent may elect in its sole
discretion, to discuss with and furnish to the Banks or to any other Person
having an interest in the Obligations (whether as a guarantor, pledgor of
collateral, participant, purchaser or otherwise) all financial statements,
audit reports and other information pertaining to the Company and its
Subsidiaries whether such information was provided by the Company or
prepared or obtained by the Administrative Agent; PROVIDED, HOWEVER, that
if such information is non-public and confidential, the Administrative
Agent shall obtain the consent of the Company (which shall not be
unreasonably withheld) prior to delivering such information to any such
Person and such Person shall have agreed to be bound by Section 9.13 of
this Agreement.. Neither the Administrative Agent nor any of its employees,
officers, directors or agents makes any representation or warranty
regarding any audit reports or other analyses of the Company's and its
Subsidiaries condition which the Administrative Agent may elect to
distribute, whether such information was provided by the Company or
prepared or obtained by the Administrative Agent, nor shall the
Administrative Agent or any of its employees, officers, directors or agents
be liable to any person or entity receiving a copy of such reports or
analyses for any inaccuracy or omission contained in or relating thereto.
10.14. DISCLOSURE. The Borrower and each Bank hereby (i) acknowledge
and agree that (a) one or more Affiliates of First Chicago are or may
become direct or indirect equity investors in the Company or its
Affiliates, (b) First Chicago is or may become a lender to, and agent bank
for, the Company and/or its Affiliates, including, without limitation,
pursuant to (i) the syndicated credit arrangements of Howmet in which First
Chicago presently acts as administrative agent and a lender, (ii) the
syndicated credit arrangements of the Company in which First Chicago
presently acts as administrative agent and as a lender, and (iii) the
short-term credit arrangements of the Company in which First Chicago
presently acts as the administrative agent and as a lender and (c) First
Chicago and/or its Affiliates from time to time may hold other investments
in, make other loans to or have other relationships with the Company and
its Affiliates, and (ii) waive any liability of First Chicago or such
Affiliate to the Borrower or any Bank, respectively, arising out of or
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resulting from such investments, loans or relationships other than
liabilities arising out of the gross negligence or willful misconduct of
First Chicago or its Affiliates.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. SETOFF. In addition to, and without limitation of, any rights of
the Banks under applicable law, if the Company becomes insolvent, however
evidenced, or any Default or Prepayment Event occurs, any indebtedness from
any Bank to the Company may be offset and applied toward the payment of the
Obligations owing to such Bank, whether or not the Obligations, or any part
thereof, shall then be due.
11.2. RATABLE PAYMENTS. In case at any time any Bank, whether by
setoff or otherwise, has payment made to it upon its Loans in a greater
proportion than received by any other Bank, such Bank so receiving such
greater proportionate payment agrees to purchase a portion of the Loans
held by the other Banks so that after such purchase each Bank will hold its
ratable proportion of Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made. The
Company agrees that any Bank purchasing a participation hereunder may, to
the fullest extent permitted by law, exercise all its rights of payment
with respect to such participation as if such Bank were the direct creditor
of the Company in the amount of the participation.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Company and
the Banks and their respective successors and assigns, except that (i) the
Company shall not have the right to assign its rights or obligations under
the Loan Documents and (ii) any assignment by any Bank must be made in
compliance with Section 12.3. Notwithstanding clause (ii) of this Section,
any Bank may at any time, without the consent of the Company or the
Administrative Agent, assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank; PROVIDED, HOWEVER, that
no such assignment to a Federal Reserve Bank shall release the transferor
Bank from its obligations hereunder. The Administrative Agent may treat the
payee of any Note as the owner thereof for all purposes hereof unless and
until such payee complies with Section 12.3 in the case
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of an assignment thereof or, in the case of any other transfer, a written
notice of the transfer is filed with the Administrative Agent. Any assignee
or transferee of a Note agrees by acceptance thereof to be bound by all the
terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving
such authority or consent is the holder of any Note, shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note
or of any Note or Notes issued in exchange therefor.
12.2. PARTICIPATIONS.
12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Bank may, in the
ordinary course of its business and in accordance with applicable law,
at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such
Bank, any Note held by such Bank, any Commitment of such Bank or any
other interest of such Bank under the Loan Documents. In the event of
any such sale by a Bank of participating interests to a Participant,
such Bank's obligations under the Loan Documents shall remain
unchanged, such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Bank
shall remain the holder of any each of its Notes for all purposes
under the Loan Documents, all amounts payable by the Company under
this Agreement shall be determined as if such Bank had not sold such
participating interests, and the Company and the Administrative Agent
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under the Loan
Documents.
12.2.2. VOTING RIGHTS. Each agreement pursuant to which any Bank
may sell such a participation shall provide that such Bank shall
retain the sole right to approve, without the consent of any
Participant, any amendment, modification or waiver of any provision of
the Loan Documents other than any amendment, modification or waiver
with respect to any Loan or Commitment in which such Participant has
an interest which forgives principal, interest or fees or reduces the
interest rate or fees payable with respect to any such Loan or
Commitment, postpones any date fixed for any regularly-scheduled
payment of principal of, or interest or fees on, any such Loan or
Commitment, releases any guarantor of any such Loan or releases any
substantial portion of collateral, if any, securing any such Loan;
provided that such participation agreement may provide that such Bank
will not agree to any modification, amendment or waiver of this
Agreement described in Sections 8.2 (a), (c) and (d) without the
consent of the Participant.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. Any Bank may, in the ordinary
course of its business and in accordance with applicable law, at any
time assign to one or more banks or other entities ("Purchasers") all
or any part of its rights and obligations under the Loan Documents.
Such assignment shall be substantially in the form of Exhibit "E"
hereto or in such other form as may be agreed to by the parties
thereto. The consent of the
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Company and the Administrative Agent shall be required prior to an
assignment becoming effective; PROVIDED, HOWEVER, that if a Default
has occurred and is continuing, the consent of the Company shall not
be required. Such consent shall not be unreasonably withheld or
delayed. Each such assignment with respect to a Purchaser which is not
a Bank or an Affiliate thereof shall (unless each of the Borrower and
the Agent otherwise consents, such consent of the Borrower not being
required if a Default has occurred and is continuing) be in an amount
not less than the lesser of (i) $10,000,000 or (ii) the remaining
amount of the assigning Bank's Commitment (calculated as at the date
of such assignment) or outstanding Loans (if the applicable Commitment
has been terminated).
12.3.2. SUBSTITUTION OF BANK. The Company may, at its sole
expense and effort, require any Bank to transfer and assign, without
recourse (in accordance with this Section 12.3) all (but not less than
all) of its interests, rights and obligations under this Agreement to
an assignee which shall assume such assigned obligations (which
assignee may be another Bank, if a Bank accepts such assignment);
PROVIDED, that (i) such assignment shall not conflict with any law,
rule or regulation or order of any court or other governmental
authority, (ii) the Company shall have received a written consent of
the Agent in the case of an entity that is not a Bank, which consent
shall not be unreasonably withheld, (iii) the Company or such assignee
shall have paid to the assigning Bank in immediately available funds
the principal of and interest accrued to the date of such payment on
the Loans made by it hereunder and all other amounts owed to it
hereunder and the fee payable to the Agent pursuant to Section 12.3.3
and (iv) nothing in the foregoing is intended or shall be construed as
obligating the Administrative Agent or any Bank to locate such an
assignee.
12.3.3. EFFECT; EFFECTIVE DATE. Upon (i) delivery to the
Administrative Agent of a notice of assignment, substantially in the
form attached as Exhibit "I" to Exhibit "E" hereto (a "Notice of
Assignment"), together with any consents required by Section 12.3.1 or
12.3.2, and (ii) payment of a $3,500 fee to the Administrative Agent
for processing such assignment, such assignment shall become effective
on the effective date specified in such Notice of Assignment. The
Notice of Assignment shall contain a representation by the Purchaser
to the effect that none of the consideration used to make the purchase
of the Commitment and Loans under the applicable assignment agreement
are "plan assets" as defined under ERISA and that the rights and
interests of the Purchaser in and under the Loan Documents will not be
"plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Bank party to
this Agreement and any other Loan Document executed by the Banks and
shall have all the rights and obligations of a Bank under the Loan
Documents, to the same extent as if it were an original party hereto,
and no further consent or action by the Company, the Banks or the
Administrative Agent shall be required to release the transferor Bank
with respect to the percentage of the Aggregate Commitment and Loans
assigned to such Purchaser. Upon the consummation of any assignment to
a Purchaser pursuant to this Section 12.3.3, the transferor Bank, the
Administrative Agent and the
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Company shall make appropriate arrangements so that replacement
Notes are issued to such transferor Bank and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting their respective
Commitments, as adjusted pursuant to such assignment.
12.4. DISSEMINATION OF INFORMATION. The Company authorizes each Bank
to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee")
and any prospective Transferee any and all information in such Bank's
possession concerning the creditworthiness of the Company and its
Subsidiaries; PROVIDED, HOWEVER, that if such information is non-public and
confidential, such Bank shall obtain the consent of the Company (which
shall not be unreasonably withheld) prior to delivering such information to
such Person and such Person agrees to be bound by Section 9.13 of this
Agreement. No Bank may disclose confidential information regarding the
Company and its Subsidiaries to prospective Transferees without the consent
of the Company.
12.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the
transferor Bank shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section
2.3.14.
ARTICLE XIII
NOTICES
13.1. GIVING NOTICE. Any notice required or permitted to be given
under this Agreement may be given by (a) actual delivery to the Company,
the Administrative Agent or the Banks at the addresses indicated below
their signatures to this Agreement, or (b) United States mail, postage
prepaid, or telecopy or telefacsimile addressed to the Company, the Banks
or the Administrative Agent at the addresses indicated below their
signatures to this Agreement. Each such notice shall be effective (a) if
given by mail, 72 hours after such notice is deposited in the mails with
first class postage prepaid, addressed as aforesaid, and (b) if given by
any other means, when delivered at the address specified in accordance with
this Article XIII.
13.2. CHANGE OF ADDRESS. The Company and the Banks may each change the
address for service of notice upon it by a notice in writing to the other
parties hereto.
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ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Agreement by signing any such counterpart.
This Agreement shall be effective when it has been executed by the Company,
the Administrative Agent and the Banks and each party has notified the
Administrative Agent by telecopy or telefacsimile or by telephone,
confirmed in writing, that it has taken such action.
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IN WITNESS WHEREOF, the Company, the Banks and the Administrative
Agent have executed this Agreement as of the date first above written.
CORDANT TECHNOLOGIES INC.
By:_______________________________
Richard L. Corbin
Executive Vice President and Chief
Financial Officer
ALL NOTICES: Cordant Technologies Inc.
15 W. South Temple
Suite 1600
Salt Lake City, UT 84101
Attn: Treasury Department
Telephone: 801-933-4025
Telecopy: 801-933-4014
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<PAGE>
COMMITMENTS
$400,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
INDIVIDUALLY AND AS ADMINISTRATIVE AGENT
By:___________________________________________
Gregory Sjullie
Vice President
ALL NOTICES AND CREDIT MATTERS: The First National Bank of Chicago
Mail Suite IL1-0374
One First National Plaza
Chicago, Illinois 60670
Attn: Transportation Division,
Gregory Sjullie
Telephone: (312) 732-8872
Telecopy: (312) 732-3885
ALL BORROWING NOTICES: The First National Bank of Chicago
Mail Suite IL1-0634
One First National Plaza
Chicago, Illinois 60670
Attn: John Beirne
Telephone: (312) 732-3659
Telecopy: (312) 732-3055
WIRE TRANSFER PAYMENT INSTRUCTIONS:
The First National Bank of Chicago
Ref: Cordant Technologies Inc.
ABA #: 071 0000 13
Credit LS2OSD Money Transfer Inc.
Account Number 4811-5286-0000
AGGREGATE COMMITMENT
$400,000,000
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EXHIBIT "A"
EXTENSION REQUEST
__________, 1999
To: The First National Bank of Chicago, as agent (the
"Administrative Agent")
From: Cordant Technologies Inc.
Re: Credit Agreement (the "Agreement") dated as of February
5, 1999 among Cordant Technologies Inc., the Banks
listed on the signature pages thereof and the
Administrative Agent
We hereby give notice pursuant to Section 2.2.2 of the Agreement
that we request conversion of the Revolving Credit Termination Balance on
the Revolving Credit Termination Date to Term Loans. The Company hereby
represents and warrants that as of the date hereof and as of the Revolving
Credit Termination Date, all conditions precedent to the conversion of the
Revolving Loans to Term Loans under Section 2.2.3 have been satisfied and
(i) no Default or Unmatured Default has occurred and is continuing under
the Agreement other than [______________________]; and (ii) no Prepayment
Event has occurred.
Terms used herein have the meanings assigned to them in the
Agreement.
CORDANT TECHNOLOGIES INC.
By:________________________________
Title:______________________________
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EXHIBIT "B"
FORM OF
PROMISSORY NOTE
$400,000,000 February 5, 1999
CORDANT TECHNOLOGIES INC., a Delaware corporation (the "Company"),
promises to pay to the order of (the "Bank") the lesser of the principal
sum of Four Hundred Million and No/100 Dollars or the aggregate unpaid
principal amount of all Loans made by the Bank to the Company pursuant to
Section 2.1 of the Credit Agreement ("Agreement") hereinafter referred to
or converted pursuant to Section 2.2 of the Agreement, whichever is less,
in immediately available funds at the main office of The First National
Bank of Chicago in Chicago, Illinois, as Administrative Agent, together
with interest on the unpaid principal amount hereof at the rates and on the
dates set forth in the Agreement. The Company shall pay the principal of
and accrued and unpaid interest on the Loans in full on the Termination
Date.
The Bank shall, and is hereby authorized to, record on the schedule
attached hereto, or otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder.
This Promissory Note is one of the Notes issued pursuant to, and is
entitled to the benefits of, the Credit Agreement dated as of February 5,
1999, among the Company, The First National Bank of Chicago, individually
and as Administrative Agent, and the banks named therein, to which
Agreement, as it may be amended from time to time, reference is hereby made
for a statement of the terms and conditions under which this Promissory
Note may be prepaid or its maturity date accelerated. Capitalized terms
used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
CORDANT TECHNOLOGIES INC.
By:__________________________________
Richard L. Corbin
Executive Vice President and
Chief Financial Officer
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<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
SYNDICATED LOANS PROMISSORY NOTE
OF CORDANT TECHNOLOGIES INC.
DATED FEBRUARY 5, 1999
<TABLE>
<CAPTION>
PRINCIPAL MATURITY PRINCIPAL
AMOUNT OF OF INTEREST AMOUNT UNPAID
DATE LOAN PERIOD PAID BALANCE
<S> <C> <C> <C>
</TABLE>
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<PAGE>
EXHIBIT "C"
OPINION OF COUNSEL
February 5, 1999
The Administrative Agent and the Banks who are parties to the Credit
Agreement described below.
Ladies and Gentlemen:
This is in regard to the Credit Agreement dated as of February 5, 1999
among Cordant Technologies Inc. (the "Company"), the Banks named therein
and The First National Bank of Chicago, as Administrative Agent (the
"Credit Agreement"). Unless the context otherwise requires, all terms used
in this opinion which are specifically defined in the Credit Agreement
shall have the meanings given such terms in the Credit Agreement.
I am the Vice President and General Counsel of the Company and have acted
as such in connection with the Credit Agreement. In so acting, I have
examined originals (or copies thereof certified to my satisfaction) of such
corporate and other documents of the Company (including certificates of
officers of the Company on which I have relied) and such statutes and
regulations as I have deemed relevant and necessary in order to give the
following opinion; the certificate of incorporation and by-laws of the
Company and its Subsidiaries as set forth on Schedule 1 of the Credit
Agreement; the corporate proceedings and other actions taken by the Company
and its Subsidiaries as set forth on Schedule 1 of the Credit Agreement to
qualify, and maintain its good standing, in the jurisdiction of its
incorporation and in those jurisdictions in which the Company and its
Subsidiaries are qualified as foreign corporations; and the corporate
proceedings of the Company taken to authorize the execution, delivery and
performance of the Credit Agreement and the Notes and the borrowings under
the Credit Agreement.
Based upon the foregoing, it is my opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. The
Company has all corporate power required to carry on its ordinary
course of business.
2. The Company has no other subsidiaries except as set forth on
Schedule 1 of the Credit Agreement. Each domestic subsidiary set
forth on Schedule 1 of the Credit Agreement is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Incorporation set forth on Schedule 1.
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3. The Company and its Subsidiaries are each duly qualified as a
foreign corporation in good standing to do business in all
jurisdictions where the failure to so qualify would have a
material adverse effect on the business of the Company and the
subsidiaries taken as a whole. The Company and its operating
subsidiaries are duly qualified as a foreign corporation in good
standing in the States listed on Schedule 1A.
4. The execution and delivery of the Credit Agreement and the Notes
by the Company, the borrowings by the Company under the Credit
Agreement and the performance by the Company of its obligations
under the Credit Agreement and the Notes have been duly
authorized by all necessary corporate action and proceedings on
the part of the Company and do not at this time:
(a) require any consent of the Company's shareholders;
(b) contravene, or constitute a default under, any provision
of any law or regulation applicable to the Company or of
the certificate of incorporation or by-laws of the
Company or of any material contract, agreement, judgment,
order, decree, adjudication or other instrument binding
upon the Company, or by which the Company or its property
may be bound or affected, or result in the creation of
any Lien on any property now owned by the Company or any
Subsidiaries pursuant to the provisions of any agreement,
indenture or other instrument binding upon it.
5. The Credit Agreement and the Notes have been duly executed and
delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with
their terms, except as such enforceability may be limited by
bankruptcy or similar laws and by laws and judicial decisions
relating generally to the enforcement of creditors' rights and
subject also to the availability of equitable remedies and to
general principles of equity.
6. Except as otherwise set forth in the Company's Form 10-K as of
June 30, 1998, a copy of which has been previously delivered to
you, there is as of the date hereof no action, suit, proceeding
or investigation of which I am aware pending or threatened
against or affecting the Company or any subsidiary before any
court, regulatory commission, arbitration tribunal, governmental
department, administrative agency or instrumentality which, would
be reasonably expected to have a material adverse effect on the
business, condition (financial or otherwise) or operations of the
Company and its Subsidiaries as a whole.
7. Neither the Company nor its Subsidiaries is in default or
violation in any respect which would have a material adverse
effect on the business or condition (financial or otherwise) of
the Company and its Subsidiaries as a whole with respect to any
law, rule, regulation, order, writ, judgment, injunction, decree,
adjudication, determination or award presently in effect and
applicable to it.
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8. No approval, authorization, consent adjudication or order of any
governmental authority, which has been obtained by the Company,
is required to be obtained by the Company as of the date hereof
in connection with the execution and delivery of the Credit
Agreement, the Notes, the borrowings under the Credit Agreement
or in connection with the performance by the Company of its
obligations under the Credit Agreement and the Notes.
9. The Company is not engaged principally or as one of its important
activities in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" (as such term is
defined in Regulation U of the Board of Governors of the Federal
Reserve System).
10. The Company is not an "investment company," within the meaning of
the Investment Company Act of 1940, as currently in effect.
Very truly yours,
Dan Hapke
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<PAGE>
EXHIBIT "D"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To The First National Bank of Chicago, as Administrative Agent (the
"Administrative Agent") under the Credit Agreement Described
Below.
Re: Credit Agreement, dated as of February 5, 1999 (as the same may
be amended or modified, the "Credit Agreement"), among Cordant
Technologies Inc. (the "Company"), the Administrative Agent, and
the Banks NAMED THEREIN
Terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Credit Agreement.
The Administrative Agent is specifically authorized and directed to
act upon the following standing money transfer instructions with respect to
the proceeds of Advances or other extensions of credit from time to time
until receipt by the Administrative Agent of a specific written revocation
of such instructions by the Company, PROVIDED, HOWEVER, that the
Administrative Agent may otherwise transfer funds as hereafter directed in
writing by the Company in accordance with Section 13.1 of the Credit
Agreement or based on any telephonic notice made in accordance with Section
2.3.10 of the Credit Agreement.
Facility Identification Number(s) _________________________________________
Customer/Account Name ____________________________________________________
Transfer Funds To ________________________________________________________
-----------------------------------------------------------------
------------------------------------------------------------------
For Account No. _________________________________________________________
Reference/Attention To __________________________________________________
Authorized Officer (Customer Representative) Date _________________
- -------------------------------------- ----------------------
(Please Print) Signature
Bank Officer Name Date __________________________
- ------------------------------------- ---------------------------------
(Please Print) Signature
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
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EXHIBIT "E"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
__________ (the "Assignor") and _______________________ ( the "Assignee")
is dated as of _______, 19__. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from
time to time is herein called the "Credit Agreement") described in Item 1
of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein
and not otherwise defined herein shall have the meanings attributed to them
in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, , an interest in and to the Assignor's rights and obligations
under the Credit Agreement and the other Loan Documents, such that after
giving effect to such assignment the Assignee shall have purchased pursuant
to this Assignment Agreement the percentage interest specified in Item 3 of
Schedule 1 of all outstanding rights and obligations under the Credit
Agreement and the other Loan Documents relating to the facilities listed in
Item 3 of Schedule 1 and the other Loan Documents. The aggregate Commitment
(or Loans, if the applicable Commitment has been terminated) purchased by
the Assignee hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the "Effective Date") shall be the later of the date specified in Item 5
of Schedule 1 or two Business Days (or such shorter period agreed to by the
Agent) after a Notice of Assignment substantially in the form of Exhibit
"I" attached hereto has been delivered to the Agent. Such Notice of
Assignment must include any consents required to be delivered to the Agent
by Section 12.3.1 or 12.3.2 of the Credit Agreement. In no event will the
Effective Date occur if the payments required to be made by the Assignee to
the Assignor on the Effective Date under Sections 4 and 5 hereof are not
made on the proposed Effective Date. The Assignor will notify the Assignee
of the proposed Effective Date no later than the Business Day prior to the
proposed Effective Date. As of the Effective Date, (i) the Assignee shall
have the rights and obligations of a Bank under the Loan Documents with
respect to the rights and obligations assigned to the Assignee hereunder
and (ii) the Assignor shall relinquish its rights and be released from its
corresponding obligations under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the interest assigned hereby. The
Assignee shall advance funds directly to the Agent with respect to
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all Loans and reimbursement payments made on or after the Effective Date
with respect to the interest assigned hereby. [In consideration for the
sale and assignment of Loans hereunder, (i) the Assignee shall pay the
Assignor, on the Effective Date, an amount equal to the principal amount of
the portion of all Floating Rate Loans assigned to the Assignee hereunder
and (ii) with respect to each Eurodollar Rate Loan made by the Assignor and
assigned to the Assignee hereunder which is outstanding on the Effective
Date, (a) on the last day of the Interest Period therefor or (b) on such
earlier date agreed to by the Assignor and the Assignee or (c) on the date
on which any such Eurodollar Rate Loan either becomes due (by acceleration
or otherwise) or is prepaid (the date as described in the foregoing clauses
(a), (b) or (c) being hereinafter referred to as the "Payment Date"), the
Assignee shall pay the Assignor an amount equal to the principal amount of
the portion of such Eurodollar Rate Loan assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree
that the Payment Date for such Eurodollar Rate Loan shall be the Effective
Date, they shall agree to the interest rate applicable to the portion of
such Loan assigned hereunder for the period from the Effective Date to the
end of the existing Interest Period applicable to such Eurodollar Rate Loan
(the "Agreed Interest Rate") and any interest received by the Assignee in
excess of the Agreed Interest Rate shall be remitted to the Assignor. In
the event interest for the period from the Effective Date to but not
including the Payment Date is not paid by the Company with respect to any
Eurodollar Rate Loan sold by the Assignor to the Assignee hereunder, the
Assignee shall pay to the Assignor interest for such period on the portion
of such Eurodollar Rate Loan sold by the Assignor to the Assignee hereunder
at the applicable rate provided by the Credit Agreement. In the event a
prepayment of any Eurodollar Rate Loan which is existing on the Payment
Date and assigned by the Assignor to the Assignee hereunder occurs after
the Payment Date but before the end of the Interest Period applicable to
such Eurodollar Rate Loan, the Assignee shall remit to the Assignor the
excess of the prepayment penalty paid with respect to the portion of such
Eurodollar Rate Loan assigned to the Assignee hereunder over the amount
which would have been paid if such prepayment penalty was calculated based
on the Agreed Interest Rate. The Assignee will also promptly remit to the
Assignor (i) any principal payments received from the Agent with respect to
Eurodollar Rate Loans prior to the Payment Date and (ii) any amounts of
interest on Loans and fees received from the Agent which relate to the
portion of the Loans assigned to the Assignee hereunder for periods prior
to the Effective Date, in the case of Floating Rate Loans or fees, or the
Payment Date, in the case of Eurodollar Rate Loans, and not previously paid
by the Assignee to the Assignor.] In the event that either party hereto
receives any payment to which the other party hereto is entitled under this
Assignment Agreement, then the party receiving such amount shall promptly
remit it to the other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. [The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or commitment
fees is made under the Credit Agreement with respect to the amounts
assigned to the Assignee hereunder (other than a payment of interest or
commitment fees for the period prior to the Effective Date or, in the case
of Eurodollar Rate Loans, the Payment Date, which the Assignee is obligated
to deliver to the
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Assignor pursuant to Section 4 hereof). The amount of such fee shall be the
difference between (i) the interest or fee, as applicable, paid with
respect to the amounts assigned to the Assignee hereunder and (ii) the
interest or fee, as applicable, which would have been paid with respect to
the amounts assigned to the Assignee hereunder if each interest rate
was____ of 1% less than the interest rate paid by the Company or if the
commitment fee was _____ of 1% less than the commitment fee paid by the
Company, as applicable.] [In addition,] [t]he Assignee agrees to pay ___%
of the recordation fee required to be paid to the Agent in connection with
this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor 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 created by the
Assignor. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor
makes no other representation or warranty of any kind to the Assignee.
Neither the Assignor nor any of its officers, directors, employees, agents
or attorneys shall be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency or collectability of any
Loan Document, including without limitation, documents granting the
Assignor and the other Banks a security interest in assets of the Company
or any guarantor, (ii) any representation, warranty or statement made in or
in connection with any of the Loan Documents, (iii) the financial condition
or creditworthiness of the Company or any guarantor, (iv) the performance
of or compliance with any of the terms or provisions of any of the Loan
Documents, (v) inspecting any of the Property, books or records of the
Company, (vi) the validity, enforceability, perfection, priority,
condition, value or sufficiency of any collateral securing or purporting to
secure the Loans or (vii) any mistake, error of judgment, or action taken
or omitted to be taken in connection with the Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment Agreement, (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 at it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, (iii) appoints and
authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under the Loan Documents as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably
incidental thereto, (iv) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Bank, (v) agrees that its payment
instructions and notice instructions are as set forth in the attachment to
Schedule 1, (vi) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are
"plan assets" as defined under ERISA and that its rights, benefits and
interests in
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and under the Loan Documents will not be "plan assets" under ERISA, [and
(vii) attaches the forms prescribed by the Internal Revenue Service of the
United States certifying that the Assignee is entitled to receive payments
under the Loan Documents without deduction or withholding of any United
States federal income taxes].
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right pursuant to Section 12.3.1 of the Credit Agreement to
assign the rights which are assigned to the Assignee hereunder to any
entity or person, provided that (i) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law,
rule, regulation, order, writ, judgment, injunction or decree and that any
consent required under the terms of the Loan Documents has been obtained
and (ii) unless the prior written consent of the Assignor is obtained, the
Assignee is not thereby released from its obligations to the Assignor
hereunder, if any remain unsatisfied, including, without limitation, its
obligations under Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement
and the Effective Date, the percentage interest specified in Item 3 of
Schedule 1 shall remain the same, but the dollar amount purchased shall be
recalculated based on the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between
the parties hereto and supersede all prior agreements and understandings
between the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered)
shall be the address set forth in the attachment to Schedule 1.
Page 58
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above
written.
[NAME OF ASSIGNOR]
By:_______________________________
Title: ___________________________
[NAME OF ASSIGNEE]
By: ____________________________
Title:___________________________
Page 59
<PAGE>
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
Credit Agreement by and among Cordant Technologies Inc., The First
National Bank of Chicago, as Administrative Agent, and the Banks party
thereto dated as of February 5, 1999.
2. Date of Assignment Agreement: ______________________ , 19__
3. Amounts (As of Date of Item 2 above):
a. Total of Commitments
(Loans) under
Credit Agreement $___________
b. Assignee's Percentage
of Facility purchased
under the Assignment
Agreement ______ %
c. Amount of Assigned Share in
Facility purchased under
the Assignment
Agreement $_________
4. Assignee's Aggregate (Loan
Amount)* Commitment Amount
Purchased Hereunder: $_________
5. Proposed Effective Date:
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: __________________________________ By: _______________________________
Title:________________________________ Title: ____________________________
Page 60
<PAGE>
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
Page 61
<PAGE>
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
____________, 19__
To: Cordant Technologies Inc.
15 W. South Temple
Suite 1600
Salt Lake City, UT 84101
Attn: Treasury Department
The First National Bank of Chicago
Mail Suite IL1-0374
One First National Plaza
Chicago, Illinois 60670
Attn: Transportation Division
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and
delivered to the Company and the Agent pursuant to Section 12.3.3 of the
Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of , 19 (the "Assignment"), pursuant to which, among
other things, the Assignor has sold, assigned, delegated and transferred to
the Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstandings, rights and obligations under the Credit Agreement relating to
the facilities listed in Item 3 of Schedule 1. The Effective Date of the
Assignment shall be the later of the date specified in Item
Page 62
<PAGE>
5 of Schedule 1 or two Business Days (or such shorter period as agreed to
by the Agent) after this Notice of Assignment and any consents and fees
required by Sections 12.3.1, 12.3.2, and 12.3.3 of the Credit Agreement
have been delivered to the Agent, provided that the Effective Date shall
not occur if any condition precedent agreed to by the Assignor and the
Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Company and
the Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before the date specified in Item 5 of
Schedule 1 to determine if the Assignment Agreement will become effective
on such date pursuant to Section 3 hereof, and will confer with the Agent
to determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Agent if the Assignment Agreement
does not become effective on any proposed Effective Date as a result of the
failure to satisfy the conditions precedent agreed to by the Assignor and
the Assignee. At the request of the Agent, the Assignor will give the Agent
written confirmation of the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or
before the Effective Date the processing fee of $3,500 required by Section
12.3.3 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Company to execute and deliver new Notes or, as appropriate, replacements
notes, to the Assignor and the Assignee. The Assignor and, if applicable,
the Assignee each agree to deliver to the Agent the original Note received
by it from the Company upon its receipt of a new Note in the appropriate
amount.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the
purchase pursuant to the Assignment are "plan assets" as defined under
ERISA and that its rights, benefits, and interests in and under the Loan
Documents will not be "plan assets" under ERISA.
Page 63
<PAGE>
9. The Assignee authorizes the Agent to act as its agent under the
Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply information with respect
to the Company or the Loan Documents to the Assignee until the Assignee
becomes a party to the Credit Agreement.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By: _____________________________ By:________________________________
Title:___________________________ Title:_____________________________
ACKNOWLEDGED AND CONSENTED TO ACKNOWLEDGED AND CONSENTED TO
BY THE FIRST NATIONAL BANK BY CORDANT TECHNOLOGIES INC.
OF CHICAGO
By:______________________________ By:______________________________________
Title: __________________________ Title:___________________________________
[Attach photocopy of Schedule 1 to Assignment]
Page 64
<PAGE>
SCHEDULE "1"
SUBSIDIARIES
(SEE SECTION 5.16)
(Ownership interests are 100% unless
otherwise indicated.)
Page 65
<PAGE>
SCHEDULE "2"
INDEBTEDNESS OF SUBSIDIARIES
(SEE SECTION 5.16)
Page 66
<PAGE>
SCHEDULE "3"
LIENS
(SEE SECTION 6.2.6)
There are no Liens outstanding by the Company or any Subsidiary
except Liens permitted pursuant to Section 6.2.6 of the Credit Agreement.
Page 67
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from Cordant
Technologies Inc. unaudited financial statements for the quarter ended March 31,
1999 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 19
<SECURITIES> 0
<RECEIVABLES> 290
<ALLOWANCES> 9
<INVENTORY> 261
<CURRENT-ASSETS> 617
<PP&E> 1140
<DEPRECIATION> 461
<TOTAL-ASSETS> 2409
<CURRENT-LIABILITIES> 544
<BONDS> 644
0
0
<COMMON> 41
<OTHER-SE> 666
<TOTAL-LIABILITY-AND-EQUITY> 2409
<SALES> 634
<TOTAL-REVENUES> 637
<CGS> 491
<TOTAL-COSTS> 550
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> 77
<INCOME-TAX> 23
<INCOME-CONTINUING> 47
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.26
</TABLE>
